The Phones Are Ringing

by Darrin DeRoches March 21 - 27, 2013

Spring is here and the phones are ringing. It may still be cold outside and the flowers are not blooming but the spring market is starting strong. I received four different calls about income properties this week and I do not have any listed. I also had two calls on a commercial property that is for lease but two different buyers want to purchase a property that is not listed. The real estate investor is looking to Hamilton in a big way.     The inquiries are for duplexes, students, triplex and commercial spaces. The questions are all the same – positive cash flow and good tenants. Hamilton is one of the only cities left where you can put down 20 per cent investment and have a property pay itself off and still have a positive cash flow monthly. The first time investor is always a challenge since they believe they will make a ton of money with very little work. A good property will make you money but the right tenants will make your life easy. Every type of investment has its challenges and a little bit of wisdom can go a long way.     Most people think the more rooms in a student house the better the return. Eight rooms at $400 each is $3,600 a month income so buy a property in the mid $400,000 and it all makes sense. I would suggest you get a student house with six rooms in the mid $300,000 and make more money.  Why would I suggest to a buyer to purchase a cheaper home and make less commission? A proper set up home with two baths and 6 rooms is easier to rent or split between groups so you can charge a little more for more space and a better set up. That six bedroom property will bring in $2,400 to $2,600 per month and be fully rented, compared to an eight bedroom house you cannot charge the same price for the attic or basements and it is next to impossible to find a group of eight who want to live together. An eight bedroom house will likely bring in $2,800 to $3,200 per month on average and the difference may pay the mortgage difference but it is more likely to be a challenge. The larger homes tend to turn into “animal houses” and bring a lot of challenges.     Duplex and triplexes are great investments but when you are buying those you have to really consider the locations and what type of tenant and rent it will bring. A rule of thumb is if they do not have long term tenants in them, there is an issue. If the seller is selling this great investment but cannot bother to have put an ad on Kijiji and fill his house it is a big red flag. Pay more for a property in a good rental area with higher rents and you will tend to have better clientele. Investing is not just about the numbers it is also about the location, people and history of the property. V         Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.

The Market Is Changing Fast

by Darrin DeRoches March 14 - 20, 2013

The MLS is a great tool to shop for your dream home but remember your agent’s knowledge and expertise is worth more than a website. In today’s market people believe they can shop online and pick out a house they want, take a look and then make an offer with the listing agent. So why use your own agent? You think that you can even save money doing it that way. The problem is you really do not know what the market is doing and the agent selling the property is working for the seller not you.     I have clients who look at the MLS every day and send me the listing asking me to set up appointments. I spend more time trying to explain to them the problems with the property than actually picking the right properties to view. I know what they are looking for because I’ve listened to their requirements but they still want a showing based on a picture. The problem is they are wasting their time and also getting frustrated with the properties not living up to their expectations. They finally got all their paperwork together so I can finally take the lead and show them what they need and not just a good looking pictures.     The MLS can open your mind to the market but a real estate agent can take you to the right properties and open the doors to your dream home. A real estate agent has access to the properties before they hit the mls and if the right property hits the market it will sell even before the average buyer sees it online. The spring market is just around the corner and having an agent working for you can make the difference between buying a home and chasing after the wrong property. You can also beat most of the competition if your agent is on his toes and gets you in before the property hits the MLS.     The best way to get ready for the spring market is by using the MLS to do your window shopping but you have to have your agent ready to move fast or faster than the market. I am getting people calling me about a property that is for lease but was up for sale last year. There are not enough quality properties on the market and there are buyers looking to find something that is not even there. Then they want a great deal on it. I hate to tell them that the market is strong and prices are going up and the inventory is going down. In simple terms, you are going to pay top dollar for real estate in our market. There is a lot of action and buyers with money ready to buy. Then there are people looking to lease and do not want to pay the asking price. The smart landlord is holding out for top dollar because available space is limited. The market is changing fast – pay attention. V         Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.

The Right Mortgage Broker

Mortgage Broker

by Darrin DeRoches March 7 - 13, 2013

The right mortgage broker can save you a ton of money. When buying a house most people are so excited that they will sign just about any mortgage to get the money so they can have their dream home. The majority of people just walk into their bank and ask for a mortgage where they are given a percentage that is posted by the bank. They figure it is the best deal and sign away. The problem is it usually is not the best deal for them but rather for the bank. This is why everyone should always consider using a Mortgage Broker for their renewals, new mortgages and re– finances.     The only problem with this is to find the right one. Usually when buying a home your real estate agent works with several brokers. Some are good at customer service and some are good with “getting the job done.” So you have to be careful who you go with since they are handling the biggest purchase that most people make in their lives. Just because they can get the job done does not mean it is worth signing your life away. I had an unusual need for a mortgage for a client of mine so I called the mortgage broker to see if they could get it done.     The client has a home that is fully paid off and is currently up for sale and is worth $280,000. They wanted to buy a new townhome that was worth about $170,000 today before the original home sold. Most people would just say to get a “bridge mortgage” from your bank. Simple enough but the bank said no. The original house is worth over $100,000 more than the house that they wanted to purchase—why would the bank say no? Banks would do the deal but it would require a lot of paperwork and time to get it done and when pressed on this their answer was simply no. So when we asked the mortgage broker to shop it around to lenders, he did.     The problem was the client was in–between jobs and the banks were worried that they would be unable to pay the carrying costs. The mortgage broker kept getting declined from several banks so he looked into private financing. This is where he got a yes! Only one problem—they wanted $16,000 to do the deal and then a monthly payment which was about double the posted rate. It would have cost the client about $20,000 to buy a home before selling theirs. Of course we declined the deal but the mortgage broker found another private lender who did the deal for under $5,000 and a reasonable carrying cost.     Big difference from 20 grand to 5 grand and a yes from a definite no from the banks. This was all completed in less than 48 hours and we closed the deal early. Working with the right people not only saves you a ton of money but gets the job done—the right way! If you need a qualified, honest mortgage broker drop me a line and I will give you his contact information. V         Darrin DeRoches is a local real estate and mortgage broker. He can be reached to answer questions, comments or stories about real estate experiences through this weekly column at mail@uniquerealty.ca.