Real Estate Insider: March 2019 News Report

Spring is here! This month we've got loads of tips & tricks as the Real Estate season begins to heat up!


If you’re looking to invest in a vacation rental, make sure you buy where the people are going! Read this list of 2018’s most booked Canadian destinations. >>

----------

ROI isn’t just a formula to use when purchasing a property; it should be used for day-to-day decision making in all of your real estate investments! Read here how ROI can be used in anything from purchasing a home to separately metering the water in a duplex! >>

----------

Read here this Doctors testimonial in favour of real estate investing, and how he came to this conclusion only after trying many other methods of creating financial independence and long term wealth. >>

----------

Buying or Selling a home can take up a lot of time, so why waste your most precious resource reading through long descriptions of tons of pictures when only a few works better? Read here why “short and sweet” is the way to go when listing a home. >>

----------

Here are 10 questions you probably have or have had if you are thinking about buying your first home. These might lead to a number of follow-up questions, but luckily we are always available to help you answer them! >>

----------

If you’re lucky enough to have your grandparents around, be sure to listen to all their stories! They might have advice that could change your life! Read here how this man’s grandmother defied the odds and became wealthy through house hacking, and sparked a passion in him that is responsible for his success today! >>

----------

The debate of Buying vs Renting continues! This time, it is explained in a different way that most people don’t think of! >>

----------

If you’re young and thinking about retirement (which you should be), you are probably thinking whether RRSP’s or buying a home should be your first step to a comfortable retirement. This article can shed some light on that question. >>

----------

When applying for a mortgage, would you rather speak with an expert or go completely digital? Seems Canada is lagging behind other countries in the automation of mortgage applications department. Call me old fashioned, but I don’t think that’s a bad thing! >>

----------

Should you re-new your mortgage early? Not saying drop everything and run to the bank, but here are a few things to consider! >>

----------

Thank you for reading & keep an eye out for more to come from your Lalovich Real Estate team!

Our Real Estate Wish List for Santa

Well this is our last blog post of the year and Santa is coming on Friday. Hopefully you’ve all been good this year and he is bringing you all the presents you have asked for.

 Today we wanted to talk about our wish list for a healthy 2016 real estate market:

1. Continued low interest rates. With historic low interest rates of 2015, it makes housing payments more affordable and investing cash flows higher. We don’t forsee these going away for a while but why not appreciate how good we have it (talk with those who owned real estate in the early ‘80s with 20%+ interest rates).
2. Immigration and migration into the Windsor-Essex Market. With the push for retirees and low housing prices, the area has become successful in attracting people from large high priced markets to relocate to Windsor-Essex. We hope to see this trend continuing to increase.
3. The continued resurgence of the Automotive Industry. The rebound in the last few years has created significant jobs and economic activity for the area which has helped drive the local real estate market.  
4. No more terrorist attacks! Aside from the human tragedy that we hope to avoid, we hope not to see these terrorist attacks continuing around the world and shaking the confidence of people in the global economy.
5. A mild winter. Put your hand up if you love brutal winter conditions….anyone? Didn’t think so. Buyer and Sellers in the real estate market don’t love bad weather either and a mild winter should keep this booming real estate market going.
6. A healthy increase in supply of houses and commercial properties. In 2015 we saw the stats swing highly in the favor of a sellers market and we have many buyers who haven’t been able to find the property they have been looking for. A slight increase in supply to balance the market out would help in 2016.

What are your wishes for Santa?

---

Russel Lalovich
russel@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 995-5620

4 Caveats to A Leverage Strategy

If applied on the right property investments and in the right market conditions, leverage is an excellent strategy. Check out this article from “DON CAMPBELL” a foremost Canadian authority on real estate investing. The numbers do not lie - if you pay particular attention to the investment illustration outlined.

But to guard against the ‘downside’, as you look to employ a LEVERAGE strategy, consider the following four “caveats”:

Source: Instphil

1. Cash Flow is KING – ensure the tenant/revenue base is stable and secure. This includes the covenant of the tenants, lease terms, current occupancy levels, and debt service coverage on current income/expenses.
2. Low Down Payment means HIGHER MONTHLY PAYMENTS – completing a deal with a low down payment, often becomes problematic if the monthly mortgage payment is beyond a comfortable level. If the market conditions deteriorate and vacancies rise, this problem often will only get worse and the monthly payment harder to meet.
3. Projecting for APPRECIATION – markets do not always go up, despite recent trends, and you must be realistic in assessing this variable, both with respect to your own market and the specific properties being targeted. In a stalled or declining market, properties which have stable cash flows thrive and are insulated from a negative market.
4. Maximum Leverage vs. POOR INVESTMENT – no money or low down payment deals on a poor investment property, typically leads to negative results. Do not let attractive leverage opportunities, compromise your ability to stay the course on targeting good property investments.

Leverage is a great strategy, but it requires sound discipline in its application.

Tells us about your use of leverage in your market. Again, we love to tell you about our own backyard here in Windsor-Essex, so feel to reach out to us!

---

Mark Lalovich
mark@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 259-5434

The World Of Leverage

No matter what market you are investing in across Canada, the principal of leverage (WHEN APPLIED TO THE RIGHT INVESTMENT PROPERTIES), has worked extremely well in recent years. Although there are many benefits, the primary ones remain –

• Can significantly enhance the ROI of the property
• Allows you to acquire additional properties & build a portfolio faster

Our definition for LEVERAGE remains the same – ‘the use of borrowed money to increase the return on an investment property’. It is considered a legitimate investment strategy, and one that is best suited for properties with both good cash flows and those having a good probability of future appreciation.

Source: Resi

A simple illustration highlights the concept in a growth market:

1. NO FINANCING – STRAIGHT CASH PURCHASE

Purchase Price $200,000 (all cash investment)
Market Growth Projection – 3% per year
After Year 2 - $212,000
ROI – 6% (on cash invested)

2. 70% FINANCING – 1ST MORTGAGE OF $140,000

Purchase Price $200,000
Cash Investment $60,000
After Year 2 - $212,000
ROI – 20% (on cash invested)

Again, this is an illustration which is based on strictly price appreciation. There is no analysis of the property’s monthly/annual cash flow, which would typically come first. If in fact the property was actually sold after year 2, the total ROI would be even more in favour of Scenario 2, and the % difference greater.

On the matter of building a portfolio of properties faster, you can see by allocating $60,000 by property, you should be able to acquire ‘3 properties’ by leveraging your cash investment. The key is to work this strategy on the RIGHT INVESTMENT PROPERTIES.

Does leverage still work in a flat market (no growth)? Or a declining market (negative growth)? Tell us your stories, we’d love to hear them - both positive and negative. Call us anytime regarding our home turf here in Windsor –Essex!

---

Mark Lalovich
mark@lalovichrealestate.com
Office: (519) 966-0444
Cell: (519) 259-5434