For those of you who missed the seminar, here are my notes from what I gathered from the speakers.
Notes from Michael Sjerven of Yaletown Mortgage's Presentation:- lending institutions are becoming stricter with lending now
- here are what lenders are looking for:
- a good credit score (you can get great rates if you are 620 or more)
- a steady work history
- proof of income (job letter /pay stubs or 2 years of Notice of Assessment if you're self-employed)
- % of downpayment
- if you're self-employed, it's trickier to get a mortgage (typically lenders would want you to have 35% down)
- this is a great time to refinance your mortgage and take advantage of the lower interest rates if the penalty and costs outweigh interest savings
- refinancing at a lower rate also allows you to benefit from lower monthly payments and decreased amortization
- you can refinance up to 95% of the value of your home
- to qualify for mortgages on investment properties, you must offset the mortgage with rent by 80%
- CMHC premiums are higher (<20%)
- min down = 10%
- beacon score 660+
- one can only have maximum 2 primary residences insured
- if you have a large portfolio, the ratio of rent to expense must be 1.25:1
Vancouver Real Estate Market- Port Moody and West Vancouver saw the biggest drop in real estate prices (25-35%) over the last year
- Port Coquitlam saw only 3-6% drop
- Mike's forecast for the next 1-2 years, interest rate will rise and home prices will continue to see a decline
My Notes from Richard Bell of Bell Alliance's Presentation:Richard Bell has his own
online television clips on BATV. You can find more information about Real Estate and Trusts there.
On Vancouver's Real Estate Market:- market stats: in 2009, 5002 units are sold vs 5343 that are on the market
- for 2010, 3500 units are sold for construction that has been completed
- for construction that has yet begun, only 1400 units are for sale
- absorption rate in Vancouver is still high
- many pre-sold condos still around, ranging between $250-450K
- developers are now becoming more flexible in terms of for sale prices
On Legal Issues:- frequent mistakes people make is that they don't read the purchase contracts they sign and the disclosure statements - and if you don't understand what you're reading, hire a professional
- often, in the fine print in the disclosure may contain information such as "rights" given to the Developer to change types of flooring or the square footage up to 35% of what YOU initially agreed on. But if you don't catch this, then you'll be signing your agreement to this without making an amendment to protect yourself
- if you've requested for upgrades, you need to make sure that they will be done, in a timely fashion - and this will also be in a clause somewhere in the documents you've signed.
- know what the obligations are from the developers when it comes to fixing the deficiencies in your unit (also contained in your contracts and documents)
- if you're renting out your property, you're entitled to a GST rebate. You will have to pay the GST at first at time of purchase. However, you can apply for a rebate after 6 months, up to 36% (To be verified).
- when purchasing an apartment/condo unit, get copies of the minutes and read up on them - you should go as far back as reading the last 2 years
- research the property you're buying - has there been grow-ops? has an oil tank been recently removed? (this is cause for contamination and can devalue your property)
- as part of the research, do a check on the TITLE of the property - this can reveal if there has been any charges (i.e. leaky condo)
- know that in Vancouver, there are still 30-40% of leaky condos STILL NOT REPAIRED
- if you're buying an Assignment, realize that you're entitled to your deposit + INTEREST accrued on the deposit
- if you are the flipper, you need to make sure you amend that clause so that you don't have to pay the buyer interest on his/her deposit
- your assignment fee may or may not include GST - be careful of this!
- you can apply for a transitional rebate on your GST if you had paid 7% when you purchased your property year(s) ago. Today's GST is 5%
- when dealing with assignment, some contracts will say that, without the developer's consent, the contract is not assignable - so make sure you can if you're a flipper looking to assign contracts to somebody else
- know what the developers want for the assignment fee - some may charge this
- some developers will demand that the assignment goes through THEIR realtor - is that something you wouldn't mind?
- it is difficult for people to get a mortgage if they want to hold their property in a corporation. Not only that, it can cost more than $3000 in closing costs due to the amount of paperwork involved
- best way to go about this is to purchase the property under your own name, then transfer it into a trust (called a trust declaration)
- when using a real estate lawyer's office, make sure that they do ELECTRONIC FILING - this speeds up the process for you and reduces the amount of paperwork
- know where your money is sitting! is it in a PC Financial or ING? because when you are closing on a deal, it would be very difficult for you to take the money out right away. it is best to have your money in a traditional institution when you want to close on deals
- you should form a team of mortgage broker, realtor, lawyer, insurance advisor - people you trust and can rely on to do business
- finding great insurance people is probably one of the most important component to your POWER TEAM
- find insurance companies that understand strata policies
- insurance comes in three main parts: 1) you need a MASTER insurance policy to protect your unit 2) you need an OWNER policy 3) you need a TENANT policy
- you should not rely on the tenant to pay for your OWNER policy because often, the tenant will miss their payments and then you won't be insured. When they miss their payments and something happens, you are still liable because you are the Owner and it is your responsibility.
- understand the different policies and what they cover (i.e. what happens when you lose out on rental income? what happens when there are damages to the unit?)
My Notes from John Lee of Affinity Properties' Presentation:
http://www.affinityinvestments.ca/
John presented a deal in Houston, Texas.
- Minimum investment: $1000 - which buys a share in the Limited Partnership
- Returns are 15-20%/year, paid out quarterly
- Holding period is 5-6 years
- Product: 136 Garden-Style Apartment Building, 93% rented out
- Building was built in 1984
- Average Unit size is 996 sq feet (1BR 1BA, 2BR 1&1.5 BA, 2BR 2 BA available)
- Premise comes with swimming pool and ponds
- For more information, you can email Dario Lorenzo, President of Affinity Properties at dlorenzo@affinitypropertiesinc.com
