Buying Houses as a Retirement Vehicle

Excerpted from Toronto Star:
I came across this article from the internet about a woman who decided to buy houses as part of her retirement plan. She walks you thru with what she did using the concept of being a landlord and selling in 3 years which she calls RTO (rent to own). She even tells you what the ideal tenant should be. Her advice- "1. Trust everything will be OK. “There is always fear; it’s like jumping off a cliff and trusting that your parachute will open;” and 2. Have people you trust, including your real estate agent, financial planner and mortgage broker. Ask them “If this was your money, what would you do?”

A Mississauga woman’s retirement plan included buying homes. A lot of homes
Tracy Hanes Special to the Star

Nov. 16, 2018

When Lisa Nagy’s marriage ended in 2014, so did her secure financial future. Her adviser suggested she buy houses.

By 2017, Nagy owned six homes.

“In three years, I’ve lived through bounced cheques, four basement floods (one caused $40,000 damage) and interest rate hikes,” she says of the various stress factors. “But there is a long game here and it is my future.”

Her first purchase as a newly single woman in 2014 was a $460,000 house in Mississauga she bought as her own residence with cash from her divorce settlement.

Rising home prices put buying a second house in Mississauga out of range, so in 2015 Nagy looked to more-affordable real estate in St. Catharines. She attended a Rent to Own (RTO), and wanted to try the concept of being a landlord with the option to sell in three years. With RTO, tenants either make a non-refundable deposit towards the purchase of the house, or pay a higher rent with a portion going toward the purchase. 

Nagy found an older bungalow in St. Catharines and bought it for $270,222 in May, 2015, with five per cent down and a mortgage on the rest. (Investment properties now require a 20 per cent down payment.) She got 3,000 responses to her ads seeking a tenant and within eight days had rented the house to a woman who had gone through bankruptcy due to divorce and needed a place for her and her mother to live.

“The ideal RTO person is someone who maybe had a rough patch in their financial history and aren’t quite out of the rough yet, but in three years should be able to qualify for a mortgage,” says Nagy.

After consulting with her mortgage broker, Daniel Patton of Butler Mortgage in Toronto, she bought an $180,000 townhouse in Niagara Falls as an RTO, in September, 2015.

Both RTO tenants each gave her a non-refundable deposit of $5,000 to put toward the purchase of the houses at agreed-upon 2018 prices, based on 2015 Canadian Real Estate Association data that then projected a 4.5 per cent annual increase was reasonable for the Niagara area.

In 2016, Nagy bought a second St. Catharines bungalow for $319,000 putting the down payment on her line of credit and mortgaging the rest. This time, with her retirement finances in mind, she rented it to a long-term tenant while the property’s value climbed — similar houses in the area are now selling for $465,000. 

“I call this the ‘GO Train house,’ because once the train goes to St. Catharines, the price of this house will skyrocket,” Nagy says.

In 2017, she researched other Ontario markets and found Windsor offered potential, with a new bridge under construction, a large new hospital and proposed high-speed train. She bought two homes in Windsor in 2017 for $187,000 and $167,000. She used her line of credit for the down payments and took out mortgages.

“The Windsor houses rent for $1,400 and $1,276 each,” she says of the properties she describes as “my most profitable homes.

“My mortgage payment (for both houses) is $700 a month, so I have an $800 surplus a month (after property management and insurance costs) that pays off the line of credit,” she says.

In St. Catharines, Nagy is selling her first RTO home after the tenants didn’t qualify to buy it. “Between when I bought it and now, the price has gone through the roof.” 

Her second RTO tenant qualified for a mortgage and Nagy turns ownership over to them this month, realizing a profit of more than $55,000.

“I’m happily looking forward to selling my second and third houses (the RTO purchases in St. Catharines and Niagara). My financial planner says the money from those sales are my fun money and I should buy whatever I want, as the remaining three properties will fund my retirement.

“So, I’m putting in a pool at my own house next year ... and my daughter and I are going on a pretty fantastic trip.”

Nagy has two pieces of advice for others considering property investments: 1. Trust everything will be OK. “There is always fear; it’s like jumping off a cliff and trusting that your parachute will open;” and 2. Have people you trust, including your real estate agent, financial planner and mortgage broker. Ask them “If this was your money, what would you do?”

Nagy’s mortgage broker Daniel Patton says successful real estate investing starts with having a detailed meeting with a financial adviser to fully understand your finances and to get financing pre-approved. A banker or broker should explain about refinancing, lines of credit and the ins and outs of adding a mortgage.

“It is tougher to qualify for financing now, and you need to understand the differences between a banker and broker,” Patton explains.

Patton also notes that financial institutions have different views of rental income: one bank factors 50 per cent of rent as income when approving loans; other banks will look at 80 to 85 per cent.

Successfully owning multiple properties, Patton adds, is about having a passion for real estate and putting time into it. “If you work 40 hours a week at another job, you need people who are going to help manage your properties — but you are still doing to have to do your research. For any return, you have to put in some work.”

Update Yourself About Home Prices

Toronto-area home prices tick upward in September

Update yourself about home prices since the year sort of started on the gloomy side of declining prices. Good reading for all home owners. Excerpted from The Toronto Star.

By Tess KalinowskiReal Estate Reporter

Wed., Oct. 3, 2018

The Toronto-area housing market continued to make modest year-over-year gains in September, with the average selling price across all housing types, from detached homes to condos, up 2.9 per cent to $796,786.

The number of resale home transactions rose 1.9 per cent compared to September 2017.

Seasonally adjusted sales prices showed a second month-over-month decline, with prices down 0.5 per cent in September compared to August — a $4,335 difference.

The average detached house price dropped 0.6 per cent year over year to about $1 million region-wide. The average of $1.34 million in the city of Toronto declined 1.4 per cent compared to September 2017.

In the surrounding 905 communities, detached houses sold for 0.6 per cent less than in the same month last year, according to the Toronto Real Estate Board (TREB).

Condo prices continued to rise, up 10 per cent in the Toronto region, including an 11.7 per cent gain in the average selling price inside Toronto’s city borders and a 6.4 per cent gain in the 905 areas.

Participate on the October 22, 2018 Municipal Elections in Ontario

Cost of housing and lack  of infrastructure are among the issues of concern of Ontarians more so with homeowners as well as prospective homeowners like you. So you don't have to read the whole article if you are pressed for time, just go to thru the highlighted lines. Then vote for your Municipal candidate that addresses this issues best.

Click here for the TREB website UnlockMyHousingOptions.ca to help you, and the general public raise key real estate issues with municipal election candidates across Toronto and the Greater Toronto Area. Act by clicking the Take Action button and write your candidate. Once you have selected what you want to say (it is made ready for you- just chose), highlight it and send message.
You may also continue below to learn more.

The following is excerpted from TREB and BILD:

Cost of Housing and Lack of Infrastructure are as Important as 

Crime as the Top Three Municipal Election Issues in the GTA a 

Home Building Industry and REALTORS®  Joint IPSOS Poll Finds 

Greater Toronto, September 12, 2018 – The Building Industry and Land Development Association (BILD) and the Toronto Real Estate Board (TREB) have come together to shed light on voters’ priorities in the upcoming municipal elections. Together, BILD and TREB represent all facets of the real estate industry. 
“Residents of the GTA are concerned about housing affordability and availability,” said Dave Wilkes, President and CEO, BILD GTA. “People are concerned about where young families and first-time home buyers will live, or if they will be able to afford to live in the GTA at all.”
Some of the key results from the poll are as follows:
• When considering the issues in the upcoming municipal elections, 4 in 10 Greater Toronto Area (GTA) residents say that the cost of housing and infrastructure are just as important as addressing crime.
o Almost 40 per cent say that the cost of housing is among their top-three election issues, statistically tied with crime and infrastructure.
o Notably, GTA residents across all areas express this to be a priority of theirs, including those living in York (42 per cent), Toronto (39 per cent), Peel (39 per cent), Durham (31 per cent), and Halton (29 per cent).

• The cost of housing is an especially important issue among certain groups of GTA residents, including:
o Millennials (48 per cent of millenials vs 42 per cent of those aged 35-54 and 25 per cent of those aged 55 and over);
o Renters (62 per cent of renters vs 26 per cent of home owners), those living with relatives or parents (50 per cent) and;
o Women (43 per cent of women vs 32 per cent of men).

• 68 per cent of GTA voters say the cost of housing has impacted them directly in some way.
o 40 per cent say it has affected their ability to save enough for retirement;
o 34 per cent say it has affected their ability to afford a major purchase or a vacation;
o 24 per cent say it has affected their ability to buy a home;
o 20 per cent say it has affected their ability to make upgrades to their home
o 12 per cent say it has impacted their ability to save for their children’s education and 11 per cent say they have put off having a child or another child.

It is estimated that 115,000 new residents call the GTA home every year. By 2041 the population of the GTA is expected to swell to 9.7 million putting increased pressure on the housing supply in the region. Only 33 per cent of respondents feel that the GTA is prepared to provide housing for this influx of people over the next 23 years, while the balance feel that the GTA is ill prepared. Furthermore, 67 per cent of those polled feel that their children will be unable to afford a home in the community they grew up in.

“If we want to build more houses, faster, to increase affordability and availability, we should look at what can be done at the municipal level. It is important that housing affordability is part of every municipal candidate’s platform.  Voters and candidates can learn more about this at  www.buildforgrowth.com,” said Wilkes. 
    FOR IMMEDIATE RELEASE
www.TREBhome.com

Page 2 of 2

"One of the key issues facing home buyers and renters in the GTA is inadequate housing supply and choice, and one of the main reasons for this is municipal policy that unnecessarily locks up housing options.  We are encouraging home buyers and renters to let municipal election candidates know their views through TREB’s new election campaign web site: UnLockMyHousingOptions.ca ; it is easy as the website does all the work for you," said Garry Bhaura, TREB President.

It is noteworthy that the Home Building Industry and REALTORS® have joined forces on this issue.

“TREB is excited to be working with BILD to ensure that important housing issues receive the attention that they deserve, from both candidates and voters, during this municipal election campaign.  As the poll shows, housing issues are top of mind for the electorate,” said John DiMichele, Chief Executive Officer for TREB. 

About the GTA Municipal Elections Poll For this survey, a sample of 1,503 GTA residents from the Ipsos I-Say panel was interviewed from August 20 to 23, 2018. Quotas and weighting were employed to ensure that the sample’s composition reflects the overall population according to census information. The precision of online polls is measured using credibility interval. In this case, the results are accurate to within +/- 2 percentage points, 19 times out of 20, of what the results would have been had all Canadian adults been polled. Credibility intervals are wider among subsets of the population.

About the Toronto Real Estate Board (TREB) TREB is Canada’s largest real estate board. Over 50,000 residential and commercial TREB Members serve consumers in the Greater Toronto Area.  Greater Toronto REALTORS® are passionate about their work. They are governed by a strict Code of Ethics and share a state-of-the-art Multiple Listing Service®.

About the Building Industry and Land Development Association (BILD) With 1,500 members, BILD is the voice of the home building, land development and professional renovation industry in the Greater Toronto Area. BILD is proudly affiliated with the Ontario and Canadian Home Builders' Associations. -30-

TREB Media Inquiries:   Mary Gallagher, Senior Manager Public Affairs  maryg@trebnet.com; 416-443-8158

BILD Media Inquiries:  John Provenzano, BILD Communications and Marketing Manager at
JProvenzano@bildgta.ca; 416 617 7994

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GTA Home Prices Dropped 14% From A Year Ago. One's downfall maybe an opportunity for others!

Excerpted from The Toronto Star:
While this confirms a drop in sales and prices, read to the end as the 2nd half of the year may be a different story. It may be an indication that now may be a good time to buy that house that you missed.
GTA home sales down 40 per cent in March compared to last year, report shows

The average home price fell 14 per cent to $784,558 year over year, as the province’s Fair Housing Plan, new federal mortgage rules and higher borrowing costs prompted some buyers to hold off, the Toronto Real Estate Board said.

GTA home sales in March dropped 40 per cent compared to March 2017, according to a report from the Toronto Real Estate Board.  (Andrew Francis Wallace / Toronto Star file photo)

By Jaren KerrStaff Reporter

Wed., April 4, 2018

Home sales in the GTA dropped 40 per cent year over year in March, with the average price also decreasing by 14 per cent, according to the latest Toronto Real Estate Board report.

TREB reported 7,228 residential transactions last month in the GTA, a steep drop from the record 11,954 sales reported in March 2017. Last month’s figure is down 17.6 per cent compared to average March sales for the previous 10 years.

The average price in March 2018 was $784,558 for all housing categories in the GTA, including detached, semi-detached, townhomes and condos. The average price was $915,126 in March 2017.

For the city of Toronto, the average price of a home was $817,642, down about 9 per cent from $897,856 a year earlier.

The share of high-end detached homes selling for more than $2 million in March 2018 was half of that reported in March 2017, further affecting the average price.

“The effects of the (Ontario government’s) Fair Housing Plan, the new (federally mandated mortgage) stress test and generally higher borrowing costs have prompted some buyers to put their purchasing decision on hold,” Tim Syrianos, president of the real estate board, said in a news release.

The number of new listings also decreased 12 per cent, year over year, in March.

“Right now, when we are comparing home prices, we are comparing two starkly different periods of time: last year, when we had less than a month of inventory, versus this year, with inventory levels ranging between two and three months,” said Jason Mercer, TREB’s director of market analysis.

“It makes sense that we haven’t seen prices climb back to last year’s peak. However, in the second half of the year, expect to see the annual rate of price growth to improve compared to (the first quarter), as sales increase relative to the below-average level of listings.”

The average GTA home price in March increased slightly from the previous month, when it was $767,818.

What's Important to You in the 2018 Provincial Budget?

Excerpted from TREB News

These are the highlights of the budget already in summary form as prepared by OREA. There is a projected deficit of $6.7 billion with some benefits to trickle to you. Know it as a taxpayer.

Highlights of the 2018 Ontario Budget

March 29, 2018 -- The 2018 Ontario Budget, entitled A Plan for Care and Opportunity, was unveiled by The Honourable Charles Sousa, Ontario Minister of Finance, on Wednesday, March 28.

OREA has provided a summary and noted that the Budget, which proposes additional spending with a projected deficit of $6.7 billion in 2018 and continued deficits through 2024, offers little in terms of housing and no major new proposal to help young families afford a home.

Below are some of the highlights and major features of the Budget:

• A new Seniors' Healthy Home Program, which provides up to $750 annually for eligible households led by seniors 75 and over to help them live independently and offset the costs of maintaining their homes;
• A decrease in residential electricity bills as of July 1, 2017, by 25 per cent on average, and up to 40 or 50 per cent for eligible rural and low-income families.
• A new Ontario Drug and Dental Program for those without extended health plans;
• Free preschool for children aged two-and-a-half until eligible for kindergarten, beginning in 2020;
• An extension to OHIP+ that will provide people aged 65 and over with free prescription medication;
• An increase in minimum wage to $15 per hour in 2019;
• Free college and university tuition for 225,000 students;
• Investment of $2.1 billion to improve mental health care;

In advance of the Budget, TREB, along with OREA and other stakeholders, successfully secured a halt on Mandatory Home Energy Audits (HER&D), and we're pursuing an optional model. These audits would have resulted in lengthy delays in the home selling process and additional maintenance costs for homeowners.

How Did The Latest Canges To Mortgage Rules Affect House Prices!

Toronto is holding out!

As excerpted from Huffington post.

House Prices Falling In Majority Of Canadian Cities As New Rules Kick In

But Vancouver is back to its old tricks, and Toronto is seeing a temporary bounce.

By Daniel Tencer

Todd Korol / Reuters

For sale signs line in Calgary, Alta. Calgary was among the cities that saw falling house prices in January, according to the Teranet-National Bank house price index.

House prices fell in a majority of Canadian cities in January, the first month of tough new mortgage rules at the major banks, new data shows.
The latest edition of the Teranet-National Bank House Price Index shows prices falling in seven of the 11 cities covered.

Among them are Ottawa-Gatineau, Hamilton, Calgary and Edmonton. Halifax, Quebec City and Winnipeg saw particularly steep drops for a single month, with each city's price index down at least one per cent.

HuffPost Canada

It's a different story in Vancouver, where the market appears to be up to its old tricks again — rapid house price increases. The city's price index is up 1.2 per cent on the month, and up nearly 17 per cent over the past year.

Detached home prices in the city are up 13.5 per cent over the past year, while condos have soared by 23 per cent.
Without Vancouver, the national house price index would have dropped for the fifth month in a row, National Bank senior economist Marc Pinsonneault said. But with Vancouver included, it rose 0.3 per cent in January.