Why Keswick, Ontario is a great market for real estate investing.
Tuesday Jan 19th, 2016
I’ve lived in Keswick, Ontario my entire life. At 24 years old, the only time I’ve ever spent residing outside of Kesiwck was during my time at the University of Guelph, studying for my B.Comm in Real Estate & Housing.
I always used to find it funny when my parents would drive me through places like Richmond Hill, Vaughan, and Markham, where they grew up, and spew nostalgic monologues about how “that plaza used to be a farm” or “I used to hunt deer right where that condo tower is now”… and now, after only 24 years, I’m finally developing an understanding of their perspective. I’ve watched my hometown grow from an admittedly stigmatized little beach and cottage town into a robust and beautiful little microurban area on the shores of Lake Simcoe.
During my brief time in Guelph for school, I worked as a rental agent, realtor’s assistant, brokerage admin staff, and on a condominium sales team, gradually generating my skills, and passion for rental and investment. When I moved back to Keswick, I saw so much opportunity, it had me watering at the mouth.
Keswick is one of the most affordable locations in the Greater Toronto Area
Keswick has always been an area where people go in the GTA to find cheap real estate. (“Affordable” if we’re speaking politically correct.) But that’s changed. Unless you’ve been living under a rock, you probably know that the 404 has landed right on the doorstep of Keswick, at Ravenshoe Road, and homeowners in Keswick have been seeing capital gains of 10-20% year/year in the years leading up to its arrival.
Now, let me get to the numbers. Keswick is no longer ‘cheap’ or ‘affordable’, but it’s still significantly more affordable than other areas in the GTA. – Which, by the way, we’re the northernmost part of the GTA, and now equally highway accessible compared to Pickering or Missisauga, if you want to try to figure out the impact the highway might have.
Returns on Investment in Keswick Real Estate
In Keswick, you can usually find a well-located 3BR up, 3BR down duplex, let’s say on The Queensway (Leslie Street) for about $400,000, give or take 10k depending on accessory vs. legal duplex, condition, tenancies, etc. With this type of asset, you’re looking at less than 2000 square feet in total. 3 bedroom units in Keswick rent anywhere from 1250-1700 in Keswick, so let’s choose an average of 1500 for our calculations.
At $400,000, with $3000 of revenue per month, and let’s say… a 50% margin pre-mortgage, you’re looking at a purchase capitalization rate (and annual rate of return) of 4.5%. That’s more than you’d get in the bank or the stock market anyday. Keswick has some of the highest excess rental demand in the GTA, with waiting lists in the hundreds… any landlord I know in the area has never had a turnover or vacancy greater than 2 months. It’s a low risk, blue chip income stream for the savvy investor.
But wait… there’s more! Keswick really doesn’t play a major role in the regional economy yet. We’ve got the basic commercial & retail amenities, minimal employment, and a lot of residential ownership units reaching the pipeline that were pending the arrival of the 404. What this means is that as these units hit the market, the population increases, the retail and commercial services arrive, employers begin looking to locate here, and our pretty little town starts playing a larger role in the regional economy and the GTA. This kind of future for a municipality promises strong, sustainable value growth of assets in the neighbourhood of 10% per annum at a minimum. With home ownership costs increasing, we’re seeing a lack of new household formation and an increase in rental demand in the Ontario Market overall, and especially in York Region.
Conclusions about Investing in Keswick Real Estate
All in all, I can confidently say that Keswick is one of the top 10 most safe and lucrative (those two words are never in the same sentence) areas to invest in the GTA, regardless of the metric you’re using to evaluate your success.
If you’re interested in investing in the Keswick real estate market, whether it be a multi-family residence, 10 or 20 year land, development sites, or retail/commercial space, I’d be happy to help you with your purchase by tailoring my educational real estate knowledge to your investment goals.
Feel free to contact me if you’re interested in investing in Keswick.
TL, DR: Invest in Keswick for blue-chip, 4.5% annual return and 10+% equity growth/capital gains in the current market…