From prime time television interviews on the Business News Network to multiple mentions on CBC and The Globe and Mail, Don R. Campbell stands as one of the foremost authorities on Canadian real estate investing. It’s easy to why. After all, he literally wrote the book on it.
Founder of the Real Estate Investment Network, Campbell has been closely analyzing, and advising on, the housing market since the 1980’s. With that in mind, TheRedPin asked Campbell seven burning questions about the Ontario and BC markets.
1.) From an investor’s point of view, what are the top three markets to buy a house in each Ontario and British Columbia?
An interesting question for sure. Each investor or homeowner will have their own goals, their own target tenant profile and own dollars available for down payment. So targeting which market is the “Best” actually can mislead an uninformed and beginning investor.
Some markets provide strong cash-flow but limited upside in value, while others provide very little cash flow but a big upside in demand. Factoring that in, let’s speak of markets that have strong economic fundamentals that will support a market if the province’s economy slows and will help accelerate the investor’s returns when the market is hot:
2.) Is there a difference when hunting for a cash flow positive single-family house versus a condo apartment?
Each type of property has its own pros and cons.
In the GTA, properties that are ground oriented (i.e. single-family house with a yard) are going to see increase in demand, more quickly than condos. Why? Simply because the supply is limited by geography, the Provincial “Places to Grow Act” and the move towards densification. Combine this restriction of supply with a demographic shift that is occurring where demand for larger, more family oriented, units will only increase and you can see out ten years that the demand curve will be increasing substantially.
Condo apartments, the hottest topic in the GTA for the last five years, will continue to see demand as they are the new “entry-level home” of this generation. However over the next ten years demand (both in purchase and rental) will shift towards larger units, especially two and three bedroom units within walking distance of a transit or commuter rail station.
3.) You’ve mentioned “the five year window” before when speaking about investing. What do you mean by that?
When buying a piece of real estate, I suggest that one must consider that they will be holding it for a minimum five years. That way you have a plan on what to do if the market doesn’t perform in a way that supports your plan for your property. For instance for someone planning to flip a property and right when they want to sell it, the market slows right down and demand falls off, they’re stuck. Having a plan in place, in advance, dramatically reduces the stress while also forcing an investor or speculator to choose their properties more wisely.
4.) What’s your one top piece of advice for first-time buyers looking to buy in Ontario?
Right now, more than ever, do not get caught up in all of the hype and excitement. Yes, this will be difficult to do given the momentum of the market. I have been following markets since the 1980’s and I have witnessed, over and over again, that it is in time of over-heated markets that the biggest mistakes are made. Do not, I repeat, do not let F.O.M.O. (fear of missing out) drive your buying decisions.
Think long term, target the regions where you would like to live for a ten year period – whether the market goes up or down – and if you don’t find anything there rent in the area where you want to live and invest your funds in another area that will provide you a better ROI (return on investment).
5.) The Places to Grow Act – it’s not that big of a talking point but it has a monumental impact on the Toronto real estate market. Why so? And if it was up to you, would you scrap it?
The green spaces that surround our urban centres are important to protect, no question. However legislation such as the “Places to Grow Act” and the “Agriculture Land Reserve” in British Columbia have the consequence of limiting supply of developable land; thus driving values upward. We, as a society, need to understand that protecting our green space is important and comes at a financial cost.
6.) What are your thoughts on the tax targeting foreign buyers in Vancouver? Should it be implemented in Toronto as well?
A Targeted ‘tax’ has so many negative unintended consequences that, at the end of the day, it can bring more problems than currently in play.
You can actually correlate it to the targeted travel-bans that the US is trying to implement. For instance, the high-tech and finance sectors, both of which have been identified as important growth sectors for Vancouver and GTA, will be negatively affected as it will become more difficult for companies in those industries to attract long-term employees from around the world. In addition, the perception of a “You’re Not Welcome Here” sign being put up also will make it more difficult for these companies to bring in even shorter-term employees. That is why we are seeing the BC Government now make changes to the policy to exempt those who have work visas, but the perception lasts.
In reality once the tax (or change in rules) is in place for twelve months and the market is still known as a world financial ‘safe haven’ (like Vancouver and Toronto are) large and small investors looking for shelters for their capital will find a way around it. In addition, as we are witnessing in BC right now, there is a class-action suit being filed against the legislation and many argue that the tax is in contravention of some Canadian trade treaties.
When the second Land Transfer Tax was implemented in Toronto, the doomsayers said it was the end of real estate in Toronto and all of the capital would rush out elsewhere. Well, the reality was much much different. After an initial pause, the market got back on its economic cycle and look where we are today. The same will occur with a foreign buyer tax is implemented.
7.) We know your expertise is primarily for investors. But for end-users and run-of-the-mill buyers, what’s your top piece of advice?
Never, ever get talked into a piece of real estate, especially by someone using F.O.M.O. Yes hot markets are hot, creating fear of missing out, and yes cold markets are cold creating fear of loss. However, when emotions drive your home-buying decisions you will have a good chance of making a poor decision.
This is your home you’re buying, not an investment piece of real estate – so make sure that it is a home you’ll be proud of and happy to live in.
Want to get started on your home buying and selling journey? Check out TheRedPin’s listings page