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Hi all. I currently live in Toronto and I'm in the market for a rental property. However looking at the Toronto market, it's hard to find cash flow neutral rental units, let along a cash flow positive one.

There has been talk about how London Ontario is great market. However because it's a 3 hour drive, I'm wondering if anyone else has similar experience in finding and managing a unit that's that far away, and do you find it manageable? Since as an investor, I'm at a disadvantage not only in my understanding of the city, but any hands on management will require a drive down, or delegate to a property manager.

Any information is appreciated. Thanks.
 

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There are various levels of difficulty in being a landlord. The easiest one is to work in your hometown, or something close by. Going to a remote city is another step up as you then need to develop a network of contractors, managers, etc. Next would be interprovincial and then across canada.

I’d never recommend starting at step two, because you need to develop experience. If the opportunity doesn’t exist in your own town, real estate may not be a good investment for you. You really need to know the areas and how a town or city functions to make proper decisions. You can’t usually just jump in and everything goes well, especially with the first few units.
 

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There are various levels of difficulty in being a landlord. The easiest one is to work in your hometown, or something close by. Going to a remote city is another step up as you then need to develop a network of contractors, managers, etc. Next would be interprovincial and then across canada. Each one is harder and more complicated to do. Plus you have to find people you can trust, which is extremely hard in this industry.

I’d never recommend starting at step two, because you need to develop experience. If the opportunity doesn’t exist in your own town, real estate may not be a good investment for you. You really need to know the areas and how a town or city functions to make proper decisions. You can’t usually just jump in and everything goes well, especially with the first few units.
 

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I can tell you what your competition would be and you can judge from there.........today's purchase prices versus renting.

As London has 2 major schools (Western University and Fanshawe College) and 2 huge teaching hospitals.......a lot of purpose rentals were built over the decades.

There are several family business landlords who own thousands of units.......apartments and townhouses, that they built in the 1960s and 1970s for much less than today's prices.

As such.........they would be the main competition because they can easily make a profit for the capital they spent 50 years ago to build the units.

We rent a 3 bed 3 bath all brick townhouse in a nice area. Unfinished basement and mature trees all around with a park behind us.

Our rent is $1100 a month plus hydro. The landlord pays for everything else, including all inside and outside maintenance (landscaping, snow removal).

They have a large maintenance staff and a lot of equipment and look after the maintenance of the entire subdivision area and it is spotless.

Our rent also includes a free membership to a private club that has a full gym, indoor pool and outside pool area that is like a resort. There is even a water spray area for kids and they sponsor a couple of events a year for the kids. They also provide subsidized swim lessons and there are also play parks for the kids.

I mention all that so you have a clear understanding of what your competition would be like in London.
 

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Having said the above, it is possible to buy townhouse units close to the schools and rent them to students.

The biggest problem with that is that students share the space and there is often damage that gets done which they all deny being responsible for.

A few years ago, when I delivered into a "student area" of brand new homes, it looked like a war zone.

Community college kids are the worst tenants. If you want student rentals I would suggest somewhere near the university where there is also a world class teaching hospital.

Those students take their education a lot more seriously from my experience of operating a delivery company for a couple of years.
 

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Sags, would someone new also pay $1100/mo or would they pay more? I.e., I'm wondering if you are benefiting from being a long time, reliable tenant.
 

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We benefit somewhat due to rent controls in Ontario. A new tenant would pay several hundred dollars a month more to live here.

There are places with higher rents, but they have fully finished basements, central air, dishwashers, underground parking etc.

There may be good opportunities with the right unit, but I have found when the price looks attractive there is usually a reason......like high condo fees or a high special assessment.

As always due diligence is required and I sure wouldn't want to rent to students from a distance.

I remember years ago a buddy of mine inherited a nice home near the University. He decided he wanted to sell it and offered us a good deal.

We arranged to meet him at the house and he was standing on the sidewalk with his mouth hanging open. He had never seen the house before.

The students completely destroyed it. The yard was nothing but weeds and garbage. Inside garbage was piled up and there were holes all over. The carpet was filthy.

We politely declined to buy the place while he had the students evicted. The students were to blame but so was the landlord who didn't watch her investment.

No.......I wouldn't rent to students unless I could keep a close eye on them.
 

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It seems to me that the situation in London has been greatly affected by the proximity to Toronto and the rising home prices there.

The same thing is happening anywhere near Toronto.

After decades of level home prices, people started selling their homes in Toronto for big money, moving to London and commuting to TO everyday.

Sell their home for $800,000 and buy a much nicer home here for $300,000. As TO values went up......the people bid more on homes here.

Today those same houses are listed for over $500,000 and are well beyond the reach of average people in London.

Meanwhile, rents didn't keep up because the market wouldn't support continuing higher rents here and rental units were probably overbuilt for decades.

So today.........a potential landlord may find it difficult to match the home price with the rent.

All the builders in London today are building high end luxury apartments. Very few are for sale. Most are rentals and people are filling them up.

Just the way our local real estate market is.........with Toronto a long, long commute away that people are willing to make.
 

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A final thought on the local real estate scene.

The media says home prices are falling, but when I go on the local Reddit website people are saying they are bidding on homes and not getting them.

They say that "asking price" is meaningless. It appears that people are still moving here from Toronto and bidding up home prices.

So, I wouldn't accept the MLS asking prices as the gospel. The property may sell for much more than that, which makes it even more difficult for landlords to calculate everything.
 

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Hi all. I currently live in Toronto and I'm in the market for a rental property. However looking at the Toronto market, it's hard to find cash flow neutral rental units, let along a cash flow positive one.

There has been talk about how London Ontario is great market. However because it's a 3 hour drive, I'm wondering if anyone else has similar experience in finding and managing a unit that's that far away, and do you find it manageable? Since as an investor, I'm at a disadvantage not only in my understanding of the city, but any hands on management will require a drive down, or delegate to a property manager.

Any information is appreciated. Thanks.
I'd go with Just a Guy's thoughts and accept Sags knowledge of the London market. But I don't see anything in your OP that says whether this is your first ever rental property or how much experience you have as a landlord. That would influence any advice obviously.
 

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Owning a rental property will require much effort, proper management and maintenance make a successful rental property. If you are living far from your property location then this will be a hard time.

It takes time to get people to rent a property. There will be inquiries, open-houses, budget discussions, and other renter concerns. It these would require you to drive in and out, then managing the property won't be easy.

Property investment is a great opportunity for an income source if everything is in place. Done wrong, it may do more harm than good.

Look for places in the city where property rentals are a thing. Short-term renters are also good because you can have more flexible pricing, as long as they can easily be replaced.

Look into your network, or find property managers in the area to help you while you are away.
 

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^
... Look for places in the city where property rentals are a thing. Short-term renters are also good because you can have more flexible pricing, as long as they can easily be replaced.

Look into your network, or find property managers in the area to help you while you are away.
... would that be good in the city of London that the OP is enquiring about? If so, I don't suppose he/she go the DIY route. Ie. a property manager is a must, right?
 

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Finding a reliable property manager should be your first step if you plan on buying a multi unit. If buying a single family home you need to build a network of contractors. This is all important before making an offer.
 

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Finding a reliable property manager should be your first step if you plan on buying a multi unit. If buying a single family home you need to build a network of contractors. This is all important before making an offer.
You can always find a tenant with property manger experience, I’ve had this before, they get a break on rent, but manage your properties for you. Place an add on Kijiji, offering the option. Professional managers are more prone to corruption I’ve found.
 

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What is the argument for owning individual properties versus just owning REITs?
As Just a Guy says, higher return. Where most people get hung up is on the 'I don't want to be a landlord' issue. They always think owning a property directly means a house and all the hassle of landlording. I had money directly in properties for years and was never a landlord. Commercial and industrial properties with a group of owners each holding a percentage and all landlording done by professional property management companies. Investing directly in real estate does NOT just mean buying a house and renting it out. Some people just can't seem to understand that.
 

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Roi is much, much higher, less chance of fraud.
.... have to ask, how much higher and over what period of time? As with the less chance of fraud - what about mortgage frauds versus frauds perpetuated by investing in REITS?
 

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As Just a Guy says, higher return. Where most people get hung up is on the 'I don't want to be a landlord' issue. They always think owning a property directly means a house and all the hassle of landlording. I had money directly in properties for years and was never a landlord. Commercial and industrial properties with a group of owners each holding a percentage and all landlording done by professional property management companies. Investing directly in real estate does NOT just mean buying a house and renting it out. Some people just can't seem to understand that.
... well, it's ALOT cheaper to buy BAM.A than to put in half a million bucks (on the cheap side) for being "part" owner of a commercial property.
 

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As Just a Guy says, higher return. Where most people get hung up is on the 'I don't want to be a landlord' issue. They always think owning a property directly means a house and all the hassle of landlording. I had money directly in properties for years and was never a landlord. Commercial and industrial properties with a group of owners each holding a percentage and all landlording done by professional property management companies. Investing directly in real estate does NOT just mean buying a house and renting it out. Some people just can't seem to understand that.
Pretty much the description of a REIT.
 
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