Tag Archives: investors

Buyers of new condos get twice the space in Waterloo as in Toronto

Cities west of GTA gain ‘notable traction’ in sales in first six months

New condominium buyers deterred by soaring Toronto prices are apparently venturing further afield to Hamilton, Kitchener and Waterloo, which offer more bang for their buck and the promise of new transit links that will improve accessibility.

Sales of new condominiums in these areas gained “notable traction” in the first six months of the year as regional economic activity picked up and Metrolinx moved forward with its $43-billion expansion plans, according to Altus Group, a market intelligence firm.

In Kitchener, sales between January and June rose to 806 units, up 93 per cent from the same period a year earlier, while 262 units were sold in Waterloo, a 51-per-cent jump. Though sales fell more than 20 per cent in Hamilton to 360 units, the city’s condominium market remains one of the most active outside Toronto, suggesting a continued flight to affordability, said Ray Wong, vice-president of data operations at Altus.

 

“The amount of demand in downtown Toronto, especially in the office market, has been well known for the last number of years and with that, demand for housing has steadily ratcheted up,” he said. “As these outlying areas are developed with more infrastructure in terms of restaurants and retail, it’s made them a lot more attractive.”

Those areas offer another powerful draw: the chance to secure a much larger space with a limited budget.

A buyer in Toronto with $500,000 to spend would likely have to settle for a one-bedroom unit of about 521 square feet, said Kruti Desai, manager of national research insights at Altus. But the same budget in Waterloo would secure a two-bedroom unit of 967 square feet.

Those in search of even more space could consider Barrie, Brantford, Cambridge, Guelph, Kitchener and St. Catharines, where $500,000 will buy a two- or three-bedroom unit with more than 1,000 square feet of space, she said.

“Individuals can get more bang for their buck when looking outside the Toronto market,” Desai said, adding that Hamilton, Kitchener and Waterloo are seeing the greatest amount of activity.

Momentum in Kitchener-Waterloo was linked both to affordability and to the economic growth kickstarted by Kitchener’s innovation hub and Waterloo’s Idea Quarter, a growing cluster of startup and technology companies operating in former BlackBerry Ltd. buildings.

Located close to the University of Waterloo campus and a future light-rail station, the Idea Quarter has attracted a range of firms — including OpenText Corp. and Auvik Networks Inc. — that “are now successfully competing for talent against Greater Toronto Area companies, helping stimulate condominium development,” Altus said in its report.

Hamilton, meanwhile, is expected to remain an attractive place to live for professionals working in Toronto, especially those who can take advantage of flexible working arrangements, Altus said.

A spike in new condominium sales in the city during the first three months of the year was credited to Television City Phase I, a 30-storey tower released in May 2017 that has since sold 80 per cent of the units on offer. Phase Two of the project, released in March, had sold 50 per cent of its units by the end of the second quarter.

Source: Financial Post – Naomi Powell August 8, 2018

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OSFI to take new measures to address equity-based mortgage loans

The federal regulator plans to address uninsured mortgages granted only on the equity of the property and loans where the lender didn’t apply other ‘prudent underwriting principles’

OSFI is taking measures to tighten the scrutiny of mortgage lending practices.THE CANADIAN PRESS/Sean Kilpatrick

A federal regulator says it will have to take further action to address mortgage approvals by Canadian banks that still depend too much on the amount of equity in a home, and not enough on whether loans can actually be paid back.

The Office of the Superintendent of Financial Institutions telegraphed the move in an update released Monday on the effectiveness of new underwriting rules it announced last year. Those rules included a new “stress test” for uninsured mortgages, where a borrower makes a down payment of 20 per cent or more.

According to OSFI’s October newsletter, the tweaks were needed after the regulator identified possible trouble spots caused by high levels of household debt and “imbalances” in some real estate markets that could have added more risk for banks.

There have been improvements in the quality of new mortgage loans since the revised B-20 guidelines came into effect this past January, OSFI says, “including higher average credit scores and lower average loan-to-value at mortgage origination.”

But even though OSFI said the new rules “are having the desired effect of helping to keep Canada’s financial system strong and resilient,” the regulator claims more work is needed.

“Although reduced, there continues to be evidence of mortgage approvals that over rely on the equity in the property (at the expense of assessing the borrower’s ability to repay the loan),” the newsletter said. “OSFI will be taking steps to ensure this sort of equity lending ceases.”

OSFI spokeswoman Annik Faucher told the Financial Post in an email that the regulator was referring to uninsured mortgages that were granted based only on the equity of the property — the difference between a property’s value and the amount remaining on a borrower’s mortgage for the property — as well as loans where the lender did not necessarily apply the other “prudent underwriting principles” laid out in the B-20 guideline, such as those aimed at proper documentation of income.

“Sound underwriting helps protect lenders and borrowers and supports financial system resilience,” Faucher said. “Having a larger amount of equity in a property does not mean sound underwriting practices and borrower due diligence do not apply.”

She added that OSFI “has a number of tools in its supervisory toolkit, and when we identify potential issues, we intervene and require financial institutions to implement remedial measures that are commensurate to the risk profile of the institution.”

OSFI said in its October newsletter that there are signs “that fewer mortgages are being approved for highly indebted or over-leveraged individuals.” According to the regulator, the amount of uninsured mortgage originations with loan amounts greater than 4.5 times the borrower’s income has dropped from 20 per cent from April to July of 2017 to 14 per cent for the same period of 2018.

In general, the Canadian housing market has cooled following intervention by regulators and various governments. But OSFI also said it realizes that its tighter underwriting rules might cause some would-be homeowners to use less-than-truthful means to obtain mortgages.

“OSFI recognizes that tightened underwriting standards may increase the incentive for some borrowers to misrepresent their income, while it has also become easier to create authentic-looking false documents,” the newsletter said. “Given that the revised B-20 calls for more consistent application of income verification processes, financial institutions need to be even more vigilant in their efforts to detect and prevent income misrepresentation. This is particularly important for financial institutions that depend on third-party distribution channels.”

Source: Financial Post – Geoff Zochodne October 9, 2018

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5 Things I Learned in My First Year Owning a Rental Property

I was determined to own property, in some form. Sadly, I couldn’t afford anything in my home city of Toronto, so I decided to buy a property in a neighbouring city and rent it out until, or if, I was ready to move.

After looking at several possibilities, I decided to buy in Hamilton because of transit options, affordable housing prices and a low vacancy rate.

I found a cute bungalow divided in two units. After all the paperwork went through, I found great tenants.

It’s now one year later, and I’ve learned a lot. Here are five lessons I learned:

  1. Plan for Extra Costs

I needed way more money than I thought in order to buy and manage a rental property. The closing costs alone were thousands of dollars in cash. In Ontario, closing costs include land transfer tax, legal fees, a home inspection, pre-paid property tax and PST on Canada Mortgage and Housing Corporation insurance — if you put less than 20 per cent down. My closing costs totalled $6,000.

In the first year, I spent $2,700 on maintenance, and that’s for a small, fully-renovated house. Just recently, a windstorm knocked shingles off my roof. Totally unexpected and $500 to fix.

Budget for all anticipated expenses, and then add a few thousand dollars to be safe.

  1. Figure Out the Rent

How do you know if you have enough money to be a landlord? Easy: use a spreadsheet. You need to know exactly how much your house costs to run so that you can charge sufficient rent.

And how embarrassing would it be if you forgot whether a tenant paid you first and last months’ rent? Think of an investment property like a business, and keep your books accordingly.

  1. Don’t Forget Tax Time

I was shocked when I had to pay $1,500 this April to the Canada Revenue Agency (CRA). The CRA taxes rental income at your marginal tax rate. I now have an automated monthly savings set up to set aside tax money and avoid last-minute scrambling.

  1. Check Your Tenant’s Credit Worthiness

What you need as a landlord is a tenant who pays their rent promptly each month. A credit score can tell you if a person has a history of paying their lenders on time. Ask for a credit report and employment letter to confirm that your tenant can pay their rent each month.

  1. To Include Utilities or Not?

I decided to include utilities. I have two units but one meter, and I couldn’t figure out a way for each tenant to split it fairly without hassle. So I called the utility companies, asked them for the monthly average of the previous year, added 30 per cent, and included it in the rent.

You can also let the tenants pay utilities themselves. Because electric and gas are so expensive in Ontario, you don’t want to be on the hook unless you have to be. It’s a lot easier for tenants to leave the lights on when someone else is footing the bill.

A Learning Experience

I learned that owning an investment property is much like having a child. Make sure you can comfortably afford it before you start trying, and if it’s exhausting you, consider hiring a nanny—that is, a property management company.

 

Source: Tangerine.ca – Written by Danielle Kubes Wednesday, July 11th, 2018

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Flipping Houses for Profit – Tips for How to Flip a House

Several years ago, I became friends with a young woman who was just getting started in real estate. She became a real estate agent, learned about renovation, and made a ton of money flipping her first house. Thanks to some luck and some serious persistence on her part, she ended up on an HGTV show about flipping houses, where she appeared in several episodes as part of an Atlanta investor team.

The show made it look simple: find a cheap home for sale, put some money and sweat equity into fixing it up, then resell it for a huge profit. So I asked her if flipping houses was as easy as it looked on TV.

She laughed and shook her head. “We make it look easy,” she said. “But it’s risky, backbreaking work. It can be fun, but if you don’t know what you’re doing, you’re sunk.”

So how do you know if you’re up to the challenge?

What Is House Flipping?

House flipping is when real estate investors buy homes, usually at auction, and then resell them at a profit months down the road. Can you make money doing this? Yes. Can you make a lot of money doing this? Yes. But you can also lose everything you own if you make a bad decision.

Risk vs. Reward

Imagine buying a house for $150,000, investing another $25,000 in renovations, and then…nothing. No one wants to buy it. You now have to pay for your own rent or mortgage, plus the mortgage for your flip property, as well as utilities, home insurance, and property taxes. You might also have to pay for home staging and realtor fees when the house finally sells. All of this cuts into your potential profit.

According to CNBC, house flipping is the most popular it’s been in a decade, yet the average return for flippers is lower than in previous years. Thanks to a hot housing market that’s raising prices, low inventory, and soaring rents (which drive even more people into home buying), it’s getting harder to make huge profits.

The average gross profit on a house flip during the third quarter of 2017 was $66,448, according to ATTOM Data Solutions. That’s more than many people make in a year, and it lures plenty of newcomers who dream of quitting their day jobs and becoming full-time investors. However, the investors making this much money really know what they’re doing — and even they still go bust sometimes.

RealtyTrac found that in 2016, 12% of flipped homes sold for break-even or at a loss before all expenses. In 28% of flips, the gross profit was less than 20% of the purchase price. According to RealtyTrac senior vice president Daren Blomquist, 20% is the minimum profit you need to at least account for remodeling and other carrying costs.

House Flipping Requirements

If you’re still reading, it means you’re relatively unfazed by the high risks of house flipping. Here’s what you need to get started.

Great Credit

You can’t get into house flipping with lousy credit, end of story. Unless you have enough cash to pay for a home and all necessary renovations, you’ll need some kind of loan. And lending standards are tighter than they used to be, especially if you want a loan for a high-risk house flip.

Your first step is to check your credit report to find out your score. Federal law allows you a free credit report from each of the three national credit reporting companies every 12 months, so this won’t cost you anything. You can get your free credit report from AnnualCreditReport.com or by calling 1-877-322-8228.

If you don’t have great credit, it’s time to start building a good credit score now. Pay your bills on time, pay down your debt, and keep your credit card balances low. There are plenty of other ways to improve your credit score, so take the time to do everything you can. The higher your credit score, the better interest rate you’ll get on a home loan. This can save you thousands when you start house flipping, freeing up more of your money to invest in the house itself.

Last, make sure you know what hurts your credit score. For example, taking out too many credit cards at once lowers your score. You don’t want to do anything to hurt your score in the months before you apply for a loan.

Plenty of Cash

If you want to flip a house, you need cash. New investors get into financial trouble when they buy a home without a sizable down payment, then use credit cards to pay for home improvements and renovations. If the house doesn’t sell quickly, or if renovations cost more than expected, suddenly the investor is in way over their head.

Don’t be that guy. If you want to flip successfully, you need plenty of cash on hand. Most traditional lenders require a down payment of 25%, and traditional lenders are where you’ll get the best rate. When you have the cash to cover a down payment, you don’t have to pay private mortgage insurance, or PMI. Most PMI costs between 0.5% and 5% of the loan, so having to pay this each month can really cut into your profits.

Loans for flips also have higher interest rates. According to TIME, most investors take out an interest-only loan, and the average interest rate for this type of loan is 12% to 14%. In comparison, the interest rate for a conventional home loan is typically 4%. The more you can pay in cash, the less interest you’ll incur.

There are several ways to build cash in your savings account. Use an automatic savings plan to make saving money each month effortless. Or find ways to earn extra money on the side and then use this money to build your cash reserves for an investment.

If you’re buying a foreclosure from a bank or through a real estate auction, another option is to take out a home equity line of credit (HELOC), if you qualify. If you have enough in savings and manage to find a bargain-priced home, you can buy the home and then take out a small loan or line of credit to pay for the renovations and other costs.

What Makes a Good Real Estate Investment?

Not every house makes a good flip. Just because a home is selling for a rock-bottom price doesn’t mean you can put money in it and automatically make a fortune. Successful flippers are very discerning about the homes they choose to invest in. Here’s what should you look for in a potential house flip.

Great Location

Expert house flippers can’t stress this enough. Find a home in a desirable neighborhood or one that’s on its way up. You can improve a house all you want, but it’s next to impossible to improve the personality and safety of a neighborhood on your own.

Start by researching local cities and neighborhoods. Look for areas with rising real estate sales, employment growth, and other indications the town is thriving. Avoid neighborhoods with a high number of homes for sale; this could be a sign of a depressed local economy or a sign that neighbors are leaving due to crime or development.

Next, research the safety of each neighborhood you’re considering. Homes located in or near high-crime areas will be next to impossible to sell at a profit. Use crime mapping services like Crime Report and Spot Crime to find out what’s happening in the neighborhood. You’ll also want to check the National Sex Offender Public Website to see if any registered sex offenders live near the home.

According to Fortune, in 2016, flippers in the following cities saw gross profits of 80% or more of the price they paid for their homes:

  • East Stroudsburg, Pennsylvania (212.1%)
  • Reading, Pennsylvania (136.4%)
  • Pittsburgh, Pennsylvania (126.8%)
  • Flint, Michigan (105.8%)
  • New Haven, Connecticut (104.8%)
  • Philadelphia, Pennsylvania (103.7%)
  • New Orleans, Louisiana (97.6%)
  • Cincinnati, Ohio (88.5%)
  • Buffalo, New York (85.1%)
  • Cleveland, Ohio (83.8%)
  • Jacksonville, Florida (81.8%)
  • Baltimore, Maryland (80.8%)

That said, there are also some markets that show signs of over-investment. This means inventory is so low and demand is so high that flippers are paying above-market prices for homes, which can drastically reduce net profit. According to Fortune, these ultra-hot markets include:

  • San Antonio, Texas
  • Austin, Texas
  • Salt Lake City, Utah
  • Naples, Florida
  • Dallas, Texas
  • San Jose, California

If you’ve found an affordable home in a neighborhood that’s on its way up, your next step is to research the local schools. Homes in good school systems sell faster, and command higher prices, than homes in mediocre or poor school systems. Use websites like GreatSchoolsSchoolDigger, and Niche to see rankings and reviews of local schools.

When considering an investment home’s location, you also need to think about its proximity to your primary residence. Remember, you’ll be working on this house daily in the weeks and months to come. Don’t invest in a house too far away from where you live or work; you’ll spend more money on gas and it will take longer to fix up.

Sound Condition and the Right Renovations

If you’ve ever done a home renovation project, you know some nasty surprises can be lurking just below the surface. And nasty surprises like black mold or a cracked foundation can ruin you financially.

Look for structurally sound homes, especially if you’re considering buying an older home. You may not have the opportunity to have a home inspected, especially if you buy it at a real estate auction. So you need to learn what to look for or bring someone knowledgeable about building, electric, and plumbing to look at the home with you and determine if it’s a good buy.

Focus on homes that only need some quick updates to resell.  Refinishing kitchen cabinets, adding new hardware, fixing up the yard, and updating paint and carpeting are all relatively inexpensive projects that can transform a home.

What should you avoid? A house that has mold, needs a roof replacement, or needs rewiring will require some serious time and cash to update and sell. Make sure you know which updates and repairs you can afford to make, which repairs you can’t afford, and which home improvements will increase the selling price of the house. Bear in mind that some home improvement projects can decrease resale value.

When you estimate the cost of any job, experts advise adding 20% to the final total as it will always cost more than you think it will.

Last, when considering a home, don’t forget to factor in the cost of building permits. These can cost anywhere from a few hundred up to several thousand dollars, depending on the type of work involved and the city you’re in. Not accounting for permit costs is a rookie mistake that can quickly ruin your renovation budget.

Market Value

Make sure the price of the home is below its value on the local market. Try to buy the worst house in a great neighborhood, versus the best house in a lousy neighborhood. The worst house in a great neighborhood has nowhere to go but up in value, due to the value of the other homes in the area.

Although you can search the web and see millions of foreclosed homes for sale, never buy a home without seeing it in person. This is the biggest mistake new flippers make. Keep in mind that an online photo gallery only tells part of the story. Out-of-date photos, awful neighborhoods, and black mold are just a few of the horror stories of foreclosed homes found online. Always investigate a property yourself before you decide to buy.

When you buy a home to flip, it’s important not to over-value the home by investing too much in renovation. You want to improve it just enough to make a healthy profit and keep it on par with what’s selling in the neighborhood. If you put too much into the home, you won’t make your money back.

home made from wood with word written market value

How to Flip a House

If flipping were as easy as finding a cheap house online, buying it, and selling it for a profit, we’d all be real estate billionaires. You must educate yourself before you even start looking at homes. Here’s what you need to know.

1. Learn Your Market

First, research your local real estate market. Where do people want to live right now? What kind of house do people want to buy right now? Don’t speculate about up-and-coming neighborhoods. Remember, you want this house sold fast.

2. Understand Your Finance Options

Next, become an expert on home financing options. Will you buy a house with cash? Will you apply for a home mortgage loan or take out a HELOC? Make sure you understand the ins and outs of home financing before you apply for a loan or make an offer on a house. This will allow you to make the best decision for your circumstances.

3. Follow the 70% Rule

Analyze how much house you can afford and how much you can afford to lose on any deal. Experienced flippers follow the 70% rule when analyzing how much they’re willing to pay for a house. This rule states that investors should pay no more than 70% of the after repair value (ARV) of a property minus the cost of the repairs needed.

Let’s say a home’s ARV (or value after necessary repairs) is $200,000, and it needs $30,000 in repairs. The 70% rule states that you should pay no more than $110,000 for this home:

$200,000 (ARV) x 0.70 = $140,000 – $30,000 (repairs) = $110,000

This rule is a good guide to follow when you first get into house flipping as it can help you avoid overpaying for a home.

4. Learn to Negotiate

The less money you invest in a house, the more money you can earn during the flip. Good negotiation strategies will help you effectively haggle with contractors and other workers.

5. Learn How Much Average Projects Cost

Do you know how much it costs to recarpet a 1,000-square-foot home? Rewire a house? Build a deck? Landscape a yard?

Every project is different, but with some experience, you can learn how to estimate the costs of many home renovations and get an idea if a particular home is a good buy or not. One of the best ways to build your experience with this is to do some renovations on your own home. This can also give you a general idea of the type of projects you like to do and which projects you’re better off hiring out.

Know which home improvements increase a home’s value and focus on these projects first. These might include upgrading kitchen appliances, repainting the home’s exterior, installing additional closet storage space, upgrading the deck, and adding green energy technologies.

6. Network with Potential Buyers

Network extensively and talk to potential buyers before you even start looking for a house to flip. Do whatever you can to build relationships with future buyers. If you have a buyer lined up when you purchase an investment home, the home sells as soon as the updates are completed.

You can also save money long-term if you take the time to get your realtor’s license, which will enable you to broker your own deals and avoid paying another agent.

7. Find a Mentor

If you know a successful house flipper, ask if they’d be willing to mentor you. You might even want to consider offering this person an incentive to be your mentor.

For example, ask if they’ll mentor you in exchange for a small percentage of your first successful flip. This way the mentor is motivated to tutor you, and you’ll be sure to get a high-quality education. Offering a financial incentive also enables you to approach experts you don’t know personally since being compensated for their efforts will make them more receptive.

8. Research Listings and Foreclosures

Many websites provide foreclosure listings. Some of the most popular include:

You can also find foreclosure listings through real estate company websites like Re/Max. Under search filters, select the option for “foreclosures.”

Your local newspaper is another source of foreclosure listings. Legitimate auctioneers put notices in the legal section of local papers, and you can usually find their specific listings by visiting their websites.

Another way to find foreclosures is through a bank. Search for a particular bank along with the letters “REO,” which stand for “Real Estate Owned.” This simply means that the homeowner no longer owns the home; the bank does. This search will take you directly to each bank’s foreclosure listings.

Once you find a home you want to buy, check out its background with BuildFax. For $39, BuildFax provides a comprehensive background check on a home. You can review extensive details about the home’s history, including repairs, remodeling, and additions. This can help save you money.

For example, let’s say you want to buy a home whose listing indicates its furnace was replaced 10 years ago. When you run a report on BuildFax, you learn the furnace is closer to 20 years old. You can now go back to the seller and negotiate a much lower price.

9. Make an Offer

Once you find a home you like, it’s time to make an offer. If it’s a great house selling for a low price, you might have competition. For many flippers, flipping is a full-time job, and they will likely know about this house too. You can sneak by the competition by targeting a neighborhood and going door-to-door making offers.

Before you make an offer, make sure you know the highest price you can pay for a house and still make a profit. This includes your estimate for repairs, interest, and taxes. Remember to pad your estimate by 20%. If the homeowner or bank won’t sell to you for this price, walk away. It’s better to keep looking than risk going broke from a bad investment.

10. Find Good Contractors

If you have some solid DIY skills, you might opt to do some or most of the renovations yourself. This can save you a significant amount of money – if you know what you’re doing.

Knowing when to DIY and when to hire a contractor is crucial. You should only tackle projects you’re sure you can do well and on budget. For projects you can’t do on your own, you need to find a great contractor.

A general contractor, or GC, is a building professional who manages the whole renovation project and hires their own subcontractors to do the necessary work. Hiring a GC can be expensive; they’ll add 10% to 20% onto what their subcontractors charge when calculating your final bill. However, they can be worth their weight in gold if you find a great investment opportunity, can’t do the work yourself, and are willing to incur the extra expense.

A good contractor can help you avoid costly renovation mistakes and save you a significant amount of time on a project. This means you can get the house up for sale faster and make fewer mortgage payments. If you’re flipping a house while working a full-time job, hiring a GC is probably a necessity; someone has to be available at the house to oversee the work at least part-time, or the project will never get done.

A general contractor will also be in charge of obtaining the necessary building permits. This means their name will be on every permit, and they’re responsible for making sure the job is done right for every inspection. Make sure to apply for permits as soon as the sale is final to save time and get the process moving.

Start building a network of contractors you trust, including plumbers, electricians, and landscapers. Services like Angie’s ListPorch, and HomeAdvisor can help you find reliable professionals in your area. When you interview a contractor, ask yourself the following questions:

  • Did they arrive on time? Contractors who are habitually late will waste your time and slow up your renovation project.
  • Do they have quality references? Ask for references and call them. If a contractor doesn’t provide references, don’t waste your time dealing with them.
  • Did they reschedule your appointment multiple times? Again, if they have a problem with time management, it will affect your renovation.
  • Are they organized? Disorganization wastes time.
  • Can they supply a professional, accurate bid? Any bid they provide should be detailed and on paper. A verbal quote and a handshake won’t cut it with a flip, at least at the beginning of a relationship when you’re just learning whether you can trust this person.

It’s a smart idea to start building a network of quality contractors before you make an offer on a house. Remember, it can take a long time to find good help, and you don’t want to start this process after you invest in a home and are making two mortgage payments each month.

Keep in mind that most experienced flippers try to have a home bought, renovated, and relisted in 90 days. That’s a quick turnaround time, and for your first few flips, it might be out of reach. But the longer your home is tied up in projects, the less profit you stand to make; that’s why it’s so important to carefully weigh whether you should do the work yourself or hire help. Doing it yourself might save you money upfront, but if it takes you three times longer than a professional, it might not be worth it.

11. Relist and Sell

Many flippers end up listing their homes with a realtor. Realtors eat and sleep real estate, have access to buyers, and can list your house in the Multiple Listing Service (MLS) database. They also know the current market fluctuations and have the skills and network to get you the best price quickly.

You can also choose to sell your house yourself. You’ll save money in realtor fees, but in some markets, you might end up waiting a long time for the house to sell. In addition, listing and showing a house takes time. If you can’t be available every time someone wants to see the house and you don’t want to host open houses, working with a realtor might be the best choice for you.

Final Word

There’s no doubt that flipping houses is a risky business. If you make smart decisions, you can make a lot of money flipping. But you can also lose everything if you make a bad investment.

Before you get into the world of house flipping, do your research to make sure it’s right for you. Books like “The Flipping Blueprint: The Complete Plan for Flipping Houses and Creating Your Real Estate-Investing Business” by Luke Weber can tell you everything you need to know to get started and avoid some rookie mistakes.

Have you ever flipped a house? What was your experience like? What do you wish you’d done differently?

Source: Home Value Plus – By Heather Levin  May 23, 2018  –  

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BALTIMORE MAY SELL HOMES FOR $1 TO REVIVE NEGLECTED NEIGHBORHOODS

In order to revitalize distressed neighborhoods in Maryland, councilmembers and local community advocates are pushing for a government program that would sell thousands of vacant buildings in Baltimore for $1 each. In turn, buyers would have to promise to refurbish and live in the properties for a certain period of time.

 

Baltimore

 

According to a bill adopted by the Baltimore City Council last month, the program would revitalize “marginal neighborhoods by matching construction ability at the grass roots of Baltimore to production of affordable housing for workers’ families and neighbors.” The idea is modeled after the 1973 “Dollar House” program, which sold rundown, city-owned houses for $1 and helped rebuild ravaged neighborhoods in the city throughout the 1980s. The original program also granted buyers low-interest loans to rehabilitate the properties as long as they lived in the homes for a certain amount of time.

Now, advocates want to restore the program to curb the city’s blight epidemic and prevent more homes from becoming vacant. The program would also create construction jobs, say advocates.

On the other hand, the housing commissioner argues that the program is outdated and that there is not enough government funding to address the estimated 16,000 to 46,000 vacant homes in Baltimore, reports The Baltimore Sun. That’s triple the amount in the ’80s. Plus, about 250,000 fewer people live in the city compared to when the program first started.

Nonetheless, real estate agent and affordable housing specialist Mable Ivory applauded the idea, arguing that city governments have implemented similar programs to revitalize distressed areas in Detroit and Harlem. “It has been proven that when home ownership increased among residents in neighborhoods like Harlem and Detroit, which were once plagued by urban blight and flight, crime declined and the communities became more beautiful as owners took pride in their neighborhoods and took better care of them,” she said in an email. “Baltimore seeks to mirror the success that has been experienced in Harlem and Detroit by creating a similar, discount homeownership program.”

Whether interested in buying a vacant property in Baltimore or purchasing an affordable home elsewhere, Ivory advises potential purchasers to “do their due diligence and research” before taking on the cost of homeownership. “If possible, before bidding on the properties, homeowners should do a property inspection with licensed professionals, such as contractors, architects, and engineers, to have a clear and full understanding of all the repairs needed to make the home inhabitable; the cost of the repairs; as well as the time it will take to complete the entire renovation. The good news is that there are mortgage loan programs available like the FHA 203(k) mortgage loan program, which provide financing for the total renovation of a home.”

Selena Hill   

by April 13, 2018 Editor’s Note: This post originally published on December 27, 2017

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IN FOCUS: Investor Services The importance of property management services for investors

Any savvy investor knows that building a success property portfolio doesn’t come without its complications. From problem tenants and maintenance issues to volatile housing markets, the challenges can sometimes seem endless. As a result, utilizing the skills of an experienced property management company is crucial for investors who want their investments to run as smoothly as possible and yield the best possible return.

“A property management company takes care of a wide range of essential functions including all of the maintenance related to the property, whether it’s tapping into a network of contractors to  handle the repairs or snow clearing and grass cutting,” says Rob Kirby, President of Veranova Properties Limited. “A property management company also does all of the leg work involved with getting new tenants, including finding them, doing the background checks, and then managing them when they move in.”

Property management companies act on behalf of the landlord and shoulder the tasks that fall outside of most peoples’ comfort zone. Finding a suitable realtor, offering legal support services, and inspecting the property if it is empty are all functions that fall under the management company’s remit.

“Many investors do not realize that if you leave a property for a certain period of time and something happens, such as a flood, the insurance may not cover it because it was vacant with no one checking on it,” Kirby says. “The property management company might check the property something like every 48 hours to inspect for things like break-ins and water damage until they get a tenant, which can take a bit of time if you’ve just bought a property.”

Property management companies play an important role in helping investors safeguard and maintain the value of their properties. “In the current economic climate, and with interest rates rising, it is harder to find real estate and harder to qualify for borrowing, and that makes it even more crucial for investors to make sure they maintain their asset’s value,” Kirby says. “A good management company takes a preventative approach to maintenance, which means issues are dealt with before they become big, costly problems. It’s an approach that saves the investor both time and money.”

Source: Canadian Real Estate Wealth – Mar 20, 2018

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Surprising facts every renter should remember

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Did you know that three of the leading causes of financial losses for renters are fire, crime, and liability suits? Lucky for you, tenant insurance can help you keep your bank account in tact — and get things back to normal as quickly as possible.

Let’s take a moment to consider the facts:

Fire

With tenant insurance, you can rest easy knowing that a fire in your apartment won’t leave you out in the cold. Not only could your policy cover the belongings you lost in the fire, but it could cover other unexpected expenses like a roof over your head and food in your belly while you wait to get back into your home.

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Fast Facts for Renters: Fire

Fire doesn’t care whether you rent or own your space. Thankfully, tenant insurance covers all the things that make your rental a home.

  • Nearly one quarter of all residential fires in Canada happen in apartments
  • The average cost of damages in an apartment fire is over $65,000
  • The most recent study of fire losses in Canada found that in 2007 alone, fires in apartments led to more than $185 million in damages
  • That same year, Ontario had more apartment fires than any other province: a total of 1,650 fires that led to more than $55 million in damages
  • In British Columbia, the average cost of damage caused by one apartment fire is over $140,000 — that’s more expensive than in any other province

Source: “Fire Losses in Canada (Year 2007 and Selected Years).” Council of Canadian Fire Marshals and Fire Commissioners.

Crime

Coming home to find that a stranger has been there — and worse, that they’ve stolen your TV and smashed your glass coffee table — is something no one should ever have to experience. But if something like this happens to you, know that renter’s insurance has your back — your insurer could pick up the tab for your stolen or damaged belongings.

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Fast Facts for Renters: Crime

Burglars don’t discriminate — and rental properties aren’t exempt from break-ins. Do your best to deter those pesky thieves, but know that tenant insurance has your back when you need it most.

  • In Canada, renters experience the greatest number of break-ins per household, with a whopping 125,000 cases reported in 2014
  • That same year, there were 248,000 reported cases of theft of personal property from rental homes
  • Cases of vandalism are decreasing year after year, but there were still 143,00.0 cases of vandalism to rental properties reported in 2014

Source: “Household victimization incidents reported by Canadians, by type of offence and selected household, dwelling and neighbourhood characteristics, 2014.” Statistics Canada.

Liability

Of all the types of coverage in your tenant insurance policy, liability coverage could be the most important when it comes to protecting your finances. This is the coverage you need when, for example, a court decides you’re legally required to pay for your friend’s Ray Bans and medical bills after you break his nose and glasses at one of your weekly baseball games. Plus, it can cover any legal fees you encounter in the process. Accidents happen, and battles over money are never pretty. Talk to your broker to make sure you’re covered.

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Fast Facts for Renters: Liability

In the event of a liability lawsuit, tenant insurance can protect your savings — and your credit rating.

  • A lawsuit can virtually bankrupt you if you’re held responsible for covering expenses that result from an injury or damage you caused to someone’s belongings — say goodbye to your savings and your credit rating
  • If you’re taken to court for a liability issue and need to pay a lawyer, you could be in the hole for thousands of dollars in legal fees
  • When your toilet backs up and the questionable puddles in your bathroom start to trickle into the apartment downstairs, you’ll have to pay for the damage
  • Don’t forget your landlord: if she claims that you ruined part of your rental unit, get ready to forfeit your damage deposit plus additional repair costs

You have options

Get protected before the unexpected happens. If you’re ready to get set up with your very own tenant insurance policy, connect with a licensed broker to learn about your options.

Source: Economical.com – Stephanie Fereiro  |  Published on: December 12, 2016  

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