CREPN #99 – Buy and Hold Investing with Jesse Fragale

CREPN #99 - Buy and Hold Investing with Jesse Fragale

CREPN #99 – Buy and Hold Investing with Jesse Fragale

Buy and Hold Investing is the standard for most Canadian real estate investors.   [x_audio_embed][/x_audio_embed]   Jesse Fragale bought his first rental when he was at college.  Recognizing a good thing, he grew his student housing portfolio with multiple single family and condo rentals. You might think student housing equals keg parties and irresponsible tenants.  While this may be true, it was a guaranteed way to push market rents in a rent controlled market. Jesse is a Commercial Real Estate broker in Toronto, where the rent control policy caps rent growth to a maximum of 1.8%.  The only time a landlord can increase rent by more is after a tenant moves out, which is frequent in student housing.  

Rent Control

Interestingly, the policies meant to help tenants gain affordable housing, has prevented investors from entering the market to build more units.  It is estimated that over ninety percent of all apartment housing in Canada was built prior to 1970.   Instead of building new apartments, investors have purchased condominium units and placed into rental.  Until now, condos have evaded rent control.  Ontario has proposed changes to rental housing policy to close the loophole and bring condos under rent control.  Ontario’s 16 new housing measures Jesse and a partner recently purchased an eleven unit property.  Two vacancies allowed for market rate rent increases.  Also, there is a possibility of creating an additional unit from a large laundry room.  These measures will dramatically increase the value of the property.  

Buy and Hold for the long run

The 1031 Exchange available in the USA, allows the investor an option to defer paying capital gains tax when a seller buys a larger property.  No such option exists in Canada.  Due to the lack of a 1031 exchange, most Canadian investors buy and hold focusing on the long .   Jesse would like to grow the portfolio substantially in the next five years.  However, given the challenges in Canada, he is considering his options in the US.   For more, contact Jesse Fragale at: [email protected] [author title=”About the Author”]]]>

J. Darrin Gross
[email protected]