All Forum Posts by: Claude Boiron

@Matt Belzileconsensus is that when rates go up, they won't skyrocket, but rather inch up. I can't speak much about the Vancouver market (other than to say it is crazy), but the Toronto market, as hot as it is, had more holding it together in my opinion (which I laid out in my eight points in my above post). I can now add a ninth point to that list: Our low Canadian dollars means that our Real Estate is on sale for anyone coming from a stronger currency - which is most countries. I believe this will assist to extend the viability of this appreciating Real Estate market, which I was already seeing continue for 2-5 years.

@Jay ShawI can connect you with a few great mortgage brokers who will have the definitive answers, but my understanding is that you cannot do the 100% financing, even if you combine conventional with VTB. However, if the first lender of 80% agrees to have a 10% VTB behind its position, and you have the 10% down payment, then it could work.

@Jay Shaw, have you considered a head lease for the property, with an option to purchase at a fixed price, in two years, three years, etc.?

Hi @Jay Shaw, as far as I know, that's not true, but it depends on what the lender in first position allows behind its charge. What you might have heard about is that you cannot buy without putting any money down - that is true from what I know. So if you have a conventional mortgage for 80% LTV ratio, and a seller willing to do a 20% VTB, that would not be allowed.

@Matt GeertsI think your approach is great - kudos!

Hi @Matt Geerts. I'm excited for you! What I've always done for every different type of Real Estate investment (retail, residential, industrial, etc.), is to have a qualified lawyer draft a boilerplate lease, and then I use that going forward. I know it is not tempting to spend the money now, but as you seem aware of the legal environment we swim in, in Ontario, you probably know how costly it can be to not have the right terms and clauses in a lease.

Good luck!

Hi @Lisa B.!

It really depends on the product you're interested in, the immediate market it is in, and your financial means.

I'll give you an example: I have a client who had limited financial means (smaller down payment, and was qualified for a low mortgage amount). We looked at several properties, but they were getting snapped up the same day they came on the market, or they were being marketed with an offer presentation date (read: bidding war set-up), and I'm not a fan of my clients getting into bidding wars.

A week ago, a new property came out on MLS on a Friday, with no offer presentation date (the Seller would consider offers at any time). We would have gone to see it that same day, but the Seller was only allowing showings the next morning. We booked the first available slot on Saturday - at 10am. We visited this property, and two others. The two others each had offer presentations dates set for a week later. We decided to put an offer on the first house, and by 10pm we had an accepted deal. We also had 3 business days to conduct a home inspection, and 4 business days to arrange for appropriate financing.

We didn't just luck out - we managed the situation and read the clues really well. The Seller was demanding a $20K bank draft with the offer (I suspect his last deal fell apart because the Buyer didn't have a large deposit, and didn't qualify for a mortgage). So we had a $20K bank draft at the Listing Brokerage within an hour of emailing the offer to the Listing Agent. Also, since the property is vacant, we knew the Seller would want to close ASAP (so as not to incur carrying costs for too long), so we proposed a 19-day closing (13 days from waiving the financing condition), which the Seller jumped at.

All this to emphasize my original comment that it really depends on what you're interested in, and what your means are.

Hi @Leo Di Croce! Happy to chat about Real Estate any time you'd like. I'm also Toronto-based, though I work within the wider GTA. Are you looking to add more Cesidential to your portfolio, or expand into Commercial?

Introduction

Many questions are created by the media when one day it talks about stability, and prices remaining high, then the next day says we are in a Real Estate bubble and that we should all be worried about a market crash. Also, uneducated consumers and industry “professionals” tend to spread incorrect information and theories.

Using 8 points, I will provide clarity on what is truth, and what is misinterpretation by the media of industry statistics.

1 – Appreciation

Most people are obsessed with analysing average property prices, and how much they have increased – that is virtually irrelevant – the yearly appreciation is the number to watch.

In the late 80’s, appreciation was between 20% and 37%, every year, for four years in a row.

No wonder there was a Real Estate market crash in the early 90’s – that rate of appreciation is just not sustainable.

Over the last 15 years, we’ve seen, 5%, 8%, even 12% appreciation in the GTA.

This has resulted in a steady, but gentle (compared to the 80's), increase in property values.

2 – The Greenbelt effect

The Greenbelt was enshrined due to legislation passed by the Government of Ontario in 2005. Though well-intentioned, the inadvertent side-effect of this legislation was the increase of values of properties inside the Greenbelt.

3 – Intensification in Toronto

Have you ever wondered what kicked off the condo boom in Toronto?

Why are they so damn many condos still being built??

The City of Toronto Official Plan of the early 2000’s called for intensification in the downtown core, and along major arteries.

That means that if you owned a few stores along Yonge Street with some offices or apartments above, you were in luck, because the government had just declared that you could build 20, 30, or 40 stories instead of two, three, or four.

This policy was meant to discourage urban sprawl, and made it cheaper for the City of Toronto to operate, since it could use existing infrastructure (roads, sewers, public transit, etc.) to grow, rather than need to build new infrastructure.

4 – Yearly migration to the GTA

There is a greater than 100,000 person net migration to the GTA every single year. Can you try and imagine what 100,000 people looks like in a parking lot, for example? That’s a lot of people!

And they all need to live somewhere.

I don’t care if they buy or rent a house, a condo, or an apartment, but they will be impacting the GTA’s Real Estate every single day.

5 – Residential vacancy rates

Residential vacancy rates have been hovering between 1% and 2% for the past many years.

This is historically low, and as close to zero vacancy as we’re likely to ever see.

One caveat, however, is that if you have bought into a condo building pre-construction, it can take six to nine months for the market to absorb your unit for lease.

The reason is not that there are no tenants looking, but rather:

• A new building is an unknown to tenants, so there are no reviews online and the amenities are a question mark; and
• During interim occupancy, which is when most investors put their units up for lease, the common areas are not yet finished, and construction activities are still taking place in the building; and
• There is usually a flood of units hitting the market for rent in a new building, so anyone who choose some nicer upgrades or colours, or who has a better layout, will lease first.

6 - Transportation

Anyone noticed that with each year that goes by, it takes a little longer to get around the City?

Despite some efforts to alleviate congestion, and to improve public transit, there is no denying that driving or public transit are perfect options, and as such, many people who work in the City are choosing to live in the City, and even in the Downtown Core.

7 – Calgary is down; Toronto is up

Toronto has traditionally been the economic centre of Canada, but was usurped for a number of years by Calgary. With the drop in oil prices, that has changed recently, and Toronto has regained the title of economic engine for Canada. Many people who left Toronto for Calgary, are now heading back to Toronto.

8 – Foreign investment and international demand

My belief is that as things get worse in the rest of the world, Canada’s appeal will just continue to increase.

We are far from perfect, and our winters are not everyone’s favourite climate, but on an international level it is hard to beat the safety, opportunity, education, health care, natural resources, and financial stability which Canada has to offer.

Conclusion on the general Real Estate market

I’m not predicting that GTA Real Estate will increase very quickly in value (thought it may continue to do so).

However, I do believe that the eight points I covered will continue to act as supports and drivers for the value of Real Estate in the GTA.

Hi @Alex Kouramanis, I'm happy to come by and take a look. It really depends on the neighbourhood market and standards, and your property's current condition.

Also, if you have it set up as a rental property, the aesthetics may be less important than if it were for an owner-occupier.

I promise not to bring any sales contracts with me (actually, I never do)!!  :-)