Why Every Investor Should Buy in Downtown Toronto
On a recent drive from Toronto to Niagara Falls, Andrew la Fleur came to a shocking realization that reinforced his belief that every investor should own real estate in the downtown core of Toronto. Also, hear Andrew’s advice for anyone thinking about buying a house in the GTA.
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| Andrew la Fleur: | Why you should own a piece of real estate in downtown Toronto, and what a drive from Toronto to Niagara Falls taught me about the Toronto real estate market on today’s episode.
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| Speaker 2: | Welcome to the True Condos Podcast, with Andrew la Fleur, the place to get the truth on the Toronto condo market, and condo investing in Toronto.
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| Andrew la Fleur: | Hello from Tampa. Here in Tampa, Florida. Apologize in advance if the audio quality is not what it usually is, or if you hear any strange sounds or background noise. It’s not my usual setup, but I’m here on vacation for a little bit with the family, and we have a place down here in Tampa, Florida, which we were lucky enough to pick up some real estate here in Tampa at the bottom of the real estate cycle, real estate crash. It turned out in hindsight it was the bottom. We didn’t know at the time, but yeah, so our investments here have done very well, but more importantly, we love Florida. We love coming down here as much as we can. There’s just so many great things to do, and places to go, and it’s just a great, great spot for vacation for us and our family.
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| We’ve got three young kids as of time of this podcast recording, 2016. We got a six, almost four-year-old, and a six-month-old, seven-month-old. They keep us busy, but Florida’s a great place to take the kids, and there’s always just so much to do here for them. Yeah. Wanted to talk to you, of course, about investing in the core, and I wanted to tell you a little story that just happened to me this week. We’re flying out of the Niagara Falls Airport to come down here this time, and so we had to drive from the city to Niagara Falls Airport, USA. Here’s what happened. I don’t ever do that drive, but I was shocked, absolutely shocked, at the traffic, and the gridlock, and the flow of cars coming out of the city.
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| I don’t do that drive ever, so I just was thinking, okay, we’re leaving in the afternoon, a weekday, in the middle of summer. Should be no problem. Not really thinking too much about leaving early or anything to beat the traffic. We had an evening flight to catch in Niagara Falls, so we had to leave sort of towards the end of the afternoon. I was thinking, it’s going to be busy through maybe Mississauga, Oakville, and then after you get there, you’re pretty much out in the country, I’m thinking. It’s going to just be opening wide up, and no worries, smooth sailing from south Oakville on. Definitely not the case. I was shocked at the fact that it was basically bumper to bumper traffic all the way from the city, past Oakville, past Burlington, past Hamilton, past I guess on the other side of Hamilton, what are you talking about? Stony Creek. It was packed, basically stop and go, all the way to past Grimsby.
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| For those of you who know the area, you know what I’m talking about. If you don’t, take a look on the map and see how far Grimsby is from the city of Toronto. All this to say that Niagara Falls, believe it or not, Niagara Falls is now basically a suburb of Toronto. It’s been joked about for years, as sort of, yeah, hey, Toronto’s growing. Niagara Falls is a suburb of Toronto, or will be soon. It actually is. People are actually commuting from Niagara Falls area, Saint Catherine’s, and that whole area, all the way to Toronto, and they’re doing this every single day in their cars. The QEW is a write off, apparently, so this is not an anomaly. I talk to people who make this drive regularly, since doing it, and seeing this, and I was saying, is this just … Did we catch it on a bad day? Was there some accident or something that we missed?
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| No. This is normal. This is bumper to bumper from Toronto, past Hamilton, through Stony Creek, Grimsby, pushing all the way to Niagara Falls? Unbelievable, so that was shocking to me. Maybe you’re listening to this, and you live out in that area, and you’re saying, “Come on. Andrew, this is normal. We know this already.” This, to me, all I kept thinking about on this drive was one thing, and that is, if it is this bad now, imagine what it’s going to be like in five or ten years. Imagine, as you add 100,000 people to the GTA, and even more to the greater Golden Horseshoe area every year for the next five or ten years. Ten years from now, you’re going to have a million more people out there, potentially a million more people on the roads of this region.
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| Imagine what traffic is going to be like. Imagine the gridlock. Imagine the time that people are going to be spending in their cars, who live in these areas that are coming into the city. Certainly, no matter what happens, we know that we are not going to be building any new highways that are going to be completed in the next ten years. We know that for a fact, because none of them have started. It takes a long time to build these things. That just is what’s going through my mind, and I want to talk about the implications of living in a mega, mega city, and a mega city that’s growing. The first point I want to make is you got to invest in the downtown core. It’s just, again, I’m thinking is all these people spending all this time in their cars. Where are they going to every day, and where are they coming from every day? The city, the downtown core of the city, specifically.
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| The closer you can get to the center of the universe, the nexus of Ontario, the nexus of Canada, and in many ways, one of the hubs of the world now, downtown Toronto, you got to get there as an investor. You’ve got to have money in the downtown core. This is where everyone is going. It’s quite simple. You just follow the flow. It’s not rocket science. If everyone is going to that spot every day, and everyone wants to be there, and needs to be there, then buy there. Invest there. The growth is going to be there, as this traffic situation becomes worse and worse and worse. Where do you think the demand is going to be the highest, the highest, the highest? It’s going to be where the commutes are the shortest, the shortest, the shortest, which is in the downtown core.
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| More and more people will be competing for fewer and fewer properties as the entire region continues to expand. That’s the number one thing, is you got to invest in the core. I talk about this all the time, but I don’t tell people to only invest in the core. There are other types of properties. The student investment properties are a big example, but there are others as well, but the primary, the bulk of your portfolio over time, most of it, I believe, should be in the downtown core of Toronto. That’s where you’re going to see the best returns in the long run. Number two point is, if you’re investing in the core, or you’re investing anywhere, invest near transit, okay? Invest near transit.
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| What was interesting this week as well, as I’m recording this, and this month, there were two big announcements. One was that the Go Train service is going to be expanding all the way to Niagara Falls, so ta-da. Literally, it is becoming, the prophecy is happening, so to speak. Niagara Falls is officially going to be a suburb of Toronto, as they have a suburban commuter train taking people into the city every day, from Niagara Falls. Can’t imagine how much that would cost, and I can’t imagine how long the trip time would be, but people are going to, I’m sure, gladly sign up for that, especially after my experience of seeing how bad the gridlock is. I would gladly, if I was that everyday, I’d gladly pay to skip that line, and to have a nice, relaxing train ride instead.
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| That’s the first announcement. The second announcement was a private company announced, and I’ll include links to all of this in the show notes for this episode, which you can get at truecondos.com/podcast. The company announced that they’re going to be doing a private airline flight, regular daily service, from Toronto to Niagara Falls. They’re saying that you can get from Toronto to Niagara Falls, or vice versa, in about 12 minutes. 12 minutes. 12 minutes of flight time, because as you know, as the bird flies, it’s not a very far distance at all because of the curvature of the lake. They can hop over there in 12 minutes of flight time on one of those little puddle jumper planes, and there’s only one reason and one explanation for why they’re doing this, and that’s because the demand is there.
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| This company sees that there is a lot of people going back and forth every day, commuters, business people, education, research. All kinds of people are going back and forth. Government, so they see an opportunity there to offer this service. There’s more and more infrastructure and transit, so to speak, connections being made between Niagara region and the city. Very interesting. All that to say, again, going back to the second point that I want to make in this podcast, after the first point of being invested in the downtown core, second point being invest near transit. Always invest near transit, and in this case, you might want to even start looking at investing in Niagara around the Go Train station that’s going to be opening up there. Duh. Duh, Andrew. Of course. No-brainer, but these are important points to make, and to understand.
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| Investing in transit in a world where the roadways are constantly getting worse is always, always a good idea. Number three, and this point might surprise some people, but if you’re a regular listener to the podcast, and a regular subscriber to my emails, and if you’ve been listening to me for some time, it probably won’t surprise you at all. Something I always say is, condos are not the best investment out there. That’s right. You heard it here. The condo investing guy himself saying that condos are not the best investment. It’s true. This is just a fact. If you’re looking for the absolute best investment, the best ROI, it’s probably not going to be in a condo in most cases. However, condos are going to give you probably the best ROI for the least amount of effort put in, to sum it up in a nutshell.
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| They’re extremely low maintenance, and they give you good yields, and you can own several condos without breaking a sweat, without needing professional property management, and many other reasons, but we won’t get into all the details here today. Condos are a fantastic investment, but they’re not necessarily the best investment if you’re just looking at an ROI perspective. The best investment from an ROI perspective, if you look at the last ten years or so, and the GTA, has obviously been single family homes. We all know that single family homes have been appreciating at astronomical rates for a long time, and those rates seem to be even going higher and higher.
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| My third point here would simply be, if you ever are planning on buying a house in the GTA, say, or the greater Golden Horseshoe, even, if you ever plan on buying a house, and living in a house, and owning a house, then my simple advice is something I tell people all the time, is, you should buy that house as soon as you possibly can. If home ownership is in your future, then you want to get into that market as soon as possible, because that market just continues to move up and accelerate. What a lot of our clients look like is, they do own their own home, and they also own several condo investments on the side.
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| You say, “Andrew, why don’t you just buy a whole bunch of homes?” That’d be great, but there’s two major problems with that. One is that the cash flow generally is horrible, because prices have escalated so much, and rents have not. Two, it’s prices have escalated so much, so it’s very difficult for most people to be able to afford to purchase a home, let alone carry a home, knowing that most of them are going to be negative cash flow every month, especially in the core of the city. For that reason, and many others, condos make perfect sense. Condos are a great vehicle for people who have some money, but who don’t have endless supplies of money, and who aren’t interested in getting into negative cash flowing investments.
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| Condos are a perfect solution for real estate investments who are looking for a good return, but who are not looking to do a lot of work. They’re looking for real estate to fund their life, but they’re not looking for real estate to be their life. Condos are a perfect fit for that, and that is why I invest in condos, because I like to spend time in Florida, like I am now, and other places, and I don’t like to have to worry about managing properties, and dealing with especially older properties that require ongoing and many maintenance-related things on an ongoing basis. Those are the three points that come to mind as I was making this horrible commute, this unbelievable, grueling, stop-and-go commute from the city, pretty much all the way to Niagara Falls, and realizing that people are doing this every single day, and more, and more, and more people are doing that.
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| First thing, again, to summarize. Invest in the downtown core. That’s where you want to center your investment strategy around fundamentally, moving forward over the next ten, 15 years as you build your portfolio. Number two, invest near transit. Always remember that transit is critical. Transit is key. Of course, if you’re in the downtown core and you can walk to everything downtown, transit is not as important because although it’s most likely there anyways, but if you’re walking everywhere, that is the ultimate antidote to transit, is not needing transit. Number three is, if you are planning on buying a house in the GTA, you should buy a house as soon as you possibly can, first and foremost, as a foundation of your financial future.
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| Again, if owning a house is not something, because it’s not for everyone. That’s not something you’re interested in, don’t worry about that, but if you are, if you’re doing the condo lifestyle, if you love living in a condo and you don’t ever want to own a house, great. Continue to do that, but if you’re saying, “You know what? Eventually, I do want to own a house, and I do want to do the land thing, and have a yard, and a family,” or whatever it looks like for you, then again, the simple advice is to get into that house, and own that, get a piece of that market as soon as you possibly can, because this region is ever-expanding, and ever-growing in terms of population. The low rise housing product is going to become more, and more, and more of a commodity that is hard to come by, and that should be common sense for most people.
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| I find that when I tell that to a lot of people, they haven’t really thought about it like that, as an opportunity to take advantage of as soon as you possibly can, because that housing market ladder just continues to move upwards, and to move upwards at an accelerating pace. You want to have that as your foundation of your real estate and financial portfolio. Once you’ve got that, next step, plan B, is start buying some more cash flow positive properties, and to me the best option for my lifestyle, and for my family’s needs and future is buying condos that are cash flow positive. That’s what it looks like for me, and I think it does for you if you’re listening to this podcast, and a lot of people are like you as well.
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| Okay. There you have it. That is today’s episode. I hope you enjoyed that somewhat unorthodox, and hopefully the audio quality works out here. I’m not sure how it’s all going to turn out exactly, but hopefully you can hear what I’m saying, and you’ve heard everything, and it makes sense to you. If not, or if it does, I’d love to hear from you either way. Drop me an email. Andrew@truecondos.com. Give me a call, send me a text anytime at 416-371-2333. Until next time, I hope you have a great week. Bye.
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| Speaker 2: | Thanks for listening to the True Condos Podcast. Remember, your positive reviews make a big difference to the show. To learn more about condo investing, become a True Condo subscriber by visiting truecondos.com.
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