Deciding to invest in real estate is a good first step. But you can’t stop there. You need to keep up your momentum and jump right into it. You have to decide where to invest, and that’s isn’t necessarily the easiest thing to do, especially if you live in a hot, high-priced market. In this article we explore 3 simple steps on how to find rental properties in emerging neighbourhoods.
In the Golden Horseshoe, Toronto used to be the place to invest. Then prices climbed too high for many investors, and neighbouring cities saw a spike. Hamilton, Cambridge, and Barrie became popular, and then it spread out even further.
While many of these cities continue to see high yearly appreciation, making them great places to own real estate, they're no longer a secret, which makes it harder to find good investment properties.
But this doesn't just happen on a city level. All cities are going to have better neighbourhoods and less desirable areas. Good neighbourhoods see the biggest growth first, and then it starts to spill over to other emerging neighbourhoods.
The problem is, not all towns and neighbourhoods are going to have a hot and growing rental demand. You could buy a great, affordable house but if it's in the wrong area, it may never see the kind of growth you're looking for.
You could also invest in an up-and-coming neighbourhood that has so far to go that it’s doesn’t make sense for you.
The trick is to find something with the right upward momentum.
So, how do you find the new place to invest before it’s mainstream news? Lets explore the 3 steps to help you with rental properties in emerging neighbourhoods.
There are a few keys signs to look for that’ll mark the start of an emerging neighbourhood.
A famous marketer once said that even he could run a successful restaurant if he had a starving crowd waiting outside. And that is what you’re looking for. You want to invest in communities where a “starving crowd” already exists.
The most obvious examples of this in real estate are student rental properties. You literally have a starving crowd of students who are looking for a house to rent close to a university or college.
Places like the Golden Horseshoe have also seen this hungry demand from a rapidly growing population thanks to high immigration numbers year over year.
Demand may be created due to a large business, school, proximity to another city or neighbourhood, or simply by a lack of supply. When demand is outpacing supply, it’s a recipe for increased value.
People who are spending money in a community will drive up the value of real estate. And a community with growing income levels has “staying power.” It usually means there are jobs directly in the area, or in close proximity and it often means there is diverse employment.
You want to make your investments as simple as possible, and an area with multiple sources of employment creates a healthy and active real estate market. It provides a good base of tenants, first-time buyers and “move up” buyers.
It’s proven that new transportation routes will increase the demand for nearby real estate. You don’t have to be a rocket scientist to figure that out. Expanding GO services definitely impacted the number of people moving out to the outskirts of the Golden Horseshoe. Why? Because accessibility and easy transit make it easier for people to work in one place and live in another. It ties cities together and allows the cities on the outer limits to feel the benefits from the core.
There are many emerging neighbourhoods for you to choose from. And as long as you remember to focus on growing demand (population), higher than average income (diverse employment), and new transportation and infrastructure projects you are setting yourself up for success.
Enough theory though, you are a Rock Star, right? We want you to gain direct knowledge of how to gather this information.
Let’s walk through these steps together and we’ll show you exactly what we do ourselves to find this data…
Statistics Canada (www.statcan.gc.ca) does a fantastic job of compiling data, there’s not much for you to do. Once you figure out how to use the tools on its website, you’ll be hooked.
It’s the most complete compilation of data that we’ve found.
And the best part, it’s free. Well, we actually all pay for this via taxes but that doesn’t change the fact that this is the most overlooked and underestimated source of real estate investing data.
Remember, as investors we want to invest in areas with increasing demand (population) and above-average income.
Well, the Statistics Canada website provides us with “Community Profiles” that detail this information for us.
Now stick with us, because this is where things get really exciting. Using the tools available to you, you can quickly analyze your target investment areas by comparing them to the provincial averages.
The tool gives you the ability to compare a community profile against the province as a whole to see if it’s below, or above Ontario’s average population growth rate. You can also find income data for the community to see if incomes reflect the provincial average.
A neighbourhood doesn't need population growth numbers to exceed the provincial average because sometimes communities grow for reasons that don’t sustain an active real estate market.
For example, retirement communities and vacation communities can have population growth above provincial averages but no growth in income. So, population growth alone can be a false indicator.
What we do want to see is population growth AND income levels above the provincial average. Together they’re a powerful force. In this particular example, we get both.
Bottom Line: Population growth needs to exist but doesn’t need to exceed the provincial average. Income levels should be above the provincial average. Together they ensure an active economy and set a solid foundation for your real estate portfolio.
These charts can be used to analyze cities right across Canada. Everywhere from Vancouver, British Columbia to St. John’s, Newfoundland.
A quick Google search for “Alberta infrastructure projects” or “British Columbia Transportation and Infrastructure” or “Ontario transportations developments” will turn up good sources of information.
These are excellent sources of information for upcoming infrastructure projects. And the best single source for the very latest developments is Google News.
The information is out there. You just need to know where to look for it.
Remember, there’s a big difference between a government “announcement” and shovels actually hitting the ground. It often takes years for projects to get started, sometimes decades. Need a good example?
The Red Hill Valley Expressway in Hamilton – the origins of that project can be traced back to the 1950s, but the project didn’t actually start until 2004 and didn’t open until 2007, more than 50 years after being proposed.
Don’t want to spend time searching for new information? No problem. You can set up News Alerts so anytime something matching your criteria hits Google News it will be emailed to you. This is a great way to find rental properties in emerging neighbourhoods.
We’ve also compiled a list of some of our top picks for places to invest in real estate in Ontario in 2020. Check that out here.