# $250k to buy land somewhere with highway access to GTA



## Kher-Spade (Oct 6, 2016)

Hey serial investors

Happy bank holiday weekend!

So I am an independent consultant and after risking the security of not having a ‘full-time’ job despite having a single income family and working really hard over the last few years, I was lucky to save some money that I would like to invest in a land that's suitable for residential and/or commercial use, and something that has reasonable prospects of appreciating over time.

Before I approach the sales people (realtors), I would like to pick you kind folks’ brains who have been very helpful in the past when I came here with money questions. So firstly, in terms of risk factor is it a good idea to invest in undeveloped land? And secondly, what factors would you consider before investing your dear money in land? Besides the geographical area and potential demographical growth of course, some of the other features that came up during my research are zoning and greenbelt considerations, property taxes, and pre-conditions or deadlines from local City Halls to build etc. Besides these is there anything else that I should be mindful of?

I have done some basic homework by visiting the following places which also helped me establish a contact directory of local realtors:

Georgina – straight access to Toronto via 404
Halton Hills/Acton – doesn’t seem to have taken off as much as Milton despite proximity (?)
Paris (Brant) – someone from the family has signed up for a new build house and the developer is already selling Phase 2 of the project at 10% higher even though Phase 1 is nowhere near completion (so potential that more developers will head in that direction making it future growth area?)
Surroundings of Airport Road (Caledon East)
Surroundings of Hurontario St. (Caledon Village)
Surroundings of Trafalgar Road/Highway 7 – Although due to being near Mississauga this area must be quite expensive

Reason why I am focusing on suburbs is that non-affordability of property prices in GTA will likely continue to force people out to areas within reasonable commute to the City. So besides the above listing, does anyone know of any other little-known gems that you think may pop over time? Especially, if you have the psychic powers to speculate on future demographics or public infrastructure developments then I definitely want to hear from you :excitement:

Lastly (just in case it sounds like I am seeking a shortcut to the millionaires’ club ), I want to make this investment for a few years (~10 years or more hopefully). So any advice that fits my bill would be highly and greatly valued.

*TLDR:* My wife and I want to park our money in a piece of land as future investment.


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## Kher-Spade (Oct 6, 2016)

Also, if someone knows of other web forums that are dedicated to Canadian real estate then would you mind sharing them with us?


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## Spudd (Oct 11, 2011)

For other forums you could look at redflagdeals.com. They have a dedicated real estate sub-forum, I believe. 

You seem to be focusing on the west end. There's lots in the east end too. Ajax, Whitby, Oshawa, Bowmanville.


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## OhGreatGuru (May 24, 2009)

Not to rain on your parade but:
- $250K is peanuts for land developers;
- the big developers have likely sewn up long ago most of the land that is likely to turn a decent profit in the next 10 years or so;
- the big developers know how to deal with the regulators and politicians to get what they want.

If you want to invest your savings in real estate, buy a REIT.


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## Kher-Spade (Oct 6, 2016)

Spudd said:


> For other forums you could look at redflagdeals.com. They have a dedicated real estate sub-forum, I believe.
> 
> You seem to be focusing on the west end. There's lots in the east end too. Ajax, Whitby, Oshawa, Bowmanville.


Great first response from a forum regular. Thank you Spudd.

I will surely look at the areas suggested. Do you have any comment on the Georgina option? Toronto has expanded far and wide towards East and West. Since we can't build on Lake Ontario (yet) what are the chances of population expanding towards North in the future years?


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## Kher-Spade (Oct 6, 2016)

OhGreatGuru said:


> Not to rain on your parade but:
> - $250K is peanuts for land developers;
> - the big developers have likely sewn up long ago most of the land that is likely to turn a decent profit in the next 10 years or so;
> - the big developers know how to deal with the regulators and politicians to get what they want.
> ...


I welcome your reply and that's exactly the type of guidance I am looking for. I already have some REIT stocks so I want to try something different (and bigger, since I do not have a lot of room available in my registered accounts). 

I am fully aware that $250k these days is not even close enough to buy land within reasonable proximity to GTA but hey, every novice has to start somewhere. And that's why I came here to obtain some suggestions (and criticism)


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## Retiredguy (Jul 24, 2013)

You say geographical. I would more specifically include the chance/potential of Fire/Flooding/Slides, and any environmental concerns especially if thinking commercial industrial.

I know nothing about RE development as I have only owned my PR(s) over the years but if I was going to buy in the future I would give much more consideration to these issues. Fortunately my present PR is pretty risk free from wild fire and flooding and as we all watch the nightly news I think more and more purchasers are going to be considering these things before buying.

...I also agree with OGG.


Added... If you buy raw land, and have a mortgage on it I believe the interest is NOT tax deductible and ongoing property taxes don't get added to the ACB. Can any RE or tax gurus confirm?


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## lonewolf :) (Sep 13, 2016)

Is there any farmland in the area that you could buy to rent out. Then in the future when 3D printed homes become more popular in the area get one printed for a small fraction of the price that homes are selling for now.


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## kcowan (Jul 1, 2010)

I did this in northern Alberta but I had a partner who knew what he was doing. The secret is to do something to the property, like a zoning change. I made out well but never did it again because I did not like being reliant on someone else. Plus I moved away from my partner.

Good luck!


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## Longtimeago (Aug 8, 2018)

I suggest you think of a bit bigger picture. You refer to commuting to the GTA. Not everyone needs to commute you know. We are now in year 7 of the Baby Boom Generation retiring. Consider the implications of that. Some of the lowest priced real estate in Ontario is found between Windsor and London. In the last 9 years since we bought here(near Chatham), we have seen home prices nearly double. Most of that increase in the last 4-5 years alone. I just read a report showing that house prices in the Chatham-Kent area have gone up 17% in the last year alone. Approximately 50% of buyers are from outside the area. ie. GTA retirees looking for more bang for their buck. My brother bought a nice little rancher for a third of what he sold a 600 sq. ft. one bedroom Harbourfront condo for. 

Then there is the high speed train planned to run between Windsor and Toronto. It's happening, not just being talked about happening. That obviously means that land near the corridor it will travel and the stops it will make, has potential for price increases for *all* uses, not just residential. 
https://news.ontario.ca/opo/en/2018...-to-build-first-phase-of-high-speed-rail.html
Why not look at land along that corridor if you are willing to hold for 10 years.
Of course with Ford in office, that may cause a hiccup in that plan, who knows. There is always risk involved in land speculation.
https://lfpress.com/news/local-news/with-its-conductor-gone-is-high-speed-rail-off-track

My point is that focusing on those commuting into Toronto is an unnecessary limitation you are imposing on your search and even with commuting, your idea of what distance constitutes 'commuting distance' may well be outdated.


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## kcowan (Jul 1, 2010)

Also your parcel could sit undeveloped while everything around you gets developed. You will need some kind of edge. And any financing is very expensive because no revenue supports the debt. Plus it is not deductible like an investment in rental property. JAG might be able to help you with how many doors of rental the $250k would be good for.


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## Kher-Spade (Oct 6, 2016)

Thank you for all the replies so far. 

Can I get someone's thoughts on Halton Hills/Acton as to why they haven't grown at the same pace as for example Milton despite having comparable access to Highway 401. 

Also, I am really intrigued to find out about any prospects of Georgina in the future. Despite being around an hour away from Toronto the traffic flow in that direction is much better than say towards Oakville or Oshawa. I have some colleagues who live in Barrie and they seem really optimistic about their house prices appreciating over time. So if that's the case then could this also be true for Georgina?


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## Kher-Spade (Oct 6, 2016)

Longtimeago said:


> I suggest you think of a bit bigger picture. You refer to commuting to the GTA. Not everyone needs to commute you know. We are now in year 7 of the Baby Boom Generation retiring. Consider the implications of that. Some of the lowest priced real estate in Ontario is found between Windsor and London. In the last 9 years since we bought here(near Chatham), we have seen home prices nearly double. Most of that increase in the last 4-5 years alone. I just read a report showing that house prices in the Chatham-Kent area have gone up 17% in the last year alone. Approximately 50% of buyers are from outside the area. ie. GTA retirees looking for more bang for their buck. My brother bought a nice little rancher for a third of what he sold a 600 sq. ft. one bedroom Harbourfront condo for.
> 
> Then there is the high speed train planned to run between Windsor and Toronto. It's happening, not just being talked about happening. That obviously means that land near the corridor it will travel and the stops it will make, has potential for price increases for *all* uses, not just residential.
> https://news.ontario.ca/opo/en/2018...-to-build-first-phase-of-high-speed-rail.html
> ...


Thank you for your advice and taking the time to write such a detailed post.

Our goal is to optimize investment over time so if there is something that can cater towards it better than an area that's closer to GTA then we would definitely consider it. 

Thank you for highlighting the rail project in Windsor. With all the US-Canada cargo traffic passing through there and a local airport that is enhancing its current reach Windsor certainly has great potential. But being an already developed city the question is can we afford to buy there within our budget. If you can provide some tips from your local knowledge about parts of Windsor and surroundings we should look into then please do so.


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## can_84 (Jul 2, 2011)

From a tax perspective your cost of holding the land including interest can be deducted from any revenue earned on the land in that year. If you don't earn enough revenue you can add the expense to the cost of the land so that you reduce your capital gains tax when you eventually sell the land. 

Like someone mentioned above, the big developers have politicians and city officials inside/payroll and thus they have much room to pick up plots that are more profitable. I believe the big guys do leave out small plots that are just not worthwhile for them, given your limited financing and lack of influence at city/region level you may choose to find these small plots that a developer leaves out.


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## Kher-Spade (Oct 6, 2016)

can_84 said:


> From a tax perspective your cost of holding the land including interest can be deducted from any revenue earned on the land in that year. If you don't earn enough revenue you can add the expense to the cost of the land so that you reduce your capital gains tax when you eventually sell the land.
> 
> Like someone mentioned above, the big developers have politicians and city officials inside/payroll and thus they have much room to pick up plots that are more profitable. I believe the big guys do leave out small plots that are just not worthwhile for them, given your limited financing and lack of influence at city/region level you may choose to find these small plots that a developer leaves out.


Thank you for the tip about using expenses towards capital gains. I appreciate it and will keep it mind for tax filing.

Now of course we cannot compete with the big property developers due to our limited budget and for other reasons you've started. But I'd like to explore the idea of investing in a parcel that developers have left out. Asking the city to provide this info may be a long shot but are you privy to other sources that may share such info?


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## OnlyMyOpinion (Sep 1, 2013)

You are motivated to get ahead and your drive is commendable. So I don't like to be negative. Tread carefully and do your homework. Consider all possibilities, including the 'other side of the equation', namely investing in yourself to grow your income earning potential.
-Is the $250k intended as a minimum downpayment, with the balance mortgaged? Leverge is how you make money, esp. if landbanking.
-Do you have the stomach for leverage and the capacity to pay carrying costs (taxes, insur, mortg)? Leasing it to grow hay, etc. won't cover it, esp. with rising int rates.
-GTA is a long way from Balzac, are you planning to be an investor-at-distance? Make sure you know what you are buying - we had a property near Oshawa. An adjacent, small, cheap sliver of land came up (again) for unpaid backtaxes. Someone from TO bought it sight unseen based on the newspaper notice. What they bought were two steep hillsides, totally unccessable and undevelopable. I expect it will come up again in a few years.

Good luck in your search.


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## Kher-Spade (Oct 6, 2016)

OnlyMyOpinion said:


> You are motivated to get ahead and your drive is commendable. So I don't like to be negative. Tread carefully and do your homework. Consider all possibilities, including the 'other side of the equation', namely investing in yourself to grow your income earning potential.
> -Is the $250k intended as a minimum downpayment, with the balance mortgaged? Leverge is how you make money, esp. if landbanking.
> -Do you have the stomach for leverage and the capacity to pay carrying costs (taxes, insur, mortg)? Leasing it to grow hay, etc. won't cover it, esp. with rising int rates.
> -GTA is a long way from Balzac, are you planning to be an investor-at-distance? Make sure you know what you are buying - we had a property near Oshawa. An adjacent, small, cheap sliver of land came up (again) for unpaid backtaxes. Someone from TO bought it sight unseen based on the newspaper notice. What they bought were two steep hillsides, totally unccessable and undevelopable. I expect it will come up again in a few years.
> ...


Thank you and I appreciate your kind words.

I absolutely agree with you that investing in a land asset that you have not seen before buying is a very risky business hence we will certainly not be doing that. 

I also do not want to buy a land *only* with the intention to lease. If I can get rental revenue, that's great; but if that doesn't happen then I don't want the loss of rental benefit to impact my running finances. Therefore, the plan is to play with the available $250k only for the peace of mind and avoid any unnecessary mortgage headaches.

One thing I'd also like to add is that we have to relocate across the country very often due to my work. So I would like to retain the liberty to forego the rental revenue and not having to think about mortgage payments, in case I am not around to deal with tenancy matters that require regular face to face interactions.


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## Kher-Spade (Oct 6, 2016)

Spudd said:


> For other forums you could look at redflagdeals.com.


OK sure, I will take a look at RFD. But from my past experience I have found that website is only good for "deals" hence its name.

Usually when I need solid investment advice then Canadian Money Forum is my go to place.


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