Your Home is an Investment

Real Estate Investment Tips

2009-04-30T10:05:00.000-07:00

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.

Home Renovation Tax Credit

2009-02-11T07:34:00.000-08:00

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.

Is It The Right Time To Buy?

2009-02-05T10:06:00.000-08:00

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.

??????????????????????????????????????????????????????????????????????????

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!

Credit Crunch Squeezes Mortgage Seekers in Canada

2008-12-15T11:46:00.000-08:00

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.

So How's Real Estate in Niagara?

2008-10-08T07:21:00.001-07:00

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.

Second Properties - Vacation or Investment

2008-07-19T10:05:00.000-07:00

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.

News & Views 2008

2008-02-08T10:22:00.000-08:00

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

News & Views 2008

2008-01-24T16:21:00.000-08:00

Well, here it is mid-January already......Happy New Year to All, and wishes for a Healthy, Happy and Prosperous Year for all.

I am going to try to enlighten and inform in this blog, how real estate works, and what you as a consumer can expect from a Realtor. This will be an ongoing blog, with additions made on a regular basis, so come back often...It just may help you!

How Real Estate Works - 101

In a normal Real Estate Transaction, there is a Seller and a Buyer. A Realtor, or two Realtors will facilitate this transaction. In a normal Transaction, one Realtor represents the Seller, as the Listing Representative, and the second Realtor represents the Buyer under a Buyer's Agency Agreement.

I will cover both sides of the Transaction in the following number of Posts.

Buying

The buying of a home is the single most important financial decision anyone will make in their lifetime. It only makes sense to work with Professionals when undertaking this task. Does one trust their new Car to the neighbourhood handyman when it comes to caring for it? Is it wise to ask your neighbourhood handyman what stocks to invest in? Is it wise to ask your neighbourhood handyman for medical attention for that ache in your chest? I don't think so.

Now, if you could get professional help and assistance, and advice when buying a property, and there is no cost to you, why would you trust the neighbourhood handyman, or for that matter someone who is selling their own house? Who is looking out for your best interests? Who is going to prepare the offer to purchase agreement, with your best interests at heart? Not the local handyman! Especially when the services of a Professional Realtor, comes with his services paid for you! That's right.....when you purchase your home using the services of a Realtor, the fees are usually paid by the Seller! And this does not, as commonly thought, add to the price of a house! The Mortgage Co. or Bank will only finance the property if it meets the Appraisal Price done on the property for the Mortgage Co. or Bank. My advice to all my friends, clients and customers is to take advantage of the services of a Buyer's Representative (Realtor) when buying Real Estate. I have no problem with someone trying to SELL their own property, but when BUYING use a Professional, for your protection.

Buyer's Representative - A Buyer's Representative will work, under a contract with you, to provide specified services, in order to find the home, prepare the offer, negotiate the final price, and to offer other professional advice and assistance in the Investment of buying your home. There are three types of services that you can choose from when you work with a Buyer's Representative Realtor; As a Customer Representative, as a Client Representative, or as a Dual Agency Representative. There are specific duties and obligations owed to you under each of the choices. I will explain the differences in a later post, or contact me for my pamplet explaining Buyer's Agency.

The important point 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 and ask for help in this Major undertaking. If you have any questions, check out my website at http://www.thehomeguy.ca/ or email me at thehomeguy.ca@gmail.com

Good news for New Home buyers!

2007-11-12T09:18:00.000-08:00

GST cut in 2008 is good news for home buyers. New homes closing in January will save 1% tax under new Federal budget
The conservative government’s recent economic update issued on October 30 left a lot of Canadians smiling. And why not? With government revenues now running higher than expected as the economy booms, the Tories have pledged retroactive income tax cuts, ‘bold’ corporate tax reductions, lowering the GST to 5% as of January 1, 2008, and still having enough surplus left over after the tax cuts to pay down the national debt by another $10 billion this year. And while this is good news all around, it’s particularly so for Canadian home buyers.
The tax changes outlined in the federal government’s economic statement will make it easier for Canadians to realize their dream of home ownership in a number of ways. Lower income tax means more disposable income to devote to a home purchase, and the one per cent cut in the GST will provide savings to new home buyers closing their sale after January 1st. According to an example provided by the Canadian Real Estate Association (CREA), using the sliding GST scale that applies to the cost of new homes, a buyer of a $375,000 house in British Columbia would save $2,738.
Even if you’re buying a resale home that is not subject to the GST, the planned one per cent tax reduction will also help Canadians pay for home renovations, or in the purchase of appliances or furniture. According to research conducted by CREA, Canadians spend an average of $7,475 on renovations when they buy a home, and spend another $3,950 on furniture and appliances. The GST cut represents $114 in savings based on these averages.
Not sure how much home you can afford? I will be happy to sit down and ‘crunch the numbers’ with you, and show you some creative financing options you may have never considered. Why not take a few minutes and find out how to turn your dream of home ownership into a pleasant reality. If you are not from the Niagara area, let me refer you to a Realtor in your area.

2007-11-05T08:03:00.000-08:00

Winter warm-up

Save on heating costs by getting your house ready now.
Avoid a winter of discontent caused by high heating costs. Performing a few maintenance chores this fall may pay dividends when the weather turns cold.
Experts say that when it comes to saving on home heating costs, it pays to sweat the small stuff. Now, for example, is a good time to schedule a furnace checkup to make sure it is working efficiently, rather than waiting until the furnace kicks in for the first time. And check to see if the air filter is clean. Experts advise changing normal furnace filters every month and high-efficiency ones every three months.
While the weather is still mild, it is easier to tackle home weatherization projects. Check weather stripping and caulk around doors and windows to keep out the winter chill. And for some homeowners, heat is literally going through the roof. Make sure your attic is properly insulated to help keep your home warmer in winter and cooler in summer. It's also a good idea to check insulation in the basement and in household air ducts, exterior walls, crawl spaces and around electrical outlets.
Each year the chimney also should be inspected for creosote buildup, which could be a source of fire. And now is also a good time to check your carbon monoxide and smoke detectors to see that they are working properly.
If you are in need of a new furnace, enquire about the high-efficiency models that will save you money in the long run by burning less fuel. You may also wish to consider replacing old windows with more efficiently designed models.
Steps to meet winter head onHere are some other ways to save on home energy costs this winter:
• Check to see that doors shut and latch properly.
• Check your window locks. Locking windows can help to prevent cold air from seeping through.
• Put up storm windows and hang heavy drapes over drafty windows.
• Replace mail slots with external mailboxes.
• Schedule a furnace tune-up at least once a year. Experts say you can save as much as five per cent on heating costs by scheduling a service appointment for your furnace before the cold weather arrives. This helps to ensure your furnace operates at its peak efficiency throughout the winter.
• Manage your thermostat. You can save about 10 per cent on heating bills by turning the thermostat down 10 degrees for eight hours a day, experts say. If you are away from your home for an extended time, however, don’t turn off the heat. This can lead to frozen pipes and costly repairs. If possible, lower the thermostat to 13 degrees C at night and when you are away.
• Check the clothes dryer vent at the outside wall for a draft.
• Keep the fireplace damper closed unless a fire is going. Keeping it open is like keeping a 48-inch window wide open during the winter, according to experts.
• Turn the water heater's thermostat down to the low setting to save energy. For some models an insulated jacket that slides over the water heater also can help hold the heat in.
• Remove hoses from outside faucets, drain them and store them away for the winter.

2007-10-14T14:10:00.000-07:00

For most Canadians, buying a home is the single largest investment you'll ever make, so you want to get good value for your money. That's why more and more buyers today are turning to professional HomeInspection experts before they firm up their transaction. What was once a seldom-used option in residential real estate has moved into the mainstream, especially since house prices have escalated to record levels in recent years. A professional Home Inspector takes a close and expert look beneath a home's surface and then reports on their findings in a detailed written report for the prospective buyer. The report will advise on the condition of such things as the foundation, electrical service, roof,insulation and many other factors. If work needs to be done, either now or in the near future, the report identifies what work will likely be required and the approximate time period before the homeowner will have to incur the expense. If there are substantial costs involved to put things right, the buyer can take this into consideration before proceeding with the purchase. Your Coldwell Banker real estate professional can help you connect with an experienced and trusted Home Inspection service in your community. Although costs will vary, you can probably expect to spend in the area of three hundred dollars for an inspection of a single family home. Andwho pays for it? Well, since the benefit of the home inspection isalmost entirely for the buyer, it's usually the buyer who pays the cost. All things considered, it's a small price to pay for the peace of mind it provides and the negotiating power it can give you -- especially if it indicates major repairs are required but you make anoffer anyway. When it comes to making your offer to purchase, your Coldwell Banker professional can advise you how to include a home inspection as a part of the home buying process. Subject to the homeowner's permission to grant access to their home, you can arrange for a Home Inspection to be completed and reviewed by you before you finalize your offer to purchase. This is done by having your Coldwell Banker salesperson prepare an offer that's conditional upon you receiving a Home Inspection report that's acceptable to you. This type of general wording allows you to decide whether or not you want to proceed after reviewing the report. Including a satisfactory Home Inspection as a condition of your offer to purchase has some distinct advantages : if your conditional offer is accepted, the property is temporarily held against other offers at your agreed price and terms, yet you still have a legal escape route if the report turns up some major negative surprises, such as a bad roof or a crumbling foundation. On the other hand, if the conditional offer isn't accepted, then the need to pay for a home inspection never arises. Your Coldwell Banker professional can counsel you on the best approach to suit your market and your individual situation.