Category Archives: Uncategorized

Young Homebuyers Are Vanishing From the U.S.

The median age of first-time home buyers has increased to 33, the oldest in records dating back to 1981, according to a National Association of Realtors report released Friday. The median age of all buyers also hit a fresh record, 47, increasing for a third straight year — and well above the median age of 31 in 1981.

Getting Older

The median age for all U.S. homebuyer profiles is creeping higher

Click link to see graph: https://www.bloomberg.com/news/articles/2019-11-08/young-homebuyers-vanish-from-u-s-as-median-purchasing-age-jumps

Note: Survey conducted almost every other year prior to 2002. No data for 1983 and 1999.

While the median age of first-time home buyers only rose by one year, the increase reflects a variety of factors facing Americans searching for a home.

A nationwide shortage of affordable housing, coupled with lower mortgage rates, has stoked prices in cities from the coasts to the heartland. At the same time, student loans and other debts make it harder for Americans to save tens of thousands of dollars for a down payment, while tight lending standards can make getting a bank loan difficult for borrowers with less-than-stellar credit scores.

“Housing affordability is so difficult today, especially when coupled with rising rents and student loan debt, that they’re finding different ways to enter home ownership,” said Jessica Lautz, vice president of demographics and behavioral insights at the Realtors group in Washington.

The characteristics of home buyers have changed in recent years. The share of married couples has declined as unmarried couples and those purchasing as roommates has risen.

As buyers’ ages have increased, so have their incomes. The typical income of purchasers rose to $93,200 in 2018 as a lack of affordable options squeezed lower-income potential buyers out of the market.

Higher prices of homes have also changed how first-time buyers are entering the market. Nearly a third of first-time home buyers said they used a gift from a relative or friend to fund their down payment.

Builders have cited a shortage of affordable lots and labor as reasons to build fewer or bigger single-family homes, leaving America’s growing population to consider more of the existing housing stock. New homes as a proportion of all purchases fell to a low of 13% in records dating back to 1981.

The report reflects survey responses from 5,870 people who purchased a primary residence in the period between July 2018 and June 2019.

Source: Bloomberg.com – By 

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Pharrell Williams is collaborating with developers on a new Toronto condo project

<img class=”aligncenter size-full wp-image-197263″ src=”https://d3exkutavo4sli.cloudfront.net/wp-content/uploads/2019/11/untitled_condo_pharrell.jpg” alt=”” width=”1200″ height=”1034″ />

Photo: Anthony Cohen

Grammy Award-winning artist, songwriter and producer Pharrell Williams is collaborating with developers on a new midtown Toronto condominium project.

Westdale Properties and Reserve Properties launched the marketing for their two-tower residential development, called untitled, today during a press event in Yonge-Dundas Square. Williams, who introduced the project via video on the screens across the public square, partnered with the developers on the design and creative elements of the condominium tower.

“This partnership has evolved from a desire to do something really unique for Toronto in architecture and design as a whole,” said Sheldon Fenton, president and CEO of Reserve Properties, at the launch. “We believe that by bringing in a cultural icon with vision and ideation, from outside the realm of real estate, it would allow us to break the mold in terms of what has been traditionally done.”

<img class=”aligncenter size-full wp-image-197266″ src=”https://d3exkutavo4sli.cloudfront.net/wp-content/uploads/2019/11/untitled_condos_pharrell.jpg” alt=”” width=”1200″ height=”1333″ />

Photo: Norm Li

Untitled is said to focus on key themes surrounding, “essentialism, connections to the elements and the universality of space,” according to a project press release. Williams desired to create an ethos of universality within the project, whereby “physical space is only a backdrop.” Drawing from these ideals, the project team landed on the name, untitled.

“We wanted to make sure that it continued to give you the message of this amazing vibration of being home, and once you get in it, you make it you,” said Williams via a recorded video, who could not be present for the launch in person. “It’s universally beautiful, but there’s enough space for you to get into it and make it yourself.”

 

Working with the project team, which also consists of Toronto-based architects IBI Group and local interior design firm U31, Williams played a role in crafting the vision and material aspects of untitled. His involvement ranged from consultation on the architectural and interior design, to choosing the furnishings in specific spaces. Williams is best known for his appearances as a judge on The Voice and his 2013 chart-topping single, “Happy.” Untitled marks his debut into multi-residential development.

“The opportunity to apply my ideas and viewpoint to the new medium of physical structures has been amazing,” wrote Williams in the release. “Everyone at the table had a collective willingness to be open, to be pushed, to be prodded and poked, to get to that uncomfortable place of question mark, and to find out what was on the other side. The result is untitled and I’m very grateful and appreciative to have been a part of the process.”

Source: Livabl.com –

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How to Choose an Out-of-State Market for Investment (in 3 Easy Steps!)

Aerial view of of a residential neighborhood in Hawthorne, in Los Angeles, CA
You’ve decided, for whatever reason, that you want to invest outside of your local area or state. Your next question is—where should I invest?

 

I’m going to offer you a list of things that you can consider when trying to figure out what market to invest in. These things are in no particular order, and some of them may not apply to you or your particular situation. My intention with each one is to give you something to think about and hopefully some ideas on where and how to start looking for a market that suits your investment needs.

Here we go!

Step #1: Narrow Down Your Market Options

First, if you are brand new to out-of-state investing and don’t have a clue where to start, your location choices are likely going to feel extremely overwhelming. I have two things for you to think about that will hopefully at least get you moving in some kind of direction.

Where do you have friends and family?

Are there any cities where you have friends or family who might be good assets to have on your “team” on the ground? I’m not necessarily saying go into business with your friends or family or make them an official part of the team. But if you already have ties to any particular cities, maybe take a little time to decide if any of those cities might be good ones to get started.

Even if your friends or family there aren’t part of your team, they may be able to occasionally drive by your property once you own it and tell you if anything crazy seems to be going on. It never hurts to have an extra set of trustworthy eyes on an investment property!

Where are other investors buying?

Thanks to technology and the internet (and websites like BiggerPockets!), you can easily and quickly network with other out-of-state investors. Ask people which markets they are buying in, and if they seem friendly and interested in chatting more, find out why they are buying in those markets.

Don’t struggle to reinvent the wheel when experienced investors are already out there succeeding with out-of-state properties. I did secretly throw a keyword in there—experienced. Don’t take just anyone’s word for what they claim to be a good city to invest in. But remember, you’re just trying to get a list started. You can dig into details later as you go along.

Start there. Make a list of the cities that come up when you consider those two things. Again, this isn’t your final list, but at least your list is much shorter now than it was when it had all 19,354 U.S. cities on it as investing options.

You may not have known you had a list of 19,354 cities on it, but if you were starting from scratch, the whole country was a possibility! That would have to be intimidating and overwhelming—and almost an impossible point to start from. Now you have a less intimidating starting point.

Related: What Moving Out of State is Teaching Me About Remotely Managing Rentals

Step #2: Analyze Those Markets

So, you are looking at your list of some number of cities or major markets, and now your question is—how do I know a good city to invest in from a bad city?

In my mind, there are only two major questions I ask to determine whether I want to invest in a particular city:

  • Do the numbers work?
  • How likely am I going to be able to sustain those numbers?

If you don’t know what numbers I’m talking about, I’m talking about your returns. Returns (aka profits) can be generated in two major ways: cash flow and appreciation. This is at least true for rental properties.

If you are flipping out of state, some of this will not apply to you, and there are some slightly different considerations that you’ll need to incorporate into your analyses. You’re on your own, though, for those—I’ve never flipped, so I definitely shouldn’t be the one to tell you how to rock that method out.

Most likely, if you are wanting to invest out of state, you’re probably doing so because you want cash flow. Most of the investors who invest out of state do so because the numbers locally don’t pencil out. This is often the case in a lot of the bigger markets—Los Angeles, San Francisco, New York, etc.

businesswoman doing paperwork at office desk, working through finances, using calculator and making notes in her notebook with pen

And while those markets don’t usually pencil out for cash flow, they are the bigger players when it comes to appreciation. So, in thinking of anyone who lives there and wants to buy out of state, it’s probably because they want cash flow. See my logic?

Either way, let’s assume you are going after cash-flowing rental properties out of state because you can’t find cash flow locally. If that’s the case, the numbers need to work in the market you choose to invest in. Otherwise, what’s the point?

So, let’s think about the numbers. What kind of numbers do you need to understand when it comes to cash flow?

If you are in it for cash flow, you want to be able to determine the projected cash flow on a property. To help you do that, use the easy formulas in this article: “Rental Property Numbers so Easy You Can Calculate Them on a Napkin.”

In addition to the equations in that article, a term you will want to be familiar with is “price-to-rent ratio.” This term compares the price of a property to how much rent it can collect. The reason these two things matter is because they will determine whether you can cash flow on the property or not.

As you saw in those cash flow equations, you need the rental income you collect on a property to surpass the expenses of buying and owning that property in order to have positive cash flow. If the expenses of buying and owning that property are higher than the rent you can collect from the property, you’re in a negative cash flow situation and losing money (on the cash flow front at least).

Knowing this term now, if someone asks you if you’re interested in a particular market for investing, your first question might be—how are the price-to-rent ratios there? What you’re ultimately asking here is—is there an option for cash flow in that particular city?

For instance, I can tell you that hands-down the price-to-rent ratios in Los Angeles are not supportive of cash flow. I can tell you that the price-to-rent ratios in Indianapolis are generally favorable for cash flow. In no way does that mean every property or every location within Indianapolis will cash flow, but it does mean there is an option for it—whereas in Los Angeles, there’s really no option for cash flow.

Now, let’s say a particular market has generally favorable price-to-rent ratios for cash flow.

Oh wait, I just heard you ask—how do I know if a market has favorable price-to-rent ratios? Great question.

The fastest way to find that out is to network with other investors. You can either ask other people where they are investing, which I already mentioned, or let’s say you have a family member in a particular city and you’re curious about whether or not you can cash flow there. Post in a BiggerPockets Forum and ask people if they have any knowledge of cash flow potential in said market.

Look for people investing there, and find out the best places for cash flow there. If all of that fails, start looking up properties and running those equations I taught you, and see if you’re coming out ahead on cash flow.

Let’s say a particular market has generally favorable price-to-rent ratios for cash flow. This is where that second question I asked comes in—how likely am I going to be able to sustain those numbers?

The answer to this question is lengthy, so I’ll just give you one basic thought to consider for now. Is the market you are looking at a growth market or a declining market? The reason this matters is because you can project cash flow numbers until the cows come home, but if certain factors come into play with your property, you may never see a single bit of that projected cash flow materialize.

Bad tenants, for example, can cause you to not see a penny of your projected flow because they can cost so much in expenses—IF they are even paying the rent.

For details on growth versus declining markets, check out “How to Know If Any Given Real Estate Market is Wise to Invest in (With Real Life Examples!).”

To help you understand the potential consequences of investing in a declining market, check out “5 Risks of Buying Rental Properties in Declining Markets.”

Step #3: Decide on a Market

Your list of potential markets should be even shorter now than it was when you narrowed it down from 19,354 cities to either cities you know people in or have ties to or cities other investors recommend. It should only include markets/cities where the numbers not only work but also where the numbers have good potential of sustaining themselves. (That last part is purely my own personal investment strategy preference—it’s certainly not a requirement.)

You may have one market on your list at this point, or you may have a handful. Which one you ultimately decide on may just come down to personal preference at this point—or it may depend on your situation and your resources.

At this point, here are a few more things you can look at.

Budget/Capital

You just might not have enough capital to invest in all of the good options out there. For instance, I know of some amazing deals in Baltimore and Philadelphia, but those particular deals require a minimum of $90,000 up front.

You may not have $90,000. You might only have $20,000. Well, good news—$20,000 can get you a great cash-flowing property in other cities!

So, for your budget, you may stay focused on one area over another. I used to work with triplexes in both Chicago and Philadelphia. At that time, you could get a good cash-flowing triplex in Philadelphia for $130,000. The triplexes in Chicago at the time were bigger and nicer, and they were around $270,000.

The cash flow on the Chicago properties was higher, of course, but not everyone’s budget would support buying one of those triplexes. But many of those people could get one of the Philadelphia properties. So, more than anything, your available capital may further limit you on where you can invest. This isn’t always the case, but it is a consideration.

Property Type

This is simply a personal preference factor. For example, some markets like Philadelphia and Baltimore tend to have properties with more of an urban feel. They are often more of the row house-type of structure. Not everyone likes the urban feel, and not everyone likes adjoined buildings.

The other option would be properties with a suburban feel that are free-standing. You can find lots of these in the Midwest. Additionally, some markets offer a lot of multifamily (MFR) options, and some markets only have single-family (SFR) options that will cash flow. So, if you prefer urban or suburban over another, and if you prefer SFR or MFR over another, those personal preferences will steer you toward particular cities and away from others.

Related: Forget the Demographics and Focus on Researching THIS Before Investing Out-of-Area

Look! You’re continuing to narrow down your list! Here’s how to further narrow it.

Returns vs. Risk

At the end of the day, some cities and property types will be more risky than others. Even if you are looking within stable growth markets and none of the areas you are looking in are majorly dangerous, some may have significantly better schools than others, etc.

Maybe one market is slightly more in a “gentrifying” stage than another more matured market. It’s always fine to take on a little more risk, but make sure the proposed returns are high enough to justify it. Or if you are more risk-adverse, you may choose to accept slightly lower returns in exchange for staying with a less risky market and property. That’s totally fine as well.

So, you want to have a feel for the returns versus the risk available to you in each potential market and weigh that against where you are on your own personal scale of desire. What’s more important to you: returns or playing it safer? That should help you further whittle down your list.

Ease of Commute

This one may be less significant than others, but it could play a role. If you have narrowed your list down to say, two markets, and those two markets are weighted pretty evenly against each other—which one is easier to get to? If a nonstop, not-too-lengthy flight is available to one and to get to the other would require a couple stops and a longer travel time (which would also probably be more expensive), go with the one you can get to easier!

Ultimately, the most important thing about whichever market you decide on is whether or not you will lose sleep over investing there. Maybe it’s because you can’t stomach your investment property being so far out of reach, maybe it’s because the market is a little riskier, maybe you hate single family homes and really wanted a multifamily. Whatever the situation, go with what will put a smile on your face (and hopefully some cash flow in your pocket).

marketing-strategy

Summary

A quick summary on the steps you can take to help you decide on a market:

Step 1: Narrow down your market options.

  • Where do you know people?
  • Where are other people investing?

Step 2: Analyze those market options to further narrow down your list.

  • Is it a good market to invest in?
  • Do the numbers work?
  • Will you be able to sustain the numbers?

Step 3: Choose what you like!

  • Decide on your personal preferences and see which markets fit those.

Then, once you have your market decided on, go shopping! Even if you only narrowed your list down to a couple of cities, that’s fine. Two cities is easier to shop in than 19,354.

And here’s one last tidbit for you. At the very end of it, no matter how or why you chose the market(s) you did, you need to confirm one last thing. Are you ready?

The last thing that matters is that you can form a good team in the market you choose.

If you can’t find good team members to help you with your property, go to another market. If you don’t have a solid team as an out-of-state investor, you’ll be up that famous creek without a paddle.

If you’ve narrowed your list down to a couple of cities you’d be willing to invest in, choose the one that offers the best team. If you’ve narrowed your list down to one city you want to invest in but then you can’t form a solid team of good people there, start over and choose a new market. You must have the team!

There you have it! Now go market shopping.

 

 

Source: BiggerPockets.com – By Ali Boone November 5, 2019

 

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A third of Canadians should probably move closer to work

A third of Canadians should probably move closer to work 

Choosing a dream home often comes with compromises and that can include accepting a longer commute to work.

But it seems that the daily journey to work is a cause of stress for many Canadians; 35% have told a new survey by recruiter Robert Half that their commute is stressful.

In addition, 36% said that their journey to and from work is too long with the average return journey taking 53 minutes of their day. More than a quarter of respondents spend more than an hour on their commute.

“A professional’s commute often sets the tone for their day. Dealing with a lengthy or frustrating trip to the office can have long-term effects on employee morale, performance and retention,” said David King, senior district president for Robert Half. “As workforces become more dispersed, organizations need to proactively offer solutions to help address and alleviate commuter stress, while keeping business priorities on track.”

While living closer to work can be a solution, a move towards less expensive neighbourhoods often means a trade off between the type and size of home desired and a longer commute.

However, the rise of flexible working is helping to ease the pressure, while changing the shape of modern workplaces.

Ultimately, companies that provide support to help workers get more out of their lives, both at and outside the office, cultivate better focused, motivated and more loyal teams,” added King.

Source: MortgageBrokerNews.ca by Steve Randall 05 Nov 2019

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Here’s Where You Can Buy a Home if You Make Less Than $50,000 a Year

 

The conversation around homeownership in Mississauga and surrounding cities has been a challenging one, especially as prices remain high across all housing types in the city and surrounding municipalities (in fact, the average 905 condo is selling for over $400,000 and has been for sometime now).

But while it’s frustrating for experts—and non-experts who entered the market years ago—to tell prospective homebuyers that they’ll have to move to find an affordable housing, some people might be interested to know that there are indeed still places in Canada that offer affordable homes for single buyers with more modest salaries.

And a recent Zoocasa report reveals where solo homeowners-to-be on a budget might be able to purchase a home.

“While having a dual-income household can greatly improve purchasing power and the ability to qualify for a mortgage, that’s not to say homeownership isn’t in the cards for single-income earning buyers. In fact, according to recent calculations by Zoocasa in celebration of Single Awareness Day (February 15), there are a number of markets where it’s possible to buy a home on one income – and even have money left over,” says Penelope Graham, managing editor, Zoocasa. 

Graham says that, to determine which markets were affordable, the average and benchmark home prices were sourced from regional real estate boards. It was then assumed the buyer would make a 20 per cent down payment and take out financing with a 3.29 per cent interest rate amortized over 30 years, to determine the minimum income required to qualify for a mortgage on the average home.

Those findings were then compared to median income data of “persons living alone who earned employment income” as reported by Statistics Canada.Buying Single - Income Gap - Age 25-64

  • Buying a Home Single - Age 25 to 34
  • Buying a Home Single - Age 35 to 44

Buying a Home Single - Age 45 to 54

So, where can solo buyers most easily afford a home?

Overall, single home buyers will see the best bang for their buck in Eastern Canada and the Prairie provinces, with Regina taking top spot out of 20 cities for greatest affordability.

There, a single buyer earning the median income of $58,823 would enjoy an income surplus of $20,025 on the average priced home of $284,424.

That’s followed by Saint John, where someone earning the median of $42,888 would see a surplus of $18,038 on a $181,576 home, and Edmonton, where earning $64,036 would net a $17,826 surplus on the average home price of $338,760.

MLS listings in Calgary, Lethbridge, Winnipeg, and Halifax also fall within the realm of affordability for single-income purchasers.

So, where are single buyers less likely to purchase a home? As expected, Zoocasa says the Greater Golden Horseshoe (which includes Toronto and the GTA), is out of most people’s budgets.

Graham says a buyer earning the median of $50,721 would fall a whopping $88,361 short on the average $1,019,600 for MLS listings in Vancouver. Toronto real estate listings are the second-least affordable with an average home price of $748,328; a buyer earning $55,221 would face an income gap of $46,858.

Victoria is the third least affordable with an average home price of $633,386, still $39,359 above what the relatively high median income of $86,400 could afford.

Other markets not considered affordable for single buyers include Guelph, Kitchener-Waterloo, London, Montreal, and Ottawa.

Naturally, the housing market is more difficult for single millennials to navigate.

Zoocasa says the research also compared how earnings ranged by age group per location, and which demographic enjoyed the greatest affordability when purchasing a home. Across every market, Gen Xers (35 – 44 and 45 – 54 age brackets) enjoy the greatest earnings and purchasing power, with 11 markets considered within affordable reach (compared to 10 markets across all age groups).

Millennials (aged 25 – 34) had the least earning power in each city, behind Boomers (aged 55 – 64).

Overall, single home buyers aged 35 – 44 purchasing a home in Regina enjoyed the greatest affordability of all, with an income surplus of $24,215. A millennial purchasing in Vancouver had the least, facing a gap of $92,774.

Check out the infographics below to see which Canadian housing markets are most affordable for single buyers, courtesy of Zoocasa.

  • Buying a Home Single - Age 55 to 64

Top 5 Most Affordable Housing Markets for Single Home Buyers


1 – Regina

Average home price: $284,44

Income required: $38,798

Actual median income: $58,823

Income surplus: $20,025


2 – Saint John

Average home price: $181,576

Income required: 24,769

Actual median income: $42,888

Income surplus: $18,038


3 – Edmonton

Average home price: $338,760

Income required: $46,210

Actual median income: $64,036

Income surplus: $17,826


4 – Saskatoon

Average home price: $290,736

Income required: $39,659

Actual median income: $55,758

Income surplus: $16,099


5 – St. John’s

Average home price: $295,211

Income required: $40,270

Actual median income: $51,964

Income surplus: $11,694


5 Least Affordable Housing Markets for Single Buyers

1 – Vancouver

Average home price: $1,019,600

Income required: $139,082

Actual median income: $50,721

Income gap: $88,361


2 – Toronto

Average home price: $748,328

Income required: $102,079

Actual median income: $55,221

Income gap: $46,858


3 – Victoria

Average home price: $633,386

Income required: $86,400

Actual median income: $47,041

Income gap: $39,359


4 – Abbotsford

Average home price: $590,900

Income required: $80,604

Actual median income: $46,714

Income gap: $33,890


5 – Hamilton-Burlington

Average home price: $550,058

Income required: $75,033

Actual median income: $51,253

Income gap: $23,778

Source: Insauga.com – by Ashley Newport on November 1, 2019
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Should We Airbnb a Room in Our Home?

Young man and woman shaking hands

 

With the booming sharing economy and travellers often preferring to forgo traditional hotel stays, the notion of renting out a room in your home (or the entire house itself) could seem appealing. But before you jump into peer-to-peer short-term rentals, there are some things you should consider:

Costs of hosting: starting up, cleaning, higher utility bills and more

Becoming an Airbnb host requires some startup cash along with ongoing expenses. These include the costs to set up and furnish the space, ongoing utility and cleaning fees which is usually not more than $30 per room.

You’ll want to make sure each guest space is attractive and has all the amenities that a weary traveller needs such as fresh backup sheets and plenty of towels. A savvy host can reasonably furnish an empty room for about $1,000. However, $500 can do the trick if you already have an extra bed. Big box stores can help supply furniture for a range of pricing.

The upside of being a host is that if you work hard, possess excellent customer service skills and treat the platform like your own personal business, the revenue generated from the listing can surpass the initial startup costs and provide a nice monthly return.

 

Young man and woman shaking hands

Permissions

If your property is controlled by a homeowners’ association or co-op, check its rules to make sure you’re allowed to host; some may restrict Airbnb activity, while others may have no issue. If you rent, you’ll want to get your landlord’s blessing.

A proportion of Airbnb hosts could very well be renters, who may or may not be telling their landlord. It is recommended to get your landlord’s approval through a signed agreement. In most Canadian provinces, tenants cannot rent out their apartments without the approval of their landlords.

Airbnb Canada details here how tenants should go about this process.

Bike hanging on living room wall.

Taxes and business licenses

Depending on where you live, you might require a business license and you might owe local taxes on any income you earn.

Quebec law requires short-term rentals of less than 31 days to obtain a licence from Tourism Quebec. Vancouver has proposed regulations that only allow the issuing of short-term rental licences for a primary residence — meaning the host, whether owner or tenant, must live in the dwelling. This rule targets hosts with multiple investment properties who operate as commercial hosts and eat into the housing stock.

Toronto has proposed a two-pronged approach to licensing, requiring both companies such as Airbnb and hosts to register and pay an annual fee. Hosts of short-term rentals in Toronto would be required to pay an annual fee ranging from $40 – $150.

As tax is a relatively complex topic, Airbnb has provided some information about local regulations in different Canadian markets. Above all, it’s good to consult a tax professional to get more specific information.

Clean + Declutter

You’ll want to tidy your space, present it in the best possible light and hide your valuables before you photograph it.

Like the listings you love to peruse here on REALTOR.ca, the photos and listing title are the first thing a potential guest will see on Airbnb. This is your opportunity to catch their attention.

You can either take your own photographs or contract out a professional photographer. Many hosts opt for professional shots, given how important eye-catching photos are for your space’s profile.

Before photographing, ensure that you prep by arranging suitable lighting conditions and use a quality camera (now available on most smartphones).

Woman standing at bottom of stairs smiling

Insurance and liability

Airbnb’s Host Guarantee provides up to $1 million in insurance coverage for property damage in 29 countries, including Canada, the United States and the United Kingdom. Airbnb’s insurance is not a substitute for homeowner’s or renter’s insurance and it doesn’t protect against theft or personal liability.

Airbnb states that damage to a host’s property (home, unit, rooms, possessions) in every listing is covered up to $1 million USD. However, hosts must provide documentation as part of the resolution process. Payments made through the Host Guarantee are “subject to Host Guarantee Terms and Conditions,” meaning there are exclusions, limitations and conditions. As well, it’s common for Airbnb hosts to receive emails from Airbnb, at random, informing them that various terms and conditions have changed.

Call your insurance company to see what is covered, as some home insurance policies cover short-term rentals. But if there are multiple short-term visits, the insurance company might require you to buy a business policy that would cover a hotel or a bed and breakfast.

Damage

Airbnb’s host guarantee doesn’t protect against wear and tear to your place, but you can charge a security deposit to cover possible damage.

Installing a reasonable security deposit is a no-brainer move for new hosts. Airbnb allows hosts to set up a security deposit to cover minor damages that would not be covered under the Host Guarantee. For example, if a guest breaks a door handle while staying at your property, you’ll want to replace that before the next guest comes.

However, Airbnb won’t consider this damage to be major and won’t cover it under the Host Guarantee. As a result, this becomes an out of pocket expense for you, unless you charge the guest a security deposit. When guests make a reservation, they are not immediately charged for the deposit – only if a host makes a claim.

Even if a host is only renting a single room, a security deposit is a safe move just in case anything gets damaged.

Couple meeting with another woman.

Getting paid

Airbnb could require you to refund a guest’s payment if you cancel a reservation at the last minute, forget to leave the key, misrepresent your listing, don’t clean your home or otherwise fail to meet Airbnb’s hospitality standards. Airbnb suggests making sure you’re available during the guests’ scheduled check-in to address any concerns.

Airbnb’s payment system is quick and efficient. Payments are sent through direct deposit after the guest completes their first night (regardless of the length of stay).

When a guest books a host’s space, they also agree to the host’s cancellation policy, which dictates the percentage of the booking costs (minus Airbnb’s cut), if any, they will get back. Most moderate policies allow a guest to cancel within two days of the first night to get their money back. Less moderate policies allow the host to collect more of the booking money.

Host cancellations also happen from time to time. One study found host cancellations are the top complaint on Airbnb, representing about 20% of all complaints.

Depending on when a host cancels a stay, they’ll be deducted either $50 or $100. If a host cancels three or more reservations within a year, Airbnb may deactivate the listing.

To Airbnb or not to Airbnb 

If you talk to enough long-time Airbnb hosts, they’ll be able to tell you an endless number of stories about inspiring and interesting guests who shared their home. Others might have bad experiences. There are clear potential advantages and disadvantages to becoming an Airbnb host.

However, if all the regulatory checks are taken care of, the space is up to par and you’re taking your hosting responsibilities seriously, the platform can serve as a nice way to earn extra cash and meet interesting travellers from around the world.

The article above is for information purposes and is not financial or legal advice or a substitute for financial or legal counsel.

 

Source: Realtor.ca – Joseph Czikk – Joseph Czikk is a Canadian freelance journalist. His work includes topics like homeownership, business, tech and personal finance. 

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Canadians Need Guidance With Their Mortgages

That’s the takeaway from a national survey released this week by Rates.ca, which found half of Canadians aren’t aware of the mortgage options available to them.

Not only that, but Canadians are lacking in some other basic mortgage trivia, with an astounding 9 out of 10 respondents not knowing that mortgage interest is charged semi-annually:

  • 28% think interest is compounded monthly;
  • 17% think it’s bi-weekly;
  • 17% think it’s annually;
  • 28% just have no idea.

Should we be concerned?

confused mortgage consumerDustan Woodhouse, President of Mortgage Architects, and a former active broker who has written multiple educational mortgage books, thinks so.

“Sounds about right. We know about what we pay attention to, i.e., The Kardashians,” he wrote to CMT. “The material concern in this is how easy it makes it for the government to over-regulate the industry, with clients blaming the banksrather than the appropriate parties. This disconnect is deeply concerning.”

Perhaps even more concerning is the fact that only four out of 10 Canadians (39%) know they can avoid paying default insurance on their mortgage if they make a down payment of 20% or more.

With default insurance running anywhere from 45.85% of the mortgage value, we’re talking some serious dinero being spentpotentially unknowingly and unnecessarily.

So, what can be done? Woodhouse admits there are no simple answers, but says making mortgages more tangible to borrowers would be a good place to start.

“The root issue is making mortgages interesting and relevant to clients more often than when they need one,” he said. “It needs to be all about housing, not simply mortgages.”

Paul Taylor, President and CEO of Mortgage Professionals Canada, agrees.

“Unless you deal in mortgages, you only talk about them, generally, once every five years,” he said. “I’m sure at the time of signing, the borrowers understood what their payment obligations were and the schedule; after that, the rest of the information provided was likely filed under ‘nice to know but not relevant enough to me to retain.’”

Making the Case for Mortgage Brokers

With a growing trend towards “do-it-yourself” online mortgage shopping, we wondered if these survey results reinforce the need for mortgage brokers in guiding uninformed borrowers about their mortgage options.

mortgage broker helping clients“Big time…more than ever brokers are required,” Woodhouse said.

Taylor added that the stats “clearly demonstrate the need for professional and impartial advice at the time of purchase/renewal/refinance. And while some may suggest they are comfortable purchasing online without counsel, I think we can see that is inadvisable in almost all cases.”

Taylor pointed to the UK as an example. Following the crash of 2008, he noted the country adopted several policies by 2014, including disallowing borrowers to be able to self-declare income, and requiring mortgage consumers to be provided mandatory advice on mortgage products.

“The last point, I think, would likely begin to receive international discussion/attention if online sales begin to increase too quickly given the data this survey demonstrates,” Taylor said. “Given the size of these loans, the personal liability and the potential interest-cost difference for as little as a quarter-point in interest, I expect there may be some scrutiny on consumer outcomes for these self-serve options.”

Additional Survey Tidbits

The Rates.ca survey revealed some additional interesting findings about Canadians’ knowledge gap when it comes to financial products, including:

  • Nearly 7 out of 10 Canadians (68%) aren’t aware that interest on credit cards is calculated daily.
  • 30% admitted they are unlikely or somewhat unlikely to make the minimum monthly payments on their credit cards.
  • 40% of respondents admitted to not knowing their credit score.
  • 43% said they felt comfortable negotiating their mortgage over the internet.
  • And 94% believe schools should place greater emphasis on teaching financial literacy.
Source: Canadian Mortgage Trends – Steve Huebl 
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