The Real Estate Market can leave us in a state of frenzy a lot of the time. Should I buy a condo in the coming year? Should I sell my home right now? What is the Market forecast like? Here to answer your burning questions is Real Estate Expert Monique Johnson.
Question 1: “I want to get into the market, what do I need to do in the next two months if I want to purchase?”
This is a great question … in short, you must get ready right now. Key questions to ask yourself, is your employment & income secure to qualify for a mortgage? This is a must.
Do you have a down payment saved? You’ll need at least 5% of the purchase price if you’re a first-time homebuyer.
Next, align yourself with a reputable realtor who will hold your hand and take you through the process – your realtor should be able to get you a great mortgage broker who can pre-qualify you and ensure you’re in a strong position to buy.
Once you’re approved, the fun begins – house shopping!!
But in this seller’s market prepare yourself as it won’t be all roses – competition is still very intense right now, so be prepared to bid on more than one home and compromise on the type of home and location where you will buy-in.
Question 2 from Angela & Adel: “We are friends and co-workers and can’t afford to buy an investment property on our own and want to do it together? What are the advantages and disadvantages?”
This is definitely an unconventional way of buying real estate that is becoming more and more popular. As prices have soared in parts of the country, there are people who are totally priced out and can no longer do it on their own. So, what’s the next best option, partner or friend and buy with someone you can trust.
The advantages are:
- you can split the down payment so you’re not putting as much cash down if you were buying alone…and if that amounts to 20% that means you’re saving on CMHC mortgage premiums.
- You can use both of your incomes to increase your buying power meaning qualifying for a higher mortgage, which may mean a better property
- And also have the added benefit that you can split expenses relating to the property. Replacing a roof at a cost of $5000-$10,000 may be more bearable by splitting those costs in two.
The disadvantage is:
- If this joint venture doesn’t go as planned, be mentally prepared this could ruin your friendship if you’re not able to find common ground on issues that may arise, so we advise clients to get an iron-clad contract in place to spell out, who’s responsible for what.
- Questions that can arise are: What happens when one party wants to sell and the other doesn’t? What happens when it’s time to pay for repairs and your friend doesn’t have the funds to pay? What happens if one party wants to refinance and take out their portion of equity and you don’t?
- Just as banks evaluate you based on credit history and income and if they are reliable candidates for a loan, I’m sorry to say, you have to evaluate your friend in a similar way to ensure you are aligned and share similar values around finances
Contracts between friends need to be clear and protect each of your interests…after all, this is business.
Question 3 from Samantha: “My sister has been looking for condos in Toronto for a long time with no success. Do you think the market will be changing at all in the next year?”
Right now, that the city is back to business and resuming some type of normalcy, the condo market is making a comeback. Now, sales are up, and prices have stabilized. But there are still varying factors that may impact the condo market again.
- Will there be a 4th wave? More lockdowns to come. Depending on the results of the election, each party has a platform with policies that may or may not impact the market and it’s just too soon to tell
- And on the flip side, we are still in a low-interest-rate environment, vaccine passports/certificates are here & a large segment of the population is vaccinated
- So, we can see timing the market can be a challenge – we don’t know how the market will react to the potential factors I’ve just mentioned.
What I would offer to Samantha is if your sister is serious about buying real estate and investing for herself, make her move now and at least capitalize off the low borrowing rates.
She should consider buying something out of the city; consider areas poised for further growth like in Barrie, Bowmanville, Innisfil, Clear View, keep it as a rental property for 2-3 years, if she’s renting continue to rent.
Once her investment has appreciated to a level where she can either sell to have enough to buy in Toronto or leverage that same property and buy another – she very well maybe in a position to buy in Toronto then.
Take baby steps…be smart … the key is to get in and then let the market work your money for you.
Question 4 from Steve: “I’d like to sell my home in February, but would it be worth it to wait for the warmer months to get better offers?”
There are key times of year we advise our clients to sell, such as the Spring/Early Summer market, & Fall markets, depending on the week, homes typically sell for more and faster. February is 5 months from now, that’s a long time in the world of real estate. What we know right now is that the market is hot, and we are in a seller’s market as we speak.
If your home is desirable and in a great area, capitalize on the low-inventory environment we are experiencing right now, capitalize on the demand, capitalize on the buying frenzy happening right now, driven by low-interest rates. If you’re thinking of selling, now’s a great time to do so. That’s what I did.
Question 5 from Aurélie: “Is Real Estate investing easier since I already own a property?”
I love this question because we are seeing most clients who have bought one existing property with us in the last 1-3 years, are already calling us to buy their second!
If you’re fortunate enough to own a property in high-performing & appreciating markets like the ones in Toronto and BC this practice has become quite popular & easier because real estate appreciates so quickly, opening up the opportunity to leverage that asset.
For our clients the equity they’re tapping into, they wouldn’t have otherwise been able to perhaps save within the short period to be able to afford their next property.
So, in short, yes, once you’re in the market, you’re in! As long as you have your first property that has appreciated enough to leverage, the income and down payment to support another purchase, yes, it definitely becomes easier!
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