Monthly Archives: July 2016

Income Properties

So You Want to Buy a Vacation Property…

Just because summer is over doesn’t mean you should stop thinking about sun and sand. Fall is actually a great time to start thinking about next year’s vacation and where you’re going to stay. Cottages are a big part of the Canadian vacation experience, and buying one might be a great investment if you go about it the right way.

Smart investment or luxury item?

The answer? It’s a bit of both. An inherited cottage or one you bought decades ago during the golden age of affordable lakefront properties could make you a pretty penny today. If you’re in the market to buy though, you have some factors to take into consideration that will drastically affect the price. Buying a property that is accessible, usable and desirable year-round is a much better investment than a property that you can only get to in the summer, isn’t insulated and doesn’t have any merit in the winter. Take advantage of winter sports enthusiasts, as their options for winter rentals are usually pretty limited.

Being less than a 2-hour drive from a city is also going to command a higher price tag, but don’t be afraid to go a little off the beaten track or settle on a smaller lake. There are still deals to be had if you look a little further out and are willing to put in some work. There’s always going to be more work involved with maintaining a cottage, so keep that in mind when setting a budget. Don’t put yourself into a “cottage-poor” situation where you can afford the cottage, but not all the other fun accessories that go along with it, like building a dock for a boat.

Fractional ownership

Want all the perks of a cottage without all the costs? Fractional ownership might be the answer. Of course, the catch is that you only “own” the cottage for half the year. Fractional ownership may not be for everyone – but it is certainly something to consider if it suits your needs and wallet. Buying a property with friends or family may be a way to put cottage ownership within reach. While it sounds like a great way to pool resources and leverage your buying power, have a lawyer draw up an agreement that clearly states who is allowed to use the cottage when and other expectations such as upkeep, mortgage payments and property taxes and how to manage other unforeseen expenses. Also make sure you come to an agreement about the rules on renting out the property during the weeks you “own” the property, but aren’t using it. The best way to maximize a cottage purchase is to maximize the income potential.

Owning a cottage is an amazing idea but before you sign on the dotted line, do your homework. Cottages, unfortunately, are not exempt from taxes, and just like at home, require regular maintenance, cleaning and grass cutting. And while it’s hard to put a price on those summertime memories by the lake, making a smart investment should be your number one goal.

Gimmicks and How to Avoid Them

Real estate agents tend to get a bad rap. But let’s face it, there are unprofessional people in every line of work. That also means there are plenty of great real estate agents – the kind that will help you earn more money as a seller or get more for your investment as a buyer. The key is to find those agents when it’s time to buy or sell a home. Need a hint? Keep an eye out for these common real estate gimmicks…that may not have the best interests of the client in mind.

Real Estate Agent Gimmicks to Watch Out For

1. “I have a buyer for your home.”

Whether it’s delivered in a letter or by phone, this a common trick some real estate agents use to get their foot in the door with a potential home seller.

“When I first started in real estate, that was one of the first things we were taught,” says Carl Seier, a real estate agent with Sigmar MacKenzie Real Estate in Winnipeg. “They told us that there’s an agent out there who will have a buyer for that area, so technically you’re not lying. But that’s not the reason to hire a real estate agent. You want one with the best marketing plan.”

If a real estate agent really has a buyer for your home, he or she should arrive with an offer. Otherwise, that agent is probably just trying to get your attention – and your business. What you really want is an agent who’s willing to price your home competitively and market it to sell.

2. “This is definitely the property for you – but it probably won’t last.”

Good real estate agents don’t sell houses; they help buyers through the process of finding the best home they can afford. So, if you feel serious pressure from your agent to buy a particular house, something’s up.

“Agents want to make a sale. A lot of agents are living paycheck to paycheck, so the quicker they can close a buyer, the quicker they get paid,” Seier said.

Plus, in some provinces, agents may be looking to “double-end” a real estate deal. This happens when they represent both the seller and the buyer, and therefore cash in on both commissions. This isn’t necessarily a bad thing, but if an agent pressures you to buy one house over another, you should be wary.

3. “If your house doesn’t sell, I’ll buy it.”

Offering to buy an unsold house is another common tactic some real estate agents use. It isn’t dishonest (sellers will have to sign a contract with all the details), but while it may help agents attract more clients, it isn’t all it’s cracked up to be. The problem? The price you’ll get for the home in this case is much lower than list price – often as little as 85 percent of the home’s appraised value, Seier says.

“It’s not a reason to list your home. List your home because your agent has devised a thorough marketing plan,” Seier said.

4. “This price will get you a bidding war.”

A bidding war happens when buyers get competitive with each other while making offers on a property. This often drives the home’s price up well beyond list price. This is an outcome many sellers (and, let’s face it, agents) fantasize about, but Seier cautions that it’s exceedingly rare. Plus, the strategy often involves listing the home for less than it’s worth, and that, says Seier, is a big risk to take.

“Agents are promising bidding wars, but when they don’t happen, the agent increases the home’s price. That’s the kiss of death,” Seier said. “Choose a list price you can actually live with, not one that might get bid up.”