Where to invest in real estate in Ontario

One of the questions we have when start investing in real estate is where to invest, what city to choose for buying investment properties. When talking about real estate investment, we are focusing on "buy, hold and rent" strategy. It has some benefits, such as:

  • tenants pay down the mortgage;
  • property value appreciation over time;
  • positive cash flow

With the real estate boom we see right now it may seem than any city provides excellent investment opportunities, and while it may be true for some time, we should be careful when buying investment properties and choose such locations which satisfy our long-term investment goals and have strong economic fundamentals such as

  • job & population grows;
  • low vacancy rate;
  • growing transportation;

You may think only large Ontario cities offer great investment opportunities, but it may be extremely hard to buy an investment property in such cities as Toronto due to overpricing, that is why we are focusing on cities located relatively far from Toronto.

Here are top 5 cities to consider investing in real estate in Ontario, based on the latest reports from CMHC and CREA.

Barrie

  • Average home price (2015): $373,203
  • Average home price (2016): $412,861
  • Average home price (2017): $494,968
  • Average 5-year rent increase: 20.0%
  • Current unemployment rate (2017) (%): 8.5%
  • Rental vacancy: 1.9%

Located less than an hour’s drive from Toronto, Barrie is an attractive community with many investment opportunities. A second GO station was recently completed resulted in house pricing increase. New business opening, such as IBMs data center provides job growth, and more young people migrate there or stay after graduating from college or university.

Current Barrie population is around 150,000 today with projected population of 210,000 by 2030, which makes it one of the fastest growing city in Ontario.

Hamilton

  • Average home price (2015): $442,493
  • Average home price (2016): $498,859
  • Average home price (2017): $557,177
  • Average 5-year rent increase: 18.1%
  • Current unemployment rate (2017) (%): 6.4%
  • Rental vacancy: 3.4%

Hamilton is the third largest city in Ontario and one of the fastest growing. Great transportation system includes all four modes - road, rail, air and port. Fast jobs grows make this city very attractive for new immigrants (who mostly rent for first 3-5 years), which make it very attractive for potential real estate investors.

And while the prices for houses in Hamilton are relatively high, you still can find good deals with a positive cash flow and nice appreciation.

Kitchener/Waterloo ,Cambridge

  • Average home price (2015): $348,269
  • Average home price (2016): $372,808
  • Average home price (2017): $493,226
  • Average 5-year rent increase: 14.2%
  • Current unemployment rate (2017) (%): 5.1%
  • Rental vacancy: 2.5%

Major transportation improvements and job grow in IT sector make these cities very attractive to young people, and the University of Waterloo provides a constant supply of new graduates for IT market. There are a lot of investment opportunities in this region for any types of real estate investments.

Durham Region

  • Average home price (2015): $439,842
  • Average home price (2016): $489,755
  • Average home price (2017): $697,896
  • Average 5-year rent increase: 14.6%
  • Current unemployment rate (2017) (%): 6.0%
  • Rental vacancy: 1.7%

Durham region includes such great cities as Ajax, Oshawa, Whitby located along the 401 highway and GO train route which allows people easily travel to Toronto every day. One of the fastest growing population in Canada expected to reach one million people by 2030 and to accommodate such population housing supply expecting to increase by 83%.

Such environment is ideal for investing in real estate with "buy hold and rent" strategy.

St. Catharines

  • Average home price (2015): $264,152
  • Average home price (2016): $291,612
  • Average home price (2017): $367,461
  • Average 5-year rent increase: 11.5%
  • Rental vacancy: 2.8%
  • Current unemployment rate (2017) (%): 6.1%

St. Catharines may become a next hot spot in the Golden Horseshoe due to transforming that city into a new center for the arts. Such infrastructure projects as

  • FirstOntario Performing Arts Centre
  • Marilyn I. Walker School of Fine and Performing Arts
  • Meridian Centre
  • Niagara Wine Route

will increase real estate prices and provide a high return on your investments.