Ottawa Real Estate Pros

Long term expected returns

2012-01-31T20:21:00.000-08:00

CBC News has reported the long term returns from the stock market should be between 4.75% and 5% over the next 15 to 20 years, in stark contrast to the typical 8% that is often predicted. Click here for the article

It is really hard to predict where long term stock market returns will go. There is a lot of debt in the USA markets now. Gold is continually pusing new highs. Long term mortgage rates are diving lower and lower (10 year ING mortgages at 3.99%). Greece is flirting with default.

It is a difficult time to predict what is going happen longer term, especially with securities that are effected by the public's sentiment. Equity mortgages are a viable option today for registered investments. Having a secured product will protect your principle.

Remember the two rules of investing, according to Warren Buffett
Rule #1 - Never lose the principle
Rule #2 - Always follow rule number 1

Amazing news ... introducing BENNETT PROPERTY SHOP REALTY BROKERAGE

2012-01-27T12:00:00.000-08:00

Hello Everyone,

Terrific news!

We are so happy to announce the opening of our new brokerage …

BENNETT PROPERTY SHOP REALTY BROKERAGE

The new brokerage will be a boutique brokerage offering a high level of service, evidenced by the prestigious Better Business Bureau Torch Award. I look forward to continuing to offer the highest in customer service and real estate knowledge.

Pre-construction condo opportunity

2012-01-21T19:47:00.000-08:00

Pre-construction condo opportunity available now. Only 10 opportunities.

- 2% off the purchase price.

Deposits:

- 5% upon waiver of conditions
- 5% on january 1st. 2013
- 5% on march 1st 2013 (total of 15%, spread over 14 months, instead of standard 90 days)

Upon Occupancy
- Additional 10% deposit
- rent your place during interim occupancy

- Free property management for 1 year

Services included
- find the tenant
- qualify tenants
- collect all rental cheques
- deal with day to day tenant issues
- answer any questions and resolve problems.

Hot new paint colours for 2012

2012-01-21T10:14:00.001-08:00

Check out the hot new paint colours for 2012

Rock-bottom vacancy rates creates a lucrative market for condo investors

2012-01-21T10:13:00.000-08:00

Looking to rent an apartment in Ottawa? Maybe you should move into a condo — a rental one, that is.

The continuing dearth of apartment building construction here combined with the rabbit-like proliferation of condos means a new kind of landlord has emerged: the individual investor who buys one, two or more condo units and rents them out. The idea is not so much to get rich on the rent — it sometimes barely covers the mortgage, tax and other expenses — but to use the rental income to cover those costs while acquiring a potentially valuable asset in the process.

Some say investor landlords could spell trouble for tenants, while others caution that becoming a landlord isn’t as easy as it appears. We’ll get to those issues in a minute.

Just 101 rental apartments, also known as purpose-built apartments, were started in Ottawa in 2011, according to Canada Mortgage and Housing Corp. That followed several years of minimal construction. At present there’s just one apartment building application before the City of Ottawa’s planning department.

Ottawa’s “last big year for (apartment) construction was 2002,” says Sandra Pérez Torres, CMHC’s senior market analyst for Ottawa. “Even if builders started (planning) apartments now, we wouldn’t see anything for at least a couple of years.” She pins the paucity of construction on skyrocketing land and development costs.

In a city where one-third of residents were renters, according to the 2006 census, that means a vacancy rate of just 1.4 per cent as of October 2011, according to CMHC’s latest Rental Market Report. That rate is down from 1.6 per cent the previous year and means only five Canadian cities had a tighter vacancy rate than Ottawa.

Even so, average vacancy rates fell across 34 other Canadian cities as well last year, to 2.2 per cent in October compared to 2.6 per cent a year earlier.

In Ottawa, says the agency, increases in the cost of buying a home, modest job and income gains and continued inflow of new residents to the city have strengthened rental demand. It predicts vacancy rates will fall to 1.2 per cent in 2012, the tightest it’s been since 2001.

Little incentive
“It’s just too expensive to build (apartments),” says Terry Nichols, vice-president of finance at Urbandale Construction. Like others, he blames development and land costs. “You have to ask, ‘Where can I get the best return?’ ” The company has more than 1,500 rental units in Ottawa, though most are 30 to 40 years old — in keeping with the rest of the city’s aging apartment stock — and therefore subject to provincial rent control regulations that govern rentals including condos in buildings constructed or first occupied before Nov. 1, 1991. Controls, not popular with property owners, kept annual increases to an average of 1.89 per cent from 2004 to 2011, although this year that jumps to 3.1 per cent.

Nichols says Urbandale has looked into building more apartments and even has a couple of properties in mind, but can’t justify it at present.

Condo construction, while slowing down last year along with Ottawa’s overall decline in house building, has boomed relative to rental apartment construction and is playing an increasing role in filling the apartment shortfall.

Of the 1,473 apartment starts last year, 1,372 were condo units. Some area developers report that as much 30 to 40 per cent of condo buyers are investors, although CMHC says it’s closer to 19 per cent. CMHC, meanwhile, says the number of investor-owned condo units has surged to 5,000 from 3,400 in the past six years. That’s just under eight per cent of Ottawa’s total rental apartment units.

Investor Monique Lalonde and her husband, Paul, rent out several condo units in Ottawa. A full-time accountant, she says it’s not a “high cash-flow thing” and that they are more focused on the appreciating value of their units than on whether the rental income is hugely profitable. In partnership with a couple of other family members, for example, they are renting out a 563-square-foot unit in Ashcroft’s new 101 Richmond Road building in Westboro.

“We’re making maybe $50 or $75 a month right now. Even if we just break even, it’s OK because our equity has already increased by about $40,000,” says Lalonde.

Traditional landlords can’t operate like that, says Roger Greenberg, chief executive officer of Minto. The company is Ottawa’s largest residential landlord, with just under 10,000 units in its portfolio. It, too, is holding off on building more apartment blocks. “A purpose-built landlord can’t afford to not make a profit for years,” he says.

It’s a situation echoed or magnified in other major centres across the country, according to CMHC. In Vancouver, for example, more than half of renters live in “secondary” dwellings, including investor-owned condo units, townhomes and others, and a little over 25 per cent of condo units are rented out.
In Toronto, where the vacancy rate is the same as Ottawa’s, 22 per cent of condos are rented out.
Not that no new apartment units are going up.
Montreal-based Groupe Lepine has constructed more than 900 rental units in Ottawa since 1997. They include the swanky, just-opened Kanata Lakes Apartments. The 146-unit site includes a club house, indoor salt water swimming pool and fully equipped gym. It’s one of four buildings planned for the area, which will eventually house 740 rental units.
Patience pays
“It’s what we do,” says company president Francis Lepine when asked why he’s building apartments when others aren’t. Unlike the fast turnaround in the condo market, where deposits and down payments mean ready cash, in the apartment business “you have to be patient.”
Rents at Kanata Lakes start at $1,285 for a 650-square-foot unit including utilities except hydro. A two-bedroom unit goes for $2,200, about double the average price of a similar-sized unit elsewhere in Ottawa, according to CMHC.
Lepine explains that builders can’t afford to put up low-end apartment projects and expect to make a profit, saying government-based charges from taxes to development fees amount to 20 per cent of total construction costs.
That worries City of Ottawa planner Stan Wilder. “We need a lot more affordable units,” he says. “I’m worried all rental (properties) will be higher-end products.”

A recent City of Ottawa staff report says more than 10,000 households are on the waiting list for subsidized housing. The report also states that family stays in emergency shelters have increased to an average of 72 nights in 2010 from 46 in 2007.

Phoenix Homes, meanwhile, is also planning an apartment building in Chinatown, although the company is battling with the city on height restrictions. Known mostly as a land developer and builder of singles, townhomes and condos, the company is looking at apartments to diversify its portfolio with a product that yields continuing long-term cash flow as opposed to the faster, one-time profits of other construction projects, says vice-president Rahul Kochar.

Interestingly, Brian Card, president of the real estate research firm CRG Consulting, says existing rental properties, which are relatively inexpensive to buy compared to building new, are among the hottest acquisition items for both developers and pension fund managers. A tight rental market practically guarantees that the units won’t sit empty, even if some upgrading is required upon acquisition.

With all this happening, what’s the scoop on becoming a tenant in a condo unit as opposed to renting a purpose-built apartment?

Well, it won’t cost you a lot more for a condo, according to CMHC. In 2011, a two-bedroom condo in Ottawa rented for an average of $1,235, compared to an apartment at $1,086.

For the extra money, you’ll likely get a new condo unit with all the trimmings, including an open-concept design, up-to-the-minute kitchen and amenities like a fitness room and maybe a rooftop terrace with a barbecue. Many of Ottawa’s condos are being built in the popular downtown, Westboro and Little Italy areas with good access to public transit, restaurants, bike paths and more.

Older apartment units can have trouble competing with all that. In fact, CMHC even reports a decline in the rental of townhomes, semi-detached and singles in favour of condos.
Not a threat
Still, says Greenberg, condo rentals aren’t a threat to traditional landlords. “They’re needed in the marketplace as cities like Toronto and Ottawa grow. If landlords like Minto aren’t building, where are these people going to live?”

But he cautions that investor landlords need to remember that there are tenants from hell who will fall behind in their rent, damage the unit or pull a midnight skip.

Tenants, he says, should do their homework before renting a condo. How much experience does your landlord have with the rental world? Does he or she live in Ottawa, and how accessible is the landlord if you have problems?

“Sign a lease,” he urges. It’s for your mutual protection.

Paramount Properties, an Ottawa apartment rental company, suggests prospective tenants also inquire about condominium regulations and other matters before signing on (see paramountapts.com/articles/condo-vs-apt-ottawa.aspx).

And if you think the condo investor model is just a contemporary spin on the traditional small-holding landlord who knew you by your first name, Wilder cautions, “In the old days, the mum-and-pop landlord watched their little building like a hawk. An investor might leave the whole thing up to a property management company.”

Condo tenants, however, are protected like any other tenant under Ontario’s Residential Tenancies Act and in case of disputes have access to the Landlord and Tenant Board.

The above holds true whether the tenant has signed a lease or just has a verbal agreement with the landlord.

In addition, Ontario Ministry of Municipal Affairs and Housing representative May Nazar says in an email, “under the RTA, landlords who enter into verbal rental agreements with tenants are required to provide tenants with written notice of the landlord’s legal name and address within 21 days from the start of the tenancy.”

While condo landlords may have the best interests of their tenants at heart, a changing marketplace could have a negative impact on both parties.

Card says that condos make a “nice little investment” that should pay off in the long run, but that a likely slowdown in resale value this year means the skyrocketing growth in equity that owners have enjoyed to date will moderate. That could leave landlords who planned to sell at a fat profit and use the money to finance other commitments with less cash than they anticipated. That, or even a jump in interest rates, could force investors to sell properties, leaving tenants unexpectedly looking for new digs at the end of their lease or facing hefty rent increases if the building is not subject to rent control.

Industry insiders like Greater Ottawa Home Builders’ Association executive director John Herbert have also worried about the potential for overbuilding in the condo market and a resulting price correction. His concern was underscored by chief executives from the Royal Bank of Canada and the Bank of Montreal at a recent banking conference. Although their concerns focused on the Vancouver and Toronto markets, Ottawa’s love affair with condos could put us in a similar situation where condo landlords suddenly have a lot less cash — or credit — than they thought.

Large landlords can also get snared in financial sand traps, but they tend to have much deeper pockets and a more sophisticated knowledge of the rental business than small landlords.

No one has a crystal ball, of course, and the market could go up, down or sideways. But however it plays out in the long run, we should expect to see even more, not fewer, condos for rent in Ottawa in the coming years.
By Patrick LangstonJanuary 20, 2012 10:50 AM
© Copyright (c) The Ottawa Citizen

Upcoming workshop in Ottawa

2012-01-19T11:48:00.000-08:00

Great news!

After numerous requests over the past few years, I am happy to announce that I will be presenting my Live All-Day 5 Year Action Plan Workshop in Ottawa on Saturday,

February 18, 2012.

The workshop is suitable not only for the new investor looking to purchase their first property but also for the seasoned investor who holds a large real estate portfolio (and everyone in between) because each individual/couple will be working on their own personal plan.

You will walk away with a very clear Action Plan that is specific to You.

Please remember that I am limiting the room size so that I am able to give personal focus and attention.

Send an email with your name, email address, contact phone # and number of people planning to attend to clientcare@peterkinch.com or call 604-939-8326 to reserve seats.

Date: Saturday, February 18, 2012
Time: 9:00am - 5:00pm
Venue: TBA
$597+hst

*the cost of the workshop covers 1 Action Plan and refers to the cost of 1 individual or 1 individual with spouse*

Click here for Workshop Information

I look forward to working with you in Ottawa!

~ Peter

Why choose Buyer Representation?

2012-01-17T08:39:00.000-08:00

Click here to watch a video on why you might want to choose Buyer Representation

Secured Real Estate Investment - information session Jan 19th

2012-01-16T08:20:00.000-08:00

Earn 8% annually in interest using a Syndicated Mortgage vehicle.

Become a mortgage lender, to large scale, successful developers like BRAD LAMB.
- 8% annual return (non-compounded)
- 3 year term
- $25,000 minimum for RRSP, LIRA, RIF, CASH
- $15,000 minimum for RESP or TFSA
- Loan to values of maximum of 80%
- Investment is secured by a charge on real estate
- certified appraisals and/or valuation opinions
- Profit bonus upon completion of the project (expected 12%)

What:
Information session on a secured equity mortgage investment that produces an 8% annual return (plus a profit share upon completion of a 3 year term) - cash, rrsp, resp, tfsa eligible.

When:
Date: Thursday, January 19th, 2012
Time: 6:30pm—8:30pm
Location: Chateau Laurier in the Adam Room, 1 Rideau Street

Please RSVP, ASAP to greg@bennettpros.com

The Bubble Debate in Canadian Housing

2012-01-13T14:22:00.000-08:00

With the release of the transcripts from the 2006 meetings of the U.S. Federal Reserve policymaking committee meetings, the media is having a field day highlighting the laxity and imprudence with which the FOMC dealt with the biggest housing bubble in U.S. history. The Fed was totally blind-sided. Apparently, no one fully predicted the repercussions of the excessive leverage and overbuilding in housing. When Alan Greenspan retired in early 2006, he was lauded as the Maestro who shepherded the U.S. economy through its greatest boom. Greenspan even in 2007 remained sanguine about the housing boom, suggesting that average housing prices would not decline nationally and that the underlying fundamentals for housing remained sound—low interest rates, low unemployment and high potential growth of the U.S. economy.

Does this have eerily similar portent for Canada? Some are now wondering if Canadian policymakers and bankers might not be too sanguine about the housing strength in Canada, specifically in Toronto and Vancouver. While the Canadian situation is far different from the U.S. of 2006, the continued surge in condo construction and overall home prices to levels that are not consistent with the growth in domestic income is certainly raising questions about its sustainability and the fallout if it were to unwind.

Subprime lending and mortgage-backed bond creation—the helium in the U.S. housing bubble—play a negligible role in Canada. Although, credit terms were eased by CMHC in 2006, allowing for 30-year, then 35-year and, finally, 40-year amortizations with no down payment, there was nowhere near the laxity in mortgage qualifications rampant in the U.S. where, by 2006, many mortgages were made to borrowers with no money down, little income or assets and no documentation.

But bells were ringing last year as Governor Carney warned of the record level of Canadian household debt relative to income. CMHC substantially tightened its standards and banks have as well. Nevertheless, though many have warned for years that interest rates are likely to rise, mortgage rates continue to fall to their lowest level in history. Certainly, low interest rates make housing more affordable, boosting sales and prices—but the elevated supply of condominiums in Toronto (and, earlier, in Vancouver) is raising issues of overbuilding and future excess supply if interest rates were to rise. As well, foreign capital inflow has supported the Toronto and Vancouver housing markets for years. That factor has apparently been on a significant uptrend in Toronto in recent years. The outlook for that flow is uncertain, although arguably, Toronto will remain an attractive safe haven for foreign money. But how stable that money is remains a question.

In addition, the investment or speculative component of the condo market is vulnerable to higher mortgage rates and/or economic downturn. For now, our baseline economic forecast is consistent with more moderate strength in Toronto housing—slowing the rate of price appreciation this year. Nevertheless, we are analysing the market in great detail, keeping a watchful eye on risks. One exogenous factor that could have meaningful impact is a potential work stoppage of inside city workers. The contracts of 6,000 outside city workers and 23,000 inside workers expired Dec. 31. This would impact every stage of condo construction in Toronto, delaying the approval and inspection processes and delaying move-in dates, which would raise the costs of funding these projects for developers and builders. It would also negatively impact, at least temporarily, the rest of the real estate sector and all of its retail spinoffs.
Bottom Line: We are keeping a watchful eye on real estate developments in Toronto and Vancouver. Price appreciation has been slowing, which is a good thing. The general level of housing starts and permits has returned to historical norms for the country as a whole, which is also good. Although household debt in Canada is at record highs, it is not out of line for most households given the sharp decline in interest rates over the past three decades. Nevertheless, mortgage rates have nowhere to go but up… eventually. Investment activity and foreign purchases in the condo market are not fully understood or predictable. Corrections in housing do occur and they can occur suddenly, so while this is not a red alert, we are not flashing green, either. Further analysis is warranted and will be forthcoming.
Dr. Sherry Cooper
Executive Vice President and Chief Economist, BMO Financial Group

Phoenix-area housing may be on the mend

2012-01-11T15:30:00.000-08:00

Data from the end of 2011 suggest that a housing-market recovery has begun in metro Phoenix.

The upswing in the market will surprise many because it comes less than five months after the region's existing-home prices fell to their lowest level since 1999. But even at last year's low point in August, when the median home price fell to $112,000, many market indicators pointed to an increase in the area's home prices by year-end. Now, it appears they were right.

Search home values
31 Days of Foreclousres

The median price of a metro Phoenix home rose to $120,000 in December, its highest level since November 2010, according to the Information Market, a real-estate data firm. That was the first December since 2005 that the region's median price didn't drop.

The number of home sales in 2011 climbed to their highest level since the housing market's peak in 2006. Foreclosures fell to their lowest level since 2008. And the number of Phoenix-area homes listed for sale has dropped to a figure not seen since 2005, indicating demand is finally exceeding supply. This is a complete turnaround from 2007, when the housing crash started and cheap foreclosure homes flooded the market while buyers were few.

Now, investors are snatching up both foreclosure and short-sale houses at a record pace. Regular buyers, who need a mortgage to purchase a home, are having a hard time competing with cash-paying investors.

"The housing market definitely saw the bottom in August or September of last year," said Mike Orr, new director of the Center for Real Estate Theory and Practice at the W.P. Carey School of Business at Arizona State University.

He continues as publisher of the "Cromford Report," an online daily real-estate market analysis. "I talked to 200 Realtors the other day, and almost all were much more positive about Phoenix's housing market then they were just two months ago."

Experts agree on roughly what a healthy market looks like: The number of home listings holds steady, and sales keep pace. Foreclosures are few, and median sales prices inch up steadily, but not so quickly that they become volatile.

The end of 2011 began to look more like that ideal than it has in recent years.

Home sales climbed to almost 95,000 in 2011, a near-record for annual resales in metro Phoenix.

During the boom, annual sales climbed above 150,000, although more than 60,000 of those deals were for new homes. Now, new-home sales are averaging about 600 a month.

Arizona homebuilding analyst R.L. Brown said the construction of new houses won't pick up until the supply of inexpensive foreclosure homes dries up. New homebuilding could increase this year if foreclosures continue to slow.

The number of homes listed for sale in metro Phoenix is down to 25,000, compared with 43,000 a year ago, according to Cromford. Only 9 percent of the homes on the market are lender-owned foreclosures. A year ago, 20 percent of the homes were foreclosures that lenders were trying to sell inexpensively.

Foreclosures started to climb in late 2007 and peaked in 2010 at almost 50,000. Last year, the number of homes taken back by lenders fell by 16 percent from the year before. Pre-foreclosures steadily fell in 2011, so foreclosures could fall again this year.

It has been a year of ups and downs for the region's housing market, making it more difficult to predict or time a recovery.

One month, home sales were down and prices were up, while the next month foreclosures might tick up as home sales climbed.

Metro Phoenix's housing market became fragmented during the crash. Inexpensive homes sold more quickly than luxury houses during the past few years, keeping the area's median home prices lower.

Early in 2011, the Arizona Regional Multiple Listing Service's pending- sales index showed metro Phoenix's median home price would fall to $100,000. It didn't drop that much, although it did fall to $112,000 after hovering around $115,000 for the first six months of last year.

But now that the region's median is climbing up, foreclosures and listings are down and sales are at a nearly record pace, a growing number of real-estate analysts say the market recovery has started.

"Six months ago, we saw a drop in prices coming. But based on other indicators, it was obviously going to be temporary," said Tom Ruff, analyst with the Information Market. "Now, we are finally seeing year-over-year gains in pricing and sales. The housing market's recovery is on track."

By Catherine Reagor, The Republic
http://www.azcentral.com/

2011 a typical year for home sales in Ottawa

2012-01-06T10:39:00.001-08:00

Members of the Ottawa Real Estate Board sold 699 residential properties in December through the Board's Multiple Listing Service® system compared with 618 in December 2010, an increase of 13.1 per cent. The five-year average for December sales is 611. The total number of homes sold through the Board's MLS® system in 2011 was 14,412, an increase of 1.7 per cent over 2010. The average price for 2011 was $343,701, an increase of 5.2 per cent over 2010.

Of December's sales, 177 were in the condominium property class, while 522 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.), which is registered as a condominium, as well as properties, which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

"Resale home sales in 2011 were slightly above the five-year average of 14,326, and that's really the story for the year. The market started off the year quietly, but gained momentum as we headed into spring and summer, losing very little steam during the fall and posting the best November on record, which leaves us with a very solid balance sheet for 2011," said Past President Joanne Tibbles. "In many ways, it epitomized Ottawa's real estate market: no dizzying highs, no dramatic lows, just slow and steady growth over the long term," she added.

Check out the Ottawa Citizen's comments - click here

CNBC - Ottawa 14th Best City to Live in the World

2012-01-06T10:35:00.001-08:00

Great honour for Ottawa, one of three Canadian cities (Western Hemisphere cities) and one of six Capital cities to be ranked in the top 15 cities to live in the world - click here

2012-01-06T10:32:00.000-08:00

Happy New Year!
It's been a while... may sound cheesy, but I still think of us looking for my very first income/ live in property. I think the best thing I ever did was attend those Increase Your Wealth seminars. I would be swimming in information over-load or wasting my money on those investment guru's from the States. I feel the best thing I did was to choose you as my investment agent, be diligent and jump in with both feet.
Any way, I am blabbing...

All the very best,
Ryan

Holiday Season

2011-12-21T13:31:00.000-08:00

Merry Christmas to all my readers

I wish you a safe and happy holiday season to your and yours!

Best wishes in the New Year

Please note - I am not available between Dec 22nd and Jan 9th 2012. During this time, please feel free to email me and I endevour to return emails daily.

USA visas to be easier to procure in the future?

2011-12-21T09:45:00.000-08:00

What is Happening with the Retiree Visa and Homeownership Visa Proposal (S. 1746 and H.R. 3341)?

With much fanfare on October 20, US Senators Schumer and Lee introduced the long awaited Canadian retiree visa proposal and a companion homeownership visa proposal. Many of us have lobbied for years for the retiree legislation. Now, with public endorsements from Washington-savvy organizations such as the US Chamber of Commerce, the US Travel Association, and the American Hotel & Lodging Association, this bill seems to have a lot going for it-but nothing is happening.

As is customary, the bill was read twice in the Senate. The bill was then, appropriately, sent to the Senate Judiciary Committee for further consideration. To date, no Committee hearings have been scheduled. Calls to Senator Schumer's office have been met with "most bills introduced never make it out of committee..." No organization has made any identifiable public effort to get the bill moving. There is no movement of the House companion bill H.R. 3341 either.

The lack of movement is a good lesson in US politics. From our perspective, four kinds of bills are introduced in Congress:

a) A momentum bill. A bill that has a natural momentum all its own. It is pushed to approval by circumstance with no meaningful opposition. These come in two flavors: the meaningful (the December 8, 1941 Declaration of War on Japan and Germany) and the meaningless (National Ice Cream Day on the third Sunday in July).

b) A self-interest bill. A bill that moves forward because it is in the self-interest of a member or members of Congress. It makes a member look very good. It saves a member's political or financial bacon. Or, refreshingly, a member decides that it is simply the right thing to do.

c) An opportunity bill. A bill that makes sense and has some public support, but no member of Congress is going to put limited time, money, and energy behind it unless there is a compelling reason to do so. In other words, opportunity bills become self-interest bills and then become law through public support/pressure.

d) A dead-on-arrival bill. A bill introduced at the request of and to please a constituent. Though the bill does no political harm to the member introducing it, the bill has no chance of ever becoming law. Members from conservative districts might propose sealing the borders, eliminating the Department of Education, or making English the only language used in government publications. Members from liberal districts might propose free university education, a ban on hunting, or a cabinet level department of alternative energy. Under current circumstances, none of these proposals will go anywhere, but in every congressional session you will see these bills or bills like them.

Though we thought S. 1746 (VISIT-USA) was a momentum bill, it is an opportunity bill. It is, emphatically, not dead-on-arrival.

Updates to the Condominium Act

2011-12-19T17:46:00.000-08:00

Changes have been proposed to the Ontario Condominium Act. After being enacted in 2001, the legislation is ten years old, like anything ten years old, it should be evaluated and updates discussed.

To be a director of a condominium board in Ontario, you have to be 18-years of age, mentally competent and not be an undischarged bankrupt.

But as condominiums become an increasingly important lifestyle choice in the province, two of the largest condominium associations want to raise the bar on the quality of directors by making sure that education becomes a requirement under the now decade old Ontario Condominium Act.

“Given the large responsibility borne by directors often dealing with assets worth many millions of dollars, and that most often they are volunteers without a specific skill set for governance of a condominium corporation…all new directors regardless of their educational and professional background attend an introductory directors’ condominium course to ensure basic knowledge,” says a proposal to be released on June 1 and obtained by The Star.

The educational bylaw requirement is just one of many long-awaited recommendations in a 102-page report by the joint committee of the Canadian Condominium Institute and the Association of Condominium Managers of Ontario.

“There are a lot more people living in condos today than when the act was implemented, and we’ve seen where things could certainly be improved,” said Armand Conant, a lawyer and past president of the Canadian Condominium Institute.

Other changes the groups want include:
• Reserve fund requirements in condos to be increased so that buildings don’t fall into disrepair. Currently the minimum contribution in the first year budget is 10 per cent. The group recommends 20 per cent.
• New property tax classifications for condominiums. The government assess units for taxes as if they were receiving individual services which is “not fair or equitable” says the group. “For example there would be only one garbage pick up for a condo of 200 homes, yet if these 200 homes were houses on a street they would have to make 200 stops.”
• The Ontario New Home Warranty Plan should apply to condominium conversions so the new owners will have protection.
• More disclosure by developers on key financial matters. Some developers may mislead consumers by artificially depressing first year expenses which results in large increases in common expenses in the second year.

Conant says his group has met with as many stakeholders as possible, from owners, to developers and trades people to draft the recommendations.

“We started with the basis that this is essentially a consumer protection act, and we wanted to have as wide an input as possible,” said Conant.

With an election coming up in October, the groups hopes this will raise the profile of condominium ownership with politicians and that the provincial government will eventually move to re-open the Act. Copies will be delivered to Minister of Consumer Services John Gerretsen’s office, as well as all the opposition parties.

The Act received Royal Assent in 1998, but didn’t come into force until May 5, 2001, or ten years ago.

There are now 9,000 condominium corporations in the province, and record breaking sales of condos in cities such as Toronto as condominiums are outselling single detached homes.

“The current Act is a huge improvement over the old one, but since then times have certainly changed,” said Conant.

Click here to read the full article

CMHC Overview for Ottawa 2012

2011-12-19T07:49:00.000-08:00

The Ottawa housing market appears to be looking positive again for Ottawa in 2012 according to CMHC. This is fueled by Ottawa having the highest employment rate in Ontario and highest paid labor market in Ontario.

2012 Predictions by CMHC
- Interest rates are expected to remain low in 2012 due to the European and USA economic issues.
- Housing Prices are expected to rise by 2%
- Vacancy rates for rental properties to remain low, close to 1% (meaning 99 out of a 100 apartments are rented monthly in Ottawa).

Some 2011 Highlights
- Largest Price Increase: West End at 10.6%
- Highest Volume: Barrhaven at 15.6%
- Most Increase In Value: Condo's

New goal - Job Optional

2011-12-12T09:28:00.000-08:00

I was at a seminar this week put on by a group promoting real estate investment. It was mostly an information session, trying to sell spaces at a weekend retreat. There message wasn't really anything new, it was planting a seed of additional information available in the future if you pay a hefty fee to attend another session (and then another session).

The one item that came to me at this seminar was a very cool new term, "job optional". Basically, job optional is exactly as it sounds, getting to a point that you no longer need to work a day to day, that your mail box money (passive income) exceeds your monthly expenses. A seemingly simple concept, but difficult to achieve. I like this term, as you could exist without a job, but it does not imply retirement. It allows for options and flexibility in life and in your future.

I have two clients who are job optional in their 30s through real estate investment. I have been working on analysing their portfolios. I figured since I helped build these portfolios, I should be able to replicate it myself with work and effort. They had clearly defined goals and a singular focus and direction towards an end result and achieved it by never losing focus on their ultimate vision for the future.

The first step is to accurately ascertain how much money you need to live the lifestyle you desire. My wife (and by extension myself) does not believe in completely sacrificing your life to live only for tomorrow, you have to enjoy today and be smart looking forward to tomorrow. For example, if you like to travel, you have to budget that into the figures. If you do not add items like travel to your budget, you will never be able to financial afford to take a trip or whatever luxury items you enjoy.

For most of us, this number will be a negative. This is why jobs exist. This negative number is how much money you have to make each month at a job to live your lifestyle. The larger the number, the more money you need to make each month. This is a number that has to be replaced by your mail box money.

I have back tracked my expenses for the past year and averaged out my expenses to reach a fairly accurate monthly expense estimate. I have added ten percent to this number as a buffer for life's unexpected bumps. I figure this gives me a pretty reliable estimate. Inflationary concerns are limited as rents increase annually and should cover these.

Now, the fun begins. My efforts going forward are to find properties that produce "mail box money". After you deduct all the expenses, mortgage payments, etc, that there is a monthly left over balance, which is predictable. To be safe, I will be deducting 10% off each month's rental income for vacancy, repairs, maintenance, etc.

It is pretty interesting to do the math on your monthly budget and how much you are deficient each month, based upon your expenses. This is a great tool to predict how much money you will need in the future for your own retirement. I suggest, heading into the new year, that everyone work these numbers.

My number is rather large (or so I think), so this goal will take some time. I think with focus and direction, it is attainable. There is no sense in setting goals that cannot be achieved. I will update you as my progress begins.

Team approach to USA investing

2011-12-10T06:24:00.001-08:00

My wife and I were new to real estate investing when we met with Greg. The team of people that he put us in contact with made us feel comfortable and confident that we made the right decision. Starting with the amazing service from Annelies and Julie to the renovation company we hired, everyone was very responsive to us and understood our investment goals. Tim's team in Phoenix is outstanding. They have answered countless questions from us and worked very closely with us on our first property which had 8 offers in the first 24 hours on the market. Their website is very simple to use. The feature we use the most is the hotlist of properties that they hand pick as some of the best deals for their clients. We have purchased 3 properties in the past 4 months. We are looking forward to our 4th purchase in early 2012.

Thanks,
Keith and Vicki

November Results - Ottawa Real Estate Board

2011-12-06T10:13:00.001-08:00

Members of the Ottawa Real Estate Board sold 1,020 residential properties in November through the Board's Multiple Listing Service® system compared with 940 in November 2010, an increase of 8.5 per cent. The five-year average for November sales is 881.
Of those 1,020 sales, 244 were in the condominium property class, while 776 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.), which is registered as a condominium, as well as properties, which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.
"Last month was the best November on record for resale home sales in Ottawa. The last time we saw sales numbers anywhere close to that number was in 2001. It speaks well for the stability of our market that even in the quieter months of the year, our market is still thriving," said Board Past President Joanne Tibbles. "The number of properties available for sale is higher than at this time last year, indicating that homeowners are confident that it's a good time to put their home on the market, and based on these great sales numbers, buyers are also confident, especially as interest rates remain stable," she added.

Lot prices on the rise in the USA

2011-11-30T12:48:00.000-08:00

USA lot prices are on the rise in the high foreclosure states - Florida, California, Nevada and Arizona.

There is still two years to three years supply on the market, which should reflect more like four to six months supply, but the numbers are dropping and prices are increasing, as builders are starting to invest in land again

In places like Phoenix, homes are still selling at fifty cents on the dollar compared to replacement costs to build a new home in the existing properties place

Click here

CMHC gives positive outlook for 2012

2011-11-24T19:58:00.000-08:00

CMHC forecasts for 2012 are positive for home owners and investors. It appears 2012 will be another growth year for housing in Canada. Interest rates are predicted to stay low.

In my opinion, I think this is a good year to be focussing on some debt reduction and asset growth. The great part of low interest rates is that a higher percentage of your payment goes to principle reduction.

To read full Ottawa Citizen article

Home Energy Audit

2011-11-24T18:49:00.000-08:00

The Home Energy Audit program has been extended to the end of March 2012.

This is a program that is used right here in Ottawa by home owners and investors to outfit their homes with energy efficient renovations on homes. Check them out here

Canada Rebate programs

Ontario Rebates programs - Ontario — You pay $350 for the first energy audit. You will receive a $150 rebate on the cost of your first audit from the Ontario government’s Home Energy Audit program, regardless of whether you make any energy-saving renovations.

The first energy audit must take place before you renovate - if you want your energy-saving upgrades to qualify for grants and rebates. A second energy audit must be completed after all upgrades are finished.

Basement apartments

2011-11-23T18:51:00.000-08:00

I have been doing a lot of research on basement apartments. They are confusing spaces for sure. It is difficult to understand the amount of work that goes into building an apartment in the basement of a house. My focus has been on houses with direct entries to the basement, so without having to dig and modify the foundation walls.

I have found that these are far pricier than I originally thought. My first rough estimates had the basement apartment at $30,000, but recent quotes have put a fully permitted and built basement apartment around $50,000. This is a big number, but this apartment should easily generate $1200 per month, meaning a return of your investment in three and a half years.

Assuming a quality job with timeless decor, this should give a lifespan to the apartment of 10 plus years. This would result in a gross return of over $93,000 in the lifespan (after costs of building the suite). The other advantage is when the property needs to be updated, you will avoid major costs like wiring, plumbing, sewers, construction, etc. The costs will merely be new kitchen, bathroom and flooring.

I think these are highly viable investment options to maximize returns in real estate. In places like Vancouver, these type of suites are now becoming very common in most homes. This is a great way for young first time buyers to get in the market, in a good neighbourhood.

Drop me a quick line to learn what to look for an how to move this forward.

When will it end? The US housing crisis

2011-11-23T15:08:00.000-08:00

A common question comes up when I speak about the USA housing crisis "Why did it start in 2007?" The second question is "When do you think it will end?"
The sub-prime USA market hit late in 2007. If you think back, that would mean these mortgages were originated in 2002, which makes sense as the policy change to bring about the "Sub Prime Mortgages" originated in 2001/2002. This policy change was in response to the 9/11 disaster and the resulting economic slow down that occured. Subprime mortgage lending was introduced as a method to stimulate the economy.

If you track the timelines, mortgages granted in 2002, with an average timeline of 5 years, means these mortgages would be up for renewal in 2007 (start of the global financing meltdown). The peak lending of subprime mortgages was 2004 to 2006, which translates to 2009 to 2011 for maturation dates. The end of the subprime mortgage fiasco was 2008, meaning the final bad debt should be washing through the system in 2013.

With the end of 2011, we have now weathered what should be the worst of the bad mortgage financing problems in the USA. This is meaningful, as we are starting to see strong embers of a recovery taking effect. It is important to remember, many USA banks were leveraged over $40 per dollar of deposit money, whereas our conservative Canadian banks were leveraged to a maximum of $8 per deposit dollar.

Many economists with bigger brains and more experience predicting the future probably have some different opinions and ideas, but it seems to me that at the base, understanding the flow of the paper will predict the start and end of the real estate based financing issues.

Does this mean magically in 2013 everything will be fine? Not likely. There is another factor that is at play, since 2008 the US new housing industry has been operating a highly reduced rate. New home construction is well below pre2007 levels. There are around 330 million people in the USA and their population grows by about 3 million per year.

On average, across America, there are 2.87 people per household, meaning each year, the USA needs another 1,050,000 homes (approx.). With housing construction largely silent since 2007, that means there is a short fall of close to 5 million homes by the end of 2012. There was an epidemic of overbuilding in some cities, so through this foreclosure process many of these second and third homes have been bought up. Eventually, new home builders will have to start building homes. When they do, prices will have to increase. In some centers, such as Phoenix, Arizona, houses are selling at 50% of their built prices.

Once the bad debt is "flushed" through the system and the new home construction industry starts building again, the USA housing crisis will have ended.