Real Estate Insider: February 2019 News Report

Welcome back! This month we compiled a set of topics fit for home owners and investors alike to help you weigh your options before making some of the big decisions in real estate.


If you are thinking of investing in commercial real estate (CRE), this article does a fantastic job of laying out the basics of all aspects of CRE to help point you in the right direction. After reading this, give us a call to learn more! >>

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Don’t be surprised, be prepared! Renting Vs Buying is an age old debate. While this isn't one of those articles (it kind of is), it simply breaks down the hidden costs of home ownership that many people don’t consider when contemplating purchasing a home. >>

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Radon, the silent killer. Make sure you know if you are at risk of harmful radon gas because it is one of the most preventable cause of lung cancer there is! Read here to find out what you need to know. >>

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Your ego might like the big house, but your back and wallet won’t. Here are 6 reasons to avoid buying a large house. >>

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Do you have foreign investments and want to buy a home in Canada? This article can explain some of the hoops you’ll need to jump through and some of the calculations you need to consider before making the leap. >>

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Winter is considered the real estate “off-season” because there are less listings, less buyers, and less motivation to go out and look at houses. Read why these are the perfect reasons to buy during this time! >>

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Thinking of buying an investment property but don’t have the down payment in your bank account? Have you thought about a home equity line of credit (HELOC)? Whether you have, or you have no idea what that is, this article is for you. >>

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Ever thought of what would happen to your mortgage if you pass away? This article walks you through multiple scenarios if this question ever crossed your mind. >>

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5 tips from a lawyer to make sure you are protected in 2019! >>

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What’s going on with mortgage rates? Make sure you do your research before your next renewal so you get the best rate possible. You can start with this video! >>

2019 Real Estate Market Predictions

Happy New Year, readers! Hope you had a great holiday season and that your 2019 is off to a great start. Now that everyone is back to business, who wants to talk some real estate? Today, we are going to offer our real estate market predictions for 2019.

Cap Rates Will Mostly Flatten Out or Even Increase A Bit

Cap rates have seemingly hit bottom. They didn’t really have much further to go, so this isn’t surprising. Now that interest rates have increased a bit, investors appear to be looking for a higher cap rate on their commercial investment properties. We reached a bit of a standstill with some properties in 2018, with sellers' lofty expectations not being achieved in the market. To get these deals done, sellers will need to adjust their expectations.

Multifamily Will Still Be On Fire

While it is our opinion that cap rates commercially will stall out, multifamily still has some positive dynamics that will keep it chugging along. First off, the demand is still very high from across Canada and the supply is very limited. It isn’t economical to build with these new construction prices, so adding new supply wont help the situation. Plus, the rental market is tight and rents are increasing—that doesn’t look like it will be changing anytime soon.

Interest Rates Will Increase, But Not As Much As Expected

Economists and market forecasters are expecting multiple interest rate increases this year, on the back of the three times the Bank of Canada raised last year. While we foresee rates to go a little higher, we don’t think the market in general can withstand an interest rate spike without causing a significant recession. The population is far too indebted and—particularly in expensive cities like Toronto and Vancouver—the cost of increased interest expenses can't be born. For these reasons, we think interest rates will have a lid on them.

The Lending Environment Will Get More Difficult For Borrowers

The government has introduced several measures over the last few years to try and cool the housing market. It finally seemed to have been working, as Toronto and Vancouver didn’t have such great stats in the second half of 2018. Combining these measures with higher interest rates, qualifying for the house you want is getting more difficult. We are also seeing lenders and mortgage insurers pulling back their risk, scrutinizing more deals and generally acting less competitive in the financing market.  We expect this to continue in 2019. This may also lead to more firm deals falling through at closing due to some of these factors.  So we advise sellers and listing agents to be extra diligent in ensuring buyers are qualified and pre-approved for a mortgage in your price range, with a little extra buffer for safety. Also, ask for big deposits!

Rents Will Rise & Vacancy Rate Will Fall Again

Residential rents have really increased in the last few years and the factors driving that don’t seem to be changing anytime soon. In fact, with the housing market continuing its climb and with the tightening lending environment, more people could be driven into the rental market, increasing demand. Adding to this is the start of the Gordie Howe Bridge, bringing with it a large influx of temporary workers coming to the area; the vacancy rate is forecast to continue to trend lower.

2019 should be an interesting year in the real estate market. Those are our predictions. What are yours?

Real Estate Insider: January 2019 News Report

Welcome back to a brand new year, Real Estate Insiders! We thought this month would be a great time to cover a variety of topics including living life in a big city, creating wealth, performing background checks, and even why the numbers in your address could deter potential buyers!

Is the “American Dream” an outdated concept? Does yours involve a house with a yard and a white picket fence, or something more suited to your lifestyle? Read about why everyone might be a lot happier if they made their own definition of the American (or Canadian) Dream. >>

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Does your address contain the number 4 or 13? If so, that might be a deal breaker for some cultures. Read here how these numbers have caused headache in housing developments and how city planners and contractors are dealing with it. >>

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If you’re thinking of how to split your estate between your children, this article won't help you decide who is your favourite, but it will help with a few of the tax questions! >>

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Finding the right property manager is essential to creating and maintaining a good portfolio. If you decide to use a property manager, be sure to read this article to help find the right one for you! >>

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Are you thinking of buying your first home? Take it from someone who’s been there before! This article describes almost every cost you should prepare for when buying a home. >>

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Not every investment you make is going to be a winner, however a big part of investing is not making impulsive, emotional decisions! Read how this investor “lost” $130,000 on his rental property but managed to turn it around by keeping a level head and trusting the process. >>

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Don’t be blinded by the cap rate. Here’s a list of things to consider when evaluating cap rates or multiples on a property—and why these tools are simply a starting point. >>

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There are so many options when it comes to creating wealth for yourself, but the common strategy between them all is to diversify. This blogger decided she needed a way to diversify her portfolio and caught the real estate fever! Read here how she turned her love of HGTV into a very profitable investment strategy. >>

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Tenants can make or break an investment property, so we want to make sure you are doing everything you can to ensure you have the best tenant possible! Here’s a list of what you should do to complete a successful background check. >>

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For many people, living in the big city would be a dream come true, but is it really worth it? Read here how the high costs of living are pushing many young adults to pursue a larger life in smaller cities. >>

Real Estate Insider: December 2018 News Report

Merry Christmas and a Happy New Year, Real Estate Insiders! 2019 is just about to start, so we thought we'd put together a handy collection of topics perfect for planning your new year resolutions on your property. When you have a few moments of rest from the hustle and bustle of the holidays, be sure to grab your favourite holiday beverage and check out just a few of the ways you can be prepared for the biggest plans of 2019!

Thinking of doing a huge home renovation? There’s no better advice to get than from someone who’s done it! Read this couple's 6 biggest lessons they learned while putting an addition on their home so you can prepare and limit the number of surprises along the way! >>

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Would you trade paying more interest overall for a lower monthly payment? That’s the argument this article is making for the 30-year mortgage in the wake of rapidly rising interest rates. Overall it is personal preference, so which is yours? >>

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Ever wonder what happened to the people who started investing in Real Estate right before the 2008 crash? Read this article to find out the biggest mistakes this Real Estate investor made when he started out, and how he eventually bounced back. These tips could help fast-track you to financial freedom! >>

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Don’t be afraid to ask the hard questions when it comes to your money and don’t let a shady salesman pressure you into signing anything you don’t fully understand! Here’s a list of 4 big rip-offs to look out for to help save you money. >>

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Preparation is the name of the game when it comes to investment properties. Make sure you’re prepared for many of the aspects of owning different types of investment properties! >>

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Step 1: Buy gifts.

Step 2: Spend time with loved ones.
Step 3: Shovel and salt the sidewalk.

Step 4: Go over your year-end financial planning checklist—we can help you with this last one! >>

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Owning a cottage or vacation home is a goal many people have, but does it make sense overall? Read here for some considerations to help you make this big decision. >>

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AirBnB is being used by many as a source of income to help offset the price of owning a home or investment property. Are you aware of the short and long term tax implications? Read here to see why it could end up costing you way more than expected. >>

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Team Lalovich never cuts corners when it comes to selling real estate, and neither should any other Realtor! Unfortunately, there will always be some that find the worst possible ways so save a quick buck; if it affects the sale price of your home, it should be a deal breaker! Make sure your Realtor of choice is doing everything they can to provide you with the best service, starting with the photos. >>

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“The Bank Profit Indicator shows the amount of profit per man, woman and child in Canada.” Find out this years number here! >>

2018 Year In Review: Local Real Estate Market Observations

Happy holiday season, Gang! Can you believe Santa is coming to town in less than 2 weeks? With the end of 2018 on the horizon, we wanted to take the opportunity to review some of the things we learned this year about our local (Windsor-Essex) real estate market. Here are some items of note that stood out to us.

Listings Are Still Down.

Per WECAR (Windsor-Essex County Association of Realtors), through the first 11 months of the year, listings were down from 2017 by 6% year to date. Everyone thought inventory was super low last year and that was one of the main reasons for the bidding wars.  Well, inventory got even lower this year. The supply and demand balance has stayed with the sellers this year.

Average Sale Price Is Up, Again.

Also through those same 11 months of the year as per WECAR, the average sale price rose 14% versus 2017. I don’t think this strayed much from our forecast. Having listings down again, upward pressure was put on sale prices. This is a healthy stat that should put us up with some of the best performing markets in Canada.

Unit Sales Are Down Quite A Bit

In that same timespan, unit sales were down 11% versus 2017. This isn't a good stat for realtors! Listings being down explains part of it but clearly there is less turnover. A partial explanation could be that sellers have increased their pricing expectations and these over-priced listings are sitting on the market and not resulting in transactions.

Total Volume of Sales Were Up Modestly

Sales volume rose 2% versus 2017 through the first 11 months of 2018 per WECAR. This stat is pretty easy to figure out when you combine sales prices being up 14%, combined with unit sales being down 11%. What also affects this stat is the fact that more and more of the sales seem to be in higher priced categories bringing up the averages.

Increased Interest Rates Haven’t Affected the Market—Yet

With the Bank of Canada's increased interest rates three times this year, higher interest rates are making things less affordable in housing. This hasn’t translated into much decreased demand yet, but should interest rates go up a few more times in 2019, this could start to drive some people out of market.

Investor Demand Has Plateaued

The fever pitch of real estate investment demand seems to have levelled off. We had some listings this year that surprised us a little on the market reaction. The cap rate demanded by sellers and what buyers will accept seem to be at a standstill in 2018. Perhaps cap rates will increase a little next year and part of that may be due to the increasing interest rates mentioned above.

There Is A Serious Housing Shortage in the Rental Market

The vacancy rate in 2017 was down to 2.3% locally. The 2018 report still hasn’t been released but is looking like it will be less than 2%. We believe this stat is somewhat inflated; if you look around for vacancies for any decent buildings, they are essentially 0% with waiting lists. There are also long waiting lists for socially assisted housing. Combining this low rental supply with the booming housing market that is driving more people into the rental market and the situation is really dire for tenants. Something needs to be done about this at the governmental level as it seems to be getting more tight every year and market based solutions don’t look to be feasible.

Those are some of our 2018 real estate market observations. What are yours?  

RealEstate Inside: November 2018 News Report

Welcome back, everyone! This month, we've put together a full lesson plan to boost your real estate smarts. How real estate savvy are you? Looking to increase that pesky credit score, or become an Air BnB? We have some invaluable reads to help you on your way.

“Proficient in Microsoft Excel” used to be a skill every employer wanted to see on a resume, but nowadays it's expected—some would say required. Those not familiar with the many functions and shortcuts of Excel could save themselves a lot of time and effort by learning these handy functions, and this article is the perfect place to start! >>

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Nightmare tenants are a tale as old as landlord time. There are steps we have gone over to ensure good tenants, but sometimes you're just unlucky! There's no such thing as too much information when getting tips on picking good tenants, so be sure to read this story of nightmare tenants and what this landlord learned during the process! >>

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POP QUIZ TIME! How up to date are you on the Personal Information Protection and Electronic Documents Act (PIPEDA)? It began November first and this 20 question quiz could help you understand some of the changes a little better! >>

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Would you want the contents of your offer on a house to be public knowledge? Some people think it should be! Read this article on the auction style bidding process and let us know your thoughts! >>

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Thinking of buying your first home? This article might help to understand some of the monthly costs to expect outside of your mortgage payments to help you get prepared! >>

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Putting your rental properties into a holding corporation could be a good or a bad idea—it all depends on your overall objectives and your regions tax rules. Read this article to find the right questions to ask during your next meeting with your accountant! >>

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Condo or single family house? This is a question many people tend to have when deciding to make a real estate purchase. Things like lifestyle and goals are only some considerations when making your decision. Read this article for some advantages and disadvantages of buying a condo to help you decide! >>

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Cities with a high “walkability score” tend to have higher property values. Is your city walkable? If not, is your city planning geared towards making owning a car optional? This article explains the reasons why “walkability” is an important aspect for future economic growth, and why it should be one of your city planner’s top priorities.  >>

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Do you have a lower credit score as a result of past mistakes but want to get back on track? This article has great tips on how to repair a bruised credit score. >>

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Should you use your rental property as an Airbnb or a long term rental? This article lists both pros and cons to Airbnb and what to consider before becoming a part of the sweeping trend. >>

Considerations when Evaluating a Multifamily Property

We are in the process of concluding a multifamily listing that kept us very busy these last few weeks. During the listing period, we came across several investors who seemed new to this area and had a lot to learn before pulling the trigger on something. Therefore, today we are going to discuss some points that are always worth considering when evaluating a multifamily property.

What is the Structure Like?

Does the property have a concrete or wood frame? Is the exterior full brick or have siding? How old is it? With a multifamily property, you are not just buying a cashflow—you are acquiring an asset. How solid is that asset? Make sure the structure is sound.

How is the mechanical in the building?

Are there forced air furnaces in each unit? Is it a boiler system with hot water or is it electric baseboard heating every unit? Heating is a very important consideration. In Ontario, hydro rates are sky-high; having electric heat is a huge drawback and can sap the cash flow of any building. Gas is a more economical choice.

Are utilities separately metered?

Are there separate meters for gas and hydro? Having your tenants pay for their utilities adds lots more certainty on expense projections. Statistically when tenants pay their own utilities, they are natural incentives to not waste energy.  

How do the existing rents compare to CMHC average rents?

If you review the rent roll and the rents seem low, this can be both good and bad. It's good that there is upside in the average rents in future should you have tenant turnover; it's bad in the fact that if you have very low rents, the tenants will be much less apt to leave such a good deal. You’ll only be able raise their rent by the annual CPI percentage (1.8% this year).  

What is the tenant profile?

What is the area like? What sort of tenants would you attract in this building? What sort of jobs do these tenants have? It is important to understand what sort of rental pool you are operating in. If you want to attract high-end renters, you need to look at high-end locations.  

What is the cap rate?

Is the cap rate consistent with the market? Does it seem too high or too low? If it's too high, it might indicate there is something off with the building or problems with the tenants. If it's too low then it probably won't appraise at the bank, meaning you’ll be forced to put down a higher downpayment, lowering your returns.

Do the expenses seem legitimate?

We continuously see buildings being advertised with several items being excluded from the expenses. For example, they’ll only include utilities, insurance & property taxes. What about other items? Where are the repairs and maintenance, management, grass cutting, snow removal, and vacancy allowance? Sometimes these buildings are run and managed by the owner, but if you are a hands-off investor, you need to hire someone for these tasks—they need to be accounted for. An appraiser working for the bank is going to rework these expenses too and run the number based on their expense assumptions.

Do you notice any major deficiencies related to fire code?

This one isn’t easy to identify and it's a bit of a grey area at times, but there are some easy items to look for. Are there any basement units? Did they get permits for the basement unit? Are there egress windows in the basement units? Are there multiple entrances and exits to the building for tenants to access? Do items like fire alarms and smoke detectors seem somewhat recent?

Those are just some items to consider when evaluating a multifamily building. There are quite a few more, but we wanted to keep this at a beginner level. Readers, are there any more you think should be added?