Downtown Condos

by Darrin DeRoches June 12 - 18, 2014

This past week the condos at the old Royal Connaught went up for sale and a few other projects also made some announcements. The Tivoli released a picture of their renderings of the upcoming project and the tower seems pretty big. The Artizen condos beside the Lister Block also put up a sign to announce their project. Both of these projects are still far away from selling and are announcing their project because the Royal Connaught was on sale.     My client is very interested in buying condos in Hamilton since we’re named number one city to invest in. For years, people have bought condos as an investment in Toronto and their condo market is so huge that some fear that the capability to make money in prospecting condos has come and gone. This has then brought attention to the Hamilton market, but after this weekend I wonder if we get it. The idea of buying a condo below market rate and then reselling it in 18 months to two years when the project is completed only works if the original price is low enough and the resale market raises enough to make a profit. If you were to buy a condo at $390 per sqft and then sell it two years later at $410 dollars per foot, then on a 1000 sqft foot condo you can make $20,000. This speculating buying process helps the condo builder’s ability to sell all the units and get the project built and at the same time allows for investors to make a better return on their money than sitting in the bank. The problem is that the builder has to be willing to sell at the right price and the market has to continue to rise. This is why it is called speculating.     The Connaught, Tivoli and Artizen condos are all big projects and will have to sell a lot of units. Collectively they will bring in over eleven hundred units to the downtown plus the other projects that are being built will bring a huge influx of people living in the downtown in the next two years. The first question people ask is “who is buying these units?” and the answer is simple – everybody. I spoke with young and older people who have the desire to buy condos and live downtown. The downtown area is changing in the right direction and the Royal Connaught will be the turning point.     Sales are the answer to everyone’s questions and sales are happening. Condos have been in the downtown for many years and different projects have had different levels of success. Over the next six months to a year, you will see the success of these projects selling. The next 18 months to two years you will then see the influx of people moving into these condos and downtown will have the biggest growth it has seen since the Royal Connaught was first built. 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 sold@uniquerealty.ca.

A Piece Of The Connaught

by Darrin DeRoches June 5 - 11, 2014

This Saturday, June 7 2014, the sales for the Royal Connaught condo will be available to the public at 9am. Over 3,000 people have signed up on their mailing list and I am curious to see the response to the sale. Personally, I will be there with a client looking to snap up several units but there are only 122 available in the original building with more to come in the future towers. They have not set out prices or announced the amenities and all of the focus is on one demo suite and the grand lobby. I believe this is the best project in the city for today and the future and it will be very interesting to find out how it will be received. The property has sat empty for over a decade and in this time we have had a few condo projects built with varied success and failures.     The Core lofts were the fastest selling condo when they came to market and made a huge splash, and then a few years ago it made another interesting mark when the condo owners had to pay out 20 to 40 thousand dollars per unit in a special assessment. The Witton lofts are the most recent and they were also well received and are a great success.     I predict that the Royal Connaught will be an overwhelming success and only hope that everyone gets a fair chance at buying a unit. Some want them as an investment and others as a piece of history. This sale of our downtown will set the standard for our future condo development.     There are other projects happening and selling but all eyes are on the Royal Connaught. The last special project of this magnitude would have been the Piggott building in the 90’s. The building is grand and well–appointed with well thought out units. Unfortunately, the builder went bankrupt and the receiver came in and sold the units under value. They were surprised how quick all of the units went and took their money and moved on. These same units have increased over the years but never reached their full potential.     The pricing on the Royal Connaught will be important not only to the condo market itself but the future of downtown. You only get one shot at getting it right and hopefully they will not undervalue or overvalue the units. The units will be from 550 to 1050 sqft and you have to decide what is the best size and value when speculating on a project that is 18 months from completion.     The risk is there but so is the reward. I will be there with cheque book in hand making the decision for my client to buy one, two, three or even four units if it all makes business sense. If it does not add up then we would have to walk away and wait for the next opportunity, but when can you own a piece of Hamilton history? Saturday morning in downtown Hamilton, that’s when. 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 sold@uniquerealty.ca.

Renew With Someone New

by Darrin DeRoches May 29 - June 4, 2014

One would think being loyal to a lender or insurance company would bring the best results in premiums and rates but you are totally naive to think this. Every time your renewal comes up for your mortgage or insurance policy, change companies! I have been with CIBC for over thirty years and that means absolutely nothing when my mortgage comes due. They have two of my mortgages and that fact also means nothing to them. Insurance companies tell you about these multiple savings and I just questioned them about my renewal and their solution was to increase my deductible by $2500 to five grand and they would give me a 4 per cent deduction or about $130 a year or just about $10 off a month to stay with them. Remember they are already over charging me and have three houses, a commercial property and vehicle insured so their solution is to up my deductible so that if I actually ever use the insurance, I will be out $2500 more and they will drop my premium by $10 per month. So if I was to do the math, that would save me about $1,300 in ten years so if in the next 20 years I would save the increase of $2,500 in deductible to a plan that is already overpriced on just one property of several they are insuring.     There was a study done to prove that staying with your mortgage company upon renewals is the worst case situation. They may give you a so–called discount but if you took that same mortgage to a broker they will get you a better discount and it costs you nothing but time and energy and that is the real issue. Taking the time and energy to send some paperwork and make a few calls to a broker is why most people just renew thinking they are getting the best deal. In some cases you may only save a little and in some cases a lot. Why? The time you renew certain lenders may have some great deals to “drum up some business” and if your timing is right you can save a ton of money. Most people are afraid that the bank or insurance company will not cover them while they shop around but it only takes broker hours to find a better deal. A couple of days if it is a busy time.     I have to get on the phone once I finish this article and find a new broker for my insurance since their solution of increasing my deductible is not only insulting to my intelligence it made me realize how much I hate dealing with insurance – but it is time to make the move. First time buyers get better deals than anyone with loyalty so if you are up for renewal give us a call and we can guarantee you a better deal with brokers we deal with. It takes a little time but it will save you money! 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 sold@uniquerealty.ca.

Pre-Approval

by Darrin DeRoches May 22 - 28, 2014

The infamous line that “my clients are pre–approved” holds a little weight in a typical negotiation and might sometimes help you win the sellers over, since you are truly able to buy their property. The funny thing in today’s market is that pre–approvals are a thing of the past and most people are not aware of it. A few banks still do pre–approvals, but most do not spend the time and effort to do so. In the past, you would provide the mortgage broker with all of your information and they would basically work the deal to get you the most money that a lender would “approve” you for. The lenders realized recently that they were doing all of the work twice and in a lot of cases, they would “pre–approve” you even though you would go with another institution. In today’s market, the pre–approval is more like a general over view of your income and major debts to give you a so–called ballpark rough idea of how much you can afford.     The problem arises when you ask the client to describe their income and debts and in most cases they leave out a couple of crucial items. It goes back to the old saying “buyers are liars” but this seems a little harsh. All banks have a tab on their websites that say “how much can I afford” where you list your basic information. The problem is that you want to buy a home that you probably cannot afford, so if you adjust things by a little — maybe you can afford it. You then get the idea in your head that you can afford a property in the $400 thousand dollar range and in reality, you cannot even be approved. So how can this be?     Everyone has different credit scores, issues and income so there is no secret sauce to figure out what you would be approved for until the broker inputs all your information. The problem is that this is only a general scope of what you can afford. If you are thinking of buying an income property or a second home, then other rules fall into place and you may not be approved. This is causing a lot of deals to fall through since you believe the client or the mortgage broker but the bank has the last word and they will not commit until you send them a “real deal”. So sellers have to be aware that the best deal on the table may not be the highest offer but the one where the buyer can actually close the deal. If you are considering buying in the coming months, make sure that your credit and debts are all in order so that you can get approved. Your agent will have to know even more information about your financial position to be able to sell your deal to a seller, since the phrase “don’t worry they are pre–approved” holds no weight in negotiations. 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 sold@uniquerealty.ca.

Agents Acting Crazy!

by Darrin DeRoches May 15 - 21, 2014

I recently wrote about multiple offers and how some are working while others are falling flat on their faces. This is a little more insight into how agents are acting crazy.     I was in a multiple offer situation with two other offers. The usual back and forth happened and it came down to my offer and another offer which had conditions. The sellers were trying to get top dollar, which is understandable. The next move was where the crazy part came in. The agent asked us to go up another ten thousand and the property would be ours, since we did not have conditions. My buyers did not want to raise their price, but the agent told us it would be ours. I stepped into the office and told them that we would go up the ten grand and sign the deal. I stepped out so that they could do the paperwork, and twenty minutes passed. The agent walked out and told me that they were going to go with the offer that had all the conditions. I asked about her ethics and the seller’s word but greed stepped in and they wanted every dollar out of the deal. Again, no sour grapes here but you told me it was ours and then you figured you could squeeze out a few more dollars and take a chance on the deal with the offer that may not close due to conditions.     The agent then has the balls to ask if we would wait the five days for the conditions to play out and if the other offer did not close, would we still be interested? It the old adage “that a bird in the hand is better...”. This agent and seller just bold faced lied to me and now they want us to wait with another ten grand in our hand to buy their property if the other offer falls through. I told them that my clients still wanted the house, but that we would not pay the extra ten grand and told them to call me when the other deal falls apart since they were over paying with conditions and I doubted that the bank would approve the deal.     I spoke with another agent who had the same type of issue this week with the same company who did a “hold off” offer where no one made an offer. This agent then made an offer just ten thousand under asking since there was no competition. The seller’s agent brought back a full price counter offer. So, you overpriced the property to where no one wanted to make an offer and you promised your sellers that they would get competition and top dollar and now you want the buyer to pay full price to make you look like you know what you are doing. The buyer agent tore a strip off the agent and then countered with just under asking. Another property this week that did not get any offers after holding off offers dropped 20 grand and the agent is calling around begging for offers. Crazy agents – price your property right and let it hit the market – cause excitement and garner multiple offers if it is worth it. 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 sold@uniquerealty.ca.

CHMC Cuts Second Mortgage

by Darrin DeRoches May 8 - 14, 2014

Here we go again with the mortgage rules getting tougher and tougher. The CHMC has decided, in all their wisdom, not to insure a second home for individuals looking to buy either a cottage, income property or even a second home in a divorce. They will not insure the mortgage to a second property and without insurance you cannot secure a mortgage unless you put down 20 per cent, which in turn will save you thousands of dollars on the insurance.     So what are you options with this new rule? As we just mentioned, you put down 20 per cent and you can get a mortgage just about anywhere. You put the second mortgage into a family member’s name and gift them the down payment. The last option is not to buy the second home. Actually, there is another option by using private–sector mortgage insurers.     Genworth is the most popular insurer who will still allow a second mortgage but they tightened up their lending practices. The property can only have one unit in it. So no income properties with them. You can buy the cottage but no duplex or even a nanny suite for your aging parents if it has a self–enclosed apartment in the house. Genworth would allow you to buy a property for yourself to live in or a family member, but not now. Think of a divorce situation and you would like to have income coming in with a second unit — not now. Rent or hope your ex–spouse can qualify on their own.     This new rule will allow the secondary market to charge even higher insurance rates for these second homes and devalue the price of income properties since only those with 20 per cent down will be able to buy them. If you are thinking of buying a home in the near future, you may want to consider buying an income property first and qualifying with as little down as 5 per cent. This will then create a great investment and in a few years look to buy a second home for yourself since it will be only one unit and all of the insurers will give you insurance with 10 per cent down instead of paying 20 per cent and higher rate of insurance.     I have clients this week who are using this strategy so that they can look back in 20 years with a great investment property and a family home. This may seem simple but it can make them over a half of a million dollars by buying the income property first and qualifying for more and putting down less.     This change of insurance by CHMC happens on May 30th so most people would not be able to do anything about it and worst of all, most people do not even know anything about it. Information is key and using a broker who is on top of the market can save you thousands today and make you a million over the next 20 years. 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 sold@uniquerealty.ca.

Multiple Offers

by Darrin DeRoches May 1- 7, 2014

It’s the time of year for the event of bidding wars which bring multiple offers. Many agents try to drive up the price by “holding back” offers until a certain date and create multiple offers. The problem is that it can also backfire on you and actually cost you money.  This past week my clients looked at three properties that came on the market with a fixed date for offers.  All three were good homes and two of them should sell over asking.  The dates for offers came up and all three agents called me to see if we had any interest on making an offer and the funny thing was, all three had only one offer registered.      When you get into a multiple offer situation, you must call the brokerage and “register” your offer and then the agent will present “all offers” at a determined time.  The properties were all priced properly but many people in Hamilton do not want to get into a “bidding war”.  The fact that there were not more offers registered and the agents were calling around trying to drum some up makes the whole industry look a little desperate.  There was a story about a property going 195% over asking and everyone gets excited that the market has gone crazy and you can sell your property for top dollar.  The problem with this agent pricing the property was it was priced at a selling price from 15 years ago.  The property got a ton of attention and it also brought 70 plus offers but what did that really prove? Yes, there is a shortage of listings and obviously there are a lot of buyers out there looking for a property but the buzz he created was exactly that – created.     If I was to list a property at a price level from 15 years ago, it too would create a buzz in the Hamilton market but that buzz would be other agent talking shit about me. It would actually hurt the sale of the property and it may even garner a lower sale price.  Everyone keeps saying the “Toronto buyer” will come in and pay the higher price but that is total bullshit and if their agent is even remotely good and can work a computer they will realize it is overpriced and move on to another property.  A properly priced property will create its own buzz in this sellers’ market and garner multiple offers which will hopefully result in a great price and a quick sale.  If your strategy is to get multiple offers and your agent comes up with these far out strategies — kick them out of your house.  A home located in the west end will not sell the same way as a home on the mountain. Different buyers react to pricing and buzz in many different ways so what works in Toronto will definitely not work here.  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 sold@uniquerealty.ca.