9 Ontario towns to consider investing in

While oil-producing provinces such as Alberta especially feel the affects of the recent slide in oil prices, Ontario is expected to be among Canada's economic leaders over the next couple of years. Here are nine Ontario towns in which to consider investing in real estate.

More economists and financial firms, such as TD Economics, are downgrading oil-producing regions and nudging up others, such as Ontario and BC. Ontario is also expected to benefit from continuing improvement of the U.S. economy.

This means jobs – such as Linamar Corp.'s recent announcement of a $500-million expansion to its Ontario operations, with investment from the federal and Ontario governments. The Guelph-based auto parts manufacturer says the project will create 1,200 high-quality local jobs over the next decade.

This is exactly the kind of news that is music to the ears of those who invest in real estate.

Indeed, the key things to look for when investing in real estate are a solid and growing local economy, stable employment conditions and minimal new apartment construction. These combine to produce a tight rental environment – the perfect storm for investor-landlords.

Investment strategy

Using an investment strategy known as “buy, hold and rent,” where you buy a property and rent it out over a period of five to seven years, you benefit in three ways:

• Positive cash flow, meaning you rent it out for more than your expenses (mortgage, taxes and other costs)
• Tenants pay down your mortgage
• Property value appreciation over time

Vacancy rates

Among of the key things to learn about, as an investor-landlord, are vacancy rates. Canada Mortgage and Housing Corp. (CMHC) summarizes these, along with average rents, in twice-annual rental market reports.An increasing rate means rental supply is growing, and renters have more units to choose from. Declining vacancy rates mean supply is tightening and your property may be in higher demand.

A vacancy rate between two and three per cent is considered a balanced market, so anything below that is ideal.

As an investor, you’re looking to select areas where:

• The vacancy rate is low and ideally tightening further

• The economic fundamentals are strong

• The area is desirable for renters and the building type is suitable for the local tenant profile

• Tenants in the area will pay what you have to charge for rent

We've identified nine Ontario towns to consider investing in in 2015, based on CMHC's Rental Market Reports as of October 2014, for two-bedroom units (generally considered the most desirable for renters, and therefore wise purchases for investors).

TORONTO

Vacancy Rates

2014: 1.5%

2013: 1.5%

Average Rents

2014: $1,251

2013: $1,213

GUELPH

Vacancy Rates

2014: 1.1%

2013: 2.0%

Average Rents

2014: $988

2013: $957

BARRIE

Vacancy Rates

2014: 1.6%

2013: 2.6%

Average Rents

2014: $1,118

2013: $1,048

HAMILTON

Vacancy Rates

2014: 1.6%

2013: 2.9%

Average Rents

2014: $959

2013: $932

BRANTFORD

Vacancy Rates

2014: 1.9%

2013: 2.6%

Average Rents

2014: $855

2013: $835

KINGSTON

Vacancy Rates

2014: 1.7%

2013: 2.4%

Average Rents

2014: $1,070

2013: $1,054

KITCHENER-WATERLOO-CAMBRIDGE

Vacancy Rates

2014: 2.3%

2013: 3.0%

Average Rents

2014: $975

2013: $952

OSHAWA

Vacancy Rates

2014: 1.9%

2013: 2.9%

Average Rents

2014: $1,010

2013: $985

ORILLIA

Vacancy Rates

2014: 1.9%

2013: 3.0%

Average Rents

2014: $903

2013: $896

Related reading:

Featured neighbourhoods in Ontario

Toronto to lead in home price growth this year

7 Canadian real estate markets to consider investing in for 2015

5 things to watch in Canadian real estate in 2015

Falling oil and gas prices: Canada's gain could be Alberta's gain