Archive for March, 2012


well that didn’t last long…….

RBC raises mortgage rates, signals end to price war

Royal Bank of Canada, the country’s largest mortgage lender, is increasing its rates.

The move is a sign that the mortgage price war could be drawing to a close as banks seek to reinflate their profit margins.

RBC announced Monday that its special rate on four-year fixed-rate mortgages will be increasing by half a percentage point to 3.49 per cent.


..courtesy of the Globe and Mail.


Interesting piece on NBR


Bank of America is trying a new tactic to help struggling home owners- providing the owners meet certain criteria, 60 days late with their mortgage, failed attempts at getting out of the hole, the bank will take over the title, and rent out the house to the current owners. Sounds like a win-win, but definitely a great idea for the bank to pick up these houses at for a low cost, and having tenants in place is half the battle.


the value of reading……


No matter how busy you may think you are, you must find time for reading, or surrender yourself to self-chosen ignorance.

– Confucius


In any business, field, or hobby one must continually strive to learn more, to become better at what you do, and in our case, to separate ourselves from the competition.  I was asked the other day what I read, how I stay current in my field.

Well, I read my fair share of books, usually reading one fiction book and one non-fiction book at the same time.  There are good real estate investing books out there – check out Chapters and get a couple!

I also read some business and industry mags – Canadian Real Estate Magazine is pretty good – every month they feature investors that have grown their portfolios substantially, some good tips about getting the maximum return from your investments, and financial experts that discuss proven strategies to get you access to capital..

Check industry blogs as well…I’ve heard the AG Secure blog is pretty good (shameless plug), but there are others as well that have full-time writers contributing their knowledge – check them out, you have nothing to lose, and only knowledge to gain!


it’s the law (rent increases)…


Many questions are asked by both landlords and tenants about rent and the increases that a landlord can and will charge.  There are different rules depending at what point you are at – negotiating a lease or already into a tenancy agreement.

When a unit is vacant, and a landlord is looking to rent the unit we have what is known as a ‘Free Market Rent System”.  The landlord has the right to establish whatever rent they want to charge, and the tenant has the right to negotiate whatever rent they are willing to pay.  Once both parties come to an agreement, then everything changes.

Upon an agreed upon rent and lease, the rental unit now typically falls under what is known as “Rent Control”.  Simple rules are as follows:

  • Increases can only happen once every 12 months
  • To do an increase, a tenant must be given at least 90 days notice
  • The maximum increase allowed without an application to tribunal is set by the provincial government.  (It is based on the previous year’s rate of inflation)
  • You can’t go back and retroactively increase for past years

For 2012 the increase guideline set by the province of Ontario is 3.1%.  A landlord may decide to increase a tenants rent any amount between 0% and 3.1%.  This increase has to be provided in writing to the tenant using the proper form through the Tribunal, and must be delivered at least 90 days before the increase takes effect.  Once increased, there can’t be an additional increase for a period of at least 12 more months.

There are some conditions where increases can be greater than 3.1% but these require an application to Tribunal, and approval on such an increase.

As a side note, some things to consider when giving an increase:

  • If you are already at the top end of the market rent in the area, could an increase force a great tenant to look somewhere else and possibly cost you a vacancy?
  • If your unit is at the low end of the market rents you should look for the maximum increase available.
  • If your increase timetable is at the end of the year you might want to check out next years increase rate before processing.  For example, the 2011 increase was 0.7% .  If a landlord put an increase through for November, then the maximum they could get for 12 months was 0.7%.  But if they waited to Jan 1, then they could put an increase through for the full 3.1%.

It’s the Law ! (an intro)


Many people, both landlords and tenants, get a little confused sometimes about where the rules that apply to rental properties actually reside in the province of Ontario.

So in order to just shed some light on a few of the frequently asked questions, we thought it would be best to help answer those questions in a few of our blog updates.

In Ontario, the rental of residential properties falls under the Residential Tenancies Act  (RTA), and are interpreted and enforced by the Landlord and Tenant Board (part of Ontario’s social justice tribunals cluster).

The representatives of the board for the purpose of hearings are considered “Members” and are non elected representatives.  These individuals are appointed to listen to tribunal cases and then interpret the facts that they are presented with and apply the Residential Tenancies Act to those facts.  They are not judges, and as such they have varying interpretations of the act.

The Residential Tenancies Act, does not apply to the following:

  • Room rentals within your personal property
  • Commercial rentals
  • Hotel room rentals
  • Rent to own agreements
  • Storage rentals
  • The legal status of an apartment (basement Unit)

Looking forward we will discuss some of the following topics;

  • Rent increases
  • No Pets allowed
  • Security Deposits
  • Subletting
  • Notices for landlords and tenants
  • Applications to the board
  • Hearings process
  • Eviction process
  • Advertising and screening of tenants (Ontario Human Rights Act)

another property to manage starting next month…..

20 inquiries in 3 days…..Newmarket is hot!



this just in…


Mortgage rates slashed to 2.99% at CIBC, TD, RBC and BMO.

…definitely a good time to have mortgages up for renewal..




25 billion downloads and counting…

This week Apple announced that the 25th billion app was downloaded…if you spend a minute thinking about this, it’s quite incredible.  Our world is becoming faster and faster and the need for information at our finger tips has never been greater.  Whether it’s to keep us connected to our friends, share our products, or explore our world, thousands of apps have been created and more and more appear every day.  And of course, real estate investing has its own share of downloadable apps designed to help you in your business.

Apps for real estate seem to be found in three main categories: those that are produced by the banks, the ones from realtors and related government bodies, and ones from entrepreneurs designing apps to help the modern investor.

I can’t evaluate them all here – check out the app store, and you’ll see why – but I can point out a couple that are useful and affordable (read ‘free’). can help you find homes based on your criteria, and can even show you homes based on your physical location (location settings need to be turned on).  The downside to this app is that it does not include commercial properties, but if you’re looking for a single unit home, this app can help you find one on the fly.

Another tool to have is a quick mortgage calculator.  Most of the banks have an app that lets you populate the figures to see your monthly debit coverage cost, but if you don’t feel like supporting a bank, the CMHC has a pretty good app that calculates your mortgage payment, and has other useful tools too.


As mentioned there are also a bunch of apps that claim to help you evaluate properties, and while some of these are obviously based in the States (for predicting market appreciation, vacancy rates, etc.), the math (ROI, CAP rate etc.) can be applied to Canadian properties too.

So, check out these tools, they will save you time and ensure that even if you’re mobile, information is at your fingertips, and if you’re ever wondering about something else to help you do your business, there’s probably an app for that too!



still time to buy in the U.S……

The following is from the Financial Post this week.  It’s another great illustration of the potential gain in investing in US properties.  Lots of foreclosed houses, and lots of potential tenants as many people can no longer qualify for mortgages etc.

There are specialized companies out there that help out Canadians find US properties, handle the financial arrangements, locate good property management companies, and can answer questions about the tax implications of owning foreign real estate investments.

It’s a bit of a long read, but worth it……


When Vena Jones-Cox entered the foyer of the once-grand Colonial-style home in downtown Columbus, Ohio, she stepped onto a wood floor that was so moldy and mushy that it actually wiggled. As Cox proceeded down the basement stairs, they disappeared from underneath her.

“I found myself lying on the floor,” says Jones-Cox, 45. “Staring at a dead rat, by the way.”

The house tour from hell didn’t stop her from making an offer on the place. While she was at it, she bid on some other houses, too. Forty nine houses, actually.

She’s paying $3,000 for each, a bit more than the cost of an Apple Mac Pro. “We’re at a bottom,” says Jones-Cox. “I mean, where else is there to go but up?”

As the greatest real-estate fire sale in the history of the United States rages on, the bulk buy is the dead hot deal of the moment. In some of the most foreclosure-ravaged parts of the country, it is almost as if the housing market has become the new big box store, with investors wiping out whole shelves at a time.

The idea is to arbitrage other people’s misery. With the ranks of the rental class expected to swell, investors can buy houses at clearance sale prices, pour some money into repairs and then take advantage of the difference between their low cost of capital and the rent they receive. Often, they bank cash from day one.

Hedge funds and private equity shops like McKinley Capital Partners started to quietly become landlords by buying up inventory last year. Now Main Street investors are following suit.

“They aren’t just buying one rental property,” says Oak Park, Illinois realtor Kyra Pych. “This is a frenzy. They are loading up.”

Pych has five clients who are in the process of buying more than one condo in Forest Park. Illinois. Units that sold for $180,000 during the boom are now going for as little as $13,500. So instead of putting that money into a retirement account, her customers are putting the cash into homes and renting them out.

In Detroit, the Midwest’s aspiring Donald Trumps are buying bungalows for $500 each. In Atlanta, a group of Florida investors are in the process of buying the remaining 322 units in downtown Atlanta’s swank, Art Deco Atlantic Residences, with room service and maids, near Atlantic Station. The prices start at $180,000.

In California, Waypoint Homes, which has already purchased 1,000 single-family homes, got $250 million in funding in January from Menlo Park private equity firm GI Partners for more bulk buys.

“The floodgates are starting to open,” says John Burns, the founder of Irvine, California-based John Burns Real Estate Consulting. “There’s billions of dollars of capital, of my clients alone, (looking) to invest in single-family rentals.”


Up to now, the business of buying foreclosed homes was often an old-fashioned affair. They were usually one off deals, and often involved an auction on the courthouse steps.

But the recent news of Fannie Mae’s pilot auction of a bulk sale of 2,500 homes was a signal to many housing experts that bulk buying is about to undergo a quantum change. The coming auctions will not only put mammoth amounts of inventory up for bid; they will also streamline and automate current procedures.

Amherst Securities managing director Laurie Goodman, a major housing bear who expects further declines in home prices, believes such bulk sales are the key to cleaning out the foreclosure pipeline before any kind of housing recovery gains traction.

It is not hard to see why U.S. housing is turning into the new value asset class of the moment. In an analysis of the 325 major metropolitan real estate markets across the globe, the U.S. was home to the top 24 most affordable markets, according to Demographia’s 2012 International Housing Affordability Survey.

No one can argue with the landlord’s seductive math. There are bank accounts and bonds and annuities with their less-than-one-percent returns, and then, west of Boca Raton, there’s the string of newly-renovated two-bedrooms overlooking the golf course, pool and cabana, along with all the people who have been foreclosed on who are now looking to rent.

For $19,000 in cash, investors can pocket $300 a month, after taxes and homeowner association dues, on each, a 19 percent annual return that compares to the zombie yields from most savings accounts.

In Charlotte, North Carolina, Cheryl and Bob Littlefield, who have five children, are already making the bulk buy work.

Two years ago, the Littlefields inherited $200,000. They considered all of their investment options. Like a lot of people, they found the stock market to be a scary, bi-polar nerve frayer. Bonds and bank accounts offered nothing.

Then there was the lovely little house for $16,000. After putting in a few grand, they cleared $600 a month, after taxes. It went so well they bought another house. And then another. Now they own eight and are in the midst of exploring financing to do a bulk deal for several more.

“I know houses, I don’t know stocks,” says Cheryl Littlefield, who estimates rental income covers 40 percent of the family’s expenses, the rest being covered by her husband’s work as a contractor. “I don’t know what to do if something goes wrong with Exxon Mobil. I know what to do if something goes wrong with a house.”


The cruel irony known to every aspiring homeowner is that there has never been a better time to buy a house. It is cheaper to own – based on the monthly payments at the current interest rates of under four percent – than it is to rent in just about every market across the United States. In Phoenix, for example, it is 21 percent cheaper to own than it is to rent. In Minneapolis, it is 28 percent, according to Burns.

But most who aspire to the property ladder are shut out of the homebuying opportunity. They have no access to credit. They are crushed by record-levels of student debt. A greater share than ever of their paycheck is already going to housing costs, according to Harvard University’s Joint Center for Housing Studies.

That’s where bulk buying comes in to play.

Often, the buyers use the cash they would have otherwise put in a retirement account and put it in houses. People can also use their individual retirement account funds to invest in real estate for use as rental properties.

There are no official statistics on the growth of the bulk buy. But no less than Warren Buffett recently said in a CNBC interview that he would like to “load up” on a couple of hundred thousand single-family homes because it is a “very attractive asset class now.”

Buffett said what held him back was that the business of being a landlord, of managing the homes, was “enormous.”

As it turns out, one no longer even needs to be handy thanks to a new cottage industry of companies that has grown up to manage virtually everything for a landlord, down to the art of hectoring the renter for the rent.

Property management outfits have popped up all over the place, from the high-end down to online companies like, which charges as little as $25 a month.


That is not to say buying houses in bulk does not pose steep risks. Morgan Stanley analyst Oliver Chang christened 2012 as the year of the landlord. But other analysts, like Bank of America’s Michelle Meyer, expect house prices to fall another 7 percent through 2013.

And if the European debt situation deteriorates, or some other economic variable jolts the economy into another recession, all these aspiring property moguls will find themselves with too many vacancies and too much leverage, especially if they have borrowed heavily to refurbish. In other words: another bubble in the making.

That’s not to mention the deals that, no matter how bullet proof they may seem at the time, can still blow up in your face. Just ask all those guys from Orange County, California, who bought in bulk during the boom. Instead of turning into real estate barons, they went bankrupt.

Jones-Cox, she of the 50 homes, has been involved in real estate in Ohio since the late 1980s. She had never looked at bulk buying until last year.

Before she bought her latest homes, she toured each one. She says the condition went from “bad” to “dreadful.” “Some of them had no walls, no windows, no furnace, no wiring, no sink,” she says.

Her plan is to rehab each house for about $20,000 a piece.

She has studied the housing stock in the neighborhood. She says most of it would fit right in with the Third World. She has also studied the demographics and how much people are currently paying for rent. All the math works in her favor, she says.

She doesn’t see how the play could go wrong.

Then again, Jones-Cox concedes, she never thought she would ever be able to buy a house for $3,000, either.

© Thomson Reuters 2012


another property to manage starting next month….


Enter your email address to follow this blog and receive notifications of new posts by email.

Hours & Info

Hours: M-Th 10am - 6pm,
F 9am-4pm