Connect with us

Headlines

This is why buying a house in Toronto is so expensive

Editor

Published

on

Toronto and Vancouver are in constant competition for who can have the most expensive real estate market in the country, and despite the pandemic and current economic recession, home sales continue to boom in both locales.

While would-be homebuyers crossed their fingers for a lucky break as a result of the health crisis and resulting months of lockdown, the Toronto market said “eff you” and returned with a vengeance after a brief blip, with prices continuing to rise citywide to over $100,000 more than they were last year, on average. Prices actually tripled between 2000 and 2017, and are only going up.

Even shacks on decent plots of land in the city are going for prices unaffordable to most, and many millennials are coming to terms with what they’ve always sort of known: they’ll likely never be able to own anything in Toronto, seeing as anyone looking to afford a home in this city realistically needs to have a six-figure income.

But aside from the obvious factors of being a growing hub for a slew of industries, being a world-class city that is one of the best on the planet to live in, and having a thriving nightlife, restaurant, and music scenes along with tons of opportunities, there are a few other reasons why buying a house in Toronto is so damn expensive.

Taxes and fees

Development charges — which have increased by as much as 878 per cent since 2004 — add more than $150,000 to the price of an average new-build condo. These fees go to the city when a developer applies for a building permit, and are then transferred to the buyer in the end price.

There are also land transfer taxes, which are paid to the province upon the closing of a real estate sale and add, on average, $54,000 to the price of a detached home in Toronto, per the Financial Post.

Property taxes, which will not impact a home price but will certainly limit who can afford to buy the property based on their long-term financial situation, accrue to be thousands of dollars per year on your typical detached home in the city, which on average now goes for $1.52 million.

These fees all go toward upgrading city infrastructure needed for residential areas, like sewage, water and roads, and are higher in Toronto than other cities.

“One reason in particular for our high Land Transfer Tax and Development Charges is that provincial legislation restricts how the City of Toronto can generate cash flow,” real estate representative Steve Fudge says.

“Unlike many North American cities, Toronto cannot add a surtax on income, or a sales tax on products (like gasoline), or tax education or health care facilities. Yet.”

Immigration and foreign investment

Hundreds of thousands of immigrants come to Canada each year, and being the biggest city in the country and the locus for so many industries and so much economic activity, Toronto is an easy choice for a place to settle down.

This means a growing population and increased competition for limited housing in the city.

And then there are foreign investors, who drive up property values beyond reasonable levels — and Toronto is now the world’s second-most overvalued housing market, with foreign investors owning somewhere around $38 billion of the city’s housing supply.

Ontario has thankfully implemented a non-resident speculation tax of 15 per cent as of 2017.

Low lending rates

With mortgage rates in Canada slashed to record lows due to the pandemic people are now able to afford more house with less. This increases competition amid an uncertain time when buyers would normally be inclined to put off big financial jumps like real estate purchases.

Also, because Canada’s banking system is so strong, a housing crash like the one that happened in the U.S. 12 years ago is highly unlikely.

Those darn boomers

Those who had the foresight to invest in real estate in the city back when things were actually affordable — aka baby boomers — are pretty unlikely to let go of their property to downsize, relocate or move into retirement homes earlier than absolutely necessary.

According to a study by consulting agency Altus Group per the Financial Post, single-family homes — that is detached, semi-detached and townhouses, which still make up a large chunk of housing in Toronto and are the most expensive type — are “the preferred living option” of 71 per cent of Torontonians aged 65-74.

“People generally want to stay in their homes and, increasingly, support systems are in place to allow this to happen,” the news outlet says.

Continue Reading

Headlines

The First Step to Property Investment – I Want To Invest, Now What

Editor

Published

on

By

Have you been considering real estate investing but aren’t sure where to start? There is no doubt that you have heard how much of Canada’s wealth stems from real estate. It’s a hugely successful area of investment, and it’s relatively easy in comparison to playing the stock market which can be far more complicated and volatile.  If it’s something you have thought about and don’t know where to begin, this is the place. The Home Guyz always want to see successful investors and they know the old saying, If you fail to plan, you plan to fail. These are the very initial steps you should take if you’re considering. It isn’t a how-to more of a where to begin.  The most important thing to understand if you’re considering real estate investing and becoming a landlord is that it takes time, you must understand that property investment isn’t a way to get rich fast, but rather a high-performing investment that grows consistently over time.

Here are 5 steps to get you started with the real estate investment process, because remember; fail to plan is planning to fail.

Step 1: Set Clear Goals. Make your goals clear, not just “I want to make money” have a target number that you want to reach by a certain time. Is this a five year goal, a 10 year goal or maybe something you want to use in retirement. Have a clear outline of why you want this, and your goal timeline.

Step 2: Make Time. Depending on how you plan on investing will depend on the amount of time you need to put towards it. But one thing is clear, despite how you inves whether short term rentals, apartment landlords etc. all of it will take some of your time. So make sure you have time to give to the process. You may think that hiring a property manager will mean that you don’t have to put in the time, but that’s just not true. The process, especially at the start is time consuming. Consider the initial time consuming things to include:
-research
-bank meetings 

-lawyer meetings 

-finding and viewing property

-managing properties or the property manager

Step 3: Do Your Research. Do you fully understand all the financial elements? Gross yield vs net yield? how will this affect your taxes and what you’ll pay in capital gains? Do you understand the power of leverage- or do you know where and who to ask for help? You need to have a full understanding of all of this before you proceed with investing. These can be very very expensive lessons to learn along the way. Knowledge is power when it comes to real estate investing. 

Step 4: Create Your Budget. Like buying any house, you need a solid budget and you need to understand what you’re budgeting for. To start with your budget, it’s smart to speak with a professional, but in general you’ll need to have the money up front to pay for your deposit, lawyer fees, agent fees, taxes, and of course you’ll need contingency money for emergencies that may arise. The difference with a budget for real estate investing is that the budget you have must be over and above your own household and life expenses, so you’ll need to ensure that you have a solid grip of all of your regular expenses to ensure that the money you are using is able to be spent over and above your regular budget. So you must have a solid understanding of your existing financial situation. Which leads us nicely into our next point…

Step 5: Speak With A Mortgage Broker: You’ll want to understand what lending options are available to you, and what the various options are. A professional is the best way to go. Do not look for these options on the internet, this information will not be accurate to you and your situation, you don’t want to base your budget around a lending option that may not be available to you! Check out a Mortgage Broker we recommend.

Step 6: Finalize Your Personal Preferences (Now is a good time to look back at your goals!) You’ll need to be clear on what you want your property investment to be. Knowing what you want your goals to be will lead you into the type of property that will make that happen. Ask yourself all the questions…do you want a higher income or a higher yield? Do you want short term rental? Do you like the idea of a condo or does the lack of control not something you want to deal with? How hands-on do you want to be? What location are you looking for? And of course budget, which will immediately narrow many options and areas. All of these questions and factors are areas that you must be clear on, you must be able to answer these questions. This is a very good time to contact The Home Guyz as they always know the best areas and options, they know the right questions you need to ask, which leads us into the next step.

Step 7: Contact Your Real Estate Salesperson. You’ll need assistance with finding rental prices. This isn’t guess-work or even information you should pull from the internet. You will want to speak with actual rental agents who can let you know the prices you can get for certain renal properties. Plus an agent will have a good understanding of the demand and you’ll want to know listing prices vs. actual sold prices. They can talk to you about rental yields, days on market, vacancy rates and other factors you just can’t find without a professional. These are all factors you must take into consideration in order to be a successful landlord and real estate investor. Your agent can assist you with your preferences outlined in the previous step and they can help narrow your search, or even better, perhaps open up some great opportunities you perhaps weren’t aware of! They can help you identify risks you perhaps hadn’t thought of and work with you to find smart ways to overcome them.  Looking for a Realtor®


Investing in Real Estate is rarely a bad idea. It’s a good way to confidently grow your investment portfolio, and build long term wealth. But it is not risk free. Be prepared, The Home Guyz would love to discuss with you investment opportunities in the Ottawa area and beyond. 

Continue Reading

Headlines

Investing in Urban Real Estate for Beginners

Editor

Published

on

By

No matter what type of urban property you’re considering, it’s important to first understand the ins and outs of urban real estate investment.

Why are more people investing in urban real estate

Many investors have shifted their focus from suburban properties to urban properties and there are many reasons for this. One big reason is that there are much more properties available in a city compared to a suburb, which can depend on the area in which you’re searching. For the most part, popular cities keep adding more and more infrastructure, which means there’s usually no shortage of properties to invest in.

Since urban areas are more popular for rentals, it’s usually easy for real estate investors to find tenants for their properties. That is sometimes a problem in suburban neighbourhoods. Not having tenants means an investor might have to go for an extended period of time without income from their investments. Utility and maintenance fees, along with property taxes, must still be paid during this time.

When investing in an urban property, however, there is usually plenty of foot traffic. People are going to notice a property available for rent and there is always someone in need of a place to live.

Why you should invest in urban real estate

If you’re a first-time investor, then buying an urban real estate property could seem like a huge undertaking. Investing in urban real estate is similar to investing in any other type of property, though. You still have to do an extensive search to find the perfect property and provide maintenance when needed. There are, however, many benefits to investing in an urban property.

One of the great things about urban real estate is that there’s a huge diversity of different properties. If you aren’t ready to take on an entire home or commercial building, you could instead invest in a local condo. This will still yield some passive income and won’t require much work. That said, if you’re looking to make a living off your investment, then it’s important to find a property, or properties, that will yield a large profit.

In urban areas, there’s also a huge diversity of people, food and shopping options. The promise of diversity is a big reason many people choose to live in an urban setting. People also like the convenience of having public transport, plenty of parks and other amenities. Interest in urban living, especially with younger people, will probably keep growing. This means you could see huge profits on your investment in the future.

With so many people moving into urban areas, you might choose to buy a piece of property in the hopes of selling it at a future date. It’s important to do plenty of research on the area where you plan on investing. This will help ensure that you see a good return on your investment.

Another reason you should consider investing in urban area properties is that they are sometimes much cheaper than suburban properties, depending on where you look. This is great for those not looking to blow all their money on a first-time investment. Make sure any property you’re considering isn’t suspiciously cheap, though. This could mean there are major problems with the property, including the need for many repairs.

Finding the perfect property

As with investing in any type of property, it’s important to do plenty of research on urban real estate investments. This means checking out the property yourself to make sure there aren’t expensive repairs needed. You should also check for things like insect infestations, mould and any other problems. Any issues with a piece of property could mean you’re wasting money by having to pay for repairs or cleaning.

If you plan on buying a property to sell at a later date, be sure to heavily research the area. Check for housing trends and see if the area has increased in value over the years. You don’t want to accidentally purchase a piece of property that will end up dropping in value over time.

There are many benefits to visiting the neighbourhood in which you’re wanting to invest before settling on a piece of property. This will help you better understand the area and the amenities it has to offer. Don’t purchase a piece of property if you’ve noticed plenty of “For Sale” signs or businesses that have closed down, for example.

It’s always a good idea to consult with a real estate professional in the area. They will offer you the best advice and provide all the information needed on a specific neighbourhood and piece of property. When going to look at a property, have a maintenance professional check for any needed repairs. This could help save you a ton of money on your budget for renovations or avoid a property that needs too much work.

Make sure to get the best financing

Financing urban homes can be subject to different rules and regulations. Often times it pays to have a broker shop around for you to get you the product that supports and urban home, but also helps to maximize your lending amount.

We recommend all readers to call LendCity Mortgages for your urban property. They can be reached from their website in the link above or by calling them at 519-960-0370.

Be aware of these things

There are certain issues with urban properties of which you should be aware. The breaking of lease agreements, for example, is a bigger problem with urban properties than suburban properties. This is an easy problem to deal with, however. Just make sure that you’re properly vetting your tenants before allowing them to rent. This means doing proper background checks and looking at their rental history. Put reasonable consequences for breaking the lease early into the agreement—something that will help you recoup your costs.

Fixing and flipping a home could also be much more difficult in an urban area because there is less room and more red tape to get through. Working with a reputable local contractor will usually ensure that you won’t have too much trouble renovating a property.

With the right research and awareness, urban properties are a great investment.

Continue Reading

Headlines

7 Tips for Investing in Distressed Properties

Editor

Published

on

By

Distressed properties are so cheap that the cost of repairs and renovations could be minimal compared to the potential profit. If you want to invest in a distressed property, it’s important to do plenty of research and be aware of the risks involved. Having a good strategy in place can ensure that purchasing a distressed property will result in larger profits.

Do your research for every distressed property you find

If you’ve found a distressed property for a good price, it’s important to do plenty of research before buying. Consider having a specialist inspect the property and check for any and all needed repairs. This will help you avoid the need for unexpected repairs down the line. You don’t want to end up investing in a piece of property that’s beyond repair.

Researching the neighbourhood is just as important. Even if the price is right, you’ll want to make sure the property is in an area where homes sell. Speaking with a reputable real estate agent in your area is the best way of finding out information on a particular neighbourhood.

Take an on-hand approach

It’s important to stay aware of whatever’s being done to your property. While construction and renovations are being done, you should frequently visit the property. Make sure your contractors keep you updated on the progress of any renovations. Knowing that everything is going smoothly will give you peace of mind. If there are any issues, you’ll want to find out about them right away.

Investing in a distressed property takes a lot of time and energy. Make sure it’ll be worth it by staying on top of repairs and renovations.

Do proper planning

Before you start looking at properties, it’s important to develop a good strategy. This will include deciding where to look and how much you’re willing to spend on renovations. Developing a strategy with a local real estate professional and the contractor could help assure that you’re making all the right decisions. Develop a timeline for how long repairs and renovations should take. Try to decide on a specific date when the property will be ready to sell.

Since distressed properties are usually a bit more unpredictable than other investments, be sure to prepare for any situation. You’ll need to push your expected sale date forward if repairs and renovations take longer than expected, for example. This means not promising a specific move-in date to potential buyers unless you’re absolutely sure that the property will be ready.

Know that there are risks

Being optimistic about any property that you’re invested in is a good thing—however, don’t ignore the risks. Distressed properties are usually in bad shape. Don’t invest if you can’t put in the right amount of time and money.

If you were hoping to receive financing for a distressed property investment, then you might be disappointed. There aren’t many lenders out there who will offer financing for a distressed property. That’s why it’s a good idea to have a backup plan.

If you are looking for financing call LendCity Mortgages at 519-960-0370. They have access to construction lenders that will move forward on a distressed property.

Selling a distressed property can also take time, even if it looks great. The market can fluctuate. That is why it’s a good idea to have a real estate agent on your side. A good real estate agent can help you decide on the best time to sell.

Have an exit strategy

Since there are many risks involved with distressed properties, it’s good to have a pre-determined exit strategy. This is true for any real estate investment, but especially with distressed properties. Don’t spend all your money on buying the property and repairs. Have some money set aside in case you need to exit the deal. Exiting will definitely result in a monetary loss, but is sometimes better than sitting on a property and waiting for it to sell.

Hire the right renovation company

Renovations are a big part of investing in a distressed property, so you’ll want to make sure you hire the best local contractors. A good contracting company can take care of all your repair and renovation needs in a timely manner. When it comes to finding the right contracting company, consider asking other investors. They might have good recommendations for inexpensive contracting companies in the area.

Online research could also result in finding the perfect contracting company. Check each company’s reviews and contact them for estimates. These estimates will also help you better develop your budget.

Have a proper budget in place

Most investors buy distressed properties through an auction. This is why it’s important to decide how much you’re willing to bid without going over. Besides just the cost of the property itself, there are also plenty of monetary considerations that need to be made with distressed properties. You’ll need to make sure you have enough money left over for repairs and renovations. The cost of marketing and landscaping, taxes and insurance should also be considered.

Is investing in a distressed property worth it?

Distressed properties are enticing to investors, mostly because they’re much cheaper than other properties. If you have the right strategy, then investing in a distressed property could be quite profitable. Depending on the distressed property, there could be less competition, which means you’ll end up spending even less.

Be willing to take the risk of owning a distressed property if you’re going to purchase one. If you’re not willing to take the risk, then consider putting off your investment and saving up for a safer option. Distressed properties take a lot of time and work, making them difficult investments for new investors. If you’re a new investor interested in a distressed property, consider consulting with experienced investors. Pick their brain for tips on making money from a distressed property investment.

Continue Reading

Chat

Trending