Real estate in 6 countries with better remuneration

Investing in Canadian residential real estate is becoming a tricky proposition right now. The average home sale price has dropped 18% nationwide in the last year, and even if you bought at those lower prices, the return on investment wouldn't be as great. According to a 2018 CIBC report, 44% of new Toronto apartment investors had negative cash flow - they weren't earning enough in rent to cover their expenses. And that was before the massive rise in housing prices during the pandemic. While home prices were skyrocketing, the negative cash flow into investments still made sense. But those days are behind us, at least for the moment.

So, what's a real estate investor to do? Fortunately, Canada isn't the only country in the world where you can buy income-producing real estate. Now may be a great time to consider buying real estate overseas. When deciding which markets to invest in, the key indicator is not whether those markets will experience rising home prices in the next few years. With interest rates rising across the board, home price growth has slowed and even turned negative in many markets. But rising prices are not what really matters when actually investing in real estate. Yield is important.

Today's returns in Canada are abysmal, as they are in many developed countries. This is not only because Canada is a very stable and predictable market, but also because the long period of low interest rates (which ended last year) has resulted in home prices rising faster than rents. According to the latest data, the average real estate yield is 3.7% in Canada's major cities and 4.3% outside of urban centers. At that rate of return, it will take you 23-27 years to recoup the money from a cash purchase of real estate. In many countries you can get a lot more. But there are risks involved: most of these countries have less stable economies than Canada. So the key is to find a level of risk you feel comfortable with.

There are six countries where yields are higher than in Canada and where Canadians can buy homes with minimal stability and predictability:

• United States
• Australia
• Great Britain
• Germany
• France
• Spain