Flourishing new technology and generative AI looks to offer professionals plenty of tools for success. Perhaps most paramount, however, is access to information and the ability to analyze that data, in order to make informed decisions. 

In real estate, with buyers and sellers seeking an edge to get the most value, those who are better equipped at data aggregation and analysis are poised to succeed, especially in times like now when markets are tense and chaotic.

As Jeremy Dawn, founder and CEO of SNFLWR Investment Corp. attests, technology and apps have revolutionized the real estate investor game, enabling investors to find properties that cash flow even in tough markets.

“One of the most significant shifts has been the availability of data. In the past, investors had to rely on traditional sources such as real estate agents and property managers for information about potential investments,” he notes. “Today, a wealth of data is available online, including property listings, rental rates and market trends. This data can be used to identify properties that are likely to generate positive cash flow.”

A desire for better information access and analysis methods to make sound investment decisions

When investor Liz Macey couldn’t find an ideal tool to identify money-generating properties based on her needs and parameters, she set out to create one.

Macey founded UnitIQ and explains the platform helps investors find and invest in properties that cash flow. “We’re able to take data from a whole bunch of different sources and make this search process a whole lot easier. We have active listings in the country with vacancy rates and rental prices, and we use financial analysis tools to find cash flow.”

Macey, whose diverse professional background includes an MBA and a pilot’s license, developed the platform after realizing how overwhelming it can be to know how and where to level up her investing. She wanted better access to information and improved ways to analyze what’s available to make savvy choices.

“(This) is a pain point for investors and realtors, especially when you’re looking at multiple communities. It’s a lot of data when you’re trying to find good opportunities.” She explains with UnitIQ, users can input their different parameters, such as budget or downpayment.

The tool will offer both a free model that allows for a basic search as well as a paid subscription tier aiming to serve agents. The latter option will incorporate advanced analytical tools: agents can create multiple profiles and specific searches for clients and have the ability to export data with custom branding.

Analytical systems and generative AI: Promising, useful tools to help clients

Eva Landreth champions such newfound tools as essential to success. A realtor with Century 21 Millennium Inc., Landreth has found success using analytical systems such as HouseSigma and AirDNA to connect clients with investment properties and secondary chalets in Ontario, with a focus on short-term rentals.

“It’s amazing,” she says of what’s possible. “Before you buy a property, you can see revenue, trends, occupancy and price strategy. You can compare similar properties on a street, look at property manager companies and really get to know the historical data, seeing if certain properties aren’t performing well,” she explains. 

Generative AI proves a promising tool as well, one that Landreth is also leveraging. “I think people are using the basics,” she says. “I don’t think people have unlocked all its potential. You have to feed it smart information to get out what you want. I think it’s just going to help our job, make things go a lot quicker — the mundane tasks, it will make easier.”

Dawn concurs, noting that tools and technologies have made it easier for investors to find and analyze potential investments, manage their properties and communicate with tenants. “They’ve also helped to level the playing field, giving (investors) access to the same data and tools that professional investors use,” he points out.

Tools and tech will never replace the human touch

Dawn feels that as technology continues to evolve, investors can expect to see even more innovation that makes it easier to find properties that cash flow and aid in decision making, saving time and money and ultimately achieving financial goals.

Still, Landreth believes you need that lived experience, wisdom and connection with clients in order to provide the best guidance. “The tools will help you get the market trends and find the hidden opportunities, but you still need that human touch. If you’re just looking at the data, you don’t have the human interaction and expertise in the local market.”

While a more diverse tool kit may prove useful for investors, there is concern about its effects on renters and those seeking to buy their first home. Macey notes some of UnitIQ’s users are prospective first-time homebuyers, and that potentially more data about property management companies will help improve the rental market.

“Investing in real estate is a tricky conversation to have when you’re considering everyone in the economy,” she says. “My hope is that we’re able to end up having more rental properties on the market, helping increase the supply so that hopefully you can find a home more easily.”

In today’s pricey Toronto real estate market, buying a home can feel like an impossible dream. So for those who love city life but want to build equity, “rentvesting” is a strategy worth considering.

Rentvesting involves purchasing a more affordable property in another city and renting it out for income while continuing to live as a tenant in a preferred city like Toronto. Over time, the rental income and property appreciation help build equity, which can be used for a down payment on a home in Toronto down the road.

Zoocasa looked into the top cities most Torontonians could afford to buy and where investments could likely turn a profit.

Best cities for Torontonians to rentvest in a condominium

To determine the best cities for Torontonians to rentvest, the study analyzed the maximum mortgage amount affordable ($275,402) on an average Toronto income ($62,050), then compared condominium prices and rents across Canada.

Torontonians could make profitable investments in several cities, including Edmonton ($163,452) and Regina ($183,630), where average condominium prices fall well within this range. 

The study notes that Etobicoke is home to the highest average annual income of the six GTA cities analyzed and, as a result, those residents can afford the largest mortgage amount ($307,137). On average, they’re a few hundred dollars short of affording a condominium in Brantford Region and Windsor-Essex, or potentially in Oshawa (which has an average price of $420,575 and a total mortgage amount of $336,460). 

Profitable Investments. In cities like Edmonton, investors can earn substantial monthly profits. With average rents at $1,553 and mortgage payments at $886, the potential for monthly gains is $667. Calgary is another great option, with potential gains of $474 per month due to the difference between rent ($1,954) and mortgage payments ($1,480).

Regina, Saskatoon, Winnipeg, Ottawa and Halifax-Dartmouth also offer opportunities for positive monthly cash flow, making them attractive for rentvesting.

Is rentvesting right for your clients?

Before diving into rentvesting, it’s crucial your clients understand what comes with it:

Higher down payments and stricter criteria. Investment property mortgages typically require at least a 20 per cent down payment and have more stringent credit score and debt-to-income ratio requirements compared to traditional mortgages.

Tax implications and benefits. While the First Home Savings Account (FHSA) cannot be used to purchase investment properties, there are potential tax benefits. Investors can often deduct mortgage interest, property taxes, insurance and maintenance costs from their rental income.

Management responsibilities. Owning a rental property comes with the responsibility of managing tenants, complying with local regulations and handling unexpected repairs. It’s important to factor in these duties when considering rentvesting.

For those willing to think creatively and take a strategic approach, rentvesting offers a pathway to achieving homeownership dreams in Toronto while building a solid financial foundation through real estate investments.

Despite ongoing housing affordability issues across Canada, younger generations remain optimistic about homeownership as a valuable long-term investment. A recent survey by Royal LePage reveals that 84 per cent of Canadians aged 18 to 38 (the “next generation” of homebuyers) feel this way.

Of those who don’t currently own a home, 74 per cent consider homeownership a significant goal they hope to achieve in their lifetime. However, young buyers are well aware of the financial hurdles: 54 per cent believe that owning a home is attainable, 26 per cent are uncertain and 20 per cent doubt it’s achievable for them.

Optimism among challenges

“It is not surprising that young buyer hopefuls see immense benefits in home ownership,” notes Phil Soper, president and CEO of Royal LePage.

“What is both surprising and promising in these findings is the practical and purposeful manner in which these people are tackling affordability barriers. They are well educated on the state of the real estate market and the wide variety of government programs put in place to assist young families find homes. They are hyper-focused on saving for a down payment, which is often the biggest hurdle buyers face. And, they are open to creative solutions, such as shared ownership with friends and family, or buying a property with the express intention of renting a portion of the home to a tenant.”

For many, this drive to own property comes from a desire for long-term housing security. About 73 per cent of next-generation homebuyers prioritize homeownership for a permanent place to live, while 57 per cent believe it provides stability. Additionally, 45 per cent feel renting is restrictive due to tenant-landlord policies, and 32 per cent view homeownership as a critical part of their retirement planning.

Confident in their financial future

Even though many young Canadians face numerous barriers on the path to homeownership, 75 per cent still plan to purchase a home in their lifetime.

“The youngest cohort of homebuyers in Canada has no shortage of barriers on their path to ownership. Though the cost of borrowing has begun to come down, chronic supply shortages have kept housing prices from dropping, even as demand softened under the weight of high interest rates,” says Soper. “Despite these hurdles, the next generation of homebuyers remains committed to their pursuit of owning real estate, and are remarkably optimistic that they can make their dream a reality.”

Among those who are unsure or don’t believe homeownership is possible, 58 per cent cite insufficient household income to cover the costs, and 52 per cent say they lack enough savings for a down payment. Conversely, those confident in achieving homeownership attribute their optimism to diligent saving (45 per cent), career trajectories that promise high income (31 per cent) and sufficient combined household income with a partner (26 per cent).

Sacrificing for the dream of homeownership

40 per cent of those planning to buy a home expect to do so within the next five to 10 years, while 25 per cent anticipate purchasing a home in more than 10 years. Nearly 18 per cent plan to buy a home within the next three years and 13 per cent in three to five years — motivated by the possibility of lower borrowing costs.

To save for a down payment, 47 per cent are setting aside a portion of their earnings regularly, 42 per cent are focusing on maintaining a good credit rating and 34 per cent are cutting back on discretionary spending. 30 per cent live with family to save on rent and increase their savings for a home purchase.

To improve affordability, 45 per cent would consider buying a property with rental income potential and 31 per cent would consider a rent-to-own program. Despite the trend of parental assistance, nearly half (47 per cent) of respondents plan to purchase a home without financial support from family, while 32 per cent expect some form of financial help.

Delaying life milestones to save for a home

High real estate prices are prompting young Canadians to make significant sacrifices. For example, 27 per cent have postponed or canceled travel plans and 21 per cent have delayed purchasing a car to save for a home. Additionally, some are delaying moving out of their parents’ homes (21 per cent), living independently (17 per cent), starting a family (14 per cent) or saving for retirement (11 per cent).

“If policymakers needed yet another example of the impact of our nation’s chronic housing supply crisis on the financial security and well-being of young people, this is it,” Soper stresses.

Policy changes to support first-time buyers

To increase affordability, the Canadian government now allows financial institutions to offer 30-year amortizations for insured mortgages on new construction homes for first-time buyers, up from the previous maximum of 25 years. This policy aims to reduce monthly payments and make homeownership more accessible.

“We know that young Canadians are eager to transition from renting to owning, and most remain hopeful they will. Government policies that make lending practices more favourable for the next generation of homebuyers will help young families achieve their real estate dreams, especially those in the country’s most expensive markets,” adds Soper.

He says Royal LePage hopes to see these initiatives expanded to include resale homes, too.

Review the full report, including regional summaries.

The Canadian real estate market is a dynamic one, often influenced by several economic factors. With the post-pandemic shift in the market, we’ve witnessed a lot of fluctuation in property prices. As prices have recently increased, this trend may cause potential first-time homebuyers to hesitate when purchasing their home. 

However, when it comes to pre-construction properties, now is actually one of the best opportunities to secure a deal. Let’s walk through some of the key reasons why pre-construction investments remain a smart choice, and how you can strategically help your clients navigate the current market.

Pre-construction pricing dynamics

Best suited for first-time homebuyers, the key fundamental aspect of pre-construction properties is the pricing mechanism. Unlike investing in resale, pre-construction properties are sold at today’s prices but completed and delivered roughly three to four years later. 

What does this mean for your buyers? The price they agree to now does not reflect the final market value at the time of completion. Real estate markets are cyclical, and as history shows, property values are set to appreciate over time. Plus, pre-construction offers a flexible down payment plan best suited for first-time homebuyers. 

Many aspiring buyers are hoping for a further price drop, but by the time their pre-construction property is built, the market is likely to have rebounded, resulting in a property value increase. Essentially, buyers lock in a lower price now for a property that will be worth a lot more in the future. This inherent appreciation potential makes pre-construction properties a lucrative investment.

Helping clients adopt a long-term perspective for real estate

These days, it’s crucial for both buyers and sellers to educate themselves on why the real estate market is all about long-term perspective. The idea is to build and preserve wealth over time. 

For buyers, this means getting used to market fluctuations and understanding that patience is key. The current dip in real estate presents an opportunity to enter the market at a slightly lower cost, instead of expecting prices to go down further and that values will rise by the time their property is ready. Have these important conversations with your clients.

Taking advantage of a buyer’s market

In today’s buyer’s market, agents and brokers have a unique opportunity to guide their clients through uncertainty and position them for long-term success. Here are key strategies that can help professionals in the field increase client confidence and close deals effectively:

1. Strengthen negotiation leverage. As an agent,  the ability to negotiate effectively becomes even more critical in a buyer’s market. Educate buyers and investors on the leverage they have, not just in price but in securing favourable terms like extended deposit schedules, builder incentives or upgrade packages. Emphasize the value of these perks, and use them to craft deals that align with buyers’ long-term objectives.

2. Highlight the importance of capital utilization. In a market where things are changing by the minute and liquidity is king, it’s important to convey to your clients the advantages of putting cash reserves to work in real estate over letting them sit idle in bank accounts.

Highlighting how pre-construction properties offer a unique opportunity for growth where they appreciate over time, it’s important to note that property values are expected to rise over the next few years. Investing now means buyers are set to benefit from future appreciation. The property they invest in today at the current price could be worth significantly more by the time it’s completed, providing substantial returns on their investment. Money in low-interest savings accounts can be worth much less in the future, whereas investing in pre-construction can yield better returns.

3. Role of population growth in demand. With the growth in population around urban centres and the increasing opportunities and improved lifestyle benefits that come with it, the demand for housing is only going to increase.

Population growth means more demand for new homes, pushing property values upwards. While we already witness many developers working towards providing more housing options, the short-term price dip is only here for a while before demand increases again. New construction is finite in desirable areas, but this means it will inevitably lead to higher property prices.

Improving economic conditions also results in a return to consumer confidence and, with that, the demand for real estate is also set to increase. This cyclical recovery will bolster property values.

Seizing the moment

In a buyer’s market, the role of an agent or broker extends beyond merely facilitating transactions. It’s about empowering buyers with the knowledge, strategies and confidence they need to make sound investment decisions.

Real estate is a journey, not a sprint. By thinking long-term and making informed decisions today, your clients can set themselves up for substantial financial gains in the future.

Venturon Ltd., a Canadian-owned investment group focused on real estate technology start-ups, has recently partnered with Darabase Canada, a technology company specializing in immersive media for the spatial web (spatial out-of-home and permission-based augmented reality (AR) advertising).

Venturon brings decades of experience in various real estate sectors, integrating technology, products and services to create opportunities, efficiencies and investment returns. This is Darabase’s first such agreement in Canada since entering the market in February.

‘As AR and the spatial web advance, buildings, streets & landmarks will be transformed … reshaping our daily lives’

The collaboration merges each company’s expertise in AR advertising and managing property digital rights, an emerging asset class.

With the rise of AR-enabled devices and advances in the spatial web, the companies partnered to create new value for property owners across Venturon’s client and partner network.

“Real estate needs a new foundation, and technology is the key to unlocking its full potential,” says Deena Pantalone, founder and managing partner of Venturon. “Our partnership with Darabase aligns perfectly with our vision to rethink real estate. By leveraging Darabase’s expertise in AR and the spatial web, we’re paving the way for innovative solutions that benefit both property owners and the broader community.”

Peter Pinfold, CEO of Darabase Canada, notes that Venturon shares their vision that modern property ownership includes not just physical space but also property digital rights: “These rights enable property owners to protect, manage and monetize their digital assets, much like air and subterranean rights add value to traditional real estate.

The world is becoming a digital canvas for immersive brand experiences. As AR and the spatial web advance, our buildings, streets and landmarks will be transformed with dynamic, interactive content, reshaping our daily lives.”

Image: Darabase

With all of the housing market challenges and financial strains on people these days — including a housing shortage and persistently high interest rates — you might be surprised that the outlook on home ownership of many Canadians is actually positive, according to a report from Re/Max Canada.

In fact, the report shows that 73 per cent of Canadians are still confident in home ownership being the best investment. This is what last year showed, too.

Re/Max brokers and agents expect the market to be slightly more active next year, with national average residential sale prices likely to go up by 0.5 per cent. As well, 61 per cent of regions surveyed expect 2024 unit sales to increase by 2 to 7.5 per cent. 18 per cent of markets analyzed anticipate a decrease of 2 to 5 per cent and 18 per cent expect to stay the same next year.

“It’s been a challenging year for Canadian homebuyers and sellers, who have been feeling the effects of a severe housing shortage and the high cost of living, but much like Canada’s housing market, Canadians have stayed resilient. Historically, real estate has given owners excellent returns and strong financial security – and that hasn’t changed,” says Re/Max Canada president, Christopher Alexander.

“The slower market we’ve been experiencing across the country this fall could be an early indicator of an active 2024, as reflected in the modest price increase and sales outlook for next year, and the balancing of conditions in several regions across the country.”

Source: Re/Max Canada

Diversity in new housing: Important

A Leger survey commissioned as part of the report says that the majority of Canadians (72 per cent) believe that as each government level plans to increase housing supply, it’s important that they consider the diversity of the new housing being developed.

Trends

Forty-one per cent of Canadians believe climate change will impact their decision on where to buy a home next year, and 21 per cent are looking into alternative home ownership or moving provinces or cities for better affordability in a neighbourhood they love.

42 per cent expect housing conditions to balance out, while 29 per cent expect them to favour sellers, 21 per cent to favour buyers and 4 per cent to see mixed conditions.

Review the full report, including regional highlights, here.

Zoocasa looked at the question as the allure of short-term rentals through platforms like Airbnb loses its shine as cities across North America tighten regulations. The latest to join this trend is New York City, which recently enacted a law prohibiting rentals for fewer than 30 days, a move that echoes the efforts of several Canadian cities. 

These changes are largely driven by the need to address housing shortages, with policymakers hoping to return more properties to the traditional long-term rental market.

New regulations for short-term rentals

Short-term rental regulations are becoming increasingly commonplace, with many Canadian cities already implementing limitations. For instance, Zoocasa notes that as of Sept. 1, Halifax has restricted how units can be rented in residential zones and now mandates basement apartments or backyard suites to be rented for more than 28 days. Meanwhile, Toronto imposes a maximum limit of 180 days per calendar year for short-term rentals, and the British Columbia government is drafting its own set of laws governing short-term rentals.

Zoocasa’s analysis compared monthly rental prices with monthly mortgage payments for the average condo in each city. Additional costs, such as utilities and property taxes, were not factored into this analysis.

The cost of renting vs. owning

In August, Rentals.ca reported an annual increase of 8.9 per cent in rent prices, reaching a record-high average rent of $2,078 across Canada, while the average price of a condo in most cities did not experience a parallel surge.

Among the 12 cities where average condo mortgage payments were found to be lower than rent, Calgary stood out with the most substantial difference. With an average monthly rent of $1,920 and an average monthly mortgage payment for a condo at $1,355, investors could see a monthly surplus of $565.

Similarly, other Alberta cities like Edmonton and Lethbridge also presented mortgage payments lower than the average rent, while Grande Prairie bucked the trend with average monthly condo mortgage payments surpassing average rent by $619.

Beyond the Prairies, Quebec and the Maritimes also offer favourable conditions for investors. In Halifax, where the average rent is $2,061, the monthly mortgage payments for an average condo total $1,956. In Quebec City, monthly mortgage payments on a condo average $1,009 — less than $401 compared to the average rent in the city.

Source: Zoocasa

Ontario’s unique challenges

However, Zoocasa’s analysis indicates that Ontario presents a distinct challenge for condo investors. With the exception of Windsor and Ottawa, where monthly mortgage payments for the average condo are lower than rent, all other cities in Ontario analyzed in the study had monthly mortgage payments higher than rent.

Toronto, boasts the second-highest average monthly rent on the list, at $2,981, while the average monthly mortgage payment for a condo reaches $3,451 — a difference of $470. Other Ontario cities, including Guelph, Barrie, Hamilton, and St. Catharines, also recorded relatively higher mortgage payments when compared to rent costs.

Lauren Haw, Zoocasa’s broker of record and industry relations officer, emphasized the challenges that rising interest rates pose to condo investors. She noted, “Condo investors continue to have a hard time covering carrying costs, and they’re not making a profit, which is leading many to sell their investment properties.”

Investor interest persists

Despite these challenges, investor interest in real estate remains. The Bank of Canada reports that investors accounted for 30 per cent of home purchases in the first quarter of 2023, and the central bank’s recent decision to pause interest rate hikes and maintain the overnight lending rate at 5.0 per cent suggests that demand for investment properties may continue to grow.

Read Zoocasa’s full analysis here.

The survey, conducted by Leger, looked at 501 Canadian homeowners who share their property with someone other than their spouse. 

Among this group, a significant 89 per cent have chosen to co-own their homes with family members, while 7.0 per cent share ownership with friends. Another 8.0 per cent of respondents have opted to co-own with individuals outside the circle of family and friends.

Diverse co-ownership situations

When it comes to living arrangements within these co-owned properties, 44 per cent of co-owners revealed that all parties involved reside in the property together. In contrast, 28 per cent co-own homes but do not live together, and 6.0 per cent view their co-owned property as an investment or recreational space rather than a primary residence.

The lasting influence of the pandemic

The ongoing impact of the COVID-19 pandemic has prompted many Canadians to reconsider their housing situations, fostering a trend of shared living spaces with friends and family. Now, even as social distancing restrictions have eased, a considerable number of Canadians are continuing to explore co-ownership arrangements as a means to address their housing needs effectively.

According to a recent Royal LePage survey, real estate professionals across Canada have noted the growing popularity of purchasing properties with others. A recent survey conducted among the company’s brokers and sales representatives revealed that 23 per cent have observed a moderate increase in the number of homebuyers opting for co-purchasing arrangements compared to pre-pandemic times. Another 8.0 per cent have witnessed a significant uptick in such transactions.

Financial realities and multigenerational living dynamics

Karen Yolevski, COO of Royal LePage Real Estate Services Ltd., emphasized the multi-dimensional nature of this trend. “Different generations of families living under one roof is not a new phenomenon but has been growing in popularity,” Yolevski explained. 

Census data highlights the rise of multigenerational households, with financial considerations now driving decisions to co-own homes. As home prices, interest rates, and mortgage qualifications become more challenging, Canadians are pooling their resources to enter the housing market.

Yolevski adds, “In cases where homebuyers cannot afford to purchase on their own, they are combining their buying power with their parents, children, siblings or even friends.” 

Of all co-owners surveyed, 65 per cent say that they co-own a single-family detached home, 19 per cent say they share an attached home, such as a townhouse or semi-detached property, and 13 per cent say they share a condominium or apartment. 

Affordability spurs co-ownership

Three-quarters of co-owners indicated that affordability played a significant role in their decision to co-purchase property. This figure rises to 83 per cent among co-owners aged 25 to 34. A considerable proportion of respondents mentioned that they embarked on co-purchasing arrangements in response to rising interest rates implemented by the Bank of Canada.

“Some Canadians are using co-ownership as a way of boosting their borrowing capacity or lowering their monthly mortgage costs, helping them achieve their goal of home ownership,” said Yolevski. “By dividing the cost of a home between more people, Canadians can not only get their foot on the property ladder more easily but also expand their home search…”

A spectrum of motivations

Among those who co-own and live in the property together, 49 per cent stated that their co-purchase was driven by the inability to afford a home individually. Thirty-eight per cent cited the advantage of affording a larger property or a residence in a preferred neighborhood. Additionally, 30 per cent chose co-ownership to facilitate family support with childcare or elderly care responsibilities.

Yolevski underlines the significance of the decision to co-own, emphasizing the importance of thorough conversations covering financial, legal, and personal aspects. “Regardless of whether you live in the home with your fellow co-owners or not, the responsibilities of owning a home with other people are shared, but so are the benefits.”