This week, I contacted home inspectors from all across Ontario to get their opinions on the most common issues found during home inspections. More specifically, I asked them to list issues that buyers might not notice themselves, but if left unresolved, could lead to significant and costly damage.
While reports varied slightly, there were constants across the board. From them, I was able to come up with this top-5 list. Should you decide to forgo the home inspection on your next purchase, here’s what you might be risking.
#5 – Improper insulation/ventilation in attics
Insulation and ventilation issues in attics can lead to costly bills, mould and mildew issues and heating and cooling issues. “Proper ventilation can actually be more important than proper insulation,” says Eric Parent of Parent Inspections Inc. in the greater Ottawa-Gatineau region. “Most people don’t realize that.” A good home inspector will come equipped with a ladder, ready to inspect the attic for proper ventilation and insulation. A thorough inspection will ensure that homeowners don’t have issues later, which will potentially save them from hefty heating and cooling bills.
#4 – Handrails and guardrails
This one surprised me, but it was on nearly every single report. According to Darren Johnston of Johnston Home Inspection in Guelph, “Tripping and falling is the number one cause of death or injury in the home.” These trips and falls are usually the direct result of a combination of uneven stairs and missing, too low or weak handrails. To reduce the risk of injury or death, have proper guardrails installed. They’re surprisingly inexpensive.
Rent-to-own properties provide higher rental income, lower expenses and typically attract better tenants. They also give would-be home owners the opportunity to become home owners when banks are turning them down. The biggest challenges with rent-to-owns come into finding and screening tenants and pricing the property appropriately for the term.
There are two ways to approach rent to own investing: with the tenant in place working with you to find a property or with the property first and you work to find the tenant.
What works best? Finding the tenant or finding the property first?
When many of us think about mortgage payments we think of them in terms of monthly payments. Your lender likely offers an accelerated bi-weekly mortgage payment plan – something you may want to seriously consider.
An accelerated bi-weekly payment plan involves a bi-weekly payment, rather than the usual once-per-month payment that most people take. By paying bi-weekly you end up contributing 26 half-payments or 13 full-payments to your mortgage debt. That’s one whole extra payment per year. It might not seem like much, but wait until you see how it adds up on paper.
Every extra dollar that goes toward the principal balance on your loan helps reduce the amount you pay in interest. Over the years, it can really add up, especially if you have a lengthier mortgage term. To get a better idea of what kind of money you could save in the long run, let’s have a look at some numbers.
To do so, we’re going to use the Financial Consumer Agency of Canada’s online mortgage calculator, found here.
Scenario 1
Tabatha and Simon purchase a home for a nice round number of $200,000. They have spent a long time saving and are able to put $50,000 down, reducing the amount they need to borrow to $150,000. Their lender offers them a mortgage at a rate of 6% for a 30-year term, making their monthly payment a mere $892.24. Tabatha and Simon are thrilled at how manageable their mortgage payment is. At the end of the 30-year term, when their $150,000 mortgage is paid off in full, they have paid an additional $171,204.65 in interest, for a total cost of $321,204.65.
Scenario 2
Michelka and Isaak purchase their new home for the same price - $200,000. They also put a hefty payment of $50,000 down. Unlike Tabatha and Simon, the couple chooses the accelerated bi-weekly payment plan at the same interest rate of 6%. They’ve heard that they will save money on interest in the long run. Their payment comes to $446.12 and is paid every two weeks. Since they both receive pay cheques bi-weekly, an accelerated bi-weekly payment plan just made sense for them. The total interest on the life of their loan amounts to $134,456.55, at a total of $284,456.55. Although Michelka and Isaak are only paying one extra payment of $892.24 per year, they saved a whopping $36,748.09 over the 30-year period.
An accelerated bi-weekly payment plan isn’t for everyone, but it’s certainly worth the consideration. Since most people get paid bi-weekly, it often works out quite well. In fact, most people who have switched from monthly to bi-weekly payments say that they don’t really notice the difference at all – but they certainly will in the long run.
Steve and Emily were excited about the new home they’d found just outside of Cambridge, Ontario. They had always wanted to live in the country and the location was perfect – or so they thought.
Two days before signing, Emily made a keen observation that would change everything. Nearly every house along the country road had a For Sale sign out front. Curious, she asked her real estate agent why, but he said he didn’t know. It would later become apparent that he had known all along – plans were in the works for a new multi-lane highway, which once complete, would run right through the heart of their quiet community.
For obvious reasons, Steve and Emily backed out, losing their deposit and the money they’d spent on the home inspection in the process. They learned an important lesson that day, one from which others could benefit.
Toronto City Council approved the sale of 22 Toronto Community Housing Corporation (TCHC) single-family houses back in May, 2011, all of which are in need of significant repairs -- albeit some more than others.
Although a contentious issue for some people, for those looking for prime real estate and are willing to put in money for the work needed, this is a fantastic opportunity.
The first five single-family houses have been approved to go up for sale in the Beach and Cliffside area of Toronto, two of which are on the market now. The sale of the total 22 homes is an effort to contibute to the reported estimate of $650 million in overall capital repairs needed for TCHC.
Here's a look at the first two on sale:
Reader EB writes: "There’s a rumor circulating around our neighbourhood that a vacant house has been taken over by squatters. Could that be possible?"
“Squatters rights,” is a casual term for what Canadian realty law calls Adverse Possession. Adverse possession occurs when someone tries to take control of a piece of land that is owned by someone else, thereby excluding the true owner from the property.
In the featured property series, we look at various homes that are currently for sale. It's an opportunity to gauge the current real estate market and see inside available homes. Whether it's a new luxury condo, a modest suburban bungalow, a country home outside the city, or a mansion in the swankiest corner of Canada's hottest market, we'll feature it.
Up today is this affordably priced condo in Toronto's Parkwoods-Donalda neighbourhood.
Address: 1338 York Mills Rd. Unit 1107
Neighbourhood: Parkway, Denalda
Agent: Simon Milberry, DeClute Real Estate Inc., Brokerage
Asking price: $157,900
Maintenance fees: $503/month
UPDATE: Sold for $153,000 after 12 days on the market.
The Property:
With a spacious master bedroom, plenty of closet space and balcony, this one bedroom condo in central Toronto is close to shopping and restaurants as well as major highways. There are great amenities in this building as well, including an outdoor pool, exercise room, recreation room and sauna.
 In January of 2011, Jim Flaherty, Canada’s Minister of Finance, announced that new mortgage and Home Equity Line of Credit (HELOC) restrictions were to come into effect as of April this year. The new rules were implemented in an attempt to curb rising consumer debt; it was quite obvious that household debt was increasing at an alarming rate. Four months later, are Canadians sinking further into debt, or have Flaherty’s restrictions brought about the stability he sought?
The New Rules
To help speed up the equity-building process, and in an effort to reduce interest payments, Flaherty reduced the maximum amortization period from 35 to 30 years. Rather than making the taxpayer responsible for consumer debt, as government backed HELOCs did, the new rules made financial institutions responsible instead. And finally, Flaherty reduced the refinancing of mortgages from 90% to 85%. This was done to discourage homeowners from borrowing against their homes and to save money instead. Flaherty said, “The prudent measures announced today build on that advantage by encouraging hard-working Canadian families to save by investing in their homes and futures.”
I'm a lousy property manager.
Mary taught me that.
Mary showed me that it takes a special kind of person to put up with other people's garbage, complaining and general nitpicking.
Mary wasn't like the bad tenants you are probably afraid of getting. She always paid her rent and she kept the property in good shape.
She was just a gigantic pain in the butt.
She fought with the tenants in the unit below her (twice their fights got so intense police were called to the property). She called to complain about EVERYTHING.
Really – she did.
She called to complain that the drawer under the stove was a little sticky and required a bit of effort to open.
And, as a clerk in a law office, she used what little legal knowledge she had to threaten, scare and upset me.
It was during one of those moments - where she threatened legal action against me because the furnace pilot light had gone out one Saturday in winter and I hadn't magically known this and had it fixed before she got home for the day - that I broke down, cried and quit managing our properties.
Unfortunately, this happened in the middle of a candle lit dinner out at a lovely restaurant… but that is a story for another day.
My husband Dave, who is my knight in shining armour, hired a property manager to take over for me so I wouldn't have to take any more calls from Mary.
I turned everything happily over to our new property manager... and have not managed any of our properties since then. I can’t avoid tenants completely but I am no longer solely responsible for tenants.
To help you avoid a melt down over dinner in a restaurant, I thought I would offer you a little quiz to help you figure out if you suited to be a property manager.
Maybe you’ve been surfing some real estate sites lately, and you’ve come across a few terms that are somewhat foreign – a refresher course on home ownership in Canada may help. In real estate in Canada there are three broad categories of home ownership – freehold, condominium, and co-operative. What are the differences?
Freehold Ownership – the most common type, this is where the owner owns the house and the land as set out and defined by property lines. This type allows for the most freedom – you can renovate, paint, decorate to your heart’s content without answering to anyone else (albeit spouses and neighbors will have opinions, as will local building codes if you are embarking on major renovations – but that’s another story). Freehold comes in the way of detached, semi-detached, bungalows, townhomes, apartments, vacant land and much more.
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July 2011
