Single Family Home vs Condo: Which is the Better Investment?

If you’re planning to invest in real estate, you may be wondering whether a single-family home or a condo will provide the best return. Both have their pros and cons, but ultimately, it comes down to your personal preference, the market and the location.

There are several things to consider when deciding which option is best for your investment portfolio.

Investment Return

Condos have long been favored by investors because they’re low maintenance and affordable. The idea is to park your money in the property with the idea that it will appreciate over the years without you having to spend a fortune on maintenance. Ideally, you would sell the condo in the future for a substantial gain.

If you’re buying with the prospect of renting, the fair cash-on-cash investment return tends to be higher with a condo compared to a single-family home (4-7% vs. 3-5%).

Just keep in mind that in the future, when you decide to sell, you may not see the substantial gains you were hoping for. Many potential homebuyers would rather not pay a higher sales price and then pricey condo fees on top of that.

Of course, this doesn’t apply to every market. Myrtle Beach, a hotspot for condo investment, was the second-fastest growing metro area last year. A growing market means a healthy economy and, usually, higher real estate prices. Location has a significant effect on an investment property’s return and appreciation rate.

Tenant Turnover Rate

When renting property, tenant turnover rate is an important thing to consider and will have a direct impact on your income stream. Whenever a tenant leaves, it’s up to you to find a new one.

Finding a new tenant can be a lot of work. It means having to take calls, show the property, do a credit check, pay for advertising and draft a lease. Even if the previous tenant left the home in good shape, you’ll still need to make some minor repairs, like carpet cleaning and paint.

Apartment and condo units, unfortunately, have higher turnover rates (usually every other year). With single-family homes, tenants tend to stay longer.

Of course, if the condo community offers excellent amenities, your tenants may stay longer. And if you can target people who prefer condo living, you may boost your chances of a longer-term stay.

Maintenance and Repairs

One attractive selling point of a condo – aside from its lower price – is the fact that they are low maintenance. With a condo, you pay an association fee that covers the cost of maintaining the exterior of the building.

If there are problems with the roof, the association will take care of it. They take care of mowing the grass, too.

With a single-family home, you’ll be responsible for everything. That includes the home’s exterior, the lawn, the roof, painting, landscaping, etc.

It’s much less work owning and maintaining a condo.


Speaking of the association, condo owners pay a monthly HOA fee for maintenance of the building and grounds. It also covers maintenance of amenities, like pools and gyms (another nice perk of condo living).

But with an HOA, there are restrictions – some very strict. If your tenant breaks the rules, you’re the one that has to deal with the fallout.

That being said, these same rules are what help the community maintain its image.

These are just a few of the many things to consider when deciding whether to invest in a condo or single-family home. Both can offer great returns if the right opportunity presents itself.


Why Canadians are Investing in Real Estate Abroad

Affordability is a serious issue in Canada’s housing market. In Toronto, the average Canadian family would have to spend 45.9% of its income to cover the cost of home ownership.

Many Canadians are heading south or abroad where housing markets are more affordable.

Between April 2016 and March 2017, Canadians spent $19 billion on real estate in the United States. Experts say the exorbitant housing prices in popular cities like Vancouver and Toronto have driven many Canadians to America.

Much of the investment activity is taking place in Florida, California and Texas. We’re also seeing Canadians investing in South Carolina in cities like Myrtle Beach, which offers 60 miles of beaches, and Charleston, which is a booming market overall for investors.

Lack of inventory has pushed housing prices in the U.S. higher, but prices have increased more quickly in Canada. The market is reaching a point where real estate in the U.S. is competitive.

Canadians purchasing real estate in the U.S. spent, on average, $560,844 on property in 2017. The median purchase price also increased to $288,615 last year, up from $223,310 the previous year.

More high-net-worth Canadians are taking their real estate investments overseas. A survey from Sotheby’s International Realty found that 80% of high-net-worth clients owned at least two properties, and one-in-five owned property outside of their home country. That statistic holds true for wealthy Canadians.

Wealthy Canadians are looking to achieve long-term capital appreciation and steady yields from rental income.

Along with the United States, Canadians are buying real estate in Europe and other parts of the world. London is a favorite city for investment, although prices have increased by double-digit percentages in recent years.

Brexit has some investors fleeing the London market for more favorable areas, like Geneva or Berlin. Real estate prices in Berlin increased by 10% in 2016.

Portugal has quickly become a popular investment destination for wealthy Canadians. Villa prices have increased by almost 4% year-over-year and rental yields have exceeded 5%.

Some Canadian investors are turning to Turkey, where a penthouse apartment can be purchased for $200,000 in Istanbul. An authoritarian government and political instability may turn off some investors, but others are finding the reward is worth the risk.

In the eastern Caribbean, investors are buying properties in St. Martin, St. Barth’s and Anguilla. The Dominican Republic is another favored spot for investment, but it’s still a developing nation with “improving infrastructure.”

Turks and Caicos offers a solid high-end rental market, and is a popular destination with Canadian travelers.

Investors with even higher budgets are moving further south to South America. Panama’s stable real estate market attracts many wealthy investors.

Outside of Panama, the gateway to South America, Chile offers Canadians more for less. While the country’s currency has fallen significantly in recent years, it’s capital city of Santiago is clean and modern.

While some investors are venturing out into these higher-risk markets, experts say that most wealthy Canadian investors are sticking to tried-and-true markets, or choosing new ones based on business or ancestry.

End of Toys R Us Leaving Glut of Vacant Space in Lower Quality Locations

The glut of vacant retail real estate space is only going to grow as consumers’ preference for the online versus brick-and-mortar shopping experience continues to claim victims. Toys R Us is the latest and not unexpected retailer demise, and its planned liquidation of as many as 700 stores across the United States is expected to leave millions of square feet of space vacant.

Nothing’s certain about the extent of the potential damage, though, as the company is still trying to negotiate possible rescues. One would combine its 200 top U.S. performers with its Canadian operations, for example.

Either way, there’s still going to be a lot of retail space available, even though landlords should have anticipated the closing given the chain’s long-standing issues. What will make the outlook murkier, though, is the patchwork strategy Toys R Us has used in choosing sites for its stores.

Many of the holes that will be created with the Toys R Us closing will be at strip shopping centers. A percentage of strip malls in the U.S. are in fact doing well – like those that have managed a solid tenant mix of Internet-resistant stores and other concerns like restaurants and specialized medical services like physical therapy services.

But over half of the Toys R Us locations in the U.S. are in what the real estate industry considers low quality, and that will be troublesome to landlords looking to fill their space at similar rates (if they are able to fill them at all).

And it’s not just the quality of the malls that’s an issue. The average Toys R Us space is around 30,000 square feet, when the biggest retail demand seems to be for 25,000 square feet or less. Retailers of a similar size to the chain that might otherwise be interested in the better locations are staying where they are and remodeling or refocusing on their digital capabilities. And while smaller stores are in Target’s sights, it’s eyeing cities and college towns for its expansion – not necessarily where Toys R Us has been situated.

Meanwhile, if the future of the chain’s Canadian operations seems appreciably brighter than in the U.S., it may be due to the “location, location, location” emphasis of the expansion strategy that started in the 1980s.

The Toys R Us Canadian footprint has been far different than in the U.S., with many in prime locations and a mix of big and smaller stores. While some of the properties may have below-market rents, landlord exposures would still be far less than they would be with such older retailers as Sears.

The slow demise of Toys R Us is a story that is still unfolding, and the impact on the commercial real estate market is just one of its various complications. It will be interesting to see how much creative use is made of the space – and how many and for how long lesser locations stay vacant.

Secondary Mortgage Market in GTA – Weighing the Pros and Cons

Home sales in the Greater Toronto Area (GTA) have decreased this year compared to last. The Toronto Real Estate Board reported that sales were down almost 35 percent in February 2018 compared to February 2017. In addition, prices have dropped, with the average sales price falling 12.4 percent for all housing types.

As 2018 moves forward, buyers are getting used to the new mortgage rules and the government regulations that went into effect on January 1 of this year. Home buyers are adjusting to the new housing market measures and have had to recalibrate their plans because of the higher interest rates and new mortgage stress testing guidelines.

What that means is that realtors have to be creative if they’re going to make sales in this market.

For both buyers and realtors, the secondary mortgage market can provide an alternative to traditional bank mortgages, one that in many instances, should be considered. Obtaining a mortgage from an alternative lender is frequently easier and quicker than getting a traditional mortgage. While it is true that buyers often need to have a larger down payment, and the loans are generally more expensive, the secondary mortgage market can provide a solution for buyers who are looking for a different course of action and for realtors who want to help their clients.

One of the great advantages of the secondary mortgage market is that it can provide a short-term solution for buyers who can then, at a later date, make different arrangements, perhaps through a traditional bank mortgage.

For example, a GTA home might have been selling for $1.4million a year ago, and today that same home will likely go for $1.05 million. If a buyer is putting 25 percent down, they will carry a mortgage of $787,500. Most secondary mortgages have a duration of one year or less. So, at 8 percent per year, the buyer is paying in one year 4 percent extra on the mortgage, or $31,496. That means effectively that the property costs an extra $31,496. That’s not really significant since the buyer could close in a buyer’s market that’s discounted. In a year’s time, the buyers can investigate refinancing with a traditional bank mortgage, and will hopefully be in a much better situation.

Realtors who want to guide buyers towards the secondary mortgage market should exercise caution, however, and recommend alternative lenders only to those buyers who can carry such a mortgage and have the financial resources and income ability to refinance within a year.

I would also recommend that GTA realtors who are interested in offering advice about the secondary mortgage market establish direct relationships with alternative lenders rather than with mortgage brokers; brokers will often charge substantial fees, which can add to the costs incurred by the buyers.

Although sales in the GTA market have taken a downturn, there are still a number of ways for both buyers and realtors to take advantage of the market conditions.

7 Money-Saving Ideas When Building a Home

Building a home is expensive. Stick-built homes are more expensive than modular homes, so an immediate way to save money is to choose modular homes. These homes are built in a factory and assembled on-site.

The homes are cheaper and often safer than a traditional construction.

But potential homeowners don’t want to drain their savings accounts or retirement accounts to build a home.

Money-saving ideas that new homeowners recommend are:

1. Take Bids for the Job

Bids are an essential part of the homebuilding process. The goal is to shop around after getting an estimate to build a home. The same process can be done with modular companies. Make sure that even if you’re required to work with a particular builder, ask if you have the option to make sure that the bid is fair.

Oftentimes, you’ll find that bids vary greatly with some being tens of thousands of dollars less or more than the competition.

2. Vet the Subcontractors and Ask for Recommendations

Construction companies often work with a variety of subcontractors that they offload particular parts of the building process to. For example, a contractor may hire another professional to do your:

  • Electrical
  • Plumbing
  • Flooring

Ask for recommendations and testimonials of the subcontractors that will be working on your home. If a plumbing contractor doesn’t have a good reputation, demand the contractor find the right sewer contractor for the job.

It’s better to get the job done right the first time rather than pay more in the future for repairs and to redo the work.

3. Downsize for a Smaller Footprint

Smaller homes cost less to construct. You can choose to build a 2,000 sqft home, but do you really need all of the space? If you downsize to a 1,500 sqft home, you’ll be saving 25% on your home’s cost which is substantial.

If you’re concerned about the home feeling cramped, open floorplans are best.

These floorplans open up the space, often connecting rooms, and make most homes feel lively in the process. If you’ve never had guests sleep over before, ask yourself if you really need that extra guest room.

4. Ask to Source Your Own Materials

Contractors aren’t in the business of helping you find the best price on materials. You can ask to source your materials. This means sourcing some materials, often:

  • Water heater
  • Cabinets
  • Countertops
  • Flooring

You can often save several hundreds of dollars on the above items by sourcing them yourself. Just make sure that your builder is on the same page as you and allows you to source your materials.

Craigslist, Amazon and even Habitat for Humanity often has items that you can buy for a lot less than other outlets are selling them for.

You’ll also want to keep in mind that your home is one of the largest investments you’ll ever make. In the right market, you can build a home and have instant equity in it. What this means is that you’ll have a home, which may have cost $200,000 to build, that might be worth $240,000 when complete.

This is a great return on your investment especially when the home will continue to appreciate in value in the future.

10 House Buying Tips for the United Kingdom Property Market

Buying a home is usually the largest investment of any family or perhaps you are buying an overseas property for investment purposes. Let’s look at what aspects you need to look at to factitive a great purchase and gain solid investment for your money.

  1. Consider whether you should be buying a house at all. 

There is an attitude in the family should by all means own their own home. Home ownership means stability and pride. However, make sure you can afford the mortgage with your current salary.

      2. Research the Neighbourhood.

When you find you are interested in a particular home, it’s time to play detective. Walk through the neighbourhood, visiting pubs, parks, school yards and homes at different times of day. Check that homes are well-maintained, that cars are kept up and there aren’t any derelicts lining the streets.

  1. Check Out the Area with the Neighbours.

Many neighbours can give you valuable information on the particular home or the neighbourhood. Check with those who are not next door, but some distance away. They are likely to be more honest about the area and won’t be either friends or enemies with the sellers. You will also have the advantage of meeting the people you will be living with.

  1. What Is the Potential for Resale?

It is possible you wish to live in your new home until you die and then leave the property to children. If this is not the case, then you must take measure of the resale value of the property. You may need to put some work in on the house.

If the home has been on the market for quite a while, you had better figure out why, because it will affect your ability to sell the home in the future.

  1. Bump Up Your Credit Scores.

Make very sure that your credit scores are as error-free and up to the demands of your preferred lender. Little mistakes that are easily overlooked can take your out of the running. Check the free websites that can give you the current credit rating.

  1. Arrange with Your Lender a Mortgage in Principle.

You probably won’t be able to arrange a mortgage unless you have a particular property in place. Instead, lenders offer what is called a “mortgage in principle (MIP).” This is very helpful in that it lets you know how much the lender is willing to allow you to borrow, as long as you find a suitable property within a specified time. However, the MIP is not a guarantee.

  1. Look at other finance options such as Bridging Finance to secure the property you want.

Bridging loans are a short-term finance option, typically used by property buyers to ‘bridge’ the gap between the sale of their current home and completion date on the purchase of their next home. You might need that window to sell your current property but have spotted a great buy that you need to move quickly on. This could ease the headache of financing your move but you must tread carefully.

  1. What Is the Actual Cost of Buying the Home?

Owning a home costs more than just the monthly mortgage payment. Remember fees can add up to thousands of pounds. From the Mortgage Arrangement Fee to the cost of removal and new furnishings, the cost of the home will likely be thousands more than the “sticker price.”

  1. Typical Home Buying Time Line for England and Wales.

The time it takes to find your new home and arrange for its purchase will likely be longer than you think. It will take you time to find a property you want. It will be wise to narrow your search to two or three neighbourhoods, but don’t be too certain you must be located in only one particular place.

  1. Put in your offer quickly.

Once you have found your desired home, put in an offer. This lets the seller know how much you are willing to pay, plus any other conditions. Once your final offer has been accepted, you will need to arrange for a survey of the property and your solicitor should research any legal issues.

At the time of the exchange of your money for the deeds and keys, it will take just a few weeks until the sale is complete.

Targeting Millennials as a Real Estate Agent – What to Know

Millennials have become one of the largest group of homebuyers. However, due in part to affordability issues and the reluctance of older generations to upsize or downsize from their current homes and free up inventory, Millennials also lag behind the benchmarks set for homeownership by older generations at the same stage in their lives.

The question facing many real estate agents now is how to successfully market to Millennials and help them achieve their goals.

Fortunately, Millennials are very much like the previous generations in their outlook about homeownership: they regard owning a home as a central part of achieving a lifelong dream and perceive it as an attainable goal. On the other hand, as I mentioned above, there are some obstacles that Millennial buyers face that previous generations have not. There are a few ways that a savvy agent can reach Millennial clients and help them make the best decision for themselves.

As alluded to above, Millennials do not have the same kind of financial wherewithal that clients in previous generations might have enjoyed: they are often burdened with debt from student loans and other financial obligations, and face the prospect of rising costs and stagnating wages. Millennials often buy their first home later in life than, say, members of the Baby Boomer generation and, as a consequence, are looking for houses that are inexpensive and simple to maintain.

In addition, and this cannot be overstated, today’s Millennial home buyer will search for homes online, via computer and smartphone. It is paramount that any real estate agent who wants to connect with the Millennial audience take this fact into consideration when building a marketing plan for his or her properties.

There are a couple important things to keep in mind in relation to this aspect of the Millennial audience:

  • Millennials expect to be able to find the information they want immediately. Info about homes should be clear and easily accessible, whether on a website or social media.
  • They also want to be able to see a lot of high-quality photos of properties online. They want to be able to obtain as much solid information about a property as they can before committing to seeing it in person.

Also, thanks to the influence of home renovation shows on TV and things like Pinterest and the proliferation of home decor magazines, many Millennials have different — some might say higher — expectations than previous generations when it comes to real estate.

  • Millennials want new fixtures and updated bathrooms and kitchens. They want things that are new and they want the appearance of luxury and modernity.

Millennials are also, on the whole, more focused on “experiences” rather than the accumulation of things. This means that they place a greater value on certain aspects of a property:

  • Millennials want open spaces within the house where they can entertain, and they want to be in urban or denser suburban areas where they can connect with others.
  • Millennials generally speaking do not want houses that sit on large lots or are difficult or expensive to maintain.
  • Millennials, in general, are not interested in houses that are in need of extensive renovations; they do not have the disposable income to complete renovations and would rather spend that money on activities and experiences.

Keeping all the above in mind can help real estate agents reach the Millennial audience and connect with them successfully.

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What is The Cash Flow Dam?

What Is The Cash Dam and How Does It Work?

 The Cash Dam (sometimes referred to as a “cash flow dam”) is a simple but powerful concept, and it’s an especially attractive option for those who are familiar with the Smith Manoeuvre or other tax minimization strategies. Cash Dam can help you with tax optimization if you have a mortgage and own either a small business or a rental property.

What is cash damming?

 The Cash Dam allows the owner of a small business or rental property to more quickly pay down their non-deductible mortgage on their home. It’s a variation on the Smith Manoeuvre, but without additional investing. The Cash Dam is essentially an expedient way to change bad debt into good debt.

For someone who’s using the Cash Dam, what it involves is using a line of credit to pay for business expenses. Then, while using the increased business cash flow, you pay down a non-deductible mortgage or loan. This, in turn, produces an increasing tax-deductible business loan, while paying down a non-deductible mortgage or loan. Be advised that the Cash Dam as described above will only work for those who own a non-incorporated personal or partnership-based small business or a rental property.


 If you own a small non-incorporated business that has $2,000 in expenses each month and you also have a readvanceable mortgage, then the $2,000 per month expense would be paid by the home equity line of credit (HELOC). You then use the additional $2,000 you have in your business expense account to make a payment on your non-deductible mortgage. Interest paid on money that’s borrowed for business expenses is tax-deductible; by using the Cash Dam, you’ll be left with a tax-deductible business loan and a non-deductible mortgage that’s been quickly paid down.

One of the keys to the Cash Dam, however, is capitalizing the interest on the business line of credit. That way, you avoid using any of your own cash flow and you keep the business line of credit tax-deductible.

How does the Cash Dam differ from the Smith Manoeuvre?

The Cash Dam relies on using a tax-deductible business loan to allow you to pay down a non-deductible debt, while the Smith Manoeuvre allows you to buy investments. Investing from your credit line is why the Smith Manoeuvre has much higher risk and return than the Cash Dam.

Potential applications

 Say that you’re a rental investor, instead of using your own cash flow to pay for rental-related expenses, you can use the Cash Dam and a line of credit. In this instance, using the Cash Dam would help you pay for your personal mortgage and help you satisfy your tax obligations as well.

And if you are a small business owner, the Cash Dam can be extremely advantageous. The strategy gives you a way to quickly pay down your non-deductible mortgage and convert that debt into a tax-deductible business loan.