Any good values out there for potential investment rental properties?

[speedfreeksteve]

I've been scouring quite a large area in southern ontario and even western new york trying to assess what the best places to get a reasonably cheap house to rent out is. So far I've seen quite a disparity in prices, and that some areas the house prices don't make sense considering the location (i.e. anywhere east of Toronto)

I'm only looking within an hour or so of Toronto since I don't want to be hours away from something I own and may have to go to once in awhile. Here's what I've found so far to be "ok".

-St Catherines (semi-decent houses available for just over 100k)
-Kitchener/Waterloo (limited supply of townhouses for mid to high 100's, but the rental market seems decent)
-Bradford (some ready to split into 2 family rentals and rent out semi's for under 250k and a healthy rental market)

Anyone have any insight on this or any other decent areas to point out?

[hhs]

I live in Kitchener and I have been looking at this type of investment: I have a rental builindg in London. It is expensive, but if you want to buy a property to rent it out, look at the apartment buildings rather than at townhouses. Location, location again.

[Pfm1011]

I'm Oakville, Forget the rental market here, There is a ton of vacant units and you are lucky if you can get 1300 to 1400 for a 300k base townhouse.In addition 300k is a very base townhouse ( ie Sh*thole) .  Put in a 5% mortgage and the taxes and you are better off going to Woodbine and picking the longshot. 

Single family homes. 2200 for a 5 to 600K house. ( Back to woodbine for the second race)

I personally would wait a year as the sales are dropping  (May  down 19% in Toronto ) and there is a ton of cheap condos coming online. Reduced sales , Increased listings, can only lead to price drops and reduced rental rates ( IE sh*t returns)  Last year the "No Money Down" mortgages artificially kept the housing market running but it also pulled everyone out of the rental market.

The rental rates have not gone up in 4 or 5  years  but house prices have doubled. So forget Burlington Oakville Mississauga

Forget east of Toronto as GM tanking 3 or 4000 ( plus 4 to 1 for related jobs) leaves 15000 people unemployed in that area.

Toyota Woodstock 2nd plant  .. Should be good for a 30 to 45 mile radius minimum so it looks like Cambridge or  London are much better bets then GTA .  Also they are both very nice towns. Not concrete jungles like the GTA .

I would still wait a year as the housing market is going to get a good kick, Not a collapse but I bet the prices will roll back 2 or 3 years back to a sane level.

As per HHS . I agree that buildings are good but I dont think an individual condo is a good move as Condo fees can be insane. If you do look at condos, be sure to look at the condo's books.  Many condo buildings have no contigency fund and when the garage/roof/windows need a million worth of repairs, you are screwed.  Although townhouses may be a good entry ( freehold only) , you are still way better off with a single family detached , may cost a bit more but worth more in rent and resale.

[speedfreeksteve]

KW and London do seem to have some value there. As for condos I just don't see how I could make a dime on one renting. Almost everyone I've ever met with a condo is paying more just to carry it then they could get for rent. Houses chopped into apts just seems so much better.

BTW, you typically need 35% down to get a business loan for an investment property without getting mortgage insurance. Usually about 5% lump sum.

[Sasha]

Hi,

Thanks for the financial information, although isn't the 35% for commerical properties or is it 50% for Commercial?  Correct to say easier to get financing if financials from previous owner are used to obtain mortgage?
I'm going this weekend to look at small apt. buildings (3 to 5 units) in northwestern Ontario.  In this neck of the woods, you may get a 7 unit building for around 200K.  I've looked at homes as well, large home renovated into semi, both sides rented etc..  In apt. buildings the owner is responsible for paying utilities such as heat, hydro, water, snow removal and landscaping as well as insurance and taxes.  In the duplexes and triplexes (split homes into semis), each unit was individually metered and renters paid heat, hydro and did their own landscaping, snow removal etc..and owners responsibility were taxes, insurance, water, sewer etc..
Utilities, especially heat can add up and so can costs for snow removal and landscaping. In other words, my net income on a 5 unit apt. building was the same as a duplex.  Probably no capital gains in this area but could have a nice addition to my income.