Insider Real Estate Reports Revealed!
If you have any questions about the articles discussed in this issue, please call me at 416-565-7445 . I would be glad to give you further information, or discuss your situation in depth.
--------------------------------------------------------------------------------------------------------------------------------------
Reverse Mortgages – What's the Scoop?
For many Canadians, the prospect of retirement holds more questions than it does answers. However, if you're a homeowner, the equity you've built up in your property could provide the answer that helps turn your dreams of retirement into a pleasant reality. With a reverse mortgage, you can unlock the equity that's present in your home and use it to generate an income to supplement your reduced earnings after retirement.
With a reverse mortgage, instead of paying the bank or lender, they pay you. The payment is based on a percentage of the amount of equity that's present in the home. For example, if your home is valued at $300,000 and your mortgage is paid off, you have your home's full value to work with. If you took out a reverse mortgage for 40% of your home's value – in this case, $120,000 – this amount is then set up in a fund that pays you a stated amount, usually monthly. This regular payment – or annuity – can then be used toward your living expenses while you're earning less money. There's usually an age requirement – say 60 or 62 years of age to qualify, so you should ask your lender about this.
Eventually, your home equity is also used to discharge the loan. You don't have to make loan repayments while you're living in the property, since that would defeat the whole purpose of the loan. The reverse mortgage loan doesn't come due for as long as you live in your home. You're under no obligation to sell by any given time, but when you do, the reverse mortgage loan is paid in full from out of the proceeds of your home sale.
Wondering what your home is worth today? Your Right at Home professional Mike Perrin can help you determine your home's worth in today's market and how much equity you can expect to draw on. It's all part of our full service philosophy. We want to be there to help with all your real estate needs and that goes far beyond the actual real estate transaction. Your local Right at Home Realty sales professional Mike Perrin has developed trusted contacts in the financial sector and together they can offer you creative financing solutions to help you realize your goals. Whether you're dreaming of early retirement, financing a higher education, renovating your home or even buying an income or vacation property, we can help. Why wait to make your dreams come true? Contact your Right at Home Realty professional Mike Perrin for his expert advice, and start putting your home equity to work for you!
Mike Perrin REALTOR® Sales Rep.
Right at Home Realty Brokerage Phone:416-565-7445 Website: www.torontoresale.com -----------------------------------------------------------------------------------
ALL RIGHTS RESERVED. Copyright (c) 1998-2022 TorontoResale.com
No part of this document may be reproduced in any form.
NOTICE: Although the information displayed is believed to be accurate, no warranties or representations are made of any kind.
Since this document presents general discussions and articles, always consult a quied professional regarding your specific tax, legal, financial, and personal circumstances.
|
Insider Real Estate Reports Revealed!
If you have any questions about the articles discussed in this issue, please call me at 416-565-7445. I would be glad to give you further information, or discuss your situation in depth.
In this issue
Buying an Investment Property
In today's times of low interest rates, buying real estate is becoming a very appealing option as an investment strategy. If it's done right, investing in real estate can benefit you financially in a number of ways... the property's value can appreciate over your initial purchase price, the property can generate a positive income stream in excess of your expenses, and your equity can increase as today's affordable payments are applied against your mortgage loan.
There are two primary strategies you can employ when considering an investment property. You can choose to live in a part of the property yourself, while renting out another flat or apartment in the same building. Another option would be to buy a separate unit, based solely on its investment potential. This can be a very worthwhile venture, but it has tax implications. In Canada, only the profit made buying or selling your principal residence is non-taxable. Secondary properties are normally subject to tax for any gain in price, although expenses to get the house ready for sale are often deductible. Whether it's your principal residence or not, rental income less some operating expenses is normally taxable. The first step in your planning should be to thoroughly investigate and understand the income and taxation implications of each strategy. Leverage The more leveraged you are, the greater the financial return on your down payment becomes if the value of your property increases. There are very few other investments which can be purchased with such a small percentage of your own money. For instance, let's say you acquire a second property for $100,000, with a $15,000 down payment, and during the first year that you own it, the property increases by a value of three per cent for a $3,000 gain. As a result, the return on your down payment of $15,000 is 20 per cent - $3,000 divided by $15,000. Other Investments Getting Financing Obviously, lenders will want to know whether the property will carry itself. (Is there sufficient rent to cover the mortgage payment?) Don't make the mistake of assuming that a rental income of $500 per month will carry a mortgage payment of $500 per month. Only a portion of the rent is used to pay the mortgage; the remainder must cover taxes, maintenance, vacancy, bad debt and expenses. (Many inexperienced purchasers think that owning rental properties will allow them to "get rich quickly" and when this does not happen, the owner becomes disillusioned and loses interest in the property.) Costs Interest rates charged on rental properties might also be higher because some lenders view these properties as being a higher risk. As mentioned above, the main responsibility of having a second property is being able to carry it financially. And if you're like most people, you'll probably have to rent it to someone as a result. This is also a great deal of responsibility because you will have to maintain the property in addition to your own principal residence, and you'll be responsible for finding tenants who you trust and feel comfortable with. Some parents with grown children ready to go off to university or college choose to purchase secondary properties for their offspring to live in while they attend school. This gives them an excellent investment and they are assured that the occupants will take good care of the home Once you've decided your strategy, it's time to start planning on the return you want on your investment. Your Right at Home real estate professional Mike Perrin can help you "crunch the numbers" by advising you how much you can afford to pay, offering mortgage financing options, counseling you on what range of payments the rental market will bear, estimating operating expenses, and much more. Once you know what you can afford, it's time to start looking. You've heard the old saying that the three most important things when buying a home are: location, location, location...and this is even truer when choosing an investment property. Not only are you looking for a home that will appreciate in value, you also want a home that will be appealing to renters for an extended period of time. That means you want a location that's handy to public transit routes, and is easily accessible to major amenities. Your Right at Home real estate professional can help you identify neighbourhoods with good investment property potential. Make sure that your real estate professional clearly understands your intention to rent out a portion of the home. Many homes for sale will advertise that they have an in-law apartment, or granny flat. This usually means that the space functions as a separate unit, but the property is not zoned to use it as a legal income apartment. You can rely on your Right at Home real estate professional Mike Perrin to advise you on zoning, and safety requirements before you make that offer. |
Mike Perrin REALTOR® Sales Rep.
Right at Home Realty Brokerage
Phone:416-565-7445
Website: www.torontoresale.com
----------------------------------------------------------------
ALL RIGHTS RESERVED. Copyright (c) 1998-2022 TorontoResale.com
No part of this document may be reproduced in any form.
NOTICE: Although the information displayed is believed to be accurate, no warranties or representations are made of any kind.
Since this document presents general discussions and articles, always consult a qualified professional regarding your specific tax, legal, financial, and personal circumstances.
Insider Real Estate Reports Revealed!
If you have any questions about the articles discussed in this issue, please call me at 416-565-7445. I would be glad to give you further information, or discuss your situation in depth.
This Issue
Freehold vs. Condo - What's right for you? |
Many Canadians looking to buy property today are considering the purchase of a condominium. Condos can be a great choice for many people, including first time buyers looking to get into the market and build some equity. A condo unit can be a good starting point, since it is usually less expensive to own and carry than a traditional house. Condos can also be the right decision for people making their choice for lifestyle reasons. These buyers primarily choose this type of home because of the freedom from maintenance and upkeep it affords.
Whatever your reasons for considering a condo, it's important you start out by knowing what you're buying into. Some people don't have a clear understanding of what a condominium really is. They use the term "condo" as synonymous with "apartment". In actuality, "condo" refers to the form of ownership and has nothing to do with the physical characteristics of the unit. In fact, a condo doesn't have to be an apartment at all. A condo can also be a flat, a townhouse, a link home, or any type of multi-unit residential dwelling or even a commercial property. What defines it as a condo is the form of ownership under which the unit is held. Condominium refers to the ownership of a specified space or unit in a multiple unit dwelling, plus shared ownership of areas used jointly with other owners. These areas, or common elements, can take the form of a swimming pool, elevators, laundry room, exercise room, front lobby, security station, etc. The cost of operating and maintaining these common areas is shared jointly by the individual unit owners in the form of regular maintenance payments, usually paid monthly. The cost is determined by the condominium corporation, a governing body made up of individual unit owners. Since this is a self-governing process, there is a certain degree of control that maintenance costs are affordable. Condominium ownership offers many of the advantages of ownership, such as title, privacy within your individual unit and the potential to build equity. It also eliminates many disadvantages of home ownership, such as snow removal, lawn care and the unwanted financial burden of single-handedly dealing with major repairs for such roof or furnace replacement. With a condo, you have the peace of mind that your property is being well maintained, with no hassle or surprises. Freehold units, on the other hand, offer other advantages over the condominium option. First of all, you are responsible for your own upkeep and maintenance costs, so you have more control over these expenses. If you are buying a relatively new unit, where major repairs and expenses can be minimal in the first several years, this can potentially give you an opportunity to pay down your mortgage quickly and build your personal equity. The downside is you have to handle all the work of either doing the labour or contracting it out. And when large expenses arise, you're on the hook all by yourself. There's a lot to consider. Talk to your Right at Home Realty professional Mike Perrin and get expert advice before you act. |
Mike Perrin REALTOR® Sales Rep.
Right at Home Realty Brokerage
Phone:416-565-7445
Website: www.torontoresale.com
----------------------------------------------------------------
ALL RIGHTS RESERVED. Copyright (c) 1998-2022 TorontoResale.com
No part of this document may be reproduced in any form.
NOTICE: Although the information displayed is believed to be accurate, no warranties or representations are made of any kind.
Since this document presents general discussions and articles, always consult a qualified professional regarding your specific tax, legal, financial, and personal circumstances.
Insider Real Estate Reports Revealed!
If you have any questions about the articles discussed in this issue, please call me at 416-565-7445 or I'll be glad to give you further information, or discuss your situation in depth.
This Issue
Downsizing in a Strong Market
Canada's population is aging; it's a fact, plain and simple. The latest statistics show that a greater than ever portion of the Canadian population is made up of people over 50. There are a number of reasons why this “graying phenomenon” is taking place, but key factors include the fact that people are living longer. Perhaps the most significant reason is that the people who made up the population surge of the baby boomer generation are now reaching middle age. This shift in demographics is having an impact on several economic fronts, not the least of which is the real estate market.
As more and more people become “empty nesters” or prepare for early retirement, you can expect to see an increased interest in the downsizing market. This time around, however, it will be downsizing with a difference. The “empty nesters” we will start to see moving into the future will be a completely different kind of homebuyer than in years past. Middle-aged people starting to transition into retirement used to be focused on two financial goals when downsizing. They wanted to reduce their living expenses to conform to a significantly reduced retirement income and also free up some of the capital tied up in their home's equity to generate additional income for living expenses. While these two goals are still part of the plan for many downsizing homebuyers, there is an increasing number that are not making the move for primarily financial reasons.
Over 9 million baby boomers have either inherited or are poised to inherit their parents' wealth. This represents a transfer of asset wealth of billions of dollars that has been unprecedented in human history. It means that for many the choice to downsize is a decision being made for lifestyle rather than monetary reasons. It also means that what were once general assumptions about the downsizing market will no longer be strictly held true.
When downsizing also means downgrading – selling one home to buy a smaller one of significantly lesser value – homeowners are highly motivated to list their home in today's strong market. They can expect to realize a good selling price for their existing home, as well as capitalize on a relatively large surplus of cash after a smaller home is bought from the proceeds. However, a declining market is not good news for those who want to downsize to free up capital. In this situation, a declining market will typically result in a corresponding decrease in the surplus capital generated from the transaction. For example, if the home selling and buying prices are reduced by, say 10% due to a falling market, a cash surplus of $100,000 will also reduce to only net the homeowner $90,000. If you're planning on downsizing, a strong market is the most advantageous time to make your move.
However, the new demographics also show that a new kind of downsizing homeowner is emerging. These fortunate individuals want to downsize for the freedom and flexibility it affords their lifestyle, rather than as a financial necessity. These people are often looking to down size , but upgrade their home, looking for high demand locations and premium features. In situations where generating a cash surplus may be a minor consideration, virtually any market can present a good time to make your move. Talk to your Right at Home professional Mike Perrin to find out more about making your home ownership dreams come true.
Mike Perrin REALTOR® Sales Rep.
Right at Home Realty Brokerage
Phone:416-565-7445
Website: www.torontoresale.com
----------------------------------------------------------------
ALL RIGHTS RESERVED. Copyright (c) 1998-2022 TorontoResale.com
No part of this document may be reproduced in any form.
NOTICE: Although the information displayed is believed to be accurate, no warranties or representations are made of any kind.
Since this document presents general discussions and articles, always consult a qualified professional regarding your specific tax, legal, financial, and personal circumstances.