Why does REIN consistently rank Kitchener Waterloo #1 ?

Here are the Top 9 Reasons You Should Invest in Kitchener Waterloo Real Estate

#1 – consistently ranked as the top spot to invest in real estate in Ontario, and #2 in Canada as per REIN

#2 Low Interest Rates – It is now more affordable to borrow money, making it a great time to buy investment real estate

#3 Great Prices

For the complete article, click here: Top 9 Reasons You Should Invest in Kitchener Waterloo Real Estate or watch this video:

Related posts:

1. Local News looks at Why REIN named Kitchener Waterloo #1 place to invest in Ontario Last night CTV ran a story on the recent Real…
2. Kitchener Waterloo Real Estate ranked #1 again A client sent me a link this morning to the…
3. Two Waterloo Region Apartment Buildings Sell For $45+ million (…and we have many clients looking to buy big apartment buildings…
4. Waterloo Chronicle reports 27.4% Increase in Home Sales Great little article from this morning’s Waterloo Chronicle, if you…
5. Report: Waterloo Vacancy Rate Falls to 1% Canada Mortgage and Housing Corporation (CMHC) just released their Rental…
6. Investment Real Estate Terms: Cap Rate & Cash on Cash Return One of the questions I get a lot is “whats…
7. From Greece with Love How the Greek Debt Crisis directly affects Kitchener Waterloo Real…

Related posts:

1. Investment Property in Cambridge Ontario Sells for BIG Bucks
2. Vacancy rate in Waterloo falls to 1%
3. Kitchener Waterloo named in “Areas Set to Boom” by Canadian Real Estate mag

Large Apartment Building Sold in Cambridge Ontario

Last week we looked at Two Waterloo Region Apartment Buildings that Sold For $45+ million.

Here is a video with some more information on the sale:

To recap, the investment property in Cambride, Ontario was purchased at a 5.7% cap rate.

Between both apartment buildings there are 225 units, and the average rent is above $1500 per month.

High valuation, but the properties generate premium income, are prestigious assets, and are very recent (6 years and 1 year) construction.

Related posts:

1. Kitchener Waterloo named #1 Investment Spot in Ontario by REIN, again
2. Two Waterloo Region Apartment Buildings Sell For $45+ million
3. Property Management for KW investment property

An excerpt of each article is included.  Click the title to read the full blog.

Google moves offices from Waterloo to Kitchener’s Tannery

Big news for downtown Kitchener: Google is moving it’s offices from Waterloo’s Tech Town (in the U of Waterloo research and technology park) to the Tannery District in downtown Kitchener.

This is great for downtown Kitchener, and will prove to be especially profitable for our clients who own investment condo’s at the Kaufman Lofts (one block adjacent) and other downtown Kitchener Condos.

Ontario Rent Increase Guideline for 2011 is pretty low

0.7%  to be exact, the lowest it’s been since the government of Canada implemented guidelines around the amount that real estate investors could increase the rents in their investment property each year.

From The Record:

The guideline is the maximum amount a landlord can increase the rent of most sitting tenants without seeking approval of the Landlord and Tenant Board.

The 2011 guideline applies to rent increases that occur between January 1 and December 31, 2011.

The calculation is based on the Ontario Consumer Price Index.

New Kitchener Condo development splits local opinion

Fresh off our discussion of the new Condos, Hotel, and Commercial real estate coming toWaterloo -  the Barrel Yards, here is some information about a new development going in donwtown Kitchener at 30-40 Margaret Ave.

I happen to think it’s a great addition to the area!  Read the article from today’s Record, and leave a comment below!

News on the Barrel Yards Development in Waterloo, Ontario

The Record has an article in this morning’s paper about a major development underway in Waterloo, Ontario – The Barrel Yards – which will bring the Kitchener Waterloo real estate market some very high quality product over the next few years

When completed, the Barrel Yards – located at the corner of Erb Street and Father David Bauer Drive in uptown Waterloo, Ontario – will be home to a hotel, condos, rental apartments, commercial real estate (office & retail space)  and townhouses

Kitchener Waterloo Earthquake!!!

There was just an earthquake in South Western Ontario, felt in Montreal, Ottawa, Toronto, New York, and here where I am, in Kitchener Waterloo.  That is a rather large span.  No words on aftershocks yet.

REALTORS discuss HST & Real Estate in Ontario

From The Kitchener Waterloo Real Estate Board blog:

On Thursday June 17^th, 2010, 16 leaders from Waterloo Region’s real estate industry, including REALTOR® members of the Kitchener-Waterloo Real Estate Board (KWREB), Cambridge Real Estate Board, staff, and a representative of the Waterloo Home Builder’s Association met with Ontario PC Leader Tim Hudak at KWREB’s offices to discuss how the HST will impact the real estate industry and to explore ways in which to help moderate its impact.

Related posts:

1. Kitchener Waterloo Real Estate Market Update: October 2009
2. Centre Block to bring $95 million development to Kitchener downtown
3. Commercial Real Estate news heard on Twitter

One reason, among many, is the proximity to the financial heart of Canada - Toronto, while still maintaining very affordable prices that allow investors to buy rentals that produce positive cash flow every month.

Today the Financial Post has a great story about Toronto emerging as a poweer player on the world stage. Toronto Rising:

“Canada’s economy and financial system has never looked so good to the rest of the world,” said Don Coxe, strategy advisor to BMO Capital Markets, who is based in Chicago.

In many ways, the stars have been aligning for nearly 20 years for Canada’s, and Toronto’s, time in the sun.

The initial drive to tame the deficit in the early 1990s — which many countries are now holding up as model for their own austerity drives — set the stage for personal income tax cuts while the recent commodity boom has helped pad government coffers further, and sent the Canadian dollar soaring.

Earlier this month, the French bank BNP Paribas mused that the loonie could become one of the world’s reserve currencies, a place where central banks and other institutions would park their money as a safe, solid store of value. Indeed, Russia has announced it has started buying the Canadian dollar as a plan to diversify away from the U.S. greenback

…

Toronto already has the makings of a great financial capital. It is ranked by the Global Financial Centres Index, a London-based group, as the third-largest financial hub in North America behind New York and Chicago, and 12th-biggest in the world.

The list takes into account such factors as the number of people employed, the availability of skilled workers, the level of taxation and the volume of transactions carried out.

Toronto is home to two of the world’s largest life insurers, five of the top 10 banks in North America and Europe and at least three of the top 50 pension funds, according to a recent report by Boston Consulting Group.

Financial services accounts for more than 20% of GDP in the Greater Toronto Region, with annual job growth of about 4.3%. The sector employed 220,000 people.

Related posts:

1. Gold hits another high, Real Estate Investors take note!
2. The Crisis in Europe, and Real Estate Investors
3. Another reason to invest in Kitchener Waterloo real estate…

The EU Debt Crisis

Anyone who invests their money anywhere should be watching the economic events unfold in the Euro Zone.

People who know me know that I’m not too optimistic about Europe’s chances to emerge unscathed (and united) from their latest economic debt (or rather, spending) crisis.

Why? The leaders don’t seem to be willing to sit down at the proverbial kitchen table, make a budget that is realistic, and live within their means. Until that happens, they have a problem.

What is the crisis? Most countries spend more than they make, and borrow to make up the difference.

Imagine you spent $150,000 for every $100,000 you made, and you had to borrow the additional $50,000 every year. This can only go on for so long.

To understand why this is a really really big problem, imagine that you and your friends all live this way, and you all are the ones loaning each other money to live this extravagant life.

Eventually, the bill comes, none of you have any money (and you all owe each other $$), and something has to give. Watch this quick video for a better idea of what I mean, then keep reading:

But that’s Europe – why should we care?

Investors will be impacted by what happens in Europe, either directly through stock in European companies, owning mutual funds or stocks of North American companies that invest (or do business) in Europe.

If you own European Banks, you’ve probably seen some of your wealth evaporate (and get ready – more will go soon!); If you own gold, you’re probably doing pretty well watching the credit chaos unfold.

If you invest in real estate, and have loans against the property (like a mortgage or a line of credit), then you’re exposed too (We wrote about this previously here: From Greece with Love).

When lending to Europeans looks riskier, money sources look to stable markets like Canada and the United States to loan to, increasing the amount of capital our banks have access to, pushing rates down (or allowing them to stay low, as we’re seeing this month).

So, what should I do?

I would (and, all of this is just what I would do… talk to a financial advisor for advice thats right for you) minimize my exposure to Europe.

The riskiest assets to be invested in, in my opinion, would be assets that have strong links to the EU economy, or that are sensitive to fluctuations in the Euro or the EU stock indices. That means alot of financial stocks, and the stocks of many companies that do significant business in Europe. Needless to say, I also don’t think buying the Euro is a good idea right now, but what do I know…

Buy tangible assets. Something you can see & touch – that you understand. Residential real estate rentals (either smaller investment property or Apartment Buildings) tend to do very well, since people always need a place to live, and they produce a consistent cash payment every month (that the property is rented).

If you’re investing in real estate, buy in areas that have a strong emplyment base, good schools (K-12 and College & Universities), prices that haven’t skyrocketed recently, and are near other major centres. Just my two cents.

What do you think? Let me know in the comments.

Related posts:

1. Kitchener Waterloo Economy Expected to Grow 3.3% in 2010 Real estate prices are tied to the quality of the…
2. News about the Canadian Economy Smart Real Estate Investors educate themselves about the economy.  I…
3. How to Get the Best Deal The other day we discussed a Real Estate Investor deciding…
4. The Kaufman Lofts in Kitchener Waterloo – an Investor’s Perspective The historic Kaufman Lofts in downtown Kitchener have been a…
5. Light Rapid Transit in Waterloo Region Light Rapid Transit LRT in Waterloo, Kitchener & Cambridge. How…
6. Invest your Home Equity to Retire Rich “Ben, I want to get started, but I just don’t…
7. Finding Money for your First Real Estate Investment I made this video after speaking to a number of…

Related posts:

1. Gold hits another high, Real Estate Investors take note!
2. One reason Real Estate Investors like Kitchener Waterloo
3. What are Real Estate Investors buying in Kitchener Waterloo ?

Here are a few articles that I’m reading about the Canadian economy:

Leading index suggests robust growth

Related posts:

1. Canadian Real Estate Market Growth Based on Demand
2. Commercial Real Estate news heard on Twitter
3. Commentary on the Canadian Real Estate Market

Many of the clients I serve are investing in real estate as a way to take control of their retirement back from the stock market. 

Related posts:

1. One reason Real Estate Investors like Kitchener Waterloo
2. Update on the Canadian Real Estate Market – June 2010
3. The Crisis in Europe, and Real Estate Investors

Two Waterloo Region Apartment Buildings Sell For $45+ million…

…$46,710,000 to be exact

Killam Properties has announced the purchase of 225 recently built residential units in Cambridge, in two river front apartment buildings. This is one of the largest recent Multi-Family transactions in the Kitchener Waterloo area.

“Killam has acquired 100 and 200 Eagle Street North in Cambridge, Ontario, in the Kitchener-Waterloo Region. The luxury apartment buildings are of newer concrete construction and include spacious units ranging from 1,000 to 1,400 square feet, modern features and five appliances. The buildings’ amenities include a fitness centre, guest suite, air conditioning and underground parking.

100 Eagle Street, constructed in 2008, has 119 units with 9-foot ceilings, including 3 one-bedroom units, 59 two-bedroom units and 57 two-bedroom units with a den. The average rent is $1,523 per month. 200 Eagle Street, constructed in 2004 and located directly beside 100 Eagle Street, has 106 units, including 25 one-bedroom units and 81 two-bedroom units. The average rent is $1,351 per month.

The purchase price for the two river-front properties of $46.7 million ($207,600 per suite) was satisfied with a combination of the assumption of a 20-year mortgage for $10.1 million at 5.15%, a new mortgage for $16.0 million at 4.5%, and the balance in cash.

“We are pleased to report progress on our apartment acquisition program in Ontario” noted Philip Fraser, Killam’s President and CEO. “Closing these two Cambridge assets increases Killam’s apartment ownership in Ontario to 362 luxury apartment units. We have continued our acquisition focus on newer, high quality assets. These two assets meet this standard and are among the highest quality assets in Cambridge. The cap rate on the acquisition is approximately 5.7%, reflecting the buildings’ age, location and quality of construction.”

Both the cap rate and the price per suite are rich for the region, reflecting the quality of the asset, as well as the cheap financing that REITs and other institutional investors have access to right now. (CMHC is happy to loan on Multi Family properties, as it is a secure asset class. Rents continue to come in, in both good and bad economic times.)

We have many qualified real estate investors looking to buy apartment buildings now – if you own one, contact us to arrange for a quick sale. You’ll likely be pleased with what buyers are willing to pay for a quality building!

The Globe Advisor expands on the lack of available supply of apartment buildings in Canada:

Apartment buildings - there are about 100,000 of them across Canada, with the majority of them clustered along the Windsor-Quebec City corridor – may not return as much to their investors as shopping centres or office buildings, but they offer a lower-risk way to own income-generating properties.

They held their value through the recession for one main reason – there were no distress sales because owners could refinance their debt inexpensively through Canada Mortgage and Housing Corp. This ensured them access to credit at a time when other property owners found debt markets completely closed.

And with mortgage rates almost certain to move higher in coming months, buyers are scrambling to make purchases while rates sit near all-time lows. RealNet Canada, which tracks sales, shows first-quarter sales volumes actually decreased in most of the country at a time when other commercial sectors were showing sharp signs of recovery.

It has nothing to do with a lack of confidence in the sector, but rather illustrates how reluctant sellers are to part with their income-generating properties.

“What’s happening is people who own them are quite happy and those who want to buy really have to spend a bit more than they may like,” said RealNet president George Carras. “The most dominant owner profile in the sector is the private investors, and they tend not to want to trade.”

…

“You can get money at ridiculously low rates and the big challenge is just finding quality product,” Mr. Greer said. “There is no low-balling, and when something comes around, you see a ton of interest.”

Halifax-based Killam Properties started the year with a goal to spend up to $150-million on Ontario apartment buildings, and passed the $100-million threshold with the Cambridge deal earlier this week.

Chief executive officer Philip Fraser said it has become increasingly difficult to find relatively new buildings that met the company’s criteria, and indeed there were never any “for sale” signs planted on the front lawn in Cambridge.

If you have a building, and you have thought of selling in the next ten years, I strongly reccomend we talk today; with interest rates as low as they are (but heading up fast!) you will likely get more for it today then when rates are higher.

Related posts:

1. What Student Rental apartment buildings can you buy in Waterloo?
2. Apartment Building With Unbeatable Location in Kitchener Waterloo
3. Investment Property in Cambridge Ontario Sells for BIG Bucks

Canada’s economy continues to remain stronger than many other major national economies, and is affirmed by the Bank of Canada’s first rate increase since the beginning of rate cuts in 2008.Cana

As rates begin to rise, experts believe the housing market is poised to soften. Incomes rise at a relatively constant rate, while the housing market tends to rise in steps with periods of stability followed by periods of more rapid appreciation. The past decade has been one of appreciation following the 1990s (when prices were fairly flat). Thanks to a solid mortgage market, prudent lending, and responsible borrowing, experts anticipate the market will generally remain more balanced and prices will stabilize. This is a positive indicator for the long-term health of the market and for the wealth accumulated by homeowners.

While it’s important to keep in mind that the country’s commodity-based economy leaves it somewhat more susceptible to external forces such as global demand, currency rates, and commodity prices, things continue to look up for Canada from a year earlier.

 Housing Market:

Home Sales

Existing home sales activity totaled 42,078 units in April, up 20.1% from last year and down 2.6% from last month. Experts believe there will be a gradual calming of the recently “hot” home sales activity over the next year, citing rising interest rates and a change in mortgage regulations that may have encouraged some buyers to push their timeline forward to purchase before the regulations took effect on April 19.

 Average Home Price

Low supply and strong demand continued to boost prices. The national average home price was $344,968 in April, up 12.2% from April 2009 and up 1.2% from March. Experts anticipate home price appreciation will slow, but prices will remain stable – a positive sign for the long-term health of the housing market.

Inventory

Sales-to-Listings Ratio

In April, 79,678 new homes entered the market. Presently, buyers continue to have a wider variety of options as the uptick in new listings draws the market back into solidly balanced territory on a macro level. As is always the case with real estate, the micro level of locations differ from place to place.

Mortgage Rates

Average for: 25-Year Amortization, 5-Year Term
In April, the Bank of Canada lifted its conditional commitment to keep rates steady until July and made its first increase at the beginning of June. Rates are expected to continue rising but are anticipated to stay within a range that will leave homeownership in reach for many buyers.

(see: Whats going on with Mortgage Interest Rates in Canada?)

 Sources: Conference Board, The Canadian Real Estate Association, Royal Bank of Canada, Canadian Mortgage and Housing Corporation, Bank of Canada

 
Notable News:

Canadian Borrowers Well Prepared for Rate Hikes

As interest rates are trending upward and housing activity is expected to cool down, a survey by the Canadian Association of Accredited Mortgage Professionals (CAAMP) shows that Canadians are in a strong position to weather the new mortgage market condition.

•Increasing home equity is easing consumer concern about rising mortgage rates.
•Many Canadians have used cost savings from historically low rates to make higher-than-required payments and will now have more breathing room as rates increase.
•Mortgage debt is a priority for Canadians with the vast majority, 93%, having never missed a payment.
•Many mortgages were renegotiated at significantly lower rates, one percentage point or more on posted interest rates.
•A high percentage of Canadians remain positive about the housing market and are bullish about house prices.

Sources: Canadian Association of Accredited Mortgage Pro

Related posts:

1. Flaherty talks more about Canadian Real Estate & Mortgage Markets
2. Canadian Real Estate Market Growth Based on Demand
3. Market Update: Real Estate selling fast in Kitchener Waterloo

1)  All changes are effective April 19, 2010 with exception to change # 7 & 8

2)  Qualifying rate – For loans with fixed term of less than 5 years and for all Variable rate mortgages, regardless of the term, the qualifying interest rate is the greater of:  the benchmark rate and the contract interest rate.  (The benchmark rate will be the average of the 5 major banks posted 5 year rate. This will be posted each Monday on a website to be announced later.

3)  Refinance loan to value maximum will be 90%

4)  Maximum loan to value for rental (non owner occupied) will be 80% LTV 1 to 4 units.

5)  Rental income qualification.  50% of the gross rental income from the subject property may be included into the borrower’s gross annual income for the purpose of calculating the borrower’s Total Debt Service Ratio.

6) Maximum numbers of Units under CMHC Second Home. Second home product only available for 1 unit owner occupied properties. 

7) Changes to CMHC Self Employed Product will be effective April 9.

• For purchase and portability the maximum LTV will be 90%. 
• For refinance the maximum LTV is 85%. 

Also qualification rules have changed for this product.  If a client has been self employed in the same business for more than 3 years, they are NOT eligible under the CMHC Self Employed Product without Traditional third party validation of income (qualified deal).  CMHC will continue to require that the borrower have a minimum of 2 years experience in the same field.  This can include time spent working as a non self employed worker in the same field.  Lenders are expected to obtain a copy of the business or GST license or Articles of Incorporation.  Therefore if a client is self employed over 3 years, then you cannot do a self employed product. It must be qualified.  If a client is self employed up to 3 years, you can do a self employed product.

8)  Commissioned income will no longer be eligible for the CMHC Self Employed Product without traditional third party validation of income.

Bottom Line

If you qualify under today’s standards for a loan for 1 or 2 investment properties (whether its a condo, townhouse, older home, student rental or apartment building) that you planned to rent out and hold as long term assets, come april 19, you may no longer qualify to purchase it. 

Let’s talk before then so you know all of your options.

PS – if we have an agreement of purchase and sale (a real estate contract) dated before april 19, and the mortgage is approved, the rental property can close after (they may set a timeframe, contact me for full details).  You don’t have to complete the purchase by april 19, just have the contract written and accepted.

If you’d like to talk to a mortgage broker to explore your options, I can recommend one who does a lot of work with real estate investors.

Leave me a comment below with any questions, and please contact me for more information at 519-772-4376 or via email at Benjamin@BenjaminBach.com.

Related posts:

1. CMHC Mortgage Regulations to Restrict Real Estate Investment
2. New Mortgage Rules for Real Estate Investment in Canada
3. CMHC *finally* returns to Student Housing Rentals in Waterloo