The markets that will help you make your first (or next) fortune

by Justin da Rosa on 06 Jun 2016
Millenials are driving growth in suburban markets making them ripe for the investor picking, according to one veteran.

“It’s simple math: You could buy the same-sized condo in Burlington as you can downtown Toronto for arguably $150,000 less, and you’re renting it for almost the same amount of money,” Tariq Adi, president of Adi Development Group, told Canadian Real Estate Wealth. “We’re going to see a big shift in the way people live in the suburbs.”

According to Adi, millenials are increasingly looking outside the downtown Toronto core to set up roots – and that is spawning a number of developments in outlying regions that offer the same sort of luxury amenities traditionally only found in the city.

And investors are flocking to take advantage.

“We’re definitely seeing a big investor market out here,” Adi said. “We’re probably looking at a five to six cap, but at the end of the day, we don’t really look at it as a cap because you’ve got to look at it as, what’s your return on the dollars you’ve invested in?
“Your investment is really your down payment,” he continued. “And in some cases, you’re one if you include appreciation, cash flow, and mortgage pay down—that should be upwards of 70% cash on cash return at the end of year one. If you’re just looking at your cash flow and mortgage pay down, that could be 17 to 20%, so I don’t know where you could get that type of return in the market today, besides being a developer yourself.”

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