~ Strata Properties - New Legislation ~

Do you live in, or plan to purchase a Strata property?

If yes then you should know about a new piece of legislation that has been passed in 2011 and is in effect now. How will it affect you? Some people say that it will have a positive impact on the industry and some say that it will have no impact at all. One thing we know for sure is that it will cost more money to live in a Strata property. My sources are telling me that the cost could go up anywhere from $10 - $60 /month just in fees - not calculating some repair bills that may be unnecessary in some people’s opinions. 

Here is some basic information about the Depreciation report.

What is A Depreciation Report?
A Depreciation Report, commonly known as a Reserve Fund Study, is a comprehensive outline of expected repairs, improvements, and common update expenses of a Strata property over time. As of December 13, 2011, Strata Corporations are required to complete a Depreciation Report by December 13, 2013 and every following
three years, unless rejected by a three quarter vote. A Depreciation Report must include a description, estimated service life, and any associated repair costs for a Strata Properties infrastructure including, but not limited to:

· the building’s Structure
· the building’s exterior; including roofs, roof decks, doors, windows, and skylights
· The building’s systems; including electrical, heating, plumbing, fire protection and security systems
· parking facilities and roadways
· common amenities and facilities
· landscaping
· interior finishes; including floor covering and furnishings
· patios and balconies

Similar Reports are already required in Ontario, Alberta, and much of the United States.

If you wish to receive more detailed information package, I have one ready and I can email it to you on request.

Tibor Bogdan
 

~ Perfect Summer Conditions for Buying a Home ~

Real estate sales in the Chilliwack area saw "a significant improvement" in May, according to the Chilliwack and District Real Estate Board (CADREB).

Sales still lag, however, below the 10-year average. There were 241 residential properties worth $72.7 million sold in
May. That's up from 198 sales worth $60.8 million in May 2011, according to CADREB statistics.

The uptick in real estate sales in May is still below 2010, when there were 248 sales worth $79.9 million and 2009's 262 sales worth $77.9 million.

Chilliwack real estate sales for May included 147 single family homes (111 in 2011), 50 townhouses (46 in 2011), 24 apartments (24 in 2011) as well as 10 mobile homes and 10 houses with acreage. In house prices, the median sale price of a single family home in May 2012 was $328,500; a strata property was $230,000. The median list price of a single family home as of June 1 was $374,900, and a strata listing was $220,000. ~Courtesy of: Paul J. Henderson, Chilliwack Times

Tibor Bogdan

~ See a penny, pick it up ~

That’s what Thomas Daigle has been doing for 35 years, saving enough pennies to pay off his mortgage.
When Mr. Daigle and wife first moved into their Milford, Mass. home in 1977, he knew he wanted to make his last payment memorable and from then on, started saving a few pennies a day.  “It was something I wanted to do,” he told the Milford Daily News.  “I was just praying I didn’t die first.”

After a few years of collecting, the grape crate he stored the pennies in began to break from the overwhelming weight, so transferred his bounty to a pair of steel military rocket-launcher  ammo boxes. Mr. Daigle rolled the pennies in packs of 50, which  became a hobby for him, and stored them in his basement.

This past April, he had enough pennies to make his final mortgage payment, which weighed-in at more than 360 kg, delivering the two boxes to the bank. According to the Milford Daily News, he didn’t  say the exact number of pennies he had, but the total came in at  over 62,000.

But if any homeowners in Canada want to make their mortgage payment in pennies, they better start hoarding. The federal government announced in March that it is  phasing out the copper coin starting this fall, citing rising production costs.

Canadians don’t appear to be as interested as Mr. Daigle is in making a statement with their mortgage though.

Tibor Bogdan
 

~Thinking of renting that basement suite? Tips for first-time landlords~

When shopping for a home, finding one with a basement suite to rent out may seem like a no-brainer. To some  people the tasks involved include finding a tenant, fixing leaky taps, sprucing the place up, and complying with various bylaws – all of which may seem worth it in order to buy in the neighbourhood of choice and become mortgage-free sooner.

In reality...finding the right tenant is more time-consuming than it appears, things often break at inconvenient times, and you can’t evict someone just because you don’t like their new boyfriend. Being a landlord is a  demanding, round-the-clock responsibility.

Don Campbell, the Vancouver-based author of a number of books on real estate investing, says a rental suite can be an effective way to help pay the mortgage, but you have to treat it like the business it is. The biggest shock for most first-time landlords, he says, is the diminished privacy.

To avoid problems, here is Mr. Campbell‘s list of considerations for aspiring mom-and-pop landlords:
1. Consider your privacy.  Can you live with seeing a stranger around your house or using your property outside? Is the extra money worth it?
2. Try to avoid renting to family.  It is best not to rent to family, as it completely changes the relationship and is difficult to use “eviction” or “collection” rules against a non-paying family member without destroying the relationship and having the repercussions ripple out into the rest of the family.
3. Sign a proper written lease.  Always – even with family members – have a properly written lease between you and the tenant that clearly outlines the rules, late rent penalties, expectations, and length of term. It must be
signed by every adult who is to reside in the suite.
4. Don’t set your rent too low.  Never be the lowest rent in the market – you will attract the type of renter whose focus is solely on dollars. It will also lead to more rapid turnover as they leave to the next “lowest rent” spot. To set the proper rent for your suite, go online and search for available units in your area. Make sure to look at a number of different sites and be location-specific in your comparisons. Look at the amenities and picture them through the
eyes of a potential renter. Then place your price in the middle or higher end of the average comparable.
5. Do your research.  Each province has its own landlord-tenant legislation so make sure to read up on the rules that apply where you live. In addition, make sure to research your local municipal bylaws, which include things like guidelines and standards for fire and building safety. Municipal bylaws also cover issues like zoning and permits. For example, some cities are now looking to shut down secondary suites in specific neighbourhoods. Not conforming to these rules means you could be shut down at a moment’s notice, so check with the city to make sure that your suite is  legal.
6. Tell your home insurance company.  When you rent out a unit in your home, you are obliged to inform your home insurance company – something that the vast majority of people fail to do. If anything were to happen, for instance if a fire starts in the rental suite, the insurance company could say they were not informed of the tenant and that the policy is voided.
7. Research the tax repercussions.  Once you have a rental suite in your home, you have to claim that rental income on your tax return. In addition, once you start using the property for revenue, a portion of the capital gain
when selling the property could be deemed taxable.
8. Learn from other landlords.  Knowing the tricks of the trade is important and who better to learn from than other landlords? A great free way is to visit www.myREINspace.com and use the search function to read discussions between Canadian property owners and their experiences and strategies when dealing with tenants.  

My advice for anyone considering renting out part of their home is: Do your homework and be prepared to do the work – and deal with the hassle – that comes with being a landlord.

Tibor Bogdan

~Mortgage Changes - Effective July 9, 2012~

As you may have heard, the Government today "tightened" the rules for mortgages. The Federal Government announced this morning four new restrictions on insured mortgages effective Monday, July 9th, 2012.

These changes include:

• Reducing the maximum amortization period to 25 years from 30 years.
• Reducing the maximum amount of equity homeowners can take out of their homes when refinancing to 80% from the current 85%.
• Limiting the availability of government-backed mortgages to homes with a purchase price of less than $1 million.
• Fixing the maximum gross debt service ratio at 39% and the maximum total debt service ratio at 44%.

What does this mean to you - Qualification will become a bit more difficult. You may qualify for a bit less, and payments will be slightly higher.

Example - a purchase of $350,000 at today's interest rates would cost a buyer $1,457. After the shortened amortization those payments will go up to $1,635 (both without taxes).

Qualification: Before July 9th, buyers can get in with a family income of about $60,000 and after July 9th, this will go up to $67.000.
Note: this is ballpark, a high credit score client may get in with a bit less income.

On a positive note the 5% down payment rule remains intact.
Let me know if you have more questions.

Tibor Bogdan

~ Attention Homeowners With a Secondary Suite  ~

Here is a bit of information that could be very valuable if you own a house with a secondary suite.

The story was first reported by Tara Carman and Vancouver Sun.
When Raj Bhangu put a secondary suite into his Kitsilano house, he spent the extra $20,000 to do it legally and get the right permits. But he was surprised to find that even though he had home insurance, it would have been null and void had the unthinkable happened — a flood, fire, earthquake or any other unforeseen catastrophe.
That’s because insurance companies will not pay out if homeowners don’t inform them when they put in a secondary suite, something Bhangu found out when his insurance came up for renewal several months after his first tenants moved in. Almost one quarter of B.C. residents rent out a secondary suite in their home to help with the mortgage — and that’s likely a conservative estimate — but most are unaware they are not covered if their insurance company doesn’t know about it, according to Square One Insurance.

Failing to tell the insurance company about a secondary suite is the absolute worst thing that could happen because they’ll say that you didn’t disclose all of the necessary and pertinent information on the home which would have affected their decision as to whether they would insure the risk or not.

In conclusion - If you have decided to get into the landlord business, then learn the rules and protect your property. Talk to your realtor about it before you turn your home into a rental property - and become a smart landlord.

To read the full story click here:
http://www.vancouversun.com/business/2035/Landlords+declare+secondary+suites+covered+insurance/6729657/story.html#ixzz1wyCIQkJQ

~Don't Turn Your Home Into An ATM~

I am sure you have heard about Secured Lines of Credit. If not here is a quick explanation.

Let's assume that you own a house that has an appraised value of $300,000 but you still owe $200,000 on your first mortgage. That means that you have $100,000 in equity. Based on this information most banks will issue you up to a $65,000 line of credit with the interest rates as low as prime+1. That would be secured by the second mortgage on the title of the property. I know this sounds really good. I know that it would allow you to go for that dream vacation or to buy that car you always wanted...but watch out. It is really easy to spend the equity you worked so hard to create.

These secured lines of credit were originally designed for two reasons;
1. For emergencies.
2. To help us to increase the value of the property like renovations, additions and remodeling. Meaning take one dollar out and give yourself $1.25 back. They were not created to decrease the value of your property, and that is exactly what will eventually happen if you are not careful.

Lately I have seen many families using their homes as a personal ATM’s. For real life examples we don’t need to look very far. In the past few years our neighbors south of the border had a number of options to extract valuable equity out of their homes (Like subprime mortgages) to buy boats, SUV's and expensive trips, and look what happened to their Real Estate values.

So be cautious with the equity of your home. It is much easier to spend then to create!

Tibor Bogdan
 

REAL ESTATE INVESTORS

This week I came across an article from the Vancouver Sun talking about investing in Real Estate and comparing it to other investments like stock markets. What got my attention was how precisely Fabio Campanella described the difference between a novice and an experienced investor.Keep reading for the article below...

Novice investors tend to follow market momentum and stretch themselves thin. They see prices increasing year over year then go out and take massive amounts of leverage to get in on the action "before it's too late."

What often happens is they buy more than they can handle, they don't do proper due diligence on their tenants, and they get caught with a dud investment that they can't support with their personal cash flow. This frequently leads to panic selling in order to raise funds to pay off large amounts of debt
consequently resulting in losses.

Smart investors take their time. They seek out properties in desirable neighborhoods, scrutinize their tenant's ability to make rent payments before they take them on, manage the property with a keen eye, but, most importantly, they do not over-extend their leverage. Smart investors realize there may be times when tenants can't make rent or that markets may temporarily turn south.

Even if the original intention for a real estate investment is a short-term flip, the smart invest-or will not purchase a property they aren't able to hold over a long period of time should price momentum not go their way in the short run.

Direct investment in real estate is not like buying a passive investment such as a mutual fund. It requires a time commitment, experience, and patience but the long-term results can be superb when done properly.

Fabio Campanella, CA, CFP, CIM, is a partner at Campanella McDonald LLP. Fabio@CampanellaMcDonald.com © Copyright (c) The Vancouver Sun

Well Said Fabio!

Tibor Bogdan
 
Read more:
http://www.vancouversun.com/business/Rental+property+still+good+investors/6670401/story.html#ixzz1vp1DXpCT

Let's say you want to buy a new house, but you have to sell your house first? You have few options and here they are...

Option 1: Put an offer on the new home with a "subject to the sale" of your old house.
Pros: Safe, no risk.
Cons: You will have a tough time negotiating good terms for your new house since this subject is too complex. The builder will still market the house you want and if a better offer comes in, your offer may get bumped.

Option 2: You can trade your house if the builder is in the financial position to do so. (Just like trading in your car.)
Pro: Clean, no hassle selling your old house, quick move-in.
Con: The builder won’t pay you the market value since he will have to sell your old house and there are some costs attached with that, and they do not like losing money.

Option 3: Compromise between option 1 and option 2
Negotiate with the builder to give you a guaranteed trade in price but you would reserve the right to try to sell it yourself in the next 60 days or so.
Pro: No risk. You are moving regardless of what will happen. You can start packing. There is a chance that you will get more money for your house than the builder would pay you.
Con: I can’t think of any.

I hope this will help you. Email me for a list of builders who are currently offering the option to trade.

Please reply with any comments on this.
Kind Regards,

Tibor Bogdan

Got a House? You need a will.

You can add one more wrinkle to the impact a booming housing market is having on Canadians — it’s getting them to make out a will.
Perhaps buoyed by the ever increasing value of their homes, which reached an average of $369,677 nationally in March, a new study says all that perceived wealth is convincing some they need a legal document to say who will get that money when they pass away.

And that’s a good thing. Not having your final arrangements organized all but guarantees your descendants will face more costs, not to mention the very likely reality that your money will end up in the hands of people you didn’t want to have it.

LawPro says 13% of Canadians were prompted to get a will when they bought a house. “It seems to turn on milestones and everybody agrees getting your first house or any house is a milestone for most people,” says Ray Leclair, vice-president of public affairs at LawPro. Despite the impetus of buying a home, LawPro’s survey still finds that 56% of Canadians do not have a signed will. The survey was conducted by Angus Reid from March 21-22 from a sample of 2,013 Canadian adults and is considered accurate to within 2.18 percentage points, 19 times out of 20.“It is a surprisingly large number,” said Mr. Leclair. “There are a whole slew of reasons.”

“The flip side is they now maybe have something of value [in a home],” says Mr. Leclair, joking most people probably have more mortgage than they have equity. He says the idea wills are just too expensive probably doesn’t wash because it’s less costly than your high-speed Internet on a yearly basis — in the $500-range. Prices vary based on the complexity of the will which includes issues like second marriages and, dividing up businesses.

Please reply with any comments on this.
Kind Regards,

Tibor Bogdan