There is no controlling the time of year that a real estate investor might be required to divest of a property, but what about the busy period leading up to the holiday season?
Although listing a home too close to Christmas isn’t ideal in many cases, it can yield positive results if done properly.
One advantage of selling a property around the holidays is that there’s typically less competition. With fewer listings on the market at this time of year, you can take advantage of the more serious active buyers. It’s not uncommon that work schedules lighten up leading up to the holidays, which may allow active buyers to focus on house hunting.
The amount of active buyers will be somewhat dictated by the condition of the local market – for instance, a seller's market will typically see more buyer foot traffic at any point during the year when compared to a buyer or balanced market. With that said, many people simply stop looking for homes at this time of year, so an impactful marketing strategy is critical in order to generate interest.
The rules for staging a home leading up to the holidays change slightly as well. Prepare your property in such a way that buyers will feel warm and comfortable. Selectively decorate for the holidays, but do not go overboard as you want to appeal to all cultures.
If the home has a fireplace, be sure to have it lit for showings. Have the heat set to a comfortable 21 degrees or slightly higher on a really cold day. Ensuring your property shows well is of utmost importance during this time of year.
It goes without saying that pricing the home properly to reflect current market conditions will greatly contribute to the sale success.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/how-to-sell-a-home-leading-up-to-the-holidays-199224.aspx
Thursday, November 26, 2015
Friday, October 9, 2015
How to protect yourself against provincial offences
The biggest worries for most landlords is a bounced rent cheque, an unexpected major repair or damage to the property caused by the tenant. However, all of these concerns pale in comparison to receiving a summons indicating that the landlord has been charged with provincial or criminal offences.
Although there are a variety of offences that a landlord could be charged with, the most likely to occur is a charge under the provincial fire code or related statute. Many landlords might assume that a fire code offence is not a serious concern, but the penalties can be steep.
In Ontario, for example, an individual can be charged up to $50,000 per count. If the owner is a corporation then the fines can be up to $100,000 against the corporation and $50,000 against individual officers and directors of the company per count.
Although rare, both individuals and officers and directors can be imprisoned for fire code offences. Compounding the severity of the penalties is the fact that, in most cases, multiple infractions are discovered at once. I have seen many cases where the landlord is looking at a cumulative fine of $500,000 or more.
So, what do landlords need to know to protect themselves against these types of charges?
1. How can I protect myself?
First and foremost, landlords should become familiar with what the law requires of them. This will depend on the type of unit they own. A legal rooming house, for example, will have different requirements than a one-bedroom condominium, which will in turn have different requirements than an apartment building. When the property is acquired the landlord should ensure that it is legally compliant.
Additionally, investors should be inspecting the parts of the property that can lead to charges whenever they are at the property for any reason, and at a minimum on a bi-annual basis. It only takes 30 seconds to make sure that hallway doors are properly latching, exits are clear of debris and smoke alarms are properly functioning. Failure to stay on top of the small things can lead to a massive fine which can erase years of profit from the landlord’s bank account.
2. Assume the property will at some point be subject to an inspection
Anything that might put the fire department in the vicinity of the property could lead to an inspection. If there is a fire, big or small, at your property you can safely assume that your property is going to be inspected afterwards. Although one could argue that the chance of a fire is rare, it is still a possibility and an event that is completely outside of the landlord’s control.
Additionally, a fire in the property is not a prerequisite to an inspection. For example, perhaps an accident occurs at the property and something catches the eye of EMS or the fire department while they are on site. A landlord has no way of protecting themselves from being inspected, so the best protection is to operate under the assumption that an inspection could occur at any time, because it can.
3. What to do If you get charged
Contact a lawyer as soon as possible. While this may sound obvious, many landlords will delay contacting counsel either because they are unsure of what to do or, worse yet, think that they can rectify the situation on their own.
Many offences are extremely difficult to defend given their nature. For example, there is almost no defence available for failing to have functioning smoke alarms in the property. In cases where there is no defence, the landlord will need to go into damage control as quickly as possible in order to mitigate the ultimate penalty that they will have to pay.
Most prosecutors (with whom you may ultimately try to arrange a plea) and adjudicators (who have the final say on the nature of the punishment) are looking to see that the problems have been rectified and in a timely fashion. Even though the offence has already been committed, time is of the essence and getting prompt legal advice is imperative.
In addition to rectifying the problems, prosecutors and adjudicators will want to see how diligent the landlord was in maintaining and inspecting the property. As stated above, regular inspections can be a life-saver for the investor. Even in cases where the tenant is directly responsible for the offence (for example, if they remove a smoke alarm, or improperly prop open stairwell doors) fault will still rest on the landlord’s shoulders unless they can demonstrate that the problems occurred even in the face of their diligent inspections and property management.
Most investors pay no mind to the thought of being charged with an offence until after the charges have been laid, by which time most of the damage has been done. While it is understandable to believe that it could never happen to you, the reality is that it certainly could. Given that the consequences are so severe, it is a risk that no prudent investor should take.
Although there are a variety of offences that a landlord could be charged with, the most likely to occur is a charge under the provincial fire code or related statute. Many landlords might assume that a fire code offence is not a serious concern, but the penalties can be steep.
In Ontario, for example, an individual can be charged up to $50,000 per count. If the owner is a corporation then the fines can be up to $100,000 against the corporation and $50,000 against individual officers and directors of the company per count.
Although rare, both individuals and officers and directors can be imprisoned for fire code offences. Compounding the severity of the penalties is the fact that, in most cases, multiple infractions are discovered at once. I have seen many cases where the landlord is looking at a cumulative fine of $500,000 or more.
So, what do landlords need to know to protect themselves against these types of charges?
1. How can I protect myself?
First and foremost, landlords should become familiar with what the law requires of them. This will depend on the type of unit they own. A legal rooming house, for example, will have different requirements than a one-bedroom condominium, which will in turn have different requirements than an apartment building. When the property is acquired the landlord should ensure that it is legally compliant.
Additionally, investors should be inspecting the parts of the property that can lead to charges whenever they are at the property for any reason, and at a minimum on a bi-annual basis. It only takes 30 seconds to make sure that hallway doors are properly latching, exits are clear of debris and smoke alarms are properly functioning. Failure to stay on top of the small things can lead to a massive fine which can erase years of profit from the landlord’s bank account.
2. Assume the property will at some point be subject to an inspection
Anything that might put the fire department in the vicinity of the property could lead to an inspection. If there is a fire, big or small, at your property you can safely assume that your property is going to be inspected afterwards. Although one could argue that the chance of a fire is rare, it is still a possibility and an event that is completely outside of the landlord’s control.
Additionally, a fire in the property is not a prerequisite to an inspection. For example, perhaps an accident occurs at the property and something catches the eye of EMS or the fire department while they are on site. A landlord has no way of protecting themselves from being inspected, so the best protection is to operate under the assumption that an inspection could occur at any time, because it can.
3. What to do If you get charged
Contact a lawyer as soon as possible. While this may sound obvious, many landlords will delay contacting counsel either because they are unsure of what to do or, worse yet, think that they can rectify the situation on their own.
Many offences are extremely difficult to defend given their nature. For example, there is almost no defence available for failing to have functioning smoke alarms in the property. In cases where there is no defence, the landlord will need to go into damage control as quickly as possible in order to mitigate the ultimate penalty that they will have to pay.
Most prosecutors (with whom you may ultimately try to arrange a plea) and adjudicators (who have the final say on the nature of the punishment) are looking to see that the problems have been rectified and in a timely fashion. Even though the offence has already been committed, time is of the essence and getting prompt legal advice is imperative.
In addition to rectifying the problems, prosecutors and adjudicators will want to see how diligent the landlord was in maintaining and inspecting the property. As stated above, regular inspections can be a life-saver for the investor. Even in cases where the tenant is directly responsible for the offence (for example, if they remove a smoke alarm, or improperly prop open stairwell doors) fault will still rest on the landlord’s shoulders unless they can demonstrate that the problems occurred even in the face of their diligent inspections and property management.
Most investors pay no mind to the thought of being charged with an offence until after the charges have been laid, by which time most of the damage has been done. While it is understandable to believe that it could never happen to you, the reality is that it certainly could. Given that the consequences are so severe, it is a risk that no prudent investor should take.
Wednesday, September 30, 2015
It's time for many Canadians to abandon the 20% down-payment rule
This one’s for the housing true believers out there.
You’re the buyers who keep pushing house prices higher in cities such as Vancouver, Toronto and Hamilton. Incomes are edging higher in these cities, prices are surging. If you’re primed to buy anyway, then listen up. Stop trying to save a 20-per-cent down payment and get into the market now.
A popular and sensible bit of financial advice is that you should ideally wait to buy a house until you have a down payment of at least 20 per cent and thus are excused from buying mortgage default insurance. But if it takes a few years to save that much, you may find that soaring prices more than offset the savings on mortgage insurance.
This insurance got a little more expensive in some cases this summer, so it’s time for a fresh look at the case for avoiding the cost of buying it.
Background for housing rookies: If you have a down payment of less than 20 per cent, you have to pay a hefty premium to insure your lender in case you default on your payments. The amount is usually added to your mortgage principal, which means it’s out of sight and out of mind. But it still costs you.
With a down payment of less than 10 per cent (5 per cent is the minimum), the cost of mortgage insurance rose in June to 3.6 per cent of the purchase price from 3.15 per cent. Larger down payments short of 20 per cent were unaffected and range from 2.4 per cent down to 1.8 per cent. You’ll pay provincial sales tax on those amounts in Manitoba, Ontario and Quebec. More importantly, you’ll incur extra interest charges by adding these amounts to your mortgage balance.
Let’s use the average resale house price in Canada to illustrate how much mortgage insurance adds to your costs when buying a first home. The average price in August was $433,367 – acalculator from Canada Mortgage and Housing Corp., a supplier of mortgage insurance, shows that a 10-per-cent down payment would trigger a mortgage insurance premium of $9,361. With that amount added to the mortgage, monthly payments on a five-year fixed mortgage at 2.59 per cent would be $1,807 per month.
With a 20-per-cent down payment, monthly costs on this mortgage fall to $1,569. Total interest over the five-year term of the mortgage falls to $41,390 from $47,681, a difference of $6,291. But would it really be worth postponing your purchase by three years to put 20 per cent down? With the market rising at 5 per cent annually (less than recent increases in Vancouver, Toronto and Hamilton), the chart that goes with this column shows you’d actually end up paying more per month.
Mortgage rates also have to figure into your thinking on whether to buy now or wait and save more. If we assume 4 per cent average annual price increases over three years and a rise in mortgage rates of one percentage point, you’d have to pay substantially more than if you bought now and paid for mortgage insurance (see chart).
If you live in a city with a slow real estate market, it pays to wait and save more. If you waited three years to double your down payment to 20 per cent on the average-priced house and prices rose 2 per cent annually, you’d come out ahead by more than $140 per month.
A June study issued by the Canadian Association of Accredited Mortgage Professionals said the average house down payment for first-time buyers was $67,000. That represents a 21 per cent down payment on the average $318,000 spent by first-timers, and a 15.5-per-cent down payment on the overall average price of $433,367.
The CAAMP study found that 18 per cent of first-time buyers received gifts or loans from family. A thought for parents who want to help their kids get into the market: Try topping up their down payment to reach the 20 per cent threshold. Warning: Parents should avoid this type of financial help if they have to go into debt to provide it, or if it greases the way for their kids to buy a house they can’t properly afford to carry.
Down payments are one of the least strategized parts of home buying, and yet they can have a big impact on your total long-term cost of owning a house. The conventional wisdom about 20-per-cent down payments is right on the money, but not if you’re set on buying in a hot market. Either jump in now or resolve to wait and save indefinitely for sanity to return.
For a free evalaution of your home or to find out what we do to GET YOUR HOME SOLD, Call: 519-841-0559 or e-mail: roy@callcleeves.com
Monday, September 21, 2015
Six benefits to investing in real estate
The time and effort it takes to build up a real estate portfolio can test your will, but when you stick with it, the benefits are worthwhile.
1. The courage to walk away
The headaches of the corporate world: endless meetings, business travel, red tape, bureaucracy at its fullest, reorganization, hiring freezes, more cutbacks, the impact on your health.
Putting up with this for years and years isn’t always worth the upside and perks a job might offer. Even if you don’t like your job, having real estate investments to fall back on can give you the courage to walk away from it all, like I did.
I decided to walk away from that job and from higher-level positions that would have sucked up more of my time so that I could balance what’s important in my life. I think Frank (played by John Goodman) in The Gambler said it best (although with a few more curse words):
“... You get a house with a 25-year roof... you put the rest into the system at 3-5% to pay your taxes and that’s your base, get me? That’s your fortress of [f---king] solitude. That puts you, for the rest of your life, at a level of f--- you. Somebody wants you to do something, f--- you. Boss pisses you off, f--- you!”
2. The time to get healthy
You know that getting in shape and eating healthy is very important, but you constantly have other commitments in life that take up all your free time. You know that’s bad for your health in the long term. Even if your life isn’t stressful, you probably could benefit from more free time.
As you develop an income from real estate, it becomes easier to balance everything in life because it’s possible to be less reliant on a salary, and to be able to afford more time off. Examples include stepping back from your day job, building healthy habits, and placing health as a top priority. I decided to do all that, by taking extended time off to repair my 18-year-old shoulder injury and committing more time to dance and sports, rather than work.
3. The opportunity to take a sabbatical
Imagine a big dream vacation, one that takes you away for several months. It’s difficult, isn’t it, because you don’t have limited vacation time or the funds to pay for it? Having a real estate portfolio that pays you might be the push you need to take a break from work and go on a sabbatical. You might want to travel for an extended period of time, experience other cultures, and naturally wake up without an alarm clock, an agenda or a plan.
After enjoying a sabbatical where I was able to recharge, travel and spend more time with family, I decided to permanently leave my engineering career with the government.
4. Time to pursue interest-based work
Maybe you’ve wondered what it would be like to do something different, like going back to school, trying a new career or starting up your own business. It’s very liberating to know that you have options and you can choose work that balances with your values/beliefs, such as family and personal goals, rather than work that is driven by money.
I left engineering for good more than a year ago and decided to pursue interest-based work. My motto is to work as long as it is fun, rather than work because of the security, benefits or pension.
5. Early retirement
Dedicating time to building a nice nest egg in real estate can afford you extra time later in life. The best thing about early retirement is having more time to do what you want to do. You can afford a less structured life, such as waking up without an alarm clock and penciling in more fun activities, like volunteering or staying at home with the kids.
I haven’t gotten to this point (yet) but I’m actively working towards it. Life is too short to spend 40 years at your peak working so that you can ‘retire’ for the last 30 years.
6. The ability to pay for your kids’ education
If you are one of those people who hates volatility (as experienced in the stock markets) and likes steady returns and lower levels of risk, then investing a bit of capital to buy a property might be the easiest and most stable solution. It is almost impossible to get significant returns without taking a significant risk in paper assets. However, buying property works best when you have time to wait while a tenant pays down a mortgage.
For a free evalaution of your home or to find out what we do to GET YOUR HOME SOLD, Call: 519-841-0559 or e-mail: roy@callcleeves.com
Source:http://www.canadianrealestatemagazine.ca/expert-advice/six-benefits-to-investing-in-real-estate-196280.aspx
1. The courage to walk away
The headaches of the corporate world: endless meetings, business travel, red tape, bureaucracy at its fullest, reorganization, hiring freezes, more cutbacks, the impact on your health.
Putting up with this for years and years isn’t always worth the upside and perks a job might offer. Even if you don’t like your job, having real estate investments to fall back on can give you the courage to walk away from it all, like I did.
I decided to walk away from that job and from higher-level positions that would have sucked up more of my time so that I could balance what’s important in my life. I think Frank (played by John Goodman) in The Gambler said it best (although with a few more curse words):
“... You get a house with a 25-year roof... you put the rest into the system at 3-5% to pay your taxes and that’s your base, get me? That’s your fortress of [f---king] solitude. That puts you, for the rest of your life, at a level of f--- you. Somebody wants you to do something, f--- you. Boss pisses you off, f--- you!”
2. The time to get healthy
You know that getting in shape and eating healthy is very important, but you constantly have other commitments in life that take up all your free time. You know that’s bad for your health in the long term. Even if your life isn’t stressful, you probably could benefit from more free time.
As you develop an income from real estate, it becomes easier to balance everything in life because it’s possible to be less reliant on a salary, and to be able to afford more time off. Examples include stepping back from your day job, building healthy habits, and placing health as a top priority. I decided to do all that, by taking extended time off to repair my 18-year-old shoulder injury and committing more time to dance and sports, rather than work.
3. The opportunity to take a sabbatical
Imagine a big dream vacation, one that takes you away for several months. It’s difficult, isn’t it, because you don’t have limited vacation time or the funds to pay for it? Having a real estate portfolio that pays you might be the push you need to take a break from work and go on a sabbatical. You might want to travel for an extended period of time, experience other cultures, and naturally wake up without an alarm clock, an agenda or a plan.
After enjoying a sabbatical where I was able to recharge, travel and spend more time with family, I decided to permanently leave my engineering career with the government.
4. Time to pursue interest-based work
Maybe you’ve wondered what it would be like to do something different, like going back to school, trying a new career or starting up your own business. It’s very liberating to know that you have options and you can choose work that balances with your values/beliefs, such as family and personal goals, rather than work that is driven by money.
I left engineering for good more than a year ago and decided to pursue interest-based work. My motto is to work as long as it is fun, rather than work because of the security, benefits or pension.
5. Early retirement
Dedicating time to building a nice nest egg in real estate can afford you extra time later in life. The best thing about early retirement is having more time to do what you want to do. You can afford a less structured life, such as waking up without an alarm clock and penciling in more fun activities, like volunteering or staying at home with the kids.
I haven’t gotten to this point (yet) but I’m actively working towards it. Life is too short to spend 40 years at your peak working so that you can ‘retire’ for the last 30 years.
6. The ability to pay for your kids’ education
If you are one of those people who hates volatility (as experienced in the stock markets) and likes steady returns and lower levels of risk, then investing a bit of capital to buy a property might be the easiest and most stable solution. It is almost impossible to get significant returns without taking a significant risk in paper assets. However, buying property works best when you have time to wait while a tenant pays down a mortgage.
For a free evalaution of your home or to find out what we do to GET YOUR HOME SOLD, Call: 519-841-0559 or e-mail: roy@callcleeves.com
Source:http://www.canadianrealestatemagazine.ca/expert-advice/six-benefits-to-investing-in-real-estate-196280.aspx
Friday, September 18, 2015
Seller Property Information Statements: What you need to know
While seller property information statements (SPIS) are not required by law, there are certain legal implications that investors and real estate agents should be aware of. Commercial lawyer Matt Maurer answers a range of questions about the statements
While seller property information statements (SPIS) are not required by law, there are certain legal implications that investors and real estate agents should be aware of. Commercial lawyer Matt Maurer answers a range of questions about the statements.
1. What is a seller property information statement?
A SPIS is a standard form document that was drafted by the Ontario Real Estate Association. It will contain information relating to defects, renovations and other pertinent property information based on the seller’s knowledge and experience.
2. Is completing a SPIS mandatory?
No. Sellers are not required by law to complete a SPIS. However, according to the Real Estate Council of Ontario, once a seller has completed a SPIS their broker or agent is required to tell all potential buyers of its existence. Additionally, if the buyer makes their offer conditional on a SPIS, then from a practical perspective the seller either has to complete one, or not sell to that particular buyer.
3. What are the legal implications?
SPIS have attracted significant judicial consideration in recent years.
The law in Ontario relating to SPIS was settled by the Court of Appeal in 2011. In short, where the seller completes a SPIS it is assumed that the seller intends that the SPIS will be disclosed to prospective buyers to use to inform their decisions respecting the purchase. This creates the relationship necessary in law to hold a seller legally responsible if the information contained in the SPIS is wrong, either through negligence (carelessness) or fraud (deliberately), notwithstanding the large disclaimer that appears at the beginning of the SPIS.
In a recent decision, the transaction was made conditional on a home inspection and financing (but not a SPIS). The agreement also contained a standard entire agreement clause. However, two days after the agreement was signed the buyer asked the seller to complete a SPIS and the seller obliged. The SPIS created an obligation on the seller not only to disclose existing information but also to notify the buyer of any changes to the information contained in the SPIS prior to the closing date.
The seller indicated on the SPIS that the house had not experienced any flooding. After the SPIS was delivered, but prior to the closing, there was flooding in the house. The seller failed to inform the buyer and the buyer ended up suing the seller after the closing when the buyer discovered the flooding issue. The court ruled in favour of the buyer and held that the SPIS and the obligation to make ongoing disclosure trumped the entire agreement clause found in the agreement itself.
4. What are the implications for agents?
Agents representing the seller are under an obligation to guide the client through the form and to provide specific warnings about the implications of completing a SPIS and the importance of ensuring that answers are complete and accurate. These warnings are to include the fact that by completing a SPIS the seller may be providing information to potential buyers that they are not legally otherwise required to provide.
In conclusion
Prudent buyers should, at the very minimum, ask the seller to complete a SPIS, and prudent vendors should avoid voluntarily completing a SPIS without the buyer specifically asking for one. If the buyer makes the request, the seller is under no obligation to do so. The seller’s decision as to whether or not to complete a SPIS at that point will likely depend on the condition of the house and the state of the local market.
For a free evalaution of your home or to find out what we do to GET YOUR HOME SOLD, Call: 519-841-0559 or e-mail: roy@callcleeves.com
Source:http://www.canadianrealestatemagazine.ca/expert-advice/seller-property-information-statements-what-you-need-to-know-195166.aspx
While seller property information statements (SPIS) are not required by law, there are certain legal implications that investors and real estate agents should be aware of. Commercial lawyer Matt Maurer answers a range of questions about the statements.
1. What is a seller property information statement?
A SPIS is a standard form document that was drafted by the Ontario Real Estate Association. It will contain information relating to defects, renovations and other pertinent property information based on the seller’s knowledge and experience.
2. Is completing a SPIS mandatory?
No. Sellers are not required by law to complete a SPIS. However, according to the Real Estate Council of Ontario, once a seller has completed a SPIS their broker or agent is required to tell all potential buyers of its existence. Additionally, if the buyer makes their offer conditional on a SPIS, then from a practical perspective the seller either has to complete one, or not sell to that particular buyer.
3. What are the legal implications?
SPIS have attracted significant judicial consideration in recent years.
The law in Ontario relating to SPIS was settled by the Court of Appeal in 2011. In short, where the seller completes a SPIS it is assumed that the seller intends that the SPIS will be disclosed to prospective buyers to use to inform their decisions respecting the purchase. This creates the relationship necessary in law to hold a seller legally responsible if the information contained in the SPIS is wrong, either through negligence (carelessness) or fraud (deliberately), notwithstanding the large disclaimer that appears at the beginning of the SPIS.
In a recent decision, the transaction was made conditional on a home inspection and financing (but not a SPIS). The agreement also contained a standard entire agreement clause. However, two days after the agreement was signed the buyer asked the seller to complete a SPIS and the seller obliged. The SPIS created an obligation on the seller not only to disclose existing information but also to notify the buyer of any changes to the information contained in the SPIS prior to the closing date.
The seller indicated on the SPIS that the house had not experienced any flooding. After the SPIS was delivered, but prior to the closing, there was flooding in the house. The seller failed to inform the buyer and the buyer ended up suing the seller after the closing when the buyer discovered the flooding issue. The court ruled in favour of the buyer and held that the SPIS and the obligation to make ongoing disclosure trumped the entire agreement clause found in the agreement itself.
4. What are the implications for agents?
Agents representing the seller are under an obligation to guide the client through the form and to provide specific warnings about the implications of completing a SPIS and the importance of ensuring that answers are complete and accurate. These warnings are to include the fact that by completing a SPIS the seller may be providing information to potential buyers that they are not legally otherwise required to provide.
In conclusion
Prudent buyers should, at the very minimum, ask the seller to complete a SPIS, and prudent vendors should avoid voluntarily completing a SPIS without the buyer specifically asking for one. If the buyer makes the request, the seller is under no obligation to do so. The seller’s decision as to whether or not to complete a SPIS at that point will likely depend on the condition of the house and the state of the local market.
For a free evalaution of your home or to find out what we do to GET YOUR HOME SOLD, Call: 519-841-0559 or e-mail: roy@callcleeves.com
Source:http://www.canadianrealestatemagazine.ca/expert-advice/seller-property-information-statements-what-you-need-to-know-195166.aspx
Tuesday, June 30, 2015
Ontario condo owners to get cheaper way to resolve disputes
The Ontario government plans to slap condo owners with the costs of protecting themselves from bad boards and unexpected financial problems within their buildings — starting at $1 a month per condo unit — under the biggest overhaul in condo legislation proposed in 16 years.
The new Protecting Condominium Owners Act is sure to result in not only higher maintenance fees but, in some buildings, costly special assessments as the government tries to get a grip on a booming sector that now houses about 10 per cent of Ontario residents — some 1.3 million people.
The massive overhaul — aimed at dealing with the “serious level of concern” around everything from transparency of condo finances to poorly trained property managers — will do nothing, however, to protect buyers against shoddy construction or developers who promise more than they deliver.
The proposed bill calls for creation of a new, non-profit Condominium Authority, funded largely by condo owners, to resolve disputes within the province’s close to 10,000 buildings that now can result in costly and lengthy litigation.
A proposed new Condo Manager Licensing Authority will regulate the booming property management system. That’s aimed at ensuring the folks hired to do the day-to-day running of multi-million dollar condo corporations across the province are adequately trained and vetted to reduce the risk of mismanagement or outright fraud which has emerged as a growing problem in a sector that now accounts for more than 50 per cent of all new housing construction.
“I see it as an insurance policy,” said veteran condo dweller Anne-Marie Ambert of the new monthly fees for owners. The York University professor was the lone representative for owners on the 12-member expert panel that advised the Liberal government on needed changes to the outdated act.
“It’s going to give us services and security that we don’t have now.”
In announcing the proposed changes Wednesday from the rooftop of a downtown condo building, Government and Consumer Services Minister David Orazietti stressed “it has become very clear what is likely to happen if we do not reform this act.
“A deterioration of condominium living — with increased potential for fraud and mismanagement. A continued rise in the number of very expensive, court-appointed administrators taking over control of condos from boards and managers as a result of failed reserve funds and other issues and more and more costly disputes between owners, and between owners and boards.”
The proposals — including the monthly fee — were among some 2,200 submissions the province received from owners, developers, managers and industry experts during the lengthy review, Orazietti said.
Other changes, which he hopes will be passed later this year and come into effect in 2016, include training for condo directors, mandatory licensing and education for property managers, restrictions against developers sticking buyers with unexpected long-term costs that drive up fees a year or so after taking possession.
The legislation would also make boards more accountable and transparent and stipulate what is an adequate reserve fund for each building for future repairs. Those are now woefully inadequate in some buildings, which could mean one-time special assessments in some condo projects.
Condo owner Sandy Steffen lauded the proposals as much-needed changes that might have protected her west-end townhouse complex, along with some two dozen other condo projects, from a rogue property manager who stole well over $350,000 from her small complex alone and left the board $170,000 in debt.
It took two years and cost each owner about $11,000 to fix the financial mess. While they were able to eventually recover 85 per cent of the outstanding funds, thousands were lost to legal fees.
“The small levy (under the proposed legislation) is a bargain compared to having to pay the full freight of legal costs,” said her condo board’s lawyer, Christopher Jaglowitz
Friday, June 26, 2015
Industrial building the next frontier in this hot market
A spotlight has been shining on Hamilton’s residential real estate market all year as investors look to capitalize on appreciating home prices – but one industrial property is signaling a new opportunity for investors.
Over the last few years, Ontario has seen successful turnarounds in revitalized industrial properties, such as Wychwood Barns in Toronto and the Tannery in Waterloo. However, the latest project, at Cannon Knitting Mills in Hamilton, could offer the most potential if enough capital is raised to turn it around.
“It’s an emerging area in the downtown that could really use this building as a mixed-use building for residential and commercial purposes,” said Dave Premi, an architect with the Cannon Knitting Mills project, adding that the building was purchased for $200,000 four years ago.
“It could be a good opportunity for investors if done right. It has to be done in phases, and the traditional rules of redevelopment won’t apply due to some risks, but it’s an important cultural asset that could pay off down the road.”
Stakeholders in Hamilton gathered last week to discuss just what could be done with the Cannon Knitting Mills, a historic industrial building that could be a boon to the local area if redesigned the right way.
Richard Joy, executive director of the Urban Land Institute, Premi, several investors, city officials and other large commercial players were on hand to hear about the opportunities for residential and commercial space in the three-storey building.
In an emerging area that's primed for growth, according to experts, the Cannon Knitting Mills has the power to be a major catalyst for downtown Hamilton, if not the entire city, said Glen Norton, manager of urban renewal at the City of Hamilton.
It’s also worth noting that the City of Hamilton offers a number of incentive programs, including interest-free loans, which investors can take advantage of.
“There’s a lack of retail in the area so I think that this building could provide that for the Beasley neighbourhood [in Hamilton],” said Norton. “There were really good ideas presented – a metal shop, a centre for fashion and design, a performance art center, so I think there’s a lot of potential there for the right investor(s) in a growing area.”
Over the last few years, Ontario has seen successful turnarounds in revitalized industrial properties, such as Wychwood Barns in Toronto and the Tannery in Waterloo. However, the latest project, at Cannon Knitting Mills in Hamilton, could offer the most potential if enough capital is raised to turn it around.
“It’s an emerging area in the downtown that could really use this building as a mixed-use building for residential and commercial purposes,” said Dave Premi, an architect with the Cannon Knitting Mills project, adding that the building was purchased for $200,000 four years ago.
“It could be a good opportunity for investors if done right. It has to be done in phases, and the traditional rules of redevelopment won’t apply due to some risks, but it’s an important cultural asset that could pay off down the road.”
Stakeholders in Hamilton gathered last week to discuss just what could be done with the Cannon Knitting Mills, a historic industrial building that could be a boon to the local area if redesigned the right way.
Richard Joy, executive director of the Urban Land Institute, Premi, several investors, city officials and other large commercial players were on hand to hear about the opportunities for residential and commercial space in the three-storey building.
In an emerging area that's primed for growth, according to experts, the Cannon Knitting Mills has the power to be a major catalyst for downtown Hamilton, if not the entire city, said Glen Norton, manager of urban renewal at the City of Hamilton.
It’s also worth noting that the City of Hamilton offers a number of incentive programs, including interest-free loans, which investors can take advantage of.
“There’s a lack of retail in the area so I think that this building could provide that for the Beasley neighbourhood [in Hamilton],” said Norton. “There were really good ideas presented – a metal shop, a centre for fashion and design, a performance art center, so I think there’s a lot of potential there for the right investor(s) in a growing area.”
Monday, June 22, 2015
How to buy a property in a hot market
1. Educate yourself
Before going out to view your first home, talk with your Realtor and other expert sources to learn as much as you can about the market you’re buying in. If you’re investing, understand what is currently driving the market demand, current inventory, how fast homes are selling, list versus sell price, frequency of multiple offers, and rental-related information.
2. Have your finances in order
Whether we like it or not, if you end up in a competitive multiple offer situation there may be pressure for you to exclude certain conditions, such as mortgage financing and home inspection. In these situations, it is imperative that you have the utmost confidence that you’ll be approved for a mortgage for the home you’re trying to purchase.
Also, be sure not to make any major financial changes prior to closing (e.g. taking on more debt, leaving a job, etc). Firming up a deal without obtaining mortgage approval prior to closing is a recipe for a potential lawsuit – at minimum you could lose your deposit.
3. Know how to recognize certain home defects
As with the above point, multiple offer situations may require you to exclude a home inspection condition. Therefore, it is important that you do your homework on what to look for regarding potential defects in a home (e.g. water issues, foundation issues, proper construction, fire hazards, etc). Preferably you bring someone with you during showings who has this background.
4. Remove emotion
Purchasing a home in a hot market may mean that you will lose during negotiations. It’s not uncommon for some buyers to have to put in offers on a few homes (at different times of course!) before they actually get an accepted offer. Attaching too much emotion prior to a firm deal can lead to a feeling of disappointment and frustration in the event an offer is lost.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/how-to-buy-a-property-in-a-hot-market-192453.aspx
Before going out to view your first home, talk with your Realtor and other expert sources to learn as much as you can about the market you’re buying in. If you’re investing, understand what is currently driving the market demand, current inventory, how fast homes are selling, list versus sell price, frequency of multiple offers, and rental-related information.
2. Have your finances in order
Whether we like it or not, if you end up in a competitive multiple offer situation there may be pressure for you to exclude certain conditions, such as mortgage financing and home inspection. In these situations, it is imperative that you have the utmost confidence that you’ll be approved for a mortgage for the home you’re trying to purchase.
Also, be sure not to make any major financial changes prior to closing (e.g. taking on more debt, leaving a job, etc). Firming up a deal without obtaining mortgage approval prior to closing is a recipe for a potential lawsuit – at minimum you could lose your deposit.
3. Know how to recognize certain home defects
As with the above point, multiple offer situations may require you to exclude a home inspection condition. Therefore, it is important that you do your homework on what to look for regarding potential defects in a home (e.g. water issues, foundation issues, proper construction, fire hazards, etc). Preferably you bring someone with you during showings who has this background.
4. Remove emotion
Purchasing a home in a hot market may mean that you will lose during negotiations. It’s not uncommon for some buyers to have to put in offers on a few homes (at different times of course!) before they actually get an accepted offer. Attaching too much emotion prior to a firm deal can lead to a feeling of disappointment and frustration in the event an offer is lost.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/how-to-buy-a-property-in-a-hot-market-192453.aspx
Monday, June 15, 2015
What is crowdfunding?
Crowdfunding is no longer a buzzword reserved for start-ups and tech entrepreneurs. Today, crowdfunding is a well-established vehicle for entrepreneurs to leverage the power of the "crowd" while enabling the crowd to participate in exciting and/or lucrative projects.
Real estate crowdfunding allows individuals to invest in existing apartment buildings or in buildings under development — an opportunity that currently is available only to wealthy individuals or institutions.
Equity crowdfunding allows small and medium-size businesses to raise capital without the time and expense of issuing detailed financial reports and offering shares for sale on the stock market. It is viewed as a low-cost alternative to taking a company public by issuing shares in an initial public offering. Equity crowdfunding would allow a large number of investments from individuals to be pooled in exchange for securities.
Such investment opportunities were called public offerings by the OSC before its consultation last year. Only accredited investors — institutions, people with incomes of more than $200,000 or people with more than a million dollars in assets in addition to their home — were allowed to make such investments.
Under its proposal, entities would be permitted to raise capital from the public by the issuance of securities through an independent and regulated website called a "portal." The exemption is designed to enable an issuer to access a potentially large number of equity investors on a cost-effective basis via the Internet and social media, regardless of an investor’s profile or investment sophistication, subject to certain requirements for the protection of investors.
No investor is permitted to invest more than $2,500 in a single investment or $10,000 in total investments in a calendar year. An issuer is not be permitted to raise more than $1.5 million in any 12-month period under the crowdfunding exemption.
Open Avenue, a company based in Kitchener, Ont. has a model for equity crowdfunding. “We are the first real estate crowdfunding portal in Canada,” says Tim McKillican, president and co-founder of Open Avenue. “It’s a new way of being able to invest in your community for individuals that does not exist right now."
The current rules [in August 2014] exclude the vast majority of people. “The accredited investor market is only four per cent of potential investors,” says McKillican. “It's not fair to anyone else, maybe they don’t have millions of dollars, but they want to invest $500 or $1,000 in something in their local community. They know the community they have a special interest in it. Why should they be crowded out?”
Three of the four men behind Open Avenue are principals in Revel Developments, while McKillican partners with the company on a project-by-project basis. To begin with, Open Avenue would only crowdfund Revel Development projects, but McKillican said the long-term plan is to open up the model to developers across the country. McKillican said the objective is to see returns of eight per cent a year for apartment buildings that already exist, and 12 per cent for buildings under development.
The higher returns for buildings under development reflect the risk involved in buying distressed or old properties that need extensive renovations. The rate of return for new projects reflects the cost of getting the approvals, builders and tenants in place for a new development.
Real estate crowdfunding allows individuals to invest in existing apartment buildings or in buildings under development — an opportunity that currently is available only to wealthy individuals or institutions.
Equity crowdfunding allows small and medium-size businesses to raise capital without the time and expense of issuing detailed financial reports and offering shares for sale on the stock market. It is viewed as a low-cost alternative to taking a company public by issuing shares in an initial public offering. Equity crowdfunding would allow a large number of investments from individuals to be pooled in exchange for securities.
Such investment opportunities were called public offerings by the OSC before its consultation last year. Only accredited investors — institutions, people with incomes of more than $200,000 or people with more than a million dollars in assets in addition to their home — were allowed to make such investments.
Under its proposal, entities would be permitted to raise capital from the public by the issuance of securities through an independent and regulated website called a "portal." The exemption is designed to enable an issuer to access a potentially large number of equity investors on a cost-effective basis via the Internet and social media, regardless of an investor’s profile or investment sophistication, subject to certain requirements for the protection of investors.
No investor is permitted to invest more than $2,500 in a single investment or $10,000 in total investments in a calendar year. An issuer is not be permitted to raise more than $1.5 million in any 12-month period under the crowdfunding exemption.
Open Avenue, a company based in Kitchener, Ont. has a model for equity crowdfunding. “We are the first real estate crowdfunding portal in Canada,” says Tim McKillican, president and co-founder of Open Avenue. “It’s a new way of being able to invest in your community for individuals that does not exist right now."
The current rules [in August 2014] exclude the vast majority of people. “The accredited investor market is only four per cent of potential investors,” says McKillican. “It's not fair to anyone else, maybe they don’t have millions of dollars, but they want to invest $500 or $1,000 in something in their local community. They know the community they have a special interest in it. Why should they be crowded out?”
Three of the four men behind Open Avenue are principals in Revel Developments, while McKillican partners with the company on a project-by-project basis. To begin with, Open Avenue would only crowdfund Revel Development projects, but McKillican said the long-term plan is to open up the model to developers across the country. McKillican said the objective is to see returns of eight per cent a year for apartment buildings that already exist, and 12 per cent for buildings under development.
The higher returns for buildings under development reflect the risk involved in buying distressed or old properties that need extensive renovations. The rate of return for new projects reflects the cost of getting the approvals, builders and tenants in place for a new development.
Wednesday, June 10, 2015
Controversial online brokerage shuts down
Zoocasa, the web-based real estate brokerage, has confirmed that it's closing its doors.
In an email sent to its homebuyer and investor clients, and republished by a number of Twitter users, the company has stated that it will cease to be registered and “will be prohibited from trading in real estate as a brokerage” as of June 22, 2015.
Analysts are already suggesting that it may hint at what's to come in September this year, when the Competition Bureau decides whether sold data should be made public.
Zoocasa was launched as a brokerage in 2013, as a Rogers-affiliate. Previously, it had published listing data via real estate agents. The concept of the company was to make real estate data more accessible to the public.
However, as of February 2015, Zoocasa has stopped publishing home sale data to its site after receiving a warning from the Toronto Real Estate Board.
The letter read: “For the past two years we have had the pleasure of matching thousands of customers like you with great Realtors throughout the country. Although we have had great success, we have made the difficult decision to close down our business.”
A representative from Rogers told REP: "Rogers has made the decision to no longer continue our investment in Zoocasa as the business is no longer a fit with our overall company plan, and core areas of focus. We will close down our website and mobile app effective June 22, 2015."
Corrie Holiday, an agent with Re/Max Chay Realty, told REP: "I'm glad its gone. It bit off more than it could chew. It didn't have a sustainable business model and it forgot about the human element of the business, which I think is more important than anything."
Darryl Mitchell, Zoocasa's broker of record, added: "[Agents] are going to say whatever they are going to say, but I'm proud of what we accomplished. We worked hard to provide quality leads, and the stats show that. That's all that matters."
In an email sent to its homebuyer and investor clients, and republished by a number of Twitter users, the company has stated that it will cease to be registered and “will be prohibited from trading in real estate as a brokerage” as of June 22, 2015.
Analysts are already suggesting that it may hint at what's to come in September this year, when the Competition Bureau decides whether sold data should be made public.
Zoocasa was launched as a brokerage in 2013, as a Rogers-affiliate. Previously, it had published listing data via real estate agents. The concept of the company was to make real estate data more accessible to the public.
However, as of February 2015, Zoocasa has stopped publishing home sale data to its site after receiving a warning from the Toronto Real Estate Board.
The letter read: “For the past two years we have had the pleasure of matching thousands of customers like you with great Realtors throughout the country. Although we have had great success, we have made the difficult decision to close down our business.”
A representative from Rogers told REP: "Rogers has made the decision to no longer continue our investment in Zoocasa as the business is no longer a fit with our overall company plan, and core areas of focus. We will close down our website and mobile app effective June 22, 2015."
Corrie Holiday, an agent with Re/Max Chay Realty, told REP: "I'm glad its gone. It bit off more than it could chew. It didn't have a sustainable business model and it forgot about the human element of the business, which I think is more important than anything."
Darryl Mitchell, Zoocasa's broker of record, added: "[Agents] are going to say whatever they are going to say, but I'm proud of what we accomplished. We worked hard to provide quality leads, and the stats show that. That's all that matters."
Monday, June 8, 2015
Toronto family moves to Kitchener to get affordable home
oronto residents Stephen and Melissa Heidebrecht have done the math and they're moving on — to Kitchener.
After two years of scouring Realtor.ca, squeezing through open-house crowds and watching homes they'd love to live in go for $100,000 or more over the asking price, they've thrown in the towel on Toronto.
Last month, the Heidebrechts put their 1,500-square-foot, two-bedroom bungalow in east-end Little India up for sale for $599,900. A four-person bidding war later, it sold for $706,000.
They move into their $482,500 home in Kitchener's Forest Hill area in July. It's a four-bedroom, more than 3,000-square-foot detached house on a quiet cul-de-sac they liken to Scarborough's Guildwood.
Their Toronto home would pretty much fit into the double-car garage.
While Heidebrecht, an engineer and self-employed contractor, will have to restart his business in a brand new city, the couple, both 35, figure the price is worth it: Overnight their mortgage will plummet from $200,000 to just $20,000. Melissa, an occupational therapist, will have the option of staying home with their two boys, Jacob, 6, and Wally, 2.
"Do you know how many times I have cried, thinking that I'm being forced out of my home by the fact that the market here is insane?" says Melissa, who is keen on the much-debated move, but concerned about leaving good friends, the children's babysitter and even nearby parks where the boys go swimming in summer.
"We couldn't even afford to buy our own house at this point. It's almost like someone has stolen something from you — like the market has stolen your ability to live here."
In reality, it has.
Last month the average sale price of a resale detached house in the City of Toronto hit $1.15 million, up 18.2 per cent from May of 2014.
And a recent report by the Canada Mortgage and Housing Corp. warned that construction of new, single-detached homes will continue to decline — and prices climb — because of land costs, lack of serviced subdivisions and land use policies, which is code for intensification and the shift to highrise rather than low-rise housing construction.
That means it's going to become ever harder to buy a detached home in the Greater Toronto Area, unless you can afford to pay $2 million for brand-new infill houses in Toronto, or are willing to move to the easterly 905 regions, Hamilton, Barrie and Waterloo Region, the housing authority noted.
"If we could have moved up to a bigger house for $50,000, we might have considered staying in the city," says Stephen. "But then we realized we were looking at more like $200,000, which would have doubled our monthly payments. I don't want to be married to my mortgage until the day I die."
Toronto real estate refugees have long been leaving the city for surrounding areas like Barrie and, more recently, Hamilton and Waterloo Region.
But even more far-flung areas like Bowmanville and Courtice in the easterly Clarington area now are seeing bidding wars as the demand for affordable houses — detached, semis or townhomes — outstrips supply in large parts of Oshawa, Whitby, Pickering and Ajax and pushes house hunters farther east.
Also driving demand to the east — as well as westerly cities like Hamilton and Kitchener — are promises of more frequent GO Train service. Added to that, in the easterly extremes of the Toronto area, is the coming Highway 407 extension which promises to ease the daily, if costly, commute to jobs in the city.
"We're seeing more bidding wars and houses going for over asking price," says Bowmanville-area realtor Kim Downey who recently listed her own Whitby home for $399,000. She had seven offers and the house went for $40,000 over asking price.
"For the last few months, almost every listing out here has been holding back offers," says Downey, a tactic that is seen as driving up competition in the city by listing a house one day and not accepting offers for a week.
"It's become the norm. Supply is tight and demand is huge. Prices here are still good compared to the west end of the (Greater Toronto Area), but I think they are going to catch up."
News services
Friday, June 5, 2015
5 tips for finding the right lawyer
In many respects lawyers are similar to any other trade or profession that you will need to retain as part of your investing business. There are good lawyers and bad lawyers. However, unlike a carpenter or a painter, it's very difficult for most people to recognize if their lawyer is underperforming.
In fact, you may not even know that you’re using a bad lawyer until many years later, if ever. This is because most people do not have sufficient experience dealing with lawyers to be able to differentiate the bad from the good.
To help ensure that you’re getting your money’s worth, here are some things to keep in mind when looking for a lawyer (or evaluating your current lawyer):
1. Find a lawyer who works with property investors – or better yet, who is a property investor
A good lawyer is a problem solver. Like a sick patient and a doctor, you come to the lawyer with a legal problem and they resolve it. A great lawyer will solve problems you may not even know you have yet.
A lawyer who is familiar with the business of property investing will be able to be proactive and offer solutions and ideas as to how to protect and further your business interests without you having to first identify a problem for them. As an added bonus, lawyers who act for investors have a solid network and can often put clients in need together to make deals happen.
2. Find someone you like
Ideally, you want to build a long-term relationship with your lawyer and have them become an integral part of your business operations. Finding someone you like and who has a compatible personality goes a long way in helping to build that long-term relationship.
3. You get what you pay for
Lawyers who practice exclusively in residential real estate law typically operate on low margins and rely on volume to pay the bills. In order to maintain low margins these lawyers often rely heavily on their clerks and fall back on the title insurance that you’re buying to cut corners on analysis. You may pay less hiring the cheapest lawyer on the block, but you’ll almost inevitably end up getting less value for your money at the end of the day.
4. Avoid Yes-Men and Yes-Women
Many people come to a lawyer to help solve a problem and already have a pre-conceived notion of what the solution should be. Many lawyers are willing to go to great lengths to appease their clients in order to win their business, and avoid pointing out the folly in their client’s thinking in order to avoid angering the client.You’re paying for your lawyer’s opinion and advice; make sure you find a lawyer that gives you an honest analysis and doesn’t simply tell you what you want to hear.
5. Get online
In this day and age every lawyer worth their salt has an online presence. Read their bio online and find out what experience they have and which professional associations they are involved with. If you’re lawyer practices litigation, look to websites such as Canlii.ca to see if they’ve been involved in important cases and what those cases entailed.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/5-tips-for-finding-the-right-lawyer-191972.aspx
In fact, you may not even know that you’re using a bad lawyer until many years later, if ever. This is because most people do not have sufficient experience dealing with lawyers to be able to differentiate the bad from the good.
To help ensure that you’re getting your money’s worth, here are some things to keep in mind when looking for a lawyer (or evaluating your current lawyer):
1. Find a lawyer who works with property investors – or better yet, who is a property investor
A good lawyer is a problem solver. Like a sick patient and a doctor, you come to the lawyer with a legal problem and they resolve it. A great lawyer will solve problems you may not even know you have yet.
A lawyer who is familiar with the business of property investing will be able to be proactive and offer solutions and ideas as to how to protect and further your business interests without you having to first identify a problem for them. As an added bonus, lawyers who act for investors have a solid network and can often put clients in need together to make deals happen.
2. Find someone you like
Ideally, you want to build a long-term relationship with your lawyer and have them become an integral part of your business operations. Finding someone you like and who has a compatible personality goes a long way in helping to build that long-term relationship.
3. You get what you pay for
Lawyers who practice exclusively in residential real estate law typically operate on low margins and rely on volume to pay the bills. In order to maintain low margins these lawyers often rely heavily on their clerks and fall back on the title insurance that you’re buying to cut corners on analysis. You may pay less hiring the cheapest lawyer on the block, but you’ll almost inevitably end up getting less value for your money at the end of the day.
4. Avoid Yes-Men and Yes-Women
Many people come to a lawyer to help solve a problem and already have a pre-conceived notion of what the solution should be. Many lawyers are willing to go to great lengths to appease their clients in order to win their business, and avoid pointing out the folly in their client’s thinking in order to avoid angering the client.You’re paying for your lawyer’s opinion and advice; make sure you find a lawyer that gives you an honest analysis and doesn’t simply tell you what you want to hear.
5. Get online
In this day and age every lawyer worth their salt has an online presence. Read their bio online and find out what experience they have and which professional associations they are involved with. If you’re lawyer practices litigation, look to websites such as Canlii.ca to see if they’ve been involved in important cases and what those cases entailed.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/5-tips-for-finding-the-right-lawyer-191972.aspx
Monday, June 1, 2015
Open up your eyes in open houses
1. The Neighbourhood
Buying a home is a package deal: it comes with the neighbours. During your visit make note of the traffic speeds, the conditions of the homes in the area and the presence (or absence) of local amenities, especially retail and schools.
Also, look to the neighbouring properties. Are those homes well taken care of? Does it seem like dogs or children live next door? That can give you a good sense of what the neighbours will be like.
2. Privacy
Look out the windows and around the backyard. Does the bedroom window look right into the neighbour’s bathroom? Is the backyard too open, inviting unsolicited visits? Remember: good fences make good neighbours.
3. The Exterior
It’s not just the inside of the home that matters; the house’s exterior can make or break a deal. Look up: does the roof look like it needs new shingles? That can be a costly repair. Now look down: are the wooden boards on the deck rotting? Is the driveway going to need to be repaved? A poorly maintained exterior can also forewarn you of what may be waiting inside.
4. Good flow and layout
The photos you see online won’t reveal how the home flows. For example, is the kitchen near the dining room? Follow the flow with the needs of your targeted tenant in mind.
5. Smells and stains
The nose knows! An odd odour can be a telling sign. Do you sense stale cigarette smoke? That could be a tough scent to remove from carpets. Or maybe you smell something moldy, which could be a far worse problem to have.
Also look around for suspicious stains and watermarks. Water stains can point to a leaky roof or former flood, which might later reveal mold.
6. Light and air
Open windows and pull aside curtains. See how much natural light enters each room and how much air flows through the space. Opening a window during the summer can cut down on the use of air conditioning.
7. Closet and cabinet space
Closet space can be a big deciding factor for buyers, especially for those that are downsizing from larger spaces. If you are staging an open house, ensure that such areas are clean and spacious looking.
8. Signs of renovations
Several people consider themselves handy, but it takes a lot more than a roll of duct tape and some glue to carry out full-scale renovations. If part of the home looks like it’s been altered, ask the listing agent about it and make sure to see a copy of any building permits.
9. The questions
Have a complete list of questions for the agent showing the property. For example, when was the property constructed, how old is the water boiler or how long has the property been listed? Open houses provide a great opportunity to get a real insight into a property.
10. Take pictures and notes
Take notes of any issues that you spot, as well as pictures, during viewing. Use these notes to help in your buying decision – they may also help during the negotiating process.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/open-up-your-eyes-in-open-houses-191710.aspx
Buying a home is a package deal: it comes with the neighbours. During your visit make note of the traffic speeds, the conditions of the homes in the area and the presence (or absence) of local amenities, especially retail and schools.
Also, look to the neighbouring properties. Are those homes well taken care of? Does it seem like dogs or children live next door? That can give you a good sense of what the neighbours will be like.
2. Privacy
Look out the windows and around the backyard. Does the bedroom window look right into the neighbour’s bathroom? Is the backyard too open, inviting unsolicited visits? Remember: good fences make good neighbours.
3. The Exterior
It’s not just the inside of the home that matters; the house’s exterior can make or break a deal. Look up: does the roof look like it needs new shingles? That can be a costly repair. Now look down: are the wooden boards on the deck rotting? Is the driveway going to need to be repaved? A poorly maintained exterior can also forewarn you of what may be waiting inside.
4. Good flow and layout
The photos you see online won’t reveal how the home flows. For example, is the kitchen near the dining room? Follow the flow with the needs of your targeted tenant in mind.
5. Smells and stains
The nose knows! An odd odour can be a telling sign. Do you sense stale cigarette smoke? That could be a tough scent to remove from carpets. Or maybe you smell something moldy, which could be a far worse problem to have.
Also look around for suspicious stains and watermarks. Water stains can point to a leaky roof or former flood, which might later reveal mold.
6. Light and air
Open windows and pull aside curtains. See how much natural light enters each room and how much air flows through the space. Opening a window during the summer can cut down on the use of air conditioning.
7. Closet and cabinet space
Closet space can be a big deciding factor for buyers, especially for those that are downsizing from larger spaces. If you are staging an open house, ensure that such areas are clean and spacious looking.
8. Signs of renovations
Several people consider themselves handy, but it takes a lot more than a roll of duct tape and some glue to carry out full-scale renovations. If part of the home looks like it’s been altered, ask the listing agent about it and make sure to see a copy of any building permits.
9. The questions
Have a complete list of questions for the agent showing the property. For example, when was the property constructed, how old is the water boiler or how long has the property been listed? Open houses provide a great opportunity to get a real insight into a property.
10. Take pictures and notes
Take notes of any issues that you spot, as well as pictures, during viewing. Use these notes to help in your buying decision – they may also help during the negotiating process.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/open-up-your-eyes-in-open-houses-191710.aspx
Wednesday, May 27, 2015
Rental demand outpaces home-buying demand
The pool of renters is getting deeper by the quarter for landlords, according to a CMHC report.
“More now than ever, we’re still a strong rental market in Ontario, and, in some cases, it’s outweighing the demand we see for homeownership,” said Ted Tsiakopoulous, CMHC’s Ontario Regional Economist, in an interview with CREW.
“There is strong demand amongst millennials aged 25-34 to rent condos because they can’t yet afford that down payment, or are taking longer to do so, but still want to rent along a transit line.”
It’s not just here in Toronto, he said, with London, Kitchener and Hamilton seeing the same trend, where demand could outpace the GTA in resale markets.
His comments come as the CMHC is expecting housing activity will increase throughout most of 2015 before slowing down in 2016, with the expectation that mortgage rates could rise.
The news also comes at a time when investors are riding high on optimism and confidence in Toronto and Vancouver. Some 55% of investors in the latter market anticipate value gains this year – a seven percentage point jump from the 2013 figure.
While the results of the survey took place largely before the oil shock took hold, Ontario and B.C. have come away relatively unscathed from the short-term impact now being felt in the Prairies.
Among respondents, 54 per cent bought their last secondary condo unit for rental income, though that figure rose to nearly 80 per cent among investors whose last purchased unit was rented out at the time they responded to the survey. Many plan to hold on to their investments for five years or more.
“An improving economy will be more supportive of the Ontario housing market in 2015 than it has been in the recent past,” said Tsiakopoulos. “However, as mortgage carrying costs continue to grow, particularly for single-family homes, demand will increasingly shift to more affordable housing.”
While home prices are expected to grow at a slower rate, sales are forecast to range between 192,000 to 218,000 units in 2015 before slowing to between 182,900 and 213,400 units in 2016.
Source: http://www.canadianrealestatemagazine.ca/news/rental-demand-outpaces-homebuying-demand-191646.aspx
“More now than ever, we’re still a strong rental market in Ontario, and, in some cases, it’s outweighing the demand we see for homeownership,” said Ted Tsiakopoulous, CMHC’s Ontario Regional Economist, in an interview with CREW.
“There is strong demand amongst millennials aged 25-34 to rent condos because they can’t yet afford that down payment, or are taking longer to do so, but still want to rent along a transit line.”
It’s not just here in Toronto, he said, with London, Kitchener and Hamilton seeing the same trend, where demand could outpace the GTA in resale markets.
His comments come as the CMHC is expecting housing activity will increase throughout most of 2015 before slowing down in 2016, with the expectation that mortgage rates could rise.
The news also comes at a time when investors are riding high on optimism and confidence in Toronto and Vancouver. Some 55% of investors in the latter market anticipate value gains this year – a seven percentage point jump from the 2013 figure.
While the results of the survey took place largely before the oil shock took hold, Ontario and B.C. have come away relatively unscathed from the short-term impact now being felt in the Prairies.
Among respondents, 54 per cent bought their last secondary condo unit for rental income, though that figure rose to nearly 80 per cent among investors whose last purchased unit was rented out at the time they responded to the survey. Many plan to hold on to their investments for five years or more.
“An improving economy will be more supportive of the Ontario housing market in 2015 than it has been in the recent past,” said Tsiakopoulos. “However, as mortgage carrying costs continue to grow, particularly for single-family homes, demand will increasingly shift to more affordable housing.”
While home prices are expected to grow at a slower rate, sales are forecast to range between 192,000 to 218,000 units in 2015 before slowing to between 182,900 and 213,400 units in 2016.
Source: http://www.canadianrealestatemagazine.ca/news/rental-demand-outpaces-homebuying-demand-191646.aspx
Monday, May 25, 2015
What is a syndicated mortgage?
For those looking to get into the real estate game without becoming a landlord, one alternative to the traditional bricks and mortar is mortgage investing. To help make sense of the mortgage investing landscape, CREW took a look at some of most popular options available, starting with syndicated mortgages.
A syndicated mortgage is where two or more investors invest in one specific mortgage. Typically they involve investors becoming the lender to a developer to build a project, such as a condo, low-rise, single family or commercial development, although a single residential mortgage can also be syndicated.
There are several things that differentiate syndicated mortgages from Mortgage Investment Corporations (MICs), including the fact that investors can choose which projects they wish to invest in. Syndicated mortgages also allow investors the additional security of having their name registered on title as a charge holder against the property, which gives them the opportunity to recoup their capital if the project fails.
Syndicated mortgages lending to developers has grown considerably since the 2008 recession because the big banks have required more equity from developers, causing them to look for third party lenders to make up the shortfall.
A syndicated mortgage provides developers with the capital and equity they need to take their project from conception to completion by working in conjunction with bank financing and developer equity. Typically, the developer uses the funds to pay for soft costs, such as consultants, zoning and architecture and marketing costs such as the sales centre.
The risk with these types of investments is knowing what projects to invest in and who you are lending your money to. Many syndicated mortgages are offered by firms that conduct all the due diligence on the developers and the projects and who offer investment opportunities through financial professionals, such as mortgage brokers, financial planners and other professionals, directly to consumers.
Syndicated mortgage investments are not securities, so they fall under the purview of the Financial Services Commission of Ontario, and therefore are open to most investors and not restricted by accredited investor rules. Investors are also able to use RRSP, TFSA, LIRA and other registered funds to invest in syndicated mortgages.
For Sean Greene, president of the Platinum Investment Real Estate Group the smaller investment amounts of syndicated mortgages make them attractive to the occasional investor.
“Even if you don’t have $300,000, maybe you have $25,000, you can still participate in that actual investment and I think that’s a benefit as opposed to a $250,000 mortgage and you only have $25,000 and if we couldn’t syndicate that.”
Source: http://www.canadianrealestatemagazine.ca/strategy/what-is-a-syndicated-mortgage-191516.aspx
A syndicated mortgage is where two or more investors invest in one specific mortgage. Typically they involve investors becoming the lender to a developer to build a project, such as a condo, low-rise, single family or commercial development, although a single residential mortgage can also be syndicated.
There are several things that differentiate syndicated mortgages from Mortgage Investment Corporations (MICs), including the fact that investors can choose which projects they wish to invest in. Syndicated mortgages also allow investors the additional security of having their name registered on title as a charge holder against the property, which gives them the opportunity to recoup their capital if the project fails.
Syndicated mortgages lending to developers has grown considerably since the 2008 recession because the big banks have required more equity from developers, causing them to look for third party lenders to make up the shortfall.
A syndicated mortgage provides developers with the capital and equity they need to take their project from conception to completion by working in conjunction with bank financing and developer equity. Typically, the developer uses the funds to pay for soft costs, such as consultants, zoning and architecture and marketing costs such as the sales centre.
The risk with these types of investments is knowing what projects to invest in and who you are lending your money to. Many syndicated mortgages are offered by firms that conduct all the due diligence on the developers and the projects and who offer investment opportunities through financial professionals, such as mortgage brokers, financial planners and other professionals, directly to consumers.
Syndicated mortgage investments are not securities, so they fall under the purview of the Financial Services Commission of Ontario, and therefore are open to most investors and not restricted by accredited investor rules. Investors are also able to use RRSP, TFSA, LIRA and other registered funds to invest in syndicated mortgages.
For Sean Greene, president of the Platinum Investment Real Estate Group the smaller investment amounts of syndicated mortgages make them attractive to the occasional investor.
“Even if you don’t have $300,000, maybe you have $25,000, you can still participate in that actual investment and I think that’s a benefit as opposed to a $250,000 mortgage and you only have $25,000 and if we couldn’t syndicate that.”
Source: http://www.canadianrealestatemagazine.ca/strategy/what-is-a-syndicated-mortgage-191516.aspx
Tuesday, May 19, 2015
How to market your property for the right tenant
The very first thing to do when marketing your investment property is create an ad that will immediately weed out those who don’t fit the tenant profile you’re interested in attracting.
Marketing properly can save you time and money. Here are some helpful tips to attract great tenants and rent your property for top dollar.
1. Be clear and concise in your advertisement words.
Use a headline that will prompt readers to open your ad. For example: Beautiful backyard, just in time for summer; completely renovated and brand new unit; large, two-bedroom with escarpment views; walking distance to Go-Transit. Think of the best feature that your property has to offer and use it in your headline.
Do not make your ad too wordy. The first few lines will outline why your property is so great. Highlight points so the reader can quickly look through your ad and check off all the features that are important to them.
Your first few lines might say: This spacious and well-kept two bedroom is a dream apartment. Just steps from the lake and close to transit, this home offers a great location for all your leisure and transportation needs.
After you paint a picture for the reader, break down the key features of the property: number of bedrooms and bathrooms, laundry facilities, parking, appliances, special features (hardwood floors, freshly painted, fenced backyard).
2. Market at the right time.
There are certain days of the week and times of day that readers tend to shop online. Advertising on a Monday morning is not the ideal time. People are catching up on work projects or completing a list of chores.
Also important is the time of the month. Listing a property at month start will give you maximum exposure for those who have just begun to look for a rental.
If the month is coming to a close and you have not found the right tenant, be wary of the end-of-the-month crowd. These potential tenants have usually struggled to find a place due to bad credit, lack of income or poor references. Be wary, but still reply and screen them over the phone as their situation could be different.
Marketing a property two or more months before it is available is a vast waste of time. Most people give 60 days’ notice and do not begin to look for a new home until that time. If you market too early, tenants will make appointments to see your property but will often not commit as they will wait to see what other properties will be advertised in comparison.
Best times to market: First day of the month, Thursday and Friday evening to book showings for that weekend. First weekend of the months is always the busiest and most productive to schedule a viewing for a potential tenant.
3. Pre-screen tenants.
It’s hard to know what tenant is a good fit just from an email or phone conversation. A good question to ask is: “Tell me what you’re looking for in a property?” This is an open-ended question that allows the potential tenant to tell you what features are important to them. Often, you will discover what their current living situation is, if they have pets and how many people will be occupying the property.
If you have a large number of calls or emails that only ask to view the property, save yourself some time and schedule an open house. Break up the times in 15-minute increments. Don’t schedule more than three people during these increments because it will not allow you to meet and evaluate the potential tenant.
4. Always be professional.
Be prepared for a flood of responses when you post your ad. The first 48 hours is when you’ll attract the most attention. Make time to respond, preferably within that day. If you are responding with a phone call, do this in a quiet location where you are not distracted or have background noise.
You must treat this like a business. You would not call a client back while shopping for groceries at the supermarket.
Marketing properly can save you time and money. Here are some helpful tips to attract great tenants and rent your property for top dollar.
1. Be clear and concise in your advertisement words.
Use a headline that will prompt readers to open your ad. For example: Beautiful backyard, just in time for summer; completely renovated and brand new unit; large, two-bedroom with escarpment views; walking distance to Go-Transit. Think of the best feature that your property has to offer and use it in your headline.
Do not make your ad too wordy. The first few lines will outline why your property is so great. Highlight points so the reader can quickly look through your ad and check off all the features that are important to them.
Your first few lines might say: This spacious and well-kept two bedroom is a dream apartment. Just steps from the lake and close to transit, this home offers a great location for all your leisure and transportation needs.
After you paint a picture for the reader, break down the key features of the property: number of bedrooms and bathrooms, laundry facilities, parking, appliances, special features (hardwood floors, freshly painted, fenced backyard).
2. Market at the right time.
There are certain days of the week and times of day that readers tend to shop online. Advertising on a Monday morning is not the ideal time. People are catching up on work projects or completing a list of chores.
Also important is the time of the month. Listing a property at month start will give you maximum exposure for those who have just begun to look for a rental.
If the month is coming to a close and you have not found the right tenant, be wary of the end-of-the-month crowd. These potential tenants have usually struggled to find a place due to bad credit, lack of income or poor references. Be wary, but still reply and screen them over the phone as their situation could be different.
Marketing a property two or more months before it is available is a vast waste of time. Most people give 60 days’ notice and do not begin to look for a new home until that time. If you market too early, tenants will make appointments to see your property but will often not commit as they will wait to see what other properties will be advertised in comparison.
Best times to market: First day of the month, Thursday and Friday evening to book showings for that weekend. First weekend of the months is always the busiest and most productive to schedule a viewing for a potential tenant.
3. Pre-screen tenants.
It’s hard to know what tenant is a good fit just from an email or phone conversation. A good question to ask is: “Tell me what you’re looking for in a property?” This is an open-ended question that allows the potential tenant to tell you what features are important to them. Often, you will discover what their current living situation is, if they have pets and how many people will be occupying the property.
If you have a large number of calls or emails that only ask to view the property, save yourself some time and schedule an open house. Break up the times in 15-minute increments. Don’t schedule more than three people during these increments because it will not allow you to meet and evaluate the potential tenant.
4. Always be professional.
Be prepared for a flood of responses when you post your ad. The first 48 hours is when you’ll attract the most attention. Make time to respond, preferably within that day. If you are responding with a phone call, do this in a quiet location where you are not distracted or have background noise.
You must treat this like a business. You would not call a client back while shopping for groceries at the supermarket.
Thursday, May 14, 2015
Size matters less than quality to homebuyers
Canadian homebuyers are willing to compromise on the size of their new home but some things are not negotiable, according to a new survey
The Canadian Home Builders’ Association's inaugural survey of the preferences of recent homebuyers found that 35 per cent would like a single-family detached two-storey home; however, while 22 per cent would adjust their size requirements none would lower expectations of quality or energy efficiency.
The ‘must-haves’ in a new home include walk-in closets and energy-efficient appliances; both were considered vital by 68 per cent.
More than half (53 per cent) of the 12,000 respondents said that their community should have walks, and cycle paths and parks were also important for 41 per cent.
The demographic of those buying homes, including first-home buyers, is dominated by generation X (46 per cent) with millennials (gen Y) making up 38 per cent. Unmarried couples with no kids make up a large percentage of all buyers of new homes.
The Canadian Home Builders’ Association's inaugural survey of the preferences of recent homebuyers found that 35 per cent would like a single-family detached two-storey home; however, while 22 per cent would adjust their size requirements none would lower expectations of quality or energy efficiency.
The ‘must-haves’ in a new home include walk-in closets and energy-efficient appliances; both were considered vital by 68 per cent.
More than half (53 per cent) of the 12,000 respondents said that their community should have walks, and cycle paths and parks were also important for 41 per cent.
The demographic of those buying homes, including first-home buyers, is dominated by generation X (46 per cent) with millennials (gen Y) making up 38 per cent. Unmarried couples with no kids make up a large percentage of all buyers of new homes.
Monday, May 11, 2015
Home renovations increase although with lower budgets
With higher house prices in many areas and economic uncertainly weighing heavily on some homeowners’ minds, more are choosing to stay in their current homes and renovate.
A survey conducted by Nielsen for CIBC reveals that the number of homeowners planning to renovate has increased from 40 per cent last year to 42 per cent in 2015. However, the average budget has fallen from $20,000 to $17,000.
Top priorities are general repairs and redecoration (64 per cent) followed by landscaping (28 per cent) and new bathrooms (29 per cent) and kitchens (28 per cent). The largest percentage of people are planning to spend between $5,000 and $10,000.
Scott McGillivray, a real estate investor and host of HGTV's Income Property, commented: "I find that more and more people right across Canada are looking for creative solutions to add more space so that they don't have to move.”
He advises homeowners to concentrate on practical improvements rather than spending money on “wow” factors such as a swimming pool: "You don't want to build a $150,000 custom kitchen in a $200,000 home. You have to be realistic about your needs, and where money is best spent."
A survey conducted by Nielsen for CIBC reveals that the number of homeowners planning to renovate has increased from 40 per cent last year to 42 per cent in 2015. However, the average budget has fallen from $20,000 to $17,000.
Top priorities are general repairs and redecoration (64 per cent) followed by landscaping (28 per cent) and new bathrooms (29 per cent) and kitchens (28 per cent). The largest percentage of people are planning to spend between $5,000 and $10,000.
Scott McGillivray, a real estate investor and host of HGTV's Income Property, commented: "I find that more and more people right across Canada are looking for creative solutions to add more space so that they don't have to move.”
He advises homeowners to concentrate on practical improvements rather than spending money on “wow” factors such as a swimming pool: "You don't want to build a $150,000 custom kitchen in a $200,000 home. You have to be realistic about your needs, and where money is best spent."
Monday, May 4, 2015
Tips for investing in curb appeal
There is a wide variety of planting that can create the necessary curb appeal for enhance the appearance of your income property. The wonderful thing about planting is that it gives back. Your investment, if kept healthy, keeps growing.
Here are a few plants to consider for your property:
1. Boxwood can relate strongly to architecture because it can be clipped and shaped into hedges to follow the lines of the house. It's a broadleaf evergreen, so though leaves eventually darken in winter time, they don't shed like most deciduous plantings, thus adding a touch of green most of the year.
2. Columnar Beech trees add beautiful architectural forms to the landscape. Their verticality offers privacy and helps define the edge of the property. They can also be placed tightly together and kept clipped to act as a wonderful tall hedge screen.
3. Beech Hedging is popular because it's also resilient. It comes in green and purple, does not take up a lot of room, and has great structure. The purple-leaved varieties add a wonderful colour to the garden and the Beech tend to keep their leaves well into winter after they have dried out, adding winter visual interest and screening, when mist other trees are bare.
4. Japanese Maple is generally a great addition to a garden. These come in many colours, sizes and shapes – they make great feature plants in a garden. They can also have a wonderful layered look, framing gardens or making great backdrop plants as well.
5. Multi-stem flowering trees such as serviceberries, pagoda dogwoods, redbuds and birch provide great accent forms and structure in gardens.
6. Flowering trees such as apples, cherries, pears and magnolias provide a beautiful burst of colour in spring and enhance the look of the garden.
7. Ground covers such as ivy or periwinkle for shade and creeping thyme and sedum for sun are great alternatives to the grass lawn, adding beauty and variety to the garden floor.
8. Hardy grasses are also a good consideration because they withstand drought, tend to hold their form well into winter, and offer beautiful plumes.
Larger properties normally require a good maintenance company to keep their landscaped gardens in order. These companies will make sure that soil is in good condition and that the plants are in good health. A professional approach will deter from destroying the plants or damaging the delicate materiality of the garden.
As we are facing the effects of climate change, one important thing to consider is the balance between hard-scaped and soft-scaped areas. It’s a good to create rain gardens where runoff water can slowly percolate and be absorbed by the soil. Use of permeable paving also helps manage water runoff.
Another good tip is to use a variety of native species of plants. Native prairie grasses typically withstand drought and harsh weather, with great varieties to choose from. They add more resilience to the garden, thus adding visual interest as well as biodiversity.
Here are a few plants to consider for your property:
1. Boxwood can relate strongly to architecture because it can be clipped and shaped into hedges to follow the lines of the house. It's a broadleaf evergreen, so though leaves eventually darken in winter time, they don't shed like most deciduous plantings, thus adding a touch of green most of the year.
2. Columnar Beech trees add beautiful architectural forms to the landscape. Their verticality offers privacy and helps define the edge of the property. They can also be placed tightly together and kept clipped to act as a wonderful tall hedge screen.
3. Beech Hedging is popular because it's also resilient. It comes in green and purple, does not take up a lot of room, and has great structure. The purple-leaved varieties add a wonderful colour to the garden and the Beech tend to keep their leaves well into winter after they have dried out, adding winter visual interest and screening, when mist other trees are bare.
4. Japanese Maple is generally a great addition to a garden. These come in many colours, sizes and shapes – they make great feature plants in a garden. They can also have a wonderful layered look, framing gardens or making great backdrop plants as well.
5. Multi-stem flowering trees such as serviceberries, pagoda dogwoods, redbuds and birch provide great accent forms and structure in gardens.
6. Flowering trees such as apples, cherries, pears and magnolias provide a beautiful burst of colour in spring and enhance the look of the garden.
7. Ground covers such as ivy or periwinkle for shade and creeping thyme and sedum for sun are great alternatives to the grass lawn, adding beauty and variety to the garden floor.
8. Hardy grasses are also a good consideration because they withstand drought, tend to hold their form well into winter, and offer beautiful plumes.
Larger properties normally require a good maintenance company to keep their landscaped gardens in order. These companies will make sure that soil is in good condition and that the plants are in good health. A professional approach will deter from destroying the plants or damaging the delicate materiality of the garden.
As we are facing the effects of climate change, one important thing to consider is the balance between hard-scaped and soft-scaped areas. It’s a good to create rain gardens where runoff water can slowly percolate and be absorbed by the soil. Use of permeable paving also helps manage water runoff.
Another good tip is to use a variety of native species of plants. Native prairie grasses typically withstand drought and harsh weather, with great varieties to choose from. They add more resilience to the garden, thus adding visual interest as well as biodiversity.
Thursday, April 30, 2015
Bank of Canada praises Canadian investors?
The governor of the Bank of Canada Stephen Poloz may be patting Canadian investors on the back, suggesting there is no current evidence of the kind of dangerous property speculation that would denote "bubble" conditions.
“There are many characteristics of a 'bubble' situation that are not present,” Poloz told the House of Commons Standing Committee on Finance earlier this week, pointing to highly speculative behaviour as one example; for instance, people buying multiple properties with the sole intent of selling them at a profit in the future.
This example would suggest that flix-and-flip investments are just not plentiful enough in the current market.
Poloz also said that, thanks to historically low interest rates, Canada's housing market actually helped to buoy the country’s economy during the global economic crisis.
“It would be unusual for us to have a cycle like we’ve had where housing did most of the work keeping us out of recession,” he added. “It would be very unusual to come out of that and not have a degree of overvaluation. One has that in every business cycle.”
The latest Nanos Research poll suggests that more Canadians are agreeing with Poloz that the worst is over, particularly when it comes to Canada’s housing market.
The survey for the week ended April 24 showed that optimism among Canadians that the value of real estate is increasing was 38.5 per cent, the highest it has been in 2015.
“There are more indications for households to consider the worst is behind them,” said Robert Lawrie and Peter Savvin of Bloomberg Economics.
“After all, oil prices and the Canadian dollar have stopped falling, and employment and the labour force participation rate appear to be recouping some earlier losses.”
“There are many characteristics of a 'bubble' situation that are not present,” Poloz told the House of Commons Standing Committee on Finance earlier this week, pointing to highly speculative behaviour as one example; for instance, people buying multiple properties with the sole intent of selling them at a profit in the future.
This example would suggest that flix-and-flip investments are just not plentiful enough in the current market.
Poloz also said that, thanks to historically low interest rates, Canada's housing market actually helped to buoy the country’s economy during the global economic crisis.
“It would be unusual for us to have a cycle like we’ve had where housing did most of the work keeping us out of recession,” he added. “It would be very unusual to come out of that and not have a degree of overvaluation. One has that in every business cycle.”
The latest Nanos Research poll suggests that more Canadians are agreeing with Poloz that the worst is over, particularly when it comes to Canada’s housing market.
The survey for the week ended April 24 showed that optimism among Canadians that the value of real estate is increasing was 38.5 per cent, the highest it has been in 2015.
“There are more indications for households to consider the worst is behind them,” said Robert Lawrie and Peter Savvin of Bloomberg Economics.
“After all, oil prices and the Canadian dollar have stopped falling, and employment and the labour force participation rate appear to be recouping some earlier losses.”
Monday, April 27, 2015
How to choose a Realtor to work with
Amazing! You’ve decided to sell your home and/or buy one. That’s very exciting. Now it’s time to hire a Realtor, but what's the best method for choosing one who will support your interests?
It’s no secret that virtually every market in Canada is saturated with licensed Realtors, so deciding on who to use can sometimes be a tricky task. Here are some simple tips to follow when determining what Realtor best suits your unique needs.
1. Don’t feel pressure to use someone just because they’re a friend or family member. Chances are you know a Realtor or know someone who knows one. That person may or may not be right for you, so be sure to do your homework before signing a contract. Don’t be afraid to show your appreciation, but kindly reject.
2. Check references. It’s surprising how rare this is. In all my time in the business I’ve never had a potential client ask me for references. This is a missed opportunity to weed out potential lack-lustre Realtors. It’s true that most references provided will be biased in favour of the Realtor, but if you listen carefully and ask the right questions you’ll often discover the truth – good or bad.
3. Ask about their services. A highly trained and reputable Realtor should be able to speak confidently about their various service offerings. Many Realtors offer similar services, but often times the differentiator between a good Realtor and a great one is how the services are implemented.
4. Interview at least two or three Realtors. Whether you’re buying or selling, it’s always a good idea to speak to multiple Realtors before choosing one. In addition to the services they offer, you’ll want to be able to build a good rapport with your Realtor. Always remember, you could be working with your Realtor for weeks, months and sometimes years, so it’s critical to build a strong working relationship with him/her.
5. Examine a Realtor’s business model and track record. Some people are drawn to the highest performing Realtors or the largest real estate teams in the area. This is neither a positive or negative. Top-producing Realtors are very successful, but make sure they’re able to devote the required time to service your individual needs. Successful real estate teams are another option, but know who you’ll be working with; just because you want to work with the team leader doesn’t mean that’ll happen – it’s possible you’ll be “assigned” one of the team members.
6. Don’t pick a Realtor based on price. If you’re selling a home then it’s your responsibility to pay the Realtor(s) out of the proceeds of your home sale. There’s a growing trend in some markets (e.g. Greater Toronto Area) for consumers to focus too much on commission rates. The old adage “you get what you pay for” still holds true. If you decide to use a discount Realtor, than know what services will be included and excluded.
7. A Realtor should have knowledge of the area. Some will argue this point, but it’s my belief that any Realtor you decide to use should have knowledge of the area in which you’re buying and/or selling. This isn’t just about market stats, as these can be found from almost any location. Neighbourhood trends, future development, zoning by-laws, local activities, family services, personal interests, etc. are much harder to determine from afar, whereas local Realtors will likely be geared with this information or know where to access it easily.
8. Use multiple means to locate a Realtor. There are many ways to find a Realtor – Internet, referrals, newspapers, mailers, magazines, networking, etc. The more you search for a Realtor the more you’ll notice the differences. We may all look the same on the outside, but dig a little deeper and you’ll quickly find we’re not all made the same.
It’s no secret that virtually every market in Canada is saturated with licensed Realtors, so deciding on who to use can sometimes be a tricky task. Here are some simple tips to follow when determining what Realtor best suits your unique needs.
1. Don’t feel pressure to use someone just because they’re a friend or family member. Chances are you know a Realtor or know someone who knows one. That person may or may not be right for you, so be sure to do your homework before signing a contract. Don’t be afraid to show your appreciation, but kindly reject.
2. Check references. It’s surprising how rare this is. In all my time in the business I’ve never had a potential client ask me for references. This is a missed opportunity to weed out potential lack-lustre Realtors. It’s true that most references provided will be biased in favour of the Realtor, but if you listen carefully and ask the right questions you’ll often discover the truth – good or bad.
3. Ask about their services. A highly trained and reputable Realtor should be able to speak confidently about their various service offerings. Many Realtors offer similar services, but often times the differentiator between a good Realtor and a great one is how the services are implemented.
4. Interview at least two or three Realtors. Whether you’re buying or selling, it’s always a good idea to speak to multiple Realtors before choosing one. In addition to the services they offer, you’ll want to be able to build a good rapport with your Realtor. Always remember, you could be working with your Realtor for weeks, months and sometimes years, so it’s critical to build a strong working relationship with him/her.
5. Examine a Realtor’s business model and track record. Some people are drawn to the highest performing Realtors or the largest real estate teams in the area. This is neither a positive or negative. Top-producing Realtors are very successful, but make sure they’re able to devote the required time to service your individual needs. Successful real estate teams are another option, but know who you’ll be working with; just because you want to work with the team leader doesn’t mean that’ll happen – it’s possible you’ll be “assigned” one of the team members.
6. Don’t pick a Realtor based on price. If you’re selling a home then it’s your responsibility to pay the Realtor(s) out of the proceeds of your home sale. There’s a growing trend in some markets (e.g. Greater Toronto Area) for consumers to focus too much on commission rates. The old adage “you get what you pay for” still holds true. If you decide to use a discount Realtor, than know what services will be included and excluded.
7. A Realtor should have knowledge of the area. Some will argue this point, but it’s my belief that any Realtor you decide to use should have knowledge of the area in which you’re buying and/or selling. This isn’t just about market stats, as these can be found from almost any location. Neighbourhood trends, future development, zoning by-laws, local activities, family services, personal interests, etc. are much harder to determine from afar, whereas local Realtors will likely be geared with this information or know where to access it easily.
8. Use multiple means to locate a Realtor. There are many ways to find a Realtor – Internet, referrals, newspapers, mailers, magazines, networking, etc. The more you search for a Realtor the more you’ll notice the differences. We may all look the same on the outside, but dig a little deeper and you’ll quickly find we’re not all made the same.
Wednesday, April 22, 2015
9 reasons your real estate venture could fail
By Ken Davidson
Success in the real estate business looks completely different for every individual. There are literally thousands of paths you can take to get to the same destination and nobody takes the same path twice. Regardless, there are a few common factors that differentiate the real estate projects that succeed from the ones that fail.
More often than not, the root cause of failure in real estate comes back to various incarnations of poor due diligence. Sure, you might think you have planned for every potential scenario, but there are many distracting pit stops on the road to success in real estate – if you aren’t careful, you might run out of gas before you get there.
Otherwise highly intelligent people can find themselves in a serious situation by making one of these nine mistakes that cause real estate ventures to fail.
1. Over-enthusiasm
You should be excited about the projects you’re working on, but jumping into a project where you haven’t done your due diligence is something I like to call “rose-coloured glasses syndrome.” Your reasons for investing in real estate need more justification than good feelings and a desire to get in the business.
2. Choosing the wrong partners
People spend years dating their spouse before they propose and get married, yet they will become business partners in a real estate transaction very quickly simply because one guy has money and the other has a project…and they don’t even know each other!
You need to get to know your partner before you go into a real estate venture with them. If you don’t, the odds are that it’s not going to end the way you thought it would. Can you really afford to risk having a negative outcome over something that is preventable? Even if you can, that’s not sound logic for running a business.
3. Interest rates skyrocket (and you aren’t prepared)
If you don’t take this into consideration before acquiring, you could be in trouble if or when it happens.
4. Poor risk assessment
There is risk associated with every real estate venture and if those risks are not taken into consideration when you acquire, things can go sideways before you know it. Truthfully, there is an element of luck here, there’s no question about it. There are always things in real estate ventures that are somewhat out of your control so you have to be looking for those potential liabilities when doing your due diligence.
Let’s say you own a very nice condo unit and your next-door unit sells to a new landlord who allows it to turn into a drug house. That’s a good example of something that’s totally out of your control, but it’s up to you to weigh your decision based upon the risks that are in your control.
5. No exit strategies planned
You bought a piece of real estate thinking you need it for a long-term hold. All of a sudden your circumstances change and you need to break the contract or get out of a deal. Then what?
You should have several exit strategies to choose from so that if circumstances do change, you can look at using one of them. Many people buy real estate with one goal and one intended outcome in mind without considering other possibilities. Take a step back and consider your exit strategies ahead of time.
6. Your partner’s circumstances change
Your partner’s circumstances may radically change and this could put you in a compromising position that threatens your ability to recover. There’s a certain element here that’s out of your hands, but part of selecting the right partner is evaluating potential outcomes in the event something does go sideways. Are you ready for those possibilities?
7. Unexpected expenses
This is another for the ‘due diligence’ category. Depending on the project, I’ll always put in buffers to have room for variances in expenses. How much those buffers are will depend on your risk tolerance and comfort level with the situation at hand.
8. Analysis Paralysis
Over-analyzing can kill any real estate deal. Remember that you can analyze anything and find a reason why it won’t work. Where there’s a will, there’s a way. Take it from an accountant: You can’t always trust the numbers.
9. Revenue is lower than expected
When you’re doing due diligence, you have to build your cash-flow models so there is an understanding of flexibility and variability because NOTHING is going to be as you originally estimated coming into the project.
I’ve seen business proposals for real estate projects where the person assumes they are going to be 100 per cent full, 100 per cent of the time in a residential apartment complex. That’s not even possible.
I don’t care how good the market is. You will have turnover and when that happens, you will have vacancies. Although it doesn’t make sense to plan your financials around being 100 per cent occupied all the time, too often I see people planning for this very optimistic scenario and that’s dangerous. Although the intention is noble, the reality will quickly reveal how misguided this approach is.
Be honest and realistic. Those rose-coloured glasses might brighten the future you think you’re seeing for your real estate project, but the real image will inevitably come into focus. It’s you and your advisor’s job to do your own independent due diligence, plan for the unexpected, and consider all possibilities before you close the deal on a real estate project that may end up being more trouble than it’s worth.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/9-reasons-your-real-estate-venture-could-fail-190149.aspx
Success in the real estate business looks completely different for every individual. There are literally thousands of paths you can take to get to the same destination and nobody takes the same path twice. Regardless, there are a few common factors that differentiate the real estate projects that succeed from the ones that fail.
More often than not, the root cause of failure in real estate comes back to various incarnations of poor due diligence. Sure, you might think you have planned for every potential scenario, but there are many distracting pit stops on the road to success in real estate – if you aren’t careful, you might run out of gas before you get there.
Otherwise highly intelligent people can find themselves in a serious situation by making one of these nine mistakes that cause real estate ventures to fail.
1. Over-enthusiasm
You should be excited about the projects you’re working on, but jumping into a project where you haven’t done your due diligence is something I like to call “rose-coloured glasses syndrome.” Your reasons for investing in real estate need more justification than good feelings and a desire to get in the business.
2. Choosing the wrong partners
People spend years dating their spouse before they propose and get married, yet they will become business partners in a real estate transaction very quickly simply because one guy has money and the other has a project…and they don’t even know each other!
You need to get to know your partner before you go into a real estate venture with them. If you don’t, the odds are that it’s not going to end the way you thought it would. Can you really afford to risk having a negative outcome over something that is preventable? Even if you can, that’s not sound logic for running a business.
3. Interest rates skyrocket (and you aren’t prepared)
If you don’t take this into consideration before acquiring, you could be in trouble if or when it happens.
4. Poor risk assessment
There is risk associated with every real estate venture and if those risks are not taken into consideration when you acquire, things can go sideways before you know it. Truthfully, there is an element of luck here, there’s no question about it. There are always things in real estate ventures that are somewhat out of your control so you have to be looking for those potential liabilities when doing your due diligence.
Let’s say you own a very nice condo unit and your next-door unit sells to a new landlord who allows it to turn into a drug house. That’s a good example of something that’s totally out of your control, but it’s up to you to weigh your decision based upon the risks that are in your control.
5. No exit strategies planned
You bought a piece of real estate thinking you need it for a long-term hold. All of a sudden your circumstances change and you need to break the contract or get out of a deal. Then what?
You should have several exit strategies to choose from so that if circumstances do change, you can look at using one of them. Many people buy real estate with one goal and one intended outcome in mind without considering other possibilities. Take a step back and consider your exit strategies ahead of time.
6. Your partner’s circumstances change
Your partner’s circumstances may radically change and this could put you in a compromising position that threatens your ability to recover. There’s a certain element here that’s out of your hands, but part of selecting the right partner is evaluating potential outcomes in the event something does go sideways. Are you ready for those possibilities?
7. Unexpected expenses
This is another for the ‘due diligence’ category. Depending on the project, I’ll always put in buffers to have room for variances in expenses. How much those buffers are will depend on your risk tolerance and comfort level with the situation at hand.
8. Analysis Paralysis
Over-analyzing can kill any real estate deal. Remember that you can analyze anything and find a reason why it won’t work. Where there’s a will, there’s a way. Take it from an accountant: You can’t always trust the numbers.
9. Revenue is lower than expected
When you’re doing due diligence, you have to build your cash-flow models so there is an understanding of flexibility and variability because NOTHING is going to be as you originally estimated coming into the project.
I’ve seen business proposals for real estate projects where the person assumes they are going to be 100 per cent full, 100 per cent of the time in a residential apartment complex. That’s not even possible.
I don’t care how good the market is. You will have turnover and when that happens, you will have vacancies. Although it doesn’t make sense to plan your financials around being 100 per cent occupied all the time, too often I see people planning for this very optimistic scenario and that’s dangerous. Although the intention is noble, the reality will quickly reveal how misguided this approach is.
Be honest and realistic. Those rose-coloured glasses might brighten the future you think you’re seeing for your real estate project, but the real image will inevitably come into focus. It’s you and your advisor’s job to do your own independent due diligence, plan for the unexpected, and consider all possibilities before you close the deal on a real estate project that may end up being more trouble than it’s worth.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/9-reasons-your-real-estate-venture-could-fail-190149.aspx
Monday, April 20, 2015
The benefits of owning multiple properties
Investing in cash-flowing real estate is obviously a benefit for an investor, especially if that investor holds onto the property for a long period of time. Every cash-flowing property has three income streams: cash flow, mortgage pay down, and the appreciation of the property.
Cash flow: The rent collected, minus the expenses. A modest cash flow on a single-family home in any of the large Canadian markets can vary, but let’s use $250 a month as our example. Multiply that monthly cash flow of $250 across 10 years of owning the property: that’s $30,000!
Mortgage pay down: All the while you’re holding a mortgage on a property, it’s slowly getting paid down by your tenant. When you sell the property the difference from the first day you got the mortgage until the day you sold the property is yours in the form of equity.
As an example, let’s use a $300,000 purchase price with a 20 per cent down payment, a three per cent interest rate, a 25-year amortization and a mortgage of $240,000. In 10 years, the mortgage amount would be $206,008, a difference of $33,992.
Appreciation of the property: The third stream of income and usually the largest increase to an investor’s wealth. Historically, real estate appreciates over time. Let's say you buy a property for $300,000 with a modest appreciation of four per cent per year – in 10 years the property is worth $426,990. Congratulations, you have just earned $126,990 in equity.
When all three of these income streams are added together, the investor would have a financial gain of $190,982. Not bad for a 20 per cent down payment of $60,000. Actually, when you calculate the return on investment of the actual money invested (which is only the down payment of $60,000), that is a 318 per cent, or 31.8 per cent per year, return on your money.
I honestly don’t know where else you could find a return that good. Please take into consideration that this is just an example and, of course, there are always unforeseen variables that can cause your returns to fluctuate, such as: vacancies, repairs, interest rate fluctuations, etc. Also, appreciation rates can fluctuate, which is why it is imperative to buy your properties in areas with strong economic fundamentals.
Having many properties provides the investor with many benefits. So ask yourself this question: What if I owned multiple cash-flowing properties? After reading this article and going over the examples provided, you can answer this question. If an investor can benefit substantially from holding one property for many years, multiply these gains – to put it simply, the more properties held, the better off the investor will be.
Now for the downside. As any seasoned investor knows, issues with your properties are inescapable, and regardless of what they are, they usually do come at a cost. Just as you would multiply the returns on your properties, you may also have to multiply your problems. The question you have to ask yourself is: How many years can you stick it out?
Cash flow: The rent collected, minus the expenses. A modest cash flow on a single-family home in any of the large Canadian markets can vary, but let’s use $250 a month as our example. Multiply that monthly cash flow of $250 across 10 years of owning the property: that’s $30,000!
Mortgage pay down: All the while you’re holding a mortgage on a property, it’s slowly getting paid down by your tenant. When you sell the property the difference from the first day you got the mortgage until the day you sold the property is yours in the form of equity.
As an example, let’s use a $300,000 purchase price with a 20 per cent down payment, a three per cent interest rate, a 25-year amortization and a mortgage of $240,000. In 10 years, the mortgage amount would be $206,008, a difference of $33,992.
Appreciation of the property: The third stream of income and usually the largest increase to an investor’s wealth. Historically, real estate appreciates over time. Let's say you buy a property for $300,000 with a modest appreciation of four per cent per year – in 10 years the property is worth $426,990. Congratulations, you have just earned $126,990 in equity.
When all three of these income streams are added together, the investor would have a financial gain of $190,982. Not bad for a 20 per cent down payment of $60,000. Actually, when you calculate the return on investment of the actual money invested (which is only the down payment of $60,000), that is a 318 per cent, or 31.8 per cent per year, return on your money.
I honestly don’t know where else you could find a return that good. Please take into consideration that this is just an example and, of course, there are always unforeseen variables that can cause your returns to fluctuate, such as: vacancies, repairs, interest rate fluctuations, etc. Also, appreciation rates can fluctuate, which is why it is imperative to buy your properties in areas with strong economic fundamentals.
Having many properties provides the investor with many benefits. So ask yourself this question: What if I owned multiple cash-flowing properties? After reading this article and going over the examples provided, you can answer this question. If an investor can benefit substantially from holding one property for many years, multiply these gains – to put it simply, the more properties held, the better off the investor will be.
Now for the downside. As any seasoned investor knows, issues with your properties are inescapable, and regardless of what they are, they usually do come at a cost. Just as you would multiply the returns on your properties, you may also have to multiply your problems. The question you have to ask yourself is: How many years can you stick it out?
Friday, April 17, 2015
How an energy efficient property will save you money
Home efficiency seems to be on everyone’s minds these days – from existing home renovation projects to new home construction developments and even many local businesses choosing to use products which save energy and reduce utility bill costs while leaving a smaller carbon footprint on the planet.
Natural Resources Canada has three programs – EnerGuide Rating System, ENERGY STAR ® for new homes and R-2000 initiatives – which were designed to assist homeowners, homebuyers, investors and homebuilders to make better decisions regarding a home’s efficiency.
If you’re planning a home renovation this year, increasing the overall level of energy efficiency should be the top priority. Not only will this help you save money on your operating costs by lowering energy consumption, it will also reduce the home’s environmental impact and add value to the property upon resale.
But before improvements can be made, investors will need to know the current efficiency level and you can find that out by having an EnerGuide home evaluation. This is performed by a licensed energy advisor who uses tools to detect the source of home energy loss from blower doors, infrared cameras, furnace efficiency meters and surface thermometers.
The advisor will review your property’s utility bills for the past twelve months then assess every room in the home from the basement to the attic to determine how much energy the house consumes, how much it wastes and what measures can be taken to increase the energy savings.
The homeowner will receive a written report that highlights the areas of energy loss and provides recommendations on the best efficiency upgrades that should be done. The house is given a rating for the current level of efficiency and a potential rating once the home renovation and efficiency upgrades are complete.
There are two simple things you can do in the land of real estate that make sense (and save money) to reduce your individual carbon footprint and lower greenhouse gas emissions. The first is to ensure all of your home renovation projects increase the overall level of home energy efficiency and the second is to purchase a new property that has been constructed using ENERGY STAR or R-2000 Standards. Go green!
Source: http://www.canadianrealestatemagazine.ca/expert-advice/how-an-energy-efficient-property-will-save-you-money-190148.aspx
Natural Resources Canada has three programs – EnerGuide Rating System, ENERGY STAR ® for new homes and R-2000 initiatives – which were designed to assist homeowners, homebuyers, investors and homebuilders to make better decisions regarding a home’s efficiency.
If you’re planning a home renovation this year, increasing the overall level of energy efficiency should be the top priority. Not only will this help you save money on your operating costs by lowering energy consumption, it will also reduce the home’s environmental impact and add value to the property upon resale.
But before improvements can be made, investors will need to know the current efficiency level and you can find that out by having an EnerGuide home evaluation. This is performed by a licensed energy advisor who uses tools to detect the source of home energy loss from blower doors, infrared cameras, furnace efficiency meters and surface thermometers.
The advisor will review your property’s utility bills for the past twelve months then assess every room in the home from the basement to the attic to determine how much energy the house consumes, how much it wastes and what measures can be taken to increase the energy savings.
The homeowner will receive a written report that highlights the areas of energy loss and provides recommendations on the best efficiency upgrades that should be done. The house is given a rating for the current level of efficiency and a potential rating once the home renovation and efficiency upgrades are complete.
There are two simple things you can do in the land of real estate that make sense (and save money) to reduce your individual carbon footprint and lower greenhouse gas emissions. The first is to ensure all of your home renovation projects increase the overall level of home energy efficiency and the second is to purchase a new property that has been constructed using ENERGY STAR or R-2000 Standards. Go green!
Source: http://www.canadianrealestatemagazine.ca/expert-advice/how-an-energy-efficient-property-will-save-you-money-190148.aspx
Wednesday, April 15, 2015
Don’t let the down market get you down
Since most of us have either invested in real estate or are planning to do so, it’s natural for us to keep an eye on how the real estate market is doing. But when the market is down, is it really such a bad thing?
People tend to assume that when prices go down everyone is affected in the same way. However, that’s just not the case. Firstly, owners of homes that have no plans to sell are not affected in the least by market fluctuations. You can’t assume a gain or loss in real estate until you choose to sell.
But even if you are planning to sell in a down market, not all sellers are affected in the same way. There are typically four types of sellers in any given market.
Seller #1: Planning to buy another home of equivalent value.
In such circumstances, this seller is not affected by a drop in prices because they are not taking their equity out of the market. Though this seller may have to sell at a discount to get their home sold, they will be buying their next home at a discount as well.
Even by selling their real estate at a lower price than they would hope to get, the first type of seller is not losing money. It makes no sense for this type of seller to wait for the market to pick up again because when prices do go up, they will have to buy their next home at a higher price. These sellers might as well buy the homes they want now and live in them while they increase in value because, either way, there is no financial impact on them.
Seller #2: Planning to buy a more expensive home.
This seller is in the best position possible because higher-valued homes tend to lose value much faster than lower-valued homes in a down market. By selling their home now they can take advantage of buying the more expensive home they want at a significantly discounted price.
Seller #3: Looking to cash their equity out of the market with no plans to buy another home.
This type of seller is negatively impacted by a drop in prices because every hit the market takes lessens the equity they hope to withdraw from the sale. If this seller is unable to wait for the market to pick up again, they should sell fast in case prices continue to drop.
Seller #4: In no position to sell.
This is someone who can’t afford to sell in today’s market because they just don’t have enough equity in their home to be able afford another place. For this seller, it’s best to stay in their existing home and focus on saving up for their next purchase.
Before you can truly appreciate how the market will impact you, it’s important to understand which of the four seller categories you fit into. Not all sellers are alike. A down market only has an adverse affect on those looking to cash out of the market entirely. Chances are, you have nothing to be down about in a down market.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/dont-let-the-down-market-get-you-down-190064.aspx
People tend to assume that when prices go down everyone is affected in the same way. However, that’s just not the case. Firstly, owners of homes that have no plans to sell are not affected in the least by market fluctuations. You can’t assume a gain or loss in real estate until you choose to sell.
But even if you are planning to sell in a down market, not all sellers are affected in the same way. There are typically four types of sellers in any given market.
Seller #1: Planning to buy another home of equivalent value.
In such circumstances, this seller is not affected by a drop in prices because they are not taking their equity out of the market. Though this seller may have to sell at a discount to get their home sold, they will be buying their next home at a discount as well.
Even by selling their real estate at a lower price than they would hope to get, the first type of seller is not losing money. It makes no sense for this type of seller to wait for the market to pick up again because when prices do go up, they will have to buy their next home at a higher price. These sellers might as well buy the homes they want now and live in them while they increase in value because, either way, there is no financial impact on them.
Seller #2: Planning to buy a more expensive home.
This seller is in the best position possible because higher-valued homes tend to lose value much faster than lower-valued homes in a down market. By selling their home now they can take advantage of buying the more expensive home they want at a significantly discounted price.
Seller #3: Looking to cash their equity out of the market with no plans to buy another home.
This type of seller is negatively impacted by a drop in prices because every hit the market takes lessens the equity they hope to withdraw from the sale. If this seller is unable to wait for the market to pick up again, they should sell fast in case prices continue to drop.
Seller #4: In no position to sell.
This is someone who can’t afford to sell in today’s market because they just don’t have enough equity in their home to be able afford another place. For this seller, it’s best to stay in their existing home and focus on saving up for their next purchase.
Before you can truly appreciate how the market will impact you, it’s important to understand which of the four seller categories you fit into. Not all sellers are alike. A down market only has an adverse affect on those looking to cash out of the market entirely. Chances are, you have nothing to be down about in a down market.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/dont-let-the-down-market-get-you-down-190064.aspx
Monday, April 6, 2015
CMHC insurance hike not as menial as believed
The Canada Mortgage and Housing Corp. announced it will increase insurance premiums for those homebuyers and investors who put less than 10 per cent down, and industry players expect the move to impact one type of client in particular.
“CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio,” said Steven Mennill, CMHC’s senior vice president of insurance.
“The premium increase for homebuyers with less than a 10 per cent down payment reflects CMHC’s target capital requirements which were increased in mid-2014.”
This is the second such move in two years. CMHC hiked its premiums from 2.75 per cent to 3.15 per cent in 2014.
Effective from June 1, the insurance premium will rise 45 basis points to 3.6 per cent for those mortgages with less than a 10 per cent down payment. The housing authority said the move, announced late last week, will only add about $5 per monthly payment.
As such, CHMC said it does not expect the increase to have a material impact on the housing market. But that is not a sentiment that’s shared across the country.
“It most certainly will, especially for first-time homebuyers,” said Ron Hollett, an agent in Dartmouth, N.S. “When it’s your first time buying a home, you’re trying to save every dollar and then there are more fees.”
Hollett said the increased insurance rate will then have a domino effect on the market, making it more difficult for homeowners to sell and move up.
For now, though, he’s telling his clients to work hard to make the down-payment cut-off and realize the benefits of homeownership.
“If they can do it, go without the CMHC fees,” he added. “See if they can get money from another source, like family. Nevertheless, we’ll have to work with [the fee increases].”
Source: http://www.canadianrealestatemagazine.ca/news/cmhc-insurance-hike-not-as-menial-as-believed-190000.aspx
“CMHC completed a detailed review of its mortgage loan insurance premiums and examined the performance of the various sub-segments of its portfolio,” said Steven Mennill, CMHC’s senior vice president of insurance.
“The premium increase for homebuyers with less than a 10 per cent down payment reflects CMHC’s target capital requirements which were increased in mid-2014.”
This is the second such move in two years. CMHC hiked its premiums from 2.75 per cent to 3.15 per cent in 2014.
Effective from June 1, the insurance premium will rise 45 basis points to 3.6 per cent for those mortgages with less than a 10 per cent down payment. The housing authority said the move, announced late last week, will only add about $5 per monthly payment.
As such, CHMC said it does not expect the increase to have a material impact on the housing market. But that is not a sentiment that’s shared across the country.
“It most certainly will, especially for first-time homebuyers,” said Ron Hollett, an agent in Dartmouth, N.S. “When it’s your first time buying a home, you’re trying to save every dollar and then there are more fees.”
Hollett said the increased insurance rate will then have a domino effect on the market, making it more difficult for homeowners to sell and move up.
For now, though, he’s telling his clients to work hard to make the down-payment cut-off and realize the benefits of homeownership.
“If they can do it, go without the CMHC fees,” he added. “See if they can get money from another source, like family. Nevertheless, we’ll have to work with [the fee increases].”
Source: http://www.canadianrealestatemagazine.ca/news/cmhc-insurance-hike-not-as-menial-as-believed-190000.aspx
Monday, March 30, 2015
Poloz answers critics questioning BoC’s credibility
The Governor of the Bank of Canada Stephen Poloz has gone into damage control mode, defending the bold actions carried out by the BoC in January when it shocked the market with a rate cut.
During a speech in the Canada-UK Chamber of Commerce in London last week, Polos was asked whether the credibility of the central bank should be called into question following the surprise move.
“It probably won’t come as a surprise to you that I would say no,” he told the audience, according to the Financial Post. “Central banks are doing their jobs in a very challenging setting.”
Poloz did, however, admit that the Bank of Canada knew the rate cut would come as a surprise to investors and real estate professionals alike.
“We knew that financial markets would be surprised by the move in January, and we generally prefer to avoid surprises,” Poloz said. “But we will do what is necessary to fulfill our inflation-targeting mandate.”
In late January, the BoC announced it was lowering its target for the overnight rate by one-quarter of one percentage point to 0.75 per cent. It said the move was in response to plummeting oil prices.
To say the move was a surprise is an understatement. It had many industry players questioning the credibility of the bank.
“Part of the significance of the announcement by the Bank of Canada is not the rate announcement but the fact that they surprised the markets in doing it, which would lead us to believe that there could be further shocks to the system,” Calum Ross of Verico Calum Ross Mortgage told CREW sister site, MortgageBrokerNews.ca at the time.
“I don’t think further rate cuts are out of the question when they surprise us with this.
“It’s uncharacteristic for a central bank to surprise the market – the very basis of stability of a financial system is about maintaining the trust and not having surprises happen.”
For his part, though, Poloz believes the bank’s credibility should be judged based on how it meets its goals.
“Ultimately, our credibility will hinge on how well we meet our mandate,” Poloz said.
Source: http://www.canadianrealestatemagazine.ca/news/poloz-answers-critics-questioning-bocs-credibility-189809.aspx
During a speech in the Canada-UK Chamber of Commerce in London last week, Polos was asked whether the credibility of the central bank should be called into question following the surprise move.
“It probably won’t come as a surprise to you that I would say no,” he told the audience, according to the Financial Post. “Central banks are doing their jobs in a very challenging setting.”
Poloz did, however, admit that the Bank of Canada knew the rate cut would come as a surprise to investors and real estate professionals alike.
“We knew that financial markets would be surprised by the move in January, and we generally prefer to avoid surprises,” Poloz said. “But we will do what is necessary to fulfill our inflation-targeting mandate.”
In late January, the BoC announced it was lowering its target for the overnight rate by one-quarter of one percentage point to 0.75 per cent. It said the move was in response to plummeting oil prices.
To say the move was a surprise is an understatement. It had many industry players questioning the credibility of the bank.
“Part of the significance of the announcement by the Bank of Canada is not the rate announcement but the fact that they surprised the markets in doing it, which would lead us to believe that there could be further shocks to the system,” Calum Ross of Verico Calum Ross Mortgage told CREW sister site, MortgageBrokerNews.ca at the time.
“I don’t think further rate cuts are out of the question when they surprise us with this.
“It’s uncharacteristic for a central bank to surprise the market – the very basis of stability of a financial system is about maintaining the trust and not having surprises happen.”
For his part, though, Poloz believes the bank’s credibility should be judged based on how it meets its goals.
“Ultimately, our credibility will hinge on how well we meet our mandate,” Poloz said.
Source: http://www.canadianrealestatemagazine.ca/news/poloz-answers-critics-questioning-bocs-credibility-189809.aspx
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