Tag Archives: construction financing

What happens when builders can’t get financing?

Source: Real Estate Professional – by Neil Sharma10 Nov 2017

In the wake of Castlepoint Numa’s announcement that it failed to secure financing for Museum Flats, the highly touted and anticipated Junction Triangle condo development, many purchasers feel like they’ve been left hung out to dry in a market that’s grown more expensive.

By one purchaser’s account, this is the second time Castlepoint has informed his family that it will not be completing a development.

According to Akshay Dev, a sales agent with REMAX Realty One, researching builders is paramount. If he’d ever encountered a builder who failed to secure financing, he’d steer clear of them.

“I haven’t had a situation like that in my portfolio yet, but definitely before we get into projects I like to do some research about the builder to make sure they have a certain reputation, background and that they have credibility,” Dev told REP. “Some builders I like working with, and some I keep my paws off.”

Dev is frequently invited to development launches, which are good places to conduct due diligence. He likes to scrutinize the builder and their past projects, as well as determine whether or not problems could arise at any point during their latest build.

He added that, because banks typically provide financing when a development is 70% sold, a developer unable to secure financing might hint at other problems.

“If a builder is pulling out of a project, it means they lack credibility right there,” he said. “If a developer cannot achieve [70% sales], it means there’s something wrong there. Either the project or location aren’t good, or they don’t have the experience to handle the whole situation.

While Dev hasn’t had a builder fail to bring a project to market, he would tell his clients not to renegotiate with them for a relaunch, or even buy a unit in a future project.

“I would advise them to walk away. If they reached a point where they haven’t gotten financing, there’s a lot more involved in this. If you’re going to talk to a builder about getting financing, what is the guarantee that they’ll get it, and what’s the guarantee there won’t be problems afterwards? It’s a credibility issue right there and then.”

Zia Abbas, owner and president of Realty Point, agrees with that sentiment, and added that, as a sales agent, his reputation is on the line as well.

“As far as I’m concerned, whenever I go and sell any product to my client, for me the credibility of the builder is as important as the location of the project,” said Abbas, adding a builder’s credibility is in their portfolio. “What if we find the best of the best location but the project won’t proceed because the builder doesn’t have the reputation?”

Abbas admits that some builders he’s spoken to have said that they could pull out of the project and bring it back to market at higher price points that better reflect Toronto’s hot market, they wouldn’t sully their reputations that way.

“They’ll stick with the promises made, and this is what is called credibility,” he said.

But that doesn’t mean unscrupulous builders never give in to temptation.

Such builders don’t just damage sales agents’ reputations, they also lose the latter money.

“I’ve never worked with these builders and I’m not going to work with any builder with whom I’m not comfortable because the money I’m making on commission is all future commission,” he said. “There would be nothing in my hand. What if the project doesn’t go through? I’m going to lose time, money and credibility in front of my client.”

Abbas has been selling in throughout the GTA for a long time and says he’s had a couple of builders pull out of projects. Clients’ deposits were returned with nominal interest. As a veteran sales agent, he knows how to keep builders like that at arm’s length.

Toronto city councillor Ana Bailao recently went on record as saying that there needs to be more protection for purchasers like the ones who won’t be moving into Museum Flats.

Dev agrees.

Purchasers’ deposits are held in trust, but there have been cases in the past in which rogue builders and lawyers took off with the monies.

“Anybody who has invested money in real estate is investing hard earned money,” he said, “and hoping to grow that money and take their net worth to next level. We need to make sure wherever they put their money is safe. If they invest in certain people who don’t have a proven track record, then they are risking their investments. If you go to credible builders, chances are your money is safe, your project will be completed, the builder will get financing and deliver you a quality product. And with the right market conditions, you’ll get a good return on your investment.”

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Can’t Get a Bank Mortgage? How Do Private Mortgages Work?

Not everyone can qualify for a mortgage these days. Government regulations targeting down payments, investment properties and high-ratio buyers mean that more Canadians won’t qualify for a home loan.

It’s often said that housing is the bedrock of the Canadian economy. But for years, federal regulations have clamped down on the ability to qualify for a mortgage. The self-employed, individuals living in rural areas and those with past credit troubles have long struggled with home financing. Now that struggle is extending to other segments of the population.

Against this backdrop, more and more Canadians are turning to private mortgage lenders for their home financing needs. Although many borrowers think of private mortgages as a last-resort option, they are a viable option for many people.

Private Mortgage Lenders Operate Differently from Banks

A private mortgage is simply a home loan offered by an individual or company other than a bank or traditional finance provider.

One of the biggest benefits of working with a private lender is they operate differently from traditional banks on many levels. Since they get their money through individual investors or groups of investors, they have the freedom to set their own lending criteria. This means they are more flexible in the application process and don’t have to deal with the stringent guidelines set forth by the major institutions. This means that if your situation falls outside conventional lending guidelines, a private mortgage could be your best bet.

Private mortgages are often suitable if you:

  • Are self-employed
  • Want to purchase raw land or unique property
  • Have less than ideal credit
  • Want to invest in real estate
  • Need access to equity in your home, but don’t want to refinance your first bank mortgage due to excessive penalties
  • Need to consolidate high interest rate debt
  • Are looking to renovate existing property
  • Looking for a short-term loan

How Private Mortgages Work

If you’re exploring a private mortgage, the first step is to seek out a broker who provides alternative lending services. The broker will assess your situation and determine if you are eligible for a loan. In particular, they will assess your ability to make the loan payments on time.

From there, the broker will then search for the best mortgage solution that meets your specific needs. They will then structure the deal and put in place an exit strategy so that you know how long the private mortgage will last.

It’s important to note that private lenders usually lend on location. That’s because private mortgages are uninsured, which means the lender falls back on the property should a default occur. That’s why location of the property is extremely vital in determining whether you qualify for a private mortgage and the rate that you’re offered.

Broker fees and legal fees generally apply when securing a private mortgage.

Private mortgages are growing in popularity as more borrowers fall outside the traditional lending guidelines set forth by the major banks. The good news is there are plenty of options for those looking for an alternative lending solution to finance their next property or major purchase.

Source: Canada Mortgages Inc. – 1 September, 2017 / by Sam Bourgi

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Why Canadians who own Florida homes need both hurricane and flood insurance

About 3 million Canadians visit Florida every year, and thousands own property there. So with Hurricane Irma threatening to do heavy damage to the state, should those property owners have flood or hurricane insurance?

The short answer is yes, they need both.

The latest forecasts suggest Irma’s winds could carve up much of Florida’s coast, damaging property from the Florida Keys through Jacksonville, and some experts say this could become the costliest storm in U.S. history.

For Canadian owners of property in Florida, the one bit of good news is that Irma is moving swiftly and should bring less than a quarter of the rain that Hurricane Harvey dumped on Texas when it stalled over the state. South Florida is also used to flooding and has a better flood control system than Texas.

Still, Irma could still cause significant water and wind damage. That’s why property owners need to be sure they have both hurricane and flood insurance – two distinct policies, says Brad Hubbard of National Flood Experts, a U.S.-based company that helps homeowners decide what kind of disaster insurance they need.

“If you have home insurance or even hurricane coverage, it does not cover flood. And flood insurance does not cover hurricane (damage). They are two, totally separate policies,” he told CTV Toronto from Tampa, Fla.

For Canadian snowbirds hoping to buy last-minute coverage before Irma hits, they will find they are out of luck. Most flooding polices must be purchased 30 days before a storm.

Property owners in areas known as Special Flood Hazard Zones are required to have federal flood insurance, through the National Flood Insurance Program (only a few private insurers offer flood insurance in Florida.).

In fact, U.S. mortgage lenders are required to make sure property owners living in flood hazard zones have the insurance in order to qualify for federally-backed loans.

Yet, according to an investigation by The Associated Press, just 42 per cent of homes in Florida’s 38 coastal counties are covered. In the counties currently under partial evacuation orders, only 34.3 per cent have proper coverage.

With storms becoming more severe and arriving more unpredictably, purchasing flood insurance is simply a smart investment for Canadians, says Hubbard.

Because Florida is particularly vulnerable to hurricane damage, many private insurance companies are reluctant to offer coverage to property owners who live in southern, coastal areas of the state.

That’s in part why the Florida state government created Citizens Property Insurance Corporation, a non-profit government agency that provides insurance to owners unable to find insurance in the private market.

Citizens’ spokesperson, Michael Peltier, says insurance premiums can vary depending on the type and the location of a property. He says premiums for “multi-peril insurance” — which includes hurricane coverage — in Miami-Dade County, for example, can range from an average of US$930 for a condominium unit, to $3,400 for a single-family home.

The same insurance in Orlando, Orange County, will cost an average of $1,400 for a single family home, simply because the county is further inland.

He recommends that Canadians who own property in Florida should ensure they are fully protected, before storms like Irma arrive.

“We would urge them to contact their insurance agent to make sure they have the coverage they need,” he told CTVNews.ca.

Source; With a report from CTV Toronto’s Pat Foran and files from The Associated Press

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Ten ways to make buying a fixer-upper worth it

Before buying a fixer-upper, consider these tips to ensure this option is right for you, and planned renovations prove profitable.

1. Consult a real estate agent to find out more about the neighbourhood

The real estate history (recent sales, pricing) of a neighbourhood will tell you if investing in a fixer-upper is worth your time and money. An agent can advise you on community news, including property development, environmental projects and other factors that will have positive and negative effects on your home’s resale value.

2. Schedule an extensive home inspection

Houses that need work may contain structural or cosmetic concerns, so it is important to know what elements need to be fixed in order to work those costs into your budget. Invisible upgrades (electrical, plumbing and heating) can be expensive fixes that don’t always increase a house’s value because they are naked to the eye of a potential homebuyer.

3. Request an estimate from a contractor

Based on an assessment by a certified contractor, determine how much money you’ll need to set aside for desired upgrades.

4. Know what you’re getting yourself into – both financially and personally

When buying any house, it is important to stay afloat and avoid swimming in debt. Fixer-uppers aren’t just hard on your wallet. Renovations can be disruptive, stressful and time-consuming, so it is imperative to have a solid financial plan in place and your family’s lifestyle taken into consideration prior to purchase.

5. Work out a schedule

Knowing if and when you plan to buy [?] your house can help you manage your renovation schedule and budget accordingly.

6. Know the law

Contact your local municipality office and request information on your city’s building permit laws before undergoing any renovations. Many large structural changes (additional storeys, extensions, decks) require a building permit. Future buyers might request proof of permits on condition of sale.

7. Don’t over-improve for the market

Once the renovations start rolling, you might not want them to stop. Designing your dream home is tempting, but only if the housing market will reimburse you for your efforts. Finishings (wood, stone, hardware) should be in line with houses in the neighbourhood.

8. Stretch your money

Forgo expensive wooden kitchen cabinets in lieu of higher quality countertops. Prime features of a home (luxury work surfaces, flooring, appliances, lighting) hold their value more than cosmetic fixes (paint, cupboards, carpet). Opt for energy efficient appliances that will save you money during residency and will be an attractive detail on resale.

9. Avoid over-customization

Remember that people’s tastes vary, so pull back on any customization that might discourage potential buyers.

10. Challenge yourself

Renovating is an excellent opportunity to try do-it-yourself projects. Simple changes like paint colour or swapping cabinet hardware are easier ways to be involved in your renovation and can also save you on labour costs.

Source: Homeownership.ca

 

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How to determine if a fixer upper is worth the work

should-you-buy-that-fixer-upper

“I love it, but it needs work!”

Don’t be discouraged if you find yourself saying that about a potential property. Even the best homes may require a few tweaks to get them move-in ready. For first-time homebuyers, fixer-uppers offer amazing value. Identify the great bones hiding behind dated wallpaper or lighting, and you can save money, while custom decorating your property to your liking. Here are 5 property flaws that are fairly easy to fix.

 

Flaw #1: Unstylish wallpaper or a unattractive paint colour

Fix: One of the cheapest and easiest ways to refresh a space is to paint it a clean, neutral colour. That’s why it’s so surprising when a home seller skips this step. Unflattering walls, from unappealing paint shades to outdated wallpaper, can elicit a visceral response in certain viewers: “Not. This. Home.” That gives savvy house-hunters an advantage: more homes to choose from, and possibly a bargaining chip when it comes to sales price.

Lacklustre walls are easy to fix. Repainting a room takes just hours, and even if you have to strip old wallpaper beforehand, it’s a straightforward weekend project.

TIP: If possible, tackle chores like painting before you move into your new home.

 

Flaw #2: Dark, gloomy rooms

Fix: Dingy rooms are often the result of bad lighting. Upping the wattage of light bulbs can make a big difference, but installing new light fixtures is the surest way to give a darker room a bright new outlook.

Well-lit rooms combine ambient lighting with task lighting. A solid lighting strategy pairs overhead illumination such as modern recessed lighting or a traditional chandelier with additional light sources like table lamps, floor lamps or desk lamps.

Lighting is an easy fix so don’t let this flaw deter you from making an offer on a fixer-upper. Basic lighting installation can be tackled by DIYers, while a pro can make short work of installing recessed lighting.

Flaw #3: Damaged hardwood or a musty carpet

Fix: Old carpets put off potential buyers, but don’t let that stained floor covering deter you. Ripping out wall-to-wall broadloom takes elbow grease, but isn’t difficult.

If you’re lucky, you may find well-preserved hardwood underneath. If not, don’t stress: stained or scratched-up hardwood can be refinished by sanding, re-staining, and varnishing. Ambitious DIYers can tackle this, otherwise, you can hire a pro to do it for less than it would cost to have new hardwood installed.

If the carpet was hiding linoleum, consider today’s next-generation engineered hardwood or budget-friendly laminate: it looks like hardwood, and features basic, glue-less, click-in installation.

Flaw #4: Out-of-date kitchen cabinetry

Fix: Nice kitchen, not-so-nice cabinetry? Not a problem: Wood cabinets are easy to update! Just give them a cheap-and-cheerful facelift via a couple coats of hardwearing enamel paint and new knobs or pulls.

Or, for a more radical makeover, have your cabinetry refaced by a kitchen specialist. New doors, drawer fronts and hardware provide a kitchen makeover, minus the hassle and waste of ripping out serviceable cabinetry.

Flaw #5: Zero curb appeal exterior paint palette

Fix: Curb appeal is huge. And when a house is seriously lacking, you may think twice about the investment. But take a few minutes to analyze a house’s exterior before you cut it from your list. Would a new exterior paint palette for the walls, porch, window shutters and front door transform the house from drab to delightful?

Source: Genworth.ca

 

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When planning home improvements, finding a reliable contractor is an important first step

Hiring the right contractor can make all the difference when renovating your home

Skyrocketing Toronto real estate prices are motivating many existing homeowners to improve their homes, rather than replace them. “We’re seeing a big trend to add value to homes through renovations and to increase living space by building ‘up or out,’” said Kris Potts, president of Toronto’s Norseman Construction & Development. “In doing so, existing homeowners are achieving the living space improvements they would normally seek by moving to another home, but at a much lower cost.”

Whether the homeowner’s goal is to add living space by ‘building up or out’ or just to bring kitchens, bathrooms, and other rooms up to 2017 standards, their biggest challenge is often finding a contractor who can be trusted to do the job right; on time and on budget.

With an impressive 83 per cent score on the consumer rating site HomeStars.com, Norseman Construction & Development is one such contractor. Established in 2005, this family-owned-and-operated company listens to its customers throughout the design and build process; keeping them constantly informed about their project’s progress until it is completed, and each customer has received exactly what they asked for.

“We do our best to take each homeowner’s vision and make it a reality, ensuring that the finished product exceeds their expectations,” said Potts. “We do this by keeping on top of the perpetual advancements in the field, and by addressing the constantly changing needs of local homeowners. Add Norseman’s wealth of experience, superior workmanship and unparalleled attention to detail, and we are able to provide our customers with innovative solutions, competitive pricing and timely results on all their home improvement projects.”

Norseman’s attention to customer needs starts with the company’s consultation process. “Book an appointment on our website, and one of our skilled estimators will come to your home to provide a free quotation on whatever you have in mind,” said Kevin Potts, Norseman’s Operations Manager. “We will do our best to come up with a plan that not only meets your needs, but also fits within your budget and schedule.”

Once the home improvement project is underway, Norseman keeps customers ‘in the loop’ about the project’s progress on a daily basis. “Our people use a program called Buildertrend to upload status reports and photos of each day’s work,” Kevin Potts said. “Our homeowners can log into it as often as they wish to see firsthand how their build is going, and to get answers to any questions they may have.”

“Today’s homeowner is very savvy, thanks to all the home improvement shows on TV,” said Becky Potts, Norseman’s Marketing Manager. “Here at Norseman, we respect this level of awareness by giving homeowners open access to information about their projects at all times. Check out our Facebook, Instagram, and Twitter pages, and you will see our customer-first values in action!”

‘Customer-first values’ is a phrase that means something at Norseman Construction & Development. It is why this contractor provides a two-year warranty on its work – many other contractors only provide a year’s coverage.

It is also why the Potts family insists on alerting customers to project-related issues should they occur. All construction projects carry with them some element of the unknown. Opening walls or floors can bring to light new information not present at the project’s beginning. “Setbacks happen,” said Kris Potts. “When they do, we tell the customer about them upfront, and we fix them in consultation with the customer.”

As well, customer-first values drive Norseman’s approach to its skilled tradespeople. “Unlike some other contractors who are focussed on profits first, Norseman treats its trades fairly,” said Kevin Potts. “In return, we inspire loyalty in the most skilled tradespeople in the industry. The payoff is the best quality work on our customers’ homes.”

That’s not all: Norseman invests money and time in ‘giving back’ to the GTA community. Its charitable efforts include underwriting the annual free Messiah for the City Christmas concert for clients and staff of the United Way. This much-loved music is performed by the Toronto Beach Chorale and members of the Toronto Symphony Orchestra. Norseman also supports Habitat for Humanity, which aids low-income families in attaining affordable housing; serves hot meals at the Scott Mission, and funds numerous local sports and charity events in the GTA.

“The way we treat our customers and our community underscore what Norseman Construction & Development stands for,” concluded Kris Potts. “When you hire us for your home improvement project, you will receive quality-oriented, customer-focussed service from a stable firm that truly puts you first, and who cares about the community we all live in.”

For more information about Norseman & Construction & Development, visit their website or connect on Facebook.

This story was created by Content Works, Postmedia’s commercial content division, on behalf of Norseman Construction.

Source: National Post

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Mike Holmes: Speaking in code

Before starting any job, it’s important to check code to ensure you’re using the proper materials and practices so that when the project is finished, it will pass inspection. By now, you all know that I like to build above minimum code whenever possible — and by doing so, we’ll have stronger buildings that are built using better products and practices.

In fact, because building codes are different depending on where you live, the best way for me to teach others is to leave minimum code at the curb and focus on teaching homeowners how to build better and stronger homes in the first place.

Here’s a question I’m asked often: When it comes to fasteners, what do I use? While there’s not one fastener for all occasions, when it comes to screws or nails, I’m going to use screws wherever possible.

The right fastener for the job

When it comes to fastening, I always say to glue it and screw it. Gluing gives you a solid connection while the screws will keep it there — and not loosen over time. Find the right fastener for the job by checking code first.

There are some projects where you need the right kind of screws, and other jobs where screws on their own just won’t cut it.

Wood screws are used to secure lumber, but the kind of job you’re doing will dictate what kind of screws to use. There are screws that are designed for interior or exterior projects.

In the case of exterior wood screws, you can get them specifically designed for the type of wood you’re using, like cedar, or a pressure-treated wood. Pressure-treated wood is treated with Alkaline Copper Quaternary (ACQ), which is more corrosive for metal. That means you need a fastener that is approved for outdoor use with ACQ treatment in mind.

For indoor projects, drywall screws are designed to hold drywall securely in place because they have deeper threads than a typical screw, which keeps them from dislodging from the wall.

Screws popping out of drywall

Have you ever had your screws pop right out of your drywall? There are a few reasons why this could be happening — but it usually comes down to an issue with the installation. A lot of installations are done too quickly. If you’ve only got one guy installing the drywall as fast as possible they might not be putting proper pressure on the sheet of drywall making sure it’s on tight.

Too many builders worry about speed, without taking the time to truly do the job right.

In the case of minor popping there’s a relatively simple fix. Push the drywall in and ensure it is snug against the stud, and add some new screws. From there, mud over the screws, sand it, and add a fresh coat of paint.

Squeaky floors

If you’ve ever tried to quietly sneak around your house only to be given away by the telltale sound of a squeaky floor — the problem may actually lie in your subfloor, and how the builder fastened the sheathing to the floor joists. You can sheath a subfloor with hardwood but you will find that it contracts and expands depending on the humidity conditions in the home.

Because the hardwood is nailed to the subfloor, in time, as the wood contracts, the nails can pop out.

To keep things quiet and in place, use a plywood subfloor that’s been properly glued down and secured with screws. The glue makes the connection between the sheathing and the subfloor, and the screws hold everything in place without loosening over time.

Builders often use a nail gun to install subfloors, and you sometimes have the nail missing the joist. When not completely secured, the floors will move when pressure is placed on them (every time someone walks on them), causing that annoying squeak you hear.

Before you decide on fasteners for your next project, always check what code dictates in your area. The spec of the job will let you know what kind of fastener you should be using. If it’s my choice — I’m going to glue it and screw it.

Building a strong house that will stand up to anything you can throw at it is all a matter of building it right and choosing the right materials.

Watch Mike Holmes in his series, Holmes Makes It Right, on HGTV. For more information, visit makeitright.ca.

Source: National Post – Mike Holmes | April 1, 2017

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