Want to buy a cottage?
A lot of good information in this Financial Post article and also the Royal LePage Recreational Property Report which you can find in full on my website, or click here.
Weigh the costs versus the rewards
With summer just around the corner, vacation plans begin to formulate. For many, this includes an extended stay at the family cottage. This article from the Financial Post gives a good background of information for those looking to purchase a vacation property.
Possibly the most important factor to take into account when looking to purchase a cottage is the mortgage. Lending terms and interest rates for “recreational properties” are different than those of a principal residence. It is always a good idea to consult a qualified mortgage specialist to advise you on the different options available.
This article also explores the possibility of renting your cottage out while you’re at home, giving your vacation spot the potential to be an investment property, and providing some tax benefits. Of course, it is essential to factor in maintenance and repair costs.
To read the full article from the Financial Post, click here.
Is this where we are going?
I found an article in an old National Post dated December of last year. It really made me think. Yes, it’s about Vancouver and they’re all a bit crazy there (sorry!) - but then, maybe they are just a bit ahead of us here in Ontario. Maybe it will happen here too! Certainly it’s true that condo apartments are getting smaller and smaller but there has to be a limit – hasn’t there? Already we are looking at apartments under 500 square feet and of course we can understand the reasons that people are buying them. Smaller price tags, less condo fees and utilities. It offers a way to break into the market for young professionals, especially those living alone, working downtown. Just a place to rest their heads and grab a quick shower. But I wonder how many would be willing to shoe-horn themselves into a space like the one described below. The apartment described is actually a rental but if they can build it to rent, they can build it to sell! I’d welcome a comment from you, my readers!
Micro-living:
Canada’s smallest apartment the size of a walk-in closet
Extracted from an article in The National Post by Karen Hawthorne Dec 21, 2011 
Andrea Wong, relaxes on her pull-down Murphy bed in her 291-square-foot apartment.
Need to declutter your home and silence that inner voice egging you on to buy more stuff? Don’t risk the producers of Hoarders showing up on your doorstep. Down-size to a 226-square-foot apartment in Vancouver.
This clean-lined apartment is just 247 square feet. The city known for expensive real estate has unveiled the smallest self-contained rental suites in the country — just 226 to 291 square feet — renting for about $850 per month, including cable and Internet. Location comes with a price tag, of course. When the bed is up and away, the table comes out. Handy! All in 237 square feet.
The tenants, most 25- to 35-year-old working professionals, say they appreciate the chance to live in the historical downtown core, even if it means sacrificing on space. “It doesn’t feel that small,” Lia Cosco says of her top-floor corner suite with three large windows, “a ton of exposed brick, and a beautiful view of the North Shore Mountains.”
Unit bathrooms are compact. There’s a drain in the floor in case water from the shower sprays beyond the stall.
All suites in the five-floor building have space-efficient design, including flat screen TVs, compact appliances — a dishwasher, but no oven — and built-in pull-down wall beds with integrated folding tables. Put up the bed in the morning and fold out the table. unit comes furnished with a sofa, chairs and coffee table.
Cosco calls it a “cosy nook.” She walks five minutes to work, and says she would have paid the same price or more for 400 square feet in a neighbourhood much further from work. This is the first time she’s been able to afford her own apartment. “It’s the price for space allocation in the neighbourhood. When people say Vancouver is too bloody expensive, well it is.”
The downside? There’s a microwave and stove-top elements but no oven, no bathtub and the windows are not double-paned, so noise can be a problem with buses going by and people getting loud during the night, Cosco says. “It’s not forever, but it’s great for right now.”
Finding the right home, with or without Mr. Right
This article, gleaned from April 19th’s Globe and Mail, addresses possible problems for women buying their first homes solo.
By Andrea Self
The Globe and Mail
I have a single friend sitting on the fence between buying and renting. She’s financially ready to make the leap into homeownership, but hesitant about doing it solo in case she meets someone soon.
Waiting for Mr. Right can derail a number of women’s homeownership plans, according to Sandra Rinomato, a realtor and owner of a full service brokerage in Toronto.
“I can’t tell you how many times a client asks what she’ll do if Mr. Right comes along, and I always say if he does, then okay, you can keep the investment in your portfolio and rent it, he can move in, or you sell it and take the equity,” she says. She speaks from personal experience, having at one point purchased property on her own while in a serious relationship. She was ready to start climbing the property ladder and he wasn’t.
More and more single women are entering the market, making up roughly one in four new buyers, according to Ms. Rinomato, who is currently hosting the new HGTV series, Buy Herself, focused on helping singles navigate the world of real estate.
The first step for those interested in home ownership is to run the numbers and ask themselves if they are financially stable. Start with a snapshot of your personal finances, to review where you stand with your assets, liabilities, and credit score. Then, dig into mortgage rates and get preapproved.
“If you are not preapproved, forget about starting your search. There is no reason to even look online if you have no idea how much you can afford,” Ms. Rinomato says.
I see her point, but it’s so tempting to click through MLS, browsing the homes you could buy if you had a little, or a lot, more money to work with. You come back to reality pretty quickly though once you start touring places that are within your budget.
“If I could pull a rabbit out of a hat I would, but we work within the budget,” laughs Ms. Rinomato. Searching outside your financial scope can derail the process, or financially stretch you further than you should be if you fall in love with something a few rungs out of your reach on the property ladder.
Aside from down payment, monthly mortgage costs, and emergency funds for the unexpected, it’s your responsibility to have a grasp on the countless other costs associated with buying your first place, like inspection, legal, and appraisal fees.
Ms. Rinomato says it’s not unusual for solo buyers to have unrealistic requirements, so sitting down with your wish list and prioritizing your needs and wants in a place is the launch pad to starting the search within your financial parameters. A strong team in your corner is also essential for a first-time buyer, and an understanding of the steps of buying, and how to will help you make the right investment decision.
Ms. Rinomato hopes her new TV series inspires women to at least ask if this is the right time to buy and not to hold back because they’re scared, or don’t think it’s an option, or think Mr. Right is around the corner. More importantly, she hopes women have the courage to leap confidently into homeownership if the time and the investment is right.
Angela Self is one of the founders of the Smart Cookies money group. Read her weekly column on managing debt and saving money at the Globe’s personal finance site.
Very interesting piece on foreign buyers
Something to think about. And please comment if you wish.
Debate on banning foreign buyers resurfaces
Written by Vernon Clement Jones
It’s a controversial suggestion that isn’t about to go away, with new calls for a ban on property buying by foreigners — increasingly faulted for outbidding local investors.
The Financial Post’s right-leaning columnist Diane Francis is the latest to float the idea of dramatically clawing back the buying privileges of foreign nationals, whether they reside in Canada temporarily or seek to plant their investment flag in a country they’ve never called home.
More specifically, Francis is asking any temporary resident — a person with a work permit — be restricted to one owner-occupied residence, which must be sold when he or she leaves the country. That temporary resident would also be banned from buying any investment property for the purpose of leasing it.
The ban is all but complete for non-resident foreigners wanting homes or investment properties.
“The only exception is if a foreign entity doing business … wants to buy housing for its Australian staff,” she writes, referencing Australian law introduced in 2010 and advocating it as a model for Canada.
The suggestion echoes some Canadian property investors concerned that they are being shut out of the Vancouver and GTA markets as deep-pocketed Asian buyers ratchet up buying prices.
Francis points to a Toronto house sold in March for $400,000 above its $759,000 asking price. The new owners are Chinese nationals, buying the property as a college residence for their child.
It’s a strategy more and more Canadian investors are adopting, although GTA selling prices have largely limited the viability of those plans. Americans, still grappling with tight credit and decimated home equities are also complaining about an influx of Canadian competitors now moving in to buy condos, townhouse and multi-family properties, often with cash in hand.
Still, in this country, foreign investors can’t be blamed for the spike in condo construction in either Toronto or Vancouver, counter critics of any Canadian move to follow several Asian and Western markets already restricting foreign ownership.
They blame the price surge in this country on a buying spree by Canadians, themselves, relying on low-interest rates and “liberal” default insurance guidelines.
Excellent article to save you from buying the wrong house
It’s a bit long to feature here but I thoroughly recommend you take a look at Mark Weisleder’s recent article featured in the Articles section of my website. Mark writes and speaks on real estate topics and I am very pleased to bring his work to your attention.
Check Moneyville for regular real estate information.
Interesting historical data
My good friend Gemma Riley-Laurin, a mortgage broker who, with her husband Kevin is part of The Laurin Team – www.thelaurinteam.com – has provided me with a 25 year overview of mortgage rates. Really interesting material. You can find it at http://roberthof.ca/documents/FLM-Historical-Rate-Sheets-March-2012.pdf.
I would also like to mention that I have been extremely satisfied in all my dealings with Gemma and I don’t hesitate to recommend her to all my clients. Gemma is good news.
Decision to stick with mortgage rules praised
This piece is reproduced from the Toronto Star, March 31st, 2012
Some brokers feared tighter leash on buyers.
Canada’s mortgage brokers are applauding Ottawa’s decision to hold its fire on further measures that would make it tougher for home-buyers to borrow.
Having tightened the rules governing mortgages three times in the last three years, the federal government has kept its powder dry in the 2012 budget.
Instead, Ottawa said it plans to tighten its oversight of Canada Mortgage and Housing Corp., the national mortgage insurance agency.
“For the consumer, there’s no immediate changes,” said Jim Murphy, president and chief executive officer for the Canadian Association of Mortgage Professionals.
Too much tightening too soon could have the unintended effect of dampening demand for housing along with many construction jobs the sector creates, Murphy cautioned.
During pre-budget consultations, some lenders had argued the federal government should increase the required down payment to qualify for a loan to 7.5 per cent of the property’s value, up from the current 5 per cent. Some lenders also wanted Ottawa to reduce the length of time a home-buyer has to fully repay their loan from 25 years, down from the current 30 years maximum amortization period.
Both moves would have made it tougher to buy a home.
Ottawa has already tightened mortgage borrowing rules three times since the recession of 2008 as record low interest rates drove household debt loads to record highs. Both federal Finance Minister Jim Flaherty and Bank of Canada governor Mark Carney have cautioned that over-indebted households could run into trouble when interest rates start to rise.
There are signs those previous measures, which raised minimum down payments and shortened amortization periods, are working, Murphy said.
Household debt loads eased in the latest three-month period and condo sales in the overheated GTA market slowed down, he noted.
The government appears to be looking at bringing Canada Mortgage and Housing Corp. more closely under the control of the finance department. CMHC is currently part of the human resources department due to its historic role in promoting social housing.
They do it differently down there…
I have recently heard about the goings-on in the Toronto real estate market. A friend of a friend listed their modest row home for $269,000. The agent held an open house which was mobbed, and buyers were told to submit offers which would be dealt with the following Tuesday. There were 14 offers, all higher than asking, and the home sold for $335,000! And this is not an unusual situation. An unimproved bungalow in a desirable area listed at $750,000 and sold for $1.1 million according to the Toronto Star. It is apparently common practice for agents in Toronto to under-list properties hugely and create a bidding war.
Does this sound like good practice? Not in my book, and I hope it never happens here. This extremely inflationary way of selling a property may make the Sellers very happy – until they are on the other end of a transaction as a Buyer! And what will happen when interest rates go up and the crazy Toronto market cools? Just doesn’t bear thinking about.
Here in Ottawa we list a property pretty well at market value and buyers do not have to go to war to buy a new home. This is our way and we going to stick with it. I hope!
Fraudsters use Realtor reputation in online scam
This is a scary story. Originally aimed at real estate professionals, it has relevance for everyone who is selling their home. Let us all be aware that there are bad people out there willing to take advantage of all of us, any way they can. Kudos for Saskatoon agent Kari Calder for taking action and making this piece of skullduggery public.
Fraudsters use Realtor reputation in online scam
By Carrie Brodi of REM magazine
March 26th, 2012
Realtor Kari Calder has done everything right. An agent with Century 21 Fusion in Saskatoon, she created an attractive and searchable website and built a solid reputation in her community.
But last month her credibility was jeopardized when someone operating from across the world attempted to illegally offer one of her listed properties for rent. Posing as Calder, and armed with little more than a fake Hotmail account and a Kijiji ad, the individual cut and paste text and photos from a syndicated website and posted the home for rent on Saskatoon’s Kijiji website. The offer was too good to be true from the start.
“A large three-bedroom, three-bathroom double-attached-garage home for $1,000 per month including utilities is an unheard of deal in Saskatoon’s tight rental market,” says Calder.
Call it wishful thinking, but many hopefuls still called and some even visited the property, wanting to be shown the interior.
The ad caught up with Calder a few days after it was posted when she received a call from an interested renter who claimed to have been corresponding with Calder for three days prior.
“I am a busy Realtor, but not that busy that I wouldn’t remember having emailed this woman,” she says. Calder asked to see the emails. The return address was her first and last name at yahoo.com. It wasn’t unheard of to see one of her listings posted for rent on Kijiji, but the crime had been taken to a new level through the use of her name.
Shaking and livid, Calder’s immediate concern was for those who may have sent the requested wire transfer of a $1,000 deposit in exchange for – they promised – keys to the home. Her next thought was how this could damage her reputation.
“I said, ‘That’s it. We’re shutting them down. They aren’t going to gain momentum with my name because if they get away with it with me, how many other Realtors are they going to start impersonating?’” she says.
Calder took decisive action, posting a notice about the scam on her website and advising the homeowner to put a notice on her front door. She had the ad removed from Kijiji and notified the local police and the media. Still, people continued to call and visit.
One was Mike Bloomquist, a father who was excited at the prospect of moving his growing family into a bigger home. “I thought it was the break we were looking for,” he says. But as he began to correspond with the crooks, his suspicions grew. “As I read further into their responses, the alarm bells started to go off. For example, they said the owners were in Africa doing ‘God’s work’ and kept talking about needing someone to trust with their home. They also said they had the keys with them overseas and I thought that was really strange.”
Luckily, Bloomquist went the extra step to find Calder’s phone number and verify the authenticity of the ad before going any further. He managed to stay safe, but it isn’t known how many did not.
Calder says this kind of scam is a serious threat to the public and to Realtors across Canada and urges agents to act quickly if this happens to them – or risk serious reputation damage.
“If somebody has sent money and they don’t have a house to go to, they are going to start turning to us as agents, saying, ‘You did this to me’. People always need someone to blame,” she says.
It isn’t much use going to the police after the fact.
“In a situation like this, the police are pretty powerless to do anything,” says Sgt. Brian Trainor, retired fraud detective with the Saskatoon Police Service. “Fraud is a difficult crime to investigate because the perpetrator may be anywhere in the world. Many international frauds are unsolved because of this jurisdictional nightmare.”
Calder says technology is a double-edged sword: both helpful to the process of buying and selling homes and also a breeding ground for identify theft. She suggests watermarking photographs and even keeping the street address private.
“Ultimately, these criminals are only getting more creative and it is up to all of us to be vigilant,” she says. “We need to be good cyber citizens and alert people when we see these frauds. The honest people need to take care of the honest people.”
Your mortgage penalty may be tax deductible
I came across this interesting piece of information from the Mortgage Brokers of Ottawa
March 14, 2012
Maximizing their income tax refund is something most Canadians seem to be thinking about this spring. Combining tax time with the expense and stress of moving brings up a whole new set of questions, and it is common not to realize the potential of your refund simply by not being informed. There are constantly changes being made regarding eligible deductions, and being educated is necessary for such an important task. This article from Moneyville contains several examples of possible deductions you may not have considered.
If you are moving to reduce your commute to work by more than 40 km, the fees you incur by breaking the mortgage on your current home can be used as a tax deduction. Revenue Canada will also allow you to deduct moving costs, if you are moving to pursue full-time college or university studies. Costs associated with selling your property when you make this move may also be deductible. Commission fees and legal fees are two examples of this. As always, it is recommended to speak to your tax professional before claiming a deduction you are unsure of.