How in the world do I invest in real estate in Canada? Stick around to find
out.
Hey, friends Stephen Michael Miller here and today, I'm going to talk about
Canadian real estate. As a matter of fact, I'm going to talk about why you may or
may not want to do real estate in Canada. Now, I know there are a lot of our
Canadian friends out there who have been asking, how do I get started in real
estate here in my own backyard or maybe how do I do real estate not in my own
backyard? So I want to kind of address this run real quick right now. I've got
my laptop right here. I'm not a Canadian real estate expert as you all
well know. Kris and I have both done the vast majority of all of our real estate
or all of our real estate in the US and so I want to be careful here
just a little bit. But I do have something that you all have access to
here as well which is a lot of great information. So I want to take you with
me as I dive in and do some of the research that I would do as I'm
looking to either do real estate in Canada or figure out why it may not want
to. So come and follow me right now. I'm here on the good old website of
google.com. If you've never been on there before then you need to find a way out
from underneath that rock, okay? So you've got google.com. Just go on right now and
I typed in Canadian real estate market. You can do Canadian real estate 2018. You
can do lots of different things. You can you know do different variations there
to get different types of information. But I type that in as you scroll down
and look, you've got a lot of different things that are coming up here. You've
got something from actually just a week or so ago. Canadian real estate prices
see biggest drop worldwide. So that's a big thing. It looks like the
Canadian housing market is you know has been seeing some some drops as of late
which by the way oftentimes when you see a massive drop, that could be a good time
to get in possibly. You see here middle class gets priced out of housing market.
That's a really big deal that's been happening
for a long time. I'm going to go into some of that here. You see a lot of different
articles here. You see this down here emerging trends in
Canadian real estate that that you could click on. I want to pull up something
that I found over here and this is on a website MoneySense. This is Canada's top
cities to buy real estate in 2018 and as I was scrolling through this article,
and kind of reading through I saw this chart that they created and I
wanted to spend the majority at the time of this video here on this chart just to
help you see some of the different things that you may want to be looking
at when in it when choosing to either invest or not to invest in a specific
area. And this has the top 35 cities that you could invest in I
guess in Canada. I'm going to say right up front. Please don't make fun of
me for any of my pronunciations. I don't speak French nor do I speak Canadian. No
I'm just kidding. Okay I do speak English and I will try to do my best here but I
want to take some of these and just pull apart the number one city here that
they've ranked as number 1. I don't know exactly what they're ranking on but
they are considering average home price in 2017, average five year rent
increase, average income to home price ratio and then your five year annual ROI
or return on investment. And as I just take a glance right now as I'm looking
at these different price points and these different these
different data points. If I look over at the five year annual ROI, I'm seeing some
pretty similar trends. Now this is over five years and so you can see here,
you've got 4.48%,, you've got 4.62%,
you've got up to 13% is the highest one that I'm seeing right now as
you continue to scroll down, it goes from 8% down to 4% back up to 7%
and these are all the different markets of course. We got as low as 1%
and this is an annual increase right and so the highest thing that I'm
seeing right now is 13% in Vancouver. Let's just let's just pull that up.
Actually let me scroll down to make sure that is the highest one. 13%....
13 yep that's the highest one here on this page. So I just want to pull up if
you were going to go invest in Vancouver because this
showing the highest annual return on investment, what would that look like?
Well, let me scroll down here a little bit and open this up. In Vancouver, the
average home price is $2.2 million. Now, I don't know if you're like
me but I'm not necessarily looking to put that much of of an asset, right? $2.2
million into just one property that's only producing 13%.
Now, I will say 13% is not bad like it's not a bad return. It's better than
all any bank will ever give you. It's better than any money market account
will ever offer you. You know it's better than you'll probably do in the
stock market in a lot of other places. So it's not necessarily a bad return on
investment but one problem here that I'm seeing is there's a massive barrier to
entry. For most people, they don't have $2.2 million to throw
around on a property or the ability even necessary get a loan for $2.2 million.
So I'm just looking at this and seeing the feasibility right? if I want
to get the best return, then I would have to I would have to invest in Canada, in
Vancouver according to this chart here. The other big problem here is or I guess
one good thing that I'm seeing, is you've got the five year rent increase of 23.63%
that is a wonderful rent increase over five years.
And it's one of the largest rent increases as well which is why it's
doing so well on the overall annual return. You see a few other rent
increases here. You've got a 24% at 23%. A couple other 23%'s.
So but it's one of the highest, right? So, you've got some good things going for
you. The one bad thing in Vancouver is your average income to home price ratio
is really, really high. In other words, the average income in Vancouver is a
little over $100,000 a year. But the average home value, it says here the home
price is $2.2 million. That's said, 22 times higher value of home than then
income. That's a massive gap and most places you know, most people can't afford
that type of a gap and so you just want to be aware of those things you just
want to take a look at this. Let's look at one of the lower ones. Just to kind of
see what we've got here the lowest value in the homes, average home value, you see
here is a$185,000. That's in Saguenay? I
think, in Quebec. So if you look at that $185,000
for the home, okay you can see right here, the average five-year
rent increase is 9.11%. So that's not a great rent
increase over five years. You divide that by five, that's less than 2% a
year of increase, right? It's not that great. You see here, you're
actually ROI, you're at a -.08% return on investment,
right? So you're going negative every year which is something that I
wouldn't recommend. So even at the price point that may make sense for some
people, you're not getting a return, you're actually going
negative on that return and you can go here you can look at all
everything in between because there's a lot of information here. But I think
really the take-home for all of this is I'm looking at this information is for
me, Canada may not be the best place to invest for you.
Canada may not be the best place to invest. I will say this if you can find a
home with a 20, 30, 40, 50% equity position, it may be a really great place
to invest if you can find that kind of a deal. But if you're not finding that kind
of a deal, then there's a big reason that I'm seeing now why people, why
Canadians are looking to America. Are looking to USA to invest their money in.
The reality is, we're finding homes here in America for you know anywhere between
$100,000 to $200,000 right in that range that produce a a 10 to 15 to even 20
maybe even 25% annualized ROI. We've been doing this for the last
decade and we're continuing to do this. So it's something that that you want to
be aware of and it's something that you know, again is drawing people from all
across the world to come to the US, to come to the US, to invest their
hard-earned capital because in their own backyard, it can be extremely difficult.
They may be priced out, but even if they can
afford the properties, being able to rent those out at the proper rental rates to
be able to earn a decent return on their investment, is just slim to none. And I
mean as I'm looking over this, I haven't really pulled averages but I'm looking
through all these cities the top 35 cities,
my guess is I'm looking through this as the average annual return is probably 5%.
Maybe 5 or 6%. Somewhere right around there. I have done the math, you
can probably do the math and you'll be a lot more accurate than I am right now
but it's probably 5 or 6% is the average annual ROI. At a 5 or 6%
average annual ROI, that's just not enough for me anyway to get my
money to really work for me. I'm looking for 15 to 25%, right?
Year-over-year over and over and over again. If you're able to earn 15 to 25%
on your money, your money's doing some pretty good things for you. If
you're able to do that and then compound that and then maximize that and have
exponential growth over time, taking taking growth in one property and then
put that into another because you're able to find cheaper homes, you're able
to find better deals, you're able to find deals that are cash flowing better for
you, then all of a sudden that increases your rate of return. It increases your
your turnover rate, it increases your velocity of money which is something I
think that everyone in Canada as well as around the world is looking to do with
their with their hard-earned dollars. So my recommendation for you in Canada is
if you can find a really good deal again with 10, 20, 30%, maybe even 50%
equity in the home you may want to buy in Canada. If you're not finding
those types of deals, the best thing that you could probably do would be to find
an area where you can put your money to use in the very best way and America may
be a good option for you. So if you're looking for.... So one of the biggest things
that I would say that as you're looking to move forward in your real estate
ventures, as you're looking to do more in real estate then look at opportunities
inside of your own country but I would also say look for opportunities outside
of your own country. Look for programs and individuals or people that could
partner with you possibly to bring some real estate... Some other real estate
opportunities to you. If you're interested in more of that, then stick
around and we'll give you some information to find out more of what you
can do. Hey, friends thanks for watching. If you've got any comments, you've got
some more questions, please put them in the comments below. If you'd like to meet
with one of our team and figure out how we can help you, then click on the link
in the description below. We'd love to help you out in your investment journey.