Waiving a home inspection is like purchasing a used car on Craigslist without taking a look under the hood — you’re likely to run into issues down the road. A new survey from the online home improvement marketplace, Porch, reveals that 86 percent of home inspections uncover one or more problems that need to be addressed. While hiring a home inspector will set you back about $377 on average, their expertise could save you from buying a lemon or shelling out thousands of dollars in future repairs.
Prospective homebuyers can use the information provided by a home inspector to negotiate a lower sales price, accounting for the cost of repairs or replacing a feature altogether. Of the 1,000 individuals surveyed by Porch who hired a home inspector, 37 percent submitted a revised offer with help from their real estate agent, saving an average of $14,000 off the listing price of their new home. That’s no small chunk of change!
Here we examine the most-flagged home inspection issues buyers can use to negotiate the best sale price.
Photo: James Bombales
1. Roof – flagged in 19.7% of reports
Roofs with asphalt or cedar shingles have an average lifespan of 20 years whereas metal roofs only need to be replaced every 50 to 75 years. Your home inspector will look for signs of water damage, mold or algae, and take note of any sagging or missing shingles.
2. Electrical – flagged in 18.7% of reports
If you’re looking to purchase a home built prior to the 1950s, you’ll want to inquire about its electrical wiring. Knob-and-tube wiring, which was popular from the 1880s to the 1940s, can cause electrical shocks and fire. Other issues to take note of include exposed wiring, ungrounded wire receptacles and paint on electrical outlets.
Photo: James Bombales
3. Windows – flagged in 18.4% of reports
While broken windows are a pretty obvious spot, your home inspector may conduct a simple test to check for air leaks. However, there’s no guarantee the home owners will agree to repair the window seals — some consider this cosmetic, rather than structural.
4. Gutters – flagged in 16.9% of reports
Your home inspector will want to make sure the gutters are in good working condition, assessing their size, any damage, and how far water is directed away from the house.
Photo: James Bombales
5. Plumbing – flagged in 13.6% of reports
Plumbing problems can quickly add up, costing an unsuspecting homeowner thousands of dollars. With a flashlight in hand, your home inspector will scan for potential leaks, polybutylene piping, DIY projects gone wrong, tree root damage, and more.
6. Branches overhanging roof – flagged in 13.3% of reports
Having an old-growth tree in your front yard might seem like a selling point, but it can actually cause a lot of damage if not properly maintained. Branches can rip off roof shingles, leaves can pile up and clog up your gutters, and heavy limbs can come crashing down into your living room.
Home inspectors will evaluate the condition of a fence that lines the property. But again, this is one of those “choose your battles” situations. Are you willing to risk losing out on your dream home because a few pickets have gone missing? Probably not.
8. Water heater – flagged in 12.2% of reports
While a rickety fence may be no big deal, a busted up water heater certainly is. Home inspectors check for things like water leaks, sediment buildup, corrosion on the pipes, and low water pressure.
Photo: James Bombales
9. Driveways, sidewalks, patios, entrance landing – flagged in 11.9% of reports
Cracks in your driveway or patio are pretty much inevitable. That being said, you’ll want the home inspector to ensure water isn’t seeping into those crevices. If major issues do turn up, you may be able to seek compensation for those repairs.
10. Air conditioning – flagged in 9.9% of reports
According to the Porch survey, most homebuyers negotiate only $500 for AC repairs, but the actual costs are much higher — think thousands of dollars, not hundreds.
Photo: James Bombales
11. Exterior paint – flagged in 9.6% of reports
If the house was constructed before 1979, your inspector will likely conduct a lead paint test. Additionally, if the exterior paint is peeling, some lenders (like the Federal Housing Administration and Veterans Affairs) will not approve the loan due to concerns over health and safety.
12. Foundation issues/cracks – flagged in 8.9% of reports
Home inspectors can look for obvious signs of foundation problems like cracks in basement walls, damaged bricks and uneven floors. If you and your home inspector suspect the problems are serious, you may want to bring in an engineer. But consider it money well spent — foundation fixes can cost $10,000 or more. Gulp.
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.
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
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.
New York City’s reputation as one of Earth’s most expensive—and daunting—real estate markets is well-earned, thank you very much: $1.8 million studio apartments? Check. Full-cash offers everywhere you look? Check. Freakishly competitive open houses? You bet. Welcome to the big time—with the prices and killer views to match. It’s little wonder that housing is top of mind for just about all of the nearly 8.4 million folks who call the Center of the Universe home.
Everyone, it seems, is angling to hit the NYC trifecta: a decent space in a good neighborhood at an affordable price. That’s why it’s so important to get a handle of what’s going to be the next big neighborhood, before it explodes in popularity and prices get out of reach.
To find out which neighborhoods in this bellwether, nationally scrutinized market are seeing the biggest price climbs—and the biggest falls—we teamed up with real estate appraiser Jonathan Miller, co-founder of Miller Samuel. He compared the median home sale prices in all of New York City’s neighborhoods throughout the five boroughs in 2017 and 2018. We included only the neighborhoods with at least 25 sales in both years.
What we found is a city going through churn, much of it due to the flurry of luxury development in some areas that traditionally have had older—and more affordable—homes. Prices go up, an area gets saturated, the luxury stock sells out, then prices go back down. Rinse and repeat. Meanwhile, the megadevelopment causes people to search out nearby areas that might be cheaper.
It’s the NYC circle of life, and it’s accelerating.
“Developers have left no stone unturned and developed wherever they could,” says Miller. “They went everywhere there was an opportunity. And that caused a lot of price fluctuations, especially in more modestly priced neighborhoods that saw a lot of new, high-end development introduced.”
But New York City hasn’t been immune to national trends. The overall market is slowing throughout all of its five boroughs of Manhattan, Brooklyn, Queens, the Bronx, and “can’t-get-no-respect” Staten Island. The city has been particularly affected by the national tax changes that make it more expensive to own a home in pricier parts of the country, says Miller.
More fun still: This month, New York state’s new mansion tax went into effect, upping the amount of taxes on properties $2 million and up. Sales had been down earlier in the year, but the prospect of giving more to Uncle Sam resulted in a rush of higher-priced home sales. Going forward, the number of sales is expected to fall back down again. Phew … Dramamine, please.
High price tags are pushing many New Yorkers farther out into cheaper communities such as the Bronx, which doesn’t have the hipster cred or water views of Brooklyn. But dollars can stretch way further there.
“A large shift or decline [in a New York neighborhood] is generally not a reflection of weakness,” says Miller. “It’s more of a reflection of … now it’s back to business.”
So which neighborhoods are seeing the largest real estate price spikes? And which expensive communities are getting (a bit) more affordable?
Annual median price increase: 122.7% Median 2018 home price: $612,500
When folks think of the Bronx, the mix of grand Tudors, Georgian Revival estates, and midcentury modern homes and lovely winding streets in suburban Fieldston are rarely what come to mind. Homeowners in this privately owned enclave of tony Riverdale pay property taxes and fees to their property owners association, which maintains the streets and sewers and pays for its own security patrol.
Prices are surging because word has gotten out: Buyers are increasingly drawn to its seductive combo of urban and suburban living. The historically designated community is near top private schools, which include the Horace Mann School and Riverdale Country School. It’s also only steps away from the Hudson River and the 28-acre green oasis of Wave Hill Public Gardens in the northwest swath of the Bronx.
“In Fieldston, you are part of the city but you have the real suburban feeling,” says Chintan Trivedi, a licensed real estate broker with Re/Max In the City. “Here you’re getting a real home, a backyard and a private community.
“For a good house with a larger backyard, a complete renovation, and maybe a pool, you can expect to pay $1.5 million to $2.5 million,” he says. But there are six-bedroom homes listed in the $1 million range. Just tryto get that in Manhattan. (Spoiler: You can’t!)
Annual median price increase: 41.2% Median 2018 home price: $275,000
Just south of Fieldston are the middle-class communities of Kingsbridge and University Heights, where buyers can score deals for a fraction of the price. But the lack of homes for sale and little turnover are causing prices to heat up. And investors are buying up whatever lots and houses they can for new development or rehabbing.
“The Bronx is the new Queens in the sense that there’s been an expansion of demand moving out from Manhattan as consumers search for affordability,” says Miller.
The neighborhood’s become popular with 20- and 30-somethings looking for a reasonably priced community with an urban vibe. Hilly Kingsbridge is filled with century-old, single-family houses and midrise co-op and apartment buildings as well as plenty of shopping, parks, and public transit.
These buyers “are[part of] the new generation that’s learning that real estate should be part of their planning,” says Trivedi. “They want to feel like they’re in Manhattan—a place where they can still go right downstairs and get a smoothie.”
Annual median price increase: 38.7% Median 2018 home price: $1,535,000
Over the past couple of decades, lower Manhattan’s East Village has shed its image as a sketchy, open-air drug market to become a sought-after place known for lively bars, great restaurants, and a defiantly boho vibe—as well as a slew of new, high-priced developments, causing prices to jump. They’re going up everywhere you look.
Annual median price increase: 36.1% Median 2018 home price: $1,226,750
Like the East Village, Prospect Heights has been rapidly gentrifying. Professionals, families, and a few stray hipsters are drawn to its charming rows of stunningly restored early 19th-century, multistory brownstones on tree-lined streets. The neighborhood is near several main subway lines and in close proximity to the 526-acre Prospect Park and the Brooklyn Botanic Garden. It also borders Barclays Center, home to the NBA’s Brooklyn Nets (and soon the team’s new dynamic duo, superstars Kevin Durant and Kyrie Irving).
In recent years, Prospect Heights has become popular with folks priced out of neighboring Park Slope, a community long popular with upper-middle-class families. They gravitate to the brownstones as well as the new high-rises and the used bookstore, artisanal bakeries, and constant stream of new restaurants.
Not surprisingly, the Prospect Heights neighborhood has attracted a slew of developers putting up luxury condo and apartment buildings wherever they can. Those high-end housing developments are skewing the neighborhood’s median prices up to new heights.
This isn’t the kind of place where you’ll find buzzed-about restaurants—you’re more likely to stumble upon a dollar store than a bougie boutique. It’s a more down-to-earth community, populated by old-school Brooklynites, hipsters, as well as Pakistani, Orthodox and Hasidic Jew, Mexican, Chinese, and Latin American immigrant groups.
Annual median price increase: -40.7% Median 2018 home price: $915,500
Once grim downtown Brooklyn has been booming in recent years. It’s become home to a slew of glassy, luxury high-rises. So why are prices in such a vibrant area plummeting?
Well, now there’s a glut of new construction, giving buyers more negotiating power as buildings compete against one another to lure residents. Plus, builders are putting up towers with some smaller, less expensive units. But in NYC, less expensive is relative. Buyers might save themselves a couple hundred thousand on a million-plus-dollar condo.
But many of the condos here, some designed by famous architects, come with just about every amenity imaginable, including sun decks, hot tubs, dog runs, saltwater pools, and even music studios. This two-bedroom, 1.5-bathroom abode in a 57-floor building is going for $2,040,000.
Some believe developers overshot their market.
“Developers there created a mountain of homogenous product,” says agent Blumstein with the Corcoran Group. Buildings in the area “were built on the thought that people are demanding amenities. But the old-school, prewar neighborhood vibe is what’s in.”
Annual median price increase: -39.3% Median 2018 home price: $3,200,000
Even many lifelong New Yorkers have never heard of the Civic Center neighborhood in lower Manhattan. The tiny community encompasses City Hall and courthouses as well as some high-rise co-op, condo, and apartment buildings. It’s just west of ultradesirable Tribeca, where prices are sky-high, and just below Chinatown, guaranteeing plenty of good Asian eats.
Prices are down because the wave of development has pretty much played itself out, says Miller. Many of the older brick and limestone, midrise office buildings had been gut-rehabbed and turned into pricey condos. That led to a spike in prices. Now that those units have been bought, the real estate for sale is a mix of lower- and higher-end properties.
It’s “run its course,” says Miller of the wave of development in Civic Center.
Annual median price increase: -30.2% Median 2018 home price: $450,000
Like Civic Center, Javits Center as a neighborhood isn’t very well-known—but that’s likely to change. Named for the sprawling convention center on the west side of Manhattan where the community is located, it’s wedged between trendy Hell’s Kitchen and Chelsea and abuts Hudson Yards.
Even nonlocals have probably heard of Hudson Yards, Manhattan’s newest neighborhood, built on a formerly desolate stretch of disused train tracks. It’s a glam (and critics say overly generic) development of ultrahigh-priced condo and rental towers overlooking the Hudson River, complete with its own weird tourist attraction, the beehive-like Vessel. The Javits Center’s proximity to this buzzy development will likely have an impact on sales with prices shooting up.
But in the meantime, prices fell because there simply isn’t much of the first wave of luxury real estate left on the market. Now what’s selling is less expensive, older condos.
That’s likely to change as sales heat up in Hudson Yards.
“Sales [in Hudson Yards] will help to increase values in the surrounding area,” says New York real estate agent Matt Crouteau. The place “was designed so people don’t have to leave.” Ever.
Annual median price increase: -30% Median 2018 home price: $997,500
Just south of the Civic Center is the Financial District, home to Wall Street and the World Trade Center on the tip of Manhattan. Like all of the other neighborhoods on this list, FiDi (as it’s called) experienced a spike in development, then a market saturation.
“It’s not that prices are collapsing,” says Miller. “The early wave of high-end new development drove prices higher. … After that activity cooled, the prices for the neighborhood are less than what they were.”
But there are still plenty of new units to choose from, including this three-bedroom, four-bathroom condo going for $5,300,000. The unit features granite countertops, a waterfall island, high ceilings, and floor-to-ceiling windows. On the lower side of the spectrum, buyers can snag this studio with plenty of closet space for $480,000.
The neighborhood is home to a few cobblestone streets, giving it an old-world charm, as well as the South Street Seaport, a tourist fave.
Annual median price increase: -29.6% Median 2018 home price: $1,550,000
Thank the long-awaited Second Avenue Subway line for prices falling in the upper portion of the Upper East Side, from about 96th to 110th streets. Developers flooded the neighborhood putting up buildings near the new train extension, which opened in 2017 after being discussed, planned, and replanned for nearly a century. They believed—rightly so—that this least fashionable part of the Upper East Side would become far more desirable thanks to its close proximity to the new train line.
“That’s essentially East Harlem, which has benefited from a significant amount of new development,” says Miller. Now development is mostly over and there’s fewer sales.
“You’re not seeing the same amount of high-end [sales], because there’s not as much new housing being introduced,” he explains.
The Upper East Side/East Harlem now has a mix of sleek towers, brownstones, low-rise brick buildings and townhomes, and apartment and public housing developments. This new one-bedroom, one-bath condo clocking in at just 609 square feet, which is near the new subway line, is on the market for $786,161.
Have you dreamed of designing and renting out a country retreat through a popular site like Airbnb.com? One family shares how they made their rural Airbnb home a success.
The Hartman family live on a small piece of acreage just outside the Asheville, NorthCarolina city limits.
Despite their proximity to one of the South’s most popular tourist destination cities, their land is rural in every sense.
Walk outside at the right time of day in the right season, and you may catch a glimpse of a black bear, wild turkeys, deer, a bobcat, some turtles or any number of birds. They’re less than a mile from several world-class hiking trails and the winding road to their home is surrounded by pasture and nature.
It’s the ideal blend of mountain-country-living with hip-city convenience.
So, when their neighbor’s home burned down about four years ago, the Hartmans leapt at the chance to buy up the 2.5 acres that abuts their current home.
Their plans for the land were vague, but after much planning, discussion, decision-making and brainstorming, they decided to build an Airbnb-style minifarm retreat: Blue Turtle Farm.
The only thing was, neither of them had any experience running a microfarm OR a hospitality business…nor did they have much spare time to learn. Meggan is a psychologist, sleep consultant and faculty member at Meridian University and Brody is an executive at a leading branding agency, as well as a Purpose Guide, mentor and a meditation teacher.
Yet they forged ahead and have managed to exceed their Airbnb business financial goals in just one year.
How did they do it (and could you do the same)? Read on to find out.
It All Started With 2.5 Wild Acres, A Chicken Coop And A Concrete Slab
Brody and Meggan knew they had something special in their new property (it’s not every day 2.5 acres with an existing house foundation and driveway go up for sale in your backyard). The trick was discovering the best use of that wild 2.5 acres.
“We sat on it for two years because we knew we had to get the overgrown land in order first,” Brody says. “So we got some chickens, got out there on weekends with the weed wacker and just dreamed about what we could do.”
Meggan adds, “We also had to set a clear intention for the property—do we want to have someone come in and do flowers, do we want to grow herbs or create a market garden? So we had to look at what we could feasibly do and manage with our limited time, andwhat made the most sense for income. We also knew we wanted continued access to the land.”
While they knew they wanted to care for the land by starting a sustainable “pocket farm,” they also knew the existing homesite would be perfect for an investment home.
“We always knew we’d build on that land someday and possibly move there,” Brody says, “the question was: just what type of structure to build and when?
“And if you’ve never managed or developed even a small piece of land, it’s a HUGE learning curve. So we had a ton of people come out to assess the soil, the water situation and where to place the home visually for functionality, off-grid capability and aesthetics.”
The Hartmans also talked to their neighbors about their plans and studied the local zoning laws.
Once the land was in order, they’d chosen the best homesite and decided on a short-term rental business, the next big choice was: what type of house to build?
Figuring Out What To Build: Tiny Home, Cabin Or Designer House?
The Hartmans originally thought they’d build something small and simple to keep costs low, but after talking to two real estate experts, they changed their minds.
“We consulted two of our friends in real estate and they both recommended we build-like we-needed-to-sell,” Brody says.
With that in mind, they began researching comps and found most buyers in the area were looking for a 3 bed, 2 ½ – 3 bath home with “X” amenities.
Brody says 3 other factors weighed heavily on their decision:
“#1: If we flip it one day, how do we get the most out of it for resale? #2: If we were to move over there, what would we want in a home? And #3: what would an ideal Airbnb experience be for our guests?”
In the end, the Hartmans hired a reputable local high-end builder to construct a modern 3-story, 3 bedroom/3 bath home with a separate basement suite on the existing foundation.
“Having a good architect or good house plans and finding a reputable builder is key. You also need to think about parking when designing your space,” Meggan says.
Next, They Turned Their Attention To Learning Their Local Airbnb Market
With a reputable builder in place and home design underway, the Hartmans re-focused on learning the local short-term rental market.
“We researched local Airbnbs and VRBOs for going rates, we read the reviews and drew on our personal experience as guests of Airbnbs,” says Brody. “We also talked to a lot of people who had Airbnbs. Knowing the market in your community is essential.”
How they determine competitive pricing:
While there are Airbnb-centric consultants, articles and content available, Meggan offered this advice on pricing:
“We knew we had to cover our costs and make a profit, and at the end of the day you’re working backwards from your mortgage—and it’s a bit of a moving target in the beginning because you know that number will change once you’re finished building.
“The Airbnb suggested rate for our area is lower than we decided to charge. But, we had a clear intention: we wanted to create the best experience in the best environment, and we knew people would pay for that.”
And they have. To-date, the Hartmans’ Airbnb earnings have already exceeded their monthly mortgage…and it’s been open for short-term rentals for less than one year.
“Pricing also depends on how you want to run your rental. For example, will it be a year-round rental or do you really want to crank it for just 4 months out of the year? So again, your intention and goals are everything.”
Tips On Creating The Best Experience In The Best Environment (without breaking the bank)
When it comes to creating an optimal guest experience, attention to detail is everything.
However, when you’re floating a mortgage and a construction loan you can’t typically do everything high-end. Here’s how the Hartmans furnished and decorated their Airbnb without breaking the bank:
Don’t go high-end on all the furniture. “Fortunately, the gentleman at our local furniture store runs his own Airbnb and told us where to invest,” Meggan says. “For example, he said not to invest in rugs, like use outdoor rugs indoors, and to think about high-traffic vs. low-traffic areas.”
Put your money where the details matter. “This means quality of the sheets, towels, beds, soaps and sundries. We’ve even gotten good reviews on our toilet paper, so little things like that matter to people.”
Once The House Was Complete, There Was Still A Lot To Do To Prepare For Guests
“In addition to getting the professional photography and branding/descriptions done, furniture had to be moved in and put together, detailed cleaning had to be done, window treatments installed, etc.,” Brody says. “It’s important you build in extra time to complete those details.”
When the house was finally done, the Hartmans invited friends and family to stay and critique the home.
“We told them to bring it! And thanks to their feedback we wound up replacing the downstairs bed and making some further improvements,” Meggan says.
To buy some time (and secure some more feedback) the Hartmans also rented the home to a local family of four for the first 3 months.
“That gave us a buffer and their feedback was extremely helpful.”
How They Promoted Their Brand New Short-term Rental Property
The Hartmans listed their home on Airbnb and VRBO and paid special attention to branding.
“Professional photography is very important,” says Brody, a branding expert, “as is getting the descriptions and owner’s manual just right.
“I’ll never forget when I got that first notification from Airbnb, then the first booking. It was so thrilling to see. I still get excited when I see them come in!”
Since Airbnb is all about recommendations and ratings, the Hartmans are vigilant about responding to guest requests, addressing any concerns and rating their guests promptly.
This attention to detail earned them “superhost” status in October. “It’s really important to get those milestones met, and it’s a high bar—no cancellations, at least 4.5 stars every time—but if you deliver, then superhost status will come,” Brody says.
While they are listed on both Airbnb and VRBO, they’ve found each application has its own distinctive audience and find Airbnb’s interface more intuitive and easy to manage.
To avoid double-bookings, they use an integrated managing calendar.
Running The Day-to-Day (Without Quitting Their Day Jobs)
For day-to-day, the Hartmans highly recommend hiring an exceptional cleaning service that specializes in short-term rentals/hospitality.
“Our first service was good, not great,” Brody recalls. “They didn’t get all the details or what it meant to be a superhost. I spend a lot of time in hotels for my job, so I know what those details are!”
One day, their cleaning service didn’t show up and Brody and Meggan had to run over to clean the house themselves. After that, they found a better service.
“We wound up hiring a husband and wife team who also does basic maintenance, which has been a game-changer,” Brody says. “They know what it means to care for a short-term rental, for example, she brings local magazines and keeps them up-to-date, and keeps the house impeccable.”
They’ve also given the cleaning service access to their booking calendars, which automates the entire process.
“Now we could leave the country for a month and would not worry.”
With the cleaning and maintenance dialed in, there’s very little other day-to-day work.
“The only other thing we do regularly is bring over wine, crackers, cheese and a custom welcome note,” Meggan says.
Technology also helps keep the day-to-day tasks at a minimum.
The Hartmans have set up their online booking so guests can book automatically—provided they meet certain requirements. Then they send a personal reply.
They also use an app that tells them if the doors are locked or unlocked, and they are out on the farm regularly should the guests need them (which they usually don’t).
How To Avoid Negative Reviews
Negative reviews are the plight of any modern short-term rental business, here’s how the Hartmans have maintained a nearly unblemished review profile:
“Airbnb lets you communicate with the guests before your mutual reviews are published. So we always take that opportunity to ask the guest if there’s anything we can do to improve hospitality. says Brody.
“With that approach, we’ve only had one 4-star review on one attribute saying we weren’t truly 12 minutes from downtown, so we changed the listing to 15 minutes.”
They also recommend being clear about the role you will play as host.
“Some hosts live off-property, some hosts live next door and personally greet every guest,” Meggan says. “We let people know we’ll be on the property and will be as available, or not, as they want. Most of our guests want to be self-sufficient and just say hello if they happen to see us, and we’re fine either way.”
How Long Did It Take The Business To Become Profitable?
“Our profit goal for year one was to exceed our mortgage costs, and we managed to do that within the first month of full-time short-term rentals,” says Brody. “There are months now that we’re more than doubling our mortgage.”
The Hartmans believe their location plays a role in this, as does the quality of the home and the natural beauty of the land.
Insider Startup Advice: What They Wish They Had Known
When asked their biggest startup challenges, the Hartmans offered these lessons learned:
“Money out vs. money in while building is a roller coaster—I mean you’re furnishing an entire house. It creeps up on you, and then once you get caught up in it you know you can’t skimp, so there’s that sense of having faith in the process.”
“Don’t skimp on construction! We did this right, but it’s still good advice. Our construction company came in on time and on budget. They landed that ship nicely.”
“The initial house set-up is crazy, so be prepared! That was a lot harder than we anticipated.”
“Be prepared to let it go,” says Brody, “I remember going over to answer some questions for our very first guests, and I walked in and saw this young man lying on my couch with his shoes on. I wanted to say, get your shoes off that couch! But I knew in that moment, I had to surrender the house. And that was quite a moment.”
“It pays to set your intention for the place,” says Meggan. “We really wanted to create a retreat and respite for people to unplug and connect with family…and it’s proving to be the perfect spot for families.”
“In the beginning we were so worried that the whole house would not get rented that we built that additional basement suite. Now I wish we hadn’t, because we’ve never not rented the whole house,” says Brody.
“Get your house rules figured out right away. This will keep your house in good condition and your neighbors happy.”
Where Will They Go From Here?
Based on their success and excellent reviews, the Hartmans’ property is now being considered for “Airbnb Plus” status.
This means they have to meet a 100-point inspection list and have a certain level of aesthetic value which caters to a higher-level guest. Airbnb pays to have the home re-photographed, and if they pass inspection, the property gets a special badge.
They also plan to add a hot tub and possibly a wood stove to increase winter rentals, and will use the property for purpose-building workshops.
Jamie Golombek: The CRA’s ability to hunt you down over your real estate transactions is better than ever; this tax case looks at what constitutes a flip
If you plan on selling a home or condo that you bought fairly recently, especially if you never actually moved into it, be wary as the tax man will be carefully watching how you report any gain on your tax return, lest it be seen as a “flip” and be fully taxable as income, rather than a half-taxable capital gain.
The Canada Revenue Agency’s ability to hunt you down over your real estate transactions has improved thanks to the recent $50-million boost in funding over five years announced in the 2019 federal budget to help “address tax non-compliance in real estate transactions.” The CRA uses advanced risk assessment tools, analytics and third-party data to detect and “take action” whenever it finds real estate transactions where the parties have failed to pay the required taxes. Specifically, the CRA is focusing on ensuring that taxpayers report all sales of their principal residence on their tax returns, properly report any capital gain derived from a real estate sale where the principal residence tax exemption does not apply, and report money made on real estate “flipping” as 100 per cent taxable income.
But what, exactly, constitutes a real estate flip? That was the subject of a recent Tax Court of Canada decision, released this week.
The case involved a transit operator for the Toronto Transit Commission who, along with his brother, bought and moved into a two-story, three-bedroom townhouse in Vaughan, Ontario, in 1999. His brother contributed toward the initial down payment, lived with him and together they equally shared all household expenses, including the mortgage payments. In 2003, the taxpayer’s brother met the woman who would become his future wife, whom he married in April 2007. She moved into the townhouse and they had a child together in February 2008.
Sometime prior to this, the taxpayer and his brother began discussing going their separate ways. The taxpayer testified that he wanted to sell the townhouse and move to a place that was smaller and closer to work. Indeed, in 2006 he found a smaller place, a two-bedroom condo, which was in the pre-construction phase. The tentative occupancy date of the condo was April 2008, but that date was pushed back several times, ultimately to 2010.
Prior to taking possession of the condo, however, circumstances changed. In December 2008, the brothers’ father passed away while in Jamaica, where he lived together with their mother for about six months each year. Following their father’s death, their mother did not feel safe living alone in Jamaica and in March 2009 she moved into her sons’ townhouse. The taxpayer testified that his brother and his family shared the master bedroom, while the taxpayer and their mother each occupied one of the remaining two bedrooms. This living situation didn’t last long and the taxpayer refinanced the mortgage on the townhouse in order to buy out his brother’s share of the property, enabling him and his family to move out.
In August 2010, the taxpayer took possession of the condo and immediately arranged to list it for sale, realizing that it would be too small for both he and his mother. No one lived in the condo in the interim. He sold it in October 2010 resulting in a net gain of $13,412, which the taxpayer reported as a capital gain, taxable at 50 per cent, on his 2010 tax return. The CRA reassessed him, finding that the $13,412 should have been reported as fully taxable income and slapped him with gross negligence penalties.
The common question of whether a gain from the sale of real estate is on account of income or on account of capital always comes down to the underlying facts. The courts will look to the surrounding circumstances and, perhaps most importantly, the taxpayer’s intention.
The judge reviewed the facts in light of the four factors previously enumerated by the Supreme Court of Canada by which these types of cases are decided: the taxpayer’s intention, whether the taxpayer was engaged in any way in the real estate industry, the nature and use of the property sold and the extent to which the property was financed.
The taxpayer testified that he purchased the condo with the full intention of living in it after his brother moved out of their shared townhouse; however, when his father died and his mother wished to return to Canada to live full-time, the taxpayer “changed his plans to move so that his mother could live with him at (the townhouse), which was a larger space.” He testified that since he could not afford to own both homes, he listed and sold the condo shortly after assuming title. As he testified, if not for his father’s death and his mother’s return to Canada, he would have carried out his plan to sell the townhouse and live in the condo as his primary residence.
The judge concluded that the taxpayer’s intention with respect to the condo was indeed to live in it as his primary residence. He had no secondary intention of putting the condo up for resale at the time of purchase.
The judge therefore concluded that the sale of the condo was properly reported as a capital gain and ordered the CRA to reassess on that basis and cancel the gross negligence penalties.
One final note is warranted: while justice was ultimately done and the taxpayer prevailed, it actually took him nine years and three separate visits to court to get relief. The CRA originally reassessed his 2010 capital gain as income back in 2014. The taxpayer filed a Notice of Objection to oppose the reassessment, which was reconfirmed by the CRA in January 2016. The taxpayer then had 90 days to appeal the CRA’s reassessment to the Tax Court. For a variety of reasons, he missed that deadline and ended up in Tax Court seeking an extension of the deadline to file an appeal. The Tax Court denied his request for an extension. He then went to the Federal Court of Appeal which, in June 2017, reversed the lower court’s decision and allowed an extension of time to appeal to Tax Court, which heard the case in March 2019 and released its decision this week.
To be blunt, most contractors are terrible. As alandlord, I deal with it all the time.
They don’t answer their phone. They don’t show up when they said they would. They don’t do what they said they are going to do.
But there ARE gems to be found in the rubble. The problem is most people have no idea how to identify that great contractor from all the bad ones out there—until long AFTER they’ve already hired one.
I want to share with you my seven-step process to identify a great contractor before hiring them. Whether you’re remodeling your own home, a rental property, flipping houses, or need a contractor for something else, here’s how to land a great one.
How to Find a Great Contractor
Build your contractor list
What I mean by this is you need to get the names and phone numbers of a lot of different contractors in your area. I mean, if we’re searching for a needle in a haystack, we have to first get a haystack.
You can find potential contractors in a number of ways, but my three favorite are:
Referrals, meaning ask people you know who they have used
Referrals, so yeah, asking people you know who they have used
You guessed it! Referrals.
Human nature is to generally do what you’ve always done. It doesn’t guarantee success, but when you know a contractor has done great work in the past, it’s likely they’ll do it again.
So get in the habit of asking your friends and family often—even when you’re not looking for a contractor. “Who did this work for you?” Then, keep track of those referrals.
There are a few other ways to find contractors, as well. I like to talk to other contractors and ask who they like working with.
Rockstars tend to party with other rockstars, and good tradesmen tend to work with other good tradesmen.
For example, I have a great finish carpenter, so I can ask him, “Hey, do you know any great plumbers?”
You can also build your list by snapping a photo every time you see a contractor sign on the side of a work truck, or by searching Yelp, or by asking the employees in the pro department of your local home store who they like.
Just as with tenants, our opinion of the contractor begins the moment we start talking with them, whether over email, phone, or in person.
Do they carry themselves professionally? Do they respond well to questions?
Ask them some general questions, such as:
How long have you been in this line of work?
What skill would you say you are the best at?
What job tasks do you hate doing?
In what cities do you typically work?
How many employees work for you? (Or “work in your company” if you are not talking to the boss.)
How busy are you?
Do you pull permits, or would I need to?
If I were to hire you, when could you start knocking out tasks?
Then, set up a time to meet and show them the project, if you have one. Set an appointment and be sure to show up a few minutes early, just to see exactly what time they arrive.
Are they on time? Late? Early? Do they look professional? How do they act?
If everything feels OK after this first meeting, move on to the next step.
The first thing we do now when looking for information on a certain contractor is to simply search Google for their name and their company name. This can often unearth any big red flags about the person.
You’ll also want to add your city name and some other keywords to the search, such as “scam” or “rip off” or “court.”
For example, if we wanted to find out more about First Rate Construction Company in Metropolis, we would search things like:
First Rate Construction Metropolis
First Rate Construction scam
First Rate Construction sue
First Rate Construction court
First Rate Construction evil
These terms can help you discover major complaints about a contractor. But keep in mind, not all complaints are valid. Some people are just crazy.
What this will do, however, is give you direction about what steps to take next.
Ask for references
Next, ask the contractor for references from previous people for whom they have worked. Photos are nice, but names and addresses are better.
Then, do what 90 percent of the population will never do and actually call those references!
You may want to ask the reference several questions, like:
What work did they do?
How fast did they do it?
Did they keep a clean job site?
You are related to [contractor’s name], right? (If they are, they will think you were already privy to that information and will have no problem answering honestly!)
Any problems working with them?
Would you hire them again?
Can I take a look at the finished product? (This could be in person or via pictures.)
These questions will help you understand more about the abilities and history of the contractor. Then, if possible, actually check out the work the contractor did and make sure it looks good.
Another tip recently given to us by J Scott was to ask the contractor to tell you about a recent big job they’ve done. Contractors love to brag about their big jobs, so he or she will likely regale you with the story of how much work they needed to do and how great it looked at the end.
Find out the address, and then go to the city and verify that a permit was pulled for that project. If not, the contractor did all the work without a permit, which is a good indication they are not a contractor you want on your team.
It’s okay to be trusting, but make sure the contractor is worthy of your trust first! To do this, first verify that they truly do have a license to do whatever work you intend for them to do.
If they are an electrician, make sure they have an electrical license. If they are a plumber, make sure they have a plumbing license. If they are a general contractor, make sure they have a general contractor’s license.
Next, make sure they do actually have the proper insurance and bond. As we mentioned earlier, you could ask them to bring proof, but you can also simply ask the name of their insurance agent and verify it with that agent. Either way, just make sure they have it.
Remember: this protects you.
Hire them for one small task
Before hiring the contractor to do a large project, hire them to do just one small task, preferably under $500 in cost. This will give you a good idea of what kind of work ethic they have and the quality of work that they do.
If the work is done on time and on budget, and if it meets your quality standards, consider hiring them for more tasks.
Even if the contractor has passed through the first several steps of this screening process, 75 percent of them will still likely fail at this step, so don’t settle with just one contractor. Hire multiple contractors for multiple small jobs and see who works out the best.
Ninety percent of the time, when I have a disastrous situation with a contractor, the blame lies on no one but myself. If I had managed the job correctly, I wouldn’t be caught in the positions I’ve been in.
Here’s an example. I hired a contractor to paint a bedroom. He says $500. I say, “Great.”
He calls me, tells me he’s done, and I send him the $500.
Now, I go check out the property and what do I see? He didn’t paint the ceiling, despite the obvious need for it. And there are a couple paint splatters on the floor that are easy to clean—but now I have to do it.
I call the contractor and he says, “Well, you didn’t say I needed to do the ceiling,” and “No, the floor was perfectly clean when I left. Someone else must have made the drips on the floor.”
Now, you might be saying, “But that’s ridiculous! It’s clearly his fault.”
But it’s my responsibility to manage him correctly. Therefore, when you work with a contractor, always get a detailed scope of work that clearly lays out 100 percent of what is going to be worked on, what’s included, and what isn’t.
Then, never pay anything until you’ve inspected the work. On larger jobs, be sure to spread out payments over the course of the job, so they don’t get too much money up front. You always want them hungry for the next paycheck.
To help with this, I put together a really simple “Contractor Bid Form” over in the BiggerPockets FilePlace—100% free—so you can fill this out every time you work with a contractor. Just go to BiggerPockets.com/bigform.
The Bottom Line
Whether you’re a real estate investor like myself or not, you’re going to need to deal with contractors in the future. By following this seven-step process, you’ll save yourself time, stress, and a lot of money.
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 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.
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!
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.
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!
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).
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!
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!
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!
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!
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!