Building a strong real estate portfolio is the cornerstone of wealth and security for smart investors all over the world. While there is a common understanding that owning a home is important, some of us are unsure about owning investment properties.
In my experience many of the concerns about owning investment property revolve around a fear of the unknown. Becoming aware of market trends, local rents and demographics, rate of return and mortgage options can result in a level of confidence and likelihood of success, whether you wish to invest in one or two units, or your plan is to quit your job and invest full-time.
Here are some tips if you are considering real estate investment:
1. Treat it as a business. Emotions are not part of the investment. Make decisions based on solid foundations, not personal feelings. B responsible, professional and treat others the way you wish to be treated.
2. When analyzing a property, look at the worst case scenario, and think about all your expenses when calculating cash flow. Make realistic allowances for vacancy and repairs.
3. Educate yourself before you start investing. A little time will save you tens of thousands of dollars and help position you to make the best and most practical decisions. I, as your Realtor, will be happy to help and am a great resource for you.
4. Establish your plan. Do you want to create a retirement plan? Add another source of income? Quit your job and invest full time? Deciding your goals will help you to build a portfolio that will work best for you. Of course, discussing your plan with me, as your Realtor, is an excellent idea.
5. Take action. There is money to be made in property investment. but only if you make a start!
The Niagara Region is a goldmine for investment in Real Estate. Choice is plentiful right now, rents are steady and mortgage rates are ridiculously low. Now is a perfect time to start or add to your buy-rent-hold portfolio. I would be pleased to discuss the possibilities with you, and to set up an automated search for suitable properties.
Thursday, April 30, 2009
Wednesday, February 11, 2009
Home Renovation Tax Credit
How to spend the home renovation tax credit
Announcement of home reno tax credit has spurred many Canadians to call their contractor
It took about five seconds from the time Finance Minister Jim Flaherty said "home renovation tax credit" for me to start thinking about redoing my kitchen.
Don't laugh, you probably did the same thing. Canadians spend more than $40 billion on home renovations. That's more than twelve hundred dollars for every man woman and child in the country. My guess is that right now, there are a lot of us looking for contractors.
If you're not sure what qualifies for a tax credit, think about it this way: If it stays with the house when you move, then it probably qualifies.
That includes:
-kitchens, bathrooms and basements
-floors and the roof
-heating and air conditioning
-insulation
-paint
-resurfacing the driveway or replacing your lawn with new sod.
-Expenses such as labour and building permits qualify too.
If you're taking it with you - it doesn't qualify. Sorry, there's no tax credit for a new television or sofa. I'm keeping my fingers crossed for next year though.
But where should we start? New kitchen or hardwood floors? Finish the basement or install new windows? Maybe it's finally time to build that deck.
More on the budget:
Read the latest budget news
Budget winners and losers
Readers react to federal budget
Politics trumps policy in the Budget
Budget offers tax break for home improvements
Blog: What they don't tell you about EI benefits
Unless you're renovating out of sheer necessity - like fixing a leaky roof - then you should think about where you'll get the most bang for your renovation buck.
The 15 per cent can be claimed on any expenditure over $1,000 and under $10,000. Since only $9,000 is eligible, the maximum you can get back is $1,350. Spend exactly $10,000 and you'll see a savings of 13.5 per cent. Spend $20,000 and you'll still only get back $1,350. Your savings drop to 6.75 per cent. So now we have a budget - $10,000.
The conventional wisdom points to re-doing your kitchen or bathroom. Home buyers are willing to pay a premium for a great kitchen or bathroom. But a survey by the Appraisal Institute of Canada found that kitchens and bathrooms tend to break even in terms of adding value. Floors and rec-rooms returned little more than 50 cents on the dollar at resale.
Howard Drukarsh, vice president at Right at Home Realty says new energy efficient windows are worth considering. "New windows can modernize the look of your home, they add some curb appeal and the energy savings are a benefit," he says. You can lower your energy bill today and increase your selling price tomorrow. Moreover, you can couple the HRTC with other programs, like the one provided by ecoENERGY. Making your home more energy-efficient can qualify you for grants of up to $5,000.
Let's stay with the windows example. On a $10,000 expenditure you'll get $1,350 back from the HRTC. Your out of pocket expense is $8,650. You'll get an ecoENERGY grant of $60 for every rough opening when you install high efficiency windows. Let's say you have 15 windows? That's $900. Your out of pocket expense is now down to just $7,750.
Not bad. Though several factors are involved, high efficiency windows can also bring your energy bill down by from anywhere between eight and 15 per cent. Your outlay is now approaching $7,000, and that isn't even taking account possible increase in the price of your home.
Regardless of what you choose to do, consider a reno that is eligible for both the HRTC and the ecoENERGY grant to get the most bang for your buck. Just remember that the Home Renovation Tax Credit expires on February 1, 2010.
If you're planning on riding out this tough economy by cocooning in the comforts of your home, why not be comfortable in your space? Renovations can be a good investment and if it means you'll be spending more time at home or reducing energy costs, they can also be a money-saver in the long run.
Thursday, February 5, 2009
Is It The Right Time To Buy?
There has been a lot of attention lately about the price of housing and and what the market holds in store for the future. If you are a prospective homebuyer, the news may leave you wondering whether it's a good time to buy a home and more importantly, whether it's the right time for you.
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How you arrive at an answer to those questions depends on where you are starting from. If you're starting out to buy your first home, it's fairly straightforward. You calculate your carrying costs and the potential for return on your investment and then determine if that situation will improve if you wait. With today's low interest rates, the cost of carrying a home is now very affordable. The low interest rates also provide you with an opportunity to pay down more of the principal in those critical early years of your loan. Paying even a quarter of a persent less in the early years of your mortgage could add up to a savings of many thousands of dollars over the life of the loan. I would be happy to help you estimate what your exprected mortgage, taxes, utilities and other carrying costs will be for a home in your desired price range.
Your Realtor, can also advise you on how much more your carrying costs will be when housing prices increase or when mortgage rates go up - or both! In most cases, a simple calculation will show you that you have a lot to lose by waiting. NOt only would your carrying costs be higher if house prices or mortgsge rates go uyp, you'd also lose any equity you could be earning as the value of your home increases beyond your original purchase price. These factors will usually outweigh any savings you might realize by entering the market later with a larger down payment. This is especially true when you consider you still have to pay rent on another location while you save for that down payment.
Perhaps you're one of those fortunate people who already owns a home and you are trying to decide if it's a good time to sell it and buy another. You have both ends of the transaction to consider, so your primary concern isn't just the price of the home you want to buy. It's the difference between the sale prices of the two properties that's important. If you are upgrading, it pays to act now and take advantage of the property appreciation that is to come, and do it before the gap between the two properties widens. Want more advice? Talk to your Realtor (that's me) today!
If you are thinking of buying or selling property, or know of someone who is, call me now......Helping People Find Homes! It's what I do!
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How you arrive at an answer to those questions depends on where you are starting from. If you're starting out to buy your first home, it's fairly straightforward. You calculate your carrying costs and the potential for return on your investment and then determine if that situation will improve if you wait. With today's low interest rates, the cost of carrying a home is now very affordable. The low interest rates also provide you with an opportunity to pay down more of the principal in those critical early years of your loan. Paying even a quarter of a persent less in the early years of your mortgage could add up to a savings of many thousands of dollars over the life of the loan. I would be happy to help you estimate what your exprected mortgage, taxes, utilities and other carrying costs will be for a home in your desired price range.
Your Realtor, can also advise you on how much more your carrying costs will be when housing prices increase or when mortgage rates go up - or both! In most cases, a simple calculation will show you that you have a lot to lose by waiting. NOt only would your carrying costs be higher if house prices or mortgsge rates go uyp, you'd also lose any equity you could be earning as the value of your home increases beyond your original purchase price. These factors will usually outweigh any savings you might realize by entering the market later with a larger down payment. This is especially true when you consider you still have to pay rent on another location while you save for that down payment.
Perhaps you're one of those fortunate people who already owns a home and you are trying to decide if it's a good time to sell it and buy another. You have both ends of the transaction to consider, so your primary concern isn't just the price of the home you want to buy. It's the difference between the sale prices of the two properties that's important. If you are upgrading, it pays to act now and take advantage of the property appreciation that is to come, and do it before the gap between the two properties widens. Want more advice? Talk to your Realtor (that's me) today!
If you are thinking of buying or selling property, or know of someone who is, call me now......Helping People Find Homes! It's what I do!
Monday, December 15, 2008
Credit Crunch Squeezes Mortgage Seekers in Canada
While the majority of Canadian financial gurus continue to maintain that Canada will not experience the same economic meltdown as the United States, the global credit crisis is definitely having an impact here. Just ask anyone looking to find mortgage financing. It seems the days of easy credit are over as financial institutions tighten up on lending policies.
"It's not that there is anything new in terms of obtaining financing," says David O"Gorman. president of MortgageLand Inc. "What is happening is that Financial Institutions are following policy more closely and enforcing requirements already in place, more stringently." Fr example, self employed mortgage shoppers will be asked for 3 annual Notices of Assessment from Canada Revenue Agency instead of 2, plus financial statements. Pay stubs and a letter of employment will be required from salaried employees to prove their income. Banks will also be looking for lower loan-to-debt ratios, meaning larger down payments. They will also be stricter about verifying an applicant's down payment.
Even private lenders who are typically prepared to take on greater risk will be looking for more equity in the properties they finance. Rules and regulations for programs such as CMHC insured mortgages may also be tightened in the future.
Real Estate Appraisals can be another concern for buyers and sellers in a softening market according to O'Gorman. "There's potential that a property could be appraised down the line, at a lower value than the price offered.
Today's real estate market means REALTORS will need to be more diligent about financing details when taking a listing or working with a buyer.
O'Gorman, along with several other market experts, says it could be 18 months before the start of a turnaround in the economy so REALTORS, sellers and buyers should brace themselves. The Canadian government will have to find ways to keep real estate and new construction markets alive in these tough economic times. What we really need to see are more affordable homes for first-time buyers."
As a Professional REALTOR, it is my opinion that we are now in a Buyers Market......there are people out there that will want to sell, for a number of normal reasons, as well as people who will want to buy, however in this market there will be more sellers than buyers, therefore pricing will be most important to be competitive.
"It's not that there is anything new in terms of obtaining financing," says David O"Gorman. president of MortgageLand Inc. "What is happening is that Financial Institutions are following policy more closely and enforcing requirements already in place, more stringently." Fr example, self employed mortgage shoppers will be asked for 3 annual Notices of Assessment from Canada Revenue Agency instead of 2, plus financial statements. Pay stubs and a letter of employment will be required from salaried employees to prove their income. Banks will also be looking for lower loan-to-debt ratios, meaning larger down payments. They will also be stricter about verifying an applicant's down payment.
Even private lenders who are typically prepared to take on greater risk will be looking for more equity in the properties they finance. Rules and regulations for programs such as CMHC insured mortgages may also be tightened in the future.
Real Estate Appraisals can be another concern for buyers and sellers in a softening market according to O'Gorman. "There's potential that a property could be appraised down the line, at a lower value than the price offered.
Today's real estate market means REALTORS will need to be more diligent about financing details when taking a listing or working with a buyer.
O'Gorman, along with several other market experts, says it could be 18 months before the start of a turnaround in the economy so REALTORS, sellers and buyers should brace themselves. The Canadian government will have to find ways to keep real estate and new construction markets alive in these tough economic times. What we really need to see are more affordable homes for first-time buyers."
As a Professional REALTOR, it is my opinion that we are now in a Buyers Market......there are people out there that will want to sell, for a number of normal reasons, as well as people who will want to buy, however in this market there will be more sellers than buyers, therefore pricing will be most important to be competitive.
Wednesday, October 8, 2008
So How's Real Estate in Niagara?
As of September 30, 2008, data provided by the Niagara Association of Realtors (NAR). Our association are covers districts; 1. Niagara-on-the-Lake, 2. Niagara Falls, 3. Fort Erie, 4. St. Catharines, 5. Thorold, 6. Welland, 7. Fonthill/Pelham, 8 Port Colborne, 9. Lincoln/west Lincloln.
- the average sale price is $214,793., last year to date, $207,140.
- Number of sales dropped 8% over last year to date, but dollar volume is down only 4%. there are 6% more active listings now than at the same time last year.
- The highest amount of activity occurred in the $260-349,999. price range, with an equal amount of transactions to last year to date.
- Overall year to date, 50% of the number of listings taken have sold (last year to date 57%). Individual districts vary: for example, the list/sale ratio in St. Catharines/Thorold stands at 54%, while Fonthill is 59% and Fort Erie is 41%.
While the number of sales has dropped slightly, the dollar value of the average sale has risen. This has been accomplished in spite of the negative publicity surrounding the American Real Estate market, that seems to dominate the news these days. The Canadian market, while it will be influenced by our American neighbours, is more secure and regulated.
It is my opinion, that the Real Estate market in the Niagara Region will continue to show signs of growth and strength due to it's location and many attactive benefits (this being said by a transplant from out of the area), including the wonderful scenery surrounding the numerous smaller communities, with the farms, orchards, vineyards, wineries, Lake Ontario and Lake Erie with the multitude of beaches and waterfront, the Welland Canal and of course the Escarpement, as well as the facilities of the larger centers in regards to shopping, cultural, educational and medical, and its location in Southern Ontario, as well as the moderate climate. It is well situated to take advantage of larger centers in Southern Ontario as well as quick access to New York State and the USA. As a border community it is a gateway to Ontario and Canada.
- the average sale price is $214,793., last year to date, $207,140.
- Number of sales dropped 8% over last year to date, but dollar volume is down only 4%. there are 6% more active listings now than at the same time last year.
- The highest amount of activity occurred in the $260-349,999. price range, with an equal amount of transactions to last year to date.
- Overall year to date, 50% of the number of listings taken have sold (last year to date 57%). Individual districts vary: for example, the list/sale ratio in St. Catharines/Thorold stands at 54%, while Fonthill is 59% and Fort Erie is 41%.
While the number of sales has dropped slightly, the dollar value of the average sale has risen. This has been accomplished in spite of the negative publicity surrounding the American Real Estate market, that seems to dominate the news these days. The Canadian market, while it will be influenced by our American neighbours, is more secure and regulated.
It is my opinion, that the Real Estate market in the Niagara Region will continue to show signs of growth and strength due to it's location and many attactive benefits (this being said by a transplant from out of the area), including the wonderful scenery surrounding the numerous smaller communities, with the farms, orchards, vineyards, wineries, Lake Ontario and Lake Erie with the multitude of beaches and waterfront, the Welland Canal and of course the Escarpement, as well as the facilities of the larger centers in regards to shopping, cultural, educational and medical, and its location in Southern Ontario, as well as the moderate climate. It is well situated to take advantage of larger centers in Southern Ontario as well as quick access to New York State and the USA. As a border community it is a gateway to Ontario and Canada.
Saturday, July 19, 2008
Second Properties - Vacation or Investment
Are You Ready For A Vacation or Investment Property?
Canada's 'Baby Boomer' generation is the most affluent group ever seen in Canada. The 'Boomers' have either already inherited, or are poised to inherit their parents' wealth. The result is a transfer of assests and an increase in discretionary income on a scope never before seen in this country. And many of these newly affluent people are deciding to invest in a second property - either a vacation home such as a cottage or ski chalet, or an investment property to appreciate in value or to generate rental income.
If you are one of the many Canadians who's thinking of buying a second property, you need specialized knowledge and planning to do it right. Here are just a few of the many things to take into consideration:
* Unlike your pricipal residence, any appreciation in value realized on the sale of a second property is considered taxable income. Therefore the name you use to purchase the property (for example, whether it's put in your spouse's name) could have major tax implications at time of sale.
* Similarly, any revenue genrated by an income property is also taxable.
* The good news is that most expences incurred in the operation and maintenance of the property can be written off against income earned.
* Your insurance coverage and costs may also be affected by how you use the property. Make sure your insurance broker knows all the facts, so that you won't be caught in a situation where a future claim is denied due to using the property off season or for commercial purposes.
* Resale values for vacation properties can vary dramatically depending upon the community you choose and the services and features of the property. For example, a year-round road access cottage will geerally appreciate at a higher rate than a water access cottage.
Unlike other more volitile investments, real estate has traditionally been a sound long term investment for Canadians, even in times of econamic downturn. Better still, it is one of the few investments that you can actually enjoy while it increases in value. However, when it comes to second properties, you need to be prepared before you start if you want to avoid surprises down the road. It's a good idea to consult your tax advisor before you buy, to develop an ownership strategy and tax plan that makes the best sense for your situation. I will be glad to provide assistance in the purchase of a second property, and with my enormous network of Real Estate contacts, can connect you with the best real estate professionals in the locations that interest you. Contact me today to find out more.
Canada's 'Baby Boomer' generation is the most affluent group ever seen in Canada. The 'Boomers' have either already inherited, or are poised to inherit their parents' wealth. The result is a transfer of assests and an increase in discretionary income on a scope never before seen in this country. And many of these newly affluent people are deciding to invest in a second property - either a vacation home such as a cottage or ski chalet, or an investment property to appreciate in value or to generate rental income.
If you are one of the many Canadians who's thinking of buying a second property, you need specialized knowledge and planning to do it right. Here are just a few of the many things to take into consideration:
* Unlike your pricipal residence, any appreciation in value realized on the sale of a second property is considered taxable income. Therefore the name you use to purchase the property (for example, whether it's put in your spouse's name) could have major tax implications at time of sale.
* Similarly, any revenue genrated by an income property is also taxable.
* The good news is that most expences incurred in the operation and maintenance of the property can be written off against income earned.
* Your insurance coverage and costs may also be affected by how you use the property. Make sure your insurance broker knows all the facts, so that you won't be caught in a situation where a future claim is denied due to using the property off season or for commercial purposes.
* Resale values for vacation properties can vary dramatically depending upon the community you choose and the services and features of the property. For example, a year-round road access cottage will geerally appreciate at a higher rate than a water access cottage.
Unlike other more volitile investments, real estate has traditionally been a sound long term investment for Canadians, even in times of econamic downturn. Better still, it is one of the few investments that you can actually enjoy while it increases in value. However, when it comes to second properties, you need to be prepared before you start if you want to avoid surprises down the road. It's a good idea to consult your tax advisor before you buy, to develop an ownership strategy and tax plan that makes the best sense for your situation. I will be glad to provide assistance in the purchase of a second property, and with my enormous network of Real Estate contacts, can connect you with the best real estate professionals in the locations that interest you. Contact me today to find out more.
Friday, February 8, 2008
News & Views 2008
How Real Estate Works 101 .......con't
I last discussed the Buying aspect in How Real Estate Works, and now I would like to discuss Selling.
When you are buying or selling a home, you are dealing with one of the largest financial transactions of your life. There is now a proliferation of You Sell It Yourself franchise businesses out there that are aimed at people who want to Sell their own Home for the main reason of saving money. Now, most of these businesses, and they are businesses, are in it to make money, and the way they do it is to charge the Seller up front for a variety of services, depending on the amount of money charged, for the amount of service they provide. It is the old saying, you get what you pay for! A small fee, limited service, a large fee, usually more service, but not always....it is wise to investigate what these companies offer, and if they have any guarantees of service. In most cases the fee will cover a Sign, some help in writing the ad, ability to post the listing on their website along with a, or some pictures. The other services, such as Open Houses, Advertising, Pricing the property correctly, Qualifying Buyers, writing and negotiating offers, investigating and using the proper legal clauses to insert in the offer, (for your protection), co-ordinating showings, follow up of potential buyers, and a multitude of other details are left for you to perform, not to mention ensuring the Buyer applies and is approved for a mortgage in a timely manner, and to followup the meeting of all the conditions of the offer so it can proceed to the lawyer for closing.
The alternative, that the majority of Sellers use, is to hire a Realtor to Manage the Sale of your Home, and no fees are charged or collected until the Home is sold! That's right, the Realtor only gets paid his fee if the property SELLS! If the property does not sell (and that is another topic) then you pay him/her nothing......nothing is paid to him/her in advance! How is that for a Guarantee!
What do you get for this Service? A professional, trained and experienced in all aspects of handling the sale of your Home. From Pricing, accurately measuring, photographing, and marketing in many ways, to finding and qualifying Buyers, co-ordinating showings, Open Houses, drafting, receiving and negotiating offers on your behalf, including recommending legal clauses to be inserted in the offer for your protection, and to track and follow up the successful removal of the conditions of the offer and contiue to follow up until the sale is properly finalized.
He/she is trained to handle all the aspects of managing the sale of your home. As this is one of the most important transactions in your lifetime, it should be handled by a professional.
This, in a nutshell, is what a Realtor does for you, and it is a good idea for you to sit and discuss the services and the management of this sale with your Realtor.
The important point that I want to make in this Post is to take advantage of the Expertise and Protection you receive when working with a Realtor.
And so until next time, take care. If you have any questions, check out my website at www.thehomeguy.ca or email me at thehomeguy.ca@gmail.com
I last discussed the Buying aspect in How Real Estate Works, and now I would like to discuss Selling.
When you are buying or selling a home, you are dealing with one of the largest financial transactions of your life. There is now a proliferation of You Sell It Yourself franchise businesses out there that are aimed at people who want to Sell their own Home for the main reason of saving money. Now, most of these businesses, and they are businesses, are in it to make money, and the way they do it is to charge the Seller up front for a variety of services, depending on the amount of money charged, for the amount of service they provide. It is the old saying, you get what you pay for! A small fee, limited service, a large fee, usually more service, but not always....it is wise to investigate what these companies offer, and if they have any guarantees of service. In most cases the fee will cover a Sign, some help in writing the ad, ability to post the listing on their website along with a, or some pictures. The other services, such as Open Houses, Advertising, Pricing the property correctly, Qualifying Buyers, writing and negotiating offers, investigating and using the proper legal clauses to insert in the offer, (for your protection), co-ordinating showings, follow up of potential buyers, and a multitude of other details are left for you to perform, not to mention ensuring the Buyer applies and is approved for a mortgage in a timely manner, and to followup the meeting of all the conditions of the offer so it can proceed to the lawyer for closing.
The alternative, that the majority of Sellers use, is to hire a Realtor to Manage the Sale of your Home, and no fees are charged or collected until the Home is sold! That's right, the Realtor only gets paid his fee if the property SELLS! If the property does not sell (and that is another topic) then you pay him/her nothing......nothing is paid to him/her in advance! How is that for a Guarantee!
What do you get for this Service? A professional, trained and experienced in all aspects of handling the sale of your Home. From Pricing, accurately measuring, photographing, and marketing in many ways, to finding and qualifying Buyers, co-ordinating showings, Open Houses, drafting, receiving and negotiating offers on your behalf, including recommending legal clauses to be inserted in the offer for your protection, and to track and follow up the successful removal of the conditions of the offer and contiue to follow up until the sale is properly finalized.
He/she is trained to handle all the aspects of managing the sale of your home. As this is one of the most important transactions in your lifetime, it should be handled by a professional.
This, in a nutshell, is what a Realtor does for you, and it is a good idea for you to sit and discuss the services and the management of this sale with your Realtor.
The important point that I want to make in this Post is to take advantage of the Expertise and Protection you receive when working with a Realtor.
And so until next time, take care. If you have any questions, check out my website at www.thehomeguy.ca or email me at thehomeguy.ca@gmail.com
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