@Jason - about your questions
Those are all very different markets; radically different markets in fact. If you just look at the City of Toronto itself (3 million of the 7+ million Greater Toronto and Hamilton Area) it has, within it, dozens of distinct "markets." When it comes to tenant profile, risk, and cash flow (or lack thereof) there is so much variety within the city that it makes your head spin. When you look at KWC compared to Barrie, compared to Oshawa compared to Hamilton compared to any of the Toronto neighborhoods, you will find massive differences. A good strategy is to compare areas and see which best suits your situation and then become an expert in that neck of the woods - find the best investor-focused realtor, etc.
About your second question, I am not a lawyer or accountant so you will need specialist advice there. We own our companies in an incorporated company. This gives us legal protection if someone sued the business as our personal accounts and personal professional corporations are not involved. It costs more in terms of accounting and administrative costs to set up an incorporated Ontario corporation. I don't think that you use an LLC unless you are building a business to attract investors and that is a more complicated structure with more costs involved and I think you only do that when you have a lot of success under your belt and know how to deploy hundreds of thousands of dollars to millions of dollars with outside investors' money. Still, I am not an expert in any of this.
The key issue you brought up is how to get the profits / cash flow / money into your hands to pay the bills. Well there may be some bad news there. Profits from real estate investments, at the scale you would be starting at, are taxed at the highest marginal tax rate. Even though it is a business, the government says it does not get the corporate tax rate or the small business tax rate. I'm not aware of any way to get money out of the business at anything less than the top tax rates so if you, or anyone else reading this has ideas, I'm all ears.
Since we are now connected on LinkedIn, we can chat about the money thing, but my belief is that investing in real estate in most cities in Canada does not typically throw off enough cash for someone to live on. Prices are high, expenses are high, and rents are modest so the strategies that can get you enough to live on, to give some examples, might be student housing, higher risk cities with low house prices and poor economic fundamentals, or starting with buying a multi-million dollar portfolio requiring hundreds of thousands or a million+ of down payment. For example (and I have not run the numbers lately) if you were to buy a ready-to-rent house with a basement suite in Oshawa in the low 500s all in, and put 100k down plus closing costs, and if you managed the property yourself, then you might get a couple hundred per month cash flow on average. That's 2k per year, maybe 5k per year if you are really lucky. And if one year you unexpectedly need to replace a roof and a furnace, that place needs cash instead of generating it.
So I'd be curious about how much you have to invest and how much you need to gain in monthly cash flow. The larger benefits you get from investing in residential real estate are from the mortgage pay,down and the capital appreciation over a long period (as prices can always go down in the short term). The benefit you get in cash flow is usually the smallest of the returns from investing in real estate.
Finally, the meeting tonight in Ajax can be found if you google Durham REI.
Cheers, Noel
