Foolish investors are not looking for value, real estate guru says

Investors are being fooled by big promises of price appreciation and not looking at where the buying value and cash-flow is. And it’s not going to end well, says one experienced landlord.

Buy-and-hold in oversaturated areas as an investment strategy is a stupid idea, and especially in Canada’s “over-valued” real estate market.

That is the controversial view of Winnipeg-based investor Stefan Aarnio, as he advises landlords to start safe-guarding against a big interest rate hike and change in market conditions.

“Everything has been sunshine and lollipops for too long. There are too many developments and too many people coming in and paying stupid money for properties that are over-valued,” he says. “People are not looking for value properties, they are buying in markets (such as Toronto and Vancouver) in the hope that it will appreciate over time.”

Adding that he is viewed as the “doom and gloom” guy of the industry, Aarnio believes we have a two to three-year window before the interest rate will increase but he fears that even a small change in the financial system could cause havoc for many investors. 

“There are two feelings here, greed and fear,” he says. “There are many investors simply putting down five per cent and hoping they can operate these assets for 20 to 30 years. And a lot of people don’t have the cash-flow or income to help them if something goes wrong.”

He believes the market is not as hot as it used to be, pointing to the fact that of the 52 offers he has made in recent months, over 50 per cent of those properties were at a reduced price. "This shows how the market is changing and why investors now need to look at more value-based houses in growing areas," such as Winnipeg.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Goderich, Beaverton, Fauxburg, Vernon, Raymond


Get help choosing the best mortgage rate

Just fill in a few details, and we'll arrange for a Mortgage adviser to help you find the best mortgage for your needs

  • How soon do you want a mortgage?
  • Name
  • Where do you live?
  • Phone number
  • E-mail address


Is a T.O foreign sales tax a good idea?