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.
Annual gross profit
Paid off in 5 years
The total term of investment recoupment
8 years 4 months
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?
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More about DGY
DGY is a real estate investment and property management company. Our experts have an impressive experience in turning businessmen into smart real estate investors. We collect limitless opportunities throughout the world’s best real estate markets and help our clients implement the best deals. We take care of all due diligence and customize documentation while your income grows. We also provide you with property management services so you can forget about the tiresome maintenance of several objects and entrust this process to professionals.
Investment advice and recommendations
DGY is an investment company that takes care of every client and helps them become successful investors. With the help of an investment experience and a well-thought plan, we will help you examine the market, choose a strategy specifically for you or your business, and calculate future costs to start making money with real estate investment.
In order to invest in real estate, you should consider how you will run your management in Ukraine. DGY will help you eliminate all possible pitfalls at an early stage as a personal project manager will be assigned to your case. They will assist you in choosing the project according to all required objectives.
DGY Investments takes care not only of purchasing property but also renovating an existing one. With the help of a thorough plan and estimating, we will thoroughly prepare a property for sale. Our professionals evaluate an investment property and create a strategy that includes the costs for renovation, possible taxes, fluctuations on the market, etc. Therefore, our clients are able to resell the renovated properties in Ukraine with more than 15-20% profit from the initial price.
Before our clients decide to deal with real estate investing, they consult with our experts concerning details such as the necessary documents needed to purchase a property and successfully run all the processes connected to it.
Therefore, if you are eager to invest in Ukraine, it’s essential to have all the paperwork done correctly, and that’s the moment when our team of experts takes care of this step. DGY Investments helps investors buy real estate property, manage the paperwork, start preparing relevant documents for purchasing realty in Ukraine, and close the deal successfully.
Real estate investment opportunities in Ukraine
When an investor decides to invest in real estate in Ukraine, the most affordable way to attain stable passive income is through buying residential real estate. Investors can expect to receive a regular monthly payment from their tenants at a fixed monthly amount, unaffected by inflation or other unforeseen circumstances. The amount of rental income will vary depending on the size, type of property and location. For example, buying an apartment in Ukraine’s capital Kyiv is beneficial to investors due to offering a large working population, central location and affordable prices. Hence, the minimum price of renting a decent one-bedroom apartment in Shevchenkivskyi District will be around $1000 per month in 2021, followed by Pecherskyi District with a cost of $850 per month. Besides, investing in real estate in Ukraine annually brings clever investors up to 15% of yield, attracting many business people every year.
Properties for investments in Ukraine
Ukraine has a giant sector for real estate investing. Businessmen who come there all over the world often choose between investing in residential and commercial properties. The main advantage of buying property in Ukraine is the affordability of prices on the houses and apartments. For instance, if you invest in real estate in a historical district, a luxurious apartment will cost you around $85k only.
How to invest in Ukrainian Real Estate
In order to invest in Ukrainian real estate, you should take into account a list of crucial factors. The first one is to choose what kind of realty you are going to invest in: residential or commercial. It is vital as it should comply with Ukrainian real estate law. The second tip is to identify the purpose of purchase in order to make a strategy for the property. For instance, you may purchase the property for your own use or buy it for lease. The next step is to calculate the taxes and what kinds of taxes are payable during the purchase, owning, or selling. Also, to invest in real estate properly, you should keep in mind currency control rules in Ukraine to sell a property and get a higher profit.