CMHC - Source of Housing Market Information

To make the best decisions, you need the best information. Canada Mortgage and Housing Corporation (CMHC) offers complete picture of housing trends and issues in Canada today. New publications can be delivered to you through e-mail or you can access it on-line

One of many useful tools is Housing in Canada Online (HiCO). It incorporates a selection of CMHC's data on housing conditions and core housing need in 2006, 2001, 1996, and 1991. Also this year they introduced Interactive local data tables for over 100 selected municipalities across Canada to help you make more informed decisions at the local level. In contrast to the fixed content of the Data Tables, HiCO enables you to choose the data you wish to explore. With HiCO, you determine the components of the data to be shown or hidden. You can conduct your own analyses of housing conditions and create tables that highlight the relationships, variables, and geographic areas that are of interest to you.

And best of all – this information is FREE!

RENT INCREASE GUIDELINE (and proposed changes)

Each year, the Ontario government announces the province’s rent increase guideline for the
following year.

The guideline is the maximum amount that most landlords can increase a tenant’s rent during the year without making an application to the Landlord and Tenant Board.  It is based on the Ontario Consumer Price Index (CPI), which is a measure of inflation calculated monthly by Statistics Canada, charting the change in the price ща all goods and services in the provincial economy.

The rate of allowable rent increases for 2012 will be 3.1 per cent and applies to rent increases between January 1 and December 31, 2012.  This is up from last year’s guideline of 0.7 per cent. Check this link if you are interested in more details of how it was calculated, as well as historical data

In most cases, the rent for a unit can be increased if at least 12 months have passed since the tenant first moved in, or since his or her last rent increase. The tenant must be given proper written notice of the rental increase at least 90 days before the rent increase takes effect.

Note that  the guideline does not apply to residential dwellings first occupied on or after November 1, 1991. So if you have one of these new condos, the RIG does not limit the amount by which a you can increase the rents.

However there is a new proposed amendment to the Residential Tenancies Act if passed, it will set annual Rent Increase Guideline between one and 2.5 per cent beginning in 2013! According to the Ontario government “tenants would benefit from greater certainty that would ensure affordable and stable rents so they have safe and affordable housing.”

For landlord this new rule means that unless someone moves out in the years when inflation rate is over 2.5% (and they happen more often than not), you have no way to bring rent in accordance to prices of everything else on the market. On top of that, no sublets (aka some finds you a tenant and help avoid vacancy) would be considered by landlords.

I suggest we all keep an eye on this proposed amendment

Investing in condos. With and without buying.

Recently I came across a list of world’s fastest growing condo markets and was amazed:

1.       Toronto with 132 new condos currently being built

2.       Mexico City - 88

3.       New York - 86

4.       Chicago - 17

5.       Miami - 16

Huge gap between Toronto and any other city in the world! Of cause, Toronto still has a long way to go from 1875 high-rises to New York’s 6000, but nearly 100 000 people arriving to Toronto every year. Add to this many baby-boomers who prefer "no hassle" condo style of living, mix high-paid young professionals who enjoy being close to work and entertainment and you get yourself a great cocktail named "booming condo market". No wonder everyone if not investing, but at least talking about it! So what are the typical ways to invest? 

Well, first of all you can buy existing condo and rent it. In cities such as Toronto you most probably will get your mortgage and taxes covered by rental income. If you play your cards right, rent might even cover part or all of the condo fees. Though this investment option is very popular, one must remember to cover all payments out of pocket if property is vacant (usually 1 out every 18 months) and budget for repairs and maintenance (few hundreds every year). People who invest in this scenario are not looking for monthly cashflow, they buy for equity (property value) growth. It is profitable in booming market and there is no limit of how long you can hold such condo, as long as you have enough cash to keep it.

What if you want to take advantage of growing condo prices but don't want to be a landlord? Well, buying condo units before they even built might be your choice. This scenario requires significant amount of cash (25-35%) of unit price, but amount is usually paid in 3 stages, all before building is registered. Main advantage is that you don't need to get a mortgage until building is registered. Your goal would be to find a buyer by that time. Usually you invest for 1-3 years and take advantage of increasing property values AND lower purchase price. How much profit you make will depend on how early in the game you get your hands on this development. The earlier - the better. Good agent might be your best ally for this.

For folks who want as little headache as possible syndicate mortgages is probably the best way to go. This is when you will act as a bank and lend money to a builder. Projects may vary from 1 to 5 years. Look for the ones that offer quarterly interest payments and have reserved fund to pay it. This way you get some cashflow and large payment at the end of constructions. Additional bonus often offered by builders is preferred shopping for units in this construction. You will have a chance to buy before general public. That way you can invest $25 000 (usual minimal required) into syndicated mortgage and if you have more - buy some units at low price.

Whichever way you choose to invest, remember to consult with professionals, such as your lawyer. And let me know if you need any contacts ;)

Mortgage And Your Legal Name

Getting married soon? Congratulations!  If you are thinking of changing your legal name for this or any other reason keeps in mind what just happened to my friends.

Happy couple got married, bought a house, baby on its way… Dream comes true!  Well one of them changed their name. Now insurance company doesn’t want to register house insurance because one of the names on the title doesn’t match ID. In order to fix that they need to change name on the mortgage at the bank (numbers may vary but probably under a hundred backs) and to change title of the property.

If you ever refinance your property or moved your mortgage to another bank, you probably know that any changes to the title (unless you use bank’s lawyer who, for some reason, has special “inexpensive” powers) could be painfully expensive. Few hundreds, sometimes over a thousand backs expensive!

And what if you are doing well in real estate and own a few properties? Don’t take my word as legal advice, but may be it makes sense to talk to your lawyer about registering these properties under a company name (which you will own of cause)!

Do you have a lot of nice staff in your house?

If we didn’t have to work so hard to make the money, we wouldn’t have to spent the money to make us feel good about working so hard

This is your life: The Holstee Manifesto

Have you ever looked for a daily inspiration? Something that will keep you going day, after day, after day? The Holstee Manifesto is one of the best moving philosophies I came across!