The February 2021 CREA figures show the average price for a home in North Bay, rose from $213,400 to $284,700 from February 2020.
Where are the prices now?
Join Josh Stevenson of Invest North as they provide a pricing update, market update and some insights into the best places to be looking for real estate investing opportunities in North Bay.
Sarah: They built 87 doors with the help of their wives and they have managed to build their portfolio with absolutely no joint venture partners. Josh regularly works with credit unions to buy buildings with no money down strategy. Curious to hear about that one. His use of creative financing techniques and vendor take back mortgages has allowed Invest North to add over 60 doors during the past two years. He and his partner planned to continue their expansion into Ontario's Northern markets for the future. Awesome. That is exciting. Welcome, Josh.
Josh: Hi, am I coming in?
Sarah: You are coming in from Mexico, by the way, I must add.
Josh: I thought this is a good motivation for aspiring property investors and property investors that have not yet quit their job. You too could be in Mexico soon. If you keep going with us.
Sarah: Amazing. It is about lifestyle. Like you say.
Josh: Sure and I was asked to join this kind of spontaneously Gary Hibbert reached out to me and I was more than happy. Do you know what if I can impart some wisdom, give some tips. I do have the market data for North Bay. It's not the only market I operate in, but I think we have 40 doors there now. I know it intimately, I'm there about three days a week these days when I'm not here.
Sarah: Let's talk about North Bay. Obviously, North Bay rose back in February 2020 average market price, 213,000 to about 284,000 a year later. Let us know what we need to know about the North Bay market.
Josh: Like the Sault Ste. Marie and Sudbury markets, this market has changed significantly in the past 18 months, two years. I bought it about a year ago, maybe a little over a year ago. I bought a single family home for $115,000. I bought another for $125,000. I bought another for $160,000. We have many multiple planned family places as well. But now of course, we've seen the COVID spike. I'm not talking about the virus. I'm talking about property prices jumping through the roof. I'll give you some of the current information.
We are on the same page in terms of what's going on today. Not in the glory days when I used to get bargains every day of the week. In February, as the CREA Canadian Real Estate Association just released the stats for North Bay for February, which is fairly recent. They only had 81 units sold in February. That's 21% down from a year ago. The problems with the inventory, it's down 19% from a year ago.
The average home price now for a single family home is $423,000, which isn't a great deal for you Southern Ontario investors, but that is a 42.9% gain from February of 21. Any year we've seen 42.9% increase, which is absolutely insane. We talked about the U Haul trucking company that released its statistics earlier. U Haul has named North Bay the growth capital of the world two years in a row. Last year more people took a U Haul to North Bay, and that was their final destination than anywhere else in Canada. That's been for 2020 and 2021.
We're seeing enormous growth, huge migration. A lot of the Toronto crowd is moving up there. As we all know you don't have to live. You don't have to go to the office as much anymore. If you've got a decent internet connection, you can work from wherever. People are moving up to the North Bay to get a backyard and to get an affordable house.
Now active listings, that's the problem here. This is why we're seeing such high prices and bidding more, so active listings have not been this low in February for the last three decades. That kind of puts things in perspective for 30 years we haven't seen such a low amount of product on the market. I reached out to my favorite realtor Jared to come to a full from a row page and bought a ton of stuff from him. He said, you're getting a single family home or an income property. They're getting between 5 to 10 offers. That's the norm. If there's something unique about it, it's on the lake or something.
There's 20 offers. Realtors are expecting single family homes to go over asking by 50,000 to 75,000 and a quarter of the time. It goes a hundred thousand over asking. You're up against all these other people. These people are investors from the GTA. Unfortunately, the secret is out with North Bay being set for Sault Ste. Marie and many investors are flooding the market. 30% of my realtors inquiries are from investors and they're not traditional local buyers anymore. A lot of investors are now pooling their money together and buying multiple income properties that often have a negative cash flow.
They're treating it like a REIT. Getting their buddies together or their business connections together and pooling their money and doing that. It's a little bit hard to compete, but there's hope. My recommendation is to wait for the spring. Like the spring fevers here, mid February had extremely low product on the market. But now there's about eight listings a day. February's about three listings a day. If you're going to buy and real estate investors generally know that the spring is when everything gets put on the market. This is a good time to actually go out there.
I would also recommend expanding your search area. North bay, super competitive, but just halfway over to Sudbury of a place called Sturgeon falls. I bought a place there last year and I got a fourplex for $400,000, not bad. There's a little place called Mattawa, there's Temagami, there's Burk's Falls, there's South River. All of these surrounding areas have little tucked away. You can get a very similar rent from, and the cash flow is actually possible, whereas you're not dealing with multiple bits situations in North Bay and negative cash flow. You want to stay away from that. That's risky investing. I would never ever recommend that.
Also be aware of wholesalers. There's so many wholesalers on the scene these days. There was actually a fiveplex on a pretty dodgy street where things in the street in north bay last year was 230 days on the market. It didn't sell because it had bad cash, local, bad tenants. It was listed for 599,000. Now it's on a discount website and it's listed for 650,000. These wholesalers, their phones are ringing off the hook just because they're wholesalers. Just because a wholesale alert is listing a property. It doesn't mean it's actually a decent buy. So, be aware of that.
Last month, I bought a triplex in North Bay for $350,000. I got vacant possession, but this was an off-market deal. The more you're in the real estate kind of game, the more connections you make and people pass your name along. You've got to get your name out, talk to mortgage brokers, talk to real estate agents, talk to whoever's in the area, even train people or people that are willing to pass your card along or your name along.
That last deal I did in North Bay, I got it for $350,000 vacant possession for two bedrooms. We're charging about $1,500 for a two bedroom and a one bedroom for $1,200. It can go up to $1,500 for a one bedroom. It's big and nice, but that building cash flow is $1,400 a month. I did that last month. Today's actually a very good day. We closed on a single family up in Espanola. That's our 95th door. There are still good deals to be had, but you have to maybe go off the beaten path.
I know a lot of people are very wary of investing in a town that doesn't have a major employer, like a big manufacturing center. North Bay is pretty much known for health education. There's a lot of minds around people who go off and work at the mines for a few weeks, and then they come back. There's Canada College, there's university there. But people are now able to work from whatever location, like I said, if you have a stable internet connection. Don't be afraid to go off the beaten path and people are particularly millennials.
Even though they're done with living in the GTA and trying to afford $1.2 million for a house. Don't be afraid to invest in a town that's a little bit off the beaten path. If you make it a nice present, rental and people will go there and people will actually pay a decent rent because we have working professionals moving out to these more remote areas. That's a movement, so don't be afraid of that. Also I invest in something called the Tri-Town area, which is three towns. It's Temiskaming shores cobalt, a new list. There's actually a battery plant that's opening up there. Electric vehicles on the batteries. What they're going to do is they're opening a battery plant because there's cobalt in that area.
Cobalt is used in these electric vehicles and they're also going to be recycling. Cobalt and refining it from the Congo and they're going to be taking spent batteries and refining the materials that they can get out of those guys. There's a big battery plant. That's opening the Tri-Town area. That's another place to look. I invest, we've got 30 units in a row. You probably have to get the cash for keys. Route there, like when you buy a building, you want to increase the rent. I have a friend called the investing drummer from a really, and he's just a young guy in his twenties and he basically, as soon as he buys a building, he's offers people money to move and he actually does well.
Once you have the building vacant and you put new people in with an increased rent. The building becomes much more valuable. What he does is he gets control of a building for market price. He has everybody move out and it usually takes between $1,000 and $5,000. Once they've moved out, he does a quick cosmetic renovation. He has the building reappraised. I think for every $500 that you increased, the building appreciates supply a hundred thousand dollars.
You can have substantial forced appreciation if you use cash for keys and in these more competitive markets. I think that is a route that people are going to have to start to take. Also in more expensive areas, like in a really for example, where you own a bunch of doors where we're looking at those garden suites in the backyard even a little duplex and there's a bylaw that allows for a building of a certain size in your backyard now.
They kinda changed their mind with the bylaws, but it really is ready to go. If you are buying an income property, Looking to see that it has a decent, deep lot, because Ontario's is so expensive now that you might think, okay, maybe I'll buy this place and it's going to hurt my pocket book a bit, but maybe I can get another duplex in the backyard. These things can be built for sometimes as little as $200,000. If you get into just a one unit building, you can get them for a 100 or 120. Think of it like this is the beginning of perhaps a project that could get you more cash flow and it might not capture that well at first, but in the future you could do that. That's another kind of angle or approach I want to take. I'm not doing it for time. I got to get in that pool.
Sarah: If you have a few other things you want to check off, just feel free to go. You still have a couple of minutes.
Josh: In terms of these markets in the North, there are certainly deals to be had. Don't give up on the North. Like I said, it's not always in the main centers. I know gentlemen from the Southern areas, pointing out someone who had good alternatives in the smaller areas around there. We're also perhaps going to see maybe the market cool off a little bit. We have seen the first interest rate hike, so that might do a little bit. I'm not expecting that to cool the market off that much, but I do encourage people to reach out.
You got to networks. My last few deals have all been off market deals. When you are making a bid on an income property, always ask for a vendor, take back the mortgage because a lot of the time and the vendor takes back the mortgage is basically the person selling the place. We'll lend you the money, oftentimes all of the money to buy the place from them. And you pay them back over three, four or five years.
I have filled a large portion of my portfolio by offering these no money down deals. And the reason that the person selling you the house often likes this is because they save in capital gains. For example, I bought $500,000 last year and the guy selling it to me let me in the entire down payment, because he had to claim a lot of capital gains to the Canada revenue agency. If you pay him back the down payment over three, four or five years, he takes less of a hit to capital gains and he gets paid back and he saves a lot of tax money.
Sophisticated investors really like this vendor take back mortgage and I don't care how hot the market is. The market could be smoking hot. You can get these guys that are sophisticated investors that will actually lend you the downtown. And that might be a difference between you getting the building and somebody else, because you're savvy enough to reach out and say, hey, listen, you might even want to put it on paper. You're going to save this much in capital gains. If you go with me rather than these other five guys bidding. Don't give up on the Northern markets and get creative with your financing of the VTB offer. Somebody's going to buy it.
Sarah: Josh. That was awesome. Actually, a funny question. I want to ask, did you leave any North Bay area properties for us? Says Maria?
Josh: I do want to get in there. I've been doing this for 15 years, and that was until I was a school teacher. I've earned my retirement. I'd like to say, we've been spoiled. The people that got in early of course have been spoiled with the easier deals. And now we have all this capital to play with. We're hard to deal with, but we'll leave you some deals, you and your audience, Sarah, I promise.
Sarah: There you go. That was from Maria.
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