Friday, 14 July 2017

Interest rates have finally increased: How that could affect your loans

After seven years of leaving its key interest steady or cutting it to near-historic lows, the Bank of Canada has finally increased its overnight rate by 0.25 percentage points to 0.75 per cent.

The overnight rate determines the rate at which banks lend money to each other on a regular basis. In practice, changes in the overnight rate get passed on to consumers through corresponding changes in interest rates on different financial products.

Here's how the increase in interest rates could filter down through the kinds of loans held by Canadians:

1. Mortgages

Canadians with variable-rate mortgages, also known as adjustable-rate mortgages, will immediately feel the increase in the overnight rate.
For homeowners who have locked in a fixed-rate mortgage, nothing will change until the fixed term ends and it's time to renew. Even before the Bank of Canada's move on Wednesday, some of Canada's big banks already started charging more for their five-year fixed-rate loans.
That said, it's possible that some fixed-rate mortgage holders who renew in the near future could actually lock in a new fixed-rate mortgage at a lower interest rate than they signed up for five years ago, according to Preet Banerjee, author of Stop Over-Thinking Your Money!.
Those borrowers "may actually still be renewing into a lower rate, because even though rates are going up, they're still lower than when a lot of people got their fixed-rate mortgage," Banerjee said.

2. Home equity lines of credit (HELOCs)

Canadians who use their homes as a source of cash by borrowing against their home equity could quickly owe more now that interest rates have risen, as those loans are frequently variable rate.
Read more about the impact of interest rates on HELOCs:



Source:  CBC News

Wednesday, 14 June 2017

New Real Estate Ontario Legislation

The Ontario government has passed its Budget Measures Act which brings in new laws to tackle housing affordability.
 
The measures include a 15 per cent non-resident speculation tax targeting certain foreign buyers in the Greater Golden Horseshoe, including corporations and trusts.
 
The tax applies to all residential properties bought in the region from April 21 2017 but there will be rebates for those who become permanent Canadian residents within 4 years of purchase, who work in Ontario for a continuous 12 month period following purchase, and for foreign students subject to conditions.
 
“Our government is working to make life more affordable for everyone in Ontario,” commented Charles Sousa, Ontario’s finance minister, following the passing of the act. “This legislation will help to address the recent price increases in our housing market.”
 

Tuesday, 7 March 2017

6 Types of Commercial Real Estate Investments

Incorporating real estate into your portfolio is a smart move if you want to diversify and include some insulation against market volatility. Investing in commercial real estate can offer you the opportunity to realize some significant returns, but it’s best to know as much as possible about a property before investing in it. Here’s a quick rundown of how different property investments compare.

1. Land Investments
Investing in raw land can be extremely lucrative for an investor who understands the market. There are several ways to make money with land. If you own farmland, for example, you could allow local farmers to use the land to grow crops or raise livestock.

2. Office Buildings
Office space is often in demand in cities big and small. If you live in a major metropolitan area, for instance, you could invest in a high-rise with multiple office units. If you live in a quieter town, you could opt for a medical office with a single tenant.

3. Retail Space
Investing in retail space is similar to investing in office space in terms of the way you can make money. One important thing to consider when investing in retail space is location. 

4. Storage Units
Storage units don’t exactly sound glamorous but there’s definitely money to be made with this kind of real estate investment. You don’t have to invest in a large market either.

5. Multifamily Housing
Multifamily housing is a complicated way of saying apartment buildings. Even though these are residences for the people who rent out the units, they still fall under the category of commercial property.

6. Industrial Property
Industrial property can mean lots of things – warehouses, manufacturing facilities, research facilities and the like.

Each type of commercial property has different risks and rewards. When you’re comparing properties, it’s a good idea to ask yourself some questions. How much income do you expect the property to generate? How long do you want to hold the investment? How hot is the market for this type of property? How much risk are you comfortable with?
The more research you do beforehand, the better your chances of succeeding as a commercial property investor.


Sunday, 19 February 2017

Top tips for real estate investors in 2017

Despite all the advice about not buying a residential property for income purposes, many still do. Rental markets are still tight in the hottest real estate markets, with vacancy rates still hovering in the mid-1% range. As such, buying property to rent out makes sense, as long as you have a large enough down payment to ensure that rent covers expenses.

For the best value, consider multi-unit rental properties—like duplexes, triplexes, and beyond. This type of rental stock is still far more favourable than single-unit rentals, such as condos, as you can spread out the risk of rental loss across multiple units. But it also means paying a premium on this type of income property. Not only do you compete against other investors, but also against families and first-time buyers who are trying to find a way into hot property markets. 

Also, consider markets that are located near university or hospital hubs but away from larger city centres. Quite often, these smaller college towns offer steady tenant stock, but not much long-term price appreciation. Just remember, as an investor, cash-flow must come first.

As in the past, anyone thinking of buying an investment property should first start with a financial plan and a budget. Then work the numbers. If you can’t withstand a loss—say the roof collapses or you need to hire a lawyer to legally evict a tenant—then you shouldn’t be buying an investment property.

Source: Money Sense 

Thursday, 24 November 2016

Average price of Canadian home sold in October up 5.9% from year ago

October was another record month for Canadian real estate, even as the average price increased by a relatively modest 5.9 per cent.

Last month, Ottawa implemented new stress test rules for first-time buyers aimed at making sure they are capable of paying a higher interest rate on their mortgage than the one they have been offered. That change kicked in last month, and it's going to be a factor in the numbers over the long term, CREA said.
Typically not a strong month for home sales, October 2016 was the strongest on record for the month, up more than two per cent from last year's strong level, with sales going up in about 60 per cent of Canada's housing markets.

Source:  CBC News

Wednesday, 5 October 2016

Refreshing your home this fall?

Great idea! Touching up paint marks or chips makes a real difference. In fact, I've just dome the same myself. I found a great tip for how to store felt over paint written by Danny Seo in the first issue of "Naturally".

"If you only need a little bit of left over paint to save for touch ups down the road try this upcycling idea: Use old plastic water bottles. Start with a clean, dry water bottle and lace a funnel on the top. Pour leftover paint into the bottle until it's about 95% full, remove the funnel and toss in about 6 glass marbles. Replace the cap tightly and secure it with a few strips of painters tape. When it's time to use the paint, shake it; the marbles will blend the paint, and you'll be good to go to till in any nicks or scratches."