Ontario Markets - First Time Investor

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Ontario Markets - First Time Investor

Ben Welch
Member since 2020 · 2 posts · 0 votes

Hello BP Canada,

I'm hoping to get some feedback on the community's feelings towards the Ontario market right now and some advice for a prospective first-time investor. 

I've been researching real estate for about a year and sitting on the sidelines while I educate myself on the topic. However, as you're all likely aware, the markets are red hot, making affordability in most areas an issue. I'm open to a number of different investment strategies but am leaning towards the more buy and hold options.

What I'm really trying to understand is whether or not this is the best time to buy as a first time investor to get into the market (and leaning towards a more buy and hold option). I know there are always options with JV partnerships, but I'd ideally like to get my first deal done solo.

I know we can't predict the future and most of us wouldn't have expected these market headlines back in April, but just curious what the community's general feel is towards the market right now and where expectations lay for the future. 

Welcome any and all thoughts! 

Thank you kindly,

Ben

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Roy Cleeves
Residential Real Estate Broker · Kitchener, Ontario · Member since 2014 · 687 posts · 370 votes
5y

If you hold onto real estate long enough - you should never lose on it.  In my market of Kitchener - Waterloo, Ontario we have incredible growth over the years and it is expected to continue for some time due to the following:

1. Low-interest rates - allow for low monthly payments - keeps prices rising

2. Low supply of homes compared to demand - under 200 homes for sale right now in a market of over 500,000 people.

3. Transition of people out of Toronto to communities nearby.  Kitchener and Waterloo is only 1-hour drive down the 401 from Toronto so we have a lot of people moving out of Toronto and into Kitchener Waterloo.

4. Desire for more space due to Covid-19.  Many people are moving out of condos (again many from Toronto) and into homes with more space in our market.  This drives detached home, semi-detached home and townhouse sales.

5.  Predicted price appreciation for next year is double digits.

6.  Increased costs of construction keep prices rising as well.

7.  Kitchener Waterloo has a solid economic base including high-tech companies such as google which are driving more jobs and more influx of people that will need housing.

8.  Our Cities have excellent services including 2 Hospitals, 2 Universities, and a number of colleges both private and public.

9.  Growing infrastructure investments including the LRT (Light Rapid Transit)

10.  Beautiful Family Spaces including large Parks, Sports Facilities, Community Centres, Chicopee Ski Hill, Bingemans Family Fun Centre and many more!

This is just to name a few from the top of my head!

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  • Tyler Stiller
    London, Ontario · Member since 2018 · 104 posts · 38 votes
    5y

    I think now is a great time to buy. I don't see that there is a going to be a crash, it could slow down. But it sure seems like there is way more demand than there is supply, for the last few years.

    I am working with some first time investors and first time home buyers now. They all say, I wish I bought a couple of years ago. The appreciation is huge. My last purchase was a buy and hold, yes it cash flows. But with the apprecation we are seeing, that is what I am holding on for. 

    0Reply
  • Roy Cleeves
    Residential Real Estate Broker · Kitchener, Ontario · Member since 2014 · 687 posts · 370 votes
    5y

    If you hold onto real estate long enough - you should never lose on it.  In my market of Kitchener - Waterloo, Ontario we have incredible growth over the years and it is expected to continue for some time due to the following:

    1. Low-interest rates - allow for low monthly payments - keeps prices rising

    2. Low supply of homes compared to demand - under 200 homes for sale right now in a market of over 500,000 people.

    3. Transition of people out of Toronto to communities nearby.  Kitchener and Waterloo is only 1-hour drive down the 401 from Toronto so we have a lot of people moving out of Toronto and into Kitchener Waterloo.

    4. Desire for more space due to Covid-19.  Many people are moving out of condos (again many from Toronto) and into homes with more space in our market.  This drives detached home, semi-detached home and townhouse sales.

    5.  Predicted price appreciation for next year is double digits.

    6.  Increased costs of construction keep prices rising as well.

    7.  Kitchener Waterloo has a solid economic base including high-tech companies such as google which are driving more jobs and more influx of people that will need housing.

    8.  Our Cities have excellent services including 2 Hospitals, 2 Universities, and a number of colleges both private and public.

    9.  Growing infrastructure investments including the LRT (Light Rapid Transit)

    10.  Beautiful Family Spaces including large Parks, Sports Facilities, Community Centres, Chicopee Ski Hill, Bingemans Family Fun Centre and many more!

    This is just to name a few from the top of my head!

    2Reply
  • Account Closed
    Rental Property Investor · Port Coquitlam, BC · Member since 2017 · 520 posts · 527 votes
    5y

    This article was published yesterday and highlights the exodus from major downtown cores into smaller centres: https://www.ctvnews.ca/canada/...

    0Reply
  • Christopher H.
    Lender · Okanagan, BC · Member since 2017 · 105 posts · 77 votes
    5y

    @Ben Welch

    You have probably already heard this more then once.  Get yourself in the game.  Education is good, but experience is also important.  

    Is the market going to crash? %99 chance it will crash again one day.  When?  In truth, no one knows and can only guess.  Try looking at it like this instead.  

    It's your first house and you said yourself your going to hold it.  You have educated yourself so you are going to buy something within your budget or that cash flows etc or whatever your criteria is.  How long is 'hold' in your mind?  1 year?  5 years?  25 years?  If you are like most investors buy and hold is many years.  So you buy your house then the market crashes.. what's the issue here?  "I could have gotten a better deal" This is true, but ask the guys who have been waiting for the market to crash since 2015, 2016, 2017, etc.  How much appreciation and mortgage paydown have they missed out on?  How much more are they paying to get into the market now?  Go ahead and search news articles in any month in ANY of the last 6 years.  I guarantee you will find some 'expert' touting the market crash is imminent.  

    'Dont wait to buy real estate, buy real estate and wait' or 'Time in the market not timing the market' are both very applicable especially on your first home.  

    The questions to ask isn't 'Should I be buying right now" it is 'What should I be buying right now?' Figure out WHY your buying real estate and it is going to be easy to see what strategy fits into that(house hack, brrrr, etc).   Then set your criteria and budget and take action. Get a solid mortgage broker and realtor(if required) on your side. 

    Maybe I am biased because I'm a mortgage broker and I want people to buy.  With that said I'm also an investor and if a deal is in front of me right now that looks good I'm buying.  

    Just my opinion hope it helps.  Feel free to dm me anytime if you need help or get stuck.  

    2Reply
  • Ben Welch
    OP
    Member since 2020 · 2 posts · 0 votes
    5y

    @Christopher H. @Account Closed

    Thank you all so much for the encouraging feedback. Look forward to getting my head into making my first deal. 

    0Reply
  • Sean Zou
    Member since 2020 · 2 posts · 0 votes
    5y

    @Ben Welch, I am in the same shoe as you. Looking to buy my first investment property and leaning towards a buy-hold strategy. Best of luck to you.

    @Roy Cleevesyour comments about KW are valuable. I have been watching KW+Cambridge market for a while. KWC and Halifax ranked the second highest population growth rate in Canada (according to a dailyhive article). I am interesting in investing in houses, wonder what market is like these days in KW. If you are open to share some insight, that would be great! Thanks.

    0Reply
  • Jacob Perez
    Rental Property Investor · Hamilton, Ontario · Member since 2016 · 285 posts · 181 votes
    5y

    @Ben Welch if you acquire cash flowing property, you don't really need a large appreciation to get a great return on your investment.

    With that said, I'm pretty bullish on Canadian real estate. Government seems to be doing nothing what-so-ever to help the supply issue. Record immigration is coming to Ontario in the coming years. Inflation seems to be evident, all positive for values. 

    0Reply
  • Melanie Dupuis
    Investor · North Bay, Ontario · Member since 2019 · 221 posts · 99 votes
    5y

    @Ben Welch@Sean Zou Take a look at Northern Ontario. Low purchase price, high cap rates, and high cashflow.

    0Reply
  • Sean Zou
    Member since 2020 · 2 posts · 0 votes
    5y

    @Melanie DupuisThanks for the note. It sounds like a lucrative market. 

    0Reply
  • Melanie Dupuis
    Investor · North Bay, Ontario · Member since 2019 · 221 posts · 99 votes
    5y

    @Sean Zou It definitely is! It allowed both of us to quit our full time careers in our 30's. The cashflow is great, and you can still get amazing appreciation by forcing it with renovation and repositioning of the asset.

    1Reply
  • Sam Hanaa
    Rental Property Investor · Member since 2018 · 78 posts · 11 votes
    5y

    @Ben Welch, same here, if you can increase your downpayment to 30% then you will be on the safe side cashflow wise, let us know here or on PM if you purchased anything. 

    Also feel free to PM me if you want to exchange knowledge and ideas  

    0Reply
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