Here’s What $1 Million Buys You Across Canada

Real estate investing can sound like the perfect option, but not everywhere. So let’s look at what $1 million might get you.

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Real estate has long been considered one of the best ways to create long-term passive income. And it’s clear why that’s been the case over the last few decades. Interest rates have been so low that if you have the cash, a mortgage can latch onto interest rates that are practically nothing!

But things have changed over the years. If you have $1 million, it might still get you a lot, but only in some places. So let’s look at why real estate could possibly still be a good investment and where this might actually be the case.

Why real estate could work for you

Historically, real estate prices in Canada have generally increased over time. This offers a strong long-term capital gains investment for those looking to buy, rent, then sell property. This can be a great way to create wealth and even outpace inflation.

What’s more, it’s a tangible asset. You can own it and use it, or even rent it out for more passive income. That income can create a steady stream which can pay down your mortgage, and even offset the costs of your own mortgage payments and property taxes.

What’s more, this type of passive income investment has tax benefits. In Canada, you can deduct certain expenses from your rental income while lowering your overall tax bill. So overall, it sounds great! However, given today’s market conditions and interest rates, it’s a bit more difficult to buy those cheaper homes and create passive income. So now, let’s look at what $1 million might get you across the country.

The numbers

For this, we’re going to simply look at the capital city of each province and territory, and on average what you can get from a $1 million purchase. You can find this in the chart below.

Province/TerritoryCapital CityPossible Real Estate Options
Newfoundland and LabradorSt. John’sDetached house with 3-4 bedrooms, waterfront property
Prince Edward IslandCharlottetownLarge, detached home with character or in a desirable neighbourhood
Nova ScotiaHalifaxDetached home with 3-4 bedrooms in a good neighbourhood, executive condo/townhouse downtown
New BrunswickFrederictonSpacious detached home with a large yard, unique property like a heritage home
QuebecQuebec CityLarge condo/townhouse in a desirable area, potentially a smaller detached home further out
OntarioTorontoTwo-bedroom condo downtown, detached house further out in suburbs
ManitobaWinnipegLarge, detached home with a yard in a desirable neighbourhood
SaskatchewanReginaLuxurious, newer detached home in a sought-after neighbourhood
AlbertaEdmontonSpacious, detached home with 3+ bedrooms and modern features, infill home in a trendy area
British ColumbiaVictoriaDetached home with some character or in a good neighbourhood, potentially a smaller condo downtown
NunavutIqaluitLimited housing options, could potentially buy a single-family home in a newer development
Northwest TerritoriesYellowknifeDetached home with 3+ bedrooms in a desirable neighbourhood
YukonWhitehorseLarge, detached home with a yard in a desirable neighbourhood

As you can see, it varies quite widely. While in Toronto you can only get a two-bedroom condo, in Regina you can get a luxurious brand-new home! Which is why investing might be a better option.

Why investing might be for you

As mentioned, a lot of issues come up with buying a home right now, especially in sought-after areas. Which is why investing could be much easier. First off, diversification is key for investing in anything, and you don’t get that with real estate. Invest even in one exchange-traded fund (ETF), however, and you’ve got access to everything in one click.

Furthermore, you don’t need $1 million to get started! Put in even a few hundred bucks and you can make passive income. Plus it doesn’t cost you to invest when it comes to maintenance costs or upkeep, simply professional management fees, if that! Finally, it’s also way easier to take out the cash when you need it, with extra change from any higher returns.

If you take this option, I would consider an ETF like the Vanguard FTSE Canadian High Dividend Yield Index ETF (TSX:VDY). It offers a 4.65% dividend yield, with shares up 16% since bottoming in November. And that dividend comes out every month! 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Amy Legate-Wolfe has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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