Thinking of selling your home and not sure about what to make the most from your sale? Potential home buyers are often searching for properties that are in “move-in ready” condition so that they don’t have to incur any extra costs when they move into their new home.
If you already own a home suitable for you and your family, renovating with long-term sell-ability means that you will enjoy a better living atmosphere for a longer period of time and will get a handsome return for your investment. The prolonged usage you also get out of the renovation maximizes your investment gain.
We have selected three types of renovation that will give you the biggest return for your investment wile making dramatic improvements to your property:
Kitchen
The kitchen has always been the heart of a home, where everyone gathers and chats about what’s new in their lives. It is also the busiest room in the house as we prepare and eat at least two meals there. That’s why it’s the first room that potential buyers look at when they walk into a property listed for sale. As a result, the kitchen is considered to be a significant marketing tool.
Here, it is important for sellers to emphasis spaciousness, functionality, clutter-free, and effective storage in a kitchen space. Hiring a design professional to design the kitchen is ideal, as they often are able to come up with innovative design solutions as well as finding and specifying the proper materials to highlight the architecture of your house, making your kitchen look more appealing to the potential buyers. In most cases, a kitchen with granite countertops would be a fast seller because it creates richness, elegance, and emphasizes quality. Besides the marketing advantage, granite countertop is also ideal for daily personal use because of its resistance to scratches, natural look and ease of maintenance. You should never try to save money on design, appliances, or labour because these are the basis of a spectacular space. Remember, having the job done well is a value adder; doing it poorly may reduce the value of your home!
According to the Appraisal Institute of Canada, the average amount that you should spend prior to selling your house should be 10-15% of the house value. If you are planning on renovating the kitchen for personal use and not only for the purpose of investment, and if you are going to live in your house for more than five years, then you should spend 15 – 25% or more. In most cases, you will be able to recover the cost of the renovation by the time you sell your house – with a 44% higher return on investment than the average return on other popular renovations!
Bathroom
After the kitchen, bathrooms are the next rooms that buyers look at. To impress a potential buyer, your bathroom should not only feel new, but also look sharp. Usually a bathroom renovation involves the complete replacement of existing finish and fixtures – tubs/showers, toilets, faucets, sinks, tiles, flooring, lightings, cabinetry, and tile-work. Sometimes bathroom renovation also involves the re-location of fixtures and the removal of adjacent walls to create a better layout. A common renovation trend has been enlarging a master or en-suite bathroom into an adjacent closet or laundry room to create space for a large soaker tub and separate stand-up shower. Twin sinks and extensive cabinetry can also offer added conveniences.
A study from Canada’s leading real estate companies shows that a well-designed bathroom renovation will generate a 56% better return on investment than the average popular renovation. The study also shows that most home buyers are looking for spa-like bathrooms with a comfortable environment at first glance. Light colours, rich textures, luxuries such as water jets in the tub and a steam shower stall can emphasize the relaxed atmosphere in the bathroom.
Floor and Wall Finishes
Don’t undervalue the paint and flooring in your home! Walking into any room of a house, the walls and floors are the first surfaces that a person sees; therefore materiality is very important in order to make a strong first impression.
Walls should be smooth and painted in a colour that isn’t too much of a personal preference. A light and warm neutral colour usually works best to both enlarge the look of a space, but also create a warm and desirable ambiance. Simply repainting your walls will give you a 29% better return than other popular renovations.
Flooring should create a good flow between one room to the next and be able to tie in with other elements such as cabinetry, wall colours, and baseboards. Choosing the right floor finish is important as it ties all the individual element of your home together. Always consult a design professional before changing your floor unless you are certain of what you want, as flooring is often difficult and expensive to change.
Based on studies, flooring can generate a 22% better return on investment than the average renovations. If your home has carpet where the family room, dining room and living room are located, it is recommended to have all the carpets changed to hardwood and/or tiles. Not only will it make your home more elegant, but you will also enjoy the benefits of a healthier indoor environment, with less allergens.
Besides the above-mentioned, there are also other types of value-adding renovations that could help in selling you house. Before making any decisions, you should always consider the length of time that you will stay in your house before selling, and consult a design professional for the proper design solutions that suits your needs. Planning ahead in detail always saves you time and money.
This article was provided by BiglarKinyan Design Partnership. Kenneth Ho is partner at the design and construction firm BKDP. For more information about the work of BKDP, please visit their website at www.BKDP.ca.
Thursday, June 24, 2010
Wednesday, June 23, 2010
10 Tips for Turning Your Home into an Income Property
If you’re looking for a way to increase your income, you may need to look no further than your own home. These days, more and more Canadians are turning their homes into income properties. An income property is a home that is bought or developed in order to generate income, typically by renting it out in part or in its entirety. Renting can be a financially rewarding experience, either to provide extra income, or to help pay off a mortgage. So if you’re thinking of going the income property route, here are 10 important steps you should take:
1.Contact your local or municipal government to first determine if you are legally permitted to turn your home into an income property. Work with them to ensure the unit adheres to all existing building and fire codes.
2.Get to know the landlord-tenant relationship regulations in your province. These laws will give you a better understanding of your role and responsibilities as a landlord.
3.Inform your insurance company about your plans for renting out space in your home and ask them if you require any additional coverage.
4.Get your home “renter-ready”. From a simple change such as a fresh coat of paint to a major renovation, try and make your home look and feel as spacious, bright, and comfortable as possible. Your home should look appealing inside and out in order to attract potential renters.
5.Price and market your unit competitively. Scan the classifieds and visit rental websites to find out how much similar units are being listed for.
6.Conduct a screening process for applicants. Consider running a criminal background check, as well as a credit check, on prospective tenants.
7.Draft a written tenancy agreement or lease. It may contain information such as: the date the tenant will move into the rental unit, the rent amount, the date rent is to be paid, what services are included in the rent (such as electricity or parking) and any separate charges, as well as the rules that you require the tenant to follow.
8.Consult a lawyer to look over the contract. Although not necessary, a lawyer can ensure there are no legal problems or issues with the contract before you present it to your tenant.
9.Request a minimum deposit of one month’s rent in advance that may be used against any property damage or unpaid bills related to the property.
10.Have the tenant sign the contract. Ensure the tenant receives a copy and keep the original for your own records. Happy renting!
1.Contact your local or municipal government to first determine if you are legally permitted to turn your home into an income property. Work with them to ensure the unit adheres to all existing building and fire codes.
2.Get to know the landlord-tenant relationship regulations in your province. These laws will give you a better understanding of your role and responsibilities as a landlord.
3.Inform your insurance company about your plans for renting out space in your home and ask them if you require any additional coverage.
4.Get your home “renter-ready”. From a simple change such as a fresh coat of paint to a major renovation, try and make your home look and feel as spacious, bright, and comfortable as possible. Your home should look appealing inside and out in order to attract potential renters.
5.Price and market your unit competitively. Scan the classifieds and visit rental websites to find out how much similar units are being listed for.
6.Conduct a screening process for applicants. Consider running a criminal background check, as well as a credit check, on prospective tenants.
7.Draft a written tenancy agreement or lease. It may contain information such as: the date the tenant will move into the rental unit, the rent amount, the date rent is to be paid, what services are included in the rent (such as electricity or parking) and any separate charges, as well as the rules that you require the tenant to follow.
8.Consult a lawyer to look over the contract. Although not necessary, a lawyer can ensure there are no legal problems or issues with the contract before you present it to your tenant.
9.Request a minimum deposit of one month’s rent in advance that may be used against any property damage or unpaid bills related to the property.
10.Have the tenant sign the contract. Ensure the tenant receives a copy and keep the original for your own records. Happy renting!
Tuesday, June 22, 2010
May brings lower homes sales and fewer new listings
OTTAWA - June 16th, 2010 - Statistics released by The Canadian Real Estate Association (CREA) show that home sales activity and new listings in Canada declined in May.
Seasonally adjusted home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards declined nationally by 9.5 per cent in May from near-record level activity the previous month. While activity declined in more than 70 per cent of local markets, the lower national figure resulted largely from fewer sales in Toronto, Vancouver and Ottawa.
Actual (not seasonally adjusted) national sales activity was down 4.3 per cent in May from the same month last year. In a departure from the normal seasonal pattern, national activity levels in May were also down from April levels. This suggests that the combination of changes to mortgage regulations and rising mortgage rates pulled forward a number of sales into April that would have otherwise taken place at a later date.
“May was the first full month in which sales activity was affected by these changes,” said CREA President Georges Pahud. “An accompanying decline in new listings and housing starts means these changes are also affecting the supply side, which will keep the market balanced and Canadian home prices stable.”
The seasonally adjusted number of homes that were new listings on Canadian MLS® Systems in May 2010 declined by four per cent from the previous month. This marks the first monthly decline in new listings in eight months. New listings had been climbing sharply, rising from a four-year low last September to the second highest level ever last month.
The number of homes listed for sale on Boards’ MLS® Systems at the end of May was up 5.4 per cent from levels at the same time last year, when the supply of homes for sale on the market had started declining.
The national average price of homes sold via Canadian MLS® Systems rose 8.5 per cent in May from a year ago. This is a smaller increase compared to those recorded over the past nine months.
“Supply and demand has become more balanced in a number of major markets,” said CREA Chief Economist Gregory Klump. “Homebuyers now have more choice and are likely be in less of a rush to purchase than they were recently, so the amount of time it takes to sell a home is expected to rise in the coming months.”
With last year’s string of downwardly skewed average price values having now mostly passed, year-over-year national average price comparisons are coming back into line with changes in the national weighted average price.
The weighted average price compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. It climbed 8.4 per cent on a year-over-year basis in May 2010. Similarly, the residential average price in Canada’s major markets was up 9.8 per cent year-over-year in May, while the weighted major market average price rose 10.7 per cent.
The actual (not seasonally adjusted) number of months of inventory stood at 5.3 months in May 2010. This is up from 4.8 months at the same time last year. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.
On a seasonally adjusted basis, months of inventory stood at 6.1 months in May, the highest level since last April.
“The number of months of inventory may rise further in response to easing sales activity and a further rise in the number of active listings,” said Klump. “However, the number of newly listed homes will ultimately retreat in response to a more competitive sales and pricing environment in a number of local markets. The outlooks for the Canadian economy, employment, and mortgage market trends remain upbeat, so supply and demand will remain balanced on a national basis. Canada will avoid a U.S.-style home price correction.”
PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month.
CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.
MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 96,000 REALTORS® working through more than 100 real estate Boards and Associations.
Further information can be found at
http://www.crea.ca/public/news_stats/pdfs/Media_May10rpt_e.pdf
Seasonally adjusted home sales activity via the Multiple Listing Service® (MLS®) Systems of Canadian real estate Boards declined nationally by 9.5 per cent in May from near-record level activity the previous month. While activity declined in more than 70 per cent of local markets, the lower national figure resulted largely from fewer sales in Toronto, Vancouver and Ottawa.
Actual (not seasonally adjusted) national sales activity was down 4.3 per cent in May from the same month last year. In a departure from the normal seasonal pattern, national activity levels in May were also down from April levels. This suggests that the combination of changes to mortgage regulations and rising mortgage rates pulled forward a number of sales into April that would have otherwise taken place at a later date.
“May was the first full month in which sales activity was affected by these changes,” said CREA President Georges Pahud. “An accompanying decline in new listings and housing starts means these changes are also affecting the supply side, which will keep the market balanced and Canadian home prices stable.”
The seasonally adjusted number of homes that were new listings on Canadian MLS® Systems in May 2010 declined by four per cent from the previous month. This marks the first monthly decline in new listings in eight months. New listings had been climbing sharply, rising from a four-year low last September to the second highest level ever last month.
The number of homes listed for sale on Boards’ MLS® Systems at the end of May was up 5.4 per cent from levels at the same time last year, when the supply of homes for sale on the market had started declining.
The national average price of homes sold via Canadian MLS® Systems rose 8.5 per cent in May from a year ago. This is a smaller increase compared to those recorded over the past nine months.
“Supply and demand has become more balanced in a number of major markets,” said CREA Chief Economist Gregory Klump. “Homebuyers now have more choice and are likely be in less of a rush to purchase than they were recently, so the amount of time it takes to sell a home is expected to rise in the coming months.”
With last year’s string of downwardly skewed average price values having now mostly passed, year-over-year national average price comparisons are coming back into line with changes in the national weighted average price.
The weighted average price compensates for changes in provincial sales activity by taking into account provincial proportions of privately owned housing stock. It climbed 8.4 per cent on a year-over-year basis in May 2010. Similarly, the residential average price in Canada’s major markets was up 9.8 per cent year-over-year in May, while the weighted major market average price rose 10.7 per cent.
The actual (not seasonally adjusted) number of months of inventory stood at 5.3 months in May 2010. This is up from 4.8 months at the same time last year. The number of months of inventory is the number of months it would take to sell current inventories at the current rate of sales activity.
On a seasonally adjusted basis, months of inventory stood at 6.1 months in May, the highest level since last April.
“The number of months of inventory may rise further in response to easing sales activity and a further rise in the number of active listings,” said Klump. “However, the number of newly listed homes will ultimately retreat in response to a more competitive sales and pricing environment in a number of local markets. The outlooks for the Canadian economy, employment, and mortgage market trends remain upbeat, so supply and demand will remain balanced on a national basis. Canada will avoid a U.S.-style home price correction.”
PLEASE NOTE: The information contained in this news release combines both major market and national MLS® sales information from the previous month.
CREA cautions that average price information can be useful in establishing trends over time, but does not indicate actual prices in centres comprised of widely divergent neighborhoods or account for price differential between geographic areas. Statistical information contained in this report includes all housing types.
MLS® is a co-operative marketing system used only by Canada’s real estate Boards to ensure maximum exposure of properties listed for sale.
The Canadian Real Estate Association (CREA) is one of Canada’s largest single-industry trade associations, representing more than 96,000 REALTORS® working through more than 100 real estate Boards and Associations.
Further information can be found at
http://www.crea.ca/public/news_stats/pdfs/Media_May10rpt_e.pdf
Friday, June 18, 2010
Selling a Rental - Vacant is Better
It doesn't matter whether you're selling a rental to another investor, or directly to a home buyer, the goals are likely still the same. For most investors, those goals are to sell that rental home for the highest sales price in the shortest period of time.
Drawbacks to Selling a Rental With a Tenant
Unless the new buyer is likely to be another investor, selling a rental home that is occupied by a tenant might cost the seller more than selling it as a vacant rental. That's because tenants often do not want to co-operate with showings, especially since there's little in it for them.
•Tenants might sabotage the sale.
Not every investor and tenant get along. Sometimes, a tenant resents the investor simply because the investor owns the home and the tenant is a renter. But there are other reasons why a tenant might sabotage the sale of rental:
1.Notwithstanding a lease, when the home sells, the tenant might be forced to move out.
2.A tenant might carry a grudge because maybe a repair wasn't promptly fixed in the past.
3.There may have been a dispute involving a late rental payment.
Whatever the reason, the person speaking with potential buyers is often the tenant. A tenant who harbors ill feelings toward the investor may lead a buyer to believe that buying the rental is a bad idea based on the way the tenant presents the home. Such a tenant will not hesitate to purposely point out defects or, worse, make up problems that do not exist.
•Buyer's agents often pass on "By Appointment Only."
If a buyer's agent has a plethora of inventory to show a prospective home buyer, that agent might be very selective when choosing homes to show. Say 10 homes are easy to show and one home requires a 24-hour notice, the agent might not show the "By Appointment Only" home. Tenants sometimes feel that they do not need to return an agent's phone call, so even if the agent does call for an appointment, the tenant might not call back.
•Tenants might not allow a lockbox.
Without a lockbox, a buyer's agent is restricted from access. This means the tenant must be home to let the agent and buyer inside. If the tenant works during the day, it means the home can only be shown on the weekends or in the evening, which limits the number of buyers who can see the home. Moreover, sometimes a tenant will make an appointment and conveniently forget about the appointment, leaving the agent to stand on the doorstep and repeatedly ring a doorbell that nobody answers.
•Untidy State
I'm not implying that all tenants keep messy homes, but they have little incentive to keep the home in perfect showing condition 24 hours a day. They might not think twice about leaving beds unmade, clothing on the floor or dishes in the sink. If the rental home is not spotless, the condition may turnoff a potential buyer. Not to mention tenants don't feel the need to "de-clutter" once in a while.
•Tenants may refuse to leave during the showing.
Buyers feel extremely uncomfortable when a seller or tenant is present during a showing. They feel as though they cannot freely speak nor address any concerns about the home in the presence of an outsider. This means they generally rush through the home and may miss or overlook qualities in the home that if noticed would otherwise make them want to buy it.
The bottom line is buyers need to envision themselves living in the home, and that's almost impossible to convey if the tenants are still in possession.
Drawbacks to Selling a Rental With a Tenant
Unless the new buyer is likely to be another investor, selling a rental home that is occupied by a tenant might cost the seller more than selling it as a vacant rental. That's because tenants often do not want to co-operate with showings, especially since there's little in it for them.
•Tenants might sabotage the sale.
Not every investor and tenant get along. Sometimes, a tenant resents the investor simply because the investor owns the home and the tenant is a renter. But there are other reasons why a tenant might sabotage the sale of rental:
1.Notwithstanding a lease, when the home sells, the tenant might be forced to move out.
2.A tenant might carry a grudge because maybe a repair wasn't promptly fixed in the past.
3.There may have been a dispute involving a late rental payment.
Whatever the reason, the person speaking with potential buyers is often the tenant. A tenant who harbors ill feelings toward the investor may lead a buyer to believe that buying the rental is a bad idea based on the way the tenant presents the home. Such a tenant will not hesitate to purposely point out defects or, worse, make up problems that do not exist.
•Buyer's agents often pass on "By Appointment Only."
If a buyer's agent has a plethora of inventory to show a prospective home buyer, that agent might be very selective when choosing homes to show. Say 10 homes are easy to show and one home requires a 24-hour notice, the agent might not show the "By Appointment Only" home. Tenants sometimes feel that they do not need to return an agent's phone call, so even if the agent does call for an appointment, the tenant might not call back.
•Tenants might not allow a lockbox.
Without a lockbox, a buyer's agent is restricted from access. This means the tenant must be home to let the agent and buyer inside. If the tenant works during the day, it means the home can only be shown on the weekends or in the evening, which limits the number of buyers who can see the home. Moreover, sometimes a tenant will make an appointment and conveniently forget about the appointment, leaving the agent to stand on the doorstep and repeatedly ring a doorbell that nobody answers.
•Untidy State
I'm not implying that all tenants keep messy homes, but they have little incentive to keep the home in perfect showing condition 24 hours a day. They might not think twice about leaving beds unmade, clothing on the floor or dishes in the sink. If the rental home is not spotless, the condition may turnoff a potential buyer. Not to mention tenants don't feel the need to "de-clutter" once in a while.
•Tenants may refuse to leave during the showing.
Buyers feel extremely uncomfortable when a seller or tenant is present during a showing. They feel as though they cannot freely speak nor address any concerns about the home in the presence of an outsider. This means they generally rush through the home and may miss or overlook qualities in the home that if noticed would otherwise make them want to buy it.
The bottom line is buyers need to envision themselves living in the home, and that's almost impossible to convey if the tenants are still in possession.
Tuesday, June 15, 2010
6 Mistakes Home Buyers Make
Mistake #1. Not Getting Pre-Qualified for a Mortgage
Before looking for your next home take the time to get pre-qualified by the bank or mortgage broker you choose. This can save you hours of searching for homes in the wrong price range or worse, purchasing a home and then finding out you don’t qualify for financing. Pre-qualifying gives you peace of mind, helps narrow your search criteria and most importantly, gives your agent a negotiating edge by being able to alleviate the sellers concern over financing. The latter is especially important should a competing offer surface.
Mistake #2. Not Shopping For Mortgage Terms
Rates are negotiable! Banks will sharpen their pencils to get your business especially if you have a good credit rating and bring other business to them e.g. RRSP’s, general account, savings etc. Posted rates should viewed as a starting point. You need to know what the best rate is and this is usually done by get competitive quotes. Also, ask whether the bank will cover appraisal fees, and about buy-out fees, penalties, payment options, portability etc. The time spent can save you thousands of dollars over the life of the mortgage.
Mistake #3. Not Getting Professional Inspections
Nobody wants to purchase a home only to find out later there are defects, latent or otherwise. Ensure you obtain inspections where needed e.g. home inspection, structural engineer, insect, radon etc. If the inspection identifies deficiencies you may be able to negotiate the purchase price to cover required repairs or make your satisfaction of the inspection subject to the homeowner remedying the problem. Your agent can advise you on inspections you should consider.
Mistake #4. Not Using A Professional Real Estate Agent.
A good agent can help you make a purchase with the least amount of problems. He or she can ensure the price you pay is market value. They can offer expert advice on what to look for, conditions to include, negotiation strategy etc. After all, they work for you.
Mistake #5. Buying First Before Selling
If price is important you should always sell your present home before buying another. It has the advantage in letting you know exactly how much money you will have available for your next purchase. Selling your home first allows you to place fewer conditions on your purchase which makes your offer more attractive to a seller. They often will demand more money to take a “subject to” offer which takes their home off the market. The other advantage is if you find a terrific house, chances are others will also find it attractive and you stand to lose it if you can’t make an unconditional offer.
Mistake #6. Not Knowing The Full Cost Of Home Buying
Know all the costs associated with your purchase. Consider the following costs: legal fees, transfer tax, property taxes, new home landscaping, fencing, appliances, window coverings.
Before looking for your next home take the time to get pre-qualified by the bank or mortgage broker you choose. This can save you hours of searching for homes in the wrong price range or worse, purchasing a home and then finding out you don’t qualify for financing. Pre-qualifying gives you peace of mind, helps narrow your search criteria and most importantly, gives your agent a negotiating edge by being able to alleviate the sellers concern over financing. The latter is especially important should a competing offer surface.
Mistake #2. Not Shopping For Mortgage Terms
Rates are negotiable! Banks will sharpen their pencils to get your business especially if you have a good credit rating and bring other business to them e.g. RRSP’s, general account, savings etc. Posted rates should viewed as a starting point. You need to know what the best rate is and this is usually done by get competitive quotes. Also, ask whether the bank will cover appraisal fees, and about buy-out fees, penalties, payment options, portability etc. The time spent can save you thousands of dollars over the life of the mortgage.
Mistake #3. Not Getting Professional Inspections
Nobody wants to purchase a home only to find out later there are defects, latent or otherwise. Ensure you obtain inspections where needed e.g. home inspection, structural engineer, insect, radon etc. If the inspection identifies deficiencies you may be able to negotiate the purchase price to cover required repairs or make your satisfaction of the inspection subject to the homeowner remedying the problem. Your agent can advise you on inspections you should consider.
Mistake #4. Not Using A Professional Real Estate Agent.
A good agent can help you make a purchase with the least amount of problems. He or she can ensure the price you pay is market value. They can offer expert advice on what to look for, conditions to include, negotiation strategy etc. After all, they work for you.
Mistake #5. Buying First Before Selling
If price is important you should always sell your present home before buying another. It has the advantage in letting you know exactly how much money you will have available for your next purchase. Selling your home first allows you to place fewer conditions on your purchase which makes your offer more attractive to a seller. They often will demand more money to take a “subject to” offer which takes their home off the market. The other advantage is if you find a terrific house, chances are others will also find it attractive and you stand to lose it if you can’t make an unconditional offer.
Mistake #6. Not Knowing The Full Cost Of Home Buying
Know all the costs associated with your purchase. Consider the following costs: legal fees, transfer tax, property taxes, new home landscaping, fencing, appliances, window coverings.
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