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Some Tips For A Multi-Family Home Investment

By | knowledge, resource

Reasons to invest in multi-family homes:

  • You expand your real estate investment portfolio faster. Multi-family homes are the best type of income properties for building wealth and generating higher returns.
  • You will experience easier property and time management by having your investments under the same roof.
  • You can make great profit by purchasing a multi-family home that is in disrepair and renovating it. That is because any new upgrade or renovation to the property will result in higher values for each rental unit you own. This can be in the form of rental price or selling price.
  • You will generate more cash flow each month along with slow, yet steady appreciation in the value of your real estate investment portfolio.
  • Your mortgage approval application and process can be easier as there is less risk involved for the lender. Multi-family properties generate a solid cash flow and with even at 10% vacancy rate, the likelihood of a power of sale on an apartment building is not as high as a single-family rental.
  • You can manage your own investment property. It would be much easier for you to manage multiple units in one building versus in different locations.
  • You will have the luxury of hiring a professional property management company, as it will cost you less with a multi family home.
  • You will save the pain of getting multiple insurance policies for multiple properties, instead you will get one insurance policy for multiple units at the same location.
  • You will have less competition. Seize the opportunity, as there are usually fewer people investing in multi-family homes due to many personal considerations.

Things to consider when purchasing a potential multi-family home:

  • Property location: Pay attention to properties located in solid neighbourhoods, places where people want to live.
  • Condition: Take into account how much time, money and work the property will need in order to be rent-ready.
  • Rent roll: Look at the current rents and compare them to the average rents in the area to see what the property should rent for and can help influence your buying decision
  • Revenue & expenses: Look at what rental revenues are coming in and what the current expenses are and see if it makes sense, remember to add in your approximate carrying costs to see if you will be cash-flow positive.
  • Vacancy rate: Look for a vacancy rate below 10% and see how long each unit is vacant per year so you can figure that into your carrying costs.
  • Zoning: You want to ensure that the property is zoned for what it’s set up as it is very common to see a triplex that is only legally zoned as a duplex.
  • School ratings: Poor overall public and private school ratings can deter tenants.
  • Public parking: Tenants need to have places for themselves and their guests to park.
  • Amenities/attractions: Parks, restaurants and shopping should be nearby
  • Walk score: The area should be walkable.
  • Nearby businesses: The business district should be thriving and businesses should be open.
  • Overall condition of area: Street lamps should work, trash should be picked up and sidewalks and homes should be well-maintained.
  • Public transportation: Tenants want easy access to and from work, school and other necessities.
  • Condition of other properties: Run-down buildings deter prospective tenants from living in the neighbourhood

We can help you plan a long-term real estate investment strategy based on your current income, savings, availability and property management skills.

Feel free to reach out to us. Subscribe to our newsletter and don’t forget to follow and like us on social media.

With love and gratitude

What Is An Income Property?

By | knowledge, resource | No Comments

An income property is bought or developed with the intention of earning income on it. The income is generally made through holding and renting it out or selling the property after the value of the property has appreciated. Income properties can be residential such as condo apartments, single family homes or multi-family properties. They can also be commercial properties like a strip mall for example. In this post, we will only focus on residential properties: single family homes and condo apartments.

How to make money from an income property?

  • Cash flow. Real estate market fluctuates. As long as the property is producing positive cash flow, you can hold on to it and make money over time. It is however important to know some basics: Calculate annual gross rents. Add up total annual costs including mortgage payments and all other variable expenses. Deduct the total annual cost from the annual gross rents. And if you have a positive cash flow, then you are on a great path.
  • Equity buildup. As rents pay down the mortgage balance, the equity increase is considered as profit.This equity is only on paper, until you sell or refinance the property.
  • Equity Recapture – Ideally, we all want to buy a property below market rate. If the market value of a home is $500,000 and we purchase it for $475,000 our net equity capture is $25,000. This allows us to make money when we buy the property and ultimately realize money when we sell it.
  • Forced appreciation – Investing in home improvements is a great way to increase the value of the home. As an investor, we do not want to buy the best and prettiest house on the street. It is best to buy properties that we can put some work into to make the value of the property to go up.
  • Market appreciation – Real estate is an investment that grows in value over the years. While it has its ups and downs, a real estate investment has shown to grow in value over time. Market appreciation on our property turns into cash profit when we sell or refinance the property.

Why invest in a single-family home as an income property?

  • Appreciation potential. Single-family homes can be converted to 2 or 3 self-contained units, generating several streams of rental income.
  • No condo fees. Condos typically cost more to own than a single- family home of the same size. Not to mention the condo fees (both monthly membership fees and special assessments) are subject to increases, thus increasing the burden of cost over time.
  • Rent limitations. Tenants interested in renting a house are usually accustomed to taking care of utility cost, the snow removal and/or lawn care.

Why invest in a condo as an income property?

With a huge demand for condos, Toronto is fast becoming another New York City, however the property values are still of course far below New York’s. There are some options for you to consider:

  • Pre-construction condo. This can offer great profit margins. Look for neighbourhoods where prices are still low, where there are future developments or transit infrastructure that will add value in the years to come.
  • Resale condo. Simply look at existing condos that are known to perform well in the market.

What to look for when buying a condo?

  • Age of building
  • Amenities
  • Appliances and Other Equipment
  • City’s Development Plans for the neighbourhood
  • Commercial Condo Insurance Policy
  • Demographics
  • Elevator Infrastructure
  • Energy Efficiency
  • Exposure
  • Finishing/craftsmanship
  • Floor plans
  • Location
  • Maintenance fees
  • Price per square foot
  • Proximity to areas of interest
  • Proximity to quality schools
  • Reserve Fund and any potential special assessments
  • Separate thermostats
  • View
  • Visitor Parking

What are some up and coming Toronto neighbourhoods?

Bloordale Village: The corner of Bloor and Dufferin is expected to get a major face-lift with new retail, office space and lots of green space.

Dupont Street: Just north of Bloordale Village along Dupont with redevelopment of the Galleria Mall at Dupont and Dufferin.

Birchcliff (Beaches): Redevelopment is on the way along Kingston Rd in the neighbourhood of Birchcliff. Being so close to the Beaches, it’s a location that can’t be beat.

Gerrard St East: Set between Danforth and Queen Street East with accessible transit lines, where you can still find affordable detached and semi-detached homes.

We can help you plan a long-term real estate investment strategy based on your current income, savings,availability and property management skills. Feel free to reach out to us. Subscribe to our newsletter and don’t forget to follow and like us on social media.

With love and gratitude

Why Invest In Real Estate In 2019?

By | knowledge, resource

This is an exciting time to invest in Toronto real estate. Here is why:

1. You are in control of your home, money and investment. How much control do you have on your traditional investments compared to your own home investment?

2. Your money starts working for you even if you buy a condo for $300,000. This will lead you to build wealth and afford larger investments in the future by:

a) forced appreciation

b) market appreciation

3. When you buy a primary residence in poor condition and plan strategic renovations two things will simultaneously happen for you:

a) Your home value will increase.

b) Your lifestyle will improve.

4. Leverage with the lowest interest rates to build your net worth without having to pay the full purchase price with as little as 5%.

5. Your return on equity is massive with the right investment strategy in real estate.

a) Resale or a pre-construction condo can offer great profit margins. Look for neighbourhoods where prices are still low, where there are future developments or transit infrastructure that will add value in the years to come. Or simply look for resale condos that are known to perform well in the market.

b) Freehold home prices in the 905 area dropped tremendously. This is an ideal time to consider upsizing and/or changing your life style.

6. With huge demand for condos, Toronto is fast becoming another New York City, however the property values are still far below New York’s market of course. Toronto’s average 10 year historical growth rate of 5% a year simply tells us that investing in Toronto condo market is wise.

7. Begin to build your portfolio of investment properties by leveraging a portion of your home equity into a second investment property.

8. Demand for rental properties is increasing.Toronto’s growing immigration and tech industry bring a great number of qualified residents to the city. You can benefit from a top quality tenant for your next income producing property.

9. Your real estate investment is safe with Canada’s lending practices and ongoing rigid mortgage regulations securing a very low (0.3%) delinquency rate.

We can help you plan a long-term real estate investment strategy based on your current income, your savings, your availability and property management skill set.

Feel free to reach out to us. Subscribe to our newsletter, and don’t forget to follow and like us on social media.

With love and gratitude

How To Showcase Focal Points Of Your Home

By | knowledge, resource | No Comments

First impression is everything. You can spend a lot of time and money showcasing your home or you can get creative, and it could be as little as rearranging your own furniture/accent pieces, to staging certain areas of your home that may need more work. Here is how to wow potential home buyers with your home along with a checklist for the most important areas of your home.

Front Entrance

The entrance is the first impression and the invitation to potential home buyers to explore inside your home:

  • Lighten up your front entry
  • Freshly paint your front door
  • Replace the door knob if needed
  • Change the doorbell if it is not working well
  • Add a good quality welcome mat
  • Add eye-catching colourful accents that would put your guests at ease

Living Room

Resourcefulness costs nothing. With a little creativity, you can give a new vibe to your living space.

  • Keep your furniture together to create conversation areas
  • Make your coffee table attractive with a tea set on a tray and a few art books
  • Have fresh flowers in a vase to add color
  • Arrange a few decorative pillows or lamps

Dining Room

Make sure you present your dining room as the focal point of your home. Arrange it to feel spacious, comfortable and entertaining.

  • Add a centrepiece, candles, or a large vase with flowers
  • Display an attractive dining set and cutlery
  • Brighten up the room with lamps
  • Bring natural light into the room by removing heavy window treatments

Kitchen

Make your kitchen inviting and the centre piece of your home.

  • Place nice hand and dish soap by the sink
  • Organize the pantry and cabinets
  • Display a bowl of fresh fruit or fresh flowers
  • Add new hand towels

Master Bedroom

The bedroom needs to feel elegant and inviting.

  • Invest in new linens, good quality cotton sheets and duvets in neutral colors
  • Create a sitting area if possible
  • Organize closets and keep them neat
  • Use tasteful art to decorate walls

Bathroom

  • Add candles, bath oils and fragrant soaps
  • Hang some new, clean towels
  • Keep the toilet lid closed
  • Hide the cleaning supplies and garbage
  • Organize bathroom cabinets

Should you have any questions, feel free to reach out to us. We are here to help you showcase your home and make it as marketable as possible. Subscribe to our newsletter, and don’t forget to follow and like us on social media

With love and gratitude

First Time Home Buyers Incentive: A Genius Program

By | knowledge, resource | No Comments

My previous professional experience at CMHC (Canada Mortgage and Housing Corporation) and AIG United Guaranty, which is now called Canada Guaranty, has taught me a great deal about various federal housing incentive programs. I will never forget the influx of new housing policies that were implemented in various real estate investment sectors. I also vividly remember their mechanisms to impact market movements either to boost 2005-2007, or to slow down during 2008-2009.

We are still witnessing the explosion of radical changes that have been introduced to mortgage rules, which caused a huge shock in the Toronto real estate market since 2017. There is now a 15% foreign buyers tax, a stress test for insured and then uninsured mortgages for purchase and refinance when changing the lender, a restriction of mortgage insurance to owner-occupied dwellings, shorter maximum amortization periods for a purchase price of less than $1 million, a minimum credit score of 600, a maximum 39% gross debt service ratio and 44% total debt service ratio calculated using the higher stress-test rates, an increase in the mortgage default insurance premium payable on insured mortgages to as high as 4%, just to name a few of these measures.

So I am truly impressed with the government’s most recent initiative called “The First Time Home Buyer Incentive” which becomes effective on September 2nd, 2019 and is administered by the Canada Mortgage and Housing Corporation (CMHC). This new program is of course aimed to make homeownership easier and more affordable to first time home buyers. I really feel this incentive program is a “real gift” to first home buyers, creating some hope and support to such an important and stressful process.

Let’s review the main highlights of ‘The First Time Home Buyer Incentive’ together:

  1. This incentive will be available to first-time homebuyers with qualified annual household incomes up to $120,000.
  2. It will allow eligible first-time homebuyers to apply for financing a portion of their home purchase through a form of a shared equity mortgage with the federal government for an insured mortgage through CMHC, Genworth or Canada Guaranty.
  3. The buyer’s mortgage plus the loan granted cannot be more than four times their qualified annual household income.
  4. The loan is interest free from a fund run by CMHC, matching the buyer’s down payment. The borrower can repay it at any time without a pre-payment penalty.
  5. The payment free loan is 5% for the purchase price on a re-sale home, or 10% on a new-build or pre-sale home. Doubling the incentive for purchasers of new homes would definitely encourage a supply new housing.
  6. This will help qualified first-time homebuyers purchase their first home with reduced monthly mortgage payment. As per CMHC, the borrowers will save up to $286 on a monthly mortgage payment for a $500,000 purchase of a newly built home.
  7. The loan, plus any equity uplift on that portion, is repayable to the government upon the sale of the home or after 25 years, or whichever happens sooner. The government shares in the upside and downside of the changes in the property value.

These are all great and very reassuring facts for the Canadian real estate market, especially for us in the GTA. It seems that the federal government is putting its own money at risk for several potential reasons, which could be:

  • to recover Canadian real estate market
  • to make up for the mess they recently caused
  • to create certainty and stability
  • to boost the real estate market
  • to encourage the buyers who are currently on the fence to start investing
  • to send a message to Canadians that we are at the bottom of the real estate market

The question is if the government is starting to invest in a potential equity uplift, shouldn’t we as well? I would love to hear your comments.

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With love and gratitude

Divorce

By | knowledge, resource

The dictionary meaning of divorce is one thing and the meaning we give to it on a conscious, unconscious, emotional, logical, legal level is another. Early in our lives, divorce could have been non-existent in our vocabulary or simply had no direct consequences in our personal life. As we grow older, we experience a whole range of meaning that we are moved or shaped by. Acknowledging and/or speaking the truth about divorce is one of the biggest fears of all time. It could feel like our identity has collapsed, our beliefs and values shattered. Fear of failing, disappointing, hurting, losing our loved ones, our purpose and our identity can weigh heavily on one’s shoulders. We suffer and feel completely lost when we are in our weakest spiritual, emotional, physical, mental and financial state. My divorce process definitely had all these effects on me. It empowered me, disempowered me, challenged me, made me grow, connected and disconnected me, inspired me, freed me, and most importantly made me more authentic, vulnerable and compassionate to myself and to others.

We are raised to open up and share our happiest emotions to the world with pride once we are engaged or get married, and to hide our darkest emotions when we separate. Though, the truth is both marriage and separation are a celebration of a new beginning and ending, aren’t they? So, let’s start by celebrating that and know we are not alone on this journey. There is a whole community out there to support us and give us the strength we need to move forward. Here is some helpful information about divorce and real estate to make things a little easier for you:

1. Buy Out

You need to decide who can and will actually afford to buy the other out or whether you’d prefer to liquidate and divide your assets. Confirm with your mortgage broker or your bank that you will each qualify for a mortgage on your own. I chose to buy out yet to be the mortgage qualifier on both ends. Avoid doing that if possible, as this would have a very negative impact on your own personal qualification in the future.

2. Children

I am so grateful to my beautiful son, who was 20 years old at the time and lived with me (and still does) after the separation. However, this is not always as easy. Bird nesting seems to be a more common alternative for divorced families with younger kids when the kids stay in the marital home and the parents come and go when it is their allocated time with the children.

3. Home Evaluation

You’ll need a bank appraisal, a letter of opinion by a local realtor before coming to the market. Of course, none of the mentioned assessments guarantees your home sale price until an actual written firm offer is accepted and your property is sold. I personally did all of the above during my divorce to make it as transparent as possible.

4. Home Equity

The estimated market value at the time of your legal separation determines your home equity. This again helped me to divide assets based on a mutual agreed separation date, which allowed me to eliminate unnecessary arguments along the way. Also, inheritance money invested in a property impacts the buy-out, real estate fees, and/or land transfer taxes on buying another property.

5. Housing

You may want to stay at your primary or secondary home, with family, rent a longer-term Airbnb, an executive furnished rental. And if no such option is available, you may stay in separate rooms in the same house, or even have one move into the basement or separated space. I kept our primary residence, consequently keeping every member of my family calm from my inspiring son to my vulnerable parents and my little dogs that I had to support.

6. Interim Expenses

A line of credit and a joint interim account are great sources for managing up-front costs associated with the sale that you can divide these expenses out of the proceeds of the sale. Sometimes, one of the spouses pays these fees and the other gets less equity back. I took on that responsibility which was a real headache and there was no other way around it for me. However, I would not personally recommend this approach to anyone, if there is an alternative option. If you are limited in budget, negotiate to pay certain fees such as legal, staging, repair etc when the house closes.

7. Mediation

An approved mediator for both spouses could eliminate a big portion of your legal fees and facilitate open communication between you, the lawyers and the real estate team from finalizing division of the assets, pricing, selling, financing, separation agreement write up, divorce agreement etc. Make sure to hire a mediator who is impartial. I happened to have a family friend mediator, whom my ex-husband listened to and who I respected. If I knew what I know now, I would have hired an approved mediator by both of us without giving grief to a family friend and more importantly to have someone who could have had no connection or emotional attachment to either of us.

I would love to help you making your divorce process easier, by holding your hand and earning your trust along the way. Let me assist in anyway that I can.

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With love and gratitude

Prepare Your Home For Sale

By | knowledge, resource

In the last 3 decades of my life, I have lived in 3 countries and moved from one home to another a total 12 times. During this period, I also purchased and sold 4 principal residences, and finally, as a realtor I have witnessed hundreds of home owners’ struggles in planning their move to their next dream home.

Although every home is different and may require additional work to get it in pristine condition, I soon realized there are some common turn-offs most buyers have when looking for a house.

Here are some tips to keep in mind when preparing your home for sale:

Check and repair plumbing

Plugged drains and leaky faucets are two of my least favorite home maintenance issues. I also know these are the most common problems all homeowners face with their plumbing. What I learned is to identify and fix these common problems rather than avoiding them. This could be as simple as checking sinks being clogged at the top or pop-up plug in bathroom sinks.

Clean your home

I always consider house cleaning as a seasonal deep cleaning duty. I call it spring cleaning, summer cleaning, fall cleaning, winter cleaning! It personally gives me motivation, meaning and purpose. At the end it is all about mindset, isn’t it? Clean your home from top to bottom until it sparkles inside and out. Have fun with the process and envision the outcome. Clean the gutters. Pressure wash walkways. Wash windows. Clean bathrooms (re-caulk the tub, shower, and sink). Air out all rooms. Remove cobwebs. Wax floors. Polish appliances and faucets. Dust everything from furniture to light fixtures, fans, bookshelves. Vacuum every day. Steam clean any carpets.

Conquer your mess

My incredible son is a passionate collector of all kind of sports gadgets and tennis shoes. My mom is a collector of dishes. My dad is a collector of comforters for our dogs and I am messy with my paper work (thank god we become more green every day 😉 . So, imagine the serious and engaging conversations I had to have with every member of the family when our house was on the market. We simply want buyers to focus on how awesome our space is, don’t we? So, pack up everything you don’t need and think as if you are getting ready to move out and start a new beginning. Get rid of any extra or oversized items that could make your space look smaller than it really is. You may want to rent a storage unit until the house sells. 

De-personalize your home

Buyers want to envision themselves in your home, so remove anything overly personal, like family photos in the hallway or your kids’ artwork on the fridge. Get rid of any art or décor that might conflict with people’s different tastes. I had to remove my Persian rugs and decorations to make it more neutral. Let’s just keep it simple.

Don’t be home during showings

Let’s face it, most buyers want to look at a house without the owners telling them stories or giving them advice. I had to make sure my parents were not home during the showings specially my sociable dad who loves to chat with everybody even with his broken and limited English. Buyers also find it difficult to visualize living in the house with the owners around.

Eliminate odors

The smell of cooking are big turn-offs to potential buyers. In my household, my mom cooks rice almost everyday. Although I can personally give up everything to taste the basmati rice, I know that the rice smell can be very overwhelming to some people. So, if cooking was unavoidable, I opened windows to let in fresh air. Cigarettes are another big turn off. If you are smoker, consider taking it outside as cigarette smell can be a deal-breaker. Instead give your home a lived-in flavor. Put some fresh-cut flowers in a vase by the sink. Place a basket of fruit on the kitchen counter. Place a few small potted plants in an empty corner. Spray the bathrooms with a zesty, clean smell. Keep your home smelling fresh. Bake bread, cookies or pies on the day of the showing. This will make buyers feel home and welcome in the house.

Enhance your entire home’s curb appeal

Don’t spend all your time indoors. Make sure your home’s exterior looks excellent as well. I have been lucky to have my parents, nature lovers, maintaining our outdoor life experience. My dad enjoys trimming our shrubs and my mom has a blast adding rows of potted plants along the walkway which has made a huge difference to our home curb appeal. I am sure you will find away to get inspired to do so too. Tidy up the outside. Mow the lawn, remove weeds, remove dead plants and plant flowers. Also remember to remove trash cans and store them in the side or the garage. Park down the street or in the garage. Keep garage door closed. Spray down corridors and sidewalks. Place a few flower pots in the porch or near the front door. Add lighting to your landscaping.

Fix the doors

I once missed the peak of the market because of my obsession to change my front door. Please don’t do what I did. However, make your doors easy to open and close and more attractive to potential buyers. Doors might stick or close improperly due to faulty locks, handles, latches, or door frames. For serious door and lock problems, call a professional locksmith. A fresh coat of paint will make the front door stand out.

Give spirit and character to your home

I am personally obsessed with home décor. I can come up with tons of ideas to give spirit and different energy to a tiny home space. I get inspired by every opportunity to move furniture around in my own home space and find it is the perfect set up every time, till next time. I invite you as well to change the energy and make your home original. Use every corner of it with purpose so that the buyers can see themselves in it. Turn your unused living room into a conversation area. Help buyers picture themselves relaxing into your family room. Create a theme for your office space, guest room, study room. An inviting chair, a tray with tea/coffee cup and an art book can turn an empty corner into an inspiring sitting area. An Aix-En Provence soap in a decorative tray can make your tiny powder room the charm of a floor. A unique welcome mat will make buyers feel more at home.

Highlight focal points

Bring buyers attention to any awe-deserving element with bright colors or accents pieces. Believe it or not this year, I had craving for yellow colour, the colour of prosperity and beauty. So, I painted my home ceilings yellow and added yellow throw pillows among others which draw my eyes towards them and every morning I wake up to the most beautiful picturesque wall to wall window with sunrise and greenery background. Sky is the limit with our imagination. What do you think of a bonsai tree on the mantle showcasing your fireplace?

Let mother nature fill your home with love

Showcase focal areas or empty corners of your home by placing a few potted plants in your living room/den, kitchen. Potted plants or a few pretty buds in a vase can help bring world of energy into your home space. I spice up my home’s flavour daily with fresh flowers from my garden and use palo santo wood as incense brought from Chile by my friend. You may want to add a bowl of fresh fruits in your kitchen or something else from the nature that talks to you.

Light it up! 

I love natural light. In fact, in my home you don’t see any window coverings because of it. Natural light is a free gift and brings so much aliveness to our daily life. Bring it in with abundance and add floor or table lamps to areas that are dim. A bright, cheery room looks much more inviting.

Organize closets and drawers

Organized and well-arranged closets give buyers the impression that you have taken good care of your home. I have a rule in my household to box winter clothes in the summer and summer clothes in the winter. This allows me to make our closet spaces airy. How is it for you? It is a good practice to invest in some boxes, dividers that will help you getting more organized. Remove any items you don’t need immediately. Messy closets give the appearance that your home doesn’t have enough storage space.

Paint

Walls, trim, baseboards, and cabinets might need to be repainted to give a fresh look to your home. Paint your walls a neutral color that will appeal to a wide range of buyers. Any off-white, gray, or cream color is a good choice. Avoid bright loud colors as they make your decor extremely personalized. I remember when we painted our home from coffee to Champagne colour, I felt our living/dining room was much brighter and bigger. Isn’t it amazing how a choice of colour can give a different feel to your home? Hiring a professional painter might be a good idea to save time and leverage as they know what kind of paint  and colour to buy for different areas of your home.

Take care of pets

To most people, pets are members of the family, as they are for me and my family. Unfortunately, dogs are also messy and in some cases their odor can be a huge turn-off to potential buyers. I remember last time I was on the market to sell my home, I had several things to take care of, including my two dogs. After doing a thorough cleaning of the house, it is best to keep pets out until the house is sold. Take your pet to a friend or family member. I took my dogs to my sister and  they had a blast together for a couple of weeks.  If you don’t have that option available, remove pets when you have scheduled house showings.

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With love & gratitude

Pre-construction Condo Guide

By | knowledge, resource

Did you know that each year Toronto welcomes 100,000 to 150,000 immigrants? Did you know that we need about 50,000 new homes each year to welcome the new comers who also need shelter and a place to call home? Did you know that we need about 100,000 new construction projects in the Greater Toronto Area to simply satisfy the demand for newcomers? Did you know that the lack of supply and huge demand in housing is constantly driving up the rentals market in the GTA?

These are just a few facts for you to think about when planning your next real estate investment opportunity. Investing in pre-construction condo projects has been one of the more lucrative investments to many real estate investors in the GTA over the last couple of decades. In this post, I would like to examine questions“why”, “what” and the “how to” so you are able to make an educated decision with confidence in your next pre-construction condo of choice:

Why a pre-construction condo?

1.Great long term return on investment

Managing condominiums is a passive form of investing. This allows you to purchase and make significant profit on brand new condos (buy at a discount and sell at a premium). Make sure you pick the pre-construction projects that will help maximize your returns. Condos are more affordable and have been holding their value better during the market and economic downturns.

2. Low-maintenance

Condo Fees in new buildings are usually quite low.That is partly because the fees are estimated years in advance before the condo is built, and partly because they developers rarely know the actual costs of running the building.

3. Build up your equity

You don’t need a mortgage during the construction process, while you are building your equity. For example, to purchase a condominium at $600,000, you simply need to invest $120,000 (20%). It means that for every dollar that you put towards the new condominium, the developer is putting in $8. You essentially have an 80% interest free loan from the developer for the duration of construction period.

What to consider before buying a pre-construction condo

1.Think ahead

From the day you purchase your unit and the date you take possession, a good amount of time will pass. In fact, expect to wait 2 to 4 years until your condo is completed with a good chance of further delays. If you need to sell the deed to your property before your condo has been completed for any reason, you may have the option of doing so on assignment, given the developer’s approval.

2. Condo fees

Maintenance fees for brand new units typically start out lower than those you would pay on a resale condo. That being said, there’s a good chance that the fees will increase during your first couple of years of ownership

3. Deposit

Deposits on pre-construction units range from 15-20% although this could be as low as 5% as special incentive in some cases. Here is what your payment structure would most likely look like:

• At signing: anywhere from $3,000 to $20,000+

• The remainder of 5% downpayment: to be paid within 30 days

• A further 5%: due somewhere between 90-120 days

• Another 5%: between 270-365 days • The final 5% on the interim occupancy date

4. Taxes

You must pay HST on new units. Fortunately, in most cases, you will receive a full or partial rebate. The rules and requirements differ depending on whether you and/or one of your immediate relatives will be theend user of the unit, or whether you’ll be renting it out. Be sure you get all of the facts before making a purchase by talking to your real estate lawyer and accountant.

5. Inventory

Getting early access to a new development may have big benefits including lower prices, developer incentives and more choice of floor plans. Remaining inventory can also come with some additional advantages including an extended deposit period, cash back on final closing, waived assignment fees, or free parking.

6. View

Spectacular views can be a major selling point for buyers. The unit you choose should offer more than a breathtaking view. Unless a unit is directly facing the lake or a park, keep in mind your view could be obstructed by a future development.

How To Purchase?

1.Your realtor

Your realtor’s expertise starts from the time she/he assists you with the right project, location, price point, floor plan, exposure and view and the right terms and conditions all aligned with your ultimate investment strategy.

2. Floor plans

When you find the right development, your realtor will assist you in finding the best available floor plans. You will look at factors such as square footage and its potential profitability while matching your preferences.

3. Sign your agreement

Once you’ve found the ideal unit, it’s time to sign your agreement and seal the deal. Make sure you have all the required documents with you at the time of signing.

4. Cooling-off period

In Ontario, you have 10 calendar days to reconsider the purchase of a new condo known as a cooling off period. During this period, get your real estate lawyer to review your agreement.If you change your mind for any reason during the 10-day cooling off period, you can back out of the contract and have your first deposit returned without any deduction or penalty.

5. Pre-approval

Obtaining mortgage pre-approval is one of the crucial steps to condo ownership. Since your pre-construction development won’t be registered yet, this process will be different than the purchase of a resale unit.

6. Customization

Around a year before your unit is completed, you will have the chance to choose the finishes that match your tastes and design preferences.

7. Interim occupancy

When the condo is built and ready to be moved into, there is a period of ‘interim occupancy’,where you can take possession and/or move into the unit. You may be able to rent out your unit subject to the developer’s approval. During this period, you do not yet own the condo; you simply pay the builder an amount roughly equal to what their mortgage payment + condo fees + taxes will equal. No land transfer nor mortgage have yet taken place.

8. Condo Registration

Once a building has passed all the city inspections and gone through all the processes to become a legal entity, the condominium is officially registered. During this registration period, condo ownership is transferred to you and mortgages come into effect. You officially become the owner. It usually happens 4-8 months after people begin to move in after the interim occupancy period.

9. Builder Closing Costs

When the unit is officially registered and you close on the purchase, you’ll be responsible for all sorts of closing costs that don’t apply to resale units. These ‘builder adjustments’ apply to all new construction projects and include development and education costs, HST on appliances and utility connections fees. If you’re looking at taking over someone else’s contract via an assignment, make sure to check if the original purchaser capped the amount of these costs when they originally negotiated the unit.

10. Reserve Fund

When you buy pre-construction condo, you’ll need to contribute 2 months condo fees to the condo’s reserve fund (the emergency fund). This usually happens at the time of closing.

11. HST

Unlike re-sale condominiums, new condos are subject to HST. If you’re an end-user living in the unit yourself, you’ll likely qualify for an HST rebate and most builder prices assume you are, and so this rebate is already factored in. If you’re an investor, there is a different rebate and you’re only eligible if you rent the condo out for at least a year and prove it. If not, you may have to pay thousands of dollars in HST upon closing. Make sure to get legal advice about whether you qualify for the HST rebate before you buy a condo.

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With love & gratitude

Choosing A Realtor

By | knowledge, resource

There is nothing more exciting than stepping into the unknown, enjoying and trusting the ride. Selling a home and/or buying one are difficult waters to navigate in today’s real estate market and often require a complete leap of faith that we all take sooner or later in life, to build wealth worth spreading. This important decision will lead to one of life’s ultimate milestones of home ownership, that come with its own rewards, as well as its own lessons. Now that you know why and how you want to achieve your goal, it is crucial to figure out what steps you need to take to make this process seamless and stress free. Here are 10 tips for you to consider in your research for the right realtor for you.

1. Action plan

When looking for the ideal realtor, always ask for their action plan, marketing strategy and services they offer in the process of selling or buying homes. Of course, many realtors offer similar services. The difference lies is their plan of implementation, execution and ultimately results.

2. Availability

Select a realtor, who is available whenever you are. Regardless how good a realtor is, if she/he can’t meet you at your preferred time, the relationship will not work. You need someone who can work with yourschedule and be flexible to your needs. A conflicting schedule between you and your realtor will make the process difficult.

3. Commission

Don’t choose a realtor based on commission alone, although this seems to have become a trend in Toronto’s real estate market. Remember that the least expensive isn’t always the best choice. Always ask what services are included and/or excluded as part of their professional fee. Focus on what you will get and not what you give, don’t forget that wise saying that “we get what we pay for.”

4. Communication

Make sure you select a realtor who is a great communicator and one who listens and then asks a lot of quality questions. You can find out a lot about a person by their answers and questions. A realtor who takes the time to get to know you, your goals, and your priorities is building a successful pathway to a foundation of extraordinary customer service. A realtor who regularly asks about your expectations and your opinions on their recommendations usually means that they have your interests and satisfaction wholeheartedly in mind.

5. Database

Ask the realtor you are interviewing about her/his database of clients and current networking partners. You also may want to find out about the types of clients and transactions they specialize in. Do they network or know local business owners in the area? These businesses may not have been their clients, but having a networking relationship with other business owners allows your realtor to acquire valuable information on what they can do to best serve you as a client.

6. Market analysis

Any realtor you decide to work with should have an extensive understanding and perspective of the real estate market in your area. This isn’t just about market stats, as this information these days can be accessed from anywhere and by virtually anyone. It is the realtor’s ability to interpret and analyze the relevant real estate data that sets the experts apart and serves as the key to a successful client relationship and transaction.

7. Price range

While a realtor can’t give you an exact selling price for any home, you can always ask them to provide you with an estimated range. Depending on the location, dynamic and time of year of the real estate market, a realtor can provide you with a comparative market analysis including the recent sales activity in your area of interest, whether it is for sale or purchase of your next property.

8. References

Begin with reviews on popular online/social networking sites such as Facebook, Google etc. Ask for references from the realtor’s past clients. By reaching out and asking the right questions and reviewing the realtor’s references will allow you to discover a lot about them and their reputation and work ethic.

9. Track record

Make sure to ask for the realtor’s past and current performance report card during the interview process. Ask about the number of homes they have recently sold and the number of listings they currently have, their number of expired listings, their current selling to asking ratio, the average number of days of their listings on the market and any other questions you may have.

10. Your realtor of choice

Whether you’re planning to buy or sell, you will want to be able to build a good working relationship with your realtor, as often you could be working with them for weeks, months and sometimes years to come. Do not be afraid or uncomfortable to say “NO” to a realtor who happens to be a friend or family member.The realtor professionals in your personal social circle might be a great family friends and will remain so, but may not always be right person for the sale or purchase of your next home. Hiring a top performing real estate team or realtor with a proven track record is the other side of that coin.

Make sure your realtor of choice is able to devote the required time to service your individual needs and make sure you get to know who you’ll be working with directly. Not all realtors are the same, so finding the right match for you will make a big difference in your experience as a seller, buyer, landlord or tenant. Selecting a realtor who fits your needs and personality will help make the process seamless and stress free.

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With love & gratitude

Home Ownership

By | knowledge, resource

Home ownership may not seem easy at times. However, it is possible to achieve with the right mind set and the right team on our side.I remember vividly my parents’ struggles with becoming homeowners, when I was a kid. They moved from one place to another about fifteen times, until finally my parents bought their first home with rent to own option, which for us at the time, was a major family milestone. Being part of a big extended family from my childhood to my teens and adolescence, I witnessed a variety of financial ups and downs, gains and losses in my surroundings, and I soon learned that it is not about how much one earns, but it is mostly about what home ownership means to oneself. My own lifetime experiences taught me overt time what home ownership means to me:

1. Community

We had everything we could want for at our fingertips, from the doctor to the butcher to the local dairy or farmer store etc. We shovelled snow together, we gave back to people in need together. We helped each other. We were one. There is definitely a certain amount of pride that comes with home ownership, which helps to anchor you to the community.

2. Credit standing

Homeownership definitely increased my parents financial credibility, from applying for a mortgage to getting a loan to buy appliances, CAC, wood stove etc. Your credit rating improves with mortgage or loan payments, which means you can get access to loans for bigger purchases and investments to grow your nest egg and personal wealth.

3. Fixed housing payment

Buying a home allowed my parents to have a regular predictable shelter cost, much more stable than paying rent. This meant a lot to my parents with their modest income. A fixed rate mortgage creates a great stability and predictability in housing costs.

4. Freedom

Freedom to be, to do and to have the home that the family envisions. I have so many great memories of us sleeping on the roof top, making tomato sauce, having feasts in our yard in the summer or painting exterior and/or interior walls of our modest home, the way we wanted and the colour we wanted, and they are still so alive in me. Home ownership gives you the freedom and creative control to have your home set up in any way you desire, free from landlords’ restrictions and is an important experience in personal growth.

5. Income opportunity vehicle

Home ownership sparks creativity. For a family of modest means, homeownership is definitely not a “lack”, but an “opportunity.” My parents were a great example of that. In their life time, they have had several rental income producing properties, renovated and sold their investment properties at the right time and price, travelled around the world, immigrated and finally settled to have a peaceful and secured life in their retirement years.

6. Increase in value

Homeownership allowed my parents to build wealth, while they raised us. By the time we were grown up, their home value also increased tremendously in value without any additional effort on their part. Home ownership lets you build your equity every month making you a little wealthier every time and growing substantially in the long term.

7. Saving

I know this with absolute certainty that my parents could have never built up their equity without that first bold and creative step into “rent to own” option, which allowed them to save the money they were paying for rent, year after year, and invest in themselves, while raising their three kids.

8. Stability

Home ownership primarily allowed us as a family to experience a sense of stability and belonging. I cannot place a value on the morning walks with my father to elementary school, to going to secondary or high school with neighbourhood friends with whom I grew up

9. Tax benefits

Home ownership allows homeowners to deduct several items such as: mortgage interest, home equity loans, some closing costs and property taxes on primary and/or vacation home, for income tax purposes. Homeowners also get a capital gains exclusion on their primary place of residence.

10. Wealth building machine

Homeownership allowed my parents to buy a few more properties over time and to build up a solid real estate investment portfolio, just because of that initial bold step to become a homeowners.

Why I am saying all of this about homeownership? It is simply because when I look back over the last five decades of my own life experiences, I see that most of the points above are still valid today and are valuable to consider homeownership as a way to build wealth worth spreading.

What does homeownership mean to you? Who do you want to team up with to build and grow your personal wealth? Do you have a financial advisor, a real estate lawyer, a realtor that you know, trust and are committed to? Real Estate market is dynamic and constantly changing. So whether you are a first home buyer, a real estate investor/renovator or simply a repeat home buyer, make sure to connect, reconnect with one of the best professionals in the industry. We are here to help you every step of the way on your journey to homeownership.

Follow us on social media, like us, comment on our topics and don’t forget to subscribe on our newsletter. If You have any questions about real estate and how to become a homeowner, downsize, upsize, right size, invest in real estate, please do not hesitate to contact us.

With love & gratitude