1. Check references  before a home renovation

Before your home renovation, ask any contractor how long they have been in business and for a list of prior customers and then call each one to make sure that the work was completed on time and on budget. Go out and take a look at the work that was done so you can judge the workmanship yourself. You may also consider doing a credit check on the contractor as well. Also make sure that the contractor is licensed and that they carry insurance should any accident occur, causing injury to any worker or damage to your property or any neighbour’s property.

2. Will the contractor be obtaining a building permit?

In most renovations, at least one permit is needed, whether electrical or building  so be extremely wary of anyone who tells you that they do not need any permits. By applying for and obtaining a proper permit in advance, you can be sure that the City will do a proper inspection when the work is completed to make sure that everything was built correctly. This will be important for any potential buyer if you are planning to sell after the renovations are complete. In my experience, title insurance companies will always question when purchase prices dramatically increase and if they hear that there was a home renovation, they will immediately ask for proof of permits. If these are not produced, then it is unlikely that any future buyer would be insured if the work turned out to be faulty and the City later required major repairs.

3. No cash deals

Contractors or owners may offer to do the work for cash in order to obtain a discount. Besides this being against the law, you will have no proof of payment if the work is poorly done and problems arise later. You will also likely not have a written contract that you can point to for assistance.

4. Tie payments to work milestones

Do not pay more than 10% as a down payment, and then make sure that you do not pay out more than the work completed at different intervals. As explained to me by construction project manager and home inspector Brian Edwards of Westbrook Building Inspection Services, make sure that the contractor also provides you with proof at every stage that any sub-trade that is being used has also been paid for the work done.

5. Make sure everything is clear and in writing

It goes without saying that you must have a written contract setting out clearly the work that is being done, everything that is to be included and the stages of payment. If you expect a certain type of handle for your cabinets, get it in writing so that there is no confusion. If there any appliances, include the brand name, model number and colour. The contractor should restore any damage to the driveway or landscaping as a result of the work completed. If you are getting a warranty, how long will it be for and what will it cover. If there are any warranties being supplied by sub-trades, these should also be transferred to you upon completion of the work. Consider an arbitration clause to solve any disputes, to avoid costly legal proceedings.

If you are properly prepared before you hire anyone to do a home renovation, you can get it done with reduced stress for you and your family.

— Credits for this article go to MARK WEISLEDER Real Estate Lawyer, Author, Speaker

First time real estate investors are often very confused with the process. Here are some helpful tips to guide your buying decision.

1. Real estate investors usually do not purchase the property without a loan. First Visit with a mortgage broker or your bank to determine how much money you can afford to borrow responsibly for your investment.

2. Look for properties that generate a positive cash flow. What this means is that the rent that you receive from tenants should be enough to pay your mortgage payment, property taxes, utilities and insurance bills. Budget an additional ten percent on your overall payments to pay for minor repairs that will invariably arise. Currently this is very difficult to find in the Toronto area. Do not be afraid to expand your search to smaller communities, where you will be able to find more properties that match your search criteria.

3. Use an experienced local real estate agent who also invests in real estate themselves. Investors learn about the pitfalls only through first-hand experience, both good and bad, and you want that experience working for you as well.

4. Have any property inspected by a professional home inspector. In addition, find a contractor who you can trust to give you the right advice for any minor repairs or renovations that may be required, especially for older properties, in order to add the most value to your investment.

5. Consult with your accountant and lawyer as to how you will take ownership of the property. There are some benefits in taking title in the name of a limited company, in order to protect yourself against personal liability should someone get hurt on the property and for other tax planning purposes. However, on the other hand, you will also have to pay about $1,000 in incorporation fees and have to file a separate tax return each year for your company.

6. Keep proper records of income and expenses for your investment property. Do not mingle these with your personal bank account as it will become difficult to properly trace this when you have to file a tax return at the end of the year, regardless whether you own the investment in your personal name or in a company name.

7. If you are buying with a partner, make sure you have a proper partnership or joint venture agreement to protect both of you should things not work out as planned. As real estate investors, provisions should be made if one of the partners wants to sell and the other one doesn’t, one partner is not paying their share of expenses or what happens if one of the partners dies.

8. Hire an experienced property manager to assist you in finding suitable tenants and dealing with any ongoing maintenance, repairs or other complaints by tenants. You do not wish to be woken up in the middle of the night to handle emergency repairs. Budget an additional $100 per month for this service.

9. Be careful not to buy and sell properties quickly. The Canada Revenue Agency may view this activity as business income. This means that you will have to pay tax on any profit you make on your investment. It is preferable to buy properties for the long term, rent them out and use your positive cash flow to reduce the amount of your mortgage owing, building equity in your property. If you then sell years later for a profit, it will likely be classified as a capital gain and thus one half of your gain will be tax free.

10. Don’t be afraid to walk away if the deal does not work for you, no matter how much time you may have invested in the property.

Be prepared before buying any real estate investment.

— Credits for this article go to MARK WEISLEDER Real Estate Lawyer, Author, Speaker

Billions spent in new construction, renovation, and infill over the past decade have contributed to a serious upswing in the calibre of the Canadian housing stock, propping up residential average price in the country’s major centres, according to a report released today by RE/MAX.

Since 2000, the value of a Canadian home has doubled, rising from $163,951 to $339,030 in 2010. Nowhere has the upswing been better captured than in both the value of residential building permits issued nationally between 2000 and 2010—at $340 billion—and the estimated $450 billion spent in renovation. The impact of these two forces alone has fuelled the Canadian residential real estate market – as well as the construction industry—for more than 10 years.

As a result, investment in the Canadian housing stock is at an all-time high in the 16 Canadian residential real estate markets examined in the RE/MAX Housing Evolution Report. Higher quality Canadian housing translated into extraordinary price appreciation across the country—with 62 per cent (10 markets) experiencing increases in excess of 100 per cent since 2000.

“While a number of external variables were also behind the exceptional gains, revitalization—amid an aging housing stock—and newer construction are largely underestimated factors supporting Canadian housing values,” says Michael Polzler, Executive Vice President, RE/MAX Ontario-Atlantic Canada. “The trend is expected to continue for years to come as investment in residential real estate through renovation, infill, and redevelopment ramps up across the country. City planners, builders, developers, and homeowners have only just begun.”

The report found that the unprecedented sum funneled into housing has effectively changed the landscape of Canada’s major centres. New home construction has advanced suburban sprawl, giving rise to new sought-after pockets in virtually every centre across the board.

Infill continues to redefine neighbourhoods, particularly in areas where the value of existing structures have not kept pace with escalating land values. The trend was evident in all centres, but had the greatest impact in large metropolitan cities such as Toronto and Vancouver. Bungalows on large lots are prime targets, making way for custom builds that transform working-class subdivisions of yesteryear into up-and-coming upper-end pockets. Infill is also maximizing land potential, often replacing one, two or several tired structures with a block of town homes or mixed-use residential, even high-rise apartments.

“Renovation has also had a tremendous impact on housing throughout the decade, so much so that it’s emerged as, arguably, Canada’s next national past time,” says Polzler. “Residential renovation spending has been gaining momentum year-over-year since the early part of the decade and now exceeds $60 billion annually.”

The trend has not been limited to single-family homes—although that activity has been nothing short of remarkable. Canada’s cities have also mounted ambitious renewal of their own, particularly in the heart of most major centres—the urban core. Strategic smart growth plans are altering cityscapes, challenging our concepts and perceptions—including our purchasing patterns—and creating partnerships that are working to escalate our markets to world-class status. Non-residential construction, including infrastructure spending has had a positive secondary impact, in turn boosting spending on the residential side.

“The past decade has also marked the rise of the condominium—moreover, its undeniable acceptance as an attractive option as opposed to a secondary compromise,” says Polzler. “Toronto, for example, has become the largest condominium market in North America. Yet, it isn’t just gaining traction in large centres like Toronto, Ottawa and Vancouver, but also in smaller cities such as Kelowna, London and Halifax—to name a few. Running the gamut from entry-level units to upscale, luxury suites, condominiums have gained widespread appeal with aging boomers, looking for lifestyle and low maintenance; young professionals, attracted to trendy locales; and first-time buyers, looking to get their foot in the door to homeownership.”

Condominiums have changed the urban landscape, driving residential neighbourhoods up, instead of out, and bringing to market a bevy of new options from mixed-use residential, live-work studios, lofts, town homes, and condo bungalows. Town homes, in particular, have experienced a serious rise in popularity, bridging the gap for empty-nesters and retirees not yet ready for apartment-style living.

With construction of rental product few and far between in many Canadian centres, it’s no surprise that investors have also been particularly active in the condominium market, especially in college/university towns or where vacancy rates remain tight.

Redevelopment holds the greatest potential for cities on the cusp of exciting rejuvenation. While former brown fields can present challenges, many have opened up and revitalized entire areas. The Barrel Yards Development in Kitchener-Waterloo, for example, is expected to change stagnant industrial land into a bustling residential, commercial and retail hub. Past successful transformations include Garrison Woods in Calgary, the Hamilton Beaches in Hamilton and Bishop’s Landing in Halifax, with countless projects planned nationwide in the years to come. Conversions also continue to breathe new life into existing structures with good bones, while supporting the move to higher-density and the introduction of affordable options.

“Greater sustainability overall, keeping the urban lifestyle attainable, livable and attractive at all price points, depends on redevelopment,” explains Polzler.

Lastly, population growth has been a key factor making housing evolution possible. Since 2000, Canada’s population has experienced double-digit growth of 11 per cent. By 2031, over 42 million people are expected to call Canada home.

“There’s no question that population growth will continue to support investment, propping revitalization and new construction in the years ahead, and by extension raising the bar and prices in real estate markets even further,” says Polzler.

RE/MAX is a leader real estate organization and Canadian housing with over 18,500 sales associates situated throughout its more than 700 independently-owned and operated offices in Canada. The RE/MAX network, now in its 38th year, is a global real estate system operating in 80 countries, with over 6,200 independently-owned offices and over 89,000 member sales associates. RE/MAX realtors lead the industry in professional designations, experience and production while providing real estate services in residential, commercial, referral, and asset management. For more information, visit: www.remax.ca.

Insurance

Title insurance is growing in popularity in Canada. But what is it exactly? Should you get it? Do you need it? Whether title insurance is right for you is something you should discuss with your lawyer, as it depends on the circumstances of your transaction. This article will provide you with some background information about title insurance to help you make an informed decision.

Title to Property

Title is the legal term for ownership of property. Buyers want “good and marketable” title to a property – good title means title appropriate for the buyer’s purposes; marketable title means title the buyer can convey to someone else. Prior to closing, public records are “searched” to determine the previous ownership of the property, as well as prior dealings related to it.

The search might reveal, for example, existing mortgages, liens for outstanding taxes, utility charges, etc., registered against the property. At closing the buyer expects property that is free of such claims, so normally they must be cleared up before closing. For example, the seller’s mortgage will be discharged and outstanding monetary expenses (such as taxes and utility charges) will be paid for (or adjusted for) at closing.

Sometimes problems (or defects) regarding title are not discovered before closing, or are not remedied before closing. Such defects can make the property less marketable when the buyer subsequently sells and, depending on the nature of the problem, can also cost money to remedy. For example, the survey might have failed to show that a dock and boathouse built on a river adjoining a vacation property was built without permission.

The buyer of the property could be out-of-pocket if he is later forced to remove the dock and boathouse. Or, the property might have been conveyed to a previous owner fraudulently, in which case there is the risk that the real owner may come forward at some point and demand their rights with respect to the property.

Who is Protected With Title Insurance?

Title insurance policies can be issued in favor of a purchaser (on new/resale homes, condos and vacation properties), a lender, or both the purchaser and lender. Lenders will sometimes require title insurance as a condition of making the loan. Title insurance protects purchasers and/or lenders against loss or damage sustained if a claim that is covered under the terms of the policy is made.

Types of risks that are usually covered under a title insurance policy include: survey irregularities; forced removal of existing structures; claims due to fraud, forgery or duress; unregistered easements and rights of-way; lack of pedestrian or vehicular access to the property; work orders; zoning and set back non-compliance or deficiencies; etc. For a risk to be covered, generally it has to have existed as of the date of the policy. As with any type of insurance policy, certain types of risks might not be covered, for example, native land claims and environmental hazards are normally excluded. Be sure to discuss with your lawyer what risks are covered and what are excluded.

The insured purchaser is indemnified for actual loss of damage sustained up to the amount of the policy, which is based on the purchase price. As well, some policies have inflation coverage, which means that if the fair market value of the property increases, the policy amount will also increase (up to a set maximum).

How Long is the Insurance Coverage?

In the case of title insurance covering the purchaser, title insurance remains in effect as long as the insured purchaser has title to the land. Some policies also protect those who received title as a result of the purchaser’s death, or certain family members (e.g., a spouse or children) to whom the property may have been transferred for a nominal consideration.

In the case of title insurance covering a lender, the policy remains in effect as long as the mortgage remains on title. A lender covered under a title insurance policy is insured in the event the lender realizes on its security and suffers actual loss or damage with respect to a risk covered under the policy. Lenders are usually covered up to the principal amount of the mortgage.

The premium for title insurance is paid once (at the time of purchase). Generally speaking, in Canada the purchaser of the property pays for the title insurance, though there can be situations where the seller pays for it. Some policies automatically cover both the purchaser and lender; others will cover both for a small additional fee.

Protection and Peace of Mind

Title insurance can help ensure that a closing is not delayed due to defects in title. And, if an issue relating to title arises with respect to a risk covered under the policy, the title insurance covers the legal fees and expenses associated with defending the insured’s title and pays in the event of loss

Grant from Government of Ontario, Canada to First time home buyers

I am a first time home buyer in Ontario Canada BUT this is not a NEW home, this is Resale/used or old home , will I still get some Grant from Government ?
YES !!

Land Transfer Tax Refund for First-Time Home Buyers in Ontario, Canada

First-time homebuyers may be eligible for a refund of all or part of the tax.

• For agreements of purchase and sale entered into before December 14, 2007, the refund only applies on the purchase of a newly constructed home.
• For agreements of purchase and sale entered into after December 13, 2007, the refund applies to all homes, whether newly constructed or resale.

How much is the Refund?

The maximum amount of the refund is $2,000. If the refund is claimed at time of registration, it may offset the land transfer tax ordinarily payable. If not claimed at registration, the refund may be claimed directly from the Ministry of Revenue. No interest is paid on this refund.

Who Qualifies?

To claim a refund, you:

• must be at least 18 years of age;
• must occupy the home as your principal residence within 9 months of after the date of transfer; and
• cannot have owned a home, or an interest in a home, anywhere in the world.

In addition:

• your spouse cannot have owned a home, or an interest in a home, anywhere in the world while being your spouse; and in the case of a newly constructed home, you must be entitled to a Tarion New Home Warranty.

How Do I Apply?

Qualifying taxpayers may claim an immediate refund at time of registration in one of two ways:

• If registering electronically, by completing the required statements under the “explanation” tab of the electronic affidavit.
• If registering on paper, by filing an Ontario Land Transfer Tax Refund Affidavit For First-Time Purchasers of Eligible Homes at the Land Registry Office.

What is the application deadline?

• Applications for a refund must be made within 18 months after the date of the transfer.

If application was not made at registration and the tax was paid, qualified purchasers may apply for a refund by completing an Ontario Land Transfer Tax Refund Affidavit For First-Time Purchasers of Eligible Homes and send it to the ministry.

For full details on the refund program, please see Ontario Tax Bulletin LTT 1-2008 Land Transfer Tax Refunds for First-Time Homebuyers.

HST real estate laws on newly constructed properties can be misleading. Inevitably, an offer to purchase an assignment property by a buyer’s sales representative will state that, if applicable, HST is included in the purchase price (as we typically see in any offer to buy resale residential properties).  According to the Canada Revenue Agency (CRA) , there are sometimes situations where HST will, in fact, be applicable and payable by the assignor/seller who is assigning a contract to buy a newly constructed unit/residence.

HST real estate laws state that when applicable, HST will be payable by the Assignor (buyer #1 from the builder) on the portion of the assignment sale price related to the return of deposits (paid to the builder by the assignor/seller) PLUS the gross profit (the difference between the builder price and the assignment price).

Believe it or not, whether or not HST is applicable to an assignment depends on the original intention/the plan (in the mind of the assignor/seller) when the offer to purchase was made with the builder.  If the PRIMARY PURPOSE by the assignor/seller in buying from the builder was to profit by assigning/flipping the deal, THEN HST IS APPLICABLE to the assignment/sale.
On the other hand, if an individual originally signed an offer to purchase a condo apartment (to be newly constructed by a builder) with the primary intention that the unit bought would be used (for example) by:

(1) a son or daughter when attending University/College, or
(2) a parent who wanted or needed a place to reside, or
(3) a spouse who planned to separate from the family, or
(4) the buyer(s) who intended to downsize, or
(5) the buyer(s) who intended to use the apartment when working downtown or when visiting Toronto
(6) a son or daughter who was engaged to be married, or
(7) buyer wanted to move closer to a workplace OR to relocate a place of work

THEN the Canada Revenue Agency would typically conclude that HST is not applicable on the assignment/sale if (at a later date) a reasonable change in circumstance resulted in an assignment/sale of the unit if, for example,

(1) such son/daughter chose not to go to University/College, or
(2) the buyer’s mom or dad no longer could use or wanted to use such apartment as a residence
(due to their death or needs a retirement home), or
(3) intention to separate from family changed, or
(4) decision was made later not to downsize, or
(5) the buyer(s) reasonably changed his/their minds about such intended use, or
(6) the engaged son or daughter decided not to marry or decided to live elsewhere, or
(7) the workplace location changed or the intended relocation of workplace changed

The question is whether the facts or circumstances would indicate to the Canada Revenue Agency that the condo was originally being acquired from the builder for the primary purpose of personal use versus buying the unit for only a potential profit with the intention of assigning or flipping the deal.  If a buyer purchases two or more new condo units or has a corporation purchase a residential unit, it is more difficult (perhaps impossible) to try to explain to the Canada Revenue Agency that the primary purpose in buying from the builder was to acquire the unit for personal use as a residence for an immediate family member.

For a more clear and specific advise on HST real estate laws in Canada, readers are advised to seek legal advice from a seasoned Real Estate or Tax Lawyer.

St. Lawrence Market has been named the world’s best food market by National Geographic.

The famous Toronto market beat out well-known food markets like the Union Square Greenmarket in New York and Cours Saleya in Nice. Take that world! St. Lawrence is numero uno…

Here’s what the magazine had to say about every Torontonians go-to place for fresh fish, produce and peameal bacon sandwiches:

“This farmers market emporium has operated since 1803, when it cohabited with Toronto’s city hall. Redeveloped between the 1970s and 1990s after long neglect, the area’s mix of homes and businesses showcases urban regeneration. More than 120 retailers dispense everything from seafood to coffee.”

A little international recognition goes a long way and we think this is a pretty great selling point for all the awesome toronto condo projects that are currently under construction or in preconstruction in the area.

We compiled a short list of our favourite new condominium developments that are only a short walk away from the St. Lawrence Market…

• Backstage by Castlepoint Realty, Cityzen and Fernbrook Homes
• 88 Scott Street Condos by Concert
• Sixty 60 Colborne Street, Toronto
• Post House by Alterra
• Berczy

Obviously there are many benefits of having the Market right at your doorstep, but the one we think we’d appreciate most is not having to wake up absurdly early on Saturday to get the freshest of the fresh produce and meat.

Just gimme that countryside! It’s one place where “flipping” still works – in fact, where it increasingly works, according to a new report, charting bidding wars for Canadian farmland. Buy agriculture, since it is on the rise!

“Competition has become a market reality, with traditional growers and cattle ranchers now vying for land with hobby/gentleman farmers,” reads the farm edition of the 2012 Re/Max Market Trends report, referencing B.C.’s Peace River North and other agricultural hotspots. “Even unused, the land is viewed as smart investment.”

While the report is particularly bullish on western agri-lands, that rosy picture extends across much of the rest of the country, according to real estate analysts tracking supply and demand. Some of those areas have seen as much as a 50-per-cent value grow over the last year, as agricultural lands dwindle and both large scale as well as mom-and-pop operations jockey for arable land.

That battle is only compounded by urban encroachment. It means developers are just as anxious to get their hands on land for subdivisions, further encouraging bidding wars to buy agriculture.

Still, for investors buying and then selling as a group, the customers are just as likely to find farmers willing to pay top dollar for the land, as crop prices push skyward, fuelled by similar gains in the cost of wheat, corn and barley. The push to biofuels has also played a part, say analysts anticipating further price growth as interest rates remain low.
—- November, 2012 Toronto, ON Canada.

When looking at buying vs renting, let’s take an example of a property on Bay Street in Toronto. A junior one- bedroom with locker and no parking on is sold for $270,000 in July of 2012; or it can be rented for $1600. Buyer put down 5% ($13,500) and has a five year fixed rate mortgage of $256,500 at 3.09%.

So why do the experts recommend renting over buying right now? That’s because renting does have a lower monthly cash outlay. In order to own this property, it requires a mortgage payment of $1259 which includes mortgage insurance + condo fees of $375 (higher than most because all utilities are included) + property taxes of $121, which equals to $1755/month; or $155 more per month than if you were to rent!

Now let’s study what happens after five years. The Renter invests the difference (they never do, but let’s believe they will) every month and earns an interest rate of 2% after tax (probably high). After five years, the Renter would have accumulated just under $10,000!

Now let’s look at what happens to the Buyer? After five years, the home Buyer would have repaid $30,850 of principal on the mortgage. If you assume that the property increased in value by 3% per year (the historical average for real estate), the property would then be worth $313,000. The Buyer would then have increased their net worth by $73,850. If in case the Buyer had borrowed the down payment of $13,500 from family and repaid it, the net gain would still be $60,350. Even if the property never increases in value, the Home Buyer is still the clear winner!

The buying vs renting answer is thus answered! Where would YOU want to be? Have a possible saving of $10,000 from being the Renter or a ‘tax free’ $60,000 in assets from being the Home Buyer !!

Calculator : Do your easy math here to find out whether to Buy or Rent in Toronto – Mississauga area market.

There are many misunderstandings about credit scores out there. Some people believe that they don’t have a credit score and many people think their credit scores don’t really matter. These sorts of misunderstandings can hurt your chances at getting some jobs, at good interest rates, and even your chances of getting an apartment or a house.
So, if you have a bank account and bills, then you have a credit score, and your credit score matters more than you might think. Your credit score can be called by multiple names, including a credit risk rating, a FICO score, a credit rating, a FICO rating, or a credit risk score. All of these terms mean the same thing, it’s the three-digit number that lets the lenders get an idea of how likely you will be able to repay your bills.
Every time you apply for credit, a job that requires you to handle money, or even apply for some more exclusive types of apartment living, your credit score will be checked.
Your credit score is grounded on your past financial responsibilities, past payments and credit, and it offers potential lenders with a quick snapshot of your current financial state and your past repayment habits.
Your credit score basically lets the lenders know quickly how much of a credit risk you are! Based on your credit score, lenders decide whether to trust you financially – and give you better rates for a loan or not.
Now moving on to the topic of weather your credit rating goes down when its checked multiple times or if the affect is very marginal.
When your credit is pulled or looked at by a lender to extend a line of credit, they perform a “hard pull” (regular inquiry) which shows them your full credit report, and in most cases, your credit score. An inquiry entry is placed on your credit file, from the bureau(s) they pull from.

Your score can be affected by these hard pulls, but by a very marginal amount. There is NO set amount of points that it goes down and it does not get too affected.

When you’re shopping for an auto loan, and more importantly for a home loan, you are granted a grace period of time to apply for multiple lines of credit/offers from numerous lenders, and only getting docked for one (1) hard pull against your overall score. However, each inquiry will still show on your credit report. This reason alone, allows you to ‘shop around’ for the best deal without affecting your credit rating too much.

For a home mortgage in Ontario, Canada, you have a 30-day period from the time of your first inquiry from a financial lender, to apply for as many home loans as you would like, and it to have an overall combined effect of one(1) pull towards your score. The inquiries will show up on your report, and (possibly) lower your score regardless of if you’re extended a line of credit or not.

Let me repeat, there is NO set amount of points that any single hard pull takes. It is all part of a very large and a conditional formula to each credit reporting bureau. What they are likely pulling, is your FICO score, which bases its number off your Equifax credit report.
What you should take away from this article is, pay your bills on time and be financially responsible so that lenders are able to trust you which will help you purchase your next Dream Home in Ontario, Canada.