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. >>

Real Estate Insider: October 2018 News Report

Hi there, readers! With new local real estate developments and a continuing housing war, we thought we'd bring you a collection of reading just for the occasion. Take a look as we cover renovation tips, the benefits of living small, how to whittle down that mortgage, and more!



More often than not, renovations increase the value of your home. Everyone should be careful of renovations that are only improvements in their eyes! This article lists 7 home renovations that might not help the re-sale value of your home. >>

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Monthly mortgage payments is something every homeowner has to deal with. There are many different theories and strategies that go with paying off your mortgage, but have you ever heard of a sinking fund? If not, you can read all about it here! >>

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There’s one thing standing between the house size you think you need, and the house size you actually need: your ego. Set it aside and read the benefits of owning a smaller home. >>

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Condo popularity is growing in the Windsor-Essex area, and they are popping up all over! If you’re thinking of buying a condo make sure to keep these tips in mind so you don’t have any surprises after you make the big investment. >>

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House flipping is rapidly gaining popularity and can be a great way to earn extra cash to set yourself up for financial freedom. However, like many things, it’s not as easy as it sounds. Read this article for some things to consider before diving into a flip so it doesn’t turn into a flop. >>

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Investing in a vacation rental could be the perfect opportunity to finance a vacation spot for you and your family—if you’re willing to put in the work! As always, we want you to stay informed on all decisions involving real estate, so if you’re thinking of investing in a vacation home, be sure to read this article first. >>

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Getting your home ready for an inspection is a win-win for everyone; doing it right is important! This article does a great job at listing the simple things you should do pre-inspection to assure you get the highest price for your home. >>

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It’s easy to make mistakes when first starting anything, but some “rookie mistakes” can end up costing you a lot of money! Be sure to avoid the common ones by reading this article, and get yourself ready for a successful investment property! >>

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Does the thought of your mortgage constantly stress you out? If you want to live mortgage free, you can start by reading these 12 tips on how to reduce that pesky mortgage. >>

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How would you feel about having a neighbour that frequently rents out their home short term? Are you with the majority of Canadians? Find out here! >>

Real Estate Insider: January 2018 News Report

Will your next home be in a mall? Who pays for what in a domestic relationship? Thinking about doing some renovating this Spring? We cover all that and more in this month's Real Estate Insider, including the latest real estate developments in Canada this month—plus we might even help you save some serious cash.

Thinking of investing in Real Estate? Capitalization Rates can be one of the easiest and most common methods of valuation used in the market today! Learn about Cap Rates and why they are so important for investors! >>

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Whether you are a Buyer or a Seller, you need to know the difference between Patent and Latent Defects. This video covers what they are, and what needs to be disclosed when selling a home. >>

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Don’t get hit with sticker shock when doing your first kitchen renovation! This article will help you understand the costs and how much to budget so you can be safe rather than sorry! >>

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If there’s one thing you should be it’s efficient. Read these simple tips and tricks to stay cozy and be energy efficient this winter! >>

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Moving in with your partner can be an exciting and confusing experience, with one of the most common questions being “Who pays for what?” Read this article for some steps to take when pooling assets together with your significant other. >>

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Watch this video to learn “5 things to know when selling a home occupied by a Tenant”: >>

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With the announcement of another interest rate hike, be sure to keep informed with some of the key takeaways and what this and future rate hikes mean for the Canadian economy. >>

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When one door closes, another opens! With the struggling retail market in Canada leaving large vacancies, Canadian mall owners are seeking to convert these prime spaces into condos in some of the largest most vacant land deficient cities in Canada. >>

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Now that everyone is familiar with the new mortgage “Stress Test”, here are 5 things that will happen in response to this new mortgage policy. >>

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Personal Loan Vs Line of Credit: read this article to learn the pros and cons of each. >>

Real Estate Insider: 2017 Summer Report

Welcome back, real estate readers! We are going to be adding a new monthly series to our blog. In addition to interesting real estate blogs, we'll be including helpful articles and subjects we think you'll benefit from reading. Last month, we found a treasure trove of insider info we just can't help but share.

Worrying about your credit score? Make it a thing of the past! CIBC is set to launch an easy-access platform for all clients to check their credit scores whenever they want, indicating the importance of everyone being comfortable and up to date with their financial situation. >>

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How much do you know about your condominium’s governance? After investigating some questionable practices in downtown Toronto, this article gives tips on what you should be doing to ensure that your condo is well-managed. >>

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Are we digging ourselves into a deeper hole with the Foreign Buyers Tax? The Montreal Economic Institute says that public decision makers are “missing the mark” and that this tax will do the opposite of what it was imposed to do. >>

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Trying to halt the train! Chief economist at the Canadian Real Estate Association says Torontonians should prepare for a possible tax on speculative home purchases to try and stop outrageous house prices, but will it work? >>

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What goes up, must come down. Home sales dropped 6.2% from April to May 2017, signifying the largest drop since August 2012. This could possibly mean the market is beginning to balance itself out once again. >>

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Is your house under seven years old? Make sure you know about the new home warranty program in Ontario and the changes coming! >>

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Could the legalization of cannabis affect the real estate business? Who should be responsible for all the costs and risks associated with growing marijuana plants? This commentary discusses some of the legal implications that could come with the industry. >>

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Risk big, win big. With interest rates set to rise, are variable rate mortgages worth the risk? Locking in your mortgage rate now might be the way to go for the more cautious homeowner. >>

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Canada has a historically moderate financial situation. In the wake of the recent housing boom, learn how the economy is protected with policies like the Foreign Buyers Tax to ensure Canada’s economy is safe now and in the future. >>

We hope you enjoy our findings -- happy summer and happy reading!

Love Is In The Air - Market Segments Clients Love

With Valentine’s Day just this past weekend, love is definitely in the air. After a weekend of blowing your budget on your significant other, our investor clients are thinking of ways they can reverse some of the damage by making a solid investment.

In honour of Hershey’s favourite holiday, we have a list of some of the market segments our clients are loving in 2016:

1. Industrial – During the downturn of 2008-09, the manufacturing sector was especially hard hit, with several of the large automakers on the brink of bankruptcy. The restructuring that went along with that has brought about the rebound of the last several years. This year we are looking at a record year for auto sales and the roll out of many new cars. This is all translating into super low supply of buildings, increasing rents and the start of a new construction cycle. We see continued upward pressure on prices and rental rates as new construction costs are prohibitive compared to resale in many cases.
2. Multifamily – The demand for yield with today’s near zero percent interest rates has fueled unprecedented demand for multifamily investment properties. This demand has far outstripped supply and prices have rose and cap rates have fallen. With continuing low supply and high demand we see this trend persisting and further downward pressure on cap rates. In our market specifically of Windsor ON, we still have a cap rate discrepancy with larger markets in Canada and we see that continuing to narrow.
3. Retail Plazas – Stable, long life assets such as these have always had plenty of investor interest and with cap rate compression this has increased demand. Cap Rates on Retail Plazas are still significantly higher than multifamily and as such we see a narrowing of this spread as plaza prices continue to rise.
4. Small Turn Key Office Space – Office space units of 1500-2000’ with good existing buildouts are in high demand in our market and landlord’s with these vacancies are sure to benefit. Office tenant’s seem to be doing more with less square footage these days and smaller spaces such as this are more marketable.
5. Townhouses & Condos – With our previous discussion about the aging population, demand from downsizing baby boomer has been buoyant in the townhome & condo market. Millennial buyers have also had a preference to this segment of property. New construction of townhomes have been booming and a new wave of condo construction has begun. We see this trend continuing as demographics continue to support it.

These are the segments being shown the love in our market. Where is the love in yours?

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

Condo Special Assessments Explained

Today we are going to talk about a topic that is rarely understood by people other than those who own a condo and have experienced the situation first hand – the situation of a special assessment. A special assessment can be an expensive item for condo owners and one that unfortunately happens often. Lets start with a definition:

A special assessment is an additional payment or a levy that a condo board has to impose when unexpected shortfalls or unexpected expenditures occur in the budget, or when an expensive system has to be replaced (i.e., a boiler) and there is not enough money in the reserve fund to cover for it.

Generally this special assessment is in the form of a lump sum payment or spread out over a certain term (i.e. 3-12 months) and added to condo fees. There are no provisions in the Condominium Act, 1998, that talk about special assessments. Therefore implementation and rules regarding the structure of a special assessment are up to the condo board.

Source: CTV News

Unit owners have the same obligation to pay special assessments of common expenses as they have to pay regularly assessed common expenses. A failure or refusal to pay a special assessment as and when required by the board of directors gives rise to a lien against the owner’s unit. Condominium boards do not require unit owner approval for a special assessment, unless the by-laws of the condominium specifically require it.

When a special assessment does occur, depending on the size relative to the pricing of condos in the building, certain owners might not be able to afford to pay them. This can lead to a series of forced sales in the building and an overhang of supply, leading to lower sale prices across the building. A long history of special assessments in a building can be a red flag and indicative of poor management or poor physical construction.

Source: Edmonton Downtown

When looking at purchasing a condo, make sure you ask or put in the schedule of an offer, for the seller to disclose any current or pending special assessments, so you are clear on any liabilities you are inheriting. As discussed in an earlier post, look through the reserve fund study so that a proper assessment can be made, of the finances of the condo corp and the likelihood of a special assessment in the short term.

Have you had any negative experiences with special assessments? We'd love to provide you advice.

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

6 Things You Should Look For In A Stable Condo

When you own a condo, you own your individual unit, but you are also entitled to use the common areas of the building. Compared to a single family home, when decision making regarding the property is generally your own, in condos most decisions are made by the condo corporation.

This brings with it an element of partnership among your common condo owners. Considering this ownership structure, it is important to feel comfortable with the future stability of the property and the condo corporation.

Source: Ottawa Citizen

6 Factors To Look For:

1. Professional management by a management company with experience managing condos. This is important because they run the financials of the building, reserve fund studies, board meetings, implementing of operational changes, etc.
2. An engaged board of directors of the condo corp (who live in the building) and who will act in the best interests of the condo owners.
3. A low to moderate amount of sale turnover. Generally it is positive for a building to have a limited amount of annual sales in the building and have a building with a majority of long term owners. This is indicative of happy owners and with long time horizons of ownership. Buildings that always have several units for sale is sometimes a red flag of problems and there is always a steady supply of people looking to sell.
4. Low to moderate amount of units that are tenanted. Having a large supply of owner occupants is usually indicative of pride of ownership in the building and lesser ‘wear and tear’ of the building. Tenants also usually will not be long term, which from #3 above, hurts stability of the building. Having a large supply of tenanted units in the building can also be a red flag that there is an overhang of units for sale that sellers are unable to unload.
5. Generally stable condo fees. Stable condo fees are indicative of good financial management of the costs and liabilities of the condo corp. If they are changing, make sure they are for a good reason (like increasing hydro and water costs in Ontario, which are out of control of management).
6. Limited history of special assessments. A special assessment usually comes down when an item or items needs to be replaced or repaired in the building and aren’t budgeted for as part of the reserve fund. We will do an in depth post of special assessments in an upcoming post. Having a limited history of this is generally positive and ties in with #5 of good financial management and maintenance of the building. Having a long history of special assessments can be a major red flag as the building may have serious physical/structural issues.

This is far from an exhaustive list but give you a few general things to look for in a stable condo building. Always make sure to do your due diligence!

Is there something you look for in a stable condo that's not on this list? We'd love to know - leave us a comment!

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

Condo Living - What Is A Reserve Fund?

For many people, THE MOST CONFUSING aspect of condo living comes from the reserve fund.

When looking at purchasing a condo in a specific building, it is general practice to review the latest reserve fund study. But what exactly is a reserve fund? And what should one look for when reviewing a reserve fund study?

‘Reserve Fund’ - An account set aside by an individual or business to meet any unexpected costs that may arise in the future as well as the future costs of upkeep.

“Reserve Fund Study” - A reserve study is a long-term capital budget planning tool which identifies the current status of the reserve fund and a stable and equitable funding plan to offset ongoing deterioration, resulting in sufficient funds when those anticipated major common area expenditures actually occur. The reserve study consists of two parts: the physical analysis and the financial analysis. This document is often prepared by an outside independent consultant for the benefit of administrators (Board of Directors or Strata Council Members) of a property with multiple owners, such as a condominium association or homeowners' association (HOA), strata, containing an assessment of the state of the commonly owned property components as determined by the particular association's CC&Rs and bylaws.

Source: Houzz

Reserve studies are in essence planning tools designed to help the board anticipate, and prepare for, the property's major repair and replacement projects. For example, such projects would include: replacement of the roof on the building(s), replacement of the boiler, retrofit of the fire alarm devices, and resurfacing of the roadways.

The reserve fund, as we know from last week’s post, is funded through the monthly condo fees of the residents. This reserve fund essentially smoothes out the costs of the major repairs and replacement projects.

Proper planning and financial management is essential in making sure funds are accessible as the need for these projects arise.

Subsection 94 (1) of the Condominium Act, 1998, requires the corporation to conduct periodic studies to determine whether the amount of money in the reserve fund and the amount of contributions collected by the corporation are adequate to provide for the expected costs of major repair and replacement of the common elements and assets of the corporation.

Source: Malvern

These periodic reviews, are important to ensure the existing reserve fund and planned reserve fund contributions (assets of the corporation), meet the expected costs of major repairs and replacement (liabiliities of the corporation).

Otherwise, the corporation could be surprised one day and not be able to meet its obligations, and be required to levy special assessments on the residents, who may have problems in paying.

Make sure when you are looking to purchase a condo in a specific building, that you review the reserve fund and latest reserve fund study, to make sure the condo corporation “has their financial house in order”. Otherwise you could be looking at unexpected future costs.

It is also a good idea to have your lawyer review these documents to ensure there are no irregularities. Better safe than sorry.

Next up we look at what factors to look for in a stable condo building.

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

The Truth About Condo Fees

Often we hear people say, “I’m not interested in buying a condo because I don’t want to pay condo fees.” Or sometimes condo owners tell us, “I pay these condo fees every month but don’t know where the money goes.”

Well, today we are going to discuss condos and where those monthly condo fees go!

First a technical definition of a condo:

A condominium, frequently shortened to condo, is the form of housing tenure and other real property where a specified part of a piece of real estate (usually of an apartment house) is individually owned. Use of land access to common facilities in the piece such as hallways, heating system, elevators, and exterior areas are executed under legal rights associated with the individual ownership. These rights are controlled by the association of owners that jointly represent ownership of the whole piece.

Put simply, when you own a condo, you own the square footage inside your unit, and are entitled to use the common areas of the building. This common element is managed by a condo corporation within the building. This condo corporation basically runs the operation and the finances of the building. Every unit owner is obligated to pay their share of the operating costs of these common elements of the building and condo fees are how that is administered.

Source: See Windsor Real Estate

Typical Expenses Incurred By Condo Corporations & Funded By Condo Fees:

• Utilities of common areas
• Maintenance of common areas
• Management of the corporation and building
• Safety/Security (Cameras/concierge in some buildings)
• Garbage/Recycling
• Landscaping/Snow Removal
• Insurance
• Allocation to the Reserve Fund (which is a topic we will discuss in depth in an upcoming post)

In other words, you are paying for the convenience of walking into your unit at the end of a long day, and having no worries outside of keeping up the interior of your unit. You also don’t need to budget for upcoming capital items the way you would in a house (like a roof) as that is built into your reserve fund allocation (unless the reserve fund is underfunded and a special assessment comes in, which we will also discuss in another post).

This works well for certain people, namely younger and older people, because it allows them to budget consistent costs for housing and not have to worry about maintenance.

To summarize, you aren’t throwing money out the window when you pay condo fees. You are paying your proportionate share of the operating (and future) costs of the property.

Were you part of the percentage of people who already knew this about condo fees? Leave a comment to let us know.

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Next up we will be talking about reserve funds – a topic that confuses lots of buyers.

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