Major Trends in London Real Estate! A Must Read!!

I received a question the other day from a gas station attendant. He asked, “What do you think of housing prices being this high and is it a good time to buy?”

I was in a bit of a hurry, but I felt compelled to answer; Even stopped in my tracks as I wanted to answer honestly and succinctly. Many of you that know me, may find that somewhat funny, however the following answer was somewhat surprising even for me. The information below may indeed graduate me into a more succinct group of speaking in shortened tweets and headlines. My response was as followed:

Well I said look at it this way…

  • The last 8 to 10 years the interest mortgage rate has been essentially flat
  • There have been two interest mortgage rate bumps since November, and the prediction is anywhere from 2 to 3 or four more bumps in the next 12 months (in the USA).
  • Canada will likely only be 3 to 6 months behind on the interest rate bumps or all the money will leave the country.
  • Generally, there has been an inventory shortage slide in the last 10 years, but overall some local ups and downs in that trend.
  • This means that money is going to be more expensive and harder to get and there are less houses available on the market to purchase… What do you think will happen to the prices?
  • Add to this that London happens to be the cheapest real estate by far in the top 15 cities in Canada.
  •  Now add in that the M-generation is about to seriously start buying homes, businesses and investment properties.
  • Impacts such as South Asian immigrants completely transforming Toronto. As prices in the GTA went up in February by 23% that month alone…big cities are getting swamped with an Asian purchasing frenzy.
  • Clients and agents are coming into London buying 3,4,5,6 houses/income properties, lots, buildings not finished for resale.
  • I mentioned that at his age the M generation thinks of the mortgage world as flat, which I explained that the Boomer generation actually made all their money with inflation and rising house prices for decades and so we need to help our kids now!
    As our conversation ended, I noticed that he looked puzzled and then smiled and this made me feel like he understood what I was explaining. With the major trends happening now it indicates that housing prices will go up and availability will go down. With increasing prices it will become more difficult.As my dad used to say when I was a kid, “Son don’t go out and buy a ditch’ because they ain’t making any more land anymore’... that was in the 1960’s when the world population was well under 3 billion.

    Garth Williams | Sales Representative | The Realty Firm Inc. www.findahomeinlondon.com 

Advertisements

Why the Bottleneck in London?

Thoughts from the London and St. Thomas Association of REALTORS® AGM Trade Show on April 18, 2017

Recently, I attended the LSTAR Annual General Meeting and Trade Show and it really brought to light some significant things going on in our London Ontario Real Estate Market.

We live in a country and a city that has plenty of land and opportunity, but yet prosperity seems to be at a standstill! The London real estate market has an unbelievable surge in price increase and buyer availability and demand. We currently have great mortgage financing rates and availability of funding.  The AGM demonstrated we have an enthusiastic professional group that are trying to raise the bar and standards in our industry.  London is quite fortunate to have many developers ready and wanting to build. With all these factors in place London should be booming!

So why is there this ten-year slide in inventory availability in the market? Why is there a slowdown of homes available to sell?  Why are the builders complaining they do not have enough land to build? 

Essentially, where is the stopper in the bottle or what is the hold up?  

Tim Hudak representing OREA is spearheading provincial legislation to help Realtors® grow better and stronger businesses. John Geha of LSTAR is making great steps in collaboration with 12 other boards for an advanced new MLS /Realtor.ca system that will improve customer service and business opportunities. This along with talks with institutions of higher learning like UWO and Fanshawe college, along with other levels of government in promoting our industries strength and growth going forward.

 Something does not seem to add up and where is the stopper in the bottle?  Why is London chronically, (in the last 10 or 20 years) in the lowest priced housing the top 15 cities in Canada?  This well-educated city like ours, with good paying middle-class jobs and relatively stable moderately growing economy… What can possibly be the conundrum of why this is occurring decade over decade?

From the tradeshow, it became clear through listening to individuals like, Mayor Matt Brown, that there is clearly way too much political bureaucracy, which is overburdening government costs regulations and process delays at City Hall that is killing our private sector jobs and the opportunities for new housing to come alive and to grow one of the most important industries in our city.

There needs to be a task force assembled of industry partners to analyze the problems that the city has been getting for new houses built thus creating new inventory of houses of all price ranges available to meet demand for those wanting to purchase a home in this city and region.  For example, when speaking to the industry leader’s at the AGM and discussing what the Mayor and City can do or even to ask the big questions such as how can we open up ‘real lots’ for builders to build and reduce the delay for processing new builds at City Hall and a plan to expand the housing inventory’ that would be a great place to start.

Garth Williams
www.findahomeinlondon.com (links to free listing alerts)
Text or call 519-902-0882

For more information: Ask the Professor of Real Estate on Facebook



Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s city, country or other appropriate licensing jurisdiction. This is a personal blog. The opinions expressed here represent my own and not those of my employer. 

Never Trusted the Bank? Employees Now Exposing Sales Schemes to the Public!

Many people by now have heard the report from CBC that revealed complaints from employees from 5 major banks that promote high pressure sales tactics and other antics enforced on their employees to up-sell and trick customers. These reports on overzealous selling practices to reach monthly targets is actually a direct result from shareholders. Due to low interest rates and other economic factors the pressure to reach targets promised to shareholders has driven banking employees to reach insurmountable sales requirements.

What I find the most surprising is that there are an astounding amount of people coming forward to expose these truths to the public. Bank managers have gone as far as resigning or taking stress leave. It is interesting that personal ethics, values and norms are coming to the forefront and individuals no longer want to work in these extreme sale’s environments. Many of the complaints came from employees who have to decide whether to put food on the table for their own family or try to manipulate customers into banking decisions that are not in their customer’s best interest.

So why does this topic appeal to me so much? Well, working in the real estate industry means that I see first hand what it means to work with banks. The bank’s largest cash cow is unsuspecting homeowners as purchasing a home is often one of the largest financial transactions in a person’s life. Banks have been using dubious practices for a long time. In fact, in the late 1880’s the “Corporation” was born in the US as a six-month permit to build a bridge or a road.

If you have a few minutes I cannot stress to you enough how you need to watch this YouTube video. It is incredible because this video is a young girl giving a speech in front of 600 business people. She shares the corrupt Canadian Banking System in such an eloquent and simple way. I hope she too can open your eyes to the scam that is being perpetrated on Canadians and people around the world.

YouTube Link: https://www.youtube.com/watch?v=axS-QdUkMqk


The 13-year-old girl a decade ago was right that we need to take back our money, have our own federal government bank print our own money, and kill this ridiculous interest to the banks forever!

We have to go back and rewrite the rules and the original manifesto creation of corporations and their obligations to shareholder and make sure they are re-focused in an acceptable balanced way and fit into our societal values.

Where are visionaries of Edison and Franklin? The boomers created this massive middle-class wealth through deficit financing, inflation high interest rates and mortgaging our children’s futures.  It is time we step forward and made the biggest contribution to the New World and figure out a way to transfer that wealth to our children’s power and control and not that of banks and multi international corporations.

This next millennium of the corporate growth explosion is not only affecting our neighbourhood societal values; it’s reaching into the very fabric of each family and its very survival. We need to start to value a sustainable financial future where the family structure and our mosaic of community dictates the ultimate ROI (return on investment) and not be slave to banks and their ROI to shareholders.

 

 

Garth Williams
http://www.findahomeinlondon.com (links to free listing alerts)
Text or call 519-902-0882

For more information: Ask the Professor of Real Estate on Facebook



Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s city, country or other appropriate licensing jurisdiction. This is a personal blog. The opinions expressed here represent my own and not those of my employer. 

Do YOU Dream About Getting Rich? Thought About House Flipping?

Student Testimonial:

The last time we spoke I was just in the beginning phases of my first house flip and I’m happy to report that it was a huge success! I would just like to thank you for all of the knowledge I gained from your Business of Real Estate Course at Fanshawe College. Without all of your advice and motivation to push forward and pull the trigger I may have never ended up doing it! – Franklin Vickers


Why Real Estate?

One thing you will hear me say often is that anyone can use real estate to increase their wealth. It does take some time to learn, but once you understand real estate investing and can harness the power that comes with that knowledge then you too can make money while you sleep!

Below I will share a story of one of my student’s and his journey into financial well-being. Some key points that I want you to see in his experience are as followed:

  1. Real estate gives you an incredible amount of control over your investment.
  2. Real estate gives you a lot of power to increase the value of your investment.
  3. Real estate investing can be lucrative, but it is also a lot of work!

My First Flip- by Franklin Vickers
14457457_10155250204302678_8765350981314401134_nLast winter I was enrolled in Fanshawe College taking general business courses. As I was selecting my electives the Business of Real Estate piqued my interest. Professor Garth Williams discussed a book called, “Rich Dad, Poor Dad”  that I had read and it sparked my interest in the ways you could use real estate to build wealth. Within the first few weeks of the course Professor Garth Williams made me really understand and believe if you really wanted to that anyone could get into investing in real estate.

Using all the information I learned in class as well as the models he provided us I began searching MLS looking around trying to get a feel for the housing market. One weekend I went home for a visit and my dad informed me that our neighbour was planning on moving and would likely list his house.

That weekend we went and visited my neighbour to check out the house. Having grown up near this neighbour my entire life I had an idea the house would be in rough shape. However, after going through the house… rough shape was an understatement! The entire house was severely outdated. The fact that the walls were wood paneling and there was shag carpet weren’t even the main concern.  As soon as you stepped into the house the smell was unbearable. Given that there was such a bad smell we knew the property would not market well.

After our visit, I took a couple weeks to look around on MLS (doing a CMA that I learned) to get an idea of what a fair appraisal of the property would be (I was doing a comparative market analysis, which is something that I had learned in class). I talked with a few agents and they thought the property would only list for only around $110,000. Having looked around on MLS my CMA showed me that if we could clean up the property and put new finishes in the house that it would easily market for close to $350-400k. With that knowledge, we knew that we needed to get an offer on the property before it was listed and someone else saw the opportunity.

We ended up settling on buying the property at $95k, which we knew was a pretty solid deal. After purchasing the property, I spent the majority of my summer tearing out the entire house right down to the bone structure (stud walls) and the horrible smell went with it!

13162197_10156842020915463_570756337_n13152880_10156842021145463_1924031160_n

 

 

 

 

 

 

Once the house was stripped we decided to talk to a few agents to see what they think the final value could be if we finished the renovations. We can came to a general value of the house. Then we talked to a few contractors about what they believed the renovation cost would be. We got a variety of answers. Some companies gave us numbers far above what would have made us any profit. and other companies gave us some reasonable numbers to work with. With our expected renovation costs combined with the buying price of the home and a few other expenses this would leave us with a substantial profit.

We spent a few weeks thinking it over deciding what our next move should be. My father and I have little to no experience in construction so whoever did the renovations for us would be almost completely in charge of construction. It took a few weeks of thinking it over before we started floating around the idea of selling the property to a contractor.

After talking to a local contractor about potentially taking over the project we realized that we could sell the property in renovation ready condition for a healthy profit. After a bit of negotiating back and forth we came to a price. It was at this point in the project where I was wishing I had brought on a real estate agent or someone in the industry that I could trust as a partner to help make this decision. Would it be better to carry on with the project and potentially make a larger profit or short sell the property and make a lessor profit?

After looking through my Business of Real Estate course notes I came back across the highest and best use of the property investing concept. This situation didn’t fit it perfectly, but it helped me realized that it was likely in our best interest to short sell the property and make the bulk of the profit without having to go through the entire project. We ended up settling for the aforementioned price and walked away fairly happy.

Check out my full story on YouTube.

video

Looking back on the experience I regret not bringing someone with more experience on board such as a trusted realtor or contractor type. In class we talked about COI’s (circle of trusted influencers/advisers) as someone like my professor has websites and resources that could be used to my advantage. A contractor would have definitely cut into the profits of the project, but a COI (circle of influence) adviser would not have cost me as much profit. The knowledge that I could have acquired from going through the processes would have been worth it moving forward. I recommend to anyone looking to try a similar project to look at your first one as a learning experience and try to attain as much knowledge as possible from more experienced individuals. It is so important to do your research and talk with industry experts (like realtors and contractors) and consult with trusted advisers. Overall, I am happy that I was able to make the right business decision and it was a positive experience.


Garth Williams
http://www.findahomeinlondon.net (links to free listing alerts)
Text or call 519-902-0882

For more information: Ask the Professor of Real Estate on Facebook



Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s city, country or other appropriate licensing jurisdiction. This is a personal blog. The opinions expressed here represent my own and not those of my employer. 

How Do You Get Rich?

moneyfrogWhat exactly is equity?  How does one use equity to get rich!  Can I make money while I sleep?

Bottom line: Equity growth is the ONLY way to guarantee getting rich! 

The term equity in real estate is basically taking the market value of your property and deducting the amount you still owe on the mortgage. The most difficult part of understanding equity is that it is an abstract concept and for those of us that learn by seeing or touching things we can often get confused about why equity is so important!

For example, your equity in your home does not work like cash as in you can’t take a piece of your garage and pay a gas bill with it. To turn your equity into cash you would have to sell your property or refinance your home.

We often hear the term equity when it comes to stocks or property. Stocks are generally invested with money that you already have and for most of us starting out, real estate property is mainly invested using money from the bank.

To simplify the concept here is an example:

  1. You decide to sell your house!
  2. You still owe the bank $60,000 (This does not include all the renovations and maintenance costs, which can get a bit more complex)
  3. You sell your property for $130,000
  4. You pay the bank what you owe so you now have $70,000 (profit vs equity) if you left it in the house then that IS EQUITY! If you sell the house, then that is called profit. What most people misunderstand is that the secret to becoming rich is to keep equity in the home and that it is actually a more powerful profit.

Real Estate can be one of the easiest ways to build equity and make a profit, for us starting out, or preparing for retirement, or growing your business etc. Residential or commercial real estate can increase your cash flow, generate income and make you a profit – positive monthly cash flow. Investors look at real estate as “good debt” that builds equity whereas buying a car would be considered “bad debt” as it depreciates in value and does not create positive cash flow, profit, revenues, tax benefits or equity!! (in 95% of cases). For more information on “Good” and “Bad” debt check out Warren Buffet’s  philosophy or contact me about auditing one of my classes.

Equity is the money that becomes profit when you sell.

Some Key Take Aways:

  1. Real estate increases cash flow and this is done through monthly rent or leases.
  2. Flipping houses can bring in high profits in a short time-frame.
  3. You can use debt to make money through real estate as a private lender.
  4. Equity in real estate and cash are not the same thing.

The benefit of having equity is endless!  For most of us it is not really taxed and residential family homes are never taxed. Equity can be leveraged an essentially you make money while you sleep! Equity is a key to learning how to grow wealth.

Interested in understanding equity further and how to take this hypothetical investment to reality? I love nothing more than helping my students (I teach at a London college) to graduate DEBT FREE! One of my daughter’s friends went to a private school in Cambridge for 4 years and bought a house and rented it out to 4 other students and today he is 100% student debt free! Imagine being only 25 and already building your equity instead of wallowing in student loan debt!

Garth Williams
http://www.findahomeinlondon.net
Have questions? Text or Call: 519-902-0882

For more information: Ask the Professor of Real Estate on Facebook

Chattels vs. Fixtures

chandelierFor many people entering the world of home ownership they find that there are legalities that tend to make the whole process a bit daunting. For anyone who has bought a home before, the words chattels and fixtures will ring a bell. With the sale of your home or when purchasing a home these two words will be important to you. I recently spoke with a former client who found out how the debate between what is a chattel and fixture is classified as can actually be a little more complicated than first meets the eye. It was interesting to hear about how some of the teaching I done with her when we went through the process of putting in offers gave her a foothold in helping her family relative deal with the age old debate of what classifies as a chattel and a fixture, which ultimately is up to the buyer and seller to agree in detailed writing on the offer is the easiest way, or for the courts to decide. As a professor, I know that the debate can get quite lively as students and buyer / seller clients discuss various situations.

First of all, lets go over the basic definitions:

Chattel- is consider ‘personal property’ opposed to ‘real property’ (attached to the asset) and would be any movable property such as appliances, mobile furniture, not bolted to the house etc.

Fixture– is described as any object that is firmly in place (ie fixed or bolted to the asset/home)

The challenge are things like gas stoves, water heaters, or even a gas dryer…are they mobile units if a professional gas person has to legally ‘unhook or remove’ this chattel of fixture?  Then items like the grandmothers inherited ‘antique’ chandelier…if replaced with a look alike?  Or how about key heritage items in a designated heritage home?

A good agent will always ensure that sellers make a list of inclusions and exclusions on the MLS listing (In specific details, serial numbers, photos, which piece in which rooms etc.) This protects things like perhaps a chandelier in your dining room that is a family heirloom. A chandelier is screwed into the ceiling and to a potential buyer this item would be considered a permanent fixture of the home. So are you thinking okay what is the big deal…sounds pretty straight forward? Well in the case of this client’s relative they bought a Heritage home (which, comes with its own fun set of regulations..but I will save that for another topic!) and a key feature of the home’s original character was removed. This may even effect the homes heritage designation and therefore market value going forward!?

The home was a General Store and the original cash register and extremely large counter it sat on were removed; Thus, drastically reducing the value of the Heritage home. Aside, from the complicated issues that can surround Heritage homes the debate between the buyer and seller was whether that item was considered a permanent fixture or a chattel. Seeing as the counter was so large the buyers assumed it was considered part of the house and the matching register was affixed to it. The seller is now selling those antique items for loads of money.  A simple way to avoid the situation is to include in your agreement beforehand whether some items that fall into a gray area are listed in your Agreement of Purchase & Sale. The old saying rings true: better safe than sorry.

To further protect yourself take many photos during the home inspection of yours and the home inspectors.

  1. Have the home inspector to double check items are fixed and detail as such in the report. 
  2. The final walk through inspection should detail the home is in the exact same condition as when the original purchase transaction date (this is the law)!
  3. Make sure your lawyer gets a copy early and get the lawyer to confirm your understanding. Have the lawyer send direct letters to the sellers lawyers to put them on notice of your expectations of this transaction.  Get legal advice on getting further authorities involved if needed.
  4. Basically all of these remedies should be completed on or before you pick up the keys on closing!!  If you’re not satisfied on the closing date your lawyer can put ‘a hold’ on certain amount of funds on the sale, as to the value of the work or items to be completed prior to closing.
  5. These are your last powerful options prior to going to court after the fact (transaction date).

Still trying to wrap your head around the logistics? Consider this typical example:

House One has a hot tub on the deck in their backyard (it sits right on top of deck). House Two has a hot tub below grade and the deck is built around the hot tub (the hot tub was built into the deck). Is the hot tub a chattel in both situations? Is the hot tub that is built into the deck considered a chattel? Some people would argue yes and others would say no.  

One of the most common sources of confusion in real estate is misidentifying chattels and fixtures and that is why a good buyer or selling agent will carefully lay out these details on the MLS listing.

What are your thoughts? Have you ever been in a similar situation when buying/selling a home? What was your outcome? I would love to hear from you.

 

Disclaimer: The information in this blog post (“post”) is provided for general informational purposes only, and may not reflect the current law in your jurisdiction. No information contained in this post should be construed as legal advice nor is it intended to be a substitute for legal counsel on any subject matter. No reader of this post should act or refrain from acting on the basis of any information included in, or accessible through, this Post without seeking the appropriate legal or other professional advice on the particular facts and circumstances at issue from a lawyer licensed in the recipient’s city, country or other appropriate licensing jurisdiction. This is a personal blog. The opinions expressed here represent my own and not those of my employer.

Why should you refinance now? Why should you buy now?

house-money--12619Want to save $1000 to $10,000’s of dollars?

Did you know that in the past 8 years that there have been very few major hikes in mortgage interest rates?

It looks like there will be 2 or 3 more interest rate hikes this year alone, which means if you are a buyer then you want to get pre-approved now, especially before the rates are jacked up!

With new and tougher government legislation being put into place for first time home buyers it is important that you make sure you take advantage of this small window of time to either refinance your home and keep a low interest rate or purchase a home and lock in a low interest rate.

Get in now and enjoy low interest rates while your home increases in value. As I observe the market trends and talk to potential clients, I often hear people say that they are waiting another 3-6 months to buy a home and save money etc., but with the way the market is at the moment it is better to get in now and save money over time by locking in a low interest rate before the bank rates go up.

Still hesitant to buy or sell? Give me a call today and we can look at the pros and cons of our current Real Estate Market.