don't look at major cities. These markets are watched intensely by many in the industry who buy using different parameters and who are okay with a smaller ROI. Personally, I look at regional centers -- the smaller cities that form the hub for many outlying communities.
The following are important factors in determining if an area is a regional centre:
1. It is highly accessible. Access is key, and that usually comes along with a regional centre, but I look for good highways and airport access. How easy is it to get in and out of the community? This is important.
2. Investment from the private sector. If newer big box retailers are entering a community, the odds are that they have access to much better research on the community than I do. They want to be in a community that is growing and vibrant, and this is the same type of community I prefer to invest in.
3. Re-development of public infrastructure. I look for upgrades occurring in public buildings and other public assets in the community itself. If school districts are growing, hospitals are expanding and recreation centres are being constructed, the federal, provincial and municipal governments are probably investing money into the area.
4. The purchase price works. It might be obvious, but the purchase price always has to work. I make sure that the purchase price of properties in the community is going to give me my required ROI based on normalized market finance terms and conditions. We can all negotiate low interest, short-term, vendor-take-back financing, but when you’ve overpaid and it comes time to refinance, be prepared to open your wallet. Fantastic short-term financing is a bonus, not a plan.
5. Strong employment. I am in real estate for the long-term so I prefer middle class, working communities over boom-and-bust areas or tourist towns. I search the city’s economic page on their website and read local papers for news of new industries coming to town, transportation hubs, medical centres or other places where people are employed in large numbers.
6. Stable increase in population. If you are looking at investing in a community and the population is declining, you really have to determine what your exit strategies will be. Who is actually going to buy your property if the population is going down? Population growth is usually linked closely to new industry employment.
7. Talk with property managers in the area. When I go into a community I always interview local property managers. You need a great property manager on the ground to solve issues as they arise, quickly and efficiently, especially if you don’t live in that community yourself. You need a property manager who is willing to give you all the information you feel you need to be comfortable managing from afar.
During the interview ask for a list of the properties currently under their management and do a drive by. Find out what they feel about the local rental market and what they charge for rent. Inquire about what type of vacancies they have with their current projects and just get to know them in general.
8. Is the area large enough to create inventory? As a real estate investor, the areas I look at need to be large enough that I can buy enough inventory to justify the management and travel expenses created by it.
Are there enough properties that are going to become available over the next few years that will allow me to have more than one property in the community? If you only have one property in a community, the percentage of revenue allocated to managing it is significantly increased.
9. Expanding a remote market. When looking to expand outside of a market that is already a plane ride away from where I live, I try to stay within a one-hour drive from my hub city. This allows for ease and efficiency of business travel.
For instance, when I selected my target city in Ontario I tried to keep all properties within an hour’s drive in any direction. I then copied this model in Nova Scotia, British Columbia and parts of the US. I fly in, rent a car, drive to inspect my properties, meet with the necessary people, then return to the airport and fly on to my next hub community.
10. Speak with an advisor. There is always the chance that a community you are considering is experiencing the downward part of a cycle. If this is the case, and it’s a good vibrant community that has come out of similar cycles in the past and you believe it will in the future, there is a potential opportunity there as well. Speak with a trusted advisor and seek sage counsel before investing in a situation like this.
Source: http://www.canadianrealestatemagazine.ca/strategy/10-tips-to-find-the-best-locations-for-real-estate-investment-186483.aspx
Tuesday, December 23, 2014
Wednesday, December 17, 2014
Can tenants break their lease too easily?
Most landlords get their tenants to sign a minimum one-year lease. This is usually done to give them some peace of mind, knowing their rental properties will be occupied for at least 12 months. What most landlords don’t realize, however, is that one-year lease agreements don’t hold much weight. In Ontario, tenants can break their leases with relative ease.
Though a lease agreement is considered to be a binding contract and a tenant is obliged to stay for the term agreed to, there is very little landlords can do to stop tenants from walking out on them. Landlords are baffled by this because at face value it seems as if the law is on the landlord’s side. Technically speaking, breaking one's lease is not something a tenant can arbitrarily do.
There are only three circumstances in which breaking one's lease is condoned by the Ontario Landlord and Tenant Board:
For example, if a landlord refuses a tenant’s request to break her lease that same tenant could request an assignment. By assigning a lease, a tenant is finding a new tenant to take over their tenancy.
Most landlords are oblivious to the severe consequence of ignoring or denying a tenant’s request for assignment. If a tenant does not hear back from a tenant within seven days of requesting an assignment, that same tenant can file to terminate their lease on the eighth day or thirty days from making such a request.
If tenants know their landlords are going to refuse an assignment, they could strategically file a request for one so that the refusal given would substantiate their right to leave. In cases where the landlord agrees to an assignment, a tenant who signs a qw-month lease is not really bound to that lease, so long as he is willing to find a new tenant for the landlord.
According to the Residential Tenancies Act, landlords are supposed to do everything in their power to mitigate their losses when a tenant breaks his lease. But finding another tenant is no small task. It takes countless hours to advertise a rental property, screen prospective tenants and show it to interested parties.
Though a landlord could pursue an unlawful tenant for damages through small claims court, many landlords choose not to. They prefer to avoid the hassle of going to court and focus instead on finding a better tenant.
Perhaps that is a smarter move. After all, the best way to insure against being a victim of another tenant who breaks their lease is to source out a better one. Good tenants who sign a one-year lease are bound to honour it.
Though a lease agreement is considered to be a binding contract and a tenant is obliged to stay for the term agreed to, there is very little landlords can do to stop tenants from walking out on them. Landlords are baffled by this because at face value it seems as if the law is on the landlord’s side. Technically speaking, breaking one's lease is not something a tenant can arbitrarily do.
There are only three circumstances in which breaking one's lease is condoned by the Ontario Landlord and Tenant Board:
- The Board issues an order ending the tenancy agreement early because the landlord has not met their obligations under the Act,
- The landlord allows the tenant to assign the rental unit to someone else.
- The landlord agrees.
For example, if a landlord refuses a tenant’s request to break her lease that same tenant could request an assignment. By assigning a lease, a tenant is finding a new tenant to take over their tenancy.
Most landlords are oblivious to the severe consequence of ignoring or denying a tenant’s request for assignment. If a tenant does not hear back from a tenant within seven days of requesting an assignment, that same tenant can file to terminate their lease on the eighth day or thirty days from making such a request.
If tenants know their landlords are going to refuse an assignment, they could strategically file a request for one so that the refusal given would substantiate their right to leave. In cases where the landlord agrees to an assignment, a tenant who signs a qw-month lease is not really bound to that lease, so long as he is willing to find a new tenant for the landlord.
According to the Residential Tenancies Act, landlords are supposed to do everything in their power to mitigate their losses when a tenant breaks his lease. But finding another tenant is no small task. It takes countless hours to advertise a rental property, screen prospective tenants and show it to interested parties.
Though a landlord could pursue an unlawful tenant for damages through small claims court, many landlords choose not to. They prefer to avoid the hassle of going to court and focus instead on finding a better tenant.
Perhaps that is a smarter move. After all, the best way to insure against being a victim of another tenant who breaks their lease is to source out a better one. Good tenants who sign a one-year lease are bound to honour it.
Monday, December 15, 2014
Top tips for evaluating local real estate markets
One of the core tasks for both new and experienced investors is to determine the geographic location(s) they want to invest in.
There’s a host of elements that may make one particular location more suitable than another, but here’s four attributes every investor should consider:
1. What is the economic state of the city? Is the local market growing, stabilizing or declining? As we saw in 2008, no city is immune to a potential downturn. However, some cities may be able to withstand more financial pressure than others. Understanding what economic factors are propping up a particular market is a valuable source of information to help predict future trends.
2. Evaluate the ratio between owned versus rented property. A market that is, or will be, saturated with rental properties will likely experience a fall in rental rates. The more options tenants have to choose from, the less they will be willing to pay. Simply put, the law of supply and demand is always applicable. However, this is not to say an investor should choose a market with very low rental rates because this may signify a relative lack of potential tenants. Finding balance is important.
3. Does the local market contain the type of tenant you want to attract? In most large cities, there will be a mixture of tenant types and housing (i.e. students, families, luxury property, vacation rentals, etc.). Obviously, knowing what type of tenant you want will also help you choose the type of property.
4. It’s all about money! At the end of the day, we’re in this business to increase equity and create cash flow so we achieve our own personal goals. There’s not enough space here to discuss this critical element, but luckily there’s an abundance of information out there on evaluating individual markets and property from a financial perspective. Read as much as you can and surround yourself with trusted advisors. If you don’t know what ROI, NOI and cap rate mean, you’re not ready – yet.
Source: http://www.canadianrealestatemagazine.ca/strategy/top-tips-for-evaluating-local-real-estate-markets-186096.aspx
There’s a host of elements that may make one particular location more suitable than another, but here’s four attributes every investor should consider:
1. What is the economic state of the city? Is the local market growing, stabilizing or declining? As we saw in 2008, no city is immune to a potential downturn. However, some cities may be able to withstand more financial pressure than others. Understanding what economic factors are propping up a particular market is a valuable source of information to help predict future trends.
2. Evaluate the ratio between owned versus rented property. A market that is, or will be, saturated with rental properties will likely experience a fall in rental rates. The more options tenants have to choose from, the less they will be willing to pay. Simply put, the law of supply and demand is always applicable. However, this is not to say an investor should choose a market with very low rental rates because this may signify a relative lack of potential tenants. Finding balance is important.
3. Does the local market contain the type of tenant you want to attract? In most large cities, there will be a mixture of tenant types and housing (i.e. students, families, luxury property, vacation rentals, etc.). Obviously, knowing what type of tenant you want will also help you choose the type of property.
4. It’s all about money! At the end of the day, we’re in this business to increase equity and create cash flow so we achieve our own personal goals. There’s not enough space here to discuss this critical element, but luckily there’s an abundance of information out there on evaluating individual markets and property from a financial perspective. Read as much as you can and surround yourself with trusted advisors. If you don’t know what ROI, NOI and cap rate mean, you’re not ready – yet.
Source: http://www.canadianrealestatemagazine.ca/strategy/top-tips-for-evaluating-local-real-estate-markets-186096.aspx
Wednesday, December 10, 2014
How to break free of ‘Analysis Paralysis’ in property selection
We all wish we could see into the future to determine whether the purchase of a certain property is going to work out or not. It’s a challenge to know whether or not you should take the plunge and buy that property you’ve been debating over.
I know because I've been there! Experience counts and, after you’ve gained the experience and knowledge of what to do, it gets much easier.
But there five simple rules to follow when selecting a property:
1. The first rule I follow in any property selection is: It’s strictly business. Never, under any circumstances, let the romance of being a landlord or house flipper cloud your judgment. A good deal is based purely on the numbers – and they don’t lie. But how do you know if it’s a good deal or if it’s a property that will work?
2. Find out all you can about the area, the house, the local rental rates, approximate carrying costs, legal fees, closing costs, taxes, utilities, etc.
3. Once you’ve learned all you can about your target area, learn how to run the numbers to analyze the property. Do this quickly and, once you have, be confident in your knowledge and pull the trigger. If it’s a worthy property, you are not the only one who is analyzing it.
4. Have a home inspection completed by a reputable home inspector. Ensure you address any defects and add any additional expenses that may be required to your cost analysis. This way, you will limit any unexpected expenses.
5. I find it works very well to make up spreadsheets or checklists and follow them to a ‘T’. This way, nothing is forgotten. Practice this on some sample properties to gain experience. After a while, you will get to know the numbers without even plugging them into your spreadsheet.
You can only analyze a property so much. Be confident and put your new knowledge to use.
Source: http://www.canadianrealestatemagazine.ca/strategy/how-to-break-free-of-analysis-paralysis-in-property-selection-186175.aspx
I know because I've been there! Experience counts and, after you’ve gained the experience and knowledge of what to do, it gets much easier.
But there five simple rules to follow when selecting a property:
1. The first rule I follow in any property selection is: It’s strictly business. Never, under any circumstances, let the romance of being a landlord or house flipper cloud your judgment. A good deal is based purely on the numbers – and they don’t lie. But how do you know if it’s a good deal or if it’s a property that will work?
2. Find out all you can about the area, the house, the local rental rates, approximate carrying costs, legal fees, closing costs, taxes, utilities, etc.
3. Once you’ve learned all you can about your target area, learn how to run the numbers to analyze the property. Do this quickly and, once you have, be confident in your knowledge and pull the trigger. If it’s a worthy property, you are not the only one who is analyzing it.
4. Have a home inspection completed by a reputable home inspector. Ensure you address any defects and add any additional expenses that may be required to your cost analysis. This way, you will limit any unexpected expenses.
5. I find it works very well to make up spreadsheets or checklists and follow them to a ‘T’. This way, nothing is forgotten. Practice this on some sample properties to gain experience. After a while, you will get to know the numbers without even plugging them into your spreadsheet.
You can only analyze a property so much. Be confident and put your new knowledge to use.
Source: http://www.canadianrealestatemagazine.ca/strategy/how-to-break-free-of-analysis-paralysis-in-property-selection-186175.aspx
Thursday, November 20, 2014
Housing starts not taking into account high levels of immigration
Ignore the rumours of “overbuilding,” says a new report – even more properties will be required to satisfy immigration levels now expected to surpass expectations.
New immigrants account for 70 per cent of the increase in Canada’s population. Half of these new immigrants are aged between 25 and 44, representing the country’s economic engine, says the report.
“Ask any real estate developer in any of Canada's major cities about the risk of overbuilding, and the first line of defense would be immigration and its critical role in supporting demand,” says Benjamin Tal, CIBC’s deputy chief economist. “It turns out that, at least for now, this claim is more valid than widely believed.”
Non-permanent residents, such as students, temporary workers and humanitarian refugees who are currently residing in Canada, add another cushion for the housing market.
Residential investors should look to this population as tenants, since they have a relatively high propensity to rent.
CMHC’s 2014 Canadian Housing Observer, published today, also reiterated the message of the CIBC report, observing that immigrants continue to be important influences on housing demand.
It also showed that, although the majority of immigrants arriving between 2006 and 2011 continued to settle in Canada’s largest metropolitan areas (33 per cent in Toronto, 16 per cent in Montreal, 13 per cent in Vancouver) increasing percentages are settling in smaller cities and communities.
Sheila Botting, national real estate leader at Deloitte, says: “The general dynamic behind the housing market is directly related to immigration.
“In Canada, we immigrate around 250,000 new Canadians every year. As you can imagine, with those new Canadians that come in, they are going to require any kind of housing product, whether or not they choose apartment buildings, townhouses through to single-family homes.”
Source: http://www.canadianrealestatemagazine.ca/news/housing-starts-not-taking-into-account-high-levels-of-immigration-185635.aspx
New immigrants account for 70 per cent of the increase in Canada’s population. Half of these new immigrants are aged between 25 and 44, representing the country’s economic engine, says the report.
“Ask any real estate developer in any of Canada's major cities about the risk of overbuilding, and the first line of defense would be immigration and its critical role in supporting demand,” says Benjamin Tal, CIBC’s deputy chief economist. “It turns out that, at least for now, this claim is more valid than widely believed.”
Non-permanent residents, such as students, temporary workers and humanitarian refugees who are currently residing in Canada, add another cushion for the housing market.
Residential investors should look to this population as tenants, since they have a relatively high propensity to rent.
CMHC’s 2014 Canadian Housing Observer, published today, also reiterated the message of the CIBC report, observing that immigrants continue to be important influences on housing demand.
It also showed that, although the majority of immigrants arriving between 2006 and 2011 continued to settle in Canada’s largest metropolitan areas (33 per cent in Toronto, 16 per cent in Montreal, 13 per cent in Vancouver) increasing percentages are settling in smaller cities and communities.
Sheila Botting, national real estate leader at Deloitte, says: “The general dynamic behind the housing market is directly related to immigration.
“In Canada, we immigrate around 250,000 new Canadians every year. As you can imagine, with those new Canadians that come in, they are going to require any kind of housing product, whether or not they choose apartment buildings, townhouses through to single-family homes.”
Source: http://www.canadianrealestatemagazine.ca/news/housing-starts-not-taking-into-account-high-levels-of-immigration-185635.aspx
Wednesday, November 5, 2014
Canadian Real Estate Market Sees Homeowners Picking Downtown Over Suburbia
Homeowners who choose the convenience of city life over the more generous living space in suburbia are driving Canada's real estate market, according to a new report jointly produced by consultancy PricewaterhouseCoopers and the non-profit Urban Land Institute.
The annual outlook on emerging real estate trends says the move downtown, which has emerged in the past few years, will continue as more Canadians decide to stay in or move back to urban cores.
Much of this is due to changing demographics as young families and millennials forgo the white picket fence and house in the suburbs to take advantage of downtown living, where properties are smaller but offer more conveniences, said the 112-page report released Tuesday.
According to Statistics Canada, the most recent numbers available show that the population of urban centres grew 7.1 per cent between 2006 and 2011.
Frank Magliocco, Canadian real estate leader at PricewaterhouseCoopers, said there are a number of factors behind the urban growth, including that Canadians are more aware of the environmental costs associated with urban sprawl as well as the cost in time and money of lengthy commutes.
As well, provincial land use regulations that protect green spaces — for example Toronto's Greenbelt involving about 800,000 hectares of protected land from Peterborough, Ont., to Niagara Falls, Ont. — have made it more difficult to find land to develop and has pushed an explosion of condominium growth in major cities.
But one of the concerns is what will happen to these urban properties once the younger generation grows out of them.
"This continuing urbanization trend has fuelled the condo boom in Toronto and other cities, but some question what will happen as the lifestyles of today's young urban singles and couples change. Will they move out of the city core in search of larger homes, schools and services, or will they — like their counterparts in other parts of the world — simply adapt to smaller living spaces?" the report asks.
Magliocco said Canadian cities will either go the way of New York, where families are willing to sacrifice space to live in the city, or the way of London, where families are used to living outside the city and commuting downtown for work.
The rapidly growing condo markets in cities such as Toronto and Vancouver have also raised concerns about an oversupply of units and whether the boom is overly weighted towards wealthy, foreign investors who lease the units to others.
Meanwhile, an expected rise next year in interest rates from historically low levels may also influence demand in the housing market.
However, among the 1,400 people interviewed and surveyed for the report, which included private property investors and developers, commercial developers and real estate service firms, the consensus was that the Canadian market is strong enough to weather a bump in mortgage rates.
"The improvement in the U.S. economy indicates that higher rates could be coming, but the economic stability in Canada and the United States will continue to attract foreign capital," said the report. "In addition, retiring baby boomers are likely to flood the market with private capital as they look to turn stock options and retirement packages into stable, income-generating assets."
Overall, the report sees developers responding to the needs of downtown dwellers by building more mixed-used properties, which include residential and retail space.
"Looking ahead, we can expect to see more and more retail and services along the streets of Canada's city cores and along major transit arteries, especially where new developments predominate. Major brands are likely to move into these new spaces, too — though with new formats and smaller footprints," said the report.
The report also noted that Calgary, Edmonton and Vancouver, will see the most residential growth in 2015, a trend that has been helped by more jobs becoming available in the West than in Central Canada, while Calgary and the Greater Toronto Area will hold the most potential for retail growth.
Source: http://www.huffingtonpost.ca/2014/10/28/canadian-real-estate_n_6059170.html?utm_hp_ref=real-estate-canada
The annual outlook on emerging real estate trends says the move downtown, which has emerged in the past few years, will continue as more Canadians decide to stay in or move back to urban cores.
Much of this is due to changing demographics as young families and millennials forgo the white picket fence and house in the suburbs to take advantage of downtown living, where properties are smaller but offer more conveniences, said the 112-page report released Tuesday.
Frank Magliocco, Canadian real estate leader at PricewaterhouseCoopers, said there are a number of factors behind the urban growth, including that Canadians are more aware of the environmental costs associated with urban sprawl as well as the cost in time and money of lengthy commutes.
As well, provincial land use regulations that protect green spaces — for example Toronto's Greenbelt involving about 800,000 hectares of protected land from Peterborough, Ont., to Niagara Falls, Ont. — have made it more difficult to find land to develop and has pushed an explosion of condominium growth in major cities.
But one of the concerns is what will happen to these urban properties once the younger generation grows out of them.
"This continuing urbanization trend has fuelled the condo boom in Toronto and other cities, but some question what will happen as the lifestyles of today's young urban singles and couples change. Will they move out of the city core in search of larger homes, schools and services, or will they — like their counterparts in other parts of the world — simply adapt to smaller living spaces?" the report asks.
Magliocco said Canadian cities will either go the way of New York, where families are willing to sacrifice space to live in the city, or the way of London, where families are used to living outside the city and commuting downtown for work.
The rapidly growing condo markets in cities such as Toronto and Vancouver have also raised concerns about an oversupply of units and whether the boom is overly weighted towards wealthy, foreign investors who lease the units to others.
Meanwhile, an expected rise next year in interest rates from historically low levels may also influence demand in the housing market.
However, among the 1,400 people interviewed and surveyed for the report, which included private property investors and developers, commercial developers and real estate service firms, the consensus was that the Canadian market is strong enough to weather a bump in mortgage rates.
"The improvement in the U.S. economy indicates that higher rates could be coming, but the economic stability in Canada and the United States will continue to attract foreign capital," said the report. "In addition, retiring baby boomers are likely to flood the market with private capital as they look to turn stock options and retirement packages into stable, income-generating assets."
Overall, the report sees developers responding to the needs of downtown dwellers by building more mixed-used properties, which include residential and retail space.
"Looking ahead, we can expect to see more and more retail and services along the streets of Canada's city cores and along major transit arteries, especially where new developments predominate. Major brands are likely to move into these new spaces, too — though with new formats and smaller footprints," said the report.
The report also noted that Calgary, Edmonton and Vancouver, will see the most residential growth in 2015, a trend that has been helped by more jobs becoming available in the West than in Central Canada, while Calgary and the Greater Toronto Area will hold the most potential for retail growth.
Source: http://www.huffingtonpost.ca/2014/10/28/canadian-real-estate_n_6059170.html?utm_hp_ref=real-estate-canada
Monday, November 3, 2014
‘Bully offers’ create fairness for investors
A new phrase being added to real estate listings is treating investors as fairly as it treats sellers, say agents.
Bosley Real Estate has added the phrase, ‘the seller reserves the right to consider pre-emptive offers’, commonly known as ‘bully offers’, to its listings.
Ann Bosley, vice president of Bosley Real Estate, says: “I think it makes it fairer for the buyers; they’re not left out in the cold.”
The Canadian housing market has seen an increased demand for property. For example, a house would be brought to market on a Friday and it would be sold by Friday night.
But is this timeline fair to investors? Does it allow for the property to really be exposed on MLS? Is there enough opportunity for people to see it?
“We heard of a recent case with the Real Estate Council of Ontario, where a buyer had walked through an open house but hadn’t contacted his agent,” says Bosley. “He learned at the open house that there were no offers until Thursday, so the buyer waited to contact his agent, and lo and behold, the property was sold.”
“In instances like that, we’re actually saying in our listings, the seller doesn’t want to look at offers until Thursday but he does reserve the right to change his mind.”
This added phrase provides the interested investor the opportunity to get their ducks in a line, adds Bosley.
“You don’t have to offer earlier, but don’t sit back on your haunches and wait until Thursday before you start calling the bank. From our perspective, it’s a fair way to treat the buyers while still exposing the property and allowing for the fact that the seller might change their mind.”
Monday, October 20, 2014
5 Big Design Trends to Try Right Now
Every year home design trends come and go but it’s never too late to try something new. Update your décor and impress your friends (and yourself) at the same time, by including some of this year’s hottest design trends. Pantone Colour of the Year Year after year the iconic people at Pantone come up with their colour of the year, inspiring not only home décor trends but fashion and other design areas across the board as well. For 2014, the colour du jour is: Radiant Orchid, a gorgeous pinky purple-hue. An infusion of this beauty would be a welcome breath of colour anywhere—from kitchen to bedroom and every room in between. Florals Florals are holding strong and continuing to be on-trend this year, but they’re definitely growing in size. Now, pretty blooms, the bigger the better are a force to be reckoned with. What lovelier way to add some vibrant colour and bold patterns to your home than throw pillows, sheets or duvet covers with big bright florals. (Try to find some with radiant orchid for a double-dose of style.) Blue & Blue Black’s younger, lighter cousin grey has certainly had its heyday, but this is the year for something far more dramatic. Black walls are en vogue—think entire living and dining rooms--but if you’re not ready to go all in, try one accent wall or the always-in-style coupling with white. And when it comes to blue, think every shade--from lovely sky blue dishes displayed in your kitchen, to darker navy and white striped towels in your bathroom. Vintage Everything old is new again but the good news is mixing and matching is totally ok. A distressed old-trunk serving as a coffee table or impressive antique maps framed and hung on the walls, not only serve as beautiful, on-trend décor pieces, but add a lot of intrigue (and conversation starters) to the room. Warm Metals Especially in the kitchen. Seems grey isn’t only taking a backseat in the living room, but in the kitchen this year as well. Warmer bronzes, golds and black are replacing sleek chrome and stainless steel when it comes to lighting and cabinetry accents. And if you’re really looking to make a big splash, try some bronze sconces in the kitchen.
Thursday, October 16, 2014
Housing market continues surge ahead
Nationally, sales for all property types rose 10.6 per cent to 42,151 units, led by significant gains in British Columbia, Saskatchewan, New Brunswick and Prince Edward Island. New listings rose eight per cent, thanks to growth in the Maritime provinces, while the average price increased almost six per cent, to $408,795.
Calgary realized the greatest rise in sales, up 31.2 per cent to 488 units sold in September, while the average price rose 8.8 per cent to $318,913. In Toronto, sales rose 20.2 per cent to 1,976 units with average price hiking 7.1 per cent to $366,588.
That increase in activity is being felt on the ground.
“A lot of people start looking for homes, or take up their search again, so I’m not surprised that sales are up,” says David Fleming, an agent with Bosley Real Estate in Toronto. “[September] is one of the busiest months of the real estate calendar.”
In terms of prices, Vancouver experienced the greatest rise, up 11.3 per cent to $476,498. During the month of September, 1,191 condos were sold in the West Coast city.
September’s performance is largely in line with industry expectations.
In August, CREA’s chief economist Gregory Klump accurately predicted no slowdown to Toronto’s housing market. “That’s because there’s a shortage and there will be a shortage because the city is trying to densify,” he said.
Source: http://www.canadianrealestatemagazine.ca/news/item/2249-housing-market-continues-surge-ahead
Calgary realized the greatest rise in sales, up 31.2 per cent to 488 units sold in September, while the average price rose 8.8 per cent to $318,913. In Toronto, sales rose 20.2 per cent to 1,976 units with average price hiking 7.1 per cent to $366,588.
That increase in activity is being felt on the ground.
“A lot of people start looking for homes, or take up their search again, so I’m not surprised that sales are up,” says David Fleming, an agent with Bosley Real Estate in Toronto. “[September] is one of the busiest months of the real estate calendar.”
In terms of prices, Vancouver experienced the greatest rise, up 11.3 per cent to $476,498. During the month of September, 1,191 condos were sold in the West Coast city.
September’s performance is largely in line with industry expectations.
In August, CREA’s chief economist Gregory Klump accurately predicted no slowdown to Toronto’s housing market. “That’s because there’s a shortage and there will be a shortage because the city is trying to densify,” he said.
Source: http://www.canadianrealestatemagazine.ca/news/item/2249-housing-market-continues-surge-ahead
Tuesday, October 14, 2014
Four signs it is a good time to sell
Are you thinking about selling? Best to consider these factors and avoid the following traps.
1. Profit has been maximised: When a property has reached maximum value, there is little value in holding onto it for longer. Therefore this is generally considered the optimum time to sell.
2. Property has not performed: Having cash or equity tied up in an investment that has not performed (over a reasonable time period) can prevent an investor from reaching their financial goals.
3. Better opportunity elsewhere: Investors should know how each of their properties are performing relative to a) others in their portfolio and b) those in the market place. If another opportunity presents itself with greater investment prospects then it should be considered.
4. Depreciation has been maximised: Depreciation on a property lasts for up to 40 years from the time of construction. Over time the value of depreciation recedes. This could weaken a property's cash-flow position to the degree that it becomes better to sell.
While a forced exit can cause investors to panic and make easily avoidable mistakes, there are a number of traps that any investor wanting to exit a property needs to be aware of, according to experts.
These include:
-Selling too soon - before the market has started moving. This can impact on capital gains and, thus, the profit made.
-Holding for too long until demand has dropped off and the market is going down. This can prolong the sales process and result in a lower price.
-Selling to buy in a rising market, but then sitting on the sidelines. If an investor sells in this scenario, they shouldn't then neglect to buy a property as intended.
-Forgetting to factor in selling costs (eg: agent commissions, legal costs and the like).
-Cross-collateral implications with lenders: Selling might trigger the need for valuations on other properties in a portfolio. This, in turn, could impact on the value of the portfolio.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2212-four-signs-it-is-a-good-time-to-sell
1. Profit has been maximised: When a property has reached maximum value, there is little value in holding onto it for longer. Therefore this is generally considered the optimum time to sell.
2. Property has not performed: Having cash or equity tied up in an investment that has not performed (over a reasonable time period) can prevent an investor from reaching their financial goals.
3. Better opportunity elsewhere: Investors should know how each of their properties are performing relative to a) others in their portfolio and b) those in the market place. If another opportunity presents itself with greater investment prospects then it should be considered.
4. Depreciation has been maximised: Depreciation on a property lasts for up to 40 years from the time of construction. Over time the value of depreciation recedes. This could weaken a property's cash-flow position to the degree that it becomes better to sell.
While a forced exit can cause investors to panic and make easily avoidable mistakes, there are a number of traps that any investor wanting to exit a property needs to be aware of, according to experts.
These include:
-Selling too soon - before the market has started moving. This can impact on capital gains and, thus, the profit made.
-Holding for too long until demand has dropped off and the market is going down. This can prolong the sales process and result in a lower price.
-Selling to buy in a rising market, but then sitting on the sidelines. If an investor sells in this scenario, they shouldn't then neglect to buy a property as intended.
-Forgetting to factor in selling costs (eg: agent commissions, legal costs and the like).
-Cross-collateral implications with lenders: Selling might trigger the need for valuations on other properties in a portfolio. This, in turn, could impact on the value of the portfolio.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2212-four-signs-it-is-a-good-time-to-sell
Thursday, October 2, 2014
Investor anger at rental licence issue
As another region flirts with the idea of introducing a license system for rental units, investors argue that this is not the solution to a housing crisis.
While more City officials recognize the need to clamp down on slum landlords, some investors are arguing that licensing is not the answer.
Last week, a number of candidates vying for seats for the west Hamilton ward said they would put this controversial plan back on the table to help solve the housing crisis in the area.
This plan could see the city issue licenses to rental units in buildings with six or fewer apartments. This clampdown is aimed at focusing on poorly maintained rental units around McMaster University and Mohawk College.
Kayla Andrade from Ontario Landlords Watch says that licensing is not the answer to this housing issue and will not have the desired effect of creating more units to alleviate supply problems.
Jay Parlar, president of the Ainslee Wood- Westdale Community Association, says there has been a deterioration of housing stock in many areas of this vicinity with students living in unsafe conditions.
Candidate Brian Lewis says there is a need to develop more student housing downtown and to boost enforcement of existing codes.
Ottawa city officials are currently studying the merits of licensing and other enforcement programs near university campuses. This follows a number of complaints from across the province about the number of unkept and illegal student properties, such as those near Algonquin College.
Waterloo currently has a licensed system where landlords of non-high rise properties must pay for licenses and submit maintenance plans. The properties are also inspected.
source: http://www.canadianrealestatemagazine.ca/news/item/2237-investor-anger-at-rental-licence-issue
While more City officials recognize the need to clamp down on slum landlords, some investors are arguing that licensing is not the answer.
Last week, a number of candidates vying for seats for the west Hamilton ward said they would put this controversial plan back on the table to help solve the housing crisis in the area.
This plan could see the city issue licenses to rental units in buildings with six or fewer apartments. This clampdown is aimed at focusing on poorly maintained rental units around McMaster University and Mohawk College.
Kayla Andrade from Ontario Landlords Watch says that licensing is not the answer to this housing issue and will not have the desired effect of creating more units to alleviate supply problems.
Jay Parlar, president of the Ainslee Wood- Westdale Community Association, says there has been a deterioration of housing stock in many areas of this vicinity with students living in unsafe conditions.
Candidate Brian Lewis says there is a need to develop more student housing downtown and to boost enforcement of existing codes.
Ottawa city officials are currently studying the merits of licensing and other enforcement programs near university campuses. This follows a number of complaints from across the province about the number of unkept and illegal student properties, such as those near Algonquin College.
Waterloo currently has a licensed system where landlords of non-high rise properties must pay for licenses and submit maintenance plans. The properties are also inspected.
source: http://www.canadianrealestatemagazine.ca/news/item/2237-investor-anger-at-rental-licence-issue
Monday, September 29, 2014
Four signs it is a good time to sell
Are you thinking about selling? Best to consider these factors and avoid the following traps.
1. Profit has been maximised: When a property has reached maximum value, there is little value in holding onto it for longer. Therefore this is generally considered the optimum time to sell.
2. Property has not performed: Having cash or equity tied up in an investment that has not performed (over a reasonable time period) can prevent an investor from reaching their financial goals.
3. Better opportunity elsewhere: Investors should know how each of their properties are performing relative to a) others in their portfolio and b) those in the market place. If another opportunity presents itself with greater investment prospects then it should be considered.
4. Depreciation has been maximised: Depreciation on a property lasts for up to 40 years from the time of construction. Over time the value of depreciation recedes. This could weaken a property's cash-flow position to the degree that it becomes better to sell.
While a forced exit can cause investors to panic and make easily avoidable mistakes, there are a number of traps that any investor wanting to exit a property needs to be aware of, according to experts.
These include:
-Selling too soon - before the market has started moving. This can impact on capital gains and, thus, the profit made.
-Holding for too long until demand has dropped off and the market is going down. This can prolong the sales process and result in a lower price.
-Selling to buy in a rising market, but then sitting on the sidelines. If an investor sells in this scenario, they shouldn't then neglect to buy a property as intended.
-Forgetting to factor in selling costs (eg: agent commissions, legal costs and the like).
-Cross-collateral implications with lenders: Selling might trigger the need for valuations on other properties in a portfolio. This, in turn, could impact on the value of the portfolio.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2212-four-signs-it-is-a-good-time-to-sell
1. Profit has been maximised: When a property has reached maximum value, there is little value in holding onto it for longer. Therefore this is generally considered the optimum time to sell.
2. Property has not performed: Having cash or equity tied up in an investment that has not performed (over a reasonable time period) can prevent an investor from reaching their financial goals.
3. Better opportunity elsewhere: Investors should know how each of their properties are performing relative to a) others in their portfolio and b) those in the market place. If another opportunity presents itself with greater investment prospects then it should be considered.
4. Depreciation has been maximised: Depreciation on a property lasts for up to 40 years from the time of construction. Over time the value of depreciation recedes. This could weaken a property's cash-flow position to the degree that it becomes better to sell.
While a forced exit can cause investors to panic and make easily avoidable mistakes, there are a number of traps that any investor wanting to exit a property needs to be aware of, according to experts.
These include:
-Selling too soon - before the market has started moving. This can impact on capital gains and, thus, the profit made.
-Holding for too long until demand has dropped off and the market is going down. This can prolong the sales process and result in a lower price.
-Selling to buy in a rising market, but then sitting on the sidelines. If an investor sells in this scenario, they shouldn't then neglect to buy a property as intended.
-Forgetting to factor in selling costs (eg: agent commissions, legal costs and the like).
-Cross-collateral implications with lenders: Selling might trigger the need for valuations on other properties in a portfolio. This, in turn, could impact on the value of the portfolio.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2212-four-signs-it-is-a-good-time-to-sell
Thursday, September 25, 2014
How to manage your portfolio from abroad
1. Tenant Selection. This is the most important part of the process. While most people put in the first application that comes in the door, we spend most of our effort ensuing we find the right tenant for our property. Why would I trust my asset worth hundreds of thousands of dollars to just the first application? It is less expensive to leave your suite vacant for one month than to kick out a crappy tenant for months while they destroy your property.
2. Property Management. Yes, you've got a property manager and you can leave all your worries with them right? Absolutely not! Remember, they have hundreds, sometimes even thousands of doors to look after. It is your job to make sure that yours are taken care of better than anyone else's.
3. Tenant requests for repaid. If you want great tenants, you need to provide them with great rental suites. However, you can't just give them blank cheques. Make sure that every repair / renovation that is over $500 needs to be approved by yourself before it can go ahead.
4. Fast Decisions. Your property manager is one of your greatest resource and they will do most of the dirty work. However, they will need to get your decisions once in a while - make sure that they get this as soon as possible. As an investor, it is your responsibility to enable your team to do their best and your PM can’t do a lot of things without decisions from you.
TIP: It's always a give and take. They may make decisions that may not be the best once in a while - during these times, do not be emotional and take it rationally. How much did it really cost you? If it isn't that much, don't sweat the small stuff! It is way better to have a great relationship with your team than to save that $50 from something that they missed.
Remember, investing in real estate is not passive. It's like a baby that needs constant attention and you need to tend to its needs right away. Build your team, implement your systems, and make fast & rational decisions - and watch your investments grow (even if you are traveling the world).
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2207-how-to-manage-your-portfolio-from-abroad
2. Property Management. Yes, you've got a property manager and you can leave all your worries with them right? Absolutely not! Remember, they have hundreds, sometimes even thousands of doors to look after. It is your job to make sure that yours are taken care of better than anyone else's.
3. Tenant requests for repaid. If you want great tenants, you need to provide them with great rental suites. However, you can't just give them blank cheques. Make sure that every repair / renovation that is over $500 needs to be approved by yourself before it can go ahead.
4. Fast Decisions. Your property manager is one of your greatest resource and they will do most of the dirty work. However, they will need to get your decisions once in a while - make sure that they get this as soon as possible. As an investor, it is your responsibility to enable your team to do their best and your PM can’t do a lot of things without decisions from you.
TIP: It's always a give and take. They may make decisions that may not be the best once in a while - during these times, do not be emotional and take it rationally. How much did it really cost you? If it isn't that much, don't sweat the small stuff! It is way better to have a great relationship with your team than to save that $50 from something that they missed.
Remember, investing in real estate is not passive. It's like a baby that needs constant attention and you need to tend to its needs right away. Build your team, implement your systems, and make fast & rational decisions - and watch your investments grow (even if you are traveling the world).
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2207-how-to-manage-your-portfolio-from-abroad
Monday, September 22, 2014
Top 10 ways to win at an auction without overpaying
1. Check everything before you put in your bid. Make sure you do some leg work well before the day. Remember it’s your money and it’s your decision. Make sure you base your decision on some good substance.
2. Don’t give away too much. If you tell people how high you’re prepared to pay, it will put you at a disadvantage. Play it like a poker game and keep your cards close to your chest.
3. Know the true value. This means, do your research! You can find out what similar houses in the area went for by looking in the paper or hiring an independent valuer.
4. Get legal advice. Before you sign any documents, hire a lawyer to look through them for you. Do not be tempted to save a few bucks by doing it yourself as it can cost you tens of thousands.
5. Don’t bid too soon. Do not bid before the reserve price has been reached. The reason for this is because until this price is reached, the property isn’t for sale.
6. Keep your highest price a secret. The buyer has the advantage in an auction negotiation simply because they know the minimum price the seller is willing to accept without the seller knowing the maximum price the buyer is willing to pay. If you keep this price to yourself you have a good chance of saving thousands of dollars.
7. Try to speak to some other potential buyers on the day of the auction and ask them how much they think the property will sell for. Most of the time, people will quote their buying capacity unknowingly, which means you can suss out your competition. This is sometimes hard to pull of casually and takes some courage to do, alternatively walk around the pre inspection and listen intently to people talking around you.
8. Refrain from making any bids on the day of auction if no other bids are made, until the last minute and aim to be the first and only bidder. This allows you to negotiate after auction session with the vendor’s selling agent (no doubt the vendor will be feeling worried about the property not selling at auction and maybe likely to move).
9. Bid confidently. Deliver your bid with a loud, clear voice and for the full amount. Your quick and understandable bid might put your competitors off psychologically, making them believe that they should back down because you are nowhere near your limit and have endless amounts of money, shown by virtue of your confidence.
10. Ignore the agents coming up and befriending you throughout the process saying it’s your dream home or investment and its only $1,000 more. Remember – they are paid by the vendor and by law have to represent the vendor, not you.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2174-top-10-ways-to-win-at-an-auction-without-overpaying
2. Don’t give away too much. If you tell people how high you’re prepared to pay, it will put you at a disadvantage. Play it like a poker game and keep your cards close to your chest.
3. Know the true value. This means, do your research! You can find out what similar houses in the area went for by looking in the paper or hiring an independent valuer.
4. Get legal advice. Before you sign any documents, hire a lawyer to look through them for you. Do not be tempted to save a few bucks by doing it yourself as it can cost you tens of thousands.
5. Don’t bid too soon. Do not bid before the reserve price has been reached. The reason for this is because until this price is reached, the property isn’t for sale.
6. Keep your highest price a secret. The buyer has the advantage in an auction negotiation simply because they know the minimum price the seller is willing to accept without the seller knowing the maximum price the buyer is willing to pay. If you keep this price to yourself you have a good chance of saving thousands of dollars.
7. Try to speak to some other potential buyers on the day of the auction and ask them how much they think the property will sell for. Most of the time, people will quote their buying capacity unknowingly, which means you can suss out your competition. This is sometimes hard to pull of casually and takes some courage to do, alternatively walk around the pre inspection and listen intently to people talking around you.
8. Refrain from making any bids on the day of auction if no other bids are made, until the last minute and aim to be the first and only bidder. This allows you to negotiate after auction session with the vendor’s selling agent (no doubt the vendor will be feeling worried about the property not selling at auction and maybe likely to move).
9. Bid confidently. Deliver your bid with a loud, clear voice and for the full amount. Your quick and understandable bid might put your competitors off psychologically, making them believe that they should back down because you are nowhere near your limit and have endless amounts of money, shown by virtue of your confidence.
10. Ignore the agents coming up and befriending you throughout the process saying it’s your dream home or investment and its only $1,000 more. Remember – they are paid by the vendor and by law have to represent the vendor, not you.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2174-top-10-ways-to-win-at-an-auction-without-overpaying
Monday, September 15, 2014
5 Easy Ways to Update a Room
You don’t have to hire a decorator (or break the bank) to give a room a quick update with lots of impact. So whether you’re getting ready to sell, have just moved in or feel like a mini overhaul, these five tips will have you enjoying the room of your dreams in no time. Change Your Fabrics Replace your curtains, re-cover your throw pillows, buy a new rug, Any one of these easy fixes can make a big impact; but all three will completely change the entire room! And if it’s a bedroom you’re tired of, same rules apply: Replace the duvet cover, re-cover the headboard, and toss a few new pillows on the bed. Freshen Up With Paint Whether you tackle an entire room, or maybe an accent wall or two, a new coat of paint is probably the easiest way to change a room. From light and bright to dark and dramatic, paint can completely alter the mood. Re-Organize A Bookshelf Bookshelves are amazing; not only do they keep your books organized, but they can also serve as great focal pieces. Try colour-coding your books or arranging them in stacks instead of side-by-side. Remove an entire row of books and replace them with framed family photos or bright accent pieces. Sometimes all a room needs is a shift in thinking about it. Update Your Art Updating the art on your walls is a great way to showcase the family talent. Frame your daughter’s sketches from high school (no one will know it’s not a real Picasso) or your son’s first finger painting. Or grab a blank canvas and paint it a bright colour to hang in the kitchen (you don’t have to be a Fine Art grad to add some basic pops of colour!). And the best part of this approach is once you’ve bought the frames, the art can be rotated throughout the year at no extra cost. Add An Accent Is your bathroom feeling boring or your living room giving you the yawns? Pick bright, colourful wallpaper and add an accent wall! Paint stripes in your dining room, or buy a chandelier for your front hallway. Adding an impressive accent is a fun way to give the room some personality without a complete overhaul (of the room OR your bank account).
Source: http://www.hgtv.ca/realestate/article/5-easy-ways-to-update-a-room/
Source: http://www.hgtv.ca/realestate/article/5-easy-ways-to-update-a-room/
Thursday, September 11, 2014
Why evaluating CAP and ROI are so important in deals
Knowing what property to acquire remains one of the more difficult decisions for any investor. The good landlord looks at the financial numbers and tries to make decisions based on facts, and attempts to keep emotions in check.
The common way to evaluate different investment properties is through comparing CAP rates. CAP rates are determined by factoring all of the investment’s expenses (but not finance) and calculate that against the projected revenue. Too often, property management, repairs, maintenance and vacancy expenses are left out in determining a proper CAP figure.
But CAP shouldn’t tell the whole story in evaluating properties. An in-depth analysis should consider projected appreciation which will lead to a superior return on investment (ROI). Suppose you are offered two investment opportunities. One is located in Windsor Ont. and offers a true CAP rate of 8 per cent and another in Toronto that offers a CAP of less than 6 per cent. If CAP is the only component to consider, it is a no brainer. You buy the Windsor property.
I'm sure you've heard the expression that past returns are no guarantee for future success. That is certainly true. But, it can be an indication. You also look at an area and see the growth within it to help estimate potential future growth. Based on your research, you conservatively estimate that the Windsor property will grow at one to two per cent over the next five years.
Meanwhile, the Toronto property should appreciate at four to five per cent over that same period.
Now calculate the projected ROI over those next five years. Ensure to include the numbers used to calculate the CAP rates, but add in the mortgage pay down and the projected appreciation and you will likely find that the lower CAP rate property, with the better appreciation, winds up on top.
The other factor to consider is risk. If I'm going to take on a riskier venture, I want a better ROI. There is nothing wrong with a solid ROI on a low risk venture. If you acquire a well-maintained building in a desirable neighbourhood, one might be willing to sacrifice some ROI to add that property to their portfolio. However, if one is willing to acquire a property that will include higher risk ventures, such as dealing with environmental issues, tear down and rebuild, complete renovations etc., then one should be looking for an ROI that can support that risk.
No one can tell you what an acceptable return on investment should be for any venture for you. A low risk individual who is accustomed to investing in GIC’s will not require the same return on a deal as a person who is more willing to gamble with his money.
My advice is not to wait around for the home run deal. Find a cash flow generating property in fair to good condition, located in a market that you have researched and understand to be a desirable area to invest and buy it. You can certainly use numbers to convince yourself not to take action in any deal, but, in my experience, the investors that do the best are those that take action.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2191-why-evaluating-cap-and-roi-are-so-important-in-deals
The common way to evaluate different investment properties is through comparing CAP rates. CAP rates are determined by factoring all of the investment’s expenses (but not finance) and calculate that against the projected revenue. Too often, property management, repairs, maintenance and vacancy expenses are left out in determining a proper CAP figure.
But CAP shouldn’t tell the whole story in evaluating properties. An in-depth analysis should consider projected appreciation which will lead to a superior return on investment (ROI). Suppose you are offered two investment opportunities. One is located in Windsor Ont. and offers a true CAP rate of 8 per cent and another in Toronto that offers a CAP of less than 6 per cent. If CAP is the only component to consider, it is a no brainer. You buy the Windsor property.
I'm sure you've heard the expression that past returns are no guarantee for future success. That is certainly true. But, it can be an indication. You also look at an area and see the growth within it to help estimate potential future growth. Based on your research, you conservatively estimate that the Windsor property will grow at one to two per cent over the next five years.
Meanwhile, the Toronto property should appreciate at four to five per cent over that same period.
Now calculate the projected ROI over those next five years. Ensure to include the numbers used to calculate the CAP rates, but add in the mortgage pay down and the projected appreciation and you will likely find that the lower CAP rate property, with the better appreciation, winds up on top.
The other factor to consider is risk. If I'm going to take on a riskier venture, I want a better ROI. There is nothing wrong with a solid ROI on a low risk venture. If you acquire a well-maintained building in a desirable neighbourhood, one might be willing to sacrifice some ROI to add that property to their portfolio. However, if one is willing to acquire a property that will include higher risk ventures, such as dealing with environmental issues, tear down and rebuild, complete renovations etc., then one should be looking for an ROI that can support that risk.
No one can tell you what an acceptable return on investment should be for any venture for you. A low risk individual who is accustomed to investing in GIC’s will not require the same return on a deal as a person who is more willing to gamble with his money.
My advice is not to wait around for the home run deal. Find a cash flow generating property in fair to good condition, located in a market that you have researched and understand to be a desirable area to invest and buy it. You can certainly use numbers to convince yourself not to take action in any deal, but, in my experience, the investors that do the best are those that take action.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2191-why-evaluating-cap-and-roi-are-so-important-in-deals
Thursday, September 4, 2014
Top 10 things modern homebuyers want
Today’s homebuyer is different to those of previous generations. In the age of smartphones, apps and smart homes, the modern house hunter’s demands have changed dramatically. At the same time, in an era defined by fluctuating house prices, today’s homebuyer is more cost-sensitive than ever before.
As searching for the perfect property continues to evolve, global real estate portal Lamudi explores the top 10 most important factors for those looking for a home in 2014. From energy efficiency to the latest technology, these are the top demands of modern house-hunters.
1. Energy efficiency
Cost of living and the household budget have always been important factors for those on the hunt for a new property. But as the price of amenities such as gas and electricity increase, it is no surprise that buyers now want reassurance about a home’s energy efficiency.
2. Storage - and plenty of it
One word: built-ins. To satisfy the needs of the modern household and help homeowners stay well organised, an ample amount of storage space has become a high priority. Built-in storage - including linen closets, wardrobes and even walk-in kitchen pantries - are now a must to attract modern home buyers.
3. The latest technology
Technology is now part of all elements of our lives and our home life is no exception. This can be something as simple as LED lighting, or involve more complicated technology like automated thermostats. These days, many property seekers expect to have the latest gadgets and high-tech features installed before buying.
4. Top notch security
Home security has been completely transformed by new technologies. Features like glass break sensors for windows and doors, and motion-activated lighting for exteriors, are just some of the modern security solutions that are attracting buyers.
5. Open plan living
Bright, open living spaces have become a staple of the modern home. The trend has even reached the kitchen, which homeowners often prefer to combine with the dining area. In fact, a 2012 study in the UK found that the dining room was becoming a thing of the past, with one in three households featuring a combined kitchen-dining area.
6. A modern kitchen
Kitchen design trends have changed significantly in recent years, as popular features of the past decade have started to look dated. Granite is no longer in vogue, with marble countertops and a simple black-and-white color palette giving the kitchen a distinctly modern edge. Here too, buyers are looking for the latest state-of-the-art, energy efficient household appliances.
7. Entertainment options
The modern home is much more than a place to sleep and eat. It is now also a place to entertain and be entertained. As a result, features including game rooms, home theatre systems and outdoor entertainment areas are now highly sought after.
8. A dedicated laundry room
It sounds simple enough but several recent surveys have pointed to the importance of a laundry room for new home buyers. According to a recent study of the most popular characteristics for new homes from the National Association of Home Builders in the US, a laundry room is one of the top features of a typical single-family home in 2014.
9. Smaller homes in general
As buyers have become more cost conscious, the appeal of the traditional McMansion or large home has dipped. Instead, homeowners are willing to sacrifice space for other key features, such as high-quality appliances and overall energy efficiency, as well as easier upkeep.
10. Location, location, location
The desire to find the perfect home in an ideal location remains top of mind for most house hunters. Where a property is located is often the number one factor influencing a property seeker’s decision to buy. It seems some things about looking for your dream home will never change.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2176-top-10-things-modern-homebuyers-want
As searching for the perfect property continues to evolve, global real estate portal Lamudi explores the top 10 most important factors for those looking for a home in 2014. From energy efficiency to the latest technology, these are the top demands of modern house-hunters.
1. Energy efficiency
Cost of living and the household budget have always been important factors for those on the hunt for a new property. But as the price of amenities such as gas and electricity increase, it is no surprise that buyers now want reassurance about a home’s energy efficiency.
2. Storage - and plenty of it
One word: built-ins. To satisfy the needs of the modern household and help homeowners stay well organised, an ample amount of storage space has become a high priority. Built-in storage - including linen closets, wardrobes and even walk-in kitchen pantries - are now a must to attract modern home buyers.
3. The latest technology
Technology is now part of all elements of our lives and our home life is no exception. This can be something as simple as LED lighting, or involve more complicated technology like automated thermostats. These days, many property seekers expect to have the latest gadgets and high-tech features installed before buying.
4. Top notch security
Home security has been completely transformed by new technologies. Features like glass break sensors for windows and doors, and motion-activated lighting for exteriors, are just some of the modern security solutions that are attracting buyers.
5. Open plan living
Bright, open living spaces have become a staple of the modern home. The trend has even reached the kitchen, which homeowners often prefer to combine with the dining area. In fact, a 2012 study in the UK found that the dining room was becoming a thing of the past, with one in three households featuring a combined kitchen-dining area.
6. A modern kitchen
Kitchen design trends have changed significantly in recent years, as popular features of the past decade have started to look dated. Granite is no longer in vogue, with marble countertops and a simple black-and-white color palette giving the kitchen a distinctly modern edge. Here too, buyers are looking for the latest state-of-the-art, energy efficient household appliances.
7. Entertainment options
The modern home is much more than a place to sleep and eat. It is now also a place to entertain and be entertained. As a result, features including game rooms, home theatre systems and outdoor entertainment areas are now highly sought after.
8. A dedicated laundry room
It sounds simple enough but several recent surveys have pointed to the importance of a laundry room for new home buyers. According to a recent study of the most popular characteristics for new homes from the National Association of Home Builders in the US, a laundry room is one of the top features of a typical single-family home in 2014.
9. Smaller homes in general
As buyers have become more cost conscious, the appeal of the traditional McMansion or large home has dipped. Instead, homeowners are willing to sacrifice space for other key features, such as high-quality appliances and overall energy efficiency, as well as easier upkeep.
10. Location, location, location
The desire to find the perfect home in an ideal location remains top of mind for most house hunters. Where a property is located is often the number one factor influencing a property seeker’s decision to buy. It seems some things about looking for your dream home will never change.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2176-top-10-things-modern-homebuyers-want
Tuesday, September 2, 2014
Are you feeling ‘cashtrated’?
I recently read a great book, The Wealthy Barber Returns, by the legendary David Chilton. I really loved this following passage. “Each year, the Washington Post runs its Mensa Invitational contest where readers are asked to add, subtract, or change one letter of a word to give it a new meaning. One year’s winner was cashtration. The act of buying a home, which renders the subject financially impotent for an indefinite period of time.”
I am a huge supporter of adding assets into my wealth portfolio. The mistake that most people make is they simply don’t know what an asset really is. Most people believe that an asset is stuff they own. The more sophisticated say that it is stuff that appreciates over time.
I tend to feel that a true asset is something that generates enough cash flow to (at minimum) sustain itself, and ideally creates cash flow that will support your personal expenses. An asset will not only cover its pure expenses, but also its debt servicing.
These are the following assets that can lead to personal “cashtration.”
1. Cottage. It is no surprise to most that a cottage is an expense. Yes, over time it may appreciate but you can never completely bet on appreciating values. When you consider property taxes, utility expenses, insurance, occasional repairs and debt servicing, this is a true expense.
2. Personal Residence. This one might generate a few arguments. How many times do we hear parents say that their house was the best investment ever owned? This could be because they never owned any other investments. I agree that you need to live somewhere, however, as long as you contend that it is a needed expense, we can all agree.
3. Downtown Condo Rental. The rental income in this case needs to generate more than the carrying costs.
How can you avoid cashtration? Simple. Make sure that any asset you own carries itself and actually contributes to your income.
We have all heard the expression “two-income household”. That typically refers to a household where both spouses bring an income that contributes to the household expenses. Why can’t you have the goal of having a 10 income household? Some might think that this means having some harem of women all working towards the household income.
But what if you add assets that pay you money on a regular basis? For me personally, I have my own realtor income. My wife’s salary. Our RRSP’s and other paper investment’s dividends. Finally, each property I purchase must contribute to the family income.
Not quite the harem of women solution, however, I’m pretty sure that option would have its own host of challenges too.
This way if one of the incomes dry up, like my wife’s job ending or one of my properties unable to rent for six months, then we have alternative sources of income.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2170-are-you-feeling-‘cashtrated’?
I am a huge supporter of adding assets into my wealth portfolio. The mistake that most people make is they simply don’t know what an asset really is. Most people believe that an asset is stuff they own. The more sophisticated say that it is stuff that appreciates over time.
I tend to feel that a true asset is something that generates enough cash flow to (at minimum) sustain itself, and ideally creates cash flow that will support your personal expenses. An asset will not only cover its pure expenses, but also its debt servicing.
These are the following assets that can lead to personal “cashtration.”
1. Cottage. It is no surprise to most that a cottage is an expense. Yes, over time it may appreciate but you can never completely bet on appreciating values. When you consider property taxes, utility expenses, insurance, occasional repairs and debt servicing, this is a true expense.
2. Personal Residence. This one might generate a few arguments. How many times do we hear parents say that their house was the best investment ever owned? This could be because they never owned any other investments. I agree that you need to live somewhere, however, as long as you contend that it is a needed expense, we can all agree.
3. Downtown Condo Rental. The rental income in this case needs to generate more than the carrying costs.
How can you avoid cashtration? Simple. Make sure that any asset you own carries itself and actually contributes to your income.
We have all heard the expression “two-income household”. That typically refers to a household where both spouses bring an income that contributes to the household expenses. Why can’t you have the goal of having a 10 income household? Some might think that this means having some harem of women all working towards the household income.
But what if you add assets that pay you money on a regular basis? For me personally, I have my own realtor income. My wife’s salary. Our RRSP’s and other paper investment’s dividends. Finally, each property I purchase must contribute to the family income.
Not quite the harem of women solution, however, I’m pretty sure that option would have its own host of challenges too.
This way if one of the incomes dry up, like my wife’s job ending or one of my properties unable to rent for six months, then we have alternative sources of income.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2170-are-you-feeling-‘cashtrated’?
Friday, August 29, 2014
Using real estate to Help Your Kids
Investors already know that buying real estate is a solution to paying for a child’s education however, this may not be the right solution. In fact, it could be detrimental to a child’s performance, according to a paper published by University of California, “More is More or More is Less? Parent Financial Investments During College.” It suggests that there is a direct relationship between parents who pay the bills and lower academic performance by their children.
Rather than let your children party at school while you are stuck with the bills, why not get them to pay the bills. Tracy Ma from Financial Nirvana Mama outlines four key strategies for getting your kids to pay for their own education and at the same time, teach them real estate investing skills.
1. Teach them property management
If your properties are less than five years old (i.e. low maintenance) and your child goes to a school near your properties, why not have them manage the properties as their part-time job? Better yet, have them live in a unit as their principle place of residence and rent out the extra rooms to friends. Teach them how to manage the properties like a pro, with the right agreements, contracts, and templates. And don’t forget to teach them about all the applicable rental regulations. Now, they can use the cash
flow from the properties to help pay for their own tuition and books.
2. Teach them to profit from a real estate portfolio
If you have a couple of properties that you have held for more than ten years, you probably have a nice nest egg for your child’s education. Rather than selling the properties when your children are ready to go to post-secondary school, hold the properties a little bit longer until they graduate. Have them take out an interest-free student loan to pay for their education. Then, transfer the assets to your kids after they graduate from post-secondary education and have them sell it, or borrow against it, to pay for their loans. Any remaining profits from a sale, or available room in a home equity line-of-credit, can jumpstart your child’s purchase of their own real estate.
3. Have them manage a real estate portfolio
If the properties are held more than 15 years and your children decide to the leave the city, why not refinance the balance of the mortgage, and have them retain a team to manage these properties? Teach them to oversee the properties and monitor the expenses and payments. The cash flow can be used to offset their tuition fees and books. Once school is finished, they can liquidate, or borrow against, a property and pay off their loans.
4. Teach them hard money lending
If the properties no longer have any mortgages and your kids are off to medical school or they are too busy to manage real estate, teach them to sell the properties, contribute a portion to their tax free savings account, and lend out their money to other real estate investors as a mortgage-backed loan. Now your kids have mortgage payments coming into their bank accounts to help offset their living expenses and tuition costs. And after they have finished their education, they can recall the loans that they have issued to pay off their own student loan.
Be creative and financially savvy with these exit strategies to not only make your money work smarter, but teach your kids life skills. Using the strategies described, your kids will be on their way to paying off their education (and becoming real estate investors) in no time.
source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2158-using-real-estate-to-get-rid-of-the-kids
Rather than let your children party at school while you are stuck with the bills, why not get them to pay the bills. Tracy Ma from Financial Nirvana Mama outlines four key strategies for getting your kids to pay for their own education and at the same time, teach them real estate investing skills.
1. Teach them property management
If your properties are less than five years old (i.e. low maintenance) and your child goes to a school near your properties, why not have them manage the properties as their part-time job? Better yet, have them live in a unit as their principle place of residence and rent out the extra rooms to friends. Teach them how to manage the properties like a pro, with the right agreements, contracts, and templates. And don’t forget to teach them about all the applicable rental regulations. Now, they can use the cash
flow from the properties to help pay for their own tuition and books.
2. Teach them to profit from a real estate portfolio
If you have a couple of properties that you have held for more than ten years, you probably have a nice nest egg for your child’s education. Rather than selling the properties when your children are ready to go to post-secondary school, hold the properties a little bit longer until they graduate. Have them take out an interest-free student loan to pay for their education. Then, transfer the assets to your kids after they graduate from post-secondary education and have them sell it, or borrow against it, to pay for their loans. Any remaining profits from a sale, or available room in a home equity line-of-credit, can jumpstart your child’s purchase of their own real estate.
3. Have them manage a real estate portfolio
If the properties are held more than 15 years and your children decide to the leave the city, why not refinance the balance of the mortgage, and have them retain a team to manage these properties? Teach them to oversee the properties and monitor the expenses and payments. The cash flow can be used to offset their tuition fees and books. Once school is finished, they can liquidate, or borrow against, a property and pay off their loans.
4. Teach them hard money lending
If the properties no longer have any mortgages and your kids are off to medical school or they are too busy to manage real estate, teach them to sell the properties, contribute a portion to their tax free savings account, and lend out their money to other real estate investors as a mortgage-backed loan. Now your kids have mortgage payments coming into their bank accounts to help offset their living expenses and tuition costs. And after they have finished their education, they can recall the loans that they have issued to pay off their own student loan.
Be creative and financially savvy with these exit strategies to not only make your money work smarter, but teach your kids life skills. Using the strategies described, your kids will be on their way to paying off their education (and becoming real estate investors) in no time.
source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2158-using-real-estate-to-get-rid-of-the-kids
Monday, August 25, 2014
5 Easy Ways to Update a Room
You don’t have to hire a decorator (or break the bank) to give a room a quick update with lots of impact. So whether you’re getting ready to sell, have just moved in or feel like a mini overhaul, these five tips will have you enjoying the room of your dreams in no time. Change Your Fabrics Replace your curtains, re-cover your throw pillows, buy a new rug, Any one of these easy fixes can make a big impact; but all three will completely change the entire room! And if it’s a bedroom you’re tired of, same rules apply: Replace the duvet cover, re-cover the headboard, and toss a few new pillows on the bed. Freshen Up With Paint Whether you tackle an entire room, or maybe an accent wall or two, a new coat of paint is probably the easiest way to change a room. From light and bright to dark and dramatic, paint can completely alter the mood. Re-Organize A Bookshelf Bookshelves are amazing; not only do they keep your books organized, but they can also serve as great focal pieces. Try colour-coding your books or arranging them in stacks instead of side-by-side. Remove an entire row of books and replace them with framed family photos or bright accent pieces. Sometimes all a room needs is a shift in thinking about it. Update Your Art Updating the art on your walls is a great way to showcase the family talent. Frame your daughter’s sketches from high school (no one will know it’s not a real Picasso) or your son’s first finger painting. Or grab a blank canvas and paint it a bright colour to hang in the kitchen (you don’t have to be a Fine Art grad to add some basic pops of colour!). And the best part of this approach is once you’ve bought the frames, the art can be rotated throughout the year at no extra cost. Add An Accent Is your bathroom feeling boring or your living room giving you the yawns? Pick bright, colourful wallpaper and add an accent wall! Paint stripes in your dining room, or buy a chandelier for your front hallway. Adding an impressive accent is a fun way to give the room some personality without a complete overhaul (of the room OR your bank account).
Source: http://www.hgtv.ca/realestate/article/5-easy-ways-to-update-a-room/
Source: http://www.hgtv.ca/realestate/article/5-easy-ways-to-update-a-room/
Monday, August 18, 2014
7 Tips for selecting great students for your rental
The student market can be a lucrative business but landlords need to do their homeowork when selecting tenants as Tim Collins from Student Rental Investing explains.
When renting to a ‘typical’ tenant, the normal checks that I undertook were references, job credentials and a credit check. I could then take all that information and make an educated decision on whether to rent out to that particular individual. I'm also a big believer in trusting your gut so if your intuition is screaming something’s not right, well then it's probably worth listening to.
When it comes to students, things can be a bit trickier. Credit checks are irrelevant as students often have not had time to build credit check. As such, it may be necessary to do a credit check on the guarantor.
By having a fabulous advertisement with great pictures and offering utilities for a nice affordable monthly price, you're likely to attract more than just students. It's not good practise to mix students with non-students and so you need to be explicit that it's a student only house. Ideally, you will attract a group of students that already know each other, and they will all be sharing common areas and bathrooms so this makes things much easier.
7 tips for selecting great student tenants:
1. Ask for proof that they are a student - acceptance letter or student card.
2. Ask for a guarantor to sign the application form establishing that they have some financial backing.
3. Ask for a deposit before holding a room, many show interest but change their mind.
4. Establish start date and term of lease that they are looking for.
5. Get job and personal references.
6. Get details of most recent addresses for last three years.
7. Set expectations - No parties will be tolerated at this house.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2135-7-tips-for-selecting-great-students-for-your-rental
When renting to a ‘typical’ tenant, the normal checks that I undertook were references, job credentials and a credit check. I could then take all that information and make an educated decision on whether to rent out to that particular individual. I'm also a big believer in trusting your gut so if your intuition is screaming something’s not right, well then it's probably worth listening to.
When it comes to students, things can be a bit trickier. Credit checks are irrelevant as students often have not had time to build credit check. As such, it may be necessary to do a credit check on the guarantor.
By having a fabulous advertisement with great pictures and offering utilities for a nice affordable monthly price, you're likely to attract more than just students. It's not good practise to mix students with non-students and so you need to be explicit that it's a student only house. Ideally, you will attract a group of students that already know each other, and they will all be sharing common areas and bathrooms so this makes things much easier.
7 tips for selecting great student tenants:
1. Ask for proof that they are a student - acceptance letter or student card.
2. Ask for a guarantor to sign the application form establishing that they have some financial backing.
3. Ask for a deposit before holding a room, many show interest but change their mind.
4. Establish start date and term of lease that they are looking for.
5. Get job and personal references.
6. Get details of most recent addresses for last three years.
7. Set expectations - No parties will be tolerated at this house.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2135-7-tips-for-selecting-great-students-for-your-rental
Thursday, July 31, 2014
10 financial mistakes you cannot afford
Making mistakes is part of just about everything – that’s how life works. No one ever said it’s going to be easy, or that you’ll glide through on waters that are as still as a mirror. Of course you’re expected to stumble, to make occasional lapses on your judgement, to fall on your face at least every now and then.
But when it’s about something as major purchasing a property, it would definitely put you in good stead to make a conscious effort to know what to avoid in the first place. That way you don’t waste time and, just as importantly, your hard-earned money in the process. So what are the financial property mistakes you can do without? Here are some of the most common.
Choosing the wrong mortgage
It’s no secret that with the plethora of home loans out in the market today, you have more than enough choices on your hand. That being said, the last thing you want is to end up saddled with a loan that’s not a good fit for you – even in a short amount of time. Do your homework and investigate all possible options, and then gradually filter out your choices as you go along. To make an educated decision, determine important factors like interest rates, both initial and future, and the probability of prepayment penalties.
Confusing “pre-approved” with a “pre-qualified” loan
They may very similar, almost the same, in fact, but they’re not. When you are pre-qualified for a loan, it means the lender is making an educated guess on how much you can borrow, based on the details you provided. Now, if you’re pre-approved, that means that the lender has already confirmed and verified the details you have provided, and is offering to lend you a certain amount at current interest rates – under a set of certain conditions, of course.
Whether you’re pre-approved or pre-qualified, it’s best to remember that the final clearance – your loan commitment – is still subject to an appraisal that’s satisfactory to your lender, a good title, and any last-minute credit checks and verifications that may arise. In order not to be left in the dark, make it a point to ask your prospect lenders to explain clearly about each term or step needed to make a successful loan.
Having too much credit
Anything in excess is bad, and the same goes for too much credit. Even if you have a good credit standing, lenders will still pay attention on just how much bills you have — even if you pay on time. The best course of action is to be mindful of your loans and avoid major purchases until after you bought your house.
Lying on your application
It won’t do you any good to exaggerate on your income when filling out your mortgage application, so best that you don’t. You should also be very careful that you don’t sign your name on a loan application that hasn’t been completely filled out. Loan officers tend to stretch the truth to get a loan approved, but remember that it’s your name on the line. The last thing you need to be at the receiving end of a loan you can’t afford to pay.
Hiding if you can’t make your payments
Whatever you do, do not ignore phone calls from your lender – yes, even if you’re lagging behind on your payments. Lenders actually have quite a lot of options to help you from losing your house to foreclosure, but they won’t be able to assist you unless, of course, they know the difficulties you’re going through.
Skipping a home inspection
Failure to go about a satisfactory home inspection can quite easily spell out a costly mistake. You can opt to hire independent home inspectors; they can aptly let you know if the basement or roof leaks, whether the mechanical systems are functioning, and how long the appliances are expected to last. They may not be able to report on everything, but their trained assessment will still be much better than yours. So consider that $300-400 an investment well spent.
Hiring just about any agent to sell your house
Real estate is a specialized field. That means you can’t hire just any random person and expect him to do wonders with the property you want to put on the market. To get favorable results, look for agents who specialize in your neighborhood, and those with excellent track record. If you’re not satisfied with your prospect agent’s plan on marketing your house, move on. You need to hire the best possible candidate to get the best possible result. And no, opting for relatives don’t count – unless they happen to be reputable agents.
Failing to properly check out a remodeler
Do not even consider hiring a contractor who knocks on your door, or one who claims that his discounted rates will only be valid in the next few days. First of all, notable contractors do not make it a habit to advertise their services on door-to-door basis. Nor do they slash their prices just because they happen to be in your district. Check the credentials and references of your prospect contractor to get a good idea of his professional credibility – or lack thereof.
Paying too much upfront
Be careful if you’re contractor asks for more than a third of the agreed contract price as a down payment; there’s a very good chance that something is wrong. He can be a scam artist with no intention whatsoever of returning once he cashes your check, or on a slightly less comforting scenario, he could be seriously underfunded and can’t afford to buy materials on his own.
Burning your mortgage
You may be tempted to hold a mortgage burning celebration after you’ve paid the last instalment on your loan. And it is quite tempting to do so. After all, the house is yours – finally. The sensible thing to do, however, is to make a copy and burn that instead – not the original. Make sure to keep your loan documents in a secure place, even after it has been fully paid.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2111-10-financial-mistaks-you-cannot-afford
But when it’s about something as major purchasing a property, it would definitely put you in good stead to make a conscious effort to know what to avoid in the first place. That way you don’t waste time and, just as importantly, your hard-earned money in the process. So what are the financial property mistakes you can do without? Here are some of the most common.
Choosing the wrong mortgage
It’s no secret that with the plethora of home loans out in the market today, you have more than enough choices on your hand. That being said, the last thing you want is to end up saddled with a loan that’s not a good fit for you – even in a short amount of time. Do your homework and investigate all possible options, and then gradually filter out your choices as you go along. To make an educated decision, determine important factors like interest rates, both initial and future, and the probability of prepayment penalties.
Confusing “pre-approved” with a “pre-qualified” loan
They may very similar, almost the same, in fact, but they’re not. When you are pre-qualified for a loan, it means the lender is making an educated guess on how much you can borrow, based on the details you provided. Now, if you’re pre-approved, that means that the lender has already confirmed and verified the details you have provided, and is offering to lend you a certain amount at current interest rates – under a set of certain conditions, of course.
Whether you’re pre-approved or pre-qualified, it’s best to remember that the final clearance – your loan commitment – is still subject to an appraisal that’s satisfactory to your lender, a good title, and any last-minute credit checks and verifications that may arise. In order not to be left in the dark, make it a point to ask your prospect lenders to explain clearly about each term or step needed to make a successful loan.
Having too much credit
Anything in excess is bad, and the same goes for too much credit. Even if you have a good credit standing, lenders will still pay attention on just how much bills you have — even if you pay on time. The best course of action is to be mindful of your loans and avoid major purchases until after you bought your house.
Lying on your application
It won’t do you any good to exaggerate on your income when filling out your mortgage application, so best that you don’t. You should also be very careful that you don’t sign your name on a loan application that hasn’t been completely filled out. Loan officers tend to stretch the truth to get a loan approved, but remember that it’s your name on the line. The last thing you need to be at the receiving end of a loan you can’t afford to pay.
Hiding if you can’t make your payments
Whatever you do, do not ignore phone calls from your lender – yes, even if you’re lagging behind on your payments. Lenders actually have quite a lot of options to help you from losing your house to foreclosure, but they won’t be able to assist you unless, of course, they know the difficulties you’re going through.
Skipping a home inspection
Failure to go about a satisfactory home inspection can quite easily spell out a costly mistake. You can opt to hire independent home inspectors; they can aptly let you know if the basement or roof leaks, whether the mechanical systems are functioning, and how long the appliances are expected to last. They may not be able to report on everything, but their trained assessment will still be much better than yours. So consider that $300-400 an investment well spent.
Hiring just about any agent to sell your house
Real estate is a specialized field. That means you can’t hire just any random person and expect him to do wonders with the property you want to put on the market. To get favorable results, look for agents who specialize in your neighborhood, and those with excellent track record. If you’re not satisfied with your prospect agent’s plan on marketing your house, move on. You need to hire the best possible candidate to get the best possible result. And no, opting for relatives don’t count – unless they happen to be reputable agents.
Failing to properly check out a remodeler
Do not even consider hiring a contractor who knocks on your door, or one who claims that his discounted rates will only be valid in the next few days. First of all, notable contractors do not make it a habit to advertise their services on door-to-door basis. Nor do they slash their prices just because they happen to be in your district. Check the credentials and references of your prospect contractor to get a good idea of his professional credibility – or lack thereof.
Paying too much upfront
Be careful if you’re contractor asks for more than a third of the agreed contract price as a down payment; there’s a very good chance that something is wrong. He can be a scam artist with no intention whatsoever of returning once he cashes your check, or on a slightly less comforting scenario, he could be seriously underfunded and can’t afford to buy materials on his own.
Burning your mortgage
You may be tempted to hold a mortgage burning celebration after you’ve paid the last instalment on your loan. And it is quite tempting to do so. After all, the house is yours – finally. The sensible thing to do, however, is to make a copy and burn that instead – not the original. Make sure to keep your loan documents in a secure place, even after it has been fully paid.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2111-10-financial-mistaks-you-cannot-afford
Monday, July 28, 2014
Spruce up exterior to attract long-term renters
Jazzing up the exterior of the home will attract renters looking for a place to call home – before they even set foot inside the house. And many of the fixes outside the home won’t cost nearly as much as those inside. Here are a handful of easy renos that can enhance a property.
1. Doors
Doors are one of the first things a person notices about a house. Changing the front door can change the entire look of the home. Add a door with more windows for a light and airy look, or try a steel door for better security. Plus, lots of doors are customizable, making it easy to set your property apart from other rentals on the block.
2. Gates and Fences
Just as there are several different types of doors, there are a slew of different styled fences and gates that your clients can choose from. And like doors, these fences can be used to compliment the style of the home. A quaint property might benefit from a traditional picket fence, while a large stone house might be completed with a wrought iron gate.
3. Front Yard
You don’t need us to tell you how important curb appeal is to a home. Simple landscaping can go a long way. Lay new sod, if necessary, or add colourful plants to a flowerbed. Ensure the front of the property is well-groomed: the lawn is mowed, the weeds are pulled, the plants are watered and the walkway or porch is clean. Potential renters should feel proud of the house they can call home.
4. Back Yard
Canada’s wonderful summers make outdoor living spaces almost mandatory. There are several ways you can play up the house’s backyard space. Again, ensure the lawn and flower beds are well-groomed. If the property has a pool, clean it of any debris before showings. Show potential renters what their summers can be like if they’re lucky enough to live in this house.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/property-management/item/2099-spruce-up-exterior-to-attract-long-term-renters
1. Doors
Doors are one of the first things a person notices about a house. Changing the front door can change the entire look of the home. Add a door with more windows for a light and airy look, or try a steel door for better security. Plus, lots of doors are customizable, making it easy to set your property apart from other rentals on the block.
2. Gates and Fences
Just as there are several different types of doors, there are a slew of different styled fences and gates that your clients can choose from. And like doors, these fences can be used to compliment the style of the home. A quaint property might benefit from a traditional picket fence, while a large stone house might be completed with a wrought iron gate.
3. Front Yard
You don’t need us to tell you how important curb appeal is to a home. Simple landscaping can go a long way. Lay new sod, if necessary, or add colourful plants to a flowerbed. Ensure the front of the property is well-groomed: the lawn is mowed, the weeds are pulled, the plants are watered and the walkway or porch is clean. Potential renters should feel proud of the house they can call home.
4. Back Yard
Canada’s wonderful summers make outdoor living spaces almost mandatory. There are several ways you can play up the house’s backyard space. Again, ensure the lawn and flower beds are well-groomed. If the property has a pool, clean it of any debris before showings. Show potential renters what their summers can be like if they’re lucky enough to live in this house.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/property-management/item/2099-spruce-up-exterior-to-attract-long-term-renters
Monday, July 21, 2014
3 Tips to fix a property disaster
Let’s say you own an investment property and you’re at risk of things turning pear-shaped. Perhaps you overextended yourself financially, or you’ve run into trouble with dodgy tenants? Whatever the problem, there is always a potential solution. Helen Collier-Kogtevs from Real Wealth in Australia explains.
1. Reinforce your finances
If you are facing financial difficulties for a particular reason, such as a prolonged tenant vacancy, then you need some funds to help you manage the situation at hand. My advice would be to immediately focus on creating a buffer account. If you don’t already have a cash buffer account at your disposal to help you deal with unexpected financial emergencies, I suggest you focus on creating one immediately. Savings from your salary, tax returns, redrawing equity in your home loans – do whatever it takes to create a cash buffer account, ideally offset against your PPOR mortgage, so that you are in a position to make clear decisions, without being ‘forced’ to sell any of your properties from a place of desperation. At the same time, make a serious and concerted effort to pay down any ‘bad debts’ such as credit cards, as they chew through your disposable income and divert precious funds and resources away from your investing pursuits. Ultimately, if you do not have a tenant, you want to do what you can to get a tenant in place to ensure you have some rent coming in so that you are not having to fund the full mortgage repayment each month.
2. Get your head out of the sand
Often when a situation is turning negative, we may avoid facing up to it – and this can be a very costly mistake to make. I’ve seen many investors who have needlessly gone to the wall financially, often because they didn’t face their financial woes early enough. The sooner you take a proactive approach, the sooner you can put the right steps in place to turn your situation around.
3. If necessary, seek help
A trusted property mentor, a friend in the industry, a colleague who knows property inside out – turn to those people you know and trust for advice, as they will be able to help you review your situation from a clear, unbiased and objective place. Importantly, they can then help you to strategize how to move forward in a positive way. Remember, there will always be new opportunities to create wealth through real estate, and by having a clear strategy and flexible, honest approach, you place yourself in the best possible position for property success.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2065-3-tips-to-fix-a-property-disaster
1. Reinforce your finances
If you are facing financial difficulties for a particular reason, such as a prolonged tenant vacancy, then you need some funds to help you manage the situation at hand. My advice would be to immediately focus on creating a buffer account. If you don’t already have a cash buffer account at your disposal to help you deal with unexpected financial emergencies, I suggest you focus on creating one immediately. Savings from your salary, tax returns, redrawing equity in your home loans – do whatever it takes to create a cash buffer account, ideally offset against your PPOR mortgage, so that you are in a position to make clear decisions, without being ‘forced’ to sell any of your properties from a place of desperation. At the same time, make a serious and concerted effort to pay down any ‘bad debts’ such as credit cards, as they chew through your disposable income and divert precious funds and resources away from your investing pursuits. Ultimately, if you do not have a tenant, you want to do what you can to get a tenant in place to ensure you have some rent coming in so that you are not having to fund the full mortgage repayment each month.
2. Get your head out of the sand
Often when a situation is turning negative, we may avoid facing up to it – and this can be a very costly mistake to make. I’ve seen many investors who have needlessly gone to the wall financially, often because they didn’t face their financial woes early enough. The sooner you take a proactive approach, the sooner you can put the right steps in place to turn your situation around.
3. If necessary, seek help
A trusted property mentor, a friend in the industry, a colleague who knows property inside out – turn to those people you know and trust for advice, as they will be able to help you review your situation from a clear, unbiased and objective place. Importantly, they can then help you to strategize how to move forward in a positive way. Remember, there will always be new opportunities to create wealth through real estate, and by having a clear strategy and flexible, honest approach, you place yourself in the best possible position for property success.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2065-3-tips-to-fix-a-property-disaster
Thursday, July 17, 2014
Understanding the real value of properties
The first is the comparison method. If I own a three-bedroom home with two baths in a subdivision, the first thing I should know is what other similar properties are selling or sold for in that area. From there, add or subtract based on key features in the home.If the last three homes all sold for in the $240,000 to $255,000 mark, there is a good chance your property is also valued the same.
The second method of determining value is based on the revenue it delivers. The most common method of calculating that is by CAP Rates. The CAP, or capitalization rate, is defined as the ratio between the net operating income (NOI) produced by an asset and its capital cost or alternatively, its current market value. The CAP rate is calculated annual net operating income divided by cost (or value).
For example, if a building is purchased for a $500,000 sales price and produces $30,000 in positive net operating income (the amount left over after the fixed and variable costs) during one year, then the cap rate is 6 per cent ($30k/$500k).
In 2014, investors in the Greater Toronto Area (GTA) are willing to purchase a property that has a much lower CAP rate then they would have been willing to do in 2010. Specifically, in Toronto, where once 6 per cent was the low number, now I’m seeing deals transpire at rates under 4 per cent. Even in Oshawa, where once 8 per cent was acceptable. Capitalization rates are an indirect measure of how fast an investment will pay for itself. A property with a CAP rate of 10 per cent, the payback is 10 years. At 6 per cent, it is 16.6 years.
Debt repayment, however, is not factored in when determining the NOI. If it were included, the CAP rate would be much worse on a building that had a mortgage versus another that is owned free and clear. The owner’s property financing must have nothing to do with a property’s worth.
Now, let me share with you the importance of consistently raising your rental amounts. For example, if you had a property that can be resold with a 6 per cent CAP rate. If you find a way to increase your rent just $10 a month, that works out to $120 a year. That works out to a value increase of $2,000. Therefore, increasing the rent by $10 a month raises the value of the property by $2,000.
An increase of $100 a month means a property value increase of $20,000. If you have the option of doing a repair to a unit and it would cost you $10,000, you can increase the rent by $100 a month, should you do it? My answer is that not only will you receive the extra rental money, but you have built double the equity in your building.
While some believe these figures only matter when you sell your property, this is not always true. Once you have built enough equity in the building, you can do a bank refinance and get much of your initial investment and/or renovation costs out of the property, while still maintaining a debt to equity ratio that our very conservative banks will accept.
Be careful when you see CAP rates. The listing real estate agent or seller may not be including all of the actual expenses or be using projected rental revenues rather than actual numbers. I can show a 10 per cent CAP in all of my properties if I exclude yard maintenance, property management, basic repairs and waste removal. I can also show a zero percent vacancy rate and tell the buyer it is always rented. However, the fact is that these things exist. Get the numbers they provide, and as you are doing the walk through of the property, look for the renovations and services that are not includes in the operating expenses provided.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2087-understanding-the-real-value-of-properties
The second method of determining value is based on the revenue it delivers. The most common method of calculating that is by CAP Rates. The CAP, or capitalization rate, is defined as the ratio between the net operating income (NOI) produced by an asset and its capital cost or alternatively, its current market value. The CAP rate is calculated annual net operating income divided by cost (or value).
For example, if a building is purchased for a $500,000 sales price and produces $30,000 in positive net operating income (the amount left over after the fixed and variable costs) during one year, then the cap rate is 6 per cent ($30k/$500k).
In 2014, investors in the Greater Toronto Area (GTA) are willing to purchase a property that has a much lower CAP rate then they would have been willing to do in 2010. Specifically, in Toronto, where once 6 per cent was the low number, now I’m seeing deals transpire at rates under 4 per cent. Even in Oshawa, where once 8 per cent was acceptable. Capitalization rates are an indirect measure of how fast an investment will pay for itself. A property with a CAP rate of 10 per cent, the payback is 10 years. At 6 per cent, it is 16.6 years.
Debt repayment, however, is not factored in when determining the NOI. If it were included, the CAP rate would be much worse on a building that had a mortgage versus another that is owned free and clear. The owner’s property financing must have nothing to do with a property’s worth.
Now, let me share with you the importance of consistently raising your rental amounts. For example, if you had a property that can be resold with a 6 per cent CAP rate. If you find a way to increase your rent just $10 a month, that works out to $120 a year. That works out to a value increase of $2,000. Therefore, increasing the rent by $10 a month raises the value of the property by $2,000.
An increase of $100 a month means a property value increase of $20,000. If you have the option of doing a repair to a unit and it would cost you $10,000, you can increase the rent by $100 a month, should you do it? My answer is that not only will you receive the extra rental money, but you have built double the equity in your building.
While some believe these figures only matter when you sell your property, this is not always true. Once you have built enough equity in the building, you can do a bank refinance and get much of your initial investment and/or renovation costs out of the property, while still maintaining a debt to equity ratio that our very conservative banks will accept.
Be careful when you see CAP rates. The listing real estate agent or seller may not be including all of the actual expenses or be using projected rental revenues rather than actual numbers. I can show a 10 per cent CAP in all of my properties if I exclude yard maintenance, property management, basic repairs and waste removal. I can also show a zero percent vacancy rate and tell the buyer it is always rented. However, the fact is that these things exist. Get the numbers they provide, and as you are doing the walk through of the property, look for the renovations and services that are not includes in the operating expenses provided.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/item/2087-understanding-the-real-value-of-properties
Friday, July 11, 2014
Bank of Canada to hold rates steady, tone down inflation concern: Reuters poll
Worries about soft growth will keep the Bank of Canada from hiking interest rates until late next year although rising prices are expected to make it temper concerns about low inflation in its policy statement next week, a Reuters poll found.
The Canadian economy geared down at the start of the year, though not as much as the United States. Twenty-five of 33 economists said the fragile state of growth was one of the biggest factors keeping rate hikes at bay in Canada.
Thirteen analysts said concern about the high-flying loonie was another reason behind the central bank's neutral stance, which means a rate cut is as likely as a rate hike. Respondents were allowed to choose more than one option."Investments have improved but employment has not. There is still a significant amount of uncertainty and that is weighing on any decision to raise rates," said John Clinkard, chief economist at Deutsche Bank Canada.The wider poll of 38 economists showed rates will stay at 1 percent, where they have been for almost four years, until the third quarter of 2015, when the Bank of Canada will lift rates by 25 basis points. That forecast is unchanged from May's poll.Governor Stephen Poloz is expected to stick to the neutral tone the bank adopted last October when it shifted away from its tightening bias. Despite the central bank repeatedly flagging downside risks to inflation in recent months, just seven economists said concern about a slow rise in prices was holding back rate hikes.And 21 of 30 analysts said Poloz would tone down his language expressing concern over low inflation at next week's meeting. Still, he is expected to walk a fine line.
"It will be necessary to acknowledge the above-forecast core CPI (consumer price index) trend, but Governor Poloz will do so as dovishly as possible in order to avoid sparking concerns about earlier rate hikes that might send the Canadian dollar stronger," said Avery Shenfeld, chief economist at CIBC World Markets.
Data last month showed the inflation rate rose to a 27-month high in May at 2.3 percent, stronger than expected and higher than the Bank of Canada's 2 percent inflation target. The increase caught the market by surprise and has been a major driver of the currency's rally.More than half the economists polled said the stronger Canadian dollar, currently trading near a six-month high at $1.067 to the greenback, or 93.72 U.S. cents, will not trouble Poloz enough for him to voice it."The loonie is not at a critical level ... for the BoC to intervene directly in the markets or to 'talk down' the loonie," said Sebastien Lavoie, economist at Laurentian Bank Securities.The central bank is hoping to see exports emerge as a greater driver of economic growth, replacing a boom in housing and consumer debt."The Bank of Canada is undoubtedly concerned about all of the above, but it has made no secret that it is hoping for a pick up in exports and business investment to provide more robust and reliable support for growth," said Mark Hopkins at Moody's Analytics."Raising interest rates prematurely would undermine that goal by discouraging borrowing and driving up the value of the loonie."
Source: http://ca.reuters.com/article/businessNews/idCAKBN0FF1YG20140710?pageNumber=2&virtualBrandChannel=0
The Canadian economy geared down at the start of the year, though not as much as the United States. Twenty-five of 33 economists said the fragile state of growth was one of the biggest factors keeping rate hikes at bay in Canada.
Thirteen analysts said concern about the high-flying loonie was another reason behind the central bank's neutral stance, which means a rate cut is as likely as a rate hike. Respondents were allowed to choose more than one option."Investments have improved but employment has not. There is still a significant amount of uncertainty and that is weighing on any decision to raise rates," said John Clinkard, chief economist at Deutsche Bank Canada.The wider poll of 38 economists showed rates will stay at 1 percent, where they have been for almost four years, until the third quarter of 2015, when the Bank of Canada will lift rates by 25 basis points. That forecast is unchanged from May's poll.Governor Stephen Poloz is expected to stick to the neutral tone the bank adopted last October when it shifted away from its tightening bias. Despite the central bank repeatedly flagging downside risks to inflation in recent months, just seven economists said concern about a slow rise in prices was holding back rate hikes.And 21 of 30 analysts said Poloz would tone down his language expressing concern over low inflation at next week's meeting. Still, he is expected to walk a fine line.
"It will be necessary to acknowledge the above-forecast core CPI (consumer price index) trend, but Governor Poloz will do so as dovishly as possible in order to avoid sparking concerns about earlier rate hikes that might send the Canadian dollar stronger," said Avery Shenfeld, chief economist at CIBC World Markets.
Data last month showed the inflation rate rose to a 27-month high in May at 2.3 percent, stronger than expected and higher than the Bank of Canada's 2 percent inflation target. The increase caught the market by surprise and has been a major driver of the currency's rally.More than half the economists polled said the stronger Canadian dollar, currently trading near a six-month high at $1.067 to the greenback, or 93.72 U.S. cents, will not trouble Poloz enough for him to voice it."The loonie is not at a critical level ... for the BoC to intervene directly in the markets or to 'talk down' the loonie," said Sebastien Lavoie, economist at Laurentian Bank Securities.The central bank is hoping to see exports emerge as a greater driver of economic growth, replacing a boom in housing and consumer debt."The Bank of Canada is undoubtedly concerned about all of the above, but it has made no secret that it is hoping for a pick up in exports and business investment to provide more robust and reliable support for growth," said Mark Hopkins at Moody's Analytics."Raising interest rates prematurely would undermine that goal by discouraging borrowing and driving up the value of the loonie."
Source: http://ca.reuters.com/article/businessNews/idCAKBN0FF1YG20140710?pageNumber=2&virtualBrandChannel=0
Wednesday, June 25, 2014
Why property really is the best investment
Forget shares and term deposits. Here are 10 reasons why you made the right call to invest in property.
1. You have more leverage
Property offers more financial leverage, and the more leverage you have, the more quickly you can build wealth says Rocket Property Group founder, Ian Hosking Richards.
“For example, if I purchase a property for $400,000 I can put down a 10% deposit and borrow 90% from the bank. If that property increases in value by 10% I have made $40,000, because I have only contributed 10% of the purchase price but I get 100% of the growth,” he explains. “So if it goes up in value by 10% in the first year I have effectively received a 100% return on my initial deposit. And if the original deposit and other buying costs came from my existing equity, it means that I have borrowed the full cost and do not need to put any of my own cash in, but still get 100% of the growth. I would aim to purchase a property that has great potential for growth and pays for itself even on high borrowings, so for me it is hard to imagine any other investment that is more attractive.”
2. Investing in property is simpler than you think
The amount of paperwork you need to produce and information you need to assimilate can be daunting at first, but the investment process in itself is remarkably simple. There are no complicated steps you need to take. As long as you’ve got your finances sorted out, you can start doing your research to find the right property. If you apply thorough due diligence in terms of getting inspection and valuation, there’s little risk for you to overpay or buy a dud property.
3. You have “control” of your investment
Unlike other investments classes, property offers you with many options in terms of growing the value and income on your property. You can also control where you buy, how you buy and when to sell.
4. You have stability
Real estate is less volatile than stocks or mutual funds, especially in uncertain economic times. The continuing demand for housing fuelled by strong population growth ensures property prices are supported in general. It’s also worth noting that the price drops most people fear are NOT real losses until you actually sell the property. If the property was purchased correctly and generates a healthy cash flow, the investment can be sustained until the price gets back up again.
5. Property is an easy asset to understand
Unlike the share markets where there are complicated terminologies you need to get your head around, real estate is relatively simple. You know what a house, unit or a townhouse is and you don’t need a 60-page prospectus to tell you all about it.
6. The taxman helps you pay off your investments
You can claim a range of tax deductible expenses through your investment property, which will help reduce your tax bills and improve your cash flow. A good accountant can help you cut your tax expenses by the tens of thousands of dollars, legally through your investment property.
7. Your tenants pay your mortgage
Another advantage to property investing is that tenants are paying down your mortgage while you sit and watch your investment grow in value.
8. Property offers predictability
Property is undoubtedly more predictable than other investment-classes. With well-chosen property, you can look out to 18 or 24 months into the future and know which direction the market pressures will be pushing, unlike the share markets where anything could change within seconds.
9. Property is recession-proof
Property with strong cash flow can ride uncertain times such as during a recession for simple reason that it meets a basic need- housing. People will always need a place to live, even during difficult times. They would do everything just to have roof over their heads. They are prepared to forgo other luxuries just to have enough money to pay for their rents or mortgage.
10. Property can make you rich
Real estate makes more billionaires than any other asset classes. In the recent Forbes Billionaire’s List, it reported that a total of 135 property tycoons now make up the world’s wealthiest list with 14 property billionaires joining the ranks this year alone, boosted by surging property values around the world.
Source: Canadian Real estate Magazine
1. You have more leverage
Property offers more financial leverage, and the more leverage you have, the more quickly you can build wealth says Rocket Property Group founder, Ian Hosking Richards.
“For example, if I purchase a property for $400,000 I can put down a 10% deposit and borrow 90% from the bank. If that property increases in value by 10% I have made $40,000, because I have only contributed 10% of the purchase price but I get 100% of the growth,” he explains. “So if it goes up in value by 10% in the first year I have effectively received a 100% return on my initial deposit. And if the original deposit and other buying costs came from my existing equity, it means that I have borrowed the full cost and do not need to put any of my own cash in, but still get 100% of the growth. I would aim to purchase a property that has great potential for growth and pays for itself even on high borrowings, so for me it is hard to imagine any other investment that is more attractive.”
2. Investing in property is simpler than you think
The amount of paperwork you need to produce and information you need to assimilate can be daunting at first, but the investment process in itself is remarkably simple. There are no complicated steps you need to take. As long as you’ve got your finances sorted out, you can start doing your research to find the right property. If you apply thorough due diligence in terms of getting inspection and valuation, there’s little risk for you to overpay or buy a dud property.
3. You have “control” of your investment
Unlike other investments classes, property offers you with many options in terms of growing the value and income on your property. You can also control where you buy, how you buy and when to sell.
4. You have stability
Real estate is less volatile than stocks or mutual funds, especially in uncertain economic times. The continuing demand for housing fuelled by strong population growth ensures property prices are supported in general. It’s also worth noting that the price drops most people fear are NOT real losses until you actually sell the property. If the property was purchased correctly and generates a healthy cash flow, the investment can be sustained until the price gets back up again.
5. Property is an easy asset to understand
Unlike the share markets where there are complicated terminologies you need to get your head around, real estate is relatively simple. You know what a house, unit or a townhouse is and you don’t need a 60-page prospectus to tell you all about it.
6. The taxman helps you pay off your investments
You can claim a range of tax deductible expenses through your investment property, which will help reduce your tax bills and improve your cash flow. A good accountant can help you cut your tax expenses by the tens of thousands of dollars, legally through your investment property.
7. Your tenants pay your mortgage
Another advantage to property investing is that tenants are paying down your mortgage while you sit and watch your investment grow in value.
8. Property offers predictability
Property is undoubtedly more predictable than other investment-classes. With well-chosen property, you can look out to 18 or 24 months into the future and know which direction the market pressures will be pushing, unlike the share markets where anything could change within seconds.
9. Property is recession-proof
Property with strong cash flow can ride uncertain times such as during a recession for simple reason that it meets a basic need- housing. People will always need a place to live, even during difficult times. They would do everything just to have roof over their heads. They are prepared to forgo other luxuries just to have enough money to pay for their rents or mortgage.
10. Property can make you rich
Real estate makes more billionaires than any other asset classes. In the recent Forbes Billionaire’s List, it reported that a total of 135 property tycoons now make up the world’s wealthiest list with 14 property billionaires joining the ranks this year alone, boosted by surging property values around the world.
Source: Canadian Real estate Magazine
Friday, June 20, 2014
6 Basic Mortgage Rules to Follow
Whether this is your first home or fourth, really understanding your mortgage and how it works is crucial. After all, it’ll probably be the biggest loan of your life!
What IS A Mortgage?
In the most basic sense a mortgage is a loan to buy a property. The process of securing a mortgage means lender approval based on your income, credit rating and other debt.
Understand Your Fixed Costs
Before you decide what you can—or should—spend on a mortgage it’s important to take stock of your habits and your true fixed costs. Be honest with yourself when putting together your household budget, if you’re going to be miserable without your daily premium cup of coffee, then along with your student debt and car payments, consider that a fixed cost.
Be PITH Safe
According to the CHMC (Canadian Housing & Mortgage Corporation), your monthly housing costs should be less than 32% of your gross monthly income. These are considered your PITH or Principle and Interest (of your mortgage payments), Property Tax, and Heating bills.
Get A Mortgage You Can Afford
If you pass the PITH test, the second test of what you can afford mortgage-wise is that yourentire monthly debt load (car payments, credit card debt, student loans, etc) should be less than 40% of your gross monthly income. The CMHC even has a handy Mortgage Affordability Calculatoron their site: cmhc.ca.
Paying Off Your Mortgage
Once you’re approved for a mortgage and buy your home (congratulations!), now you have to actually start paying off the loan. There are several factors involved in this like your interest rate,payment schedule (monthly, twice a month, every two weeks, or weekly) and your amortization period, which is the amount of time you’ve selected to pay back the mortgage (usually ranging from 15-25 years).
Picking The Right Interest RateThe interest rate at which you select to pay off your mortgage varies from “fixed”—whereby the rate will NOT change for the term of the mortgage, and is generally a bit higher but considered more stable, or “variable” whereby the interest rate can fluctuate with the current state of the market.
Finally, owning a home can truly be an amazing thing. Thankfully there are many resources out there to help make the process a smooth one like mortgage brokers and financial advisors, so remember, you’re never alone through this daunting process!
Wednesday, May 28, 2014
5 ways our mind tricks us into not investing
1. What if we have problems with tenants – or can’t get one?Make sure you have landlord insurance set up which will cover you for damage or loss of rent. You should also line up a good property manager as soon as possible – ideally prior to settling – to help you get a tenant in as soon as possible, and to do the hard work of tenant screening, lease agreements and liaison.
2. What if I buy the wrong property?
There’s no substitute for research here – buy a property in an area where you know it can be rented, and where capital growth is likely. Remember, too, that property is a very forgiving investment – I have clients who’ve made every mistake in the book, and they’ve still made money.
3. What if I can’t meet the mortgage payments?
Get your finances in order before you start investing: principally, make sure that you can cover the payments, and that you’ve got a cash buffer to cover you for unexpected circumstances. You should also get acquainted with techniques to make things more affordable, such as negative gearing and depreciation allowance. Finally, buy a property in an area where you know you can sell it if you have to, so that you’ve got the ultimate get-out clause if it all goes wrong.
4. What if I end up losing money?
Be proactive about adding value – consider renovations, even if it’s just repainting and putting in new carpets. Take control of your asset – don’t just leave it down to market forces.
5. What if it’s a scam?
Again, this comes down to research. Scams typically trade on ignorance: as long as you are thorough about investigating your chosen areas, you should be fine. And remember, if it seems too good to be true, it probably is!
Want to know more about investing in homes? Contact us via: roy@callcleeves.com to get information on our monthly seminar on how to invest.
2. What if I buy the wrong property?
There’s no substitute for research here – buy a property in an area where you know it can be rented, and where capital growth is likely. Remember, too, that property is a very forgiving investment – I have clients who’ve made every mistake in the book, and they’ve still made money.
3. What if I can’t meet the mortgage payments?
Get your finances in order before you start investing: principally, make sure that you can cover the payments, and that you’ve got a cash buffer to cover you for unexpected circumstances. You should also get acquainted with techniques to make things more affordable, such as negative gearing and depreciation allowance. Finally, buy a property in an area where you know you can sell it if you have to, so that you’ve got the ultimate get-out clause if it all goes wrong.
4. What if I end up losing money?
Be proactive about adding value – consider renovations, even if it’s just repainting and putting in new carpets. Take control of your asset – don’t just leave it down to market forces.
5. What if it’s a scam?
Again, this comes down to research. Scams typically trade on ignorance: as long as you are thorough about investigating your chosen areas, you should be fine. And remember, if it seems too good to be true, it probably is!
Want to know more about investing in homes? Contact us via: roy@callcleeves.com to get information on our monthly seminar on how to invest.
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