# Investing in an Oshawa rental property



## CB1021 (Mar 28, 2011)

Hi all,

What do you guys think about buying a rental property in Oshawa? It will be a bungalow, allowing me to rent out upstairs to one family and the basement to another. I can put enough equity into it so that the rental income can cover mortgage payment + expenses. The property I'd be looking at would be 50-60~ years old. 

My main concern is location. Basically the location is ****. I can't completely throw this idea in the trash though, because I have little choice. I can't afford to invest in a good location. Any property more expensive than 450k, I won't be able to have break-even cash flow. 

So what do you guys think? Will a low grade location home appreciate at a similar rate as a property in a good location? Maybe even half?

I need honest and practical rationale. Trying to pull trigger soon or else be priced out of the market.


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## carverman (Nov 8, 2010)

CB1021 said:


> Hi all,
> 
> What do you guys think about buying a rental property in Oshawa? It will be a bungalow, allowing me to rent out upstairs to one family and the basement to another. I can put enough equity into it so that the rental income can cover mortgage payment + expenses. *The property I'd be looking at would be 50-60~ years old. *
> 
> What do you guys think? Will a low grade location home appreciate at a similar rate as a property in a good location? Maybe even half?


Can't see it as a long term investment but then again it will depend on what shape it's in for 50-60 years, what upgrades it will need to even sell at todays prices compared to others on the same area...and what major repairs it will need during the rental period.

It could turn out to be a "sweet deal" or a money pit and you would sink all your rental income into repairs and have to pay the mortgage out of your own pocket..negative returns,

Besides, GM Oshawa , a major employer in Oshawa * could be* mothballing their Oshawa factory as early as 2017, so that will no doubt have an impact on real estate prices and rentals. 
http://business.financialpost.com/n...wa-plant-wont-be-decided-until-well-into-2016


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## Berubeland (Sep 6, 2009)

Oshawa is very hardcore, I rent and manage there and good solid tenants are thin on the ground. I wouldn't recommend it for a new landlord.


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## Prospector (Jul 25, 2014)

There are a lot of opinions on Oshawa's future, but I'm not enough of a gambler to play the cards, even though our family has had a lot of long discussions about it. By your property description I am guessing you are looking at south Oshawa. With 401 expansion set to go in the next 20 years and GM shuttering its plants, I would be concerned. But as you say it may be a good entry market. It is a high crime, high poverty, challenging area - especially the Bloor/Wentworth area. I wouldn't even entertain Cedar/Malaga/etc.

On the other hand, North Oshawa is set to, no it has already exploded - if you want to speculate on a new build. With the 407 coming through and plans in place for retail and university expansions and the Windfield communities growing steadily, I think you will see a lot of upwards price pressure in the area.

No matter where you buy in Oshawa though, you will be faced with a big tax burden. Years of propping up GM and mismanagement have lead to Oshawa being one of the most taxed communities in the GTA. And the city doesn't seem averse to increasing taxes going forward. This is my biggest turn-off with buying in town. The purchase prices and taxes combine to make it very difficult to find properties that work by my math. My math is also very conservative. 

Over the next 10 years or so, I suspect we will see a transformation in the outlook of Oshawa. As GM fails, we will see small businesses spring up, as the 407 takes hold, with the neighbourhoods and retail headed that direction we will see the money increasingly move north. The widening of the 401 will force a number of properties to be sold to the crown and will distrupt a number of communities, which may be for the better or worse. Eventually South Oshawa will either decay to utter poverty or gentrify. Olive Avenue is headed for (or already at) poverty levels. I can't say where that will spread to or if it will be contained. Having said this though, I have owned very nice homes with very good neighbourrs in very bad neighbourhoods - you may get lucky and find a diamond in the coal mine.


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## carverman (Nov 8, 2010)

Prospector said:


> No matter where you buy in Oshawa though, *you will be faced with a big tax burden*. Years of propping up GM and mismanagement have lead to Oshawa being one of the most taxed communities in the GTA. And the city doesn't seem averse to increasing taxes going forward.



Over the next 10 years or so, I suspect we will see a transformation in the outlook of Oshawa. As GM fails, we will see small businesses spring up, as the 407 takes hold, with the neighbourhoods and retail headed that direction we will see the money increasingly move north. 

I can see that happening as well. I used to live in the beaches area of Toronto in the early 70s and had friends living in Oshawa near
the 401 corridor. It was run down then, with industrial mixed, junk yards, and the houses were sub par. I can see that area turned into a ghetto once GM pulls out entirely, attracting a different class of renters, but just like Toronto/Mississauga with new development going north, it will happen there in Durham county over the next few years. 

GM will be replaced in the new expansions with new business opportunities..but the older areas around the 401 will have a lot of difficulty, as no investor will want to sink any money in an area that has a dubious future. Whether the GM factory property can be re-utilized for other types of manufacturing is anyone's guess at this point.

Big industry is upon hard times..unless subsidized by the gov'ts. Look at what's happening now with Bombardier areospace..they are having a cash crunch already with their new line of jets..another Quebec govt bailout coming up, I'm sure.


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## CB1021 (Mar 28, 2011)

Okay gents,

Thanks for the advice. Will keep in mind. Learned some stuff about the neighborhood that I did not know before. 

Thank you


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## Just a Guy (Mar 27, 2012)

People who are despirate to get into any market usually live to regret it. 

Patience is important in investing, especially when it comes to real estate. You have to look forward at least 10 years to have some idea of what's going to happen. It usually takes about 7-10 years just to break even if you wanted to cash out. You need to consider what will happen to the area, interest rates, taxes, tenants, the building, etc.


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## Prospector (Jul 25, 2014)

CB1021 said:


> Okay gents,
> 
> Thanks for the advice. Will keep in mind. Learned some stuff about the neighbourhood that I did not know before.
> 
> Thank you


No problem - but these are just opinions. Properties in the area are still selling within days of listing - with multiple offers on anything under $400K. I don't understand the feeding frenzy, but it is there. Some are saying that as the cheapest commuter town in the GTA, Oshawa can only go up in price. As I said, its a gamble, and the risk is yours to decide on. I don't like the high pressure, high stakes game, so I choose to stay away. Also as pointed out above, the tenant pool is a challenge.

Good things will come to town eventually, but as far as I can tell, it will be many years for it to kick in. Even the development surrounding UOIT/Durham College hasn't been very inspiring. I am hoping we see good things to the north of the college as neighbourhoods fill in. What I have seen of the EA/secondary plan is not much different from standard urban sprawl - and a major retail developer (RioCan) has recently "adjusted their timelines" in the Windfields commercial plan, so that is a pretty strong indicator of expectations. FWIW, RioCan sold off their residential lands, and reduced the footprint of their commercial development adjacent to the 407 alignment.

GO Transit has bought out the old Knob Hill Farms site (First Ave between Simcoe and Ritson) but they plan to sit on it for at least 20 years before relocating the train line post-electrification. The existing GO station is the worst in their system for congestion issues without adequate parking, and with only 1 signalized access. There are plans to expand or modernize the station. I don't know what that will look like - especially with the conflicting plans to realign the tracks at Whitby to serve the Whitby campus of Durham College and the Knob hill property. Whatever improvements are made to the existing Oshawa station will be throwaway, so I can't imagine anything extensive. Of course government spending is often interesting.

There is a strong vacancy rate in Oshawa today - so you will likely find tenants. I doubt they will be blue chip tenants though. Also of interest, Holiday Inn has either just completed or is about to complete an "Express Suites" hotel in the DT core. Its only a guess, but I imagine some of those suites will be taken as permanent or intermediate housing. I'm not sure how much of an impact a couple hundred suites coming on the market will have on the vacancy rates in town. The old hotel downtown (its name escapes me at the moment - used to be a strip club) is sitting vacant waiting for an investor to come and reno/rent it out as well. I think its been sitting for 15 years waiting for a change in the economy.

Oshawa is really an interesting problem. As I said, we looked closely at it, but the puzzle goes off in too many directions for me.


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## Davis (Nov 11, 2014)

^ It's the Genosha in Oshawa that you're thinking of. here's the latest info: http://oshawaexpress.ca/clearing-the-air-on-the-genosha-project/


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## Berubeland (Sep 6, 2009)

One thing people do not know about Oshawa is that when they emptied out the Regent Park social housing scene, those people were sent to Oshawa for the most part as it was the most affordable burb around the GTA. 

I'm not really into the affordable housing scene, I'm mostly doing higher end condos and houses. I do discuss renting a lovely house here. http://wp.me/pYiYd-zj The tenant I rented to is still there and good, but you have to sift through quite a few rotten apples to make applesauce in Oshawa is all I'm saying.


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## carverman (Nov 8, 2010)

Prospector said:


> especially with the conflicting plans to realign the tracks at Whitby to serve the Whitby campus of Durham College and the Knob hill property. Whatever improvements are made to the existing Oshawa station will be throwaway, so I can't imagine anything extensive. Of course government spending is often interesting.


Think what they could have done to improve the Go Trains in the Oshawa area for 1 billion, compared to what they wasted on the Gas Plants. Now they want to install windfarms in the eastern Ontario counties.

http://www.windontario.ca/


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## Prospector (Jul 25, 2014)

^ But if we don't keep exporting electricity for free, what will power the US grid?


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## JeanJean (Feb 12, 2016)

what about buying a property in Ajax ? a detached house to rent out for a few years? for potential capital gain and cash flow? any view on Ajax?


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## Just a Guy (Mar 27, 2012)

As with any property, it depends on the purchase price, the rental market and the future of the area.

If you pay too much, have no renters, or the place is in a downturn any one of those three would make the investment unlikely to succeed. More than one is almost certain doom. 

Paying to much is the number one sin probably, if you buy cheap, you can rent cheap if you need to, which can usually get you renters, even if the town doesn't have a huge upswing (people usually need a place to live...unless you are in Detroit or Flint).

I was just talking to a guy today, owned a duplex which he originally bought for $35k, was renting each side for $1350, had great tenants who actually improved the property. Decided to sell and cash out. Sold the place for $650k. The new landlord had to raise the tent to $1700 each side to make the numbers work, lost his tenants and has had a revolving door of bad tenants ever since...

Tough to make money starting at $650k...


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## JeanJean (Feb 12, 2016)

*tenants*



Berubeland said:


> One thing people do not know about Oshawa is that when they emptied out the Regent Park social housing scene, those people were sent to Oshawa for the most part as it was the most affordable burb around the GTA.
> 
> I'm not really into the affordable housing scene, I'm mostly doing higher end condos and houses. I do discuss renting a lovely house here. http://wp.me/pYiYd-zj The tenant I rented to is still there and good, but you have to sift through quite a few rotten apples to make applesauce in Oshawa is all I'm saying.


looks like most tenants in oshawa are blue workers / if not on government support. 
How about Ajax? do you handle tenants in Ajax?


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## Underworld (Aug 26, 2009)

I'm new to the game - but I like to think having a higher priced place filters out a lot of the less-quality characters before anyone even contacts you. I believe that a higher credit score (typically held by more affluent people) is indicative of stability and repeat-ability of character. I've heard horror stories from friends who have rented out to sketchy folk.


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## Berubeland (Sep 6, 2009)

Ajax is better, but as Just A guy says it's harder to make the numbers work.


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## Just a Guy (Mar 27, 2012)

Underworld said:


> I'm new to the game - but I like to think having a higher priced place filters out a lot of the less-quality characters before anyone even contacts you. I believe that a higher credit score (typically held by more affluent people) is indicative of stability and repeat-ability of character. I've heard horror stories from friends who have rented out to sketchy folk.


As a landlord, I can tell you bad tenants come from all backgrounds, just as good tenants do. I've known of "nice little old ladies" who know how to play the system with the best of them, affluent crooks, professional who are nightmares. To counter that, I know excellent tenants with criminal backgrounds. Screening is more than a credit check, in fact there is a current thread about wealthy tenants who trashed a place here...

You can't screen solely based on a category.

More expensive places means lower cash flows, and more expensive repairs. Plus, if you pay to much, you won't be able to rent it for enough to make it work. You can make some very nice places without spending 500k or more.


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## marina628 (Dec 14, 2010)

I would rather buy a condo in Pickering than anything in Oshawa right now ,anything decent would be 400k+ but Cap rates would be low.Some decent condos for $230k -$250k that would get you 1600 a month rental income around Pickering Town Center.


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## colossk (May 11, 2011)

As someone who just rented my Bowmanville Duplex after my long term tenants moved out the story I kept hearing constantly was there is nothing Available in Bowmanville at the moment and places in Oshawa are a dime a dozen.

Skip Oshawa


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