Posts in Kijiji Real Estate

5 Tips for the First Time Home Buyer

With mortgage rates possibly headed even lower and property values skyrocketing in some parts of the country, many are considering if now the time to take the plunge into home ownership is now.

1st Time Home Buyers

Think with your head, not your heart. Buying a home is emotional, we get it – but, ideally, you should treat it like you would any other investment to get the most out of the transaction. It is easy to get wrapped up in the excitement and be so afraid of losing out that you are willing to overlook certain things, or skip certain steps such as the home inspection (don’t let anyone pressure you into buying without a home inspection clause, and don’t use the inspector recommended by the selling agent).

Crunch the numbers (independently). So you are pre-approved for a mortgage? Great – that is a good way to show sellers you are serious, and to get an idea of what the bank will give you. Don’t make the mistake of trusting what the bank says you can afford. Remember, selling mortgages is big business for them, and they are trying to sell you on using their products. They will likely pre-approve you for an amount higher than what you can actually afford, as they don’t take into account your daycare costs, the price of your daily commute, what it will cost to make home repairs, and all those other day to day living expenses. Make sure the amount of mortgage you are signing on for is something you can realistically carry, and do some additional calculations for in case interest rates go up. You don’t want to be forced to sell if interest rates rise. Don’t forget to consider different payment schedules and amortization periods. A shorter amortization period or accelerated biweekly payments rather than monthly could save you thousands of dollars in the long run. See how much you could save by using the federal government’s home buyers plan (up to $25000 for an individual, or $50000 for a couple can be borrowed from RRSPs). Does it make sense to use for you?

Remember the invisible costs. Closing costs, land transfer taxes, moving, home repair and renovation costs, and real estate lawyer fees all need to be factored in to the total cost of owning a home. Make sure you have plenty of room in your budget.

Buy at the right time for you and your family, not for interest rates. It is tempting to rush to take advantage of a great rate, but if you end up buying before you can afford it, you might not be as happy in your house as you are imagining yourself to be. Being house poor is no fun, so make sure you have a good down payment and you are comfortable taking on the extra commute, payments, or responsibility of making all the fixes yourself at this point in your life. Do you know your credit score? If it is low, you would save money by improving your credit worthiness before buying a home, and rushing might not make sense.

Don’t furnish your home on credit. Once you move into a big house, after spending all your extra cash on closing fees and moving, it can be tempting to furnish your house with a “buy now, pay later” arrangement. Don’t do it – wait until you have the money for the furniture you want, and save money by buying used furniture on your local Kijiji.

Selling Your Home By Owner: Is it a Smart Choice?

Thinking about selling your house? Looking at the commissions that real estate agents charge on every sale makes selling your home by owner look like a great option, but is it right for you? A lot of what traditional real estate agents do is invisible. Selling your home by owner might be a great way to save yourself major cash – or it might be a gigantic headache and far more trouble than the savings on commission is worth. Whether or not it is a good idea depends on whether you are equipped to do the work. Not everyone is, and some give up midway through the process and hire a real estate agent anyway. For those who are able to pull off the process well, it is a great way to save some of the huge costs associated with moving. How do you know if selling your home yourself is a good idea for you?

house for sale by owner

You are comfortable negotiating. Buying or selling a house is the biggest transaction of a lifetime for most people, and the negotiations can drag on and get pretty complex. Buyers might have all sorts of strange demands, and if you go into the transaction alone, you will need to be educated on what demands are standard, and what are unreasonable. They will also be looking to save money on the list price, so if you are selling your home by owner, make sure you are comfortable haggling and don’t take low offers personally. If you are not comfortable negotiating prices, it will be worth it to pay a professional to do so on your behalf. If you don’t negotiate often, but want to sell your home by owner anyway, practise often with smaller items before listing your home. Learn how to negotiate without causing offense.

You are comfortable touring strangers through your house. Not everyone is, and that is ok. Buyers might criticize your décor choices, talk about things they would change, walls they would knock down, and do things like test your taps, inspect your back basement, or flush your toilets. You’ll have to act professional and like none of those things get under your skin so as not to scare off the buyers or sour the transaction before it starts.

You have the time and a flexible schedule. Prospective buyers are going to want to tour the home before making any offers, and their schedule might be wildly different from yours. You can reduce the time commitment if you are able to schedule house tours in groups of prospective buyers, but you will have to be prepared to let a significant number of people into your home, which could end up being weeks or months of moving around your schedule to accommodate them.

You can think about your home’s value objectively. It can be difficult to determine the worth of your own possessions. People tend to value their own things higher than they might value the same thing if it did not belong to them. If you are someone who tends to price items you have owned for the same price as you paid for them or more, you might want to think about enlisting professional help to assess the value of your home. If you prefer to set the price on your own, check out what comparable properties have sold for in your neighbourhood or town to get an indication of a good starting point.

You can say no to people. If you handle the sale yourself, you will have to turn down low ball offers, and likely also ward off agents trying to get your business. If you have a hard time saying no firmly and politely, selling your home yourself might balloon into a giant headache for you.

Selling your home by owner has the potential to be a great way to save money, or a total waste of your time and resources. Being honest with yourself about what you are willing to put into the process, and your chances of success will be much higher.

Thinking of renting to a lodger or a roommate?

Shows like Income Property on HGTV make renting out a portion of your home pretty enticing – who wouldn’t want to pay off your mortgage quicker or have more disposable income? Before you start creating a basement apartment in your home or begin renting out a room in it, it’s important to do your homework. Being a landlord can be a demanding role that comes with a number of rules and regulations to follow.

Your House, Your Rules

Here are some you should keep in mind when making the decision to rent out a part of your home:

• Some municipalities require a permit for renting your basement. If you don’t have one and you build an income suite in a municipality that doesn’t allow it you could face some heavy fines and be forced to take down your rental property you worked so hard to put up.
Renting a room in your home with shared space generally doesn’t require a permit, but it could affect your insurance. You need to contact your home insurance company to let them know. If something were to happen to your rental space and the insurance company wasn’t informed of a lodger or tenant living in your home, they will likely not cover the damages.
• The rental income you get from a tenant renting a room out of your home is taxable. You must claim the rental income you get out of it on your tax return each year. Be sure you know what percentage of your home is being rented out as well as the percentage of time a renter uses the shared space like the laundry room, bathroom or kitchen when you file your taxes. You can also claim expenses specific to the rental unit like purchasing a washer and dryer.
• Make sure you know the fair market value in your area and set the rent for your suite accordingly. If you rent the room lower than the market rental rate you likely won’t be able to claim that income when it comes to your taxes.
• Know your rights and responsibilities as a landlord and make sure you protect yourself by having a written lease signed by the tenant. You should also screen potential tenants, making sure you do a credit check to learn whether the tenant would be a right fit for your suite.
• Lay down some ground rules, especially when you are renting out a room and there is shared space involved like a kitchen, laundry room and common area. It might be good to get it in writing as well just in case there is a disagreement that needs to be taken up with the Landlord and Tenant Board, which is responsible for settling landlord and tenant problems.
• When dealing with lodgers, since you are sharing your living space you are not bound by the same rules that apply when renting out a self contained apartment(learn more about the responsibilities of a landlord). You can select whomever you feel comfortable with, as they are effectively your room mate. Learn how to spot room mate red flags and avoid disaster.

Sources:
Ontario Human Rights Commission
Ontario Landlords Association

Finding Reliable Tenants: How Do I Screen Applicants Effectively?

As a landlord, protecting your investment should always be top of mind. A good way to achieve that is to find a tenant that will pay rent on time and take good care of your rental property. That, however, can be easier said than done. Some landlords run into problem tenants who know how to manipulate the landlord and tenant relations rules in each province to cheat landlords out of several months rent. Some tenants have also been known to provide false letters of employment and have even created fraudulent credit reports. As a landlord, you have to choose carefully. Don’t ever let your guard down. It is better to have an empty unit for a month than end up with a tenant that doesn’t pay, damages the property, or both. After all, it isn’t much of an income property if it isn’t generating any income (or causing a loss).

Finding Reliable Tenants

Screening tips
To avoid these bad tenants, you should be taking the time to screen each potential tenant. That means creating a rental application that asks them important questions like how much they make and where they work. You should also ask for some references that you can call to verify the information they have given you, a letter of employment and permission to run a credit check. Take some time to chat with them and learn what they are like as people, and ask some specific questions about their job and their lifestyle preferences to ensure it is a good fit all around. After all, there are reasons that an apartment or neighbourhood might not be right for them, and if you can let someone with severe allergies know that the neighbors have dogs, you can potentially save both parties the trouble of a living arrangement that isn’t going to work out long term, and concentrate on finding someone who will be the right fit for your income property.

Be weary of tenants who seem too good to be true. It’s possible they have copied someone else’s credit report and given it to you. You should look into using your local landlord association as a resource. Often times if you become a member you can get discounts on things like running credit checks on potential tenants. That credit check, provided by a third party company like TVS or Equifax will provide a financial history of the person looking to rent your property. You can find out if they pay their bills onetime and also their dealings with former landlords.

Another way to find a tenant best suited for your rental property is to contact the potential tenant’s former landlords and learn about their character and rent-payment patterns. You may also want to ask them to provide a criminal record check.

What not to do
Even though you may want to know every detail about the potential tenant to help you make an informed decision, you should make sure you aren’t asking questions that may cross the line. Human rights legislation in each province states you cannot select or refuse a tenant based on their race, place of origin, ethnic origin, religion, sex, age, sexual orientation, marital status, family status (e.g. children) or disability. Make sure you familiarize yourself with your respective province’s human rights code to find out more.

Most prospective tenants are honest and are looking for an apartment and landlord that will be a good fit and a good experience for all involved. While it is important to protect yourself, be mindful of coming across accusatory or paranoid in requests for background checks (particularly criminal record checks), as the vast majority are not out to scam rent, and many would be offended by the insinuation.

Sources and more information:
OntarioLandlords.org
Canada Mortgage and Housing Corporation
Landlord and Tenant Board

Fires, Thieves and Foam Parties – The “ins and outs” of Tenant Insurance

You never know when disaster can strike. The old, “it won’t happen to me” is a common sentiment until Murphy’s Law kicks in. Theft, fire and damage to apartments happen more than you would guess and you should be prepared, it won’t cost you much and you’ll worry less. Check out this neat Infographic resource from one of Canada’s top property managers, they’ve seen it all.

Capreit Tenant Insurance Infographic

What does the monthly Tenant Insurance cost cover?

  • damage to or loss of your possessions if you rent or lease your apartment or home
  • personal property stolen from your vehicle
  • injury caused to visitors (ex. slip and fall on the driveway)
  • Accidental damage you cause to any part of the apartment building or home you are renting. If the bathtub overflows and floods your apartment, or you’re having a foam party (you’ll want to ask about coverage for this one before sending invites, parties probably won’t qualify as accidents). Tenant insurance can pay for the damage caused to your apartment, the building or neighbouring units.

I don’t have any expensive stuff!

Replacing one or two sweaters is no biggie but imagine having to dish out for 4 or 5 new pairs of shoes, not to mention a new laptop, TV or even a new bed! Are you adding this up? My rough count is up to about $4000 on these few items alone and we’re just scratching the surface. You get the point here; what’s a few hundred bucks a year for a piece of mind? If this sounds like scare tactics to you, you’re catching my drift.

flood

Will my insurance cover the full value of my lost/damaged possessions?

There are two standard types of reimbursement and it’s important to understand the difference between the two; it can impact your premiums and affect how the insurance company assesses your claim. When shopping around for home, condominium or tenant insurance, make sure you find out if the quotes you receive are based on actual cash value or replacement value because premiums for replacement coverage will be higher than for cash value.

  • Cash value coverage reimburses you for the value of personal belongings at the time of a claim. If your 3-year-old mountain bike is stolen, you’d receive the value less depreciation. If the original cost was $2,000, you might only receive $1,000, minus the deductible.
  • Replacement cost coverage reimburses you for the full value of an item. If you’d have to pay $2,500 to buy that same mountain bike today, that’s what you’d receive, less the deductible.

Do Students need Insurance?

Starting at college or university comes with brain clutter like exams, parties, co-ops and friends but one thing that rarely comes to mind is insurance, and for good reason. If you’re a student you’ve probably never had the need for your own insurance; living at your parent’s house and driving their car means you’re insured under their policy. Depending on where you stay while attending school, you might need your own.

  • If you’re living at your parent’s home or residence, you’re covered by their insurance
  • There is usually a cap or limit to how much coverage a student can claim from their parent’s plan, make sure to inquire about the limitations.
  • Students living off campus in an apartment, condo or house should definitely get coverage, especially if you’re living with roomates!
  • Best of all, once you have insurance you can now host a raging foam party (I recommend attending rather than hosting, from personal experience)