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cash flow in GTA

I

investornewbie

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Apr 17, 2009
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Hey all,

This is my first post and I am glad I found this site. I made some money in some flips and I wanted to invest in some properties in the GTA. Since this is a rent and hold market, I am looking into condo`s in downtown toronto or houses in the surrounding areas with great cash flow opportunities. Which is better to invest in? ie balanced need for cash flow and steady appreciation? . . . also what are good quick pre-screening cash flow rules to evalute properties?

Thanks,

Tony
 
I don`t think there are any nice cash flow properties in the GTA without a catch like home about to collapse, serious crime area or something but I`d be glad to learn I`m wrong.. good luck.
 
QUOTE (investornewbie @ Apr 17 2009, 06:53 PM) Hey all,

This is my first post and I am glad I found this site. I made some money in some flips and I wanted to invest in some properties in the GTA. Since this is a rent and hold market, I am looking into condo`s in downtown toronto or houses in the surrounding areas with great cash flow opportunities. Which is better to invest in? ie balanced need for cash flow and steady appreciation? . . . also what are good quick pre-screening cash flow rules to evalute properties?

Thanks,

Tony
go further afield .. like: SK, AB or BC .. some smaller ON towns as well with universities and Toyota nearby .. GTA and Ontario will have some serious (downwards) adjustment ahead ..
 
Morning Newbie,

I am a bit of a newbie myself.
I believe you can find cashflowing properties in the GTA. I have two myself.
Consider the personal skills you have and consider the type of property that will allow you to maximize the value of those skills.
For example: if you are a carpenter/renovator type(myself and you I assume from your post), a condo in Vancouver will not allow you to use those skills easily. You need to keep it simple. Stay close to home and value cashflow over but not to the exclusion of appreciation. Cash flow is much easier to predict than appreciation. The wisest of experts are only speculating when they tout cities or regions. The Durham region and the GTA were both in REINs top 10 Ontario towns, so are they going down or are they good investments or both?
You will probabley want to manage and maintain your porperties yourself at least for the first few.
You are familiar with the neighbourhoods and the type of tenants you will be dealing with in those neighbourhoods if you stay close to home.
Imagine how a leaky faucet will affect your cash flow in Saskatoon versus a 10 minute drive from your house.
In closing:
-take your time shopping for your properties.
-keep your properties close to home.
-keep your porperties modest.
-keep your properties well maintained.
-Keep it simple.

Good Luck, Brian
 
Hi Brian, can you give an example - just the RENT and PROPERTY PRICE that you were able to find in the GTA. Thanks.
 
Hi Investsmart,
-1000 sqft bungalow purchaced in 07, give or take a few ft.
-Purchase price 205K (same thing now sells for 220-230K)
-renovation cost to make legal 2 bed basement apartment and do a few minor repairs on the mainfloor 35K.
- That price includes material, legal and my time. If contracted out I would guesstimate it at 40-45K.
-My total cost 240K
-Current rent $1320 up, $945 down including gas, water and hydro.
-utilities and taxes are aprox $500 per month.
-I guess they aren`t stellar performers, but they sure are easy and I am learning every day.
 
Re above - and it was a reno project
 
I am also a newbie. I have only two properties, both in North York. I closed 1.5 month ago on a duplex for 340k. I put 10% down.Rent from upper appartment $1375 bottom $1100. Separate meteres, utilities paid by the tenants.
it is obviously not so great as in SK, AB...but good enought for me.

Great thing they are close to my house. I manage them myself (so far).

igor



QUOTE (kabuku @ Apr 18 2009, 05:28 AM) Morning Newbie,

I am a bit of a newbie myself.
I believe you can find cashflowing properties in the GTA. I have two myself.
Consider the personal skills you have and consider the type of property that will allow you to maximize the value of those skills.
For example: if you are a carpenter/renovator type(myself and you I assume from your post), a condo in Vancouver will not allow you to use those skills easily. You need to keep it simple. Stay close to home and value cashflow over but not to the exclusion of appreciation. Cash flow is much easier to predict than appreciation. The wisest of experts are only speculating when they tout cities or regions. The Durham region and the GTA were both in REINs top 10 Ontario towns, so are they going down or are they good investments or both?
You will probabley want to manage and maintain your porperties yourself at least for the first few.
You are familiar with the neighbourhoods and the type of tenants you will be dealing with in those neighbourhoods if you stay close to home.
Imagine how a leaky faucet will affect your cash flow in Saskatoon versus a 10 minute drive from your house.
In closing:
-take your time shopping for your properties.
-keep your properties close to home.
-keep your porperties modest.
-keep your properties well maintained.
-Keep it simple.

Good Luck, Brian
 
Toronto will not cash flow due to the high initial cost of properties. In addition the overall tenant pool is very poor and getting worse every day.
Ultimately the examples posted above will not cash flow and in fact will likely end up negative with the advent of only one eviction.
The Ontario RTA and LTB are extremely anti landlord resulting in only one bad tenant destroy new landlords.

If you really want to know what it is like to be a landlord in the Toronto area check out these two sites.

http://forums.canadianbusiness.com/forum.j...html?1236648478


http://members7.boardhost.com/Landlordonta...html?1236648478
 
Thanks guy`s I appreciate everyone`s input (aaaaaaaaaa esp!). Since my fiancee works here and I am working on continuing education, I feel that this is my only choice. As Spark1 aka Igor mentioned keeping it local would be my initial thought. However I also have a partner who is willing to invest with me, but he is more inclined to do commercial. This was also because he shared Thomas` and invst4proftit`s concerns.
 
Investforprofit,
Just a few questions if I may.
When you say "Toronto" do you mean the GTA or just the City of Toronto?

Please elaborate on "the tenant pool is poor and getting worse". Are you refering to rising unemployment or something else?

Would your your opinion that one eviction would turn the example properties negative not apply to all of Ontario because of it`s laws or are the #s just bad on these examples? Also, wouldn`t this happen with almost any property that is highly leveraged?

Do you like any cities in Ontario and if so which and do you have an example property?

Investornewbie,
When you refer to "commercial" are you refering to apartments or malls/stores/industrial?

Thanks, Brian
 
Not being from T.O. I refer to the entire area of T.O. and surrounding area where monthly rental income is not a minimum of 1% of purchase price of property. If you can not get a minimum of $2000/month for a property costing $200,000 positive cash flow will be difficult to impossible.
Obviously T.O. core is worst due to price and concentration of renters.

The quality of renters is poor because in the past few years many renters have moved into home ownership leaving behind the low wage earners and those lacking the mentality for ownership. There seems to be a growing tenant mentality in T.O. whereby they believe they have an entitlement and display a blatant lack of respect for LLs.

Evictions are less likely outside of concentrated areas, fewer professional tenants, and less down side to lost income where properties have higher positive cash flow.

Any town or small to medium sized city in Ontario would be my preference if you must invest in Ontario.
 
Investforprofit,
You make some good points.

It`s very hard to make the 1% per mth mark in the GTA.

Also true about the entitlement attitude especially in the downtown NDP/Liberal strongholds.

I guess I am pretty conservative. Maybe one day I will venture out of my comfort zone and perhaps mortgage a property or even buy one in another city. For now I will keep searching in the "905" for that elusive 1% per mth property.

Regards, Brian
 
I like this post



QUOTE (invst4profit @ Apr 20 2009, 08:45 AM) Toronto will not cash flow due to the high initial cost of properties. In addition the overall tenant pool is very poor and getting worse every day.
Ultimately the examples posted above will not cash flow and in fact will likely end up negative with the advent of only one eviction.
The Ontario RTA and LTB are extremely anti landlord resulting in only one bad tenant destroy new landlords.

If you really want to know what it is like to be a landlord in the Toronto area check out these two sites.

http://forums.canadianbusiness.com/forum.j...html?1236648478


http://members7.boardhost.com/Landlordonta...html?1236648478
 
QUOTE (kabuku @ Apr 18 2009, 02:30 PM) Hi Investsmart,
-1000 sqft bungalow purchaced in 07, give or take a few ft.
-Purchase price 205K (same thing now sells for 220-230K)
-renovation cost to make legal 2 bed basement apartment and do a few minor repairs on the mainfloor 35K.
- That price includes material, legal and my time. If contracted out I would guesstimate it at 40-45K.
-My total cost 240K
-Current rent $1320 up, $945 down including gas, water and hydro.
-utilities and taxes are aprox $500 per month.
-I guess they aren`t stellar performers, but they sure are easy and I am learning every day.

Hi Kabuku,

Thanks for sharing. I agree it is an amazing ratio for the GTA - $2,265 rent a month for a 205K purchase price + reno`s. Good job!
However, if you compare it to other cities the ratio in other cities is still much better and you do not necessarily need the 35K additional expense/renovation - which is a big one by itself as 35K can buy you a property/be used as down payment.
Still, the GTA has some Great advantages and it does sound like a Good deal, just not for people who focus 100% on cash flow and care much less about appreciation in today’s environment.

Regards,
Neil
 
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