Category Archives: female home owners

Real Estate Investing, It Isn’t Just for the Boys Anymore

When 51 year old stay-at-home mom and part time piano teacher Gena H. from Washington State woke her husband up at 1:15 AM and said “I want to be a real estate investor,” he patted her on the shoulder and said, “that’s nice dear.” In the morning he shared all the reasons he believed it could not work for her. Fast-forward a few years and Gena, who obviously didn’t listen to the husband she adores, is a successful and very profitable investor. She has in her words “dramatically changed the financial course for me and my entire family.”

Stories like these are coming to my attention at a rate like I’ve never seen in my well over 20 years of investing. I’ve been fortunate to watch countless people go from real estate observer to successful real estate investor. But never before has there been such a massive wave of women taking ownership of the household finances using real estate.

In watching this transition, I believe it’s due to a couple of primary factors. First, we all know that the real estate market peaked like never before around 2006, and then the bubble burst and the market crashed. It reminded me of flying down Space Mountain in Disneyland. However, after the bottom comes the inevitable shift in the market, when it begins trending back up as we are seeing now. This is truly a magical time for investors.

Second, I think we are heading into the years of more empowerment of women. I could be criticized for saying this, but I think it’s less about women’s liberation, as that was yesterday’s news. I see it as more that women are just losing any hesitation at all to do anything they want. I think it’s a very positive trend for our country. I watched my single Mom struggle to support my sister and me growing up, so I’m always cheering for the ladies. I think we are entering a whole new era of advancing equality. But that’s for another story.

Jen G., a single Mom, was working in an accounting office with no windows and too little pay each month to support her and her son. Frustrated, stressed and wanting a new path in life, she decided to reinvent herself through real estate investing. Friends and family told her real estate investing was for people with money and experience. Some even expressed resentment and actively discouraged her. Recently, Jen called to tell me: “Just six months after starting, I got to walk into my office and tell my boss I no longer needed her services!” Jen quit her job and has done more than 185 real estate transactions so far and feels she is being the Mom she always wanted to be.

Tammy R. lives in a crazy fast moving market in CA. This is a market where even seasoned investors are afraid to take the plunge. However, this determined Mom of four, who was homeschooling her children when she started investing, refused to yield to her fears. She didn’t listen to her husband who said “it won’t work for you.” Like Jen, she didn’t have a ton of money to start, but researched a method called “wholesaling.” Wholesaling is matching up monied investors with good deals, and making money in the middle. On one transaction alone she made more then she did the prior two years, and she is currently working on her 23rd deal. “You just can’t let the naysayers spoil your dreams” she said when asked about the secret of her success.

Whether you’re in a strongly rebounding large urban market like Tammy, a more rural and smaller city in Alabama that’s coming back at a slower pace like Jen, or somewhere in the middle like Gena in Washington State, it doesn’t matter. The current state of all of these markets is opening up endless opportunities for investors to gain the knowledge to profit and who aren’t afraid to go for it.

Real estate is my life, and with over 20 years of non-stop investing I’ve personally experienced that there is always a profitable strategy that fits the current market cycle. However, the massive spike in real estate, followed by the inevitable and dramatic crash, is setting up a solid rebound. I truly believe this is the greatest time for everyone who would like to secure a better future to get educated, learn from those who are doing it, and jump into real estate investing.

I’m currently doing 30 to 50 deals every month all around the country, in 9 states actually. I’m working with women like Gena, Jen and Tammy, as well as a slew of others who are crushing todays shifting real estate market rather then complaining about it.

Maybe real estate investing is cooler and more possible then you think. All I can say is that the boys better step up.

Source: The Huffington Post 07/12/2013 –   Dean Graziosi

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Tired of Toronto? Why not move to the St. Catharines-Niagara region

Affordable homes in the St. Catharines-Niagara region are attracting buyers from Toronto.

It took Russell Phipps just one day to sell his three-bedroom, 1,800-sq.-ft. house in Ajax, Ont., after a fierce bidding war. With an early closing and no place yet to live, the Toronto native moved into a friend’s 550-sq.-ft. Corktown condo in the city to give downtown living a try. It didn’t take long before he realized he wanted out − far out.

“It’s expensive,” Phipps says of living in the core, where the average price of a detached home is $1,336,640, according to the Toronto Real Estate Board (TREB). “Parking is expensive. When people come to visit you and you try to find them parking on the street, that’s a hassle. And I was always in the shadow. Wherever we seemed to go downtown, it seemed the buildings were always blocking the sun. I like a little bit more of a view.”

Like many others, Phipps, 48, turned his views to the St. Catharines-Niagara region, which is benefiting from Toronto’s spillover effect as buyers look for more affordable homes.

When Phipps’ request for a job transfer came through, the case manager with the Ontario government, started shopping for a condo. Within a few days he found the perfect pad: a two-bedroom, 1,118-sq.-ft. penthouse in Pinewood Homes’ mid-rise Fairview Condominiums project now under construction in St. Catharines. He’ll move in this fall.

Phipps can’t gush enough about all the pluses of leaving Toronto. He didn’t have to deal with intense condo bidding wars. He only had to pay a $20,000 deposit instead of about $80,000 in the big city. He avoided what he calls Toronto’s “double land transfer tax.” Parking, storage and finish upgrades were all included in the $389,000 price tag. He can walk to work, the mall and the gym but is still within an hour’s drive of Toronto if he wants to pop in to see friends. And he’s just 10 minutes from the beach. “I get all the bonuses of condo living but I get it in a suburban atmosphere.”

Affordability

With the Toronto Real Estate Board pinning the average cost of a home in 2017 at $727,928 in Toronto and almost $800,000 in the 905, it’s no surprise folks are starting to look further afield for affordable living and, perhaps, a less frenzied lifestyle.

According to the Niagara Association of Realtors, the average price of a home across the region is up 24 per cent year-on-year to $345,294, while condo prices rose 31 per cent to $288,868. They don’t release the average price of a detached house. However, in The Six a detached house costs about $1,337,000 and a condo is about $471,400, the TREB said.

While high-end properties in Niagara can swell far above $500,000, there are still a lot of savings to be made for more space. And with a 10-year, $13.5 billion program to expand the GO regional express train network − including weekday service to Niagara Falls by 2023, new stations in Grimsby and upgrades to Via Rail stations in St. Catharines and Niagara Falls − there’s even more incentive to make the move.

“We’re probably the best bang for your dollar in the country right now, anywhere from Port Colborne to Grimsby,” says Patrick Dummitt, president of Niagara Association of Realtors. “Even the further east you go − Fort Erie, Port Colborne − people never used to venture out that far. Now people are leaving Toronto and settling in Fort Erie and doing the commute…. We’re becoming quite metropolized to the chagrin of a lot of people. But what the heck, why not? We’re like the last frontier for people. We’ve been dubbed as the suburbs of the GTA.”

Dummitt first noticed the region’s real estate landscape changing about a year ago when bidding wars started cropping up in Niagara for the very first time. Today, $340,000 will buy a 30-year-old house needing $40,000 in upgrades. But with so many people wanting in, supply is scarce and properties are fetching multiple offers 30 to 40 per cent over asking prices. He says those coming from Toronto, Mississauga, Hamilton, or Oakville don’t bat an eye because their houses are selling for more than double Niagara’s prices so they have extra money to renovate.

All the attention has developers busy, with dozens of condos, townhouses and single-family homes on the go, or in the works across the region. St. Catharines, for instance, issued permits for 383 new dwelling units last year, up from 224 in 2015, and 36 to date this year in and around town. As such, the city has built a performing arts centre, a 5,300-seat arena and new parking facilities to accommodate the traffic.

“We’ve sketched out a bold new vision for our city,” says Brian York, director of economic development and government relations at the City of St. Catharines. “Now we’re adding colours, and the palette is perfect for new business and good living.”

Unprecedented growth

In Niagara Falls, Mayor Jim Diodati uses words like “explosive” and “feverish” to describe the unprecedented growth in his city’s south and southwest ends. More than half of the new home and condo purchases are from GTA buyers, he says, with “entire subdivisions selling out before we can get services in the ground.” Some 761 building permits worth $238.5 million were issued last year, up 27.3 per cent from 2015. Those numbers “are from outer space,” Diodati says.

The Niagara region’s population is expected to grow from 447,888 now to 610,000 by 2041, according to the municipality’s forecasts.

The city and the region are building and upgrading water and sewer treatment plants, pumping stations, fire halls and expanding transit to ensure infrastructure keeps up with demand. There’s a commuter airport and talk of a ferry service to the Toronto area, and the Go train expansion will improve capacity and service levels.

“You don’t have to look too far down the QEW [Queen Elizabeth Way highway] to see where the average house price is $1.2 million,” says the mayor, who grew up in Niagara Falls. “For a third of that you can get a lot more house, a lot more yard, in Niagara, and with that extra equity you can start a business, buy a place in Florida or a cottage…. It really is the perfect storm of opportunity.”

Along with a host of local, GTA and overseas developers getting on board with intriguing projects of all shapes and sizes. Entrepreneur Ted Zhou of Evertrust Development Group Canada Inc. in Toronto, for one, considered building luxury condos in the GTA but felt the market was saturated.

He inspected more than 100 sites before settling on two acres within Thundering Waters Golf Course in Niagara Falls that will soon house his 150-unit Upper Vista Condominiums, fulfilling the Toronto resident’s goal of becoming Niagara Falls’ “pioneer” of luxury condos. It’s now one of dozens of low-rise, mid-rise and high-rise projects drawing eyeballs from out-of-towners.

Another project that has people talking is Paradise, a $1.5-billion development being proposed by GR (Can) Investment Co. Ltd. of Niagara Falls on 480 acres of land surrounding the golf course. The city has conceptional plans from the group calling for about 3,400 residential units (including bungalows, townhouse, condos, estate homes and vacation homes), a five-star boutique hotel, restaurants and 200 acres of wetland.

It’s the Hong Kong-based company’s first foray into Canada but chief executive officer Zhiying Chang, who moved to Toronto in 2011, expects to replicate it in other cities here. A longtime lover of Niagara Falls for its natural beauty, she’s excited about increasing Niagara Falls’ curb appeal to both residents and tourists.

With so many projects and proposals, there’s no doubt that the region will continue its ascent as the new “It” spot for frazzled city folk looking for a happier, more affordable life.

“They can keep the smoke stacks in Toronto as long as people come home [to Niagara] to buy their groceries and their cars and their clothes and pay their property taxes and have community,” says Mayor Diodati. “There’s nothing wrong with that.”

Source: Suzanne Wintrob, Special to National Post | February 20, 2017 |

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Why single women are buying homes at twice the rate of single men in U.S.

More single women are buying homes than single men in the U.S., according to data. Although women have been ahead of men in National Association of Realtors' data since 1981, the gap has widened even further in recent years, said NAR’s managing director of survey research and communications.

In recent years, the gap has widened and it’s the women who dominate as home buyers. Single women account for 17 per cent of home buyers in the U.S., compared with 7 per cent of single men, according to data.

By 2007, Michelle Jackson, a 30-something writer in Denver, held a master’s degree, had travelled the world, and was enjoying her social life as a single woman. She also felt the pull to purchase her own home, a rite of passage she thought was reserved for the coupled.

“I wanted to have my own place,” Jackson said. “A lot of people in my circle of friends were women purchasing their homes when they got married, but I still felt like I wanted to build my own wealth and buy. If and when I met someone, it’s something that just added to what I bring to the relationship. It didn’t make sense to wait.”

A few open houses later, Jackson was preapproved for a 30-year, fixed-rate mortgage and had put an offer in on a small, one-bedroom home in a triplex in Denver for $94,300 Canadian. She still lives in the home, which was appraised last year at more than double the price she paid, and said she plans to renovate it and perhaps buy an additional property nearby.

“I’m so happy,” Jackson said. “It’s completely changed how I feel connected to the place where I’m living. It’s one of the best things I’ve ever done.”

The news and research about women and money can be dreary. Women earn less than their male counterparts, pay harsher workplace penalties for pursuing parenthood, struggle more with debt, and save less for retirement.

But there’s one area of personal finance where single women are outpacing men in the U.S., and it’s a significant one: home ownership.

Nearly a century since the publication of “A Room of One’s Own” — Virginia Woolf’s essay on women’s urgent need for a private physical space in which to flourish — and a legacy of laws that restricted women in owning property or considered them to be property, single women account for 17 per cent of home buyers in the U.S., compared with 7 per cent of single men. The data, from last year, are from the National Association of Realtors.

“I’m not married, I don’t have kids. I can live alone, and fabulously. I feel empowered”

Although women have been ahead of men in NAR’s data since 1981, the gap has widened even further in recent years, said Jessica Lautz, NAR’s managing director of survey research and communications. Property values and mortgage lending imploded after the 2008 financial crisis, and low interest rates have made lending more appealing to new, more frugal buyers.

Single women are also likelier than single men to be parenting on their own, Lautz noted, and therefore likelier to seek stable housing for raising children. There were 8.6 million single-mother households in 2011, more than three times the 2.6 million single-father households, according to the Pew Research Center. 

“If you have children, it’s definitely going to play a role in where you’re thinking of living and how,” Lautz said. “And a mortgage can provide financial security. I think women, even with lower incomes, want a place where they can have roots and really own a place. The psychological desire to do that is great.”

With that comes an increase in financial sacrifices women are willing to make to own a home, Lautz said, such as taking a second job or working their budgets to save for a down payment. “They really value home ownership, and they’re willing to give up a lot to have a home of their own.”

Then there are single women’s sheer numbers. As millennials postpone or shrug off marriage, more women are unmarried than ever before. Today, one in every five Americans 25 years and older has never been married, a sharp contrast to just 9 per cent in 1960, according to the U.S. Census Bureau. More of them are men (23 per cent) than women (17 per cent), according to the Pew Research Center, but it’s the women who dominate as homebuyers, for the reasons above, and more.

For one, unmarried women may be likelier than men to seize singledom as a lifestyle, said Bella DePaulo, a professor at the University of California at Santa Barbara and the author of Singled Out.

“Despite the stereotypes that insist that women care more about marriage than men do, it may actually be single life that women embrace more than men,” DePaulo said. “Some research suggests that single women are especially unlikely to be lonely — again, contrary to our stereotypes. … I think that buying a home is a way of living your single life fully, rather than seeing your single years as just marking time until you find The One.”

When single women do buy their first homes, they do so at an older age than men, 34 compared with 31, according to NAR research from last year. And women are buying at a lower average price: $224,500 compared with $247,300

Single women also have long had a slightly higher foreclosure rate than men: 73 per 10,000 vs. 70 per 10,000, Daren Blomquist, a senior vice president with ATTOM Data Solutions, said. One reason may be that men’s properties involved larger initial sales and appreciated faster than women’s.

“There’s a domino effect,” Blomquist said. “Because of the wage gap, you see women having to purchase lower-value homes, and they’re more open to risk when they do. Typically what causes a foreclosure is some kind of shock, like a job loss. If you have a lower-value home that’s appreciating less quickly, you have less of a cushion than someone who has seen their value appreciate more.”

For Rachel Weiss, a fashion executive in New York, the thought of owning a home in Manhattan “always seemed so unattainable.” Having spent her 30s and some of her 40s in a rent-stabilized studio in the West Village, she accumulated a pile of cash that was sitting dormant in a savings account and was hungry to invest. On a whim last spring, she began to look at properties, and she said she was surprised when, running the numbers and being preapproved for a mortgage, she saw that a one-bedroom in a co-op in the area could be within reach.

“I outgrew my apartment 10 years ago, and buying a home was always in the back of my mind,” Weiss said. “But I didn’t know what to do and never knew if I could afford an apartment. I started looking online at Trulia and Streeteasy, and the next day (real estate agents) started calling. It wasn’t premeditated or anything. It was almost like I was on Tinder for an apartment.”

After a few open houses, Weiss had narrowed her search to apartments in smaller buildings with lower maintenance fees. She was OK in a walk-up, but location was still a priority. She put an offer on a one-bedroom co-op in Chelsea for $830,400. It was accepted. She moved in last August.

“There was a psychological aspect to it, too,” Weiss said. “I’m in my 40s, and I looked at what my life was like. I’m not married, I don’t have kids. I can live alone, and fabulously. I feel empowered.”

Because ATTOM looked at more than 5 million homes with mortgages for this data point, the small difference translates to a lot of foreclosures.

 

Source: By Tues., Jan. 31, 2017

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What it’s like to live in women’s-only housing in NYC

You get a housekeeper, but you can’t bring boys over

Though apartment buildings designed for professional women—think the Barbizon Hotel on the Upper East Side, or the Martha Washington Hotel on Park Avenue—are largely a thing of the past, some of these women-only enclaves still exist in Manhattan. One of these is the Webster Apartments on West 34th Street, and the New York Times is ON IT.

Specifically, they recently ran a profile of a 24-year-old resident of the building who ticks basically all the boxes you’d expect from someone who lives in what is basically a glorified dorm. She’s a recent New York City transplant (check) who works in fashion (check) and doesn’t mind the living situation because she lived in sorority houses in college (check). Her room, which measures just 13 feet by 8 feet, is decorated with twinkly lights (check), a copy of The Devil Wears Prada (check check), and a poster of Audrey Hepburn in Breakfast at Tiffany’s (checkcheckcheck). “I had to live in Manhattan,” she told the Times. “I was so excited when I went to get my license and it said New York, New York.” (Oh, honey.)

But what’s really interesting to us, as professional real estate gawkers, are the specifics of this particular living arrangement, which isn’t so different from the ones offered at trendy “co-living” situations like WeLive or Common—but without the cool start-up factor, and with far more stringent rules.

Residents at the Webster Apartments get their own rooms, but have shared bathrooms—five or six to a floor, to accommodate 25 to 30 women (each room also has its own private sink). According to the Times, rents in the building go from $1,000 to $1,800, and are determined by a sliding scale “pegged to the resident’s income.” Residents must also be employed, “at least 35 hours a week or have an internship or fellowship of at least 28 hours a week,” with a yearly between $30,000 to $85,000.

What do you get for that price? Actually, quite a lot: Housekeeping, two meals a day, plenty of common spaces (including a TV room and a library), and per the Times, “social events, most with an educational or professional bent”—resume workshops, mixers, and the like. (The resident they profiled mentions a painting workshop, but there are also yoga classes and movie nights, among other things.)

When you compare the cost of living there to something like WeLive—where a studio will soon cost $3,050 (albeit with a private bathroom)—it may seem like a pretty decent deal, particularly if you’re new to the city or not inclined to live with strangers. There is still a rule that men aren’t allowed into rooms—and given that these sorts of boardinghouses came from a general fear of women’s well-being in early-20th-century New York City, it’s not surprising that it exists, though that doesn’t make it any less weird in modern-day New York City. (Though the building apparently has “beau rooms” that are “uniquely decorated recalling ‘Legends and Lotharios.’” where you can take a, well, beaus.)

But the Webster’s website notes that it’s been filled to capacity since it opened in 1923, so clearly there’s a demand for this sort of housing—even if the audience for it is limited. And the resident the Times spoke with, at least, is happy with her situation—especially considering it’s temporary, since the Webster has a five-year limit for residents. “Even when my mom came to visit me last month and stayed on a cot in my room, she was like, ‘I don’t want to go back home!’” Isn’t that sweet.

 

Source: Curbed New York – BY DEC 9, 2016

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Women are more responsible than men when it comes to mortgages

Women, especially those in their 30s, are the most reliable mortgage candidates in Canada, according to Toronto-based author and money coach Lesley-Anne Scorgie.

Scorgie—who wrote three books on fiscal responsibility for young women and couples—stated that a closer look at individual credit scores will reveal that Canadian females are better at fulfilling their mortgage obligations than males.

“Single women have a lower tendency to default than males. It has to do with their psychological make-up. It has to do with risk aversion which women have more of than men,” Scorgie told The Globe and Mail.

Canadian Real Estate Association spokesman Pierre Leduc agreed, adding that while no hard numbers on gender-based spending in Canada exist as of present, CREA transactions point at a significant rise in the number of females participating in the country’s housing markets.

Toronto agent Suzanne Manvell concurred with these points.

“I have worked with many single women, as have many of my colleagues, who are ready, willing and able to purchase on their own,” Manvell said. “Some like the convenience of a condo, others a simple residential home. Some, including myself, have elected to become landlords and are happy in that role and have parlayed their first purchase into a secondary income property.”

Female buyers have been playing an increasingly important role in ensuring the vitality of the housing machinery in North America, observers said.

In the United States alone, single women now account for 15 per cent of all home purchases, according to the 2016 U.S. National Association of Realtors Home Buyer and Seller Generational Trends report.

 

Source: Real Estate Professional – by Ephraim Vecina21 Oct 2016

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‘No safety net’: How a divorce rips a tornado through your finances, and what to do about it

FP_DivorceTornado

Divorce sucks.

Whatever else you may think of divorce, or marriage for that matter, we can all agree on that.

In fact, I looked up the word “trauma” in the Oxford American’s Writer’s Thesaurus while writing this article. To my delight: “Trauma, noun, 1. The trauma of divorce.” There you go. Divorce is known as so universally crappy that it’s used as the example for a word whose synonyms include “torture” and “war-weariness.”

Reaching beyond the obvious emotional implications though, a major consequence of divorce is the absolute tornado it rips through your finances.

Few couples realize that no matter how conscious the uncoupling, no matter how determined they are to dissolve their marriage congenially, their finances are likely to be, if not decimated, then at minimum thrown into disarray.

“I really don’t know if there’s a watershed mark when people look at this thing and say ‘I have no money left’,” says Donald Baker, a family law specialist at the Toronto firm Baker and Baker.

“During the divorce what happens normally is that they don’t even think of the financial ramifications because, you have to remember when they go through this process, it’s an incredibly emotional process. Even a so-called simple divorce … they aren’t really thinking that clear.”

That is, until they are confronted with the raw numbers.

To determine asset split and spousal support, Canadians must fill out a financial statement, which is a document of about 15 pages detailing income, expenses and assets.

“This is sort of the first point in the process for people who are saying, ‘I didn’t realize it costs me this much to live,’ and it usually comes as a bit of a shock for most people,” Baker says.

Greg, who asked not to use his real name, is 48, works in sales and had two sons with his wife of 15 years. They divorced last January in what he describes as “amicable” circumstances.

“Almost no one talks about how you’re going to manage your finances when you’re separated before you actually go out and educate yourself at that time,” he says.  “And you’re dealing with a short window of time to bring yourself up to speed…. You’re not an expert and you’re learning things that surprise you.”

The biggest surprises for Greg were not the obvious hefty expenditures, like child and spousal support, but the smaller legal and administrative costs. For example, both Greg and his ex-wife had to take on critical illness insurance.

“There’s no fall back. Even in a situation where two people are married and one is stay-at-home, that situation can be changed and that other person can go back to work,” he says. “I don’t have that option (now).”

They also spent thousands on legal fees.

The cost of an uncontested divorce ranges from $1,000 to $3,500, according to 2015 Canadian Lawyer’s legal fees survey, but you also have to consider the cost of things like making a new will (another $430 to $750).

“I was still surprised, despite how amicable (we were) … how expensive the legal system was to navigate through,” Greg says. “And we did as much as possible ourselves in terms of the paperwork.”

Baker says that the court’s main fiscal aim is to ensure both parties “leave the marriage as equal partners.”

That means all property is generally split 50/50 and the spouse with the higher income pays the spouse with the lower income an equalization amount so that one party doesn’t experience a huge drop in his or her standard of living. (Any assets, besides the marital home, that you can prove you brought into the marriage you usually get to keep.)

But no matter how careful a couple is, there are almost always expenses that don’t make it into the calculations.

For example, Greg was required to split his pension plan with his ex-wife. Although he found the concept of the division fair, what really irritated him was that the pension plan administrators charged $800 just to find out the present value of the fund — a fee he was responsible for paying in full, since it was his asset, even though both parties would benefit.

He also got his taxes reassessed this year because he and his wife agreed to split the Child Tax Benefit, which seemed fair to them since they share custody. But the CRA told him the party receiving any kind of support is the one that can claim the entire tax credit.

“I still don’t understand why the system is set that way. It’s hard to comprehend where the equality is,” he says. “As far as I know we’re trying to set up each household with roughly equal income, so we naturally assumed that (credit) would be split as well.”

Ultimately, whichever way you split it, running two households is simply more expensive.

“It’s like single people,” Baker says. “You have two separate lives financially. Instead of paying one rent or one mortgage payment you have two of them. Those are after-tax dollars, so that’s pretty painful financially.”

divorcepiggy

Greg dealt with this by going through his budget line-by-line. Luckily, he was fiscally aware enough to know what he was spending and managed to trim his expenses by about $300 a month.

“The biggest thing I recommend everyone to do is go through your expenses twice,” he says. “Once to eliminate what you don’t need and, for the things you want, ask how you can get that stuff as low as possible.”

Even if you can cut back a bit, having higher overall expenditures means that saving for retirement often gets put on the back burner after a divorce.

Greg and his ex-wife used to put money in their RRSPs, but there’s simply not enough cash to go around right now.

“I’m not making progress on building security for myself and a buffer,” Greg says. “It’s a very thin line for me and I would be in a situation, if I were to lose my job, I would almost inevitably have to put up the house for sale immediately.”

Despite their experience on either side of the issue, neither Greg nor Baker can see any real way to prepare yourself for a divorce.

I don’t have a safety net and neither does she

Baker does suggest that people draw up a Marriage Agreement, sometimes called a pre-nuptial agreement, before they wed: Taking inventory of any assets you have before exchanging vows makes it easier to deduct them from your calculations upon dissolution.

Greg suggests taking a more practical and serious view of marriage and divorce.

“I believe in love and romance and marriage and all that stuff,” he says. “The only thing I’ve changed slightly is that I believe both parties should receive independent legal advice before they get married. That does need to be considered because you are essentially asked to sign a financial document without representation. It’s a legal document.”

It’s true that part of the reason divorce catches us so off-guard is because it’s a reminder of what we’re dissolving: not just an affair of the heart, but a covenant between two parties who once agreed to combine and share assets within a conjugal relationship.

“This is really permanent,” Greg says. “I don’t have a safety net and neither does she.”

How to make the financial side of divorce less horrible

1. Sign a Marriage Agreement

Commonly called a prenup, creating a Marriage Agreement before your wedding will allow you to tabulate your assets before marriage. If you ever divorce, says Baker, you’ll be able to prove that you did indeed have savings of $30,000, for example, before entering the marriage, which will then likely be entirely yours to keep.

2. Consider going through a mediator

If your divorce is amicable, you may be able to save money by going through a mediator instead of hiring two lawyers. Greg says he wishes he and his wife went to a mediator first “given we were so close,” and because they were so “surprised at how quickly the (lawyer) fees added up.”

3. Recognize divorce law is not what you see on TV

Canada has totally different divorce laws than the U.S., and trying to get tips from your favourite lawyer show won’t help you at all. For example, behaviour has zero effect on how much money you’ll walk away with. The division of assets is a purely mathematical calculation.

4. Know your expenses

Ultimately, the divorce process is likely to catch you off-guard and throw you into the ocean where you’ll be gasping for air. The only real way you can prepare for your post-divorce financial situation is to know what you’re spending now. By tracking your expenses, you can figure out where you can cut back once you’re on a single income and you’ll feel much more confident taking a firm grasp on your expenditures.

 

Source: Financial Post – Danielle Kubes, | February 19, 2016

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New mortgage rule might ‘temper’ hot markets, but not for long

$500K downpayment graphic

Starting Feb. 15, mortgage insurers require 10% down payment on portion of mortgages above $500K

Beginning next week, many Canadians hoping to buy an abode will need to put more cash down before they can call it home. The extra cost might keep some would-be homeowners from mortgages they can’t really afford, but it’s unlikely to leave any lasting impressions on the country’s most “overheated” real estate markets.

The federal government announced in December that mortgage insurers, including the Canada Mortgage and Housing Corporation — by far the largest in the country — will require a 10 per cent down payment on any portion of a mortgage it insures above $500,000 and up to $999,000.

That’s double the five per cent down they currently ask to insure mortgages worth more than 80 per cent of a home’s value.

“We want to make sure we create an environment that protects the people buying homes so they have sufficient equity in their home,” said Finance Minister Bill Morneau at the time, also noting that “elevated” house prices were the driving force behind the move.

The change will “likely impact a broad spectrum of buyers,” though it will surely be the highest hurdle for those who don’t already have a good bit of equity from one home already.

“The majority of the impact is going to be on first-time homebuyers, particularly first-time buyers in the hotter markets,” says Don Campbell, senior analyst at Real Estate Investment Network, an organization that tracks Canadian housing trends.

Bill Morneau Finance Minister

Finance Minister Bill Morneau announced the new mortgage rule in December, saying the government was trying stabilize real estate markets in some cities, like Toronto and Vancouver. (Chris Wattie/Reuters)

“It could certainly prevent them from getting into a market that is overheated.”

That could, the theory goes, ease the intense demand for starter properties such as single-family detached homes in places like Toronto and Vancouver — one of just several factors keeping average house prices in those cities so astonishingly high — and perhaps help those markets cool off a bit.

Good politics, bad policy?

It could also help save some people from themselves, encouraging sober second thought about getting locked into mortgages that would stretch their finances dangerously thin.

There’s plenty of evidence that many Canadians have taken on alarming debt loads to finance their dream of home ownership, leaving them vulnerable to ruin if the markets start to deflate.

Young Canadians and their families would face the brunt of the impact. A report by the Canadian Centre for Policy Alternatives, for example, found that about 10 per cent of homeowners under 40 would be bankrupted if housing prices dropped 20 per cent.

The C.D. Howe Institute similarly calculated that about half a million first-time homeowners, mainly young people with lower-than-average incomes, could be left ruined if the historically low interest rates that have fuelled drastic jumps in house prices went up, or they faced a personal financial crisis.

Canadians who have built equity in their homes throughout the real estate boom of the last 15 years or so, though, would be on more stable ground.

Once it becomes psychologically normalized for people, there’ll be less of an effect.
– Don Campbell, real estate analyst

The underlying problem is that it’s far from clear if the new mortgage rule — just the latest in a string of government-led measures to shield the economy from the high household debt loads Canadians are carrying around — will make a mark where one is most needed.

“I would say, generally speaking, there is some good politics in this but not much good policy,” says Jon Sowerby, a licensed mortgage broker with Toronto-based TvH Financial.

“It’s made to look like Mr. Morneau is on top of things, but the reality is that it’s not going to have a massive impact on the market.”

$500K downpayment graphic

Starting on Monday, CMHC will require a 10-per-cent down payment on the portion of any mortgage it insures over $500,000. (CBC News)

Drop in the bucket

The Canadian Association of Accredited Mortgage Professionals agrees. The organization revealed last year that first-time homebuyers put down an average of about 21 per cent of their home’s purchase price, a number that has not deviated much since real estate prices began their relentless climb in the late 1990s.

The analysis is based on data gathered from an annual survey of 800 Canadians who just bought a new home.

The same report estimates that of the 120,000 to 125,000 sales of homes that involve a mortgage of $500,000 or more each year in Canada, around 10,000 would involve down payments that had to be increased under the new rule.

Eveline Zia housing real estate prices

Last summer Eveline Xia, who began the popular social media hashtag #DontHave1Million, led demonstrations in Vancouver, demanding more decisive action from the government on soaring real estate prices. (Jim Jeong/Reuters)

It concludes that the change will have negligible resonance in the Canadian mortgages market.

That’s not to say that first-time buyers haven’t been looking ahead to the deadline, hoping to get in before a down payment lightens the coffer that much more.

The minds of homebuyers

Michael Elmenhoff is a realtor who does a lot of work in the east end of Toronto, a formerly blue-collar area of the city where the average starter home in a “cool neighbourhood” sells for about $650,000.

He says he saw about a 50-per-cent traffic increase in the first few weeks of this year compared to 2015, a time that is generally considered a slow period for buying before the spring markets picks up.

For example, Elmenhoff listed a rowhouse with three bedrooms, two baths and no parking on the boundary of the trendy Leaside neighbourhood for $499,999 dollars in early January. The property attracted about 150 prospective buyers and 13 offers before selling for $649,000.

The interest was almost exclusively from first-time homebuyers, Elmenhoff says. “That kind of traffic is unheard of, really.”

He expects to see a slowdown come Monday.

“With the market seeming to be at precariously high price points, the new mortgage rule could help ease the situation,” he says, adding that “anything to temper the speculation and the leveraging” is welcome.

Low rates, inventory remain factors

But realtors and analysts agree that, at best, any changes will likely be very short-lived because so many of the factors keeping prices sky high, like low mortgage rates, a short supply of detached homes, and speculation by foreign buyers, all remain in place.

“Once it becomes psychologically normalized for people, there’ll be less of an effect. It will slow down buyers in that $500,000 to $900,000 range for a while, then it won’t,” says Campbell.

“Or people will just get more creative in securing a loan.”

Source: CBC – Lucas Powers, CBC News Posted: Feb 11, 2016 5:00 AM ET

 

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