1% increase in Ottawa

Check out this article. Found here.

Feathersold!

I like these posts. They bring me a lot of joy. Congrats to Matt and Steph on their purchase of a brand new condo unit. It's their first investment property, but hopefully it won't be their last.

Multi-Unit residential and single family homes

Last night, I attended another Ottawa Real Estate Investor's Organization (OREIO) meeting. They had two guest speakers. The first was Ken Beaton, a specialist that invests in multi-unit residential buildings. The second individual was Peter and he discussed owner single family units.

These meetings I attend are very important because they offer great advice and tips when it comes to properties. It also gives an insight as to what kind of returns the bigger investors are looking for when they see a property. It also gives an idea of some of the expected costs that you need to budget for, for each property.

For example, for a multi-unit residential property, depending on the age of the property, the average cost per unit/door should only cost in the neighbourhood of $400-800 annually. This amount would include painting and upgrades as needed. It also shows you the need to be able to budget and create a plan for your investment. Without a plan, you are shooting aimlessly at your investment opportunity. If you need help with that plan, or know someone that does, I can certainly help point you in the right direction. It's important to base a lot of your decisions on the numbers involved.

My memberships

I'm not sure how many people know this, but I am a member of two very key groups that I believe will help me in servicing you better as a real estate agent. I'm very proud of the fact that I'm in these groups because I believe it gives me a competitive advantage over some of my competitors.

First, I am a member of OREIO. It is the Ottawa Real Estate Investors Organization. This is where small and large real estate investors come together to share ideas, opportunities and contacts with each other. I think the link here for why this is important for me as a real estate agent is clear. Why should you care? Well, even if you are not necessarily interested in real estate investing, you should at least have a salesperson that knows about shady builders, shady home inspectors, or shady sources of financing. By being a member of OREIO, I have a better understanding of the services available in Ottawa and the experiences that go along with them.

Secondly, I am a member of Business Network International. Unfortunately, this group already has a real estate agent involved, but I represent the Chartered Accounting part of the group. This group is key because they seem to offer a wider range of potential services. Electricians, plumbers, home inspectors are directly members of this group and I can talk to them regularly on an informal basis. This becomes especially key when I talk to insurance agents and real estate lawyers. I know that I may be relatively new to being an agent, but I trying to surround myself with the best tools available, so that I can deliver the best service, bar none.

A lesson in Capital Gains

This was a specific question from a friend from my high school days. He wanted to know how capital gains works with investment properties. Granted, there should be some caution in reading this as I do not have all of the specific information for a particular tax scenario. You should likely discuss this concern further with your accountant. ;)

If there is anyone out there that doesn't like numbers, please stop reading. If you're still reading this, I think you might learn something that could be very important.

This is how capital gains works when it comes to an investment property. In its most basic form, it is the proceeds from the sale of the property less the cost of that property. Let's use a couple of numbers. You paid $100,000 for a rental property and you sold it for $150,000. Your capital gain would be $50,000. Of that $50,000, you are generally taxed only 50% of this amount. Therefore, $25,000 gets added to your income for the year.

What kind of tax do you pay on this? Well, it really depends on what tax bracket you fall under. Hence, it is important to discuss this with your accountant. There are things like loss carryforwards, capital gains reserves, principal residence exemptions and cost capitalization that can affect your tax implication. It's beyond the scope of this blog, so if you are serious about investing you really need to learn to find a good accountant. I cannot stress this enough.

The reason is that cash is king when it comes to real estate investing. You need to know how to manage your cash through tools like leveraging, and financial structuring. I'm not just trying to use big business words, but trying to encourage you to use professionals when it comes to these types of decisions. I think it is absolutely critical that you have a professional that you can trust, so choose carefully :P

Buying Condos

For the last couple of weeks, I have been looking at some of the newer condos in Ottawa. Right now, it seems like the hot thing to do, so I am researching as much as I can in each of the buildings. The first thing to do when you are looking for a condo is find someone that knows what they are doing. The reason you have to do this first is that condo builders will only offer a commission to those people if they walk into a building with you.

It's a silly rule, but its an important one. Even if you do not decide to use my services, it would be wise that you hire a professional to help walk you through the process. When you sign up with a buyer agent, they can look after your needs and it would not be the greatest move to not have an agent. It could mean that you pay out of pocket for your agent, and that may not be necessary.

Typically, to purchase a new condo, it takes a pretty large down payment. I'm not a mortgage professional, but it has been my experience that you can purchase a resale condo with a lower down payment than a new condo. New condos have been going for about 15% as a required down payment. It's not a number that is set in stone, but it's a number that you should be prepared for.

Over the next few posts, I'm going to try to talk more and more about condos. I'm getting a lot of good information on them, so I would like to share some of it. All I ask in return is to be able to have a chance to help you or someone you know when there is a chance of doing a real estate transaction.