What is the best way to get into the Real Estate market with limited funds.

DARLENE

Buzzer

44

2

What is the best way to get into the Real Estate market with limited funds.

Real Estate is still a great investment, and many people with limited funds want to get into the market. I say the best way to do this is by taking baby steps. Start small then work your way up. I say it's not in your best interest to be house poor. What do you think?

25

Canada / General Chit-Chat

BLOCKBUYR

Buzzer

14

1

Play the pre-construction game, and get in very early. You don't need to put much down, and if you play your cards right you can get an assignment clause and lots of other great extras.
Better yet, buy two condos on a bulk deal, sell one, and keep the other and rent it out.

RONALD SAMSON

NewBee

2

Make sure its a solid builder. Look for builders that have a good track record in area. Look for Projects that will be completed with 2 years. Get a good lawyer- i have seen builder that hide up to $40,000 extras in development fees- that's fees above the purchase price.

MATTHEW SLUTSKY

Senior Buzzer

2299

171

^^Up to $40,000 per suite?? You must share more information on this!

BLOCKBUYR

Buzzer

14

1

Ronald said:
Get a good lawyer- i have seen builder that hide up to $40,000 extras in development fees- that's fees above the purchase price.

Cap your closing costs people!!

DARLENE

Buzzer

44

2

Ronald said:
Make sure its a solid builder. Look for builders that have a good track record in area. Look for Projects that will be completed with 2 years. Get a good lawyer- i have seen builder that hide up to $40,000 extras in development fees- that's fees above the purchase price.

Ronald, I have never heard of builders being able to hide $40,000 in development fees. I know that sometimes people don't understand the closing costs, although I don't believe that they are that high. Could that be what you mean?

MATTHEW SLUTSKY

Senior Buzzer

2299

171

^^Agreed.. Maybe $10,000+ for all closing costs, but never $40k.

RONALD SAMSON

NewBee

2

Guys im not in debating fact- ive seen three situation in the last two years that my lawyer have caught $40,000 in extras. He a great lawyer if i may say he reads all the clauses and protect my clients. Builders have been doing this more and more in the last two years as they advertise these "cheap" priced condos.

DARLENE

Buzzer

44

2

Ronald said:
Guys im not in debating fact- ive seen three situation in the last two years that my lawyer have caught $40,000 in extras. He a great lawyer if i may say he reads all the clauses and protect my clients. Builders have been doing this more and more in the last two years as they advertise these "cheap" priced condos.

Ronald, although I have never heard of that, I would never say it couldn't happen. Bottom line is you are right when you say that purchasers should be very careful and I always say that they should do their homework regarding choosing a builder.

BLOCKBUYR

Buzzer

14

1

@Ronald, I would like to know what these three projects are. It is not that I do not believe you, but when I hear something like that I must know who the builder is.

DARLENE

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44

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BlockBuyr said:
@Ronald, I would like to know what these three projects are. It is not that I do not believe you, but when I hear something like that I must know who the builder is.

Frankly, I wouldn't mind knowing either.

MIKE DREW

NewBee

8

I was told any builder involved with Baker is a good builder.
Sound correct to anyone?

VANCOUVER BUZZ

Buzzer

23

2

Darlene .. definitely start small and work your way up. Pre-construction is a good idea during good times, but very speculative unless you choose the right location at the right price point and the right builder/finishes. A lot of 'investors' in Vancouver were caught buying a few pre-construction condos right before the big drop off in 2008/2009 and lost a lot of money.
My personal recommendation is to get into an entry level price (resale, new sale or pre-construction) and make sure that you do your homework. Do your due diligence ... if it is a home for yourself, don't forget about all the extra monthly fees, property taxes, insurance etc. Have an exit strategy.
If is is an investment, cash flow is king. NEVER buy an investment property without doing your proper homework and budgeting 10% monthly contingency for vacancy, repairs, strata increases etc.
And Ronald - re $40k hidden fees ... we've seen this in the Vancouver market where builders promote 'HST included' or 'GST included'. What they do is increase the purchase price by 7-10% and say that the HST is included. But what happens is that the home buyer won't be able to get the HST/GST rebate. So not a hidden fee, but certainly, not a good deal for the buyer.

ED

NewBee

8

1

The HST issue also applies to Ontario. It could also be a big surprise to investors of new condos in Ontario. Read this article (under 12 - CAUTION) to see how the HST could mean an additional $40K in closing costs for investors of new properties.
http://homelegalcost.com/hst.asp

Disclaimer: I don't have any affiliation to the website/company I listed above. I just find this article to be very informative and an eyeopener for many.

DARLENE

Buzzer

44

2

Vancouver, I agree with what you say. As for the $40,000.00 hidden costs, I said before that it could be those closing costs HST etc. that many purchasers just aren't aware of.
Ed, thanks for the link. Very informative.

PHILIPPE LABRIE

NewBee

2

If I were you, I'd look for regions that have good growth in the rising prices of houses and haven't reached too high of a Cap (aka Vancouver).
Kind of in-between.
Find a builder over there that has a good track record and has been in business for a while.
Play around with the numbers and if it makes sense, you're probably going to make money off it.

BENJAMIN BACH

Buzzer

41

2

Phillippe, pricing in Vancouver is crazy, as is pricing in downtown Toronto, especially when compared to other growth markets in Canada.
For example, Kitchener Waterloo has brand new condos selling between $300-400 per sq ft.
$400 per sq ft is for a high end building.

PERRY WONG

NewBee

8

Good guestion ... with limited funds, how about using your existing RRSPs ... you can easily transfer your existing rrsp into a secured real estate investment earning an estimated 12% per annum return. Use your limited funds and combine the transfer with a new current year rrsp contribution and get a tax deduction. Check out this short 1.5 minute video on one of the available project ... http://www.youtube.com/watch?v=rAhmGodu-Uk
Your funds are fully secured as a registered lien against the property as collateral.
Please call me for more details ... Perry Wong, CA 1.877.999.7011 perry@perrywong.ca

PHILIPPE LABRIE

NewBee

2

Benjamin said:
Phillippe, pricing in Vancouver is crazy, as is pricing in downtown Toronto, especially when compared to other growth markets in Canada.
For example, Kitchener Waterloo has brand new condos selling between $300-400 per sq ft.
$400 per sq ft is for a high end building.

Sorry, in my post I didn't mean to say that Vancouver was a decent candidate, I meant to say the contrary. (aka vancouver was targeted at the Capped regions)

DARLENE

Buzzer

44

2

I am glad that my questions has received such a great response. There are so many people who really don't have a lot of funds, but want to get into the real estate market. I always say that real estate is a good investment, and everyone should take advantage of it, if they can.
Perry, thank you for such a detailed answer to the question. I am sure it will be helpful to those who are looking for real estate with a limited budget.

ANONYMOUS

My very first real estate investment was to buy a little bungalow in the yonge and Sheppard area of Toronto which at the time was an up and coming area. It had a basement apartment already and a storage space that we converted into a second basement apt. The income from the main floor and the one apartment made us positive cash flow almost immediately after some minor cosmetic repairs. Once the third unit was rented it was very positive cash flow. For only 10% down we did very well. There are still lots of properties in areas of Toronto and York region where this can be done. I think there has been somewhat of an overfocus on condos especially precon. Remember you have to stay ahead of the curve to make real money. Look for up and coming areas. One fundamental that would be good to remember is in the end a brick and mortar house holds value and appreciates more than a condo.
Probably the simplest investment to start with is to buy a personal property and rent the basement. Doesn't get much safer than that. There are also some REITs that u can buy shares in. This can be good way to put very little into real estate without physically owning property.
I'm not saying precon condos can't be good because many have made $ on them. Just don't forget there are other options. A good Realtor, like me hahaha, can help go through all the options.
Happy investing!!
@brianprashad

BRENT WILKER

Buzzer

126

4

To limit any risk I personally wouldn't buy anything I couldn't rent out with a positive cash flow.

DARLENE

Buzzer

44

2

Brian said:
My very first real estate investment was to buy a little bungalow in the yonge and Sheppard area of Toronto which at the time was an up and coming area. It had a basement apartment already and a storage space that we converted into a second basement apt. The income from the main floor and the one apartment made us positive cash flow almost immediately after some minor cosmetic repairs. Once the third unit was rented it was very positive cash flow. For only 10% down we did very well. There are still lots of properties in areas of Toronto and York region where this can be done. I think there has been somewhat of an overfocus on condos especially precon. Remember you have to stay ahead of the curve to make real money. Look for up and coming areas. One fundamental that would be good to remember is in the end a brick and mortar house holds value and appreciates more than a condo.
Probably the simplest investment to start with is to buy a personal property and rent the basement. Doesn't get much safer than that. There are also some REITs that u can buy shares in. This can be good way to put very little into real estate without physically owning property.
I'm not saying precon condos can't be good because many have made $ on them. Just don't forget there are other options. A good Realtor, like me hahaha, can help go through all the options.
Happy investing!!
@brianprashad

Thanks Brian for your response, and I always endorse finding a good realtor, such as yourself, to help people find a great income property.

JOEY RAGONA

Buzzer

21

6

Hi Darlene, and crew...
Some great suggestions here and I would like to know what "limited funds" means to you. Is it 10, 20, 50k ?
I'm not a huge fan of pre-construction condos because it's tying up your money for years before the build actually happens. Secondly, you are speculating on the income the unit will produce because there is no factual data on the firstly the expenses and more importantly, the actual rent someone will pay for the unit.
Many times in a newly registered condo (after it's been built and occupied) the rents usually fall in line with whomever is panicking and sets the lowest price. You will be hard pressed to go above that price if your unit is the same, with very little value to offer for an increased rental price.
Another suggestion for you is if you have limited funds of say 20k, look into a joint venture with an expert in real estate investing already. You will be able to get a fantastic return on your money (if they are sophisticated) and you may also be able to bring a friend with you providing the other portion of the down payment so everyone wins.
If you need more information on that, don't hesitate to ask - people are finally starting to wake up after being bombed with the financial industry and no longer believe the "just hang on while it jumps back" mentality so I applaud you for beginning to take control of your money!

PERRY WONG

NewBee

8

I also have access to another RRSP eligible real estate investment involving a Napa Valley winery and crushing facility. This investment is perfect for lovers of premium quality wines ... unlike your typical investment where you will be earning a monetary return on your investment, in this investment, you will be receiving 60 bottles of premium quality Napa Valley wines (valued at over $4500 per year) every year for 25 years !!! Your investment is only $11,000 (rrsp eligible so its 100% tax deductible as a rrsp contribution) and in approx 3 years (Dec 31st, 2014), you will receive a full return of your $11,000 investment. You still retain part ownership of the winery and you will still get your 60 FREE bottles of premium Napa Valley Wines every year for 25 years ($4500 per year in value).
Any wine lovers interested, please contact me for more details .... Perry Wong, CA 416.999.7011 perry@perrywong.ca

MATTHEW SLUTSKY

Senior Buzzer

2299

171

^^sounds like a scam. No?

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