Comparing Two Large Capitals – Kyiv, Ukraine Vs Toronto, Canada: Where To Invest?

A good investor with available money is always in search of new opportunities. Not rarely, the process goes out of borders of just one country or even continent. In this article, we’re making the comparison of two countries located on two continents – Toronto, Canada & Kyiv, Ukraine. An unexpected winner is estimated by the end of the article!

For the sake of making our comparative calculations simple and straightforward, we’re taking market-average good-condition apartments in both cities. In other words, they are the same attractive for an eye and great for living for a family of two: a 1-room apartment that includes a kitchen-studio + a bedroom (of 60-65 sq. meters or 650-700 sq. feet). Particularly, we’re taking apartments in good neighborhoods with lower crime rates and better infrastructure, weeding off all old houses of 50+ years of age (which are in colossal plentitude in Kyiv) so as to evade large housekeeping investments through the years of operation.

All prices are submitted in American Dollars.

Toronto real estate analysis

Toronto home prices in October 2021 make a cost of a described apartment be on average $549,000 (to buy). It costs $27,450 to rent it for 1 year (which makes it $2,288 a month). In the real estate Toronto market these days, the average annual ROI (rent/cost*100%) is equal to 5%. For 5 years, the total ROI before taxes is 5%*5=25%.

The full recoupment of such an investment in the Canadian housing market is:

$549,000/$27,450 = 20 years (before taxes).

Real estate Kyiv analysis

In Kyiv, the same apartment would cost $111,100. The current annual ROI in Kyiv is 12% (taking a realistic estimation of profitability). This circumstance makes renters pay $13,332 a year for this apartment or $1,111 a month. In 5 years, ROI is 60% (12%*5).

The full recoupment of such an investment in the Kyiv housing market is:

$111,100/$13,332 = 8 years and 4 months (before taxes).

Conclusion about houses in Toronto, Canada vs Kyiv, Ukraine

In both cases, we consider the full recoupment and ROI before taxes and excluding such possible extra expenditures as:

• Insurance from damage, loss, and robbery
• Unforeseen expenses, which are required to maintain the good living condition of an object
• Probable payments to funds of local unions of owners of leased property (if any)
• Expenses borne to transfer money from tenants to a landlord (like bank fees)
• Payments to managing companies, who will be hands-on with everyday activities
• Expenses connected to searching new tenants and dealing with probable evictions.

Also, we’re not considering the tax benefits of owning rental property, which can reduce the cost of owning a property (individual or commercial).

We acknowledge that these sums might be similar or different in both capitals, Toronto and Kyiv, but it is hard to predict them more or less precisely, as the biggest part of them depends on a particular property, the way it is managed, and thin-air things like luck. But as we do realize that the aforementioned and other expenses will always be present, no matter what object you’re running as a landlord, it would be wise to exclude them from calculations for the sake of obtaining a clearer picture.

Let’s generalize the results we received in the table below.

Kyiv is an unexpected winner!

By the way, you have to consider that for the cost of 1 described object in Toronto, Canada, you can actually buy nearly 5 objects in Kyiv (4.94). Even if we consider you will have bought 4, you automatically get these numbers: with an annual gross profit of 12% in Kyiv, from 4 objects, you get $53,328 rental income a year ($4,444 a month). Although the total recoupment term remains the same, for the same money, by investing in Kyiv, you receive annually $53,328 instead of $27,450, which you would gain in Canada (+94% or 194% in total).

And if you’re interested in a faster turnover of your money, Kyiv is more alluring in this case because you will save 11 years and 8 months to recoup, after which you could reinvest the full sum again. More than twice the faster cycle of money turnover allows you to do 3-4 cycles in Kyiv during your life compared to just 1-1.5 cycles in Toronto. That literally means the following: by starting your investor path in your 30, by 63, you will go through 4 cycles of recoupment, owning eventually 4+4+8+16 = 32 properties (gross capital of $3,555,200). In Toronto, starting in 30, you will only complete 1 cycle by 50 and one more by 70, owning just 4 properties at the end of the day (gross capital of $2,196,000).

And how do you think, what will be more preferable for your children and grandchildren?