Tag Archives: home buyers

When is a good time to get into the market?

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When it comes to real estate, one of the most common questions is: when is the best time to buy? The typical response is the best time to buy was yesterday and the second best time is today. That response is a bit clichéd as many homebuyers have heard it before and it doesn’t provide any practical advice.

Buying a home will likely be the largest purchase people make in their lives which is why they want to be as informed as possible when making their decisions. It’s impossible to predict where the markets are headed, but there are some scenarios where it makes sense to get into the market.

Early in the year

Historically, real estate sales slowdown at the start of the year. This happens because many people aren’t exactly excited to go out in the winter to search for a new home. Although there’s usually less inventory available during this season, there’s an opportunity for buyers since sellers may be more motivated to negotiate on price to complete the sale.

When interest rates are low

Over the last couple of years, interest rates in Canada have been at near record lows. In 2018, when the Canadian economy was doing well, the Bank of Canada increased interest rates three times from 1% to the current rate of 1.75%. The economy has since cooled and a recent poll found that many economists expect rates to remain flat until the end of 2020.

In the first half of 2020, we’ve seen mortgage rates fluctuate both up and down. In early 2019, 30-year fixed mortgage interest rates rose to between 4.5% and 5.0%. However, right now, we’re seeing rates as low as 2.54% which can be very appealing to potential and current homeowners.

When your financial situation is optimal

Buying a home is a goal for many Canadians, but it’s easier to make that a reality if your financial situation is in good standing. Ideally, you should have a secure income, good credit score, no or limited debt, and a healthy down payment.

By having all of the above, lenders are more likely to approve you for a mortgage in the amount you’re looking for. That’s not to say that lenders will ignore potential homeowners who have debt or are on a single income, it just means that they may not be extended as much money.

When inventories are high

Real estate is cyclical and things can change fast. A seller’s market can quickly become a buyer’s market if a lot of homes are up for sale. Generally speaking, spring and summer are when listings are at their peak, but there’s also an increased amount of buyers so that doesn’t automatically mean buyers will get a deal.

The highest month for home-for-sale inventories is May, followed by April and June which lines up perfectly for potential homeowners who are looking to move in by Labour Day. If there are more homes for sale compared to buyers, then sellers will need to ensure their home is priced competitively so they can get it off the market.

When the economy is doing well

Although interest rates may rise when the economy is doing well, it may still be a good time to buy a home. Those looking to buy who have been pre-approved for a mortgage may not feel the effects of any increased rates and they may be able to take advantage of new market conditions.

With an increased economy, there may be more construction of new homes which means more inventory for potential homeowners to choose from. This scenario also helps current homeowners who are looking to move up on the property ladder since they’ll likely have an easier time selling their current home before buying a new one.

The pros and cons of buying real estate

The above factors are all good reasons to start looking for a home but note that homeownership isn’t for everyone. If you’re looking to enter the real estate market, it’s important to look at the pros and cons early so you know what you’re getting into.

Pros

  • As a homeowner, you can choose what to do with your home
  • Over time, you build equity in your home
  • You may be able to generate income from your home by renting it out (or a portion of it)
  • There are some tax benefits e.g. tax deductions on mortgage interest

Cons

  • As a homeowner, you’re responsible for all the maintenance and repairs
  • There’s limited flexibility if you need to relocate quickly
  • A huge part of your net worth is locked into your home which makes it difficult to diversify
  • There are additional expenses that renters don’t have such as property tax and repairs

As you can see, deciding on when is a good time to get into the real estate market depends on quite a few things. There’s never an ideal time, but you can look at the current market conditions as well as your own financial situation and then decide if you’re ready to become a homeowner.

 

Source: Equitable Bank – Joe Flor Director, National Sales


Equitable Bank is a major lender partner to the mortgage broker network and offers mortgage products to meet almost every client need. To find out more call us at 905-813-4354 or stop by our office for a chat.

 

 

 

 

 

 

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Preparing for a House Appraisal

How to Get a Home Ready for an Appraisal

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

 

Cleaning and Organizing

While these may not be the most desirable tasks, cleaning, organizing and removing clutter from your house are among the best ways to prepare for an appraisal. A clean home looks well-maintained – something the appraiser will be looking for. Organizing the garage, closets and cupboards helps them appear larger, which is a great way to add value. Finally, removing excess clutter from your house, such as items on counter tops, makes a room appear both larger and cleaner.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

Curb Appeal

Check out how your home stacks up against those that have recently sold in the area insofar as its exterior appeal, also known as curb appeal. The outside of your house makes a first impression on the appraiser, so make it is as clean and de-cluttered as the interior. Tidy up the landscaping and spread some fresh mulch in the landscape beds. Remove any toys or other clutter from the front yard. A well-maintained yard gives the impression of a well-maintained home.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

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Make Necessary Updates

Fresh paint is an easy and inexpensive way to add value to your house. This is especially necessary if you have wild or unusual wall colors, advises Loreen Stuhr, an appraiser with Appraisers of Las Vegas. She recommends painting the walls in neutral colors and replacing vinyl flooring with wood, laminate or tile. If it’s in your budget to do so, consider replacing laminate counter tops with tile, granite or other more upscale materials.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

Repairs

Fix any maintenance issues that the appraiser is sure to notice, such as leaking or dripping faucets, running toilets, torn screens, missing trim and missing or wobbly stairway handrails. If the home buyer is using a loan backed by the Federal Housing Administration (FHA) to purchase the house, keep in mind that FHA requires that the seller repair anything that affects the health and safety of the occupants. An FHA-approved appraiser is required to make note of such property conditions, including an assumption of the structural integrity of the property. Items that require repair before the close of escrow include providing adequate access and exit from the bedrooms to outside the home, leaky roofs, foundation damage and flaking lead paint.

Whether you are selling, purchasing or refinancing a home, the lender’s appraiser has the final word on how much money the home is worth. Therefore, the appraisal can make or break the real estate transaction. Unlike a home inspection, where the inspector determines any existing mechanical or system problems in the house, the appraiser’s job is to compare your house against comparable homes that have recently sold to determine its market value. Some items on the appraisers list you can’t change, such as location, but others, such as condition and updating, depending on your budget, may be appropriate tasks to perform to prepare your house for an appraisal.

Paperwork

Although the appraiser has numerous ways of finding information, she may have no way to know about improvements you’ve made to the home, which could have a positive impact on its value. A good way to let her know is to create a list of the home’s features and benefits, advises David Hesidenz of David Hesidenz Appraisals in Pennsylvania. Hesidenz suggests that you supply the appraiser with a page or two containing the exact street address of your home, the number of bedrooms and bathrooms and the square footage and lot size. Then make a list of any improvements you’ve made to the home and the date they were finished. Some of these improvements may include a new roof, new windows, upgraded plumbing or electrical work, and room additions.

Source: PocketSense.com – Bridget Kelly

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The Least Discussed Reason Wannabe Investors Don’t Take Action (& How to Overcome It!)

I’ve never fully understood the obsession with figuring out why other people fail to take action when it comes to real estate investing.

It seems like a lot of people genuinely look for justification not to start.

“If Jimmy didn’t start because he had no money, and I have no money, then I’m justified in not starting yet.”

This is entirely the wrong mentality! Why not focus your energy on figuring out why successful people DID take action?

Regardless, I’m going to tell you the real reason some who are interested in investing never take action. It’s something that isn’t discussed very often.

But first, here are some of the most stereotypical excuses.

Why Some Wannabes Never Take Action: The Typical Responses

Don’t get me wrong. All of these excuses are pretty understandable—yet unfortunate.

Let’s briefly discuss each.

Fear

Fear is a beast. And taking the plunge into real estate isn’t easy.

That being said, everybody experienced the feeling of fear when they bought their first property. It may not have been crippling, but it was there. Anyone who tells you they weren’t at least a little scared is probably not being completely honest with you.

This is why it’s important to make decisions based on numbers and bounce the analysis off experienced investors. Don’t bring your emotions into the deal at all.

Emotions are dangerous—leave them out of investing.

Nervous businessman peeking over desk

Lack of Experience

This excuse drives me nuts!

NOBODY had experience before they took action—you gain experience BY taking action!

If this is your excuse, either quit or work under somebody for free to gain the experience you so crave.

This is a silly excuse to me. Just take action!

No Money

This is an understandable excuse and probably the most common.

I have been investing since 2015. To date, I have never paid more than 6 percent down on a real estate transaction.

Leverage is wonderful. It is risky but wonderful. I house hacked my first duplex for less money than most of my cars have cost.

Theoretically, you could sell your car and buy a house.

You can overcome the “no money” issue by utilizing FHA loans, VA loans (if qualified), seller financing, purchasing subject to the existing mortgage, partnering, other people’s money, hard money lenders, etc.

My point is this: While having no money is scary, if you have knowledge and time, you can invest in real estate!

male showing empty pockets implying moneyless

Not Enough Time

YOU HAVE THE SAME AMOUNT OF TIME AS EVERYONE ELSE!

Set your priorities, and either make REI a priority or find someone with time and provide money/knowledge!

This is a cop-out excuse.

I purchased a property while spending six weeks on a remote island and only having access to the internet through my cell phone a couple of times.

Figure it out.

Why Some Wannabes Never Take Action: The Least Discussed Reason

We have ruled out the most common excuses. And yes, they are just excuses.

Now let’s talk about the least discussed reason some wannabes fail to take action (and how to avoid it).

You’re LAZY!

That’s it.

The number one reason some people fail to take action is the amount of work required.

This excuse is behind the time, fear, and experience excuses. You know it’s going to take a lot of time and energy to make this happen. You’re afraid because it takes a lot of work, and you don’t fully understand what to expect. You don’t have experience because you haven’t done it yet.

In the military, there is a common phrase we use in combat: “Complacency kills.”

Although the meaning is a little different when applied to real estate, the message is the same. It’s not the one morning you sleep in or the one day you get nothing done that hurts you. It’s not the hassle you avoided today or the excuse you used today in order to procrastinate.

However, if you ALWAYS avoid hassle, procrastinate, and sleep in, you will never succeed.

Sloth is one of the seven deadly sins. If you want to succeed as a real estate investor, or in life in general, you need to kill the urge to be complacent—before it kills you!

Related: Getting Started In Any New Real Estate Business

Start Investing NOW: Here’s How

Goals

The first step to conquering the excuse of laziness is to sit down and set goals.

You need to long-, medium-, and short-term goals. These goals should be similar to a five-year plan, yearly goals, monthly goals, and weekly goals.

Think of the cartoons you watched as a kid where a rider would tie a carrot to the end of a long pole and dangle it in front of a stubborn horse/mule in order to motivate them to move forward.

Goals are the carrot you dangle in front of yourself.

No matter how driven you are (or aren’t), there will be days when you lack the motivation to do any work. At these times, it is important to have a carrot (goals) to chase in order to stay on track!

Pensive young entrepreneur looking at laptop screen and drinking coffee at table in cafe

M.I.N.S.

Some of you may have noticed I didn’t say you need daily goals. You may have even been bothered by this and decided to tune out (haha).

The reason I didn’t mention daily goals is that, while they serve a purpose, I prefer to think in terms of the “most important next step.” This is sometimes called M.I.N.S.

M.I.N.S. should be determined every night before you go to sleep. This will ensure you knock out the most important next step toward your weekly goal(s) first thing the next morning.

If you can knock out the most important next step toward your goal every morning, it will snowball into accomplishing your goals quickly!

The key is determining what this step is the night prior, and then doing it first thing the next morning!

Accountability

Most of the actions you take to achieve your goals will not be fun or easy.

It’s easy to find “busy work” to use as a distraction. This busy work is more fun and often easier than accomplishing the most important next step would be.

Since we are all human (I think), it’s safe to assume that you will have days, weeks, months, or even years when you fail to do the difficult task(s) that need to get done.

This is human nature and a hard habit to break. And this is why accountability is crucial to your success as an investor.

You need to find some people who are on the same path as you, as well as a few who are farther down that path, and get together to grow and hold each other accountable!

A common way to do this is through mastermind groups. A mastermind group is comprised of people who have lofty goals for life and are determined to achieve these goals. They meet regularly, whether in person or on conference calls, and talk through their struggles, successes, and so on in order to help each other progress.

These mastermind groups are great for helping you grow and holding you accountable to achieve more!

Mans Hand Reaching For Red Ladder Leading To A Blue Sky

Systems

Real estate investing isn’t easy at first (most things aren’t).

Imagine REI as a large flywheel, and every step you take gets it to move just a little bit faster. As the flywheel speeds up, it takes less and less effort to keep it moving.

This is the power of systems!

Every time you complete a task, remember how you did it. If you complete that task a second time, create a system for streamlining the process. The simpler you can make tasks in real estate, the easier it becomes to buy homes!

For example, one of my favorite systems to date is my Google Drive folder for lenders. Every time I have applied for a loan, I needed to provide the previous two years’ tax returns, W-2s, bank statements, photo IDs, verifiable income, etc.

I created a folder titled “Lender Documents” in Google Drive that has all of this information in it, separated by tax year.

Now, when I apply for a loan, I simply email a link to this folder to my lender and wait for them to tell me if they need any more documentation (which is minimal, if any)!

Talk about streamlining the lending process.

Don’t forget to create systems as you journey down the path of real estate investing. It will make your life so much easier!

Use Laziness to Your Advantage

Lazy people will often find the easiest way to accomplish a task. Use this mentality to succeed as a real estate investor—without losing all of your hair.

Real estate investing isn’t easy, but it is extremely rewarding.

Embrace your laziness, and use the safeguards above to continually attack your goals.

Take the time to put in a lot of work now. You will be happy that you did!

Source: BiggerPockets.com by

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Listen, 2008 Is Never Happening Again—Invest NOW for Best Results

The real estate crash in 2008 was unique in that we saw a very fragmented industry that was burdened by large-scale systemic risk. This is not what usually happens.

It’s important to realize this situation would not be easy to duplicate; it was sort of a perfect storm of bad circumstances. Since then, we have implemented things to protect us from a similar event. Things like Dodd-Frank, better lending fundamentals, and a lot of growth left to capitalize on all make the possibility of another crash similar to 2008’s very unlikely.

Real estate is usually market-specific, so this isn’t to say prices can’t drop in the near future in your market. But it does imply that those waiting around for the next nationwide crash are going to watch a lot of success pass them by in the meantime.

This is going to frustrate many people who see inflated prices and increased competition making it a harder time to buy. However, the truth is real estate is going to be a good investment for a long time going forward. Now might not be as lucrative of a time to get in as it was in 2012, but investing now is likely better than getting in five years from now. In 20 years, it won’t make any difference at all.

Waiting for the perfect moment costs a lot more in experience and opportunity than the potential downsides could produce. As the saying goes: “Time in the market is better than timing the market.”

red down arrow on black and white grid indicating stock loss

When Will the Next Crash Happen?

In 2016, I bought my first rental property. At the time, there were an abundance of threads on BiggerPockets that said, “Don’t buy now. We are about to see a crash.”

Luckily I ignored this noise and bought anyway. In the last three years, I’ve done very well—despite the supposedly imminent danger. Grant Cardone had a bunch of content around this time claiming he was preparing for a crash, as well, but he’s done quite a bit of business since then.

The BiggerPockets forums now reflect much of the same message as a few years ago. Don’t buy! There will be a crash soon!

Maybe those members who are spreading this sentiment are right; maybe they are wrong. Either way, I find that this message seems to have a single constant underlying motive: jealousy.

I really think much of this mindset is coming from people who are actively hoping the market will downturn so they can buy in. They are salty they missed the last big opportunity.

I’m not mad about that. In fact, I’m salty I missed the last downturn, as well! I would have much rather purchased in 2012 than 2016. But unless I create a time machine to go back to 2010 and buy assets, I’m sunk. Fussing about it is never a helpful strategy.

While another recession of some sort is inevitable, no one really knows what it will look like or when it will happen. It most likely will NOT be a repeat of last time though. So waiting for the bottom to drop out of real estate is a mistake, because you’ll be waiting forever while not learning or building experience along the way.

If you don’t have the confidence to buy in an upmarket, you don’t stand a chance to pull the trigger in the down market.

Plan Around Fundamentals—Not Luck

Over the last eight years, many BiggerPockets members (myself included) have bought low and then ridden the wave upward, making money on the sheer luck of being in a good industry at the right time. This is not a sustainable strategy for success in the long term, but it doesn’t mean that real estate only works when you stand to get outsized gains.

Do you only want to buy real estate because you think you might get lucky with an area that’s rising? Or do you want to buy a profitable asset at a discounted price that is going to make money even through market fluctuations?

Waiting for a theoretical crash is just admitting to the world that you can’t compete unless the market is unusually easy to make money in.

In real estate, you make money when you buy. This holds true no matter where we are in the market cycle.

So instead of waiting for your market to downturn, find great deals that are going to make you money no matter what. Have good exit strategies in place, and pass on deals that don’t make sense.

Businessman forecasting a crystal ball

There are two kinds of mania surrounding real estate right now:

  1. Those who are so excited about real estate that they are willing to spend anything to get into an asset and are therefore blind to risk.
  2. Those who are so sure a crash is coming that they are sitting on the sidelines.

Neither of these two parties is going to make as much money as they could. They are too busy making decisions based on emotional hyperbole, anecdotes, and luck instead of solid financial analysis.

Focus on the fundamentals, and you can make money in any market.

Accept That Real Estate Is a Long Play

Why does everyone seem to be playing a two-year game with a 30-year investment? Even if you’re doing fix and flips, there is a long road of education and understanding that goes into this business.

Certainly there are outlier success stories of people doing 20 deals in their first year. However, it’s disingenuous to assume that is universally possible.

In many cases, chasing unrealistic gains gets people into more trouble when ambition outruns reality. Real estate is a slow business filled with complex transactions and ill-liquid assets. Even most superstars go slow!

It’s a patience game that relies on compounding. Trying to force outsized gains at the command of one’s ego is dangerous.

The long game of real estate levels out lots of short-term instability. You need cash reserves to weather economic storms, and you need to buy based on good fundamentals.

You will absolutely experience drops in the future; you can’t avoid them completely. This is why it’s best to get in now (at the right price) and start making money—money that will help you get through a recession.

Even if there were a crash tomorrow, it would be a long time before you felt comfortable at the bottom. The last bottom was in 2009, but people didn’t start buying until 2012 or so.

That’s three years later! Do you really want to wait that long to get started—just because you can’t buy at the discount the last crash offered?

You missed the crash. So what?!

Stop waiting around, nostalgically hoping that opportunity will return. Instead, enter the marketplace. Grab the opportunities that are available right now!

Source: BloggerPockets.com – by

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What Size Storage Unit Do I Need? And Other Questions to Ask When Picking a Facility

If you need a storage unit, there are many questions you should ask before you pick one. For example: What size unit do you need? How much does a storage unit cost?

Choosing a storage unit may seem daunting at first, but if you’ve reached that point where you’ve run out of space in your home for all of your belongings, it’s time to dive in. Here are some questions to ask to ensure you find the right storage unit for you.

What size storage unit do I need?

Before you begin your search for the right unit, make a list of all the items you’ll be storing. This way you can save time by focusing only on storage facilities that meet your needs in terms of size.

Storage units generally range in size from 5-by-5 to 10-by-25 feet, and some may be even larger. Wondering which size is best for you? Picture these:

  • A 5-by-5 unit is the size of a small closet and could hold several small- to medium-size boxes, a dresser, or a single bed.
  • A 5-by-10 unit is comparable to a walk-in closet, which could hold larger furnishings such as a queen-size bed or couch.
  • A 10-by-10 unit could hold two bedrooms’ worth of furnishings.
  • A 10-by-20 unit is equal to a standard one-car garage, and could hold the contents of a multiple-bedroom house.

Prefer not to climb over mountains of tubs and boxes to track down something stashed at the far reaches of that space? Choose a unit that allows entry on either side.

“How many times do you put something in the back of a closet only to find that you need it? The same thing happens with a storage unit,” explains Willie Dvorak, owner of AAA Storage in Mellette, SD. “Ensuring you can access your goodies from both sides of the unit makes it that much easier to find what you need quickly and safely.”

How much does a storage unit cost?

Unless you’re filthy rich (and then you probably have a big house with ample storage), you’ll want to know how much this unit will set you back each month. CostHelper.com breaks down how much you can expect to pay on average:

  • A 5-by-5 unit costs about $40 to $50 a month.
  • A 10-by-20 unit costs about $95 to $155 a month.
  • A 20-by-20 unit costs about $225 a month.

Is this storage unit easily accessible?

What good is having a storage unit if it’s hard to access, both in terms of its location and its design? Dvorak outlines what to look for when selecting a facility.

“If you can’t get your vehicle close enough to the unit, you’ll be lugging your stuff feet—even yards—in both directions,” he says. “While it may not seem like a long walk as you look at the unit, imagine carrying all of your stuff back and forth all of that way. When you’re storing stuff, every step is a nuisance. And, when you are stressed, you’re more prone to accidents. Turning that rental truck around just adds to the stress. Be sure you can pull up the unit and get your vehicle turned around without any trouble.”

What are the storage facility’s hours?

Once you’ve unloaded your belongings, you still want to know that you can reach them in a hurry should you have the desire.

“It’s hard to predict when you’ll need that hiking gear you haven’t used for years, Grandma’s scrapbook, or that special award you want to show off,” Dvorak notes. “Don’t miss out because you think of it after they’ve locked things up for the night (or weekend). Make sure you can access your stuff 24 hours a day, 7 days a week.”

What’s the payment policy?

Fred Levine, founder of Little Hard Hats, recommends reading all of the fine print of the contract to determine how long the price is guaranteed.

“They routinely get you in, then shortly thereafter, once you’ve moved all your stuff in, they sometimes raise the rates,” he cautions.

“Understanding the payment policy can also help you make decisions about a storage facility,” says Caitlin Hoff of consumersafety.org. “What is the late fee or policy? Some facilities will auction your storage unit if rent is not paid after a certain amount of time. Does your facility allow for online payments? If it doesn’t, do you have to pay in person? Knowing the full extent of the policy can narrow down a list of facilities.”

What type of security is used?

Ask how the storage unit facility is secured. Is there a guard? Video surveillance? Alarms? Is the area well-lit? Also, don’t assume the facility is going to cover damages to your possessions inside the storage unit in case of an accident. Check your homeowners policy, and purchase a rider if necessary.

Is it climate-controlled?

Depending on the items you are looking to store, you might debate whether or not you want a climate-controlled storage unit. A climate-controlled unit is better for items such as appliances or antiques that might be damaged in extreme temperatures.

How are pests handled?

No one wants to find that a family of critters has turned your family heirlooms into their home.

“If you are looking at an outdoor storage unit, you want to ask about pest control,” says Hoff. “Ask if they have had issues with any insects or critters, and find out how they handle these situations.”

Eric Hoffer, president of Hoffer Pest Solutions, suggests doing your own detective work when you preview the facility.

“Overgrown bushes, unkempt landscaping brushing up against the side of the building, and overflowing trash cans are not only a sign that maintenance may not be a priority for a storage facility, but these can be things that attract pests like rodents and roaches close to the building,” he says. “All it takes is a small crack or gap in the wall to allow pests inside.”

If you’re going to the trouble of storing your items for later use, you want to know they’ll be in the best shape possible when you want them. Finding the right facility can make all the difference.

Source: Realtor.com –  | Oct 29, 2018. Liz Alterman is a writer who’s covered a variety of subjects, from personal finance issues for CNBC.com to career advice for The Muse.
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Everything you need to know about CMHC’s First-Time Home Buyer Incentive

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The federal government wants to make home ownership more affordable for young people and to do that it’s introducing the First-Time Home Buyer Incentive (FTHBI) this September. The $1.25 billion program, announced as part of the March federal budget, involves the government buying equity stakes in homes purchased by qualified home buyers, allowing for smaller mortgages that will keep monthly payments lower.

But how will the plan work? Below, we break down all the key details and take a look at who this new program is right for.

How the FTHBI works

The program will be administered by Canada’s housing agency, Canada Mortgage and Housing Corp. (CMHC), which will pay 5% of the purchase price for an existing home, and up to 10% for the value of a new home, in exchange for an equity stake. Once the homeowner sells, they’re obligated to repay the CMHC.

The fine print includes the following:

  • To qualify, you must be a first-time home buyer.
  • Buyers must have a down payment of at least 5% of the total purchase price, up to 20%.
  • The household’s income must be under $120,000, and the mortgage and incentive amount together can’t be more than four times the household income.
  • Only insured mortgages will be eligible, meaning this will be restricted to those with a down payment worth less than 20% of the purchase price.
  • Buyers will not be exempt from federal “stress test” regulations (a mandatory mortgage qualification using the five-year benchmark rate published by the Bank of Canada or the customer’s mortgage interest rate plus 2%)

Who is this for?

The program is for purchasers looking for a starter home but aren’t able to afford the monthly payments needed for a mortgage below $500,000. To qualify for mortgages in the $400,000 – $500,000 range, the household income would have to be close to six figures. Buyers would have to be willing to give up at least 5% of the value of their home to the federal government in exchange for lower monthly payments.

As an example, a couple earning up to the household income cap of $120,000 with a down payment of 5% on a new home would be entitled to an additional $48,000 provided by CMHC, as below:

Couple earning $120,000
$480,000 total purchase
-$24,000 down payment
-$48,000 matched by CMHC (10% for a new home)
= $408,000 mortgage

As both the household income and total purchase price are capped under the program, it’s worth noting that buyers with good credit and low debt might actually be able to borrow more money than the FTHBI would allow.

In this scenario, “the program forces you to buy less home than you otherwise would be able to. Whether consumers are disciplined enough to take part of that or not is the real question,” says Paul Taylor, president and CEO of Mortgage Professionals of Canada.

Buyers in the program will also want to consider the future value of their home over time. Is the neighborhood likely to increase in value? With a 5-10% equity stake in the home, CMHC will be along for the ride, both in the case of depreciation or appreciated value of the home.

“Vancouver North Shore is a great example. Now, it’s very much an outlier but if you bought the home in 1986 for $250,000 it’s probably worth $4 million now,” says Taylor.

Comparing markets

The most expensive home you can buy would be about $565,000 a government official told the CBC, which all but disqualifies purchases of detached homes or upscale condos in downtown Vancouver and Toronto. For example, the average home price in the Greater Toronto Area as of May 2019 was $838,540, according to the Toronto Real Estate Board.

CMHC acknowledged earlier this year that the average home in these markets won’t be within reach.

“It may not be a condo in Yaletown or a house in Riverdale, but there are options in both metropolitan areas to accommodate this program,” CMHC said in a press release in April. “In fact, around 23% of transactions in Toronto are for homes under $500,000 and 10% in Vancouver.”

This means that potential buyers will want to be comfortable living in the outer suburbs like Langley or Surrey in Vancouver, or Brampton and Mississauga in Toronto.

Recent residential listings for $472,000 (the average price for a home in Canada) 
*Compiled using listings found on Realtor.ca during the week of May 26th

Downtown Toronto Less than 30 listings
Downtown Vancouver Less than 100 listings
Calgary More than 600 listings
Winnipeg More than 2,000 listings

The program would seem to favour first-time buyers in smaller cities across Canada, at least when comparing options for buyers that tend to want to live in large cities downtown.

What you get for $490,000-$505,000

While this program can get you property up to $565,000 if you put the maximum down payment allowed for an insured mortgage (about 19.99%), we expect many who use this program will have the minimum 5% down payment and are looking to get into the property market sooner with help from the CMHC.

Based on that idea, we’ve compiled a look at some properties you can get in four major housing markets in Canada in the $490,000 to $505,000 price range. Take a look.

In Toronto: No houses listed but one-bedroom condos are available, typically 600-1,000 sq feet. Condos have more rooms and additional bathrooms as you get away from the city core. There is almost no supply below $300,000.

Here’s an example of what you might be able to get in the downtown core (one bedroom) in that price range.

 

 

In Vancouver: No houses listed but one-bedroom condos are available, typically 600-1,000 sq feet. More rooms and additional bathrooms as you get away from the city core.

Here’s an example of what you might be able to get (one bedroom).

In Calgary: You can find listings for two-bedroom bungalow houses downtown, along with two-bedroom condos over 900 square feet.

Here’s an example.

In Winnipeg: Limited supply at this price range. Detached houses are available however, with two-plus stories and multiple rooms. Large condos over 1,000 sq feet are available closer to a $300,00 price point.

Here’s an example.

Listing photos courtesy of Realtor.ca.

Source – LowestRates.ca –  Mike Winters on June 17, 2019

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It’s going to be hard to own a home in Toronto if you are not part of the 10%: report

In Toronto, you need more than $160,000 to buy a house; meanwhile, in Regina, the most affordable city, you only need $70,000

The Canadian dream of home ownership is slipping away: Tim Hudak5:17

Canadians looking for a home in major cities will likely have to look elsewhere, unless they count themselves among the country’s richest.

New analysis from RateSupermarket.ca shows that only those in the top income bracket can afford to buy homes in many of Canada’s major cities like Toronto, Vancouver and Montreal.

It cites a recent study from Zoocasa, a Canadian real estate website, which places the benchmark prices for Toronto at $873,100 and Vancouver at $1,441,000. Only the top 10 per cent can afford to live in Toronto and only the top 1 per cent can live in Vancouver.

Jacob Black, managing editor of RateSupermarket.ca, had this advice for potential homeowners: “Step one is to have a realistic idea of what you can spend. Step two is look outside the box that you might have looked in before,” said Black. “We’ve seen a trend develop in terms of cohabitation, multi-family homes, looking at options like condos, smaller apartments outside of the major city area.”

The RateSupermarket analysis compares these benchmark prices against the household income needed in order to afford a home in 12 Canadian citiesincluding Victoria, Hamilton, Kitchener-Waterloo, Calgary, Ottawa-Gatineau, London, Edmonton, Saskatoon and Regina.

RateSupermarket’s criteria for determining household income was to assume a 3.25 per cent five-year fixed mortgage rate, $10,000 in debt, a monthly lease vehicle payment of $300, a down payment of 20 per cent, and amortization of 25 years.

Using these figures, one’s household income in Vancouver would need to be above $240,000 in order to afford a home. In Toronto, a household would need more than $160,000.

A surprising result for Black was the difference between Toronto and Hamilton — a city that’s 70 kilometres away, which requires a more ‘reasonable’ $120,000 household income for a $630,000 home.

“I think that really highlights that there are opportunities in thriving vibrant areas,” said Black. “It’s just not necessarily in the same traditional areas you’ve been looking in or that you’d be expecting.”

This seemingly insurmountable unaffordability applies to starter homes as well. With these homes in Vancouver, only income earners in the top 25 per cent can afford them. The benchmark unit price is $656,900. Toronto is not far behind at $522,300.

Above all else, Black stresses a wise use of resources when it comes to the property market.

“I don’t see (the market) reversing. I don’t see a correction, but I think it’s important people do what they can with the resources they’ve got,” said Black.

Regina emerged as the most affordable city in the study, with a benchmark price of a home of $275,900 and a minimum household income of $70,000.

Here’s the full list:

  • Vancouver: House price: $1,441,000. Household income needed: $240,000
  • Toronto: House price: $873,100. Household income needed: $160,000
  • Victoria: House price: $741,000. Household income needed: $140,000
  • Hamilton: House price: $630,000. Household income needed: $120,000
  • Kitchener-Waterloo: House price: $523,720. Household income needed: $110,000
  • Calgary: House price: $467,600. Household income needed: $100,000.
  • Ottawa-Gatineau: House price: $444,500. Household income needed: $90,000
  • London: House price: $426,236. Household income needed: $90,000
  • Montreal: House price: $375,000. Household income needed: $80,000
  • Edmonton: House price: $372,100. Household income needed: $80,000
  • Saskatoon: House price: $301,900. Household income needed: $70,000
  • Regina: House price: $275,900. Household income needed: $70,000
Source: Financial Post Staff Nicholas Sokic May 30, 2019

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