Building equity for multiple properties

by Haripal Pannu, real estate broker and investor

One real estate agent looks at pre-build investments for the first-time investor.

It’s always challenging to buy the first investment property because there is a lot that must be learned. There is a little bit of difference when it comes to buying real estate as your primary residence compared to buying it as your investment property.

If you are buying real estate as your primary residence you can get financing even with 5% down
(as long as you qualify) but for investment properties you typically need 20% down in some cases even 25% or more.

Some “A“ lenders (big banks) don’t finance an investment property after a certain number of properties; for investment properties there are other costs associated too if you are also buying a primary residence you get certain rebates and you can even buy under first-time home buyers plan while in case of investment property it is not possible. If you are buying a brand new investment it is very likely you are going to pay HST on top of purchase price (if you fulfil the conditions the HST you pay you will get it back one condition is that you cannot sell the property before one year period).

Let us look at where and what kind of investment property one should buy so that equity can build up fast and that equity can be used in future to buy more properties.

One thing which matters most in real estate is the location; excellent location makes all the difference where your property is located location is always the key. Do not buy a property in an area where you do not want to live. Good location must have public transit system accessible to everyone, good walk score and should be close to all amenities.

Check the vacancy rate in the area. A low vacancy rate in the area is an indicator that your property will be rented out quickly and more chances are that rent will increase in the near future.

Check employment rates in that area. Property prices are increasing at a very fast rate not only in the GTA but all over in Central and Southern Ontario and, as a result, more and more people are being forced to rent instead of owning.

Let us look at an example of a $400,000 pre-build condo property. We’ll assume it will be ready in 2-three years. By the time you take ownership of the condo you will see that property already has already appreciated by 3-4 % or approximately $50,000. If it is in a desirable location you will have no problem renting it out and in another 2-3 years you should have paid already approximately $15-20k of your mortgage and also at the same time your property is further appreciated by another approx. $30 – 40K. Now it is time to talk to your bank or your lender so that you can take money out and on your way to buy another property and in another 2-3 years next property and so on.

The more properties you own, the more cash flow you will generate. In times of inflation real estate creates hedge against inflation. One can reap the rewards of equity build up, not to forget many tax advantages of owning real estate and advantages of appreciation real estate enjoys.

Word of caution before you buy a rental property: it is very important you do your due diligence.
Make sure numbers work out for you and seek help from a real estate expert. Owning your real estate is owning your own business and you are your own boss.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

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The Toronto market investors may want to target

Many investors have been priced out of Toronto, but one neighbourhood is poised to see impressive price growth – and those who buy in now could make a fortune.

“Regent Park is an area under complete renewal and rebirth. It’s a terrific opportunity to be a part of that in the downtown market,” Brent Binions, president and CEO of Chartwell Retirement Residents, told Canadian Real Estate Wealth. “I have no doubt [prices] will continue to rise. Everything will have doubled or more compared to the original prices [prior to revitalization].”

That bullish outlook inspired Chartwell to establish a retirement residence in the up-and-coming neighbourhood.
What drew the company to the area was the revitalization efforts – which is apparent in the number of condos and parks being developed – as well as the affordability of the land.

“It’s very difficult to do senior living in Toronto because the cost of land is very, very high. You need pretty good density to make this work,” Binions said. “This is a multi-generational is great. And in the downtown core there just isn’t much down there for seniors, so this is great. And it’s a renewing area.”

Despite its close proximity to the downtown core, prices in the area are still affordable due to the poor reputation Regent Park is quickly shedding.

“Absolutely, [investors should be targeting this area]. I look at what they’ve done there and it had to take quite a vision at the beginning of this process,” Binions said. “And I’m not sure if they had come to me on day one, before they had begun the renewal, and said ‘this is what we’re going to do – we’re going to turn this neighbourhood around and this is going to be an area in demand’ I’m not sure 100% what I would have said back then.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Good Corner, Pleasantville, Bella Coola, Glen Walter, Spa Springs

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Are you properly managing your property managers?

Julie Broad, a noted author and industry veteran, thought she hit the jackpot when she found a Toronto-based property manager who only charged 5% of the rent and didn’t expense any fees for acquiring new tenants, outside of advertising costs.

Little did she know, however, that the “mom and pop shop” running her triplex was charging tenants $950 per month – even though rent only amounted to $890.

Looking back, Broad is not only dismayed by the scam, but she struggles with the fact that it may have continued for some time if she hadn’t moved into the house and started collecting rent on her own. As a result, she imparts several strategies to catch fraudsters before they can do any damage to an investor’s reputation and credibility.

These include:

Asking around. “Ideally, these would be investors in your area,” Broad said. “Ask: how long have you worked with them, why, what do you like and what don’t you like. If everyone keeps mentioning the same company, definitely call them.”
Conducting research. This not only involves an online search for complaints and negative reviews, but some investigative work as well. “Ask if they offer other services other than property management, and ask it that way, almost like you’re looking for them to offer other services,” she said. “In my opinion, you only want them to be property managers. If they have a maintenance company, how can you trust that when they say work needs to be done, they’re saying that because work really does need to be done or because they need to boost their revenue on the property side?”
Obtain references. “Ask for the address of some the properties they manage and find some listings on their website, then do drive-bys to see what kind of conditions they’re in and what kind of properties they are.” She also encourages investors to request names of clients and call them for a full evaluation.

Finally, Broad emphasizes that these tips are necessary for all investors – even those who may think they prefer managing their own properties.

“Life changes, and even if you manage your own properties today, you might move away, your job might get more intense, or something might happen where you can no longer do it,” she said. “It’s a good idea to always be in contact with a local property management company just in case you need them.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Courtland, Sainte-Rita, Alder Flats, Barkmere, Pictou Landing

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Surging market putting more and more Vancouver homes out of reach

2015 has seen modest or negative real estate price growth in all but two Canadian markets – namely, Vancouver and Toronto. Taking these two areas into account, average resale home price across Canada went up by 10.2 per cent.

In particular, the latest official figures showed that the MLS home price index (the rate of price changes over time) for the Vancouver market as of December 2015 was up by 18.9 per cent from 2014. Also, the benchmark for detached-house properties went up by 24.3 per cent over the same period, representing a price of $1,248,000.

This trend has prompted the increased popularity of the #DontHaveAMillion hashtag among disgruntled would-be owners, highlighting the invisible barrier that looms over a growing fraction of the purchasing population. This is in conjunction with the number of Vancouver homes listed for sale last year, which was among the area’s lowest historically.

Compounding the situation for prospective buyers are the latest mortgage rule changes that will saddle consumers going for properties worth more than $500,000 with larger down payments.

Despite rumbling discontent, however, the burgeoning market is showing no signs of stopping as 2015 home sales went up by almost 28 per cent, translating to 42,326 transactions in that year alone. Vancouver property assessments have seen a corresponding increase to 30 per cent.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Irish Cove, Hiawatha, Innisville, Lemberg, Saint-Ferréol-les-Neiges

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Led by Toronto, home price gains blow past expectations

New home prices in Canada blew past expectations in October, led by gains in Toronto’s booming housing market, according to a Reuters report.

Economists had predicted a slight month-over-month gain of 0.1% nationwide, according to Reuters. However, Canadian new home prices rose 0.3% in October. The Toronto and Oshawa region led the increase. In that region, prices were up 0.5%, with builders citing market conditions and higher land costs as prime movers in the increase.

On an annual basis, prices were up 1.5% nationally in October – the largest year-over-year increase since December of 2014, according to Reuters. The Toronto and Oshawa market saw an annual gain of 4% – the largest since January of 2013.

In Calgary, meanwhile, prices were unchanged, according to Reuters. Prices in the area have been stifled in the last year by the oil slump.

The continued rise of home prices in Canada has led some analysts to worry that Canadians may be taking on more debt than they can handle, Reuters reported.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Limerick, Morden, Bonnington, Rawdon, Wedgeport

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Good news for investors

A recently released study points to an increased need for rental properties for Canadians, as home prices continue their upward trajectory.

According to a Manulife Bank of Canada’s Debt Survey, published Thursday, 38% of Canadian homeowners feel that housing in their area is unaffordable. And two thirds of those expect housing prices to continue to increase in 2016.

The survey found that 28% of respondents found their local housing market “somewhat unaffordable.” 11%, meanwhile, believe their local market is “not affordable at all.”

A mere 10% believe their local market is “very affordable” and 51% say their market is “somewhat affordable.”

These results point to a large portion of the population who may have to rely on rentals in certain areas.

“The survey also revealed that those in Canada’s largest urban areas (Vancouver, Calgary, Edmonton, Toronto, and Montreal) are much less likely to describe their housing market as affordable (46%) than those elsewhere in Canada (68%),” Manulife said in a release. “Perceived lack of housing affordability was most acute in Vancouver, where just one in three (33%) indicated housing was affordable.”

Investors in specific regions will likely be impacted differently, however.

“In Alberta, Manitoba and Saskatchewan, almost one in five (19%) expect prices to decline in the next 12 months, while just 3% of homeowners in Ontario, 4% in British Columbia and 4% in Quebec expect price declines in the next year,” Manulife said.

Nationally, 63% of homeowners expect housing prices to increase; while a mere 7% expect to see them decrease.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Sainte-Hénédine, Manitou, Grande-Rivière, Silver Harbour, Rosedale

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Rental units quadruple in Canada’s hottest market

Ryan Smith

The percentage of new rental units in Canada’s hottest housing market has skyrocketed in recent years, but residents are complaining that the increase hasn’t led to more affordable housing.

New rental units in Vancouver jumped from 5% of new housing units between 2005 and 2009 to about 20% between 2010 and 2014, according to a CBC News report. Mukhtar Latif, Vancouver’s housing budget chief, attributed the jump to initiatives that urged the construction of rental units over condominiums.

“(The program) has had a big impact,” Latif told CBC. “It will create affordability over time because we are getting new supply coming in.”

But many Vancouver residents say rents in the new buildings are still too steep. For instance, one of the newer buildings, a 22-storey high rise that opened in the West End in 2012, recently listed a two-bedroom apartment at nearly $3,500 per month. And Randy Helten, the head of a West End residents’ association, said the building was pitched to the community as a development that would increase the amount of affordable housing in the area.

“The city should be monitoring what kind of rents are being charged,” Helton told CBC. “At the very least, that should be feedback for the mayor and city council to see if their policies and decisions are providing affordable housing.”

That situation may change in the future, however. Latif told CBC that although the initial incentive program didn’t place rent limits on developers, the regulations have since been amended. Since 2013, developers have been required to limit rental prices in order to qualify for development waivers.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Sherbrooke, Westlock County, Kapuskasing, Lucasville, Schuler

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Commerce Space for Sale / A Vendre *PRICE REDUCED / PRIX REDUIT*

For Sale is commercial space that can easily be transformed into a supermarket, computer technician or technical support for PC laptop desktop netbook notebook, jeweler, tabagie depanneur, convenience or sweets store, restaurant, office, hair parlor or beauty salon, loft or apartment room, health and wellness spa, cafe, bistro, accounting or tax consulting office, travel agency consultant, law offices or partnership firm, dentist or dental clinic, construction or contracting outlet, kindergarten daycare, tutoring, studio or art space, theater or art gallery, textile, notary or government building, reception area or banquet hall, aromatherapy or massotherapy, medical practice or medicinal practitioner, bakery, etc. in the area of Pierrefonds / Roxboro.

Very attractive and conveniently located near the local mosque, Masjid Makkah – Al – Mukarramah, and Ecole Secondaire Le Savoir High School.

Plenty of free parking space available and multiple entrance and exit points.

Lot is fully asphalted at almost 10,00 square feet, basement level, huge parking lot and upper floor with full-sized patio deck in front and kitchen. One thousand square feet plus (1000 sq. ft.) of space for each level inside.

For more information such as rent inquiry, please contact the owner at (514) 880 – 7786 for an appointment for this amazing location and clean space. Hurry, the property will not last long as the offer is negotiable!

A Vendre est un espace commercial qui peut facilement etre transformer en chambre ou appartement, depanneur, centre informatique pour reparation des ordinateurs portables, marche ou magasin, confectionaire ou restaurant, bureau, salon de coiffure ou beaute, mezzanine, bien-etre spa, cafe, bistros, boutique, centre de commerce, espace prive, entreposage, bijouterie, salle de rencontre ou reception, garderie, patisserie, clinique ou centre dentaire, etc. dans le domaine de Pierrefonds ou Roxboro Senneville.

Idealement situe a proximite de la mosquee locale, Masjid Makkah – Al – Mukarramah et l’ecole secondaire musulman Le Savoir.

Beaucoup d’espace de stationnement gratuit ainsi que nombreux points d’entree et de sortie disponibles.

Pour plus d’informations telles que le loyer, s’il vous plait contacter le proprietaire au (514) 880-7786 pour prendre rendez-vous ou fare une offre raisonable pour cette offre incroyable!

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