It’s a tough time to buy a home in Canada. Home prices have increased 29.7% since 2019, and the average home price in Ontario is $931,000, while the median annual income is just $41,000. On a global scale, Canada ranks as the 8th least affordable housing market in the world, containing 2 out of the top 10 least affordable cities in the world.

For investment properties, the outlook is even more bleak. To prove this point, let me show you (using some examples) why it’s more financially beneficial to rent vs. own in Canada.

For practical reasons, let’s agree to use Robert Kiyosaki’s definition of an asset from the iconic personal finance book Rich Dad Poor Dad: “An asset is something that puts money in your pocket.” Simply put, an asset is an investment from which you receive money on a regular basis – it provides positive cash flow. Unless something is putting money in your pocket, it’s not an asset. While there are certainly other ways to make money in real estate (e.g., long-term equity growth), this definition is more practical and realistic for most people, because it prioritizes owning assets that are not a cash suck / liability that most people can’t afford to hold on to.

Now that we agree that cash flow is the primary goal of an investment property – at current home prices and interest rates, cash-flowing real estate investments in Canada are nearly impossible to come by.

Let’s consider a few examples comparing the finances of renting vs. owning to show why renting is more advantageous than owning a home in Ontario.

Example 1: Toronto, ON – 2 Bedroom Condo

• Renting – Average Monthly Rent:                                           $1,992
• Owning – Average Monthly Mortgage Payment:               $4,646.98

Example 2: Windsor, ON – 2 Bedroom Home

• Renting – Average Monthly Rent:                                           $1,253
• Owning – Average Monthly Mortgage Payment:               $3,055.02

In both examples above, the monthly mortgage payment is calculated based on a 30-year term assuming a 5-year fixed rate mortgage with an interest rate of 6.79%.

The above examples compare only the monthly mortgage payment against the cost of rent… this does not include other necessary costs of ownership such as taxes, insurance, maintenance, condo fees, etc. Even still, it is immediately obvious that renters fare better financially. Coupling this with the fact that laws that are generally more favourable for tenants vs. landlords, renting is an even more obvious winner.

While these are just examples / anecdotes, similar outcomes are experienced for cities across Ontario and Canada. Windsor was chosen as an example since it consistently ranks as one of the most affordable cities to buy a home in Ontario. That’s not to say you can’t find deals that cash flow in Canada… of course you can. But they are rare exceptions… clearly far less than is typical / average.

Of course, this comparison assumes that renters have the discipline to regularly invest the cash saved by renting into other assets (for instance… more profitable real estate assets in the USA!). Since you’re here visiting crossborderresolutions.com, it’s safe to bet that you’re one of the disciplined ones. 😉

Contrary to Canada, the United States is much more affordable – a standard home in the United States costs about half as much as a standard home in Canada. Even when factoring in an average USD to CAD exchange rate of 1.35, this means Canadians still have 15% additional buying power. Not to mention, there are more diverse investment opportunities in the USA. There are many cities where you can buy homes for <$100k, and you can even buy established, profitable short-term rentals (Airbnbs / VRBOs) in popular tourist beach towns for <$300k (trust me… I’ve done it!). Besides cost / Return on Investment (ROI), there are many other reasons to invest in the USA… most notably, more favorable laws for landlords / property owners.

Are you sold on the idea of US real estate investment, but don’t know how? You’ve come to the right place. Start with our online course – Fundamentals of Cross-Border Real Estate Investing. We’ve distilled years of experience and knowledge into easy-to-follow lessons and guides designed to get you started on your investment journey with confidence.

Topics covered in this course include:

• Obtaining financing
• Protection against liability
• Cross-border taxes / tax efficiency
• Long-distance real estate investing strategies
• And more!

Fast-track your path to start buying more affordable, cash-flowing real estate investments in the USA.