Pricey Windsor real estate pushes some to invest south of the border
Ontario firm says it's simplified the process of investing in the United States
A booming real estate market across Canada — including in Windsor-Essex in Ontario — has meant that for some investors, opportunities are drying up, and they're turning their efforts toward the United States.
As recently as five years ago, Windsor's properties were a steal. But with the average price of a home selling at a record $636,422 in the region in January — a 10 per cent jump from the month prior, and about 26 per cent more from the same time last year — investors say, thanks to bidding wars and dwindling profit margins, there are fewer opportunities to invest locally.
"When the prices are too high, they're going to be looking at the outskirts," explained Danial Malik, a broker at ReMax Preferred in Windsor
The outskirts are not just communities in the county, but out of province, as well as south of the border.
"These buyers are going to the states to look for more opportunities since they know that the prices are a little bit easier to access," he said.
Investors look south
Local entrepreneur Dan Crosby was among investors who started looking for a different means of investment.
"I started looking outside of our own backyard here, and American real estate really caught my eye," he said.
WATCH | Local investors at Coachwood Capital explain why they turned to the U.S.:
He even turned it into a business model.
Crosby said his firm, Coachwood Capital, which launched a couple of years ago, has simplified the process to invest in larger-scale investment properties like condo buildings on the other side of the border.
In the last two years, with a team of at least 30 investors, most of whom are from southwestern Ontario, the firm invested in a building in North Miami as well as a building in Canton, Mich. Both are senior-focused rental properties.
Between a booming market and certain tax benefits in the United States, Crosby explained the cash returns are sometimes triple or quadruple that of a southwestern Ontario investment.
Opportunity for a young investor
For 22-year-old Humza Mirza, buying a home in Windsor-Essex at his age, fresh out of school, seemed out of reach. But through his job with Coachwood Capital, he's now part-owner of the Miami building.
Mirza said it would have a difficult accomplishment to achieve on his own locally, given the competitive Windsor real estate market.
"Not many people my age can really front the amount of capital [needed to buy a home]. And essentially, you're just kind of kicking the can down the road," he said.
This option also attracted Windsor real estate agent Scott Innocente to invest with the firm and join as its market analyst.
"It's definitely getting more difficult to buy properties [in Windsor-Essex] that are producing the returns that we're used to," he said.
Fewer investors could mean a calming market
Maggie Chen, broker of record for LC Platinum, said the window of investing for profit is slowly closing locally.
She predicts that though prices are still on an incline, this is the year when the market will finally settle down.
WATCH | Broker of Record Maggie Chen says a shift will come, but it'll take time:
A big reason for that is because investors are starting to realize they won't be able to maintain cash flow as prices continue to rise.
"If you cannot rent it out for $2,500 per month, you are not able to keep the property without paying out of your pocket every month. Imagine then, what's the point of investing if you have to pay out of your pocket unless you have the confidence that this market will keep growing?" Chen said.
She noted several of her clients are also looking elsewhere to invest, with Calgary being "the hottest topic" because of its housing prices.
While investors are still continuing to buy in Windsor-Essex, she predicts a shift is coming, and with that, the possibility of relief in the market down the road.
"Yes, I think if the investors stopped coming into our community, it'll take some time for this market to relax a bit," Chen said.
"So it'll be more space for us, for all of us to breathe."
Though, she said, we're definitely not there yet.
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