Canadian Real Estate - where are the opportunities?

[MrBrown]

Who asks a real estate question on an escort review site?
I guess I do (asking for a friend).... figured at least some of the hobbyists (and maybe the ladies) know how to make $$.

Seriously though. Vancouver and it appears the whole Lower Mainland is a playground for speculators.
I've heard some projects nowadays sell abroad (China) much before they are permitted to sell here (no prospectus).
Seems there's no yield to be made from rental income.

Where would one buy rental income property (in Canada)?
Assuming you had up to $700k cash to spend?

Nanaimo - not too late?

Calgary - not too early?

 

[johnnydepth]

That's a tough question. Real Estate is a big market and there are lots of ways to make money and lose money. You have $700K to spend. Is that cash or mortgage? What area do you want to be in? Residential, Commercial, Industrial? In and out, or long term? Development or existing? Do you want to handle everything or hand it over?

 

[appleomac]

If someone has 700k to invest; it's best not to plow all in on real estate. One can make better returns than going all in with 700k into real estate. Also, one can get exposure to real estate without having to actually buy real estate - you don't need to actually own gold to make money off gold.

 

[sybian]

Comox.....you can still buy a newer house in really good condition for 3 to 5 hundred , and an awful lot of BC people are buying there ,and retiring.
Kamloops for housing/commercial....big companies are buying real estate there and moving to Kamloops.
Cheap office space, very cheap warehousing ....3 major highways connect there, and no traffic jams....and the city is business friendly.
The nice part about commercial holdings is the tenant is responsible for their own upgrades and maintenance, but it needs to be stated as such in the lease.....I happen to have a few.
Also some very large investment companies are buying up very large ranches around the Southern Interior, hiring managers and continuing to operate.....and I mean they are gobbling up family ranches, and paying whatever price is put on them.
They can be purchased for 1 to 5 million depending on the production, beef output, and range lease size...average price hovers around 2 million, and the money is coming out of Ontario investment companies.

 

[jgg]

"Buy land, they're not making it anymore" Mark Twain.

 

[coffeeb]

Calgary is perfect for investing right now, with $700k cash you could put split it and purchase 2 properties close to or in downtown with 10 year mortgage at the current 5 year fixed rate average of about 3.29%. Also assuming the condo/house is around $500k each, the rent itself would cover the mortgage and more, just gotta calculate taxes but the value is not likely to drop, and it will be really good income once the mortgages are paid off.

 

[MrBrown]

Thanks everyone for your thoughts.

Yeah, I know about alternative investments and types of property, each with their puts and takes.
But the context of my question was specifically for rental income and yes, the cash is on hand so no need for mortgages and no real benefit with writing off the interest.

My gut is telling me apartments in Calgary. I'll be there in a few weeks and may check it out. Again, not for me.

Thanks!

 

[appleomac]

Thanks everyone for your thoughts.

Yeah, I know about alternative investments and types of property, each with their puts and takes.
But the context of my question was specifically for rental income and yes, the cash is on hand so no need for mortgages and no real benefit with writing off the interest.

My gut is telling me apartments in Calgary. I'll be there in a few weeks and may check it out. Again, not for me.

Thanks!

If the cash is on hand (i.e. pure liquid, no costs associated with the cash, like winning the lottery or inheritance); your "friend" is much better off taking the windfall, paying off his/her existing mortgage, re-borrowing the amount of mortgage paid off and using the mortgage proceeds to buy an investment (any investment, investment property, stock portfolio, mutuals funds, etc). CRA allows you to right off interest if one "borrows" money to invest, whereas CRA will not allow one to simply right off mortgage interest otherwise, that way the mortgage interest can be tax deductable against his/her normal regular income. If memory serves, it's called the Smith Maneuver, and people have been doing it for decades. Free cash is often best served to the average Joe by using the Smith Maneuver as interest on a mortgage can be significant, the tax savings are real and free cash over and above whatever return one makes on the investment from the remortgaged funds. From your "friend's" perspective, nothing has changed (perhaps current mortgage rates are higher than his/her existing rates), but now he/she can write off interest against regular income.

 

[nightswhisper]

Most properties purchased on mortgage will cover interests with rent.

Since mortgage interest diminishes, your equity rises, and the property inflates in value, you will gain significant capital. If you AirBNB, you're likely to earn more.

However, RE has slowed in BC due to vacancy tax, so keep that in mind.

Purchasing property in vacation heavy areas and renting them out is great these days. I purchased a cabin in Banff for 421,000 and it makes upwards of 38,000 a year.

 

[Cognoscente]

I would leverage a property and not buy it outright. I have always thought "Would I live here?" Before i bought a rental. Cheapest property in the nicest neighborhood. The rent should cover the mortage and taxes. I would buy a entry level house that i could sell in maybe two years. It use to be here in Victoria that the property would go up 50K a year in value. I would leverage, best way to take 100% control of a asset with 25% down payment. Don't buy anything that is so far away from where you live that you cannot drive to it within a few hours. Best of luck. A friend asked me once if I liked begin a landlord. I said "If making money was easy,everyone would have lots of it". I have always treated my tenants with respect. I have one, that i have not raised the rent in five years. She is a great tenant. Go with your gut when selecting tenants. I use to use the Beacon score, and that guarantees nothing.