Despite a slowing property market in some areas and further expected interest rate increases, the demand for real estate investment properties on the edges of the GTA appears to continue to be strong.
Is that still the case?
Where are the opportunities for reasonable house prices and cash-flowing rental markets?
Join us for the next stop on our virtual tour of Ontario markets with expert insights and market updates for Waterloo and Cambridge.
Daniel: When you're not working with clients, which is not often, we can find Meaghan spending time with her family, hanging around the pool or you like playing ice hockey and then of course, which is completely different from Enza who likes to do Latin dancing. Tell us about Cambridge, Waterloo.
Meaghan: Thank you so much for having us. I know that Ryan had spoken to this too, that there's really been a shift in the real estate market to more of a buyer's market, which we are just thrilled with because in our opinion, the market really got out of hand totally in the last six months. What's contributing to this? There is a higher level of inventory. More properties are coming on the market which is great cause there's more inventory for buyers to look at and they can take more time in their purchase.
One of the things that's contributed to this is because there's higher interest rates. But one thing that we've still been reminding our clients is that while interest rates have gone up maybe a percent and a half, they are still at very historic lows. To be able to get a mortgage at 3% or 4% is still very strong and very healthy because for investors, you don't always have to buy a house at a particular time. Like maybe you would, if you were buying there to live for yourself, if you were moving to a new community to work, if your family has grown or you're going through a life change, buying a house might be something you have to do.
When you're an investor, you don't have to buy real estate or you don't have to buy at a specific time. One thing that we're reminding our investors is that, we're never thinking about timing, the market. We're always looking at what are your goals? Where do you wanna end up? And for us, it's the amount of time you're in the market. Meaning the amount of time you've owned the asset and you're able to earn the capital appreciation, get the mortgage pay down and then get that monthly cash flow. I'm gonna turn it over to Enza.
Enza: Thank you so much. We're so excited to be here. And as Daniel mentioned, we are working together very closely with Daniel and with the REITE club. It's honestly an honor and a privilege for us to be here. We are investor focused realtors. Why do we love real estate? We love real estate and having our clients invest in real estate and build wealth through investing in real estate. Because first of all it's been the number one trusted asset class that transcends class culture age, historically. It's completely trusted through the generations as a way to protect, preserve, and actually grow wealth.
The reason why people love and trust this asset class, including myself, is one of the reasons I got involved in this is because it's so simple to understand. It's basic, simple fundamentals that anyone can understand to know if this is a good investment. If it makes sense for them, it helps people feel empowered. We are reminding everybody about why they started to get investing in real estate to begin with, which is you're building wealth over time. There's a lot of fundamentals in the GTA that still exist.
Everyone keeps asking us, is now a good time to invest? With me and I, when we look at a property, we always look at the cash flow. Yes, now is a good time to invest as long as those fundamentals make sense. As long as you're running the finances and there's cash flow, it is a good time to invest. We've got a good, healthy, more balanced market.
As Ryan was saying, it was way into a seller's market. Nobody wants that, severely low interest rates will cause hard assets to be heavily overpriced. We want something that's very balanced, which we feel that there's more of that. It's more of a buyer's market now, which is great.
We were trying to buy properties for our clients and we were going into competition with 20 offers on the table. Our buyers were getting buyer fatigue. It was getting really difficult to buy a good property that made sense for our investor clients. The fundamentals and we wanna remember but have not changed.
We look for good assets and good neighborhoods. Also, you have to remember that in the Golden Horseshoe area, in the Niagara region, you have this huge population growth. Immigration is still very high. You've got people that are coming in from other countries and they're settling in this GTA area.
We've still got a shortage of supply of housing for people. This is what makes the type of properties that Meaghan and I work with. The two unit properties are really appealing. And also why has real estate been a great investment vehicle to begin with? One of the things that's undeniable is the leverage banks will loan you up to 80%.
If you wanna invest in stocks, you're gonna need, if you wanna invest in apple stocks and you want a hundred thousand dollars of Apple stocks, you're gonna have to have a hundred thousand dollars with real estate. If you have a hundred thousand dollars, you can get a $500,000 property that you can't find anywhere.
This is one of the reasons we remind everybody why real estate makes sense. It still continues to make sense. This is what it is, we've been asked to update on Cambridge and Waterloo. We'll start with Cambridge. Whenever we look into a city, I always encourage our investor clients, because of course we go into different markets.
Meaghan and I are not focused on one particular market because we buy and sell in the different markets that our clients are interested in. I always encourage our clients, look at the community profile of the city that you're interested in. All of the stats that you need to know mainly who's your major employers in industry? What's education looking like in that city? What's the transportation looking like?
In Cambridge, it's amazing because it's got a Toyota. I come from a manufacturing background. I toured that plant. You could eat off of the floor. Toyota employs over 4,500 people. That's significant. You've also got Honeywell and Loblaws.
In terms of education, Cambridge is strategically located within one hour of eight universities and Conestoga College is located right on the border. There highways you're right off the 401 with major access to Kitchener, Hamilton, Toronto. And in terms of public transportation, you've got the go bus going into Kitchener. Great fundamentals to make that a great market to invest in Cambridge home stats.
From May of last year, you're still looking at a 12% increase in home prices, which is a very strong return for a market 74% increase in the last five years. Your average house price in Cambridge was $827,000 for a single detached three bedroom home.
Again, great fundamentals for that market. Here's an example of a property that we would encourage any of our investors to buy. Here is a two unit property in Cambridge. It's been beautifully renovated. It's a side by side duplex, which is really nice. You're gonna find that a lot in this market. And it's got two bedroom units. They were all beautifully renovated. You can see the picture there. They staged it, beautiful, gorgeous, currently vacant. We love that too, because then we can put in our own tenants at current market rents. The estimated cash flow, when we ran, would be over a thousand dollars with the current interest rates. Meaghan's gonna talk about Waterloo.
Meaghan: Thank you. Why do we love Waterloo? There's many reasons. From an employment perspective, healthcare is a big employer in this area. You have sunlight and Manulife which have huge office facilities there. You also have the university of Waterloo and along with it the exploding tech sector. That's influenced not only Waterloo, but also Kitchener. The median household income is very high in Waterloo for the area. It's up over 88,000. You have like really premier university, Wilfred Laurier and Waterloo in that city.
You also have Conestoga College. As far as the transportation sector, because transportation is one of the key things that really does drive value in properties and pricing and it's conveniently located freight near highway eight, highway seven, and it's a really short drive down South to the 401. It does have the LRT and Go Train connection to Toronto. Just looking at some of the hosts, the pricing stats, so very consistent with what we're seeing in Cambridge. 12% increase year over year, like may year over year market numbers and a 65% increase in the housing prices over the last five years.
You can see over the long term, it's been a solid investment. The average house price in April was $915,000. This is actually one of our clients' properties. We work with a variety of different investors just to give you guys a sense. This one in particular is a duplex conversion. Our client purchased it as a single family home, and they're going through the process to register it as a registered duplex in Waterloo. It will be the starting property on our tour on Saturday.
We also help people with buying pre construction, buying condos, buying multi units, up to more than two units and buying single family homes as well, because as prices have gotten higher, sometimes it's more difficult to buy these two unit properties and you start at a single family home and work your way up. To go over this one in a little bit more detail so our client is converting it into a legal duplex.
The upper level it'll be like an up, down duplex. Meaning the upstairs is one unit and then the downstairs is another unit. It has two bedrooms upstairs, a bathroom and a living area. It walks out onto a beautiful cottage scene backyard. This is one of the beautiful things about this property. The lower level they've converted it and done a complete renovation and have created a two bedroom basement apartment with a beautiful kitchen living area.
A side entrance, walk out to a nice area for them. It's gonna be vacant, which is one of the things that we love. When we're helping our client buy a property, our favorite type of property to get for our client is when they're vacant because we like to be able to help our clients choose their own tenants and also set the rents at market rents, which are always going up. They've continued to appreciate the price of housing.
It's always nice to be able to get a property that's vacant because you can set rents at the market rent for today. This property overall will cashflow at $600 to $700 a month. It's in a beautiful, mature neighborhood in West Waterloo, and it'll be very sought after.
Katherine: This is a great question. What is the current market and forecast for the small apartment buildings, 4 to 20 units in the area?
Enza: What's nice? What I found, I don't know what the actual projection is, but what's nice about Kitchener and Cambridge is you do find purpose built units there. They're really nice and sought after because they are purpose built and they're beautiful. We're happy to compile something like that. If somebody is specifically looking, they can email us. We can pull and see what's been selling. What's currently available. But those two particular markets, I really like for that reason.
Meaghan: Me too, and I was actually looking at some recent market data on multi units and they're going for about 200,000 a door. That's like the going rate.
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