Investment alert

Dorchester Circle 233, 7297 Moffatt Road List Price: $235,000 Floor Area: 740 Taxes: $907 Maintenance Fee: $135.73 MLS: V965302

If you have some money burning a hole in your pocket and would like to consider investing in real estate, this is the type of property I would suggest putting your investment dollars.  Main reason: location.  The location has an excellent walk score (70 out of 100), with it being close to restaurants, shopping, coffee shops, schools, community centres, parks, and transit.  Perfect components for a rental unit.  The complex is also situated on a beautiful quiet and welcoming cul de sac, a nice place to call home.

The unit was renovated in 2008 and still looks like new.  There is decent closets/storage space within the unit and a separate storage locker.  The bedroom is large and currently has a king size bed with two large dresser units filling the 143 sqft room.  The bathroom is compact, with the a small tub, but it has been upgraded to match the rest of the condo.  The den is a great size that could be converted to a second room or used as an office.  Although the kitchen is small, the open living area provides a nice flow through the unit.  The patio is a good size and the view, along with all windows of the unit, face an open court yard.

Its a large building with amenities including a pool, steam room and exercise centre.  Considering those extras, the maintenance fees are very reasonable.

Before anyone considers to buy an older property, I recommend some due diligence to ensure that no surprise bills are expected in the near future.  That being said, this building has finished replumbing in 2008 and more recently painted the exterior walls and replaced the roof.  The complex has an on-site manager and is known to be excellently maintained.

If investing with a 20% down payment, your $47,000 would leave you with payments of approximately $800/month at a 3.09% interest rate and a 30-year amortization.  This particular unit was rented out a few years ago at $950.00   Depending on the market now, it is possible to cover your full property costs (mortgage, maintenance fee, and taxes).

If you’re considering buying, a 5% down payment of $11, 750 would give you payments just under $1100.00 at a 3.09% rate and 25-year amortization.  You would need an income of around $50,000 to support a $229,400 mortgage (inclusive of mortgage default insurance).

PROS

1. Location, location, location
2. Priced better (per sqft) than the other 1-bedroom unit available in the building (and it’s not renovated).  Comparisons
3. Amenities included
4. Quiet and nice cul de sac
5. Nice renovations
6. Great den
7. Welcoming and functional layout
8. On-site management
9. Building upgrades recently completed

CONS

1. Small bath tub
2. Hallways have “mixed” smells from cooking and smoking units, however, the unit is not effected by this
3. Long walk from entry to unit, however, there is a shorter route from parking garage
4. Older building, may need additional maintenance upgrades over time

From my home to yours - Irene

It’s got potential

5182 Moncton Street, Richmond MLS Listing: V964472 List Price: $1,088,000.00 Floor Area: 3030 Taxes: $3664

A whooping 7 bedrooms, 5 bathrooms and 4 different living areas makes up this over 3000 sqft home.

The kitchen is large and spacious with exceptional cupboard space, an eating area, office space and an additional family space.  The living room and dinning room are comfortable, however, for the size of the house they are not as spacious as I would have expected.   The upstairs is basically comprised of the bedrooms and bathrooms to one side of the house with the eating, social areas and decks on the other. The downstairs has three more complete rooms with a fourth option off the garage.  There is a bathroom and finished kitchen that can be enclosed to act as a mortgage helper.  The suite currently has one bedroom, but can include a second and/or third if a section of the garage was converted to a bedroom.

A true bonus to the home is that there are TONS of closets and storage spaces, something I feel is always overlooked in modern developments.  For this particular unit, it adds great value to the home  There are two very large closets/pantry upstairs with a crawls space, closet, laundry area and garage storage down.  The bedrooms are not exceptionally large, but they have basic layouts with decent closet space.  The master bedroom had a walk-in closet, which is a nice feature to an otherwise basic master unit.

There is a deck facing the street (north) as well as one facing the backyard (south) with a patio below.  This provides a space in the sun on either end of the house depending on the time of day.  The yard is a good size and can be landscaped to add more value to the home.

The home is only 5-years old, however, there is some wear and tear on things such as the closets, doors, and stairs, however, a little TLC can refresh the home to top quality.

The space is not a fit for everyone, but for the right family, this home could not only offer the space and comfort for raising youngsters, but provide an additional income generator with the rental suite to offset some of the monthly mortgage costs.

PROS

1. Lots of storage
2. North and south facing decks
3. Large yard
4. Rental suite option
5. Granite counter tops in bathrooms and kitchen
6. Close to Steveston village
7. Closet to Steveston Community Centre, Parks and Schools
8. Lots of garage space, pad parking and street parking

CONS

1. Some touch up work to be done
2. Construction work needed if converting rental suite to 3-bedrooms
3. Landscaping improvements to consider
4. Lots of bathrooms to clean 

Mortgage Notes

It is difficult to determine the exact income required, however, assuming no assets or debts and a good credit rating a income of $105,000 should be able to support a mortgage of $870,400 with a 20% down payment of $217,600.  This is estimated with a 3.09% interest rate, a 30-year amortization, and a rental offset of 80% with an estimated rental rate of $1000 per month.  Total monthly mortgage payments would be $3,702.72.

Due to the mortgage rule changes, one would not be able to purchase this home with less than 20% down unless an offer of under a million was accepted.  At $999,999.00 with 5% down, a 25-year maximum amortization for an insured mortgage, and maximum 50% rental offset, the income required to support this mortgage at 3.09% would be approximately $150,000 (no assets or debts factored in).  Total monthly mortgage payments would be $4664.66, with the inclusion of CMHC default insurance.

From my home to yours… - Irene

Parkside Community Living

South Arm Gardens 109, 8391 Williams Road, Richmond MLS Listing: V934954 List Price: $578,000.00 Floor Area: 1324 Maintenance Fee: $274.62

The South Arm Gardens is a complex comprised of 15 units, 3 of which have already sold.  The units are between 1034 and 1545 sqft and list prices of $498,800 to $658,800.  All prices are inclusive of HST.

This project is one of three complexes (Broadmoor Gardens, South Arm Gardens and Whiteside Gardens) being developed by Krafsmen Group of Companies.

The location is great for families.  There are 5 elementary schools and 3 secondary schools in the area and only a short drive to the two closest post-secondary institutions in Richmond.  Located directly across from the South Arm Community centre, there is access to a number of amenities including  green space, multiple play parks and an outdoor community pool.  The central location makes it easy to get to many shopping complexes, malls, movie complexes, Steveston, and the highway.

The units themselves are nicely designed.  The gargage layouts offer tandem and side by side options.  The tandem garage can be converted to a single garage to make an extra office or bedroom space on the bottom floor.

The main level has a few varioius layouts.  For the most part space is utlized well, bathrooms are situated facing away from the kitchen and some offer a nook area that could be used for additional eating space, reading lounge, office or kids play area.  The finishings and colour pallets are nice and neutral.

The bedroom on average are larger then most townhomes I have seen recently.  They provide decent closet, bed and dresser space.  Some units have the the master bedroom on the main floor with the additional two rooms on the top, interesting layout concept, but could work well for some mature families or young adult shared accomodations.

PROS

1. Great location for access to community ammenities, schools and shopping
2. Unique layouts that maximize space
3. Nice finishings
4. Nice use of colour palettes
5. Bedrooms are larger than average newer townhomes
6. A variety of layouts to choose from

CONS

1. The balconies on the units along Williams Road, face Williams road, which is a busy and not that appealing of a view.
2. The maintenace fee seem high for a newer property with minimial amenities, however it is stated that the City of Richmond Flat Rate Utilities are inlcuded (which would be an average cost of $100+ per month).
3. Some units seem a bit pricey, however, this may be due to location of unit within the complex and layout specifics.

Backyard Oasis

This week I ventured to a property that is near my home, and my heart.  When I was little, my family visited the Fantasy Gardens for one very beautiful day.   I thought it was such a magical place and it left me with an ever lasting happy memory.

The Fantasy Gardens has come and gone, but the area has keep with its past legacy, and will continue to be a magical place.  The Gardens by Townline is a complex slated to have six residential buildings containing a variety of living spaces, shops and services amongst 12 acres of green space composed of five different multi-purpose gardens.  One garden, The Farm Garden, promises to offer plots of soil to residents for growing fresh organic produce of their own.

1. The Play Gardens - An open, green patch for your children to discover, play games, and run free to your heart’s content. 2. The Farm Gardens - The City will provide Garden plots for Richmond residents who want to grow their own fresh, organic food. 3. The Contemplative Secret Garden - The simple beauty of doing nothing at all, just thinking, meditating, reading or admiring the lush scenery. 4. The Celebration Garden - Birthdays, picnics, anniversaries or the arrival of Summer – celebrate anything and everything here. 5. The Country Lane - A quaint, scenic road, perfect for leisurely walks towards the natural gardens and beyond.

The first phase with two buildings named Magnolia and Azalea are selling one bedrooms from $238,800 and two bedrooms from $309,800.   They are scheduled to be complete for January 2014.

The units are nicely finished and have been designed well to maximize space. The living space is on the small side (one bedrooms 522-589 SF and two bedrooms 707-973 SF), but if owners take advantage of integrating some of the built-in ideas shown in the showroom, the living and bedroom space could be quite comfortable. I’m impressed with how some layouts even include walk-in closets in the master bedroom and dual closets for the second room.

PROS

1. Large garden and park access at your back door
2. Shops to be on site including a grocery store
3. Ironwood mall across the street for additional services
4. Quick access to downtown Richmond, downtown Vancouver, Surrey, New Westminster, and the US border
5. Access to plant your own organic produce
6. Low 1st deposit requirement (5%)
7. Nice finishing pieces and neutral colour palettes
8. Layouts maximize space and flow

CONS

1. Completion is 2014 with future phases to follow – gardens may take a few years until residents get full use
2. Intersection of Steveston and No.5 needs to be improved for peak traffic hours
3. Size of units are small
4. Tub, although deep, is short
5. Will need to consider adding space saving built-in options to maximize space

http://www.youtube.com/watch?v=ATpVVJR4t7c&feature=player_embedded

From my home to yours… -Irene

More Mortgage Rules Clouding Over Canada

THE RULES If you would have asked me a month ago if the mortgage industry would be hit with another round of government regulations I would have said it’s possible, but HIGHLY unlikely.

After stating in April that he was not going to intervene in the housing market, Minister Flaherty suddenly thought different. On June 21st, Flaherty felt the need to make a drastic announcement implementing changes to the mortgage regulations to curb what could inevitably be the bust to a potential housing bubble.

We’ve seen a great example right before our eyes of what could happen to a thriving economy should the wrong pieces happen to fall into the right place. Our American friends have experience one of the greatest economic downturns in modern history. Greed mixed with poor regulation lead to a crippling effect to millions of US citizens, homeowners or not. Many other countries (Greece, France, Spain, Ireland, etc.) have or are experiencing similar downward spirals.

Minister Flaherty put some personal reasoning behind this government legislation, addressing comments and thoughts about his children now entering the market.

Out of fear of rising household debt, and the inability to increase mortgage rates to curtail borrowing, it was decided to protect all Canadian from themselves by implementing the following rules:

1. Changes effect insured mortgage loans starting July 9, 2012 2. Maximum Amortization reduced from 30 years to 25 years 3. Maximum refinancing now 80%, down from 85% loan-to-value 4. Maximum Gross Debt Service ratio of 39% from 44% 5. Mortgage Insurance will max out at a property value of $1 million

OSFI will be implementing their own changes late summer/fall, which include limiting the maximum loan-to-value on HELOCS to 65% (from 80%), having stricter rules on variable rate qualifications, increasing stated income proof and eliminating cash back mortgages.

Click here for a full listing of Q and A’s from the Department of Finance website.

THE CAUSE AND EFFECTOur TMG President, Mark Kerzner points out in his blog “More Change to mortgage rules,” that these recent changes are even more drastic than those we have experienced in the past. He provides this example:

Moving amortizations from 30 years to 25 years is NOT the same as when they were reduced from 35 to 30 years. For example:

A $250,000 loan amount for 5 years with fixed interest rate of 3.29% the monthly P&I payments are as follows:25 year amortization = $1,220.6330 year amortization = $1,090.44 (The monthly cash flow difference between 25 and 30 years is $130.19)35 year amortization = $999.86 (The monthly cash flow difference between 30 and 35 years is $90.58)

In this example the delta between the two is nearly 30% – a significant difference. In an economic report released this morning from CIBC it was estimated that “the direct impact of this move alone might cut the value of mortgage originations by close to 2%.”

Kerzner also notes that the unfortunate bystander in these changes is the first-time homebuyer. CIBC published a report showing habitual borrowers to be skewing the debt-to-income ratios and the over 45 year-olds nearing retirement, were a demographic with rising risk, two groups that won’t be as harshly effected with these changes.

First-time buyers looking to put less than 20% down will now need to put more money towards living expenses each month. They will save on interest costs and be out of mortgage debt faster, but it might come at a cost of less discretionary income or paying higher interest rates on other forms of debt such as credit cards or lines of credit.

CHANGE FOR THE GOOD We are definitely headed for change, but that’s nothing new, that seems to be standard with the housing industry. However, change doesn’t necessarily mean bad. Canada will hopefully come out stronger because of these new rules and perhaps if the market drops as it’s expected, first-time homebuyers will still have the opportunity to get into the market with a home that is priced sensibly while mortgage rates are still at all time lows.

BUYERS I still believe real estate is a great long-term investment. The changes will require buyers to take more time to understand their financial position and assess how they want to move forward. Meeting with a mortgage professional and a financial planner are great ways to start planning and preparing for purchasing real estate.

Interest rates are expected to remain low, coupled with the potential lowering house prices, buyers will likely have negotiating opportunities instead of bidding wars. Further more, homeowners maybe able to take advantage of upgrading their home at a savings to earlier prices. This could pay off well if you have the time to wait for the sale of your current property while having an offer on or looking for your second property.

SELLERS For those needing to sell, I recommend looking at the option of renting your property, that is, if it makes sense to do so. Projections are for rental rates to increase as rental availability decreases with fewer buyers in the market. If you look at the States today, its more expensive to rent than it is to buy in nearly every major city. However, most Americans are still not in a position to buy due to income, credit rating requirements or bank lending capabilities. I don’t think we will experience this extreme, but I think we will have a similar effect. Lenders are already getting much tighter with their mortgage lending.

If you have to sell, there can be ways to come out ahead. Search for other areas or type of properties that may have dropped more/similar in price to what you experience with your home. Look to buy unique properties (one in a million, not one of a million) that should sell more quickly if you needed to sell again in a down market. Doing a bit of personal research and spending time with your Realtor to understand what is happening in the market now can make a big difference to your return on investment.

CONCLUSION It was a shocking month to the housing industry, but in speaking with Mark Kernzer, I think he summed it up best with “It’s surprising, it’s unnecessary, but it’s not the end of the world.” We’ll make it through this bump in the road – just as we have every other time!

From my home to yours… -Irene