Calgary Real Estate News

June 5, 2017

The Advantages Of An Income Property

 

Continuing with the HGTV theme, another one of our favourites is Income Property, hosted by Scott McGillivray. Scott walks homeowners through the renovation process by adding an income suite to their property, whether in the basement or another location in the home.

If your lifestyle allows it, (it’s not for everyone), adding an income suite to your home can have tremendous benefits. Applying the income from the rent directly to your mortgage substantially reduces borrowing costs. The principal is paid down quicker and equity in your home increases faster. An income suite can also increase the value of your home, and energy costs can also be reduced by splitting the costs with the tenant.

An income suite can also increase your borrowing power. CMHC allows 50% of the rental income from legal-secondary suites to be used when qualifying for a mortgage. Purchasing a home with a turn-key rental suite in it, is recognized as a source of affordable housing. It allows the buyer a chance to live in a single family dwelling. Since your buying power increases you might be able to afford a nicer home and or in a more desirable location than wouldn’t have otherwise been possible.

Here’s another scenario:

Let’s say you purchase a 1000 square foot home in the community of Acadia for $500,000. It has a secondary suite that brings in $950 per month in rental income. You put a 20% downpayment, which allows you to avoid the nasty CMHC insurance and your monthly payment over 25 years at 2.5% is $1906. 

Now lets apply the rental income to the mortgage. Your're now able to reduce your mortgage payment to $956 a month. The rental income covers a massive 50% of your mortgage. In order to have had an original mortgage payment of $956 a month your original downpayment would had to have been 60% of the purchase price. There can be huge financial gains having an income suite in your home. The $950 monthly rental income removes about $200,000 of mortgage costs. On the flip side…you’re now a landlord.

Consider this as well. Traditionally the only way of earning income through a suite has been to rent to a full-time tenant. Due to the advancement of technology, more creative options are now available.

Have you thought of hosting a suite or an extra room in your home via VRBO (Vacation Rentals By Owner) or Airbnb? It’s called a peer-to-peer short-term rental service.

According to Airbnb they’ve hosted more than 60 million guests in more than 34,000 cities worldwide. Why not have some of that rental income go into your pocket.

Hosting allows you tremendous flexibility to earn income from your property. Unlike having a permanent tenant, you can choose the dates that you wish to host. You can rent per night, week, or month. 

Many individuals are taking advantage of this income-earning potential by having students, business professionals, and tourists rent out rooms and or suites in their private home.

Depending upon which area your home is located, a basement suite can get you north of $1200 per month in Calgary.

You don’t have to worry about getting paid. Payment is guaranteed. Both companies broker the deal for you. Guests register online and payment is done on their website. 

Whether you choose to rent your suite in the more traditional way, or use these new services, consider these factors. There is the added cost of insurance, personal safety, liability, home safety, taxation, and unclear local laws. Due diligence on your part is required.

Having said that, it is our opinion that the return on investment out weighs the negatives. If you are searching for an income property or if you have any questions, contact us. We are happy to help.

Posted in News
April 4, 2017

To Love It Or List It? That Is The Question.

 

One of our favourite shows is Love It Or List It Vancouver. Homeowners are faced with a dilemma. They love their home, the neighbourhood but their home no longer meets their needs. The show highlights problems that can arise during a home renovation as well as how difficult it is to get everything you would like in a home in the preferred community all within your budget.

Regardless, the home owners are paired up with designer Jillian Harris and Realtor® Todd Talbot. Todd and Jillian listen to the homeowners story, their wish list, then get to work. Whether the family decides to love their home or list it, is decided at the end of the show.

Having your very own love it or list it story is not uncommon. Many people are faced with the same situation. Why? Simply put life changes and it seems to have no regard for marked trends when it decides to do so...families change size, jobs change, whether you're upsizing, downsizing, or simply swapping locations, changing housing needs will always be apart of life.

On the show they present the homeowners with three homes. If they decide to list they must choose one of the three (not at all realistic), but I guess it makes for good TV. In reality, it usually takes 10-12 homes that meet your criteria before deciding to purchase.

When it comes to deciding whether to buy a new or an old home, there are important factors to take into consideration, some that change with the same regularity and similar disregard to personal circumstances in life.

Location, location, location. And even more location. (Ok, this one does not change but still one of the most important factors).

Market trends, buyers or sellers market–(ever changing) lending rules and rates. (always changing). Economic shifts.(Never changes...right...) Municipal ordinances. The list goes on...

The point being, it's crucial to put thought into the process to ensure your decision will not only complement your life but prove to be a financial asset.

Buying a new house

Pros:

Buying a new house gives a feeling of nervous excitement that can't compare to anything else. Knowing that the clean, shiny house is now your home can send jolts down your spine.

One of the biggest advantages of purchasing a brand new house is that everything in it will be unused. The warranties will be new, and the appliances will last for decades before needing replacement.

New houses are built and designed to meet the modern needs of a homeowner. With great advancements in technology, they're constructed with energy efficient materials and can be equipped with features that make everyday life much easier. Exterior maintenance is minimal,  this makes up for fewer repair and maintenance costs over a span of several years. If any event occurs, home warranty coverage is common with new houses.

Cons:

There are two sides to every coin however, and new homes have there fair share of drawbacks, the major one being cost. New areas usually have similar floor plans and facades. Your home will practically be identical with that of your neighbours and everyone in the community. Often there are strict architectural controls in place that restrict your choice of colour, fence design, and landscaping. Lot sizes are much smaller and zero lot lines are becoming very popular. These type of lots have been designed by developers enabling them to build more houses in an area. They've decreased the lot size keeping the house as large as possible, building a larger home on a smaller piece of property. They sell it to you as creating more useful space of the land. Of course...

Buying an old house:

Pros:

An older home generally doesn't have as many restrictions, although they can. You can expect more character out of an older home and have more freedom to implement changes in the future. Having existed for some years already, these homes usually have matured trees, shrubs and a fenced yard. They're conveniently situated close to amenities such as banks, entertainment, shopping facilities, markets, and schools are already at a close distance, generally, in prime areas, and can return excellent resale value. Prices will vary dependant upon location and the shape of the home.

Cons:

As with any kind of house, old houses usually require more maintenance. The exteriors often require staining or painting due to the wood materials used when constructed. Appliances such as the water heater and furnace will not be as efficient and could require replacing. Plumbing and wiring may not be to current code therefore requiring costly updates. If the home is quite old, be warned that closet space could come at a premium. Contemporary homes are constructed with a focus on space. Older homes are often situated closer to amenities and the urban core. As such, they can be more expensive than a new home in a new community.

While both options have their own set of pros and cons, the choice in the end is yours alone, and must be based on what is best for you and your family.

Your home is most likely the largest investment, and has a massive impact on your overall happiness and well being. So getting this one right is a big deal.

If you would like to know if you should love or list your home contact us. We'd be happy to link you to valuable information you need to make a smart investment and give you a list of great properties that could be your next love it!

Fill out the form below and we'll be happy to give you a no obligation free home evaluation.

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Posted in News
March 11, 2017

To Flip or not not to Flip? That is the question.

Home flip reno image

 

When I started my first home flip I thought it was going to be a quick simple turn around. My plan was to go in, remove a wall, make a few upgrades to the bathrooms and kitchen, put in new flooring, and be back on the market in a few months.

Well…It wasn’t quite that easy. There were miscalculations and errors on my part that ended up costing me a lot more money than I had thought. I barely broke even.

As you know home flipping is attracting a large crowd. From professionals to your average Joe. It’s easy to understand why. There is potential to earn a handsome ROI even when starting out with little capital.

Flipping is not a get-rich-quick scheme. It is an investment opportunity. Work and planning are involved. Having a well thought out plan is vital if you desire to turn your property into profit.

To succeed in home flipping, you first need to do your homework. Gather as much information as you can regarding the housing market in your target area in order to capitalize on substantial profit potential. Read about positive and negative experiences of other real estate investors and learn from their mistakes.

Reality TV shows on home flipping glamorize home flipping and aren’t a good source for information however, they’re entertaining to watch (My favourite’s are Vintage Flip and Flip or Flop).

The following 6 tips are essential to keep in mind before you flip a property… number one is the most important, if not adhered to 100%, you might as well stop reading the rest of the article…seriously.

 

1. Profit at the purchase:

When flipping a property your profit is made at the purchase of the home, not when you sell the property. Every other cost in the process is fixed. Labor, materials, holding costs, closing costs and sale price are already determined before you even sign on the dotted line.

Data about home values in the potential area you are wanting to flip is crucial at the point of purchase.  Negotiating a profitable purchase price will ensure that once the renovations are complete, selling your home will indeed turn a profit.

 

 2. Right Lending & Lender

Most mortgages are set up to attract people looking to stay in their properties five years. Breaking a five year mortgage can often lead to substantial exit penalties, possibly costing you tens of thousands of dollars. (Bye bye profit). Choosing the right lender who understands your needs can put the right lending plan together for you. This is key. This is will ensure you have enough capital to make the necessary renovations, flip it as quickly as possible, and maximize profit. 

 

3. Get a complete inspection performed on your house:

It is surprising how many people will overlook a certified home inspection. The few hundred dollars spent on this expense could possibly save you tens of thousands in hidden problems. Issues like a failing foundation, structural damage, electrical problems, moisture, and heat loss, are just a few examples out of many potential problematic areas. With a certified inspection you can be sure that you can move forward with your your eyes open. Knowledge is power when  investing in real estate. 

 

4. Don't perform all the work on your own:

When flipping a home, many go in with the idea of performing much of the renovation work themselves, (this was one of my first big mistakes). Don’t fall for this rookie trap. Unless you’re a contractor with access to skilled trades, hire out the renovations to a professional. In order to turn a profit, you need the renovations done as quickly as possible. The longer it takes the less valuable the time sunk into the home ownership becomes. The faster you sell the home the lower your holding costs are, and the faster you obtain a profit.

 

5. Price correctly and show value:

If you are expecting to make a profit from flipping real estate, the object is buy and sell the property as quickly as possible. Doing so enables you to make your profit as soon as possible and start work on your next flip. Price too high and it won’t move - it will sit on the market for months and will eventually sell for less than it would have if it had been priced correctly from the start. Price too low and you leave money on the table. Here again market data is key. So working with an agent who knows the market and has access to recent sold data is essential to pricing correctly.

 

 6. The right representation:

To be straight up, there some very, very bad real estate agents out there. Conversely there are some absolutely great real estate agents. They’re professional, love what they do, and sincerely care about your success. Finding the right agent can take time. Interview several agents and you will find the one who is active, and knowledgeable.Their marketing strategy should also be light-years beyond the standard MLS® posting that most agents think is good enough. Building a relationship with a great agent is going to pay you back in the long run. Agents who have their ear to the ground will have access to off market properties, distress sales, and foreclosures. Success in home flipping is much easier with the help of a great real estate agent on your team.

 

 

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Posted in News
Feb. 6, 2017

Learn History around Your Calgary Home at the Glenbow

Go to the Glenbow near your Calgary home.Glenbow offers visitors the chance to appreciate art, culture, the world around them, and the beauty of their Calgary home. Stand in awe of the works of art while also learning about the people and events that have shaped Calgary’s history. Come explore the permanent collection, watch for new and exciting traveling exhibitions, and also take advantage of special programs and events. Learn more about such topics as coal mining or the feminist movement though a Photography Film series, have a conversation with an artist, or go on a behind the scenes tour. Those who call Calgary home can consider becoming a member for unlimited free general admission, guest passes, and discounts at the museum shop and special events.

Calgary Real Estate Owners Will Find a Great Variety of Exhibits

There is something at Glenbow for all ages. Challenge your own imagination and that of your children to create something in the Discovery Room. Come in for things like glass painting, string art, making lantern slides, art workshops, sculpted landscapes, or a scavenger hunt. Keep an eye on the website for current offerings. This is a very engaging spot for a field trip. Watch the joy on the children’s faces as they are inspired and learn more about the world around them. Summer youth programs are also available to keep the kids busy and involved, allowing some time away from your Calgary real estate while on break from school. Learn more about Glenbow, find admission prices, contact information, and plan a visit. 

 

 

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Posted in News