Ottawas Condos Team Blog
The Smartest 5%
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Kevin

A recent report found that one in every 20 Canadian households owns at least one income property, citing that the stability of income afforded by rental investment is a strong motivator compared to other asset classes.

“A lot of people are getting into the market right now and buying rental properties because they love the fact that it’s a fixed asset,” said Shawn Maher, an investor and owner at GS Maher Property Holdings. “They can actually see it and they don’t have to worry about it melting away.”

The Altus Group report, which was published this week, also found that on average landlords were able to obtain rent increases of around 2.5 per cent in the 12 months ending October 2014. This is based on average rents for two-bedroom units in condo buildings.

Interest among large investors in buying rental buildings in the major markets has been increasing in the past two years – in particular in CalgaryEdmonton and Ottawa.

According to the report, the incidence of owning at least one rental unit is slightly higher in the under-50 age groups. Income, however, is a more important factor than age.

Are Landlords Liable in Police Busts at their Properties?
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Kevin

Every investor will have a troublemaker tenant at one time or another, but who’s responsible when your tenant is the target of a police bust that results in damages to your property?

The question has been answered in a Quebec Court ruling in a case that involved a presumed drug trafficking tenant, a pre-dawn raid and four damaged doors.

It kicked off in Longueuil, QC in 2012. Landlord Victor Martac’s apartment building was the subject of police intervention due to one of his tenants’ recreational activities, resulting in damaged property.

Police argued the intervention was justified and that the damage was the landlord’s problem, but Quebec Court Judge Claude Laporte disagreed, ordering the municipality to pay the landlord $1,300 in damages.

Judge Laporte said the municipality, in its defense, did not clearly establish the need for forced entry to execute its warrant. “In theory, there will always be a risk that the person sought is armed, will try to destroy evidence or take hostages,” he said, but “this would have the ultimate effect of justifying use of forced entry in every case.”   

Longueuil police failed to make the case for the action they took and it’s not up to the landlord to bear the cost of that choice, the Judge added.   

Year-end Wrap-up
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Kevin

The total number of homes sold through the Ottawa Board’s MLS® system in 2014 was 13,928, compared with 13,871 in 2013, an increase of 0.4 per cent. Residential unit sales for the year were slightly higher with a 2.4 per cent increase over 2013, while condo sales declined by 7.2 per cent compared to last year. The average residential home price, including condominiums, sold in 2014 was $361,712, an increase of 1.2 per cent over 2013.

Condo units for sale increased as high as 23 per cent in February and March over the previous year, but settled back down to 2013 levels by the end of December. Increased inventory levels contributed to a market favoring Buyers for much of the year.

The average sale price of residential properties, including condominiums, sold in December in the Ottawa area was $345,449, an increase of 1.6 per cent over December 2013. The average sale price for a condominium-class property was $270,236, an increase of 10.1 per cent over December 2013. The average sale price of a residential-class property was $367,286, a decrease of 0.7 per cent over December 2013.   

The price range with the most concentrated amount of sales for 2014 was the $300,000 to $349,999 range, with 18.8 per cent of the year’s sales, followed by the $350,000 to $399,000 range, with 12.5 per cent of the year’s sales.  The third highest category with 11.6 per cent of the year’s sales was in the $500,000 to $749,999 price range. All three of these price range property concentrations are very similar to the ranges from 2013.

Residential Negotiations 101
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Jeff

Deal making is at the center of a Realtors job every day. With this said, there have been noticeable similarities / common denominators present in the majority of residential properties that our buyers have picked up at what can be viewed as a “steal”. The three most critical pieces of information that need to be understood prior to entering into a non- emotional negotiation.

1)   Don't even consider a negotiation without this piece of info. "How much did the seller pay for the property and when did they buy it ".

Thinking rationally, it should not matter what the seller bought a property for because in a perfect world market price will find itself. But since the world isn't perfect, if you are a deal seeker and you combine a property that was purchased 10 years ago for 200k that is now worth 315k and a seller that is motivated a deal COULD be on the table at 300k or north. The thought of cashing out, or moving on combined with a nice profit will typically help facilitate the transaction. Vs the exact same property except the seller just purchased it last year for 298k and would be taking a loss at 300k. This second seller may be more inclined to sit tight and wait for 315k to cover their loses.

2)   How many days has the property been on the market for.

This element is pretty obvious. Days on market combined with motivating mitigating factors can often lead to a low ball ofer being looked at more seriously than if the property has been two weeks on market

 3)      Has the seller purchased another property yet or any other motivating factors such as break ups.

The thought of carrying two properties can lead consumers to act irrationally. If possible, look into this. Even if the seller holds their hand close, have your agent test their position with the old Offer and Walk. This approach will likely lead to a call back in a few days and a possible deal!

 Deals are in the details!

Steering Clear of Bad Tenants
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Kevin

Any landlord who has been involved in the real estate business for more than a few years has likely come across a tenant disaster, or at least knows somebody who has. 

The best way for landlords to avoid having to deal with this problem starts at the very beginning of the landlord-tenant relationship – the rental application. 

The rental application contains the most comprehensive set of information about the prospective renters and should take the most time to review and confirm.  Renters are extremely unlikely to include information in their application that they know will hinder their chance of having it approved.   In addition to thorough follow-up of the details in the application, follow the smell test.  If a landlord happens to smell a skunk hiding in the rental application, then the balance of probabilities suggests there is in fact a skunk hiding there.  In practice this means that if a tenant’s information seems too good to be true, it usually is.  Ask the following questions:

 Does the tenant’s stated income seem unreasonably high?

Look for ways to confirm income, such as a letter of employment from a reputable business.  If the income is from self-employment, ask for a recent tax return to confirm it.  Remember: the more intrusive the questioning, the less likelihood of a disaster or massive repair bill from a problematic tenancy.

 Is the employer reputable?

A quick Google search to confirm the existence of the company or place of work provided by the tenant should be sufficient.  If it does not exist or is extremely difficult to find online, then it is likely to have been made up.  If the tenant claims to be self-employed, ask for a business card or marketing/promotional materials to prove the company’s existence. 

 Are there gaps in the tenant’s rental history?

If a tenant’s application lacks previous landlord information for a period of time, they may be trying to hide a less than positive past tenancy.  If they refuse to provide comprehensive chronological information for the past 2 years, ask where they lived during the missing time. 

 Ask the current referees if they can provide names and contact information for other referees.

Being proactive will help to weed out undesirable applicants and greatly reduce, if not eliminate, the likelihood of a rental catastrophe.

 

Do you have any questions about tenants or rentals? Feel free to contact me at any time at Kevin@Ottawascondos.com

 

Kevin Sharpe

Ottawa's Gift to Savvy Investors
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Kevin

Investors were recently gifted a huge potential pool of renters thanks to Ottawa’s big plans for the student market.

The student rental market could explode in the coming years following Ottawa's plans to double the number of international students in Canada by 2022.

Canada hosted more than 265,000 students in 2012, up 94 per cent since 2001. The goal is to attract 450,000 across all of the major schools in the country.

According to Study Canada, the online resource for international students, the monthly cost for shared accommodation ranges from $250 to $700 per month, and from $400 to $1,500 per month for a suite or apartment. Students typically prefer rooms in houses that are fully furnished with as much as possible provided.

Providing a fully furnished house not only reduces the “wear and tear” on the property itself, but also allows a landlord to command a premium on the rent requested.

 http://www.canadianrealestatemagazine.ca/news/item/1847-buyers-to-jump-on-student-changes

If this type of investment vehicle may interest you, please feel free to contact us.  Our team has first-hand experience identifying and managing successful student rental properties.

 

Kevin

Kevin@OttawasCondos.com

Stage It!
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Krystal

Staging doesn't necessarily mean spending your day at IKEA choosing inexpensive furniture to hopefully sell your home. Staging can mean a fresh paint job and moving some of those useless corner coffee tables out .

  

1. Start outside. If you own a home, make sure that curb appeal is clean and welcoming.

- Add hanging flower pots

- Keeping the grass short and weeds off your property.

- Please don't leave your garbage and recycle bins out. 

 If it's winter, make sure to keep the driveway clear.

  

2. The entrance. Is your entrance cluttered? Don't just hide shoes in the closet. Make sure they're organized, coats hung properly, and any extra outdoor gear organized in Bins labelled either by the name of the person using them, or by the type of gear it is "sunglasses", "gloves", "scarfs". A clear unobstructed entrance is key.

  

3. Remove. Remove any "junk" or trinkets from all rooms. You should have a bin in every room for garbage, donating , or hiding in storage. Try not to hoard. None of the rooms should have a box , container, or jar of "stuff" . We all do it, but get rid of it  . Hide it in your garage.

  

4. Clean. Do a thorough clean of your home. Cleaning companies charge about 60$ on average for a minimum of 3 hours. Pay the cleaner...get a good cleaner. Sometimes you have to go over their clean jobs.

  

5. Paint. Are the colours of your home neutral? If you have a yellow living room, red kitchen, navy blue bathrooms and a pink bedroom, I highly suggest setting one neutral tone for the entire home . Greige is cool. Like any grey , beige, soft neutral tones.

  

6. Corners. Check your corners.Try not keep any chairs, desks, tables, side tables, coffee tables, dressers, or drawers in corner if possible. Corners that are obstructed make  rooms look smaller. Keep the flow.

  

7. Furniture placement. According to Fengshui, you don't want to block the flow of energies from room to room. It should flow smoothly. It is best to have your back to a wall when seated. Don't overflow a room with furniture. Keep drapes open for natural light at time of showings.

  

8. Plants. A vase or two of fresh flowers in a room/ bedroom is welcoming. Avoid plants with thorns. Live plants are said to induce positive emotions.

A Bird's-Eye View: Living in 40 Sq. Ft.
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Krystal

There are small apartments, and then there are small apartments. Take, for example, these living spaces in Hong Kong, which are so tiny that they could only be photographed from above.

The photographs were commissioned by the Society for Community Organization, as a means of drawing attention to the housing crisis in the Hong Kong, a city with rents that average 35% higher than New York City and housing prices that average a staggering $1,300 a square foot. There's no denying that these living conditions are difficult. Yet still, I can't help but be inspired the ingenuity with which city dwellers such as these tackle small space living on a daily basis. 

http://www.apartmenttherapy.com/a-birds-eye-viewliving-in-40-square-feet-the-atlantic-cities-186335

Tarion Warranty Program - Lets Get the Facts Straight!
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JP

One Year Warranty

• Requires a home is constructed in a workman-like manner and free from defects in material;

• Protects against unauthorized substitutions

• Requires the home to be fit for habitation;

• Protects against Ontario Building Code violations; and

• Applies for one year, beginning on the home’s date of possession even if the home is sold.

Two Year Warranty

• Protects against water penetration through the basement or foundation walls;

• Protects against defects in materials that affect windows, doors and caulking and defects in work that results in water penetration 
  into the building envelope;

• Covers defects in work or materials in the electrical, plumbing and heating delivery and distribution systems;

• Covers defects in work or materials that result in the detachment, displacement or deterioration of exterior cladding (such as 
  brickwork, aluminum or vinyl siding);

• Protects against violations of the Ontario Building Code that affect health and safety; and

• Applies for two years, beginning on the home’s date of possession.

Seven Year Warranty

Your home’s seven year warranty covers major structural defects (MSD) and begins on the date you take possession of the home and ends on the day before the seventh anniversary of that date.
 
For example, if your home’s date of possession is October 23, 2005, the seven year MSD warranty begins on October 23, 2005 and remains in effect until and including October 22, 2012. 
 
A major structural defect is defined in the The Ontario New Home Warranties Plan Act  as:
 
In respect of a post June 30, 2012 home, any defect in work or materials in respect of a building, including a crack, distortion or displacement of a structural load-bearing element of the building, if it,

(i) results in failure of a structural load-bearing element of the building,

(ii) materially and adversely affects the ability of a structural load-bearing element of the building to carry, bear and resist applicable structural loads for the usual and ordinary service life of the element, or

(iii) materially and adversely affects the use of a significant portion of the building for usual and ordinary purposes of a residential dwelling and having regard to any specific use provisions set out in the purchase agreement for the home


The seven year MSD warranty includes significant damage due to soil movement*, major cracks in basement walls, collapse or serious distortion of joints or roof structure and chemical failure of materials.
 
In addition to the general exclusions, the seven year MSD warranty specifically excludes: dampness not arising from failure of a load-bearing portion of the building; damage to drains or services; and damage to finishes.


Common Elements

For most condominium projects, warranty coverage also includes the shared areas of the building, referred to as common elements.

Limitations and Exclusions

Please consult Tarion’s Construction Performance guideline if you are in doubt about whether an item is covered.

 

5 Ways to Save $ and Reduce Clutter
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Krystal

I found this article on my new favourite website www.ApartmentTherapy.com and couldn't relate more...

I was at Target the other day, and standing in front of me in line was a gentleman buying a plunger. That's it. A plunger. While I really should have been feeling bad for him, because after all, the poor guy was out on a plunger run, I found myself staring at him in wonder, dazzled by his ability to get out of Target with only one darn thing.

You see, had I been on a plunger run, I would have somehow managed to also scoop up some ballet flats, random office supplies, a soy candle or two, a hand towel, a tank top, some Play Doh for the kids, an impractical scarf… aaaand my bill would have been $100 of weird little items + a plunger. It never fails. But the buck stops here. Literally. I'm kicking off 2013 with the goal of getting back to my minimalist roots. I used to be quite frugal, but over the last few years I've lost my way. So, my goal is to greatly reduce the amount of new items I bring into my home and hopefully save money, because as much as I enjoy donating things, I feel wasteful constantly cleaning out and sorting through stuff, much of which I never needed in the first place.

Since my shopping tends to be rather unfocused, a lot like mindless snacking, I realized I first needed a clear plan to tackle my goal. My plan is to follow the 5 steps listed below as a way to develop more mindful spending habits. I'd like to think that one day I too will join the ranks of those wise individuals who can leave Target with only a plunger, ignoring the siren song of colorful office supplies and laughing in the face of impractical scarves.

Check out the following 5 steps and feel free to offer any additional suggestions.

1. Control "clutter cravings". According to The Clutter Diet, we all have areas of weakness when it comes to spending. It could be a collectible, housewares, shoes, magazines, beauty products, and so on. After a quick run through of my home, I pinpointed three key areas where I do too much impulse buying, which in turn leads to clutter. My weaknesses are books, small toys for my kids, and clothes for the whole family. It seems so obvious, but writing down exactly what I buy too much of makes me feel more accountable. I now clearly see that these are areas where I need to exert more control, and I can be mindful of this moving forward.

2. Follow the time rule. Meg Favreau from Wisebread (via MSN Money) notes that one of the most effective ways to control impulse buying is to make yourself wait before buying something. So, rather than tossing something into the basket, tell yourself you'll come back to it in 20 minutes, or tomorrow, or next week. I like this approach because it calls for some reflection before buying and a chance to cool down from the initial excitement of spotting a shiny new thing. Plus, I'm sure the satisfaction of not coming back to an item far outweighs the instant gratification of impulse buying.

3. Shop with a list. This seems like a no-brainer, but so often I run to the store with a mental list, not a written list. Funny thing about mental lists, they're very easy to add to, aren't they? As the Everyday Minimalist points out, "One of the best things you can do to stay on your spending diet is to shop with a list… if it isn't on the list, don't get it". Amen.

4. Reward yourself with experiences instead of things. Upon reflection, I realize I do buy things as a pick-me-up. I'll buy a new sweater as a treat after finishing a tough assignment for work, or purchase a book on a whim after a stressful day (when I have countless books sitting around that I haven't yet read), and I'm routinely tossing little things for my kids into the shopping cart, with the thought, 'oh, it's only $5', or 'it's on sale.' But I do these things far too frequently, which = clutter and mindless consumerism. I really don't want to continue down this path. The article 21 Frugal Ways to Reward Yourself Right Now lists some nice ways to relax and reward yourself through experiences, like savoring a glass of wine, visiting someplace new, exercise or a walk, or reading a new book (from the library!). In the words of Thoreau,"Live in each season as it passes; breathe the air, drink the drink, taste the fruit..."

5. Think before you buy. This tip is also from The Clutter Diet, and I like the approach of framing each purchase with a few relevant questions:

• Who can I borrow this from or share this with?

• What do I already have that is like this item?

• Where will I store this item?• When will I have time to use it and maintain it?

• Why do I need this item?

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