As a real estate investor it is always nice to have credit available to you. I've researched a couple personal line of credits(PLoC) at different banks. CIBC worked best for me because they are an interest only PLoC meaning I don't have to pay back the principal until I'm good and ready. TD Bank had a forced schedule of repayment that didn't gel well with me. (Not enough flexibility)
From what I understand a PLoC cannot be used as a proof of down payment since then technically you are borrowing more than the allowed on top of your mortgage. (Could even be up to 100% in some cases). Talking to my mortgage broker though it sounds like as long as you actually can show you have the cash or investments available as a proof of down payment you can still use the PLoC for the actual down payment. Say you don't want to cash in your stocks or TFSA for the down payment of your next property, but you can easily show that you have the money available... then you can use the PLoC to do the down payment and just pay the interest as you go and not have to upend your investment portfolio.
An interesting positive to a PLoC is IF you borrow your max and for some reason later on the bank wants to decrease your credit... at least you can just keep paying the interest and it won't be a squeeze to your cash stores (I mean they can't decrease it more than you already owe... but as you pay it off they can decrease it down to what you owe). That sounded confusing. An example might help. Say you had a limit of $25,000... you borrow the $25,000... say later on you lose your job... but your investment properties easily cashflow to cover all your loans... but based on the banks assessment you are more risky and wouldn't qualify for the $25,000 PLoC... the worst that can happen is you just keep paying interest on the $25,000 but don't ever pay it back... but say you do pay back $5000 of the principal... they may decrease your limit to what you still owe ($20,000). Anyways just a small perk.
Back to my experience applying for the actual PLoC. I had an appointment with my banker and she requested my most recent two pay stubs. Thing is that wasn't all she required. Luckily I had brought my "Sophisticated Investor Binder". (Those who have read Don Campbell's book on the ACRE System will be familiar with this). She asked for fairly detailed accounts of my assets:
- Balances on RRSP, TFSA, Margin trading accounts
- Each of my bank accounts (not just a summary of all the cash you have available)
- Investment property information (Mortgage payments, rent, taxes)
- Worth of my personal car (guess they also count that as an asset)
I thought it was rather interesting anyways. She did compliment me on being organized and having it ready. (Even though she only told me to bring two pay stubs...)
I was automatically approved for a $35,000 credit limit at Prime + 3%... but if I had a a limit of $50,001 the interest goes to Prime + 2.75%... a quarter percent difference... not huge... but I might as well try and get it. Thing is anything over $35,000 must be sent in for approval and is not done automatically at the branch. Oh well I'll wait a few days... worst they can say is no right? Either way... Prime is currently 3% at CIBC... so a 6% interest rate isn't that bad... similar to what average mortgages used to be.
Thursday, May 5, 2011
Tuesday, May 3, 2011
Review: Everyday Real Estate Millionaires
I just renewed my subscription last month to the Canadian Real Estate Magazine and was given a book for renewing, Everyday Real Estate Millionaires: How Average People Really Do It
by Paul M. Hecht. This is a book I probably would've bought anyways due to the title and my interest in real estate so getting it included in my subscription was a bonus.
The book itself is written from the first person perspective of 4 different people each writing their own story with Paul being the 4th and last story. Each persons story is unique and offers a different strategy to become a real estate millionaire. Starting with Cam the Accounting Controller who made a decent wage and took the slow and steady, live well below your means and invest the rest, route to Paul who went from bankruptcy to millionaire in 24 months.
I found that the book was a fairly light read probably around 160 pages of actual material (not including the introductory 15 pages and the end 20 pages which were all advertising for Paul's website and his services such as mentoring, DVD training kits etc.)... big font. I ran through it in a weekend. There are some little investment tips that are highlighted in each story such as positive cashflow being very important in case you lose your job and the property has to support itself (I'm paraphrasing)... or buying the worst property in the best area is better than buying the best property in the worst area (again just paraphrasing). Most of them I've already read about in other books, but if this is your first book on Real Estate they are good little tips to know.
It was interesting reading the different ways each family made it to financial independence and Paul does highlight a very large range of methods to make money in real estate outside of the traditional Buy and Hold strategy. I learned about Sandwich leases from this book which is when you sign a lease option with a seller and then turn around and create another lease option with another buyer for a profit... in a sense making money from being the middle man with no real upfront capital for yourself. Of course there is a the flip the house strategy which worked well prior to the financial crisis (and which may still work in certain regions) but which is probably not AS lucrative with 110% returns in a year like some of the stories in this book. Lease Options, Seller Financing and I believe even MICs or Mortgage Investment Corporations were also talked about.
All in all it was a pretty good read. Broad and not detailed so you won't necessarily be able to just put these stories into practice. Probably more of a motivational read and an eye opener into the many ways that you CAN actually make money in real estate, but you would require other resources to become adept in your chosen strategy or strategies. If you are actually serious about investing in real estate in Canada I would recommend buying the Real Estate Investing in Canada: Creating Wealth with the ACRE System
book by Don Campbell. It mainly deals with the buy and hold strategy, but is a lot more in depth in what you need to find the right property, gather the right team, finance and run the property.
by Paul M. Hecht. This is a book I probably would've bought anyways due to the title and my interest in real estate so getting it included in my subscription was a bonus.The book itself is written from the first person perspective of 4 different people each writing their own story with Paul being the 4th and last story. Each persons story is unique and offers a different strategy to become a real estate millionaire. Starting with Cam the Accounting Controller who made a decent wage and took the slow and steady, live well below your means and invest the rest, route to Paul who went from bankruptcy to millionaire in 24 months.
I found that the book was a fairly light read probably around 160 pages of actual material (not including the introductory 15 pages and the end 20 pages which were all advertising for Paul's website and his services such as mentoring, DVD training kits etc.)... big font. I ran through it in a weekend. There are some little investment tips that are highlighted in each story such as positive cashflow being very important in case you lose your job and the property has to support itself (I'm paraphrasing)... or buying the worst property in the best area is better than buying the best property in the worst area (again just paraphrasing). Most of them I've already read about in other books, but if this is your first book on Real Estate they are good little tips to know.
It was interesting reading the different ways each family made it to financial independence and Paul does highlight a very large range of methods to make money in real estate outside of the traditional Buy and Hold strategy. I learned about Sandwich leases from this book which is when you sign a lease option with a seller and then turn around and create another lease option with another buyer for a profit... in a sense making money from being the middle man with no real upfront capital for yourself. Of course there is a the flip the house strategy which worked well prior to the financial crisis (and which may still work in certain regions) but which is probably not AS lucrative with 110% returns in a year like some of the stories in this book. Lease Options, Seller Financing and I believe even MICs or Mortgage Investment Corporations were also talked about.
All in all it was a pretty good read. Broad and not detailed so you won't necessarily be able to just put these stories into practice. Probably more of a motivational read and an eye opener into the many ways that you CAN actually make money in real estate, but you would require other resources to become adept in your chosen strategy or strategies. If you are actually serious about investing in real estate in Canada I would recommend buying the Real Estate Investing in Canada: Creating Wealth with the ACRE System
book by Don Campbell. It mainly deals with the buy and hold strategy, but is a lot more in depth in what you need to find the right property, gather the right team, finance and run the property.
Monday, May 2, 2011
Response: Rescue your retirement
I was reading the latest edition of Canadian Real Estate Magazine (May 2011) and an article by Gord Lemon and Daryl Hemingway caught my eye. It was titled "Rescue your retirement".
This caught my eye because I'm always interested in retiring early and the gist of the article is that you only need 5 properties, 17 years and you would be making $7376/month (not accounting for inflation still enough for most of us to live comfortably).
The properties they would be buying are duplexes @ $266,000 each per year... with a 25% down or $66,000 for each of the 5 years and rental income of $2300 per month. Mortgage of 5%.
Expenses:
Property Taxes : $250/month
Property Insurance: $100/month
Heating (gas) $325/month
Water/Sewer: $35/month
Vacancy allowance: 5% or $115/month
Total Expenses: $825
The numbers definitely sound very good, but I did have a few things that I believe would fairly difficult to overcome.
1. Where to find $66,000 a year?
Average family income of two or more people in 2008 was 74,600... so under 40,000 per person... then accounting for %35 housing costs... the average household would have difficulty saving up $66K a year for the down payment. Not that this is impossible, there are definitely households that make much more than this. As well this is an article targeting those in their 50's and many people of that age do own their own home and might have $330,000 equity in their house to take out in the course of 5 years. But definitely not a viable strategy for those without a decent nest egg or equity already built up.
2. Where to find duplexes with over 10% cap rate and at $266,000?
Average Canadian single family house prices were $327,000 excluding Vancouver. To find a duplex at $266,000 (meaning $133,000 per side) which also rents at $2300 (or $1150 per side) seems like it might be a tad difficult. It might be possible in the US market... but there are definitely other concerns when buying in the US (financing for one, currency risk, I'll try and get into more in another article). Plus this article was written on Canadian Real Estate Magazine so I'm assuming Canadian deals can be found. I guess if you're only looking for ONE deal a year there might be a very motivated seller every year that you can find. Possibly with creative solutions. Just seems very difficult even in a fairly cheap market like Regina where I am looking.
3. Missing a few numbers like Repairs and Maintenance, Property Management and Cash to close?
It's usually good to budget 3 to 5% for repairs and maintenance every year... because properties do require maintenance (roof, furnace, windows, yard, etc)... I do like their fairly conservative vacancy allowance of 5%... so lets add another 5% to maintenance. (Another $115). While you can manage your own properties... I for one know I can't find duplexes in Yellowknife for that price (more like double that price bare minimum... or close to 800K for the one I currently live in... 400K a side)... which is why I am buying in Regina. Property Management is usually around 8 to 12%... with many just charging a flat 10% of gross rents so to be conservative lets say $230. Their net cashflow is already down to $63... still positive and with all the conservative numbers probably more than that in reality... but still.
My other concern is how they just pay the $66000 a year and are able to own the property... There's still the lawyers fees, appraisal for the bank, Inspections (house, sewer lines, furnace, possibly electrical and plumbing, structural), title insurance and I like to have at least a months rent reserved (will you really rent it out the DAY you gain possession or will you have to correct details brought up in the house inspection first?). I'd say you'd need closer to 72K for cash to close a year for a $266,000 property. (or about 9% more)
I have a minor quip about the insurance as well. Rental properties are higher insurance risks than normal owner occupied properties. My insurance on my $140,000 property in Regina is $1064 a year... I'm guessing it would cost me more than the $100/month they have budgeted for a duplex at $266,000. This of course depends on the age of the property, location of the property (different jurisdictions have different costs... and even different locations in a city could have an effect on the cost).
4. What kind of mortgage allows THAT much of a pay down every year?
I don't know where they are getting their mortgage terms, but they seem VERY flexible. I mean I have a mortgage that lets me double my payments and put up to %15 a year on my mortgage... but near the middle of the plan they seem to already be putting a lot more money into each mortgage then can be done without penalty. I guess theoretically they could be spreading it out amongst the mortgages and it is LIKE they've paid off each property in year 8, 12,14, and 16... in terms of the amount of equity they have in the properties... anyways this one is minor... if the other 3 points didn't get you... this 4th point is minor.
Conclusion
It was an interesting article that I think makes investing in real estate sound a bit too easy. A good little thought provoking exercise IF you everything in the article was taken at face value. So you have $330,000 (or$360,000 that I believe you would need) AND you can find duplexes at that price ever year for that amount of rent AND you manage the properties yourself AND your houses never need maintenance... anyways you get my point.
If we're looking at thought exercises and not having to account for inflation... you can grow $330K into 1.5 million at 10% a year... which was what the stock market traditionally returned before inflation. Meaning on the 18th year you would make 151K... or about $12600 a month... which is quite a bit more than the $7376 / month with the real estate. (I also didn't account for taxes... but neither did this article... though there are more ways to shelter from taxes in real estate... hopefully I'll remember to get into that later as well)
Both are fairly nebulous in my opinion, but the basic concept is the same... basically have a plan, keep saving and eventually with time your money will compound and you can be financially free! Which I do totally believe in... so the message is good.
This caught my eye because I'm always interested in retiring early and the gist of the article is that you only need 5 properties, 17 years and you would be making $7376/month (not accounting for inflation still enough for most of us to live comfortably).
The properties they would be buying are duplexes @ $266,000 each per year... with a 25% down or $66,000 for each of the 5 years and rental income of $2300 per month. Mortgage of 5%.
Expenses:
Property Taxes : $250/month
Property Insurance: $100/month
Heating (gas) $325/month
Water/Sewer: $35/month
Vacancy allowance: 5% or $115/month
Total Expenses: $825
The numbers definitely sound very good, but I did have a few things that I believe would fairly difficult to overcome.
1. Where to find $66,000 a year?
Average family income of two or more people in 2008 was 74,600... so under 40,000 per person... then accounting for %35 housing costs... the average household would have difficulty saving up $66K a year for the down payment. Not that this is impossible, there are definitely households that make much more than this. As well this is an article targeting those in their 50's and many people of that age do own their own home and might have $330,000 equity in their house to take out in the course of 5 years. But definitely not a viable strategy for those without a decent nest egg or equity already built up.
2. Where to find duplexes with over 10% cap rate and at $266,000?
Average Canadian single family house prices were $327,000 excluding Vancouver. To find a duplex at $266,000 (meaning $133,000 per side) which also rents at $2300 (or $1150 per side) seems like it might be a tad difficult. It might be possible in the US market... but there are definitely other concerns when buying in the US (financing for one, currency risk, I'll try and get into more in another article). Plus this article was written on Canadian Real Estate Magazine so I'm assuming Canadian deals can be found. I guess if you're only looking for ONE deal a year there might be a very motivated seller every year that you can find. Possibly with creative solutions. Just seems very difficult even in a fairly cheap market like Regina where I am looking.
3. Missing a few numbers like Repairs and Maintenance, Property Management and Cash to close?
It's usually good to budget 3 to 5% for repairs and maintenance every year... because properties do require maintenance (roof, furnace, windows, yard, etc)... I do like their fairly conservative vacancy allowance of 5%... so lets add another 5% to maintenance. (Another $115). While you can manage your own properties... I for one know I can't find duplexes in Yellowknife for that price (more like double that price bare minimum... or close to 800K for the one I currently live in... 400K a side)... which is why I am buying in Regina. Property Management is usually around 8 to 12%... with many just charging a flat 10% of gross rents so to be conservative lets say $230. Their net cashflow is already down to $63... still positive and with all the conservative numbers probably more than that in reality... but still.
My other concern is how they just pay the $66000 a year and are able to own the property... There's still the lawyers fees, appraisal for the bank, Inspections (house, sewer lines, furnace, possibly electrical and plumbing, structural), title insurance and I like to have at least a months rent reserved (will you really rent it out the DAY you gain possession or will you have to correct details brought up in the house inspection first?). I'd say you'd need closer to 72K for cash to close a year for a $266,000 property. (or about 9% more)
I have a minor quip about the insurance as well. Rental properties are higher insurance risks than normal owner occupied properties. My insurance on my $140,000 property in Regina is $1064 a year... I'm guessing it would cost me more than the $100/month they have budgeted for a duplex at $266,000. This of course depends on the age of the property, location of the property (different jurisdictions have different costs... and even different locations in a city could have an effect on the cost).
4. What kind of mortgage allows THAT much of a pay down every year?
I don't know where they are getting their mortgage terms, but they seem VERY flexible. I mean I have a mortgage that lets me double my payments and put up to %15 a year on my mortgage... but near the middle of the plan they seem to already be putting a lot more money into each mortgage then can be done without penalty. I guess theoretically they could be spreading it out amongst the mortgages and it is LIKE they've paid off each property in year 8, 12,14, and 16... in terms of the amount of equity they have in the properties... anyways this one is minor... if the other 3 points didn't get you... this 4th point is minor.
Conclusion
It was an interesting article that I think makes investing in real estate sound a bit too easy. A good little thought provoking exercise IF you everything in the article was taken at face value. So you have $330,000 (or$360,000 that I believe you would need) AND you can find duplexes at that price ever year for that amount of rent AND you manage the properties yourself AND your houses never need maintenance... anyways you get my point.
If we're looking at thought exercises and not having to account for inflation... you can grow $330K into 1.5 million at 10% a year... which was what the stock market traditionally returned before inflation. Meaning on the 18th year you would make 151K... or about $12600 a month... which is quite a bit more than the $7376 / month with the real estate. (I also didn't account for taxes... but neither did this article... though there are more ways to shelter from taxes in real estate... hopefully I'll remember to get into that later as well)
Both are fairly nebulous in my opinion, but the basic concept is the same... basically have a plan, keep saving and eventually with time your money will compound and you can be financially free! Which I do totally believe in... so the message is good.
Monday, September 6, 2010
Geographic Information Systems and investing
I remember seeing ArcView GIS being used as an example in B-School to show how GIS systems are very useful for analyzing business problems. As I get ready for my next purchase I have been thinking about how I could leverage GIS technology to analyze properties and make profitable investments.
In the B-School demo it showed how Home Depot made their decision to place their next store. (As we know in business location, location, location... which is extremely true for real estate) The map that was shown was for things like income levels, traffic patterns, and proximity of population compared to the closest Rona store. From using GIS data they predicted that by placing the next Home Depot very strategically they could basically slice into Rona's marketshare... basically sandwiching them between two Home Depots. It was a very intriguing visual display of how GIS technology is used.
Now ArcView is a very complex program and I was not a GIS major in school =) Thing is I did find Google Earth has a lot of what I was looking for in a GIS system. You can even create your own layers using Spreadsheet mapper... like a layer for all MLS listings... another for all rentals.
I've just been doing manual entries for the moment. My current mapping strategy:
Translucent Polygons - map out specific areas/divisions/suburbs in a city. Green for Good, Red for bad
Folder of Placemarks for Rentals
Sub folder with number of bedrooms from bachelor to 3+
In each sub-folder placemarks and in the descriptions rent and other information
Colour coded based on rent in $100 increments (so $800 dollar would be yellow say, $900 would be light orange)
- This allows you to quickly see average rents in the city visually... you can also check on and off the number of bedrooms to see the rents of say just 2 bedroom rentals if you're looking at properties that are 2 bedroom.
Folder of Placemarks for MLS listings
Again same subfolders
colour coded placemarks based on List price in $10K increments.
- Again this allows you to visually see the average costs of properties.
By combining these two pieces of information... rent and price you can easily spot the areas with the most potential. If you also had access to crime rates, average incomes, etc you can refine your view even further.
Anyways I am just playing with it for now. Manually entering everything in does take a tremendous amount of time so at the moment it's just for experimenting sake... but I could see someone like a realtor with access to an MLS feed automating this and having it fed into a GIS system... then taking statscan data and data provided from the city and also pumping it in. Someone with some decent GIS knowledge could have a very refined tool for real estate investment. Maybe could even charge a subscription to the map for searching =)
I know I would probably subscribe at the right price ;)
In the B-School demo it showed how Home Depot made their decision to place their next store. (As we know in business location, location, location... which is extremely true for real estate) The map that was shown was for things like income levels, traffic patterns, and proximity of population compared to the closest Rona store. From using GIS data they predicted that by placing the next Home Depot very strategically they could basically slice into Rona's marketshare... basically sandwiching them between two Home Depots. It was a very intriguing visual display of how GIS technology is used.
Now ArcView is a very complex program and I was not a GIS major in school =) Thing is I did find Google Earth has a lot of what I was looking for in a GIS system. You can even create your own layers using Spreadsheet mapper... like a layer for all MLS listings... another for all rentals.
I've just been doing manual entries for the moment. My current mapping strategy:
Translucent Polygons - map out specific areas/divisions/suburbs in a city. Green for Good, Red for bad
Folder of Placemarks for Rentals
Sub folder with number of bedrooms from bachelor to 3+
In each sub-folder placemarks and in the descriptions rent and other information
Colour coded based on rent in $100 increments (so $800 dollar would be yellow say, $900 would be light orange)
- This allows you to quickly see average rents in the city visually... you can also check on and off the number of bedrooms to see the rents of say just 2 bedroom rentals if you're looking at properties that are 2 bedroom.
Folder of Placemarks for MLS listings
Again same subfolders
colour coded placemarks based on List price in $10K increments.
- Again this allows you to visually see the average costs of properties.
By combining these two pieces of information... rent and price you can easily spot the areas with the most potential. If you also had access to crime rates, average incomes, etc you can refine your view even further.
Anyways I am just playing with it for now. Manually entering everything in does take a tremendous amount of time so at the moment it's just for experimenting sake... but I could see someone like a realtor with access to an MLS feed automating this and having it fed into a GIS system... then taking statscan data and data provided from the city and also pumping it in. Someone with some decent GIS knowledge could have a very refined tool for real estate investment. Maybe could even charge a subscription to the map for searching =)
I know I would probably subscribe at the right price ;)
Thursday, September 2, 2010
Reading your "local" newspaper
Been reading how it is very useful to keep to the pulse of the local city or community you're investing or planning to invest in. You get to know quickly of new developments on public transit or when a big company might be moving to town, etc.
Of course the reverse is true. You get to hear about plant closings and the general vibe of a city by what is in the news (rising crime rates, natural disasters...)
I am investing in Regina so the Leader-Post is quite a good newspaper to read daily. Finding things out like new railway hubs, BHP's Potash Corp bid, even just very local economic studies like vacancy rates, average wage increases, average rents... seem to come up fairly frequently in stories. I also check Real estate that's for sale and also rental listings to get a feel for rental rates in various areas.
I've come across a company called PressDisplay.com that has 1400+ newspapers from around the world online. You can purchase editions at like a buck each or subscribe on a monthly basis at $29.95 US for all newspapers.
But for a more Canadian feel CanWest has quite a digital package using PressDisplay's technology... I of course am subscribed to Leader-Post Digital... They have a 21 day trial if you wanted to just check it out. It allows you access to 11 regional newspapers (Leader-Post, Star-Phoenix, Calgary Herald, Edmonton Journal, National Post, Ottawa Citizen, The Gazette, The Province, Vancouver Sun, Windsor Sun, Times Colonist) for a low monthly fee or increasing savings for a 3, 6 or 12 month subscription (not much savings... I would suggest the monthly route)
$9.99 a month and you get 11 different newspapers daily... of course read what you want... but even a regular subscription is not that cheap. And this digital format really makes it easy to read your "local" papers of all the cities you are investing in. =)
Of course the reverse is true. You get to hear about plant closings and the general vibe of a city by what is in the news (rising crime rates, natural disasters...)
I am investing in Regina so the Leader-Post is quite a good newspaper to read daily. Finding things out like new railway hubs, BHP's Potash Corp bid, even just very local economic studies like vacancy rates, average wage increases, average rents... seem to come up fairly frequently in stories. I also check Real estate that's for sale and also rental listings to get a feel for rental rates in various areas.
I've come across a company called PressDisplay.com that has 1400+ newspapers from around the world online. You can purchase editions at like a buck each or subscribe on a monthly basis at $29.95 US for all newspapers.
But for a more Canadian feel CanWest has quite a digital package using PressDisplay's technology... I of course am subscribed to Leader-Post Digital... They have a 21 day trial if you wanted to just check it out. It allows you access to 11 regional newspapers (Leader-Post, Star-Phoenix, Calgary Herald, Edmonton Journal, National Post, Ottawa Citizen, The Gazette, The Province, Vancouver Sun, Windsor Sun, Times Colonist) for a low monthly fee or increasing savings for a 3, 6 or 12 month subscription (not much savings... I would suggest the monthly route)
$9.99 a month and you get 11 different newspapers daily... of course read what you want... but even a regular subscription is not that cheap. And this digital format really makes it easy to read your "local" papers of all the cities you are investing in. =)
Wednesday, May 5, 2010
Independent Legal Advice Clause
Okay so I just finished all the last paperwork for the house (May 4th,2010). I got the papers emailed to me from my lawyer in Regina Monday afternoon (May 3rd, 2010). I emailed them off to my real estate lawyer in YK. I then took a quick glance at the paperwork and found two clauses that made me pause.
1) Insurance Confirmation to be completed by insurer on or before possession date.
2) Certificate of Independent Legal Advice.
I quickly emailed my insurance broker in Regina about this and she gave me a letter saying that a policy was on it's way, but that they don't create the policy till closer to the policy date. She assured me that was enough.
The second clause was a bugger for a couple of reasons. For one I was the one who put this deal together so I'm not sure why I'm the one needing to seek independent legal advice while my Joint Venture partner did not? This was written into the Scotia Bank mortgage. Next time I'm going to have to make sure that clause is left out. I'm not saying getting independent legal advice is not a good thing. I'm saying it should not be a clause that stops you from getting a mortgage. The second thing is that my real estate lawyer in Yellowknife was going to be our Notary Public (the guy that watches us sign basically) so he wasn't independent to the transaction anymore... so now I had to scramble to find another lawyer who would give me independent legal advice (which I didn't need). Luckily my Real estate lawyer was able to help me find another lawyer who could just run me through the basics and sign on the dotted line.
Basically...the "advice" was a mortgage means you owe money to the bank and have to pay them back. If you don't they can foreclose on you. Thanks, and here's $105 bucks for your signature. Ugh... then another $52.50 for the notary publics John Henry. (Though having a lawyer be your Notary is very useful here... he actually went through each clause with us as we signed to make sure we understood). There were 3 copies of the mortgage papers to sign. Many lawyers must get carpal tunnel.
This whole transaction was a bit rushed since the lawyer in Regina wanted everything back to them by the 7th of May (but only got it to me the afternoon of the 3rd)... since the closing date is on the 10th of May. Next time I think I'll make sure they get those damn papers to me more than just a couple of days before the possession date =P And from Yellowknife even with Priority mail it is only guaranteed to be there within 2 days. Imagine if my lawyer was not available right away? How about that independent legal advice trap? Anyways we did luck out... Learn something new each time right?
Hope you all learned from my experience and followup with everyone early on yourselves... no one cares about your transaction as much as you.
1) Insurance Confirmation to be completed by insurer on or before possession date.
2) Certificate of Independent Legal Advice.
I quickly emailed my insurance broker in Regina about this and she gave me a letter saying that a policy was on it's way, but that they don't create the policy till closer to the policy date. She assured me that was enough.
The second clause was a bugger for a couple of reasons. For one I was the one who put this deal together so I'm not sure why I'm the one needing to seek independent legal advice while my Joint Venture partner did not? This was written into the Scotia Bank mortgage. Next time I'm going to have to make sure that clause is left out. I'm not saying getting independent legal advice is not a good thing. I'm saying it should not be a clause that stops you from getting a mortgage. The second thing is that my real estate lawyer in Yellowknife was going to be our Notary Public (the guy that watches us sign basically) so he wasn't independent to the transaction anymore... so now I had to scramble to find another lawyer who would give me independent legal advice (which I didn't need). Luckily my Real estate lawyer was able to help me find another lawyer who could just run me through the basics and sign on the dotted line.
Basically...the "advice" was a mortgage means you owe money to the bank and have to pay them back. If you don't they can foreclose on you. Thanks, and here's $105 bucks for your signature. Ugh... then another $52.50 for the notary publics John Henry. (Though having a lawyer be your Notary is very useful here... he actually went through each clause with us as we signed to make sure we understood). There were 3 copies of the mortgage papers to sign. Many lawyers must get carpal tunnel.
This whole transaction was a bit rushed since the lawyer in Regina wanted everything back to them by the 7th of May (but only got it to me the afternoon of the 3rd)... since the closing date is on the 10th of May. Next time I think I'll make sure they get those damn papers to me more than just a couple of days before the possession date =P And from Yellowknife even with Priority mail it is only guaranteed to be there within 2 days. Imagine if my lawyer was not available right away? How about that independent legal advice trap? Anyways we did luck out... Learn something new each time right?
Hope you all learned from my experience and followup with everyone early on yourselves... no one cares about your transaction as much as you.
Monday, May 3, 2010
Why Regina?
I seem to get asked this question a lot. I did promise to answer this question on this blog so here goes. I don't think many people usually go and buy property outside their home town unless they have some sort of other connection to it apart from investment. (Family lives there, retirement property, used to live there). I generally give everyone a very quick and simple answer using the 3 F's. Namely Food, Fertilizer and Fuel. This generally describes most of Saskatchewan, but it is a quick way to answer this question that gets asked repeatedly.
What do I mean by this for those of you who still don't understand. All three (Food, Fertilizer and Fuel) are necessities for the people of the world. These are things the world will continue to need (and demand) for the foreseeable future and Saskatchewan has them in abundance.
Food: Saskatchewan being a prairie province is a major food producer with many people making their livelihood as farmers.
Fertilizer: It is also the location of a very large chunk of Potash deposits which is a fertilizer... the price of Fertilizer was bid up to like a $1000 a tonne before it came crashing down. Current spot price is about $400 a tonne... but still way higher than what it had dropped to ($150 a tonne)... at the end of the day farmers might be able to go a year or so without fertilizer, but eventually they need to fertilize to keep crop yields up. Potash Corporation was at one time the darling of the stock market and had the highest market cap of any corporation in Canada. They are headquartered in Regina. (Woohoo stable jobs).
Fuel: Saskatchewan also has oil, gas and uranium deposits. Oil from tar sands, but also from oil shales (Estimated to have about 25 billion to 100 billion barrels of oil in the bakken formation alone). Also Saskatchewan is currently the largest uranium producing region in the world. Think of all those new Nuclear power plants coming online in China and elsewhere in the world. While prices for all types of fuel are still on a major uptrend (apart from the hiccup for the great recession)
For those that have a little more time I also explain how Regina currently has one of the lowest vacancy rates in the country. (In the May 2010 issue of Canadian Real Estate Magazine there is a quick write up on Regina in the "Top rental markets" section. 0.6% overall vacancy rate is what is listed there.) Of course that means you don't have much worry renting out your property and with lower vacancy rates also means rising rent (basic supply and demand) which will turn into better and better cashflows through the life of your property.
Meanwhile average house prices are still about $100K below Canadian average. Granted markets like Toronto and Vancouver tend to skew the average upwards, still there are significant deals to be found in Regina. Definitely much easier to cashflow on a cheaper property than a more expensive one.
Net in-migration forecast for between 0.5% to 1.8% in the next five years in Regina. New comers usually rent for awhile first before buying and an increasing population will keep demand high before new housing stock comes into play, putting pressure on rents to rise. Saskatchewan also seems to have a relatively lucky place in the age of their population with a nice little bump in the 15-24 age category that allows them to in a sense replace the baby boomer population a bit compared to the rest of the country. (Less labour shortages)
Other things going for Regina:
- RCMP Headquarters... again a stable workforce and amount of people
- Provincial Legislature. Public Sector again diversifies the workforce with another stable employer. (This contrasts with Saskatoon which is more tied to the resource sectors ups and downs)
- New 2000 Acre Global Transportation Hub that Loblaws and CP Rail will use which will provide construction jobs and permanent jobs as it gets underway
The question should really be... Why not Regina?
What do I mean by this for those of you who still don't understand. All three (Food, Fertilizer and Fuel) are necessities for the people of the world. These are things the world will continue to need (and demand) for the foreseeable future and Saskatchewan has them in abundance.
Food: Saskatchewan being a prairie province is a major food producer with many people making their livelihood as farmers.
Fertilizer: It is also the location of a very large chunk of Potash deposits which is a fertilizer... the price of Fertilizer was bid up to like a $1000 a tonne before it came crashing down. Current spot price is about $400 a tonne... but still way higher than what it had dropped to ($150 a tonne)... at the end of the day farmers might be able to go a year or so without fertilizer, but eventually they need to fertilize to keep crop yields up. Potash Corporation was at one time the darling of the stock market and had the highest market cap of any corporation in Canada. They are headquartered in Regina. (Woohoo stable jobs).
Fuel: Saskatchewan also has oil, gas and uranium deposits. Oil from tar sands, but also from oil shales (Estimated to have about 25 billion to 100 billion barrels of oil in the bakken formation alone). Also Saskatchewan is currently the largest uranium producing region in the world. Think of all those new Nuclear power plants coming online in China and elsewhere in the world. While prices for all types of fuel are still on a major uptrend (apart from the hiccup for the great recession)
For those that have a little more time I also explain how Regina currently has one of the lowest vacancy rates in the country. (In the May 2010 issue of Canadian Real Estate Magazine there is a quick write up on Regina in the "Top rental markets" section. 0.6% overall vacancy rate is what is listed there.) Of course that means you don't have much worry renting out your property and with lower vacancy rates also means rising rent (basic supply and demand) which will turn into better and better cashflows through the life of your property.
Meanwhile average house prices are still about $100K below Canadian average. Granted markets like Toronto and Vancouver tend to skew the average upwards, still there are significant deals to be found in Regina. Definitely much easier to cashflow on a cheaper property than a more expensive one.
Net in-migration forecast for between 0.5% to 1.8% in the next five years in Regina. New comers usually rent for awhile first before buying and an increasing population will keep demand high before new housing stock comes into play, putting pressure on rents to rise. Saskatchewan also seems to have a relatively lucky place in the age of their population with a nice little bump in the 15-24 age category that allows them to in a sense replace the baby boomer population a bit compared to the rest of the country. (Less labour shortages)
Other things going for Regina:
- RCMP Headquarters... again a stable workforce and amount of people
- Provincial Legislature. Public Sector again diversifies the workforce with another stable employer. (This contrasts with Saskatoon which is more tied to the resource sectors ups and downs)
- New 2000 Acre Global Transportation Hub that Loblaws and CP Rail will use which will provide construction jobs and permanent jobs as it gets underway
The question should really be... Why not Regina?
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