Real Estate Exam #3

This is the final phase that I have to complete before I am able to sign up with a brokerage and begin to buy or sell a home. I guess, at this point, if you are thinking of buying or selling, I could probably start pointing you in the right direction. There are many things to consider before buying or selling a house.

The reason why you would use me as your future real estate agent is that I have the knowledge from a tax and business perspective that will not only help you make the right decision, I will soon have the ability to get you the best deal possible for your home or future home. There are tax planning opportunities that you should be aware of, and these planning opportunities co-exist with your ideal home. It's important that you take advantage of these opprtunities because, for most people, a home is the single largest investment you can make in your lifetime.

As of May, I will also be looking for people interested in real estate investing. With interest rates so low, there are plenty of opportunities out there that people should try taking advantage of. I can bring many small investors together in hopes of finding properties that offer a safer and better performing investment opportunities than the markets are currently giving.

I guess I should mention my background for a change for those that do not necessarily follow my life too closely. I recently graduated Carleton University with Honours in Finance and Accounting with the co-op option. I have been working as an accountant since 2005, and received my chartered accounting designation this year. I have owned property since 2006, and I have two single family homes in my portfolio at this moment. During the last few months, I have been pursuing courses at OREA (Ontario Real Estate Assocation) in order to be a licensed broker. I should be licensed by the end of May, and I am looking to do business.

Another property???

Well, there are those that are close to me that might know which home I am moving into to try to buy. At this point, we are still in the negotiation stage, but I'd like to reach an agreement in the next couple of weeks. It's going to be a private deal to save the seller some commissions. I'm hoping that this will translate into some savings for me.

I'll keep people posted. I'm sorry for the vague nature of the post, but I really wanted to share this information. I suppose that a little post is better than nothing right?

OREIO

Last night, I popped my OREIO cherry.

OREIO stands for Ottawa Real Estate Investors Organization. It's a group that meets about once a month on the second Monday of the month. They usually have guest speakers to talk about a variety of subjects relating to real estate. It's a great place to learn, and it's a great place to build up a good little network.

Last night was a freebie. I got to see first hand what a membership would be like in OREIO. It was a roundtable discussion about real estate from many different perspectives. Each session of the roundtable offered a unique insight into one aspect of real estate. Granted, at my level of real estate investment, some of the information was not relevant. I'm not quite prepared to jump into multi-unit buildings just yet. I like the idea of managing single family homes.

I know this post is not about taxes, but the main focus of the blog was originally supposed to be about real estate and sharing ideas and knowledge about real estate. I think real estate is more interesting for people, and it may prove to be a better investment given the economic circumstances that we are currently dealing with, and have to deal with in the near future.

The group meetings offer a new perspective for me. It's a chance for me to gain valuable insights into the world of real estate, and I will likely be able to share my knowledge via this blog. It's a new source of knowledge for me that will benefit anyone that needs information about properties for personal use or for properties for investment purposes. I no longer have to use my own experiences, but the experiences of others to ensure that actions are done with due diligence.

This post has been very vague in terms of offering anything new. I plan on sharing in the next couple of days some of the various knowledge that I received. It's a good excuse for more posts, and it also gets my mind off of taxes a little bit. If I get stuck, I'll put up a tax-related post, but I'd like to avoid that if possible.

Another whim...

Tonight I go and visit Jeff. I've convinced myself to try and sell my downtown property. What prompted this? Simple. Money!!!

The house next door, which I once considered purchasing, is now listed on the market for $249,000. Now, I believe that my house is in better shape. Therefore, I think I should be able to get a decent return on my original investment of $200,000. This is a nice little chunk of change. There are many costs on my end that I need to worry about, but I am going to discuss this with Jeff and we're going to see if the numbers are going to work for me.

There is still a strong chance that I keep my place. I'm thinking that I will offer my home up in the hope that an investor would be coming along that wishes to purchase both halves of the semi. If that's the case, I'm hoping that he's going to pay a slight premium and that I will have made some money without actually doing anything to the property except hold it.

If I sell the place, I think I will go with a condo centrally located. Realistically, I do not really want to live with anyone. I'd like the privacy that I get with a condo. The place would also be smaller so I wouldn't have to spend a fortune on furnishing the place either.

This is my latest whim, but I expect that not much will happen from it. I have set a short timeline to help gauge interest, but if nothing happens too soon, I will continue to look for renters and move in September 1st.

Hydro Tip

I recently got a hydro bill that nearly knocked me to the floor. When I first glanced, I was in shock to see the bill nearly $300 more than I had anticipated. I looked over at my windowsill to see if I had a money-tree growing, but with no such luck, I began to look at the details of the hydro bill.

My suspicions were right. There was something unusual about the hydro bill. I had received a charge for a deposit on the account. It was a new account because I had just bought my place at 75 Arlington. I decided to call because a deposit shouldn't have been necessary with my good credit history with the other property.

I was fortunate that I was right. I called Hydro Ottawa, and they were able to remove the required deposit from my bill. I was much happier. I saved myself a couple of hundred dollats.

However, my tip is this. If this is the first time you have a hydro bill, you may wish to get your parents or someone with some credit history to create the account. That way, the deposit is not required. After the account has been setup, you should be able to switch the names on the account without any repurcussions. Even though there is a new name on the account, there is an existing account and the hydro company may not require an account deposit. I figure this is a good way to save some extra coin when you first buy a house. It can be pretty hard on the pocketbooks when you are trying to get everything setup in the house.

This has never been actually tested by me, so I can't guarantee it will work. If it does, let me know and I'll write something to say that it works, so that other people can save some money.

F.A.Q.'s

I decided today would be a great opportunity for me to answer some of the more common questions that I receive about my recent ventures in real estate. It will give some background on my thoughts and goals in this whole process. Although some of the renovations will not occur until late summer, I want to be able to plan as much as possible to help reduce costly mistakes. I will be posting to the blog on a semi-regular basis as a result.

When are you moving in?

I am planning to move into the house in September 2008. Currently, the house is being rented by students. The students are under lease until the end of August. Their rent payment will be enough to cover my mortgage for the period that I do not live there. This will give me an opportunity to try to save up some money to help towards renovations.

How can you afford two houses?

I can't. I would never be able to pay the full cost of the two mortgages on my own. The key is to have income coming in. I have decided to rent out one property entirely, and the other property entirely until I want to take over. After I take over, I plan to rent out a room or two to help cover some of the expenses. Hopefully, by doing this, I will be able to get a little more money ahead to help with additional renovations.

When I bought the first house, I had used some of my personal savings for down payment. In addition, I had performed some legal maneuvering in order to obtain this home. I'm not going to get into many details, but tell you that I now own that house.

As for the second house, I purchased this home using money that I had saved up over the years using an RRSP. When I was 18, I put $3500 into an RRSP. Every subsequent month, I had put $50 per month into the RRSP. Honestly, if you have never done it, I would recommend making an RRSP contribution this year. There are tax benefits now and you will be saving for a home in the future. There are some serious benefits in doing this. The $50 a month is nothing. I do not even notice it coming out of my bank account each month, but it has paved the way for me to own a house.

In addtion to the RRSP advice, I want to give another little bit of wisdom. Although it seems like that it sounds very profitable and the opportunity to establish some equity sounds desirable, it is very important to consider many factors when purchasing a home. Most people will only ever buy a home once or twice in their lifetime. It is truly one of the most important decisions that you can make. Therefore, it is important to do your homework. There is not much point in paying a mortgage if you decide that you are not settled into a career or city. The transaction costs associated with homes is fairly significant and the concept of living in a home for one or two years is probably going to result in you losing thousands of dollars. You have to be sure you want the home.

Where did you find the second house?

I'm a bit of a real estate junkie. I frequently visit mls.ca to help keep an eye on the properties in the vicinity of the first home that I bought. I want to see if places are selling, what they are being listed at, and the details of those homes that are comparables to the home that I own.

Recently, I've been using mls.ca to look at homes in the area in which I wanted to live. I wanted to do some research on the area. I wanted to make sure that the place I bought wasn't going to cost me any more then it had to. I had stumbled a couple of properties in the past that I thought would be pretty good, so I had an old friend from high school send me some additional information. He's a real estate agent and he gives me some extra info on properties if I ask him. Unfortunately, the properties I thought might have some potential were listed on Bell Street. Bell Street is a dump and the houses were appropriately valued.

One day, I had came across another property. I asked my real estate agent for some additional information and he told me that it was on Arlington Street. Not knowing where it was at first, I google-mapped it and decided that this was a prime location. The price seemed right, so I made an appointment to go and see it. The rest is history and will explain it at another time...