Canadian Realty Holding Its Own

The annual winter lull in the real estate market means that the time is good for prospective buyers who like to take their time. With Canadian unemployment at a 33 year low, the realty market looks like holding strong.

It is difficult for many of us Canadians to accept that while the US realty market may be floundering, the Canadian market is steady. In fact, due to the strength of our dollar and the weakness of the US dollar against International currencies, many Americans are actually buying into Canada to preserve their funds.

While coastal and lake areas would seem an obvious choice for American speculation, many are buying properties simply as an investment project. Renting a condo is one of the easiest way to make money and have the property 'buy itself', and condo sales everywhere have jumped as people are realizing the enjoyment of life without maintenance!

Condominium prices in Ottawa have been climbing upwards all year, with an increase of 7% over this time last year. The strong job market was partly the cause of this. The increase in national employment has marked the 15th. straight year of national employment growth.

In Calgary, condos are also a good investment and offer a reasonable price range if you are trying to get started on the property ladder. The increased inventory of all properties has slowed the market at the moment, so now is a good time to look for a condo. Some builders have even dropped their prices, so brand new ones can be snapped up by the shrewd buyer.

Despite the changes emanating from the famous revisions to the oil royalty revenue, Calgary has a strong economy and has seen a large population increase. According to one national forecast, it is poised to experience moderate growth and a sustainable real estate market though 2008.

Average house prices in Calgary are set to increase by 4% and in a slower moving market, first time buyers may be encouraged to put their toe in the water.

One of the mandatory requirements for a mortgage for first time (or any other) buyers is a good credit rating. If there is no credit rating recorded against you then apply to a bank for a credit card. They may require you to deposit $500.00 or $300.00 and then you will be required to leave that untouched in the bank as security.

By using your card every month, and paying it every month - on time, you will begin to build up a good credit history. Of course, other data is required by a lender. You will need tax forms showing your income and a letter on headed notepaper from your company stating your earnings.

It is always advisable to get "pre-approved" before looking for a house. This means you sort out the finance before checking out the realty. If you proceed in this order, you will know if you have to save more money for the down-payment, or which price range you can look in when choosing.

Things often 'heat up' in the housing market in the spring, so now may be a good time to invest in some Canadian realty.

Buying Revolution

FHA HAS JUST INCREASED THEIR LOAN LIMIT IN KING AND SNOHOMISH COUNTIES

TO $567,500! This is up over $200K from the previous loan limit. This will allow for much better pricing than JUMBO loans up to $567,500.

Can you imagine a JUMBO scenario where the borrower doesn't need to show
any seasoned assets and only has to make a 3% down payment, -which can be money contributed from any family member AND their interest rate would be 5.625% on a 30yr?? (today's rate) This is almost a FULL point better than a JUBMO, non-conforming 30yr fixed!

UNREAL. .we will be seeing MANY more FHA loans in the following years to come.

Also to help BOTH Buyers and Sellers.  I have a special program that give the commission back to the buyer looking for any type of Real Estate.  Thats right, you find the property and I will write and negotiatie the contract and then see it through to the end.  North West RE will keep $2,500 and the rest will go to YOU!   for Sellers I have a Flat Fee listing for $2,500. You will get your property listed on the MLS and Full a Service, completely Marketed listing. Best of all you pay nothing till your home sell.

Feel free to call me with any questions.

Scott Doppke
425-208-5468
Investing Realtor
NW-RE

Buying Real Estate That's Not For Sale

Buying real estate can start with a look in the newspaper, a visit to a broker, or a search online. These are all good ways to find your next investment property. You're looking at the same properties as every other investor, of course, so it's not always easy to beat the competition to a great buy.

A better way to find good real estate investments is to look for properties that aren't yet for sale, and make an offer. I bought my first home this way. I put an ad in the paper stating what I was looking for, and soon had a call from an old couple that had been thinking about selling. I bought their place at a good price, and they saved a broker's commission.

Buying investment real estate that isn't for sale starts with a three step search process. First decide what you are looking for. Single family rentals or apartment buildings? Then start looking for properties that fit your criteria. Then contact the owners.

Buying Real Estate From Non-Sellers

Don't limit yourself to "fixer-uppers" or other "problem" properties that seem more likely to have owners willing to sell. Many owners of investment real estate have thought of selling, so you can start with almost any building you like.  You never know beforehand if or why a landlord is ready to call it quits. You find out by asking.

Tact is necessary here. Call the owner and tell him you're an investor, not a broker. Let him know that you like what you see. Tell him you can have an offer ready in a week if he's interested. If he's not interested, thank him politely and hang up, but send him your card or a letter. Many investors have bought from owners that changed their minds.

If there is some interest, explain that you are an investor, so your offer will have to be based on your return on investment. This means you'll need to see the books. Specifically, you'll need to see the rent roll, listing the units and what they rent for, plus current occupancy, and operating expenses for the last year.

Have a confidentiality agreement ready before you call. Let the owner know that you'll sign it and deliver it to him before you see the books. He may not want to let the tenants know he's thinking of selling, so inspecting the units may have to wait until you make an offer. Just make an acceptable inspection a contingency in the offer.

Why buy investment properties this way? No competition and no sales commission means you may get a better price. Also, instead of waiting for that perfect property to be listed for sale, you just find it now. Why wait until it's for sale before buying real estate?

Buy The Most Expensive House In The Neighborhood?

When looking at homes, one is tempted to buy the best home in a neighborhood. Should you buy the most expensive home on the block?  No.

Think Long-Term

Assume you fall in love with the masterpiece home in a particular neighborhood. It has everything you could dream of: black bottom pool, marble, an incredible kitchen, top of the line windows, stunning brick work and so on. The sellers obviously put a lot of time, effort and money into the home. Accordingly, it stands out as the pearl on the block. Why wouldn’t you want to snap it up immediately?

Before you start signing documents, take a look at the sales prices of comparable homes, “comps”, in the neighborhood. If you compare the comp prices to the dream home, you should notice a pretty significant price difference.  This difference should act as a metaphorical slap in the face or pouring of cold water over your head. The dream home is undoubtedly selling for a price range far beyond the comps. Warning lights should be going off at this point.

You are going to have a problem if you give into temptation and purchase the most expensive home on the block. In fact, you are going to have two problems.

The first problem is the appreciation of the value of the home. The appreciation on the best home in a neighborhood is always going to be dragged down by the structures around it. If you take a $900,000 home from a private community and put it on a block of $250,000 track homes, the $900,000 value is going to come down a lot because the neighborhood will not support it. When you eventually sell, buyers are going to look at the comps in the neighborhood and laugh at a $900,000 asking price.

The second problem is “hemming.” Since you own the most expensive house in the neighborhood, your appreciation potential is already limited. This becomes a bigger problem if you want to remodel or add on to the home. Taking such action would typically add to the value of a home. With the most expensive home, not only will it not add value, it may cut into your equity.  Why? If you do a $50,000 remodel, you may see a $10,000 gain for your $50,000 cost. You just lost $40,000.

Dream or Nightmare

Unless you can accurately predict an increase in valuations for an entire neighborhood, you shouldn’t buy the most expensive home on the block.  If you do, the dream home could quickly turn into a nightmare.

All you Should Know Before Buying Commercial Real Estate.

All you Should Know Before Buying Commercial Real Estate.

Buying or renting,  such is the question many business people ask themselves around the 1st of the month,  when comes the time to write their rent's check.

With the interests rates being what they are and prices being affected by the commercial paper crisis,  the answer might very well be yes if the right property becomes available and you can afford a relatively important cash down.

Owning  commercial real estate does have it's advantages.
Choices:  as the owner,  you can decide whether to select a building that matches your current needs,  has enough room for future expansion or maybe is large enough for you to lease parts of it.

Equity: every month,   your payments are applied to paying down your mortgage and building some equity which could be useful eventually to secure a loan for new equipment,  to finance an acquisition or simply as an asset.

Appreciation: not withstanding any unforeseen occurrences,  your building should appreciate with time.  This appreciation could,   just as the above mentioned equity,  be used to get better financing conditions.

Power:  as the landlord,  you are the person in charge of deciding how to finance the building,  picking the tenants,  choosing the decorations,  selecting entrepreneurs for the work to be done,  improving the building.  You even have control over your rent's rate.


If it's so great,  why doesn't everyone do it?

The main reason why not everyone owns the commercial space they're using is that,  in real life,  thing don't necessarily go exactly as in late night's infomercials…

You can buy commercial real estate with no money down,  especially if it's because your money is bringing you more in another (safe) investment. 

On the other hand,  if it's because your cash flow doesn't allow you any flexibility and that you don't have anything aside should things go a little unexpectedly,  then you may want to seriously consider all the ramifications of the deal you are considering.


Your business' cash flow's growth stage.

Is your business bringing you comfortable and predictable income  which you are looking to invest or would spending an important part of your income hinder any growth possibility for the near future ?

Will you be able to afford any substantial and sometimes unexpected expense should you have to do unexpected maintenance on your building?

Usually,  a commercial property will require a 15 cash down which,  in some cases,  can end up being a lot of  money.

Don't forget you also have to factor in the price of insurances, taxes and legal fees.  Due to the importance of the figures involved in most commercial real estate transactions, I recommend you surround yourself  with adequate representation meaning:  a real estate agent with experience and a positive track record as well as financial and legal advisers.


Examining the tax perspective.

Since I'm not a CPA and that all situations are unique,  I strongly suggest you meet with a competent financial advisor who will help you evaluate your particular situation.

For now, keep in mind that in most situations, you will be able to use some of your expenses as depreciations to reduce your taxes or some of the rent as a personal income.


You make your money when you buy, not when you sell.

One last but extremely important factor to consider before making your decision is that you make your money when you buy but realize it when you sell.

Paying more than the fair market value,  not taking into consideration your cash flow factors (mortgage, interest rates, insurance, taxes and repairs VS incoming rent, other income possibilities such as parking for example) or letting your feelings dictate a purchasing decision may negatively affect your exit strategy for year if you are not careful.

Though appreciation is quite probable, we suggest you don't factor it in when crunching your numbers:  if the deal is still a good deal without factoring in appreciation,  you are likely to make a favorable ROI (return on investment) when you decide it's time to go for your exit strategy.

If you absolutely need appreciation to justify your purchase,  be extremely careful as no one really knows what will happen in the future and, in the present, you may be paying too much.

Discuss the situation with a real estate agent know for his or her integrity such as Anne-Marie Perno from www.Laurentides-St-Jerome-Tremblant-Immobilier.com


What you should remember.

So we looked briefly at the different aspects of buying a commercial property.  Remember the advantages of being a landlord are:
?    Choices
?    Equity
?    Appreciation
?    Power

?    Make sure you carefully evaluate your future cash flow.
?    Purchasing the property won't hinder your growth strategy.
?    You can afford unexpected and sometimes quite expensive repairs should they                  be needed.
?    You can afford the cash down.

?    Get advice from a professional financial advisor about your tax situation.
?    Get advice from a professional law adviser.
?    Get advice from a professional real estate adviser.
?    Avoid free advice as it often end up being the most expensive kind.

?    Evaluate the building's cash flow.
?    Make sure the purchase makes sense even without appreciation.
?    Find a reputable real estate specialist.