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! >>

Real Estate Insider: July 2018 News Report

Welcome back everyone! With more than a few hot topics this month, we've made sure to scope out the best reads you won't want to pass up. Do you agree with condos banning smoking with the legalization of marijuana? What is the issue with having Kitec plumbing on your property? How can you save money on your flooring renovation? We'd love to hear your feedback on these topics plus more in this edition of the Real Estate Insider!

Everyone knows the phrase “Location! Location! Location!” when buying a home or business. There are many factors that can increase, or decrease the value! Which do you think living next to a cemetery will do? Find out here! >>

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Building your dream home? Congratulations! While this is an exciting time, we want to make sure you are getting the best tax return on your current home as possible! This can be a tricky situation, read this article to get started! >>

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You don’t have to start with a lot to become a successful real estate investor. Read how at 27, Paula Pant was paying $400 a month in rent to share a kitchen and bathroom with roommates, and at 34, she now has 8 homes!  >>

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Don’t let your ego get in the way of your financial strength! Read here for various reasons why you should put your ego aside when thinking about buying a home. >>

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Ahead of the legalization of recreational marijuana, some condos are taking pre-emptive steps to make sure they ban smoking on their properties. Do you agree or disagree with this move? Read more here. >>

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The age-old question of “fixed vs. variable” mortgage rates continues in this article following the rumours of another rate increase before the end of 2018! Read here. >>

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A deceased person could have assets not controlled by their executor. Who is entitled to these assets? Read here for some insight on the different parts of an “Estate Pie” and who all gets a slice! >>

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Kitec plumbing could be an issue when buying or selling a property that contains it. Watch this video for 5 things to know about Kitec plumbing! >>

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Pooling resources can be a great idea when buying or renting a home to get more for your money, as long as everyone is protected! Read here for tips to avoid costly or ugly scenarios down the road! >>

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Floors are often the last things to go into a renovation project, so make sure to finish strong! Here are 5 ways to save money on flooring. >>

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. >>

2017 Real Estate Trends: Bidding Wars – Part 2

Last week we discussed a topic that everyone seems to be talking about: bidding wars.  Some of the cause and effect for these trends are hard to pinpoint.  Today we are going to expand on some of the factors leading to these bidding wars, with some that are less obvious.

Migration To The Area

As explained last week, part of the population growth that is occurring in the area comes from elevated levels of immigration.  The other part of the equation is the people migrating to the area from other parts of Ontario and Canada.  One large drag we had back during the economic downturn was people moving out west for Jobs after being laid off in the auto industry.  With the rebound in the auto industry and the downturn in the oil patch, this trend has reversed.  And not just out west, but from other population centres in Canada as well.

People Choosing Windsor-Essex As A Retirement Destination

As the population of Canada ages with the Baby Boomers, a large segment is hitting or will soon hit the traditional retirement age.  Some of these boomers are choosing to retire in lower cost areas such as ours to boost their retirement balance sheet.  Moving from high priced markets such as Toronto or Vancouver to ours provides a way for them to access the equity in their home and in many cases buy a similar home and put a very significant sum in the bank to fund their retirements.  To add to this, the area boasts some of the best weather, easy access to the US, wineries, and more – all perks to retiring in Windsor-Essex.

Increased Investment From Out-Of-Towners

A lot of real estate investors invest based on economic fundamentals, something our area didn’t have for a long period of time.  That has changed and so has the appetite to invest in our market.  Leading indicators such as economic growth, low unemployment, population growth, new construction, etc. have all been very supportive and investors have followed.  Traditional investor segments of the market, such as multifamily, might be the hottest markets of all.  In fact, the inventory of investment properties is so low its makes it extremely tough for buyers in this market.

Unseasonably Good Weather This Winter

The prognosticators were calling for a brutal winter in our area this year.  Didn’t end up playing out that way (fine by us ☺).  In fact, people were golfing in February this year in our area!  This balmy weather pulled up some of the traditional spring market activity and definitely added to demand.  This is a seasonal effect but no doubt helped the statistics to start the year.

Those are some additional factors that have resulted in the continued bidding wars.  Next week we will exhaust our analysis to wrap up our thoughts on the subject.  Have you seen any of these factors playing out too?

Bonus: Investing In Real Estate – Building the Right Team: Mentors & Education

Ask any successful real estate investor and they’ll be sure to admit that they haven’t invented the wheel. They have taken ideas and concepts from other landlords and incorporated them into their investing business. The learning curve is much easier when you aren’t starting at square one.

Why do I need a mentor?

One of the best ways to learn the tricks of the trade is to find a mentor who is a successful real estate investor.  It's often that successful landlords enjoy talking real estate and will be happy to share some info. Pick their brain. Even if you take a few concepts, or learn to avoid a few mistakes over time, they can make you money or save you big money long term.

How do I find a mentor?

The best way to find a mentor, or like minded real estate investor, is to network. Look to see if there is some sort of real estate investment club in your local area. Talk to your realtor or other professionals on your team to see if they know of anyone they can refer you to. Networking is key in any business and having successful contacts can very much help you investing business.

What else should I know about staying educated?

Besides having a mentor, it is important to keep investing in yourself as a real estate investor. Continual learning will improve your understanding of the business and keep you sharp. There are numerous books on the subject, online classes, in-person seminars, and of course, blogs (like this one ☺) that have lots of information to keep you up-to-date on what is happening and what you need to know in your market.

Don’t be lazy. Aim to improve yourself continually and your investment business will thrive. Readers, do you have a mentor? What do you do to keep continuing your real estate education?

Investing in Real Estate – Building The Right Team #4: Accountant

As the saying goes, “The only two certainties in life are death and taxes.” Continuing on in your journey of investing in real estate and building your team, you’ll need a good accountant to figure out the latter. Today we are going to talk about why you need a good accountant on your team and how they can help you succeed.

Why Do I Need An Accountant?

The main function of your accountant in relation to your real estate investing is to help figure out the taxable rental income attributable to your rental properties. They will help with filing your tax return, and provide advice relative to your situation and any tax planning that is necessary. All this would also apply to your employment income (if your employed) as this would all go on the same tax return.

How Will My Accountant Help?

Outside of the filing of tax returns, your accountant will help with general tax advice and planning.  Decisions an accountant can help with include:

• Can you expense or amortize a certain repair or renovation?
• How much depreciation expense should you take?
• When is a good time to sell based on tax consequences?

An accountant will also help should you ever get audited by CRA. Basically they will help you within existing tax laws to maximize your after tax rental income, which is really what investing is all about.

What Should I Look For In An Accountant?

As a real estate investor, it is a definite plus to deal with an accountant that has lots of experience with real estate investors. Ask for references from other investor colleagues. Having an accountant with a Chartered Accountant designation is also huge plus.

How Much Will My Accountant Cost?

This will vary depending on your tax situation and the accountant you use. Some charge a flat rate for a comprehensive tax return and some charge per hour. One way to lower your bill will be to have all your paperwork organized for tax time so your accountant isn’t drowning in paperwork. This can be done with bookkeeping software such as Simply Accounting or by hiring a bookkeeper to keep proper records of everything.

In the business of real estate investing, it’s not what you make, it’s what you keep. You also need to be aware of exactly how much your investment properties are making so you can make any necessary changes to ensure your success. Keep diligent records with the help of your accountant and your cheque book will be happy you did!

Investing In Real Estate – Building The Right Team #2: Lawyer

Moving along in our series of building the right team as a real estate investor, after you’ve selected your realtor, it is time to consider legal representation. Today we are going to talk about what to look for and why you need the right lawyer on your team.

Why do I need a Lawyer?

The most basic task you need your lawyer for is to close the real estate transaction, transferring title to you. They will also provide legal advice for your investment business to protect your interests.

What will my Lawyer do for me as a Real Estate Investor?

Aside from the closing transactions, they will run title searches, register mortgages on the property, give legal advice or opinions on properties or related issues, review or even prepare real estate documents and even advise on ownership structures of your real estate.

What should I look for in a Lawyer

You’ll want to look for a lawyer who does a lot of real estate transactions and has the requisite experience. They should be able to provide relevant advice for your situation as a real estate investor and how to protect your interests. Having a lawyer that is an investor in real estate or has some sort of background in the business is a bonus.

How much will my Lawyer cost?

As in anything else, the costs will vary depending on the lawyer and the amount of work needed. On real estate transaction, some lawyers charge a flat rate plus disbursements (out of pocket costs the lawyer incurs on your behalf) and an hourly fee. Make sure you understand the costs beforehand and maybe compare prices in your market. Although the decision of cost alone shouldn’t determine which lawyer you choose, the decision is very important!

As we aren’t lawyers, we leave the legal advice to the legal experts. This is far from an exhaustive list regarding legal professionals but an intro to get your started with adding to your team. Now get to work!

Investing in Real Estate – Building The Right Team

After doing some research on different investing ideas, you’ve decided that real estate investing is right for you. No matter how big or small you intend for this investment venture to be, its important to be ready, willing and able to handle everything that comes your way. But how do we do that? By building the proper team of professionals around you to set yourself up for success.

But what type of professionals do you need? We've put together a list of such professionals. Not every one of them is necessary for every investor, but the list is a starting point to make sure your bases are covered.

Realtor

Now this is a pretty obvious one ☺. They’ll be able to help you out with understanding values, demographics, rents, etc. Working with a realtor who either owns rentals themselves or does a good amount of income properties is a huge bonus.

Lawyer

A good real estate lawyer is invaluable. They will make sure your interests are protected in whatever deals your are considering. Good legal advice can be expensive but can save you money in the long run.

Mortgage Broker-Professional

Assuming you will be mortgaging your properties, a good mortgage broker-professional is essential in getting your deals financed. They can give you advice so you can continue to accumulate properties and get the best terms possible.

Accountant

A good accountant is also invaluable. Understanding the best way to hold the real estate, claim expenses, amortize costs, etc. can save you tax dollars. They also have your back should CRA ever audit you.

Property Manager

Don’t have time or the ability to handle your rentals yourself? Finding a good property manager is must-have. They can collect rents, leasing, handle tenant calls and be the general go between the property and the owner. Fees generally range from 5% of rent to one month’s rent per year and up.  Make sure you factor this cost into your budget if you're planning to have the property managed.

Contractor/HandyMan

Not very handy? Then you’ll need to contract out any renovations or general upkeep. When you find good people who don’t cost an arm and a leg, it is important to keep them around and happy. They will make your life much easier in this business.

Bookkeeper

A good bookkeeper can keep track of all your income and expenses related to each property and make sure everything runs smoothly. They can also run regular reports so you understand your profits and can uncover trends (like increasing utility costs), so they can be addressed.

General Maintenance – Grass, Snow, Cleaning

A list of maintenance contacts can go a long way in efficiently operating your property and keeping it safe and attractive to tenants. Be sure to also add these costs to your budget.

This is far from an exhaustive list, but it gives you a general idea about who you should have on your speed dial as a real estate investor. How has your experience been in creating your team?

Growing Trends for 2016 Real Estate - Crowdfunding

Have you ever wondered what it would be like to own a large commercial property (i.e. retail plaza, office complex, high rise apartment building), but unfortunately don’t have the millions of dollars in the bank to make it a reality? Well the rise of crowdfunding in real estate might just be the opportunity you’ve been looking for.

But first, what exactly is crowdfunding and how does it work?

You might be familiar with fundraising sites such as Go Fund Me or Kickstarter, or US based peer-to-peer lending sites such as Prosper or Lending Club. Crowdfunding for real estate is similar to these platforms and the basic premise is simple. An investor can access individual real estate properties through an online platform and pool money with other investors to invest the required funds for a property. Say for example, the property cost $10 million dollars, it could be split into 10,000 shares of $1,000 each or 0.01% ownership for each share.

Real estate crowdfunding falls into two sub-groups: debt and equity.

In debt crowdfunding the investors act as a lender for, rather than as, the owner of the property. In such circumstances, the investment would be secured by the property and the investor would be entitled to monthly interest and a return of principal, but not to any benefit from property appreciation.

In equity crowdfunding, the investor becomes an indirect owner of the property by obtaining shares, limited partnership units, or other securities in the entity that owns the property/project. This form of investment carries inherently more risk, but also a potential greater return as a result of a direct interest in the property appreciation.

Crowdfunding for real estate is still in its early days in Canada. However, it has been making significant inroads in the US. The Ontario Securities Commission has been reviewing the industry as it matures and tries to regulate to protect investors. So check back often on the regulations as the industry matures in 2016.

Though crowdfunding will allow more people access to the commercial real estate market, for companies being able to solicit investments in projects from the general public online both greatly increases companies’ ability to raise the capital they need, from a greatly expanded pool of potential investors, but may also greatly increase the likelihood of lawsuit, especially if the investment performs poorly.

So there you have it. We are on the precipice of “the democratization of the real estate investment opportunity”. Are you excited?

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