Commentary

Why Real Estate is a Better Investment than RRSPs?

First buy your principle residence as soon as you can. Selling your principle residence is the only tax-free investment you can ever make in this country. But, if you buy an RRSP, lets say $10,000 a year for 30 years at 5%, will get you $725,000. Which translates to a pension of $36,000 a year, and you pay tax on that, and you start to get this money in 30 years.

The trick is to buy 3 properties over your working life. Make sure each property has positive cash flow, that's after the mortgage payment. At current mortgage rates, only half your payment is interest and the balance goes to pay the mortgage down. So with a 20% down payment, if your property appreciates at only 3% per year, your equity is growing at 15%-that's leverage.

You can have tenants paying off all your mortgages and you can have your properties increasing over time. So, I ask you, you do the math, what would you do?

Why Small Condos are the Hottest in Toronto Real Estate Right Now

Why are small condos the hottest segment of our Toronto real estate market today? Prices are now at $1000 per sq.ft. At the same time, bigger units can be had for about $800 per sq.ft. In the long term, these bigger condo units will become the most in demand units, but not right now.

The problem has to do with the new rules for mortgage financing. People still want to own, now and tomorrow. And they ask us, "what can I get for $500,000 to $1,000,000?" At the $500,000 mark, you can buy a 500 sq.ft.-600 sq.ft. condo. And, no one wants to go over 1 million dollars in purchase price. For conventional mortgage lenders, they will lend up to 80% of the first million dollars. Go over one million dollars and they're only going to lend 50% over this amount. For example, if you want to buy a property for 2 million dollars, you need a minimum of $700,000 down payment. There are not many people sitting on $700,000 cash.

Realtor Tips: Protecting Your Buyer When the Seller Wants No Conditions

When doing an offer, the main focus is usually about what conditions to include, that's important. But sometimes you cannot get an offer accepted with conditions. Not just in a multiple offer scenario, but at times when a seller wants a quick sale and wants the buyer to take the property 'as is'. This is where warranties can play a key role in protecting the Buyer. By warranties, I mean that the seller commits to certain truths about their property. For example, when you want to buy a condo but cannot include a Status Condition clause. You would then want the seller to warrant that 1. The condo has not had any changes or improvements made to it that have not been approved by the condo corp. And also that there are no special assessments coming in the next 6 months.

A lot of agents already do that, but what they miss is the consequences if these warranties are not met. If you don't spell it out, you will end up in court to settle these disputes. For example, if the seller did improvements to his condo without the condo corps approval, you need to add the following words: "The seller either has to get the approval prior to closing or has to make changes to the unit at their own expense, to get that approval. "

So, warranties and their consequences seem like a small part of an offer, but to me, it's critical in protecting buyers.

The Luxury Condo Market

Since April, the hottest real estate market in Toronto has been luxury condo sales. In 2016, the highest price for a condo was 6.5 million. This year, the highest priced condo was 11 million. Did you know, sales over 1 million dollars for condos are 86% higher in 2017 than for the same period last year. In contrast, the overall market is down by 16%. So why the sudden interest? Baby Boomers are cashing out of those big, single-detached family homes. We’ve been talking about this happening for 10 years and now it's finally here. Toronto is also a trendy destination to live in. It is a destination city for people looking for a second or third home, and condos are the perfect answer. At the same time, developers are not building enough big condos. Pre-Construction sales are focused on investors and smaller units. We use to think of luxury condos as over 2,000 Sq.Ft. Today these units are in the 1,200 to 1,500 square foot range. Big condos in older buildings will soon become the new thing.

3 Tips for Finding the Best Real Estate Agent

Welcome to Inside the Real Estate Market. I'm Jamie Johnston, Broker/Owner of RE/MAX Condos Plus.

I get more calls asking for "Who is your best agent?" from potential clients, looking for someone to help them and from other agents wanting to refer a client to an agent. Unfortunately, there's no such thing as a "best" agent.  For example, best listing agents know staging and setting up the property for maximum value They're great at taking pictures, videos, marketing the property and getting key promotion, and also, they know how to set the exact right list price.

On the other hand, best buyer agents, have an understanding of what you want. They know how to find the right property for you. They know how to negotiate the very best deal and they have time to visit all the properties with you. We have not even considered that agents specialize by area, by property type, and even client style.

So, what do I think are the keys for finding the best agent for you?
 1. Do they have the time for you? To do all the things necessary to give you great service.
 2. Do they relate to you? As an agent, are you one the same wave length?
 3. Do they have the knowledge for the property you are either selling or buying?

Notice how I never said, "Do they do the most sales?"