In a purchasing environment characterized by a recovering economy, intense consumer competition, and ever-increasing prices in the best-performing markets, mortgage specialists remain to be the best guides in the current fiscal climate, according to an industry analyst.
The temptation to buy right away and snap up the remaining almost-affordable properties in Toronto and Vancouver might be strong—especially for young professionals and other members of the millennial market who are increasingly feeling the pinch of lower purchasing power stemming from static wages and inexorably growing costs.
“On top of that, lenders are offering very low interest rates right now, so it’s hard to resist the lure of getting in while the market is up and rates are low,” analyst Melissa Dunne wrote in her Yahoo! Canada Finance breakdown piece.
Dunne pointed at offerings such as the Meridian Credit Union’s 1.69 per cent fixed mortgage rate (for one year) as understandably attractive for the younger set. However, a closer analysis of the fine print reveals that a home buyer going for this package would be locked into a fixed rate of 2.59 per cent over a period of five years after the first 12 months are up.
“So, homebuyers need to ask themselves: If my mortgage went up a few hundred dollars per month, can I pay that increased amount and for how long?” the analyst warned.
This is where the unique knowledge of a mortgage specialist would come in, Dunne said. Such a professional can give young buyers a more accurate and complete picture of their purchasing and payment prospects.
Meridian Credit Union agreed with the assessment.
“The ideal mortgage really depends on your risk appetite,” vice president of sales and service Wade Stayer said, adding that an informed choice on the prospective buyer’s part would benefit both the consumer and the loan originator in the long run.
Source: http://www.canadianrealestatemagazine.ca/news/mortgage-brokers-the-best-guides-in-current-fiscal-climate-205068.aspx
Thursday, March 31, 2016
Monday, March 28, 2016
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.”
Soure: 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.”
Soure: http://www.canadianrealestatemagazine.ca/strategy/what-is-a-syndicated-mortgage-191516.aspx
Thursday, March 24, 2016
Real estate crowdfunding goes residential
Crowdfunding has arrived in the Toronto residential real estate market, but while these deals have the potential to be lucrative for investors, they’re not without risk.
Crowdfunding is a way to finance a venture by raising small sums of capital online from a large pool of people, allowing small-time investors to carve out a slice of big projects that would normally be beyond their reach.
It has taken root in the Canadian commercial real estate sector in recent years, and now it’s growing as an alternative way to fund residential projects.
“I think there’s a lot of interest with individual investors with residential real estate given what’s happening in Toronto and Vancouver markets, specifically,” said Hitesh Rathod, CEO of real estate crowdfunding platform NexusCrowd Inc.
NexusCrowd successfully closed two commercial real estate deals in the Greater Toronto Area – a shopping mall in Mississauga, believed to be the first project of its kind in Canada, and 110,000 square feet of industrial properties in Mississauga and Toronto.
Now, it has its eyes set on the residential sphere, partnering with Downing Street Financial in its first debt transaction to develop a 25-acre multiphase residential condominium project in Ajax, Ont.
“What we’re trying to do is provide access to different types of investments within the real estate space on the development side, which is very hard to access for individual investors,” Mr. Rathod said.
That was the draw for Hockey Night in Canada producer Sherali Najak who, who has invested both of NexusCrowd’s campaigns and is eyeing the Ajax condo project.
Although he’s been playing the market since he was a teenager and is considered an accredited investor, he would never have access to a real estate deal of this scale on his own.
“It allowed me to invest with the big boys,” Mr. Najak said. “Or at least alongside the big boys.”
Another crowdfunding platform, Open Avenue, is offering investment opportunities in multifamily residential real estate projects in Kitchener, Ont., and president Tim McKillican says it will offer residential real estate deals in the GTA soon.
One of the appeals of crowdfunding, he says, is that it allows you to “invest directly into your community.”
That’s something Mr. Najak appreciates.
“Real estate for me is something that you can touch and feel,” he said. “I could drive right by there. I could see it. I could see the buildings that we’re buying … it was a kind of a neat feeling to be a part of that.”
The lure of these ventures is clear, said John Andrew, a real estate expert at the Queen’s University School of Business. Developers can raise funds at a lower borrowing rate than they could through a bank loan, while investors have the potential to earn more bang for their buck than by investing in a traditional real estate investment trust.
“High returns, diversification of your portfolio, all of those benefits are there, and probably at a lower transaction cost,” he said.
But, he added, it can be risky for an inexperienced investor to enter the real estate market, which is complex and high stakes.
“Do those small investors really understand what they’re getting into? Are they being given the appropriate amount of information? Do they understand that information? Are they getting any sort of independent professional advice?”
This has been a major concern in Vancouver, where at least two crowdfunded real estate deals are under investigation by the B.C. Securities Commission for allegedly enticing buyers to pay inflated prices without getting complete information on the risks or how demanding the rezoning process is.
That’s where new rules around crowdfunding come in.
New regulations introduced by securities regulators in most provinces widens the pool of potential crowdfunding investors, while placing some restrictions on how much they can spend.
Previously, crowdfunding was limited to accredited investors – those with a net worth of $5-million or $1-million in investable assets – who make up only about four per cent of the Canadian population, according to the Ontario Securities Commission.
Under Ontario’s new regulations, which came into effect on January, retail investors are able to invest up to $10,000 annually. Individuals earning at least $75,000, or $125,000 a household, can invest up to $30,000, or $100,000 annually if they receive advice from a portfolio manager, investment dealer or exempt market dealer.
Open Avenue’s Mr. McKillican welcomes the new regulations, which he says “strike the right balance between protecting investors as well as allowing opportunities for everyone to get involved in private real estate investment.”
“It gives us an opportunity to reach all types of investors as opposed to just accredited investors or wealthy investors,” he said.
“That’s the beauty of crowdfunding. We can target all types of investors and people can invest an amount that they’re comfortable with, so they don’t have to have a large income or a large bankroll to get involved and invest a small amount.”
NexusCrowd, however, has no intention of opening up investment opportunities to the average Joe.
The company exclusively targets “ultrahigh net-worth individuals who can write really large cheques or institutional investors,” Mr. Rathod said. What’s more, it only partners with developers who fund 50 per cent of a given project.
“The rationale for that is to ensure that our partners have significant skin in the game and their interests are aligned with our investors,” he said.
Whatever the business model, it’s still not clear whether crowdfunding real estate will grow in Canada to the degree it has in the United States, wherehundreds of millions in capital have been raised for real estate development, and where some savvy entrepreneurs have taken to crowdfunding single-family homes and flipping them for a profit.
“It is a very, very new area,” Mr. Andrew said. “I don’t think anybody really knows at this point whether this is going to be a big thing or even really be a viable alternative to traditional lending.”
As to whether he’ll keep investing in these ventures, Mr. Najak said, “it really comes down to the numbers.”
“Once I took the emotion out of it in terms of the platform and all the rhetoric around it, it’s basically about the deal.”
Monday, March 21, 2016
Female real estate agents in Brampton warned of suspicious person
A real estate agent in Brampton, Ont., is warning her colleagues about what she described as a "shady character acting as a buyer" who allegedly asked her for a late-night meeting and a ride in his car.
Anna Powell, a real estate agent for Re/Max Realty Services Inc. in Brampton, posted a warning on Facebook about her encounter with a man on March 11. "Need to send out ALERT to my fellow female REALTORS," she wrote in a post published on March 13.
Peel Regional Police said they received a complaint last weekend about a "suspicious person" and have "spoken to" the individual.
"It was found that there were no grounds for criminal charges," said Const. Rachel Gibbs, spokesperson for Peel police.
According to Powell, the man, who acted as a potential buyer, arrived at her office, requested that they take a drive in his car to the Caledon, Ont., area at night to look at property and followed her in his vehicle after she left the office. She managed to lose him in traffic, she said.
Awful things have happened in our industry that you have read about," Powell told CBC.
"I'm not a rookie. I'm not in a desperate situation. My fear was for that young female agent. If someone wanted to go to a remote location, an agent might agree because she might be seeing commission stardust. At least we have each other's backs."
After Powell posted her warning, the Brampton Real Estate Board sent out an alert to all staff, warning agents about the man. The board declined to speak publicly about the alert.
Powell met with the man — whom she described as East Asian with a husky build who is either in his late 30s or early 40s — at about 8 p.m. last Friday. He had told her he could only meet as late as possible and had recently sold property in Vancouver so he had cash to buy a house in Ontario.
Powell said that the man told her he was interested in buying property in the Caledon area. After looking at listings in her office, he suggested going there at 9 p.m. at night. She ended the meeting and, as she escorted him out, he took a quick look around the brokerage office and remarked that it was empty. She told him the cleaners were still there and escorted him out the door.
"He suggested that we take a drive in his car. At 9 p.m., that is a ridiculous request," she said. "I didn't know what his motive was. I can imagine."
When she left the office, she saw him in a van and the van followed her car. She said she deliberately lost him, driving across two lanes of traffic at one point, so he would not follow her home.
"I didn't report this incident to anybody at first. I thought it just happened to me. But I heard that the following day, someone in my office had a similar incident."
'Safety first'
Re/Max, in an inter-office alert to staff, released the man's name and urged staff to call the brokerage if he tries to make contact.
Powell's posting has been shared more than 8,000 times.
"Please ladies, be careful, no deal is worth it. Safety first," she wrote on Facebook.
Meanwhile, police urge real estate agents to:
- Get identification and contact information from a client, including name, address and a copy of a driver's licence.
- Bring a co-worker along when viewing property.
- Let their office and another person know where they are or where they are going to be.
- Keep a cellphone handy when showing homes.
- Be aware of a home's exits in case they have to leave quickly.
- Trust their instincts.
"If someone doesn't feel right, remove yourself from that situation," Gibbs said.
Friday, March 18, 2016
How transportation impacts real estate prices
Being around public transportation wasn’t always a good choice when it came to real estate. After World War II, downtown living was frowned upon and people flocked towards the suburbs in order to find larger and greener land. As a result, real estate prices rose outside the city.
Fast forward to today and we’re seeing the opposite effect. People want to live in the downtown core and public transportation is at the forefront of political debate.
Billions of dollars are being spent on new subways and streetcars in cities like Toronto and Vancouver. Calgary and Ottawa are also beefing up its public transit service in response to a higher demand from residents.
In fact, every major city across Canada has plans to focus on public transportation. It’s a response to increased population demands, and on minimizing the cost of economic and environmental resources.
Increased housing prices are a result of higher demand. In terms of housing near public transportation, this demand has increased because people want the convenience of walking to a subway or streetcar. This is an advantage because there is no requirement to pay for parking.
The millennial generation (those under 30 years old) also prefers to live close to public transportation. This generation of the population has made a conscious decision to drive less and walk more, thus, making them more dependent on public transportation.
This is especially true in the rental market where many renters opt to live in housing that is walking distance to a subway or streetcar route.
Transit is vital for building communities. It’s an essential service that provides mobility, creates jobs and takes cars off the street. As a result, congestion is reduced, fostering economic growth in the economy.
In terms of real estate prices, property values that are located close to public transit increase at a higher rate and have been shown to be more resilient to economic downturns.
A study created by the National Association of Realtors (NAR) and the American Public Transportation Association (APTA) concluded that “property values with good access to public transit remained much closer to their pre-recession levels than properties without access, even within the same city.”
This can also be seen in the short-term rental market. Properties listed on AirBnB and VRBO yield a higher return when they are located close to public transportation and to the downtown core.
As cities across Canada become more developed, it will be more and more difficult to commute downtown via car. Thus, properties that are located closer to the downtown and have good access to public transportation will continue to see growth in real estate prices.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/how-transportation-impacts-real-estate-prices-199523.aspx
Fast forward to today and we’re seeing the opposite effect. People want to live in the downtown core and public transportation is at the forefront of political debate.
Billions of dollars are being spent on new subways and streetcars in cities like Toronto and Vancouver. Calgary and Ottawa are also beefing up its public transit service in response to a higher demand from residents.
In fact, every major city across Canada has plans to focus on public transportation. It’s a response to increased population demands, and on minimizing the cost of economic and environmental resources.
Increased housing prices are a result of higher demand. In terms of housing near public transportation, this demand has increased because people want the convenience of walking to a subway or streetcar. This is an advantage because there is no requirement to pay for parking.
The millennial generation (those under 30 years old) also prefers to live close to public transportation. This generation of the population has made a conscious decision to drive less and walk more, thus, making them more dependent on public transportation.
This is especially true in the rental market where many renters opt to live in housing that is walking distance to a subway or streetcar route.
Transit is vital for building communities. It’s an essential service that provides mobility, creates jobs and takes cars off the street. As a result, congestion is reduced, fostering economic growth in the economy.
In terms of real estate prices, property values that are located close to public transit increase at a higher rate and have been shown to be more resilient to economic downturns.
A study created by the National Association of Realtors (NAR) and the American Public Transportation Association (APTA) concluded that “property values with good access to public transit remained much closer to their pre-recession levels than properties without access, even within the same city.”
This can also be seen in the short-term rental market. Properties listed on AirBnB and VRBO yield a higher return when they are located close to public transportation and to the downtown core.
As cities across Canada become more developed, it will be more and more difficult to commute downtown via car. Thus, properties that are located closer to the downtown and have good access to public transportation will continue to see growth in real estate prices.
Source: http://www.canadianrealestatemagazine.ca/expert-advice/how-transportation-impacts-real-estate-prices-199523.aspx
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