New homes

In this post, I want to let you know about why a real estate agent can help you find the perfect home. It can be new or used. When it comes to new homes, you may not think that an agent can help. This is false as agents can still give you sound advice based on their experiences.

This advice can be referrals to mortgage professionals that can get you great deals. This advice can come in the form of getting you a great lawyer. All of these things add up, and an agent can help you make the biggest purchase of your life. Did you know that it is valuable to get a home inspector? Do you know a good one? Maybe you should talk to a real estate agent.

Something you should know is that some builders will pay the agent's commission or at least a part of it. When you deal with an agent, be sure you understand how he or she gets paid. If you don't, an agent may not have your best interest in mind. Buying a new home can be a great way to find your perfect home. There's a bunch you need to know and if you want to discuss some options, I'm all ears.

Market still warm

Although the mad rush to get things done before July 1 had passed, the market is still pretty warm. From other agents, home inspectors and mortgage specialists, the market still seems pretty active. There are pockets of really hot activity and pockets of no activity, but all in all the market in Ottawa seems pretty good.

As a side note, fixed mortgage rates have dropped. I've seen posted 5 year rates under 4%. I'm still a fan of variable rates as those rates have historically outperformed fixed rates. Variable rates have dropped as well, not as a result of prime going up, but as a result of the market trying to remain competitive. Prime -.7% seems to be out there for the right buyer.

Of course, please consult your own financial advisor about what kind of rate you should acquire for your personal needs. If you are tight on cash, you may want to play it safe and fixed your rates.

10 things you may or may not know about me

1. I've been skydiving.
2. I have my grade 4 in piano.
3. Sabo un poco espanol, et francais.
4. I can play trumpet and flute.
5. I'm a Chartered Accountant.
6. I once sued Martha Stewart, The Bay and Zellers.
7. I have my real estate licence.
8. I own 3 properties, but still rent.
9. I was voted most likely to be prime minister in high school.
10. I once showed up to "dress-up day" at school as a gorilla, not in a suit or dress like every other classmate.

Feathersold!

I want to extend my congratulations on Derek Storie's first home purchase. He found a beautiful urbandale home in Bridlewood. The house was in top condition and we managed to get a good price for Derek. Derek had been in the market for a little while, so now he can rest easy. FEATHERSOLD!

7364 Flewellyn Road - Stittsville

I've just got a new listing! More details are available on realtor.ca. MLS #762649

Email me or call me for more info.

C: 613-851-8132

chad.featherstone@kwottawa.ca or

cfeatherstone@kwottawa.ca

Slower May

According to the Ottawa Real Estate Board, May sales are down nearly 14%. Most people are suggesting that the cool down was due to the HST and some changes in the mortgage rates. This is not unexpected as I had predicted this before. It was only a matter of time before activity cooled down in Ottawa from record high levels.

As a side note, I signed a lease on Saturday to move. I wanted a one bedroom to live in by myself and I didn't really want to buy a condo downtown. I think they are overpriced. I'm hoping that prices may cool off in the next year, and I might consider purchasing then.

Interest rates

Hey Guys,

Sorry I`ve been slow with these posts. I`ve been quite busy lately, but I want to get back to writing them. This week, there was an increase in the overnight lending rate, and I wanted to discuss the potential impact.

Interst rates have gone up. This is not new. Fixed rates had shot up awhile ago as they are more in line with the bond markets and not necessarily what the bank of Canada sets at their prime lending rate.

The Canadian economy grew something like 6% in the last quarter which is really an unheard of growth at this point. It was a no brainer that the Bank of Canada had to increase rates to ensure inflation remains modest. You can probably expect more of the same in the near future.

As a homeowner, what does this mean for you!(sorry the question mark doesn`t seem to be working on my keyboard, nor the proper apostrophe) Well, it means you can possibly be paying more interest on a monthly basis. What does this mean if you are looking to buy! There are a couple of factors. First, it will be more expensive to own a home. Secondly, and possibly less intuitively, it means that the growth of housing prices may start to cool down.

The growth of house prices is based on supply and demand. Currently, there has been a growing demand with a limited supply. Hence, prices go up. However, when interest rates rise, housing affordability becomes more difficult and people may be forced to sell their homes. They may have only barely qualified for a mortgage, and when the costs had increased, they can no longer serve their mortgages. I expect prices in Ottawa to flatten out as a result.

I should remind people that my opinion is not fact. These are only opinions and you should make any decisions on your own device. I merely discuss my thoughts to share my ideas as a matter of interest. Please do your own research when thinking about buying or selling real estate.

Some real estate basics

Today, I thought I would share a few basics for the first-time buyer. If you are thinking about purchasing in the near future, here are a few tips that may help you out:

1. Get pre-approved for a mortgage - From an agents perspective, this is one of the first things that you should do. Agents want to know what you can afford. This will serve as a useful background in helping you narrow down your search. I usually like to sit with my clients after they've been to a bank to ensure that they can afford what the bank is offering. There are some lifestyles that may have to change because what the bank says you can afford and what you can afford based on your lifestyle can be two different things.

2. Understand the costs - I think the biggest surprise to people is the CMHC insurance. What is CMHC insurance? It's a premium levied on buyer's to help protect lenders when a down payment is less than 20%. Basically, it means that you may purchase houses at lower interest rates with smaller down payments than would otherwise be available for a loan that had a larger downpayment. The premium is based on the size of the down payment and amortization period of the loan. Therefore, you may wish to think twice about having a 30 or 35 year amortization period.

3. Learn about the market - This is where I think I try to help out my clients the most when I show houses. I think once they have an understanding of the areas in which they want to live, they can make an educated decision about what to buy and not an emotional one. Home buying is a big decision, so it can become very emotional very quickly. The more you know, the more rational your decisions are and the more likely that you've made a great decision.

Other topics
- Learn about different mortgage options. You may not want the best 5 year fixed rate.
- Home inspections - How you can use them to save you money
- Buying new vs. buying used - who are the good builders out there. Do you need an agent?
- The costs of an agent - each agent has a cost. What is the true cost to you?

If you know someone that is thinking of buying, please send them my way. I can go over many of these topics with them to ensure they make a sound business decision.

Book

For awhile now, I have been preaching to family and friends about the need to educate people about money, debt, and investing. It's something I think is fundamental about our lives, yet we do not teach enough about it in schools. I think it's a core reason for why you see people go into university and come out with a barely manageable debt. I think it's a reason for why the US had a real estate crisis. There are fundamental rules and principles that people can follow that they simply know nothing about. It's time to try to educate.

At first, I thought it would be best to try to help lobby school boards to institute some sort of course in school. I think this is the best approach to teach Canadians about wealth management, but there may not be enough tools, or training available to implement this idea. Sure, there are a ton of get rich quick books, and books that promote wealth through real estate, stocks, or small business development, but a lot of these books that I have read appeal to only the entrepreneurs in the world. I'm thinking of creating a book that teaches some basic fundamentals about budgeting, taxes, investment plans, and other goals. It's a guide to not going broke for dummies.

I have never written a book, nor have I been a stellar student in English class. I have not made millions of dollars, or owned my own business. I pay for $10 haircuts. I still eat Kraft Dinner on occasion, and I just got a new job working for someone else. I am just a normal guy who paid his way through university without going into debt, owns 3 rental properties, and has dealt with hundreds of businesses because I have my Chartered Accountant's designation. I know why businesses fail and succeed. I know why people fail and succeed in their financial lives. It's not complicated, but, like how to cook, some people have never learned about it.

Hence, my decision to try to write a book. I will likely take a few years to write it, probably never get it published, but I still want to write it. It's a creative exercise that I would not have had the opportunity to do while working in a public accounting practice. I'll let people know how it goes.

New Job!

For those that didn't know, I got a new job as a business consultant with the city of Ottawa. I have a week off next week before I start, and I will be using the time to catch up on a few household things. I'm really excited for the opportunity and I think it will give me some more free time on the evenings and weekends in order to do a little more in real estate.

I'm going to miss being an accountant in a public practice, but I just don't think I want to commit my every waking second in tax season to accounting. I'm thinking that I might do a few returns on the side next year, but generally, I will not be returning to a tax firm. I want to be in control of the amount of work that I do in any given year. It's a work-life balance issue, and I decided I wanted more of a life than to work all of the time.

Happy Mothers Day!

Luxury homes

I thought that this was an interesting article to show that the market is still super hot. The expectation seems as though things might cool off around the fall. HST, rising interest rates, and tighter government restrictions on lending rules will likely cool things off a little. This is just an opinion, not fact.

Feathersold!

I sold my first re-sale condo this week. It was a stressful experience as there is a hot market right now for downtown condos. It is very difficult to find a condo that is not overpriced, or has a lot of buyers bidding up the price. The unit was at 429 Somerset (at Kent) and it was a one bedroom, plus den. I think we managed to get a great deal considering the location and price we paid for it. If I had the money last week, I would have bought it myself. It was a grapevine listing, so we were able to get ahead of most agents and buyers out there.

Facebook

Up until about a month ago, I didn't really have an idea of how many people might be reading my blog as it is posted in a few different forms. It is posted on my website, my facebook page, and my facebook fan page. The numbers have been pretty good from my facebook fan page. I guess it's a part of some people's everyday facebook creeping they are doing. I'm happy to share my knowledge.

It is encouraging to know that people are interested in what I write or write about. I will try to continue to keep posting, to talk about as many topics as I can, and be a source of insightful information. I think it's a great way to build trust in a real estate relationship.

Homework time

It's a crazy real estate market out there. I've been helping some people buy and emotions are quite high right now. As the lending market becomes tighter, buyers are rushing to try to buy with the record low interest rates we have been having. I've witnessed people getting into crazy bidding wars, and I think this is the best time to have an agent.

I know I am biased, but hear me out. There are people out there using private listing services and are trying to cash in on the hot real estate market. They price their house based on what they want to get, not on the advice of someone that knows what the market is worth. This can be troublesome in two ways.

The first way, the seller does not know what his house is worth. He/she may undervalue it. They may not be informed enough about their house and what the market is going for. What the market is going for this spring is very different than the fall. You need to know what a place is worth in order to save possibly 10's of thousands of dollars, well worth an agent's fee. This information can be shared with an experienced agent, and one that recognizes the different market factors involved.

This is important for both the buyer and seller. As an agent, I have advised clients multiple times to go over asking price to try to buy a house. In some cases, it has worked, and in some cases it wasn't enough. It was important though, as an agent, to be able to advise my clients as to what the house was worth. My clients were ok with walking away from a property because they knew what the house was worth. We didn't have one of our offers accepted because someone offered $35,000 more than asking. It wasn't worth it at that price, but certainly warranted a bid over asking. Hence, we lost the house, but we didn't go broke looking for one.

The other way, the seller overvalues the house. Buyers can sometimes be had in this case because they think they are saving money without the services of an agent. First, they may be exposed legally by not going through the proper procedures and paperwork. Second, the existence of an agent or no agent does not change the value of the house. You need an experienced agent to know what a place is worth. If someone overvalues the house, it is sometimes deceiving from the seller that you are truly saving money. Houses are likely going to be your single greatest investment in your lifetime. You should get professional help to ensure you won't be set back for years. Hire an agent.

Anti-competitive behaviour

There was another interesting article today on ctv.ca. It discusses the recent request of the competition bureau to the Canadian Real Estate Association. CREA has decided to oblige by this request and has suggested a solution that reduces the anti-competitive nature of real estate agents. The competition bureau looks like they will challenge CREA on their proposed solution. They do not believe it goes far enough to help reduce prices.

It is a well-known fact that real estate agents yield higher prices for homes, on average, than private sellers. It is questionable, in some cases, why this may be the case. It may be because real estate agents know their business, or, according to the competition bureau, it is because they run the MLS system.

The MLS system is the biggest tool real estate agents have to collect and share information. CREA has proposed that private sellers be able to list on MLS for a flat fee, so that they may represent themselves. It should resolve the issue of the competition bureau, but they do not believe that this will help reduce prices of homes. The competition bureau has completely rejected the proposed changes.

I expect quite the dog fight to continue. Stay tuned.

I love Larry.

For some people, they might have heard that I had a great scheme to one day to move the Greyhound bus station, when I was big and rich, and to develop the site into a commercial or residential high-rise. I wish that was still the plan. I'd be rich. It would be the act that would let me retire. There was only one problem with that plan. I am nowhere near rich enough or connected enough at this point to pull off such a move.

So, what's the next best thing?

Well, check out this article.

This article talks about Larry O'Brien's plan to have Greyhound move out of the downtown core and move to Vanier along with the Via Rail Station. I think this is a wonderful idea. First, the piece of land where the Greyhound sits should be redeveloped. From a transit perspective, I could see light-rail going to the train station before I could ever see it connecting to the current bus station. The current bus station is somewhat cumbersome for travelers to maneuver around town once they arrive from the bus station. The current infrastructure is not very convenient.

Second, urban planners for the city of Ottawa are trying to get people to move back into the downtown core. With the hot sale of condos in the area, the plan seems to be working, but by redeveloping the eyesore the bus station is, the city has a better chance to continue to do this. Part of the reason for the city's plan to do this is because urban sprawl costs a lot of money. Roads, buses, and light-rail need to be constructed to service outlying areas. If we create a downtown core that is suitable for pedestrian traffic, the city has reduced its costs significantly.

I would be lying if I didn't have an interest in this plan. My house is directly behind the bus station. I love the location due to the proximity to downtown and the highway, but the bus station can be a little noisy. I would certainly prefer to see a new condo or office tower built. It would be new and would make my neighborhood that much more desirable. I think my property value just went up. :)

Bad driver?

Do you have a lot of outstanding parking tickets? Have you not paid those bills in a long time? I hope you don't own a home. You might be surprised when you pay your property tax bill this year when you find out that you have to pay your parking tickets as well. There is a new legislative change where the city is now allowed to collect any fines on your tax bill, so it might show up as a surprise.

The city claims there are $23 million worth of outstanding tickets to collect. The amount is pretty substantial. The impact can be noticeable to the whole city. It could mean improved services or a freeze on taxes. When the budget ax falls, I'm sure the city would love to have this $23 million.

What impact does this have? With this new power, the city may be able to put a lien on your property for unpaid parking tickets. It's a significant power that the city now holds against taxpayers, so be sure to pay off those tickets!! You can lose control of your house if you fall too behind in arrears!!

Condos red hot!

Check out this article.

Marketing group

For those that don't know, I am a member of BNI Centrepointe. I meet weekly for breakfast with like-minded individuals that want to help grow their respective businesses. I represent our accounting firm, DNTW. I thought I would mention this as there are quite a few people in the networking group that can provide excellent services in a wide variety of fields.

These fields currently include: insurance brokers, investment advisors, sign makers, electricians, mortgage brokers, real estate lawyers, bookkeepings, business coaches, physiotherapists, environmental printing supplies, land developers, IT specialists, Web analytics, naturopathic doctors, and the list continues to grow.

If you know anyone that could benefit this group, or benefit from this group, I would love to give you their information. These people help grow my business, so I would love to help grow theirs.

Housing inventory down

I've mentioned this before, but here is a recently published report.

Old news, but important news

It is now going to get harder to buy your first home. The government has recently decided that lending rules must get tighter, so that when, not if, interest rates go up, we will not have a real estate crash similar to something that occurred in the US recently. I think it's a solid proactive move that will help the Canadian economy in the future.

The new qualifications are based on a 5 year fixed term mortgage. In the past, the lending rules were more lenient in that a person would be able to qualify for a mortgage with something less than the 5 year fixed term standard. When interest rates have been at a historic low, this is not an issue. This only becomes an issue when interest rates begin to go up, and that is the only way for them to go.

Some people in the real estate business may not like this news. It means that there might be a few less buyers out there for some properties. The extra buyers are not worth the risk that this presents to our economy. First, there is currently an inventory shortage in many cities across Canada, leading to historically high home prices as there are more buyers than sellers. Thus, I don't expect that this rule change will alter home prices all that much. This can be good news. It means that homes remain affordable.

The second issue is the fact that those who will face trouble when interest rates go up will be fewer in numbers. This means less people liquidating their properties in a mad rush. This will keep home prices stable when interest rates do eventually go up.

A Great Start to 2010 for Ottawa’s Housing Market

From the Ottawa Real Estate Board

""Members of the Ottawa Real Estate Board sold 713 residential properties in January through the Board’s Multiple Listing Service® system compared with 529 in January 2009, an increase of 34.8 per cent.

Of those sales, 156 were in the condominium property class, while 557 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.) which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

“These numbers are more in line with what we might expect for a typical January, whereas 2009 started off abnormally slow due to uncertain financial and market conditions worldwide,” said Board President Pierre de Varennes. “Although listing inventory remains low, we expect that will change as we head into the spring market and interest rates remain low,” he added.

The average sale price of residential properties, including condominiums, sold in January in the Ottawa area was $320,966, an increase of 11.4 per cent over January 2009. The average sale price for a condominium-class property was $259,273, an increase of 22.5 per cent over January 2009. The average sale price of a residential-class property was $338,244, an increase of 8.2 per cent over January 2009. The Board cautions that average sale price information can be useful in establishing trends over time but should not be used as an indicator that specific properties have increased or decreased in value. The average sale price is calculated based on the total dollar volume of all properties sold."

“A Great Start to 2010 for Ottawa's Housing Market”. http://www.ottawarealestate.org/news_release.shtml (9 February, 2010)

Groundhog day!

This may sound strange, but "groundhog day" is one of my favourite movies. Each year, I try to watch some TV rerun, so I can enjoy it. In a way, it reminds me to keep things fresh. I don't want to ever live the same day, over, and over, and over again. I think it's a lesson that we sometimes need to be reminded of when we are stuck in the 9 to 5 rat race. There are little things you can do each day to make each day special.

Anyways, that's enough for my emotional reflection of an old movie. I want to talk some real estate.

I think today, if you've been thinking about moving, is a great day to start to plan it. It's still a little cold to move, but there is a lot of planning that needs to be considered. You might want to take advantage of making an RRSP contribution before the March 1 deadline. Under the home buyer's plan, this can significantly influence whether or not you are able to buy this year or next. It's important to start to ask the questions now.

The next thing is that interest rates are still at historically low levels. Why not take advantage of that if you can? Home-ownership will only likely be more expensive in the future with any rise in the prime rate.

If you are looking at moving in the spring, you should find out how much prices are going up now. Inventory of homes in certain areas is low, it may be a hard time to find something to buy without the proper strategy. You should contact me to know whether or not it is a good time for you to sell your property. There are many, many things to consider.

Again, I remind everyone to continue to try to get some referrals for me. Whether or not you are interested in a condo, investment property, single-family home, new, old, or you are just curious about real estate, let's talk! Real estate is an interesting business, and you should know some of the basic ins and outs. For most people, it is the single largest investment that they make in their lives. You should work with a professional.

"The Millionaire Real Estate Investor"

Hey everyone, I apologize for the time between posts, but things have been quite hectic. I have a few things on the go right now and the blog has just taken a back seat.

I had previously mentioned that I read 3 real estate related books on my Californian crusade. The only book I haven't discussed yet is "The Millionaire Real Estate Investor". I should start by mentioning that I picked up this book probably for one reason. This book was written by Gary Keller. He is the "Keller" of Keller Williams. Since I work for them, I figured I should know what people are talking about when they talk about his book.

I would describe this book as an instructional book. It gives pretty clear advice on how to spend your time and energy when it comes to real estate investing. Gary Keller tries to make things as systematic as possible. He wants people to use resources that exist to them that help to save on your most precious resource, your time.

Generally, I don't think I would give this book to someone that is looking at getting into real estate investing for the first time. To me, it is not written in a spirit that is all that inspirational unless you can visualize the product of your efforts. Since you don't quite know how involved you need to be, I cannot foresee how you can visualize the end result. I found that rich dad, poor dad, was more inspirational than instructional, and I think that is critical for someone who needs to take the plunge into real estate.

If you have already bought a property or you have an incredible need to do more research before you buy, I would recommend this book. Again, this is an American book, so some of the strategies may not work in Canada. This is especially true considering the time that the book was written. The book pre-dates the housing bubble that had burst during the housing crisis. My advice to you is that you do your due diligence before acting upon what you read.

Rich dad, Poor Dad

This is another book that I read while I was in transit to San Jose. This is probably the easiest of the 3 reads as the book is pretty fluent. I thought it was also the best read for an investor starting out for the first time.

The reason I chose this to be the first book for an investor (of the three I read on the trip) is because it talks about some fundamental principals about money. Being an accountant, I have some finance background that certainly aids me in my financial endeavors. When I am talking about fundamentals about money, I am talking about some of the myths associated with home ownership. Specifically, I am talking about thinking of a house as an asset.

In accounting, an asset is something that is purchased to generate income. A typical owner-occupied home does not generate income, however, this concept delivers an important lesson about money. If you can somehow generate an income or at least reduce your monthly payments, you can generate an opportunity to make more money, making your money work for you instead of you working for money.

The book goes into detail about how people move into bigger and bigger homes when their salaries go up and up. The problem becomes that people don't really get further ahead because they carry larger mortgages as a result. In that sense, you fall into the rat race. The book starts to go into detail about how to get out of the rat race. By the end of the book, the tips become more advanced (and more American), so these points may not be advantageous for the person just starting out. I like to think that this book can convince people to think of real estate when thinking about their investments.

The reason I am stressing this point is because I think our education system is somewhat flawed. I remember in multiple math classes learning about trigonometry and wondering when the hell I would use this info. After university, I still think that trig is somewhat useless for the average person. I'm not saying that trig should be removed from the curriculum, but I think money should be added.

How many people get themselves into deep credit card debts? How many people have trouble with student loans? There are people that don't understand basic concepts about money and I think a more concerted effort should be taken in our schools to help kids understand how to use money properly and effectively. It can be the largest lesson a kid could learn. Anyways, it's just my two cents.

97 Tips for Canadian Real Estate investors

When I was on my trip to San Jose, I picked a few books to read while on the road. I figured I could do a little more research and share some of the advice from those books. The first book I read was called "97 Tips for Canadian Real Estate Investors" by Don R. Campbell.

The best part of this book is the fact that it is a Canadian book. The tips and advice that are offered in this book relate to many things, but it is nice to know that things such as tax advice are applicable in Canada, and not necessarily worldwide. I've noticed in the other books I have read that not all the tips necessarily work.

As an example, in some American books, there is a special rollover available to real estate investors that allows them to increase their investment in real estate without necessarily incurring a taxable event. I think this should serve as a lesson about any real estate book that you pick up. The advice and tips that are available may not work for you for a variety of reasons. However, you should learn about the possibilities and do the research necessary to ensure you are making the right decision.

The reason I am making this point is that, when I bought a different book, I was asked some questions by the person who recommended the book. It was a tax question, and being a CA, I questioned the tax advice that he had learned about. After reading the book, I realized where he got his misinformation. Although the information in the book was true, it does not apply to Canadian property at this point in time. Canadians have a different set of rules. You should contact a tax specialist to learn more.

Back to the book.

I thought that this book was a pretty advanced book. For the novice investor, I would say that if this was the first book you read, be sure to pick it up once you've gained more experience. There is a lot of content in this book and you won't be able to take it all in at once. It's also a very fragmented read. You might want to have this book in the bathroom, so you can read it in bursts. I don't find it easy to read from beginning to end. It's too scattered in the thought process.

The thing I do like about this book is that it can act as a good reference guide down the road. The advanced tips will be there to quickly read, so that you can move quickly on any investment decisions. It's like picking up a bible for some quick guidance, except this is for real estate. Therefore, if you are just thinking about getting into real estate, I might recommend a different book. If you are a novice investor, I would highly recommend for you to pick up this book if you are involved in real estate in Canada.