The Benefits and Risks of Investing in Canadian Real Estate: Market Trends and Return on Investment

Written by

Investing in Real Estate can be an incredibly lucrative opportunity, especially in Canada, where the high standard of living attracts a willing market. With the economy recovering post-pandemic, many seek stable income streams, and owning an investment property has become an increasingly popular option. One such option for an investment property is rentals, which are in high demand among students and entry-level employees who may still need more resources to buy a home but still need a comfortable and affordable place to call home. The current market presents an ideal moment to invest in this growing market and reap the benefits of a steady and profitable investment.

As predicted and proven by many big names in the industry, there’s no slowing down regarding the growth of Real estate in Canada. The question again now comes to the same, how good would it be to invest in this market, and what are the returns on investment?

To answer that, here are a few factors that affect the Canadian Real Estate market that one needs to understand before stepping into these unchartered territories. 

Investing in Canada comes with its own set of advantages and disadvantages. However, Canadian real estate has consistently shown appreciation in property value and rental earnings over the years. As reported earlier, the MLS in Canada’s Home Price Index has surged by over 25% since the start of 2020. Although Toronto and Vancouver are the most commonly discussed real estate hotspots, buyers’ and balanced markets have recently transformed into sellers’ needs.

While appreciation is desirable, rental income is vital to investment in real estate, in Canada. Over the past year, the national average rent has increased, as per In February 2022, the average rent was $1820, a 6.2% increase from the previous year. With inflation and rising interest rates, it is expected that rental prices will continue to increase at a slow pace.

The Current Market Trends in Canadian Real Estate 

Following a frantic activity in Canada’s housing market due to the COVID-19 pandemic, 2022 marked a turning point for the industry. The Bank of Canada’s interest rate increased to a cooling effect on residential real estate in cities spanning the country.

Several economists and industry experts anticipate this cooling trend will persist into 2023. Factors contributing to this expectation include:

  • Excessively high mortgage rate
  • Low inventory in the market
  • Ambiguity regarding when the Bank of Canada’s interest rate cycle will ultimately reach its peak

Here Are A Few Pros And Cons Of Investing In Canadian Real Estate


The significant advantage of investing in Canadian Real Estate is that you save tax, and the leeway on an investment property is quite good. As a landlord in Canada, several costs can be deducted from your rental income and shown in your tax returns. It will eventually bring down the amount of tax you have to pay.

The second significant advantage is that there are tens of options that you can do with your rental property and thus create a source of profitable income for every month. From BnBs to rental homes, there are many things that one can do with the property, and it acts as a source of revenue for you.

Investment properties are immune to inflation, and when the cost of living goes high, so will your rates for rent. Thus, you have the upper hand in times of economic crisis if you have a good inflow of tenants through MLS in Canada or a secure contract with existing tenants.

The risk is lower when investing in property than other investment options like stocks. Properties are one thing that keeps on appreciating, making Real Estate one of the best investment options for any generation and a secure alternative to hand over to the family. With property prices increasing yearly, it only adds to your equity if you manage to keep the property for a more extended period and add to your return on investment.

Canada has a booming Real Estate market, and with hundreds of professionals there to help you find your perfect property, be assured that you will find the best property that matches your revenue-generating idea in mind. Many apps and platforms currently operate in the Canadian Real Estate market that can help you find options for the property you want to invest in. One such trending app is The Canadian Home, which has over 6 million properties and a live chat option with experts who can guide you toward your perfect home in no time.


As Canada offers many investment properties, many people jump on investing in vacation homes, warehouses, apartment homes, and even hotels/motels. But the question is what percentage of those investments is profitable? People investing in vacation homes need to know that the house will sit idle for a good season; hence, it is a good investment if you have many other properties or are a billionaire. From the point of view of a good investment, investing in a BnB is a better option than vacation homes because you can list your home on several sites and get inbound leads from customers throughout the year.

Another disadvantage is that if you are trying to save taxes by placing your home as an investment property but plan on having multiple properties, you are in for much hassle. If you want to rent it out to tenants then that comes with another hassle because tenants can seem like a good option, but you never know with whom you trust your property. Thus, finding the right tenant through MLS in Canada for your investment property can be a significant challenge.

Mortgage financing for an investment property is a whole other ordeal. Mortgage approval can take up to months, and you must make at least a 20% downpayment on the property in most cases. You should seem eligible enough to maintain more than one property if you own a home already. Your funds and source of income play a crucial role along with your credit history when you finance your investment property. The whole situation can be expensive for someone with a tight budget planning to invest in a property in Canada.

Disposing of the property could be another challenge, especially if your investment is short-term because, in that case, you would be incurring Realtor Fees, Lawyer Fees, and such, which can ultimately reduce your return on investment. Investing in a property in major cities like Toronto and Vancouver can incur an additional cost you may need help recovering while selling your property. The market condition in Canada is also subject to changes; thus, selling your investment property quickly can become a task.

Another disadvantage is the property management of an investment property which can cost a fortune. It directly affects the return on investment because you can run into losses if you cannot get profitable income from your property and yet have to spend double the amount you expect on managing it.


Everything has pros and cons when it comes to investing, but with the Real estate in Canada market growing every year for the better, the pros of investing in Canadian real estate weigh better than their cons. The return on investment is also high in central provinces of Canada, such as Ontario, Alberta, and British Columbia. The market trends that hit the Canadian Real Estate market in the last few years looked promising, and with the interest rate hikes coming to a halt, more people will be willing to invest in this industry.

Article Categories:
Real Estate

Leave a Reply

Your email address will not be published. Required fields are marked *