Where to buy first investment property outside of GTA and GVA ?

Question

About me:

- Recent university graduate (international student) who is still on work permit. Don't expect to become a PR within a year. Because of this, GTA and GVA are out of question due to the 15% oversea buyer speculation tax. ( the tax ruins the leverage and return )

- Have about 150K CAD for downpayment. Annual employment income is about 200K. Therefore, mortgage potential is between 800K - 1MM

- Investment goal: achieve appreciation with the leverage provided by mortgage. I am willing to accept negative cash flow for extended period of time.

- I work in Toronto now and will relocate to US in 1-2 year time. I have a demanding job, therefore any strategy that is time-consuming will not work for me

Question:

If I would like to get into the market right now, what is my best option ?

Should I look at pre-construction properties (I will be PR when it closes -> no tax) in GTA ? If so, what type of property and in which neighborhood ? Is downtown condo a good choice at the moment ?

Should I look at pre-owned properties outside of GTA and GVA ? If so, which city and what type of property ?

Thanks so much for your input and contribution !

Gary McGowan · Answer

Great insight here!!! I would look at the GTA Secondary locations. Ontario over time will always provide appreciation. So if your long-term plan is to hold properties then appreciation will show up. A portion of my portfolio has been through 2 major dips and lots of Real Estate Cycles. I can tell you without "time" I would not be in the positive financial position I'm in now. (100% of my portfolio has been in Ontario)

Zorya Belanger · Answer

Hi @Cloud Huang

I agree with @Huong Luu. When I look at your situation... good income but limited on time, and you want to avoid buyer speculation tax... sounds like a turn-key portfolio, where you are not the one on title would work well. You may qualify as an accredited investor, which opens the doors to many great opportunities. Many people are active real estate investors because they want to achieve the accredited investor status, and then they are able to sit back & enjoy life while passively investing and doing private lending. Sounds like you may be there already!

If you get clear on your ultimate goal, then it's easier for everyone to help you. Appreciation, mortgage paydown, cashflow, etc. is typically not the goal. What do you hope that those things will do for you in your life?

Steve Gibbs · Answer

@Cloud Huang

Hi there,

Impressive financials for an international student - Awesome! And Congratulations!

I’m an international student as well from the early 2000’s.

I invest in the Kitchener waterloo region. I can share my experiences with you in the interest of learning a thing or two and networking.

Connect up if you are interested and we shall discuss more.

Thanks!

Chris Baxter · Answer

@Cloud Huang Welcome to BP.  Be careful with "Investment goal: achieve appreciation" .  Appreciation is never guaranteed and should be viewed as a bonus, not the foundation for investing.

Huong Luu · Answer

@Cloud Huang You are in a great position! If you plan on staying in your job long term, then perhaps a TURN-KEY rental portfolio is better suited for you. You are completely silent and have a capability team running things for you. This also opens up the JV and syndication options for you. With your relocation plans to the US, do not limit yourself to only Canada. Investing in the US allows for 1031 exchange which is not available in Canada while giving you other similar benefits to Canada.

In regards to your questions, I would narrow them down. They are too vague. Look at your long term goals, what returns you want, etc to help get better questions.

Good luck.

Roy Cleeves · Answer

Hi Cloud Huang - yes, KW is the Silicone valley of the North.  We have the most successful Tech Startups in the Country right here in KW.  The price appreciation here has been outstanding - 30% plus in recent years.  This is due to the fact that many people from the GTA want to live in a bigger space now rather than an apartment or a condo and KW offers the space and at prices lower than the GTA.  We are only 1 hour to downtown Toronto and the Go trains make it possible to not even need to do the drive if you don't want to fight the traffic.  I can email you some recent Market reports on housing here if you want to email me.   We are now connected as Collegeaues so you can send me a message with your email that way.  Cheers!

Cloud Huang · Answer

Care to elaborate and educate a newbie? Why does KW region stand out compared to the rest of Canada (especially other metropolitans outside of GTA and GVA )?  Any link or article you could share ?  Appreciate your insight

Roy Cleeves · Answer

Kitchener Waterloo area