crew work.compressed

10 DECEMBER 2012 canadianrealestatemagazine.ca

10-17_BuyBuyBuy 10-17_BuyBuyBuy

STRATEGY WHERE TO BUY


BUY!From bustling Alberta to growing Guelph, there are investment hot pockets heating up all over Canada. Jemima Codrington gets the scoop from six investors on where they are putting their money and why now is the best time to buy

BUY!BUY!

BUY!BUY!

10-17_BuyBuyBuy.indd 10 10/17/2012 2:36:58 PM

DECEMBER 2012 canadianrealestatemagazine.ca 11




For Greg Head, striking the perfect balance between market conditions whilst still keeping to the real estate

cycle is the key to a successful investment. Combining these two factors, Head (pictured above) and his business partner Christine Ruptash (right) feel it’s the best time to buy on the West Coast.

“Too often investors get caught up in the hype of the market and buy at the peak,” he says. “We prefer to invest in markets during the end of the slump to early boom, which is why we are once again focused on Alberta and avoiding Toronto and Vancouver.”

It is in this market that Head recently purchased a 1,500 sq ft three-bedroom single-family home. � e property is in keeping with his preference of single-family homes, and while condos are another area of interest, Head cites location as being a deciding factor when considering a condo investment.

Head and Ruptash are currently buying real estate in Edmonton, Grande Prairie, Red Deer and Calgary, and have recently purchased in neighbourhoods such as Bergman and Mission Park. “� ese markets

possess both the economic fundamentals and the position of the real estate cycle that indicate an ideal time to buy,” says Head.

Quality over quantity Head is more concerned with landing fewer deals with long-term cash fl ow than the successive acquisition of multiple properties. Carefully-crafted marketing catches seller interest, then Head lets the rest of the work come to him.

“When it comes to fi nding deal fl ow, we employ a diff erent approach than most investors,” he explains. “We do a signifi cant amount of online marketing targeted toward homeowners who are highly motivated to sell. As a result, we don’t pursue deals, the deals come to us and then we decide if the deal is a fi t for ourselves and the seller. We do less deals this way; however the deals we do are very good deals.”

To assess the quality of a deal and the potential for long-term cash fl ow, Head takes each property to task based on a number of factors. “Before adding any property to our portfolio we stress test diff erent variables such as rents, interest rates and values to see how the entire portfolio would be impacted based

on diff erent scenarios. � is also serves as a scorecard to see how we are tracking to our long-term goals.”

As for fi nancing recent investments, Head cites a number of options that have helped fund the two properties purchased in the past few months. “We use a combination of traditional fi nancing, seller fi nancing, or pay all cash,” he says. “In cases where we pay all cash, we are buying well under market and making money on the buy, and then re-fi nancing later on. Essentially, fi nancing depends on the deal. Each is like a puzzle, you have to know which pieces fi t best.”

For the most recent purchase in Grande Prairie, Head used cash to close then placed conventional fi nancing after renovations.

For the most part, the exit strategy for Head’s investments is based on long-term buy and hold, although he also wholesales deals to other investors. While some investors prefer to follow their gut, for Head, careful evaluation of each deal has led him to success in the current market.

“Fall in love with the deal, not the property,” he advises. “Take the emotions out. Buy based on the overall deal, and consider cash fl ow before equity.”

INVESTOR: GREG HEAD RECENT INVESTMENT: Three-bedroom single -family home in Grande Prairie, Alberta

PROPERTY PRICE: $226,000

POTENTIAL RENT: $2,250

ESTIMATED ROI: (5 years including cash flow/mortgage pay-down) 220%

on diff erent scenarios. � is also serves as a





Calgary-based real estate veteran Randy Bett (pictured above) has watched the market – and the

city – heat up over the past couple of years. “Looking at Calgary’s demographics, net migration is higher this year already than what we expected,” he says. “We projected 18,000–25,000 migrants, and we’ll be at 26,000 and counting before the year end.”

As Calgary’s booming job market brings people to the area, developing and purchasing investment properties was an easy decision. “� ere is, and will be, a demand for quality, new rentals in Alberta, with over 100,000 jobs needed in the next decade just for the oil sands projects. We need places to house the new workforce,” he explains.

In anticipation of this infl ux, Bett has been snapping up properties in the area, including two townhomes in High River, and is working on a purchase plus mortgage with a JV partner to update a legal suited home in the Mountview neighbourhood, Red Deer.

INVESTOR: RANDY BETT RECENT INVESTMENT: Two new three-bedroom townhomes in High River, south of Calgary


POTENTIAL RENT: $1,200 per unit/month

ESTIMATED ROI: 6.2%

“We see the ‘sweet spot’ as being towns and cities within 25km of the Edmonton to Calgary corridor, and on a provincial basis it would be towns and cities within 25km of Highway 1/Trans-Canada Highway, QE2 highway all the way from Lethbridge to Edmonton, and then from Edmonton to Grande Prairie and fi nally from Edmonton to Fort McMurray.”

Bett saw proof of the demand during a bus tour they cooperated with REIN on in August, 2012 with his son Chad, when they put out feelers for what tenants would be willing to pay for a new townhouse.

“We advised our clients to see how much we could get for a $250,000 three-bedroom townhouse. We started at $1,500 and were inundated with responses. We moved it up to $1,600 and still had people seriously interested, and then moved it to $1,700 – nine people were still interested,” he says.

“It closed the next day and four people were on location to look at renting it. Needless to say, the single-family home/townhome rental market is tight in and around Calgary/Red Deer and Edmonton.”

While Bett has seen clients purchasing in areas such as Taradale, Millrise and Shawnessy, he has recently bought a home in the Ravenswood neighbourhood of Airdrie – a city Bett describes as the fastest growing in the west. All three recently-purchased properties were new builds, a deliberate choice after fi nding renovations and constant upgrades to older homes were too costly.

“Tenants prefer newer properties, so it’s worth spending the extra money,” he adds.

Sizing up Alberta’s supply and demand Recognizing the need for investment-grade residential properties, Bett has begun developing them in these areas. To fi nance these developments, Randy and Chad are working on several joint ventures.

“Our JV capital partner supplies cash to purchase a lot in Calgary or Red Deer, or along the Calgary to Red Deer corridor.”

� e father-and-son team then takes care of all of the development from the building plans to lot purchase, permits, estimates, general contracting/development, marketing and sales, right through to completion.

“We’re also setting up a joint venture with a capital partner whereby they purchase the lot and, along with my son, I supply the funds to build the fourplex.”





Bett works with a number of diff erent exit strategies, and has at least two planned for each property. He advises other investors to do the same, especially when other parties are involved in the fi nancing.

“Even if you don’t think you need to have an additional strategy, life changes for all of us and circumstances may dictate a sale. � is amplifi es when you work with JV partners as now you have more ‘life’ experiences which will infl uence the potential sale of a property.”

For his current investment, Bett has a couple of options. “Our exit strategies include building and selling the fourplex as a complete turn-key building ready for tenants, or strata each unit and sell to fi rst-time buyers/investors, or strata and sell the building to a group of investors who purchase one unit each.”

All things considered, Bett’s choice to expand his portfolio in Alberta is one that looks likely to pay off . “More rental demand, higher rents, low interest rates and steady prices for investments are some of the reasons I’m choosing to buy now.”

BETT HAS AT LEAST TWO EXIT STRATEGIES

PLANNED FOR EACH PROPERTY





“My buying strategy is to buy

and hold properties and rent them out. Rent to Own deals

aren’t suitable”

Kelly Sawatski’s young family and full-time job has kept his investing interests in his own backyard, an area

ripe with opportunity. “I’m currently focusing on my local market

on the Sunshine Coast, as well as exploring diff erent areas in Surrey and Penticton,” he says. “It gives me more opportunity to research and visit diff erent neighbourhoods, plus it makes it easier to manage a rental when it’s close by. I’m looking at Surrey for its growth potential and Penticton, where my family likes to vacation.”

Sawatski (pictured above) is currently focusing on single-family homes that either have a suite or the potential for one. “With property values so high, these types of homes provide a much better chance of positive

INVESTOR: KELLY SAWATSKIRECENT INVESTMENT: Single-family home with suite in the district of Sechelt, B.C.


POTENTIAL RENT: $800–$1,200 per unit/month

ESTIMATED ROI: 30%

cash fl ow,” he explains. For his most recent investment, Sawatski opted to purchase a foreclosure at $272,000 and get creative with some cost-eff ective renovations. As a result, the market value of the property is now pegged in the $330,000 region. While the single-family home market is where his interests currently lie, Sawatski is also looking at exploring the condo and apartment market in areas outside of his local area.

Know your marketSawatski’s buying strategy depends on the market of the property, noting that an approach that may prove lucrative in one area may not yield the same success elsewhere.

“My buying strategy is to buy and hold properties and rent them out,” he says. “I would like to start looking more at doing Rent to Own deals but it’s not a suitable strategy in my local market.”

With a portfolio of three properties under his belt, Sawatski’s buy and hold strategy is one that focuses on long-term cash fl ow from a handful of carefully-selected properties.

“I invested so much time in researching potential properties, following through with my due diligence and putting the deal together that it doesn’t make sense to exit in the near term,” he says. “I plan to hold my properties indefi nitely, so long as they don’t become negative cash fl ow.”

� e exit strategy of his current investments play a role in fi nancing future ones, as

Sawatski plans to use the equity built initially to refi nance down the road, and use that capital to acquire more properties in the future. His existing fi nance strategy combines funding from diff erent sources, largely from commercial lenders. However, as his investing interests develop, Sawatski is examining other sources for capital such as a JV partner.

“I’ve used conventional fi nancing, as well as combining conventional fi nancing with a home equity loan, but as my business evolves I will be looking to partner up on a joint venture to fund future deals. It’s a must if you really want to grow your business,” he says.





After self-professed “dabbling” in the industry for over a decade, Mark Knodell (pictured above) quit his

full-time job to concentrate on investing in 2011 – a move that has seen his portfolio grow exponentially. In 2010, Knodell owned

INVESTOR: MARK KNODELLRECENT INVESTMENT: A 28-unit building in Guelph, Ontario

PROPERTY PRICE: Over $1 million

POTENTIAL RENT: $20,000/month gross

ESTIMATED ROI: 15%

13 units in two properties. His portfolio now consists of 152 units throughout eight properties – and counting.

Knodell is investing in Toronto and the surrounding area. He owns six small buildings in Toronto, and has recently made purchases in Hamilton and Guelph. He cites property management as one of the key reasons he never strays too far from home. “� e target market is anywhere within a 60-minute drive from Toronto. I follow ‘the rule’ ... if it’s further than that, one can’t micro-manage if required,” he explains.

Seeking out hidden real estate gems Knodell is Director of Bedford Properties, a Mississauga-based property and asset management company. � e company concentrates specifi cally on the residential property sector, with a total of 300 residents occupying their units across the GTA.

As for fi nancing these properties, Knodell’s strategy is a simple one. “Eighty per cent of our loans are CMHC insured,” he explains. “We choose the CMHC insured product because the cost of insured funds is less than the cost of a conventional structured loan. Maintaining a 75% loan-to-value ratio is key to weathering future downturns. We are considering selling some of our properties; this will enable us to acquire larger assets for further effi ciency and management.”

� ough positive market conditions play a part in his buying strategy, according to Knodell, his simple passion for property is what’s driving him to buy now.

“I simply enjoy the multi-residential business, that is why I’m buying,” he explains. “I’m not trying to time the market with low interest rates, or low vacancy

13 units in two properties. His portfolio now consists of 152 units throughout eight properties – and counting.

the surrounding area. He owns six small buildings in Toronto, and has recently made purchases in Hamilton and Guelph. He cites property management as one of the key reasons he never strays too far from home. “� e target market is anywhere within a 60-minute drive from Toronto. I follow ‘the rule’ ... if it’s further than that, one can’t micro-manage if required,” he explains.

Seeking out hidden real estate gemsKnodell is Director of Bedford Properties, a Mississauga-based property and asset management company. � e company concentrates specifi cally on the residential

rates. While these factors are positive, I am purchasing undervalued assets which many investors are not interested in, such as properties with environmental issues or structural problems. We are creating value by remedying these issues and bringing the asset back to market value.”

Knodell has no intentions of getting out of the investment business any time soon. “I never want to retire from the business, I love it,” he laughs. “Our team runs our business like it could be sold tomorrow, but I don’t have an exit strategy for the entire business. I’d like to work until I’m 92 and pass it on to my children.”

“I am purchasing undervalued assets which many aren’t

interested in, such as properties with

environmental issues or structural

problems”





For Bashar Hussein (pictured above), investing now is not only providing positive cash fl ow in the short term,

but is a decision to help ensure his family is provided for fi nancially, too.

“My plan is for my kids to inherit these properties,” he explains. Bashar has recently invested $2.2 million into properties across the Calgary area, including neighbourhoods such as Tuscany, Arbour Lake and Harvest Hills. Bashar points to the city’s overall high GDP and strong economic fundamentals as the primary reason for choosing this Alberta hot spot. “Calgary has the highest GDP in the country, the lowest vacancy rate and the best aff ordable properties,” he explains.

Creating a legacy Hussein’s most recent investment was a three-bedroom single-family townhouse in Calgary. For his next investment, he is examining plans to buy a multi-family unit, “due to the economy of scale and low risk.”

His fi nancing strategy is a conventional one, purchasing with 20–30% down and then relying on traditional bank or lender fi nancing. � is strategy suits Hussein, who does not work with a joint venture partner, but notes that for the future multi-family purchase, a JV is one option he is exploring. He plans to buy and hold the properties.

Over the past 20 years, Mississauga-based investor Todd Slater (pictured above) has developed a vast and

varied portfolio. Today, he’s looking outside the GTA for his real estate investments. “I like the outer market,” he says. “Hamilton, Kitchener-Waterloo and Barrie are going to be steady for quite a while.”

Slater points to the current market conditions as being attractive to any investor. “At the most basic level, interest rates are the biggest driver. We’re going to see consistency in them staying relatively low.”

� is appeals to Slater’s fi nance strategy, which leverages these low rates from commercial lenders.

“Financing is excellent over the fi ve- and 10-year terms, therefore interest rates make sense for us to go long term in the form of a buy-and-hold strategy,” he explains.

Investing in long-term growth Slater recently purchased a 34-unit

INVESTOR: TODD SLATERRECENT INVESTMENT: A 34-unit condominium in north Kitchener

PROPERTY PRICE: $5.7 million

POTENTIAL RENT: $1,200 per unit/month

ESTIMATED ROI: 7%

condominium in north Kitchener, an investment he said was a simple decision given the current lending climate and steady rental market. “For me, it was a wise investment choice for a couple of reasons. We get steady rent in the area, it’s a well-appointed building and the area has a vacancy rate of zero. For me, it made a lot of sense.”

Kitchener is just one of the areas Slater is exploring, a city poised for development and migration over the next few years. “Kitchener is slightly undervalued in comparison to other markets,” he explains. “It has good growth structure in place over the next few years, and has a close proximity to the GTA. It’s right on the 401, so we’re near major facilities.”

Up-and-coming areas appeal to Slater, who keeps abreast of where the government is investing money.

“I’m always looking for areas of development, meaning areas where the government is putting money. I’m investing in neighbourhoods that are updating infrastructure like schools and hospitals.”

As well as being a well-versed investor, Slater also has his hand in the contracting business. It’s a connection that defi nes his exit strategy, allowing him some fl exibility.

“A key part of our exit strategy is that we have the ability to do condo conversions, and then sell them out to separate buyers,” he explains. “We can essentially chop up the title and sell off individual units.”

� e markets that appeal to Slater are those that are set to develop over the long term, and his recent investment choices refl ect that. His buying strategy consists of focusing on the ratio between purchase price and rent. “I’m concentrating on long-term hold properties, with more of a secure tenant,” says Slater. “Smaller cities and smaller towns are excellent areas to invest because of this consistency.”

INVESTOR: BASHAR HUSSEIN RECENT INVESTMENT: Three-bedroom single-family townhouse in Calgary


POTENTIAL RENT: $1,700/month

ESTIMATED ROI: 22%

10-17_BuyBuyBuy.indd 16 10/18/2012 8:40:13 AM

-

MY INVESTMENT PROPERTY

Facing the fear of the flipCrystal Rael's dream of ioining thereal estate game became a reality withher first flip, She tells Jemim a Codringtonabout her biggest beginner hurdle, howshe learnt to trust her instincts, and herfavourite places to buy now

or Crystal Rael, investing in real

estate was always a dream,

"I've always liked real estate," she

says, "but I didnt know that you

could be in real estate without being a realtor

or a millionaire."

But after doing some research, reading some

literature, and attending some seminars, Rael

was hooked. "I attended a seminar, and what

I learned from that evening was that there are

all kinds ofways to get involved in real estate.

I got really excited about it, and then I went to

every kind of real estate workshop, informationsession and seminar I could find."

The research paid ofl but while Rael was

enthused about getting started, she hadjustone reservation holding her back.

*[******-***'l"I was truly terrified ofrenovations,"

she confesses. "In the past, I had looked at

properties to invest in and, ifit required more

than paint, I wouldnt even consider buying

it. Usually you see a lot of people who do

renovations doing it themselves, and I was a upstairs suite, completing the first renovation.

little fearful about doing it for that reason. "The timing was amazing-you couldnt

But once I committed to doing it, all the have planned it more smoothly," she says.

fear about how that was going to happen

went away. Facing my fear was my biggest Setting up f uture successchallenge, but it went away pretty quick1y." Rael credits the successful flip with putting her

Rael found the perfect property for the job in a position to examine other property markets

through a contact she had made at an investing and investment strategies. "The reason I started

networking group that met monthly. Located with the flip is because I didnt have any money,

in the gorge area ofVictoria, BC, the property so to try to do a buy and hold without any

was in a prime location close to downtown. money is kind of hard. But my longterh goal is

"Ifsomething goes up for sale or rent in definitely to buy and hold," she says.

that area, people are on it," she says. The Decelerating prices in \4ctoria arent

house was going into foreclosure, so Rael conducive to a fast flip, so Rael is considering

swooped in and purchased it below market the market for properties to hold for the long

value. After convincing the sellers to pay the term. "I'm also looking at other areas, such as

property purchase tax, Rael bought the house multifamily in Phoenix - the reason being that

for ff372,000. "I didnt use a single dime of I want that perpetual income."

my own money," she says, "I financed it in As for lessons learned along the way, Rael

multiple ways . I used my line of credit for the rcalized that facing her fear of failure and

downpayment, and I put $20,000 on my credit jumping in head first was the best way to get

card." Bought in March and sold in August, her investing career jump started. "The biggest

the property garnered Crystal a tidy $45,000 iesson I learned is that I already had everything

profit on her first flip. inside of me to overcome the fear of doing a

Rael got on the phone to find contractors renovation," Rael says. "There was nothing from

and painters to gut the first floor, replacing outside ofme that I needed to get to be able to

the existing suite with a one-bedroom, do this project. And you dont need to know

one-bathroom suite. The team put in a new everything before you start - there will always

kitchen, fresh paint and newly finished floors, be something new to learn, no matter how

and added a newvanityto the bathroom in the much experienceyou have." r

i

ItlI

112 r,rnacrzors m canadianrealestatemagazine.ca

JANUARY 2013 canadianrealestatemagazine.ca 53

STAR STRATEGY

With a hit TV show in its fi fth season and a thriving real estate business off -screen, David Visentin knows where to fi nd a good deal. He tells Jemima Codrington about the new season of Love It or List It, his biggest real estate regret, and the property hot spots all investors should know about

As the host of the popular property reality show Love It or List It and as a successful realtor with Country Living Realty Limited, David

Visentin has fast become the go-to guy for fi nding hidden real estate gems. Surprisingly, the Mississauga native had no intentions of ever getting into real estate at all.

“I was doing theatre in high school and my plan was to go to Ryerson for it. I decided to work for a couple of years to save money, and then my dad said, ‘what are you doing? Why don’t you get your real estate licence and make some money?’ Of course I then started making money and thought, ‘this isn’t so bad!’ ”

His dreams of theatre may have been placed on hold while he pursued his real estate ventures, but his experience would come in handy in 2007, when he signed on to appear as

one half of a battling realtor versus renovator duo on W Network’s hit show Love It or List It. � e show will be celebrating its 100th episode in May, as well as a West Coast spin-off in the form of Love It or List It Vancouver, premiering this month. But Canadians aren’t the only fans of the property program; it’s developed a steady viewership south of the border over the past year. Visentin admits that Canada’s current housing market has made for some great television. “On the real estate side, the levelling out of the market has made fi nding houses a little easier. Because they are on the market longer, it allows us to get into them during our fi lm schedule before it sells,” he says.

Visentin has been in the industry for 23 years, but admits he was a late bloomer when it came to purchasing property for himself.

DAVID VISENTIN

In fact, Visentin had been in the industry for 10 years before making his fi rst investment, a small two-bedroom house. “When I was younger, I really wasn’t thinking about investing to be honest,” he admits. “I was just thinking, ‘this is fun, let’s make some money!’ It was kind of foolish.” When he got into real estate in 1988, the market was hot with foreign investor interest snapping up properties in Toronto. Visentin regrets not purchasing at the peak before the market took a nose dive in 1990, “but it was a learning experience for me,” he notes nostalgically.

“It was after this that I sort of thought about getting serious about investing.”

Navigating the marketWhen asked about the current market, he pauses before answering. “It’s a weird place

Love It or List Itstar reveals realestate secrets

52-55 PROFILE DAVID V.indd 53 11/14/2012 2:46:43 PM

54 JANUARY 2013 canadianrealestatemagazine.ca

STAR STRATEGY

1 Bump up your curb appeal. You can’t a� ord to have

someone driving by not to take notice.

2 Make sure that access to you and your house is

easily done at short notice. You cannot a� ord to miss any showing because someone cannot reach you or get into your house.

3 Choose your agent wisely. Get a seasoned vet that

knows your area like the back of their hand. Interview several before choosing.

4 Don’t put your house on the market until it’s ready.

Do all the little jobs that need to be done. You don’t want to waste a showing with your house not looking its best.

5 If you’re selling your property in the winter,

make sure to have summer pictures out to show them your incredible gardens that they will be enjoying in the summer.

6 Get an inspection report done on your house so you

can pinpoint any de� ciencies that need tending to that you are not aware of. They are going to be revealed in a buyer’s inspection so you don’t need any surprises once you do have an agreement in place.

DAVID’S TOP 6 TIPS FOR SELLING IN ABUYER’S MARKET

to be,” he says. “� e market’s not really down, but it’s not really up either. Not a lot of homeowners have bought into the current market, but for people who have an understanding of what’s happening, there are some great deals to be had. You really have to look around, and you have to be smart.”

According to Visentin, some of the best areas to scope out great deals are ones that are still gentrifying on the outskirts of Toronto. “If I could tell someone where to go, head to Vaughan or Scarborough,” he says. He praises Vaughan as a particularly up and coming area to invest in on account of the transit line being

to be,” he says. “� e market’s not really extended. � e 8.6km extension of the Yonge–University–Spadina line connecting the city to Toronto will open up the area for commuters, and is slated for completion in 2015. “Consider investing anywhere around where that transit line will end,” he advises.

As for Visentin’s own buying strategy, he focuses on securing properties that can handle even the tough times. “For me, I think the best investments are the ones you buy and hold. Flipping is OK, but it’s riskier, and I like having something that pays for itself using other people’s money. I want something in an area where there’s low vacancy, where there

When selling your own home you may

have to accept a slightly lower price, but

this will make up for the lower price you’ll

be paying for your new house.

some great deals to be had. You really have to look around, and you have to be smart.”

Aareas to scope out great deals are ones that are still gentrifying on the outskirts of Toronto. “If I could tell someone where to go, head to When selling your own home you may

HERE IS THE GOOD THING ABOUT A BUYER’S MARKET:



STAR STRATEGY

DAVID’S TOP 7 TIPS FOR BUYING IN A SELLER’S MARKET

“I think the best investments are the ones you buy and hold. Flipping

is OK, but it’s riskier”

are no issues, and where the property can ride out a market that’s fl uctuating and still make money on it.”

Opportunities in the North Visentin works as a realtor alongside his father, a broker, focusing primarily in areas north of Toronto, such as Hockley, Caledon and up to Creemore. It’s a hot spot he’s seen buyers turn their interest to, particularly those looking for holiday homes but wanting to opt out of the increasingly crowded cottage country. � e tedious commute, over-crowding on the lakes and overall congestion are some of the push factors, but so is the lack of value for money.

As a result, areas north of Toronto are gaining investor interest; properties are larger, less cramped and thanks to the close proximity to the city, are easy to rent out and manage. “It’s a good investment because what you can get for the money is incredible. You buy a place on Lake Simcoe and it will cost you a million bucks, and you get an OK house on a little lot. In the areas I deal with, you’re getting 50–100 acres, a nice pond or private stream and peace and quiet for around the same price.”

For example, Visentin recently assisted a couple looking to move away from investing on the great lakes and turned their attention to north of Toronto. “� ey bought 50 acres, with a seven-acre lake that they own privately, and a 4,000 sq. ft. house that they’re going to renovate. � ey bought that for $1.3 million.”

� e further north of Toronto, the steeper the price, Visentin advises. As Caledon is quite an expensive area, most of the areas his clients are leaning toward are north of Highway 9 going into Hockley Valley. “I think Toronto is a great place to invest,” he affi rms, “but the wise investments are north of the city.”

1 If you have a house that you need to sell to buy … do that � rst whenever possible so that your o� er is stronger, especially in a

multiple o� er situation.

2 Don’t get discouraged if you lose out on a multiple o� er situation. There will be others, maybe even one that makes you

glad you lost out on another. It happens.

3 Make sure your agent is well informed in the area you want to buy and what it will cost. Ask for recent sales so

you feel comfortable with the price you are going to pay ahead of time in the event you may need to pay more than the list.

4 If you are very serious about buying in a certain area, make driving in the area a common

practice. Maybe after work to look for new signs. Most agents put signs up before the listing goes out so you want to get a leg up if you can in a hot market.

5 A building inspection is very important, especially for � rst-time buyers who are excited and driven to get into

their � rst home. This is not one of the conditions that should be left out to make your o� er more competitive over another, unless you’re OK with surprises that cost.

6 Bigger is better. Put as much deposit down as you can a� ord to. Sellers do see this as a sign that

you can a� ord the house you’re trying to buy and that the � nancing clause you put in will not be an issue…but just a formality.

7 Find out from the listing agent what the preferred closing date

would be for the seller. The closing date may be very important to a seller and be worth thousands of dollars to him/her.

DAVID’S TOP 7 TIPS


INTERNATIONAL CITIES TO INVEST IN

TOP 10Canada consistently ranks among the best countries in the world in which to invest in real estate. But what about other global markets? Jemima Codrington investigates what 10 cities from around the world have to offer Canada is home to some of the best real estate in the world, but what opportunities abound in the global housing market?

We scoured local markets in countries all over the world to see where investors could expect low vacancy rates, rental cash flow, and high capital appreciation and resale value. Whether your ideal tenants are local residents or holidaymakers, there are numerous options to choose from. From the exotic Caribbean to the rainy streets of England or the romance of Paris, we narrowed down a list of 10 cities that fit a variety of budgets and investment goals.

We reviewed each city based on fundamentals that ensure strong supply and demand, including vacancy rates and property prices, as well as area features, amenities and economic performance. But there is a unique set of criteria for buying property overseas, when it comes

to due diligence. Property management, ease of access, as well as tax and financing implications are just some of the factors we quizzed local experts about.

International investing is a great way to diversify your portfolio, helping you weather local market downturns and price dips by generating cash flow from appreciating and already-strong currencies.

So where in the world should you buy?

44 march 2013 canadianrealestatemagazine.ca march 2013 canadianrealestatemagazine.ca 45

hot spot international markets hot spot international markets

The sunny city of Atlanta, Georgia, has shown strong signs of recovering from the economic downturn, as has the housing market. “The combination of the region’s strong housing affordability, low cost of living, improving consumer and business confidence, and superior quality of life makes Atlanta an incredible buy right now,” says Terence Richardson, local realtor and CEO of Georgia Real Estate Experts.

Atlanta's emergence from the financial crisis has seen jobs return to the city and a boost in migration to the area. Metro Atlanta is home to some of the biggest companies in the world, such as AT&T Mobility, Coca-Cola, Delta Airlines, Home Depot, UPS, and others. The commercial property market remains strong, but Richardson advises individual investors to seek out deals in the residential market. With homeownership still slightly out of reach for a large number of residents, many are searching for rental opportunities

Detroit’s housing market was among the hardest hit during the economic depression, but statistics indicate a steady resurgence in the housing market that signals the city may finally be recovering.

“The city of Detroit has benefited from a wave of positive economic developments over the past 24 months,” says Sameer Beydoun, CEO of Metro Property Group. “The areas of job growth and small business creation saw the best gains. Major companies such as Quicken Loans and Henry Ford Health Systems are leading the resurgence of the Downtown and New Center areas. With the headquarters of Quicken Loans moving from Cleveland to Detroit, thousands of jobs were created.

instead. “The $0–100K market is red-hot and has become a seller’s market this year due to a large influx of owner-occupant and investor buyers. The best opportunities are now found in the $100–$250K market where there is less competition,” advises Richardson.

The city is accessible to Canadians via Hartsfield-Jackson International, the world’s busiest airport.

According to Richardson, the best neighbourhoods in which to seek an investment in Atlanta depend on the buying strategy. “Some areas of metro Atlanta are better suited to buy/hold investors while others are more in line with buy/flip investors. Some of the best buy/hold opportunities can be found in areas with strong schools. Rental (and purchase) demand is always strong in these areas,” he says. Metro Atlanta is also relatively safe, with a crime rate of 92.71 per 1,000 residents.

Improvements to infrastructure in the city are frequently discussed, with the local government and residents agreeing that updates are necessary. That said, the transit system is expansive and connects metro Atlanta via a bus and rail system. The highway system allows for easy access in and out of the city centre, but Richardson notes that new studies are trying to determine ways of improving traffic flow.

This led to many young professionals moving to the city.”

According to Mike Coyle, international property investment specialist at High Yield Bricks, investors are snapping up foreclosed properties in the area to meet the rising demand for affordable post-crash housing. “They [investors] are attracted by discounts as high as 70% and net yields of up to 17%. With more than 9,000 working families already on the waiting list, demand is high,” he says.

Houses are spending just 48 days on the market, akin to markets such as Seattle and Washington, DC, and capital growth is expected to hover at around the 5% mark over the next five years. And with the most affordable median house price in the country, it’s no wonder investors are turning to Detroit for low-ticket prices in the city’s many gentrifying neighbourhoods.

“Detroit is commonly credited with creating the modern blue-collar middle class in America,” says Beydoun. “The quintessential example of middle-class living in Detroit can be found in Rosedale Park. From large English Tudor revivals to carefully designed Dutch colonials, the architecture in Rosedale Park leaves visitors in awe.”

This is just one of the neighbourhoods Beydoun highlights. While districts like Greektown offer exciting nightlife, world-class restaurants, casinos and gaming areas, there are many other neighbourhoods in which investors can find cash-flow-creating properties with a small price tag.

“An area known for its shopping strips and restaurants, Grandmont is frequented by Detroiters across the city. Two major freeways are within close proximity: Southfield running

There are no restrictions on foreign ownership, and many lenders in the US also operate in Canada. Private money lenders are also willing to loan money to investors. Where tax is concerned, it would be best for foreign buyers to consult a local expert, says Richardson. “Foreign buyers may be subject to US gift tax or transfer taxes on real estate owned during their lifetime, or possible estate taxes upon their death.”

PoPulation: 432,427

average Price: uS$264,671

caPital growth (12 monthS): 3.69%

➜ Why buy? Strong emergence from global financial crisis home to 13 Fortune 500 and 24 Fortune 1000 company headquarters Vacancy rate of 7.4% in metro atlanta 8-12% rental yields ➜ Why buy?

Strong economic resurgence bringing jobs to the city Affordable property prices close proximity to canada/US border Lowest-cost urban-market median house price in the US

Where to buy areas north and northwest of atlanta, including cobb county (neighbourhoods such as marietta, acworth/Kennesaw, Smyrna), North Fulton county (neighbourhoods such as alpharetta, Johns creek, milton, Sandy Springs), and inside the city of atlanta. “Early college high School at carver is in a very sought-after district,” says richardson. What to buy "many investors are purchasing single-family homes, townhomes, condos and small multi-family units in our metro area for the purpose of holding and renting them to generate positive cash flow.”

Where to buy rosedale Park (artesian and Warwick Streets, between Fenkell and Lyndon avenues); Grandmont (Grandmont and rutland Streets, between Grand river avenue and Schoolcraft road); russell Woods (Leslie Street and Sturtevant Street (west of Dexter avenue); Fitzgerald (best streets: Northlawn Street and Kentucky Street, between marygrove Street and Puritan avenue); morningside (Bedford and audubon Streets, between mack avenue and Outer Drive); East English Village (chandler Park Drive, between Outer Drive and cadieux road); Bagley (Pennington and Santa Barbara, between W 7 mile and mcNichols roads); Green acres (Warrington and Picadilly Streets, between Pembroke and W 8 mile); Sherwood Forest (canterbury and Shrewsbury, between Pembroke and W 7mile); Blackstone Park (Littlefield and Hartwell, between Pembroke and chippewa).

What to buy Single-family homes.

➊ Atlanta,

USA

➋ Detroit,

USA

PoPulation: 706,585

meDian Price: uS$89,900

rental YielDS: 17%

Statistics indicate a steady

resurgence

north–south and I-96 running east–west. Detroit’s famous Cooley High School serves this area, along with outstanding private schools such as St. Mary of Redford High School,” he says.

Cooley High School produced Mike Illitch, founder and owner of Little Caesars Pizza and owner of the National Hockey League’s Detroit Red Wings. True to his roots, Illitch has plans to build a publicly funded arena to act as new home for the Red Wings – and to create close to 10,000 jobs in the process. The project is estimated to have a $1.8 billion economic impact on the state.



The beachside town of Grace Bay has become a hubbub of investor activity over the past 10 years. Situated on the island of Providenciales, Grace Bay's property market is as attractive as its bright white sandy beaches.

“Providenciales is the main area of development in the Turks and Caicos Islands,” says local realtor Blair McPherson, who has lived on the islands for over 10 years. “Key population growth drivers are our main sectors of tourism, real estate development and banking. As the real estate market picks up, so does the expatriate population in these sectors, as more people relocate here to handle the growth demand.”

According to McPherson, the tourism, fishing and financial industries drive the local economy. “The only other notable industry is construction,” he says, “which is largely geared towards improving tourism infrastructure.”

Statistics from the Governor’s Office show that hotels and restaurants accounted

Manta is a relatively little-known city to Canadian investors, but that is about to change. This mid-size city in the Manabi province of Ecuador is rapidly catching up to major South American cities as an economic hotbed and tourist destination, and the property market is heating up too.

“The city has undergone incredible growth in terms of tourism, in particular responsible eco-tourism,” says Gordon Poole, co-owner of Hola Ecuador Property Development Inc. “Ecuador is one of the most bio-diverse places on the planet, home to 12 million hectares of Amazon rainforest, Andes mountain chain, hundreds of coastal beaches, and the world-renowned Galapagos islands. The government has estimated that the country is at only 15% of its foreign tourist inflow potential. In the

for 47.4% of GDP in 2011, as this sector grew by 22.7%. Grace Bay Beach already boasts over thirty condo-hotel resorts, but other nearby areas are ripe for development. “Leeward, a residential canal lot community, is definitely on the radar with the reopening of the Leeward Mega Yacht Marina scheduled for March of 2013, as well as the recently completed Atrium, located at the Gates of Leeward, just minutes from Grace Bay Beach,” McPherson says. Vacant land in the surrounding area, such as the South Shore, is also attracting developer interest.

first quarter of 2012, tourism in Ecuador grew by 15%, whereas the rest of the world grew by 4.5% on average.”

To date, over US$600 million in private investments has been pumped into tourism projects. But people are choosing Manta as more than just a holiday spot. The city is drawing migrants, thanks to its bustling economy based on tourism and transshipment – it has the largest port in the region and one of the few that are large enough to accept both commercial vessels and cruise ships.

“The government is launching tender to have the port expanded to accommodate larger trade and cruise ships,” Poole says. It is also investigating ways to establish more direct flights to the region, with Manta city lobbying government for more international passenger flights.

The city is outfitted with modern, US-style conveniences such as supermarkets, movie theatres (with films in English), yoga studios, an Olympic-size swimming pool, nightlife, and restaurants. Manta is also home to new private healthcare facilities that operate at or above Western standards, Poole points out. The residential market has been and

The residential sector has been strong, thanks largely to the island’s increasing popularity as a tourist destination, but with increasing development the commercial real estate market is starting to bloom. “Commercial development is starting to emerge, and we are seeing large-scale developments such as Regent Village really

continues to be strong, but Poole notes that commercially-zoned sectors are selling fast.

With the sunny weather, stunning beaches and excellent infrastructure, it’s no wonder people are investigating the housing market in Manta. According to Poole, there has already been significant foreign investment in the region, particularly in beachfront developments just south of the city centre.

Canadians do not need a visa to acquire property, and visas are not necessary for stays of up to 90 days. Investors can also purchase in US dollars, strengthening their investment in the only Latin American country to use this currency. The land title transfer process is straightforward, and there are no restrictions on Canadians acquiring property. “There’s already a Canada–Ecuador double taxation avoidance agreement in place,” adds Poole.

PoPulation: 30,000

average Price: uS$500 Per Sq ft

caPital growth (12 monthS): 3.49%

PoPulation: 300,000

average Price: uS$75–$95 Per Sq ft

➜ Why buy? Grace Bay Beach voted the number one beach in the world Strong rental market of holidaymakers and expatriates airport will be expanded in 2013 commercial development starting to emerge ➜ Why buy?

Increasingly popular tourist destination home to largest port in the region New highway connects manta with the Pacific coast Ecuador uses US currency

Where to buy Several pre-construction projects along the South Shore. What to buy Fully furnished turnkey condominiums managed by an onsite property manager in a condo/hotel environment, and luxury private villas.

Where to buy South manta and developments just outside the city, such as mirador San Jose.

What to buy Oceanfront or ocean-view single-family homes and condominiums.

➌ Grace Bay

Beach, Turks and

Caicos

Hotels and restaurants

accounted for 47.4% of GDP in 2011

People are choosing Manta

as more than just a holiday spot. The

city is drawing migrants, thanks

to its bustling economy based on tourism and transshipment

➍ Manta,

Ecuador

gain some positive momentum in terms of occupancy and growth,” says McPherson. The islands are also home to a new National Hospital, operated by Inter-Health Canada.

Grace Bay is easily accessible by air, and the airport will be receiving a US$10 million expansion, beginning in 2013. Like accessing the islands, purchasing in Turks and Caicos is a fairly straightforward process. There are no restrictions on foreigners owning property, and no income, estate, corporate or real estate taxes. “The Turks and Caicos have no annual property tax on the ownership of real estate, although owners will need to pay a one-time transfer tax (Stamp Duty), which applies to anyone purchasing property,” explains McPherson. Financing can be obtained through the banking system, which McPherson describes as “very robust and open for business,” but he adds that Turks and Caicos is primarily a cash market for investors.



For years London has been attracting foreign investors from all over the world, and in spite of the Eurozone financial crisis, property investors are not being dissuaded.

“It is clear that investors still recognize the value of London's premier real estate as

a safe-haven investment as well as a hedge against inflation and instability elsewhere in the world,” says Lany Ashwell, portfolio development manager at PropertySecrets.com. Property is easier to acquire for cash buyers, with numerous brokers in the city specializing in foreign investors. “Despite being in a double-dip recession with an unemployment rate of 7.9%, more and more people are entering work, partly due to a greater amount of job creation across the country. With a birth rate that outstrips the death rate, the need for housing is imperative, though the number of new developments are still not meeting the demand for this.”

PoPulation: 8,174,100

average Price: £392,000

➜ Why buy? Improvements to already-stellar transit system underway Strong demand for housing rental yields of 3–8% 34% of all prime residential London buyers in 2011–12 were from overseas

Where to buy The Borough of Newham is set to receive £22 billion in funding, which is expected to create 35,000 new homes and 100,000 new jobs by 2025. In addition to this , underground stations in Newham are serviced by the circle, District and hammersmith lines, which are all undergoing improvement in 2012-13.

What to buy Two- and three-bedroom apartments in London are very popular, due to the necessity to build “upwards” rather than “outwards”, and to many young professionals choosing to flat-share rather than considering the more costly option of living alone.

Investors are moving away from the once-popular one-bedroom apartments in favour of larger properties. “Three-bedroom terraced houses are popular, as they are often seen as a safe bet for investors,” says Ashwell. To reduce maintenance costs, investors are advised to focus on new-build properties in areas set for regeneration, resulting in lower costs for upkeep and higher yields and capital growth in years to come, adds Ashwell.

Areas such as east and southeast London are seeing a huge rebirth. “We have the 2012 Olympics to thank for this in particular, bringing previously deprived areas more business and interest from tourists, as well

➎ London, England

as greatly improved transport links directly having a positive impact for commuters into Central London, who cannot or do not want to pay elevated rental prices,” says Ashwell.

Yolande Barnes, director of Residential Research at Savills, agrees. “Fresh off the success of the 2012 Olympics, London is a city in demand perhaps now more than ever,” she says. “The number of foreign buyers in the prime London resale market is up from 24% in 2007 to 34% in 2011–2012.”

Although the transit system in London is already one of the most advanced in the world, it is set to improve with the Circle and Hammersmith & City lines receiving 53 new trains per line, and the District Line will have 80 new trains. The improvements will connect residents to the city’s many amenities, which are also undergoing gentrification in many cases, thanks to corporate and government grants.

New shopping centres and transit updates are bringing residents to new areas of the city, and Mayor Boris Johnson has announced a £30 million investment for the London Sustainable Industries Park in Dagenham, home to the first organic waste recycling facility in London. “This is set to create at least 1,200 jobs, which will further sustain the economy and the environment,” says Ashwell.

The residential market is where investors can expect the highest capital gains, as the commercial property market took a hit in 2009, falling 40–50% from 2007. Commercial tenure can range from five to 10 years, a riskier

“Fresh off the success of the 2012 Olympics, London is a city in demand perhaps now more

than ever”

investment than residential tenancies, which range from six months to a year. “Rental prices can synchronize with the market more steadily, and ensure your rental property receives the appropriate market rent, thus the investor does not miss out as the market continues to rise. As well as this, professionals and families continue to flock to and stay living in London, meaning that for now the residential property market far surpasses commercial,” says Ashwell.

AVERAGE ANNUAL GROWTH IN HOUSE PRICES TO 2016

SOUTHEAST EAST

2007 1.8% 1.4%

2008 -4.1% -4.4%

2009 1.3% 1.1%

2010 0.5% 0.9%

2011 0.7% 0.2%

2012 3.2% 3.7%

2013 8.1% 5.7%

2014 7.7% 7.8%

2015 8.2% 7.4%

2016 8.3% 6.5%

2011–16 (inc.) annualized 7.1% 6.2%

Capital Growth; table courtesy of BMP Paribas



The world will be watching Brazil in the next few years, and investors are no exception.

Between the football World Cup in 2014 and the 2016 Olympics, the local economy and tourism are expected to be on the up. Property values in Brazil have seen the strongest acceleration in the world, according to a report from Knight Frank. Their global house-price index reported a 23.5% spike in 2011–12.

Goldman Sachs has famously estimated that Brazil will become one of the top five global economies by 2050, and several projects in Natal are fostering job creation to contribute to this earmarked economic growth.

“The major infrastructure projects, such as roads, light rail, the new stadium, and of course the new Greater Natal International Airport, are major factors driving population growth. These projects create employment

opportunities, and, as a result, drive population growth. Tourism is on the rise and has been for some years, further enhancing job opportunities,” says Deen Bissessar, chief of North American operations at EcoHouse Group.

Situated in the northeastern coastal region of Rio Grande do Norte, Natal is home to endless beaches, a low crime rate, and the Minha Casa Minha Vida program, a government-backed initiative launched in 2009 to help solve Brazil’s housing deficit.

“The residential market is stronger at the moment as it is doing supremely well due to mortgage availability, increasing incomes and surging demand,” says Bissessar. “But that is not to discount the commercial aspects. With all of the residential expansion going on, there is an ever-increasing need for commercial property.”

Bissessar points to a central neighbourhood that has lots to offer investors. “The downtown core of Natal is an area called Petrópolis. Property prices in this area are very stable, and demand continues to exceed supply, keeping the prices on a stable rise.”

Natal, along with other host cities of the FIFA 2014 World Cup, will be on the receiving end of US$1.8 billion, which will go towards improving local infrastructure to

accommodate the millions of visitors expected to flood the region. “City infrastructure is steadily improving; highway construction, water/waste services, electricity, sea-port modifications, and rail, among other things, are all happening,” says Bissessar. Among those other things is the construction of what will be the eighth largest airport in the world, opening in 2014.

Canadians must obtain a CPF (Cadastro de Pessoa Fisica), or taxpayer identification number, in order to have full property ownership. Bissessar also advises consulting a professional when navigating taxation in Brazil. The amount of tax incurred will depend on whether income is derived from rentals or from capital growth, he says.

PoPulation: 1,340,285 (2010) (greater natal area)

average Price: r$4,000 Per Sq m

caPital growth (12 monthS): 10%+

➜ Why buy? New international airport allows easy access One of the FIFa 2014 World cup host cities capital city of the state of rio Grande do Norte rated the safest capital city in Brazil

Where to buy Downtown core.

What to buy The expansion areas of Greater Natal, such as São Gonçalo do amarante and the Zona Norte, are seeing a large influx of middle-class citizens. as a result, residential housing is a profitable venture.

➏ Natal, Brazil

Named for the stunning coral reefs lining its shores, Recife is more than just a pretty city.

Located where the crossroads of the Beberibe and Capibaribe rivers flow into the Atlantic, Recife is a major port, a factor that, according to Paulo Bressiani, director of EH Real Estate, has increased its popularity with investors. “Capital growth has grown because of a new sea port and new

manufacturing companies in small towns around Recife, which have contributed to the growth in Recife’s economic strength,” he says. Additions to the area are drawing workers from neighbouring towns to the city, increasing an already high demand for housing. Bressiani adds that the metropolitan area ranked fifth nationally for its 2011–12 economic performance, which resulted in 2.2% growth. The metro’s 2011 GDP growth also outperformed the national average.

Like most metropolitan areas in Brazil, there is a deficit of available housing in Recife, which the government is taking steps to correct. According to Bressiani, investing in the Minha Casa Minha Vida government housing program or in residential apartments within the city would be the smartest buys.

“There are no restrictions on foreigners obtaining property,” he adds. “Canadians are able to invest easily, and in fact it is encouraged. Canadians need a visa, but it is very straightforward and easy enough to obtain.”

Nicknamed the “Venice of Brazil”, Recife draws visitors year-round, thanks to its warm climate and cultural offerings, such as the Recife and Olinda carnivals. In addition to being a buzzing tourist destination, the city is an economic and commercial hub. Recife also has the second largest medical centre in Brazil – Boa Viagem Medical Center – and is a university town, home to the state’s largest university, the Federal University of Pernambuco.

“Recife center itself has excellent infrastructure, and now due to increased manufacturing neighbouring towns which have the new factories are seeing their infrastructure and amenities developing and improving rapidly,” Bressiani says.

Recife has been selected as one of 12 cities to host the 2014 FIFA World Cup, and a new Sports City is being developed just outside the city centre in São Lourenço da Mata. This will be home to the R$500 million Pernambuco stadium, seating 46,000, which will host five matches. This development will bring both jobs and tourism to the city.

PoPulation: 3.7 million

average Price: r$400,000

➜ Why buy? capital of Pernambuco state home to Brazil’s ninth largest economy Strong industrial economy commercial centre of northeastern Brazil

Where to buy city central locations such as Boa Vista.

What to buy minha casa minha Vida government housing.

➐ Recife, Brazil



Low property prices, a strong Canadian dollar, and a constant flow of tourism have long made Orlando a favourite with Canadians. But now more than ever, the Sunshine State is drawing investors to its shores.

“Foreign investors have and still are taking advantage of the market in the metro Orlando area,” says Jen Dollar, broker at Realty Executives Seminole. “Florida had 31% of total international transactions this year, the most of any state.” According to Dollar, foreclosure sales accounted for 5% of sales, normal sales

➜ Why buy? metro Orlando is projected to be among the nation's fastest-growing regions this decade Boasts a GDP of more than US$100 billion Affordability index has increased to 258.44% mortgage interest rates are low, and home prices affordable

➑ Orlando,

USA

accounted for 10%, and short sales accounted for 45% of transactions.

The city is home to a strong residential market, which, according to licensed real estate broker Lesley Dolby of Dolby

Where to buy meadow Woods, Pine hills, college Park. “For long-term rentals and residential areas with strong rental potential and good schools, include Dr. Phillips, Windermere, hunters creek and celebration. The Lake Nona area is also good because of the big new medical city located there,” says Dolby.

What to buy “condominiums seem to be very popular with foreign investors, due to the low price, low maintenance and high rental demand,” says Dollar.

EXPERTS' TIPSWhen considering an investment in Orlando, what are some of the things that can help you to achieve good potential capital appreciation, a decent yield and tenant stability? here are some tips from the experts at Dolby Properties to avoid property vacancies with ongoing costs and no income.

Located in good school zones In Florida, all schools are graded each year according to student test scores and teacher performance. county websites publish the school grades in a letter scale from a (best) to F (worst). a good realtor can advise where the best schools are located and then guide you to properties in those areas.

Community amenities and standards Some neighbourhoods offer various recreational amenities and/or security systems, such as a gate, mobile patrol and traffic cameras, as well as maintenance of common areas. a neighbourhood with deed restrictions protects a community from unsightly situations, such as a bad choice of exterior paint, parking of campers and commercial vehicles, and unwanted activity such as door-to-door salespeople. These features can offer tenants a feeling of protection and stability, leading to a longer lease term!

Homeowners association rental restrictionsa potential investor has to be really careful with this, because some

homeowners associations set limits on the number of rental properties they will allow in their community. Find out before searching whether or not you can immediately rent out your property, or if there is a waiting list or even a complete ban on turning a property into a rental.

Solid build block and stucco vs wood frame Florida has some natural hazards such as termites and hurricanes. The best type of build to look for is concrete block with a stucco overlay, as opposed to wood-frame construction. Insurance companies tend to charge a higher premium for a wood-frame property, because it is more vulnerable to Florida’s natural hazards.

Tenant-proof flooringIn general, the best flooring is tile, which is easily cleaned and damage resistant. Landlords with tile floors are also more likely to feel comfortable about allowing tenants with dogs. many landlords refuse to accept pets, so it is always a good thing to be able to help someone with this, as well as receiving additional rent for doing so.

Swimming pool or not?The best option is no pool, but if you do buy a property with a pool, it is advisable not to let the tenant handle the maintenance. They will often not take as good care of the pool as a pool maintenance company would, which can end up costing you down the road. You can usually charge more rent for a property with a pool, so this should cover some or all of the maintenance costs.

Lesley Dolby is a licensed real estate broker in Florida and New York, and a broker at Dolby Properties in Orlando.

PoPulation: 243,195


rental YielDS: in 2012, on average moSt reSiDential inveStmentS haD a caP rate of 7–10%

vacancY rate: 7.3%

Properties, has drawn investors to a different property type in recent months. “In the Disney area, buyers have traditionally purchased fully furnished single-family homes with a pool, for renting out to tourists when not using them for

personal vacations. However, more buyers are now starting to invest in properties for long-term rental with no personal use, so we are seeing more condo purchases and single-family homes without pools.”

Orlando is primarily a cash market for foreign investors, she adds. Although traditional financing is possible, lenders often have restrictions that can hamper acquisitions. “Lenders usually have restrictions on the number of properties one person can own. Also, lenders sometimes will not lend on certain properties, such as lower-end condos or condotels.” Financing through an equity loan or purchasing with cash in Florida are best practice, she adds.

The city is world renowned for tourism and entertainment facilities such as the Walt Disney World and Universal Orlando resorts. This is an industry that brought over 55 million visitors to Orlando in 2011 and contributed more than US$27.6 billion to the economy. To accommodate the mass of visitors each year, the city is set up with superb amenities and infrastructure that make accessing everything from conference centres to beaches straightforward.

While this sector is by far the city’s strongest, the technology sector is also growing fast and creating jobs throughout the metro area. “Other equally strong, innovative sectors include Orlando’s aerospace and defence sector; modelling, simulation and training; life sciences and biotechnology; digital media, and many more. Major employers such as Walt Disney World, Lockheed Martin, Darden Restaurants, Northrup Grumman, Siemens Energy, Mitsubishi Power Systems, and many other global powerhouses make a home in our community,” adds Dollar.

Rental properties are in high demand in the metro Orlando area. For short-term rental properties, Dolby estimates that gross rental yields are higher than short-term, sitting at around the 10–13% mark, but she adds that expenses are also higher. Typical net yields are therefore around the 2–3% mark. Short-term holds are generally looking to spend their own vacation time there and are more suited to a lifestyle investment.

In terms of cash flow, long-term rentals are bigger earners, says Dolby. “For long-term rental properties, typical rental yields would be 9–12% gross and 4–6% net. For long-term rentals, the Disney area is also good because lots of residents working in the tourism industry live there.”

Now is a great time for buyers to snap up properties in the Orlando area at half the price of their worth. This 4-bed, 3-bath, fully furnished single-family home with a pool in the Disney area was purchased in 2005 for US$330,000 and sold in 2012 for US$179,000.



The City of Light has had one of the strongest property markets for the past several years, attracting the attention of foreign property investors from all over the world.

The strong and constant flow of tourists through Paris means rental apartments are

always in demand. “Paris is the most popular city in Europe, with over 50 million travellers coming each year,” says Glen Cooper, expert with Paris/Lisbon property development. “It is in the geographical centre of Europe, so easy to access for most Americans and Canadians, and most Europeans. In addition, the strong growth in the number of furnished apartment rentals has contributed enormously to the tourism boom here.”

Cooper names the 4th arrondissement as the most desirable location in which to consider property investment in Paris. “This includes the Île Saint Louis, Île de la Cité, and Le Marais,” he adds. As the area is already

➜ Why buy? Excellent infrastructure and amenities Year-round rental market of tourists Prices set to rise through 2016 many desirable neighbourhoods

Where to buy Property located in central Paris, in tourist neighbourhoods, is in high demand so it rents well and generates a good return on investment. Of course, this depends on the type of property you purchase and how often you choose to rent it, but yields of 10-12% are fairly common for Paris apartments.

What to buy a one- or two-bedroom apartment.

popular with foreign investors, like most Paris real estate, it tends to be more expensive than other regions. “However, their values hold through good and bad times, so it represents a pretty solid investment in a Paris pied-à-terre,” Cooper says. “There are other areas which are a bit less sought after, although very popular among younger Parisians, such as the 10th district, with the Canal Saint-Martin and République.”

The high price tag associated with a central Paris location has seen many commercial companies retreat to the suburbs, giving strength to the residential sector.

Structurally speaking, Paris has one of the

➒ Paris,

France

strongest infrastructures of any city in Europe, and is home to exceptional transit and public services, shopping, restaurants, hospitals and resources for non-French residents.

Where rental properties are concerned, Cooper advises working with a French notary, an official who will help to handle the entire transaction, including due diligence, property title search, and transfer details. The cost is standard and will help the investor to avoid getting trapped in red tape.

“The laws are becoming stricter in Paris, but there are still legal ways to rent to tourists. It is important to structure the purchase correctly because tax issues at sale time are affected

quite a bit by how the property is owned here,” he adds.

Sylvia Davis of FrenchEntrée magazine says the enduring appeal of Paris makes it hard to assess numbers for the entire city. “Paris is the number one tourist spot in the world, counting over 81 million visitors last year,” she says. “Short-term rentals are closely regulated by the respective mairie (town hall) for each area. It is a crowded market with rental yields and occupancy rates varying significantly according to location.” FrenchEntrée magazine also reports that the Chambre des Notaires de Paris announced a new record reached in October 2012, placing the average property

PoPulation: 2,217,874

average Price: €5,550 Per Sq m

rental YielDS: 5–6%

price at €8,440 per square meter, equivalent to an increase of 37.1% over the past five years.

French banks have been tightening up on lending, along with most institutions globally, but according to Cooper many foreign buyers still take out traditional financing on their investments. Davis advises examining options before beginning the property hunt. “Assess your financing options before visiting your first property,” she advises. “It is possible to take a mortgage of up to 75–80% loan-to-value.”

“Paris is the number one

tourist spot in the world”



The sunny city of Tucson is already rising in popularity with Canadian investors, which is more than okay with Jeffrey Utsch, a local realtor with MyOwnArizona™.

“Come on down! That’s our yell down here in Tucson,” he says. “We are open for business and welcome Canadians. There are few, if any, restrictions when you buy property here in Arizona.”

Tucson’s residential market is recovering from the economic downtown, making it a prime time to snap up properties. A total of 13,418 units were sold in 2011, with properties spending an average of 83 days on the market. “Residential is golden,” says Utsch, “Commercial properties are still suffering. Some areas seem to be doing much better, such as multi-family units, but others, such as offices, are still hurting, and we have not seen

any upswing in that area that I can see.” There is an increasingly high demand for

single-family units, and so investors would be wise to explore opportunities in the duplex and townhouse markets. “Some of the best buys around right now are within the townhouse and condo area,” says Utsch, adding that these properties rent fairly quickly, although some condo boards have restrictions regarding rentals.

Utsch has seen many factors contribute to growth in Tucson over recent years. “Growth comes from a number of factors, and weather is certainly one,” he says, alluding to the fact that Tucson is the sunniest city in the US. “People come from all over to get out of the cold and into the sun. Location and affordability also draw people here. We are six hours away from San Diego; we don’t have earthquake and other natural disaster threats; and our cost of living is half the amount or less.”

Retirement also brings migrants to the area, as does industry. Tucson is home to the Davis-Monthan Air Force Base and Raytheon Missile Systems, as well as over 100 companies involved in optics manufacturing, the fact behind the city’s moniker of “Optics Valley.” The thriving local economy continues to create jobs, and a steady need for housing.

Utsch describes Tucson as a “big small town”, with a population in the general Tucson area totalling just over one million. The city has something for everyone, from restaurants to entertainment and shopping. The University of Arizona brings students to the area as well.

According to Utsch, properties in better areas of Tucson yield between 7% and 10%, but less attractive areas could produce yields as high as 20%. In terms of financing properties, investors can qualify for a loan through the same procedure as US citizens. “It has gotten harder to do, but that is the case everywhere in the US,” says Utsch. “But loans still do happen every day.”

PoPulation: 525,796


rental YielDS: 7–10%

➜ Why buy? Surrounded by mountain ranges and national parks 29.7% cash sales in September compared to 33% in august (mLS) average 52 days on market 32nd largest city in the US

Where to buy “I believe South Tucson is a great place to be. The single-family and multi-family properties are very well priced, and the rents generated can yield very high returns. If an investor wants to be in a more affluent area, then Oro valley is the best place to be,” says Utsch.

What to buy Duplexes and multi-family units.

➓ Tucson,

USA

rE INVESToR PROFILE

Working hiswayffipWith a young, growing family toprovide for, Jeff Trapp was looking toachieve financial stability withoutworking every hour in the day He tellsJemim a Codrington of initial struggles,his best piece of advice, and all abouthis newest, and favourite, deal

ith a young, growingfamily and bills mounting,

JeffTrapp was lookingfor financial free dom,

not just stability. He recounts a particularlyfateful trip to the company accountant,

while working for his father-in-1aw's

small business.

"I just asked him, 'How does a young guy

get ahead?"'says Trapp. "I'm as educated

as I'm going to be, T have a )oung, growingfamily, and I don't have time to work six

part-time jobs. And he just said, 'Rea1 estate'."

While the idea of a rental property was

instantly appealing to tapp, he was not so

sure about broaching the subject with his

wife. "Initially my thoughts were: my familytnever going to go for that. But my wife rvas

on board! So we started ini estigating options

and talking to people we knew that were

property owners. It was around then that

we bought our first little house, and went

from there."

The propern' i:- : -. . .: :: 1f i1s a two-

bedroom, 600-.;_-.:.-- :1ouse in Regina,

bought for just S: : . :: r tJ03. But even

with the help o: . : ...- .. Trapp admits there

were some burr.:. :: - -. :lad when outfittinghis newly acqur:.: ::.-:., 11 ith tenants.

"I'd been aL --,, :.. -rring my mentor with

questions, ani .:-. ...- .uch a help - she'd

owned home. :-: - -:1us vears. But of al1 the

questions I r.<.: .:-i .r11 the discussions we

had, no one t : ::-: iLr get a deposit from

the tenanrl"

Althouq:r . : ,:.e had agreed to occuPy

the propei:-,. .. :: ";e-in day approached, the

tenants dri:-:. -1 =,-es back to the drawing

board, 1.r,---.:,. ,l mv next'first' tenants," he

laughs. B--. --.-,. ii u,as new territory for us."

Eecod'n I adviceTrapp ::". ,---:rded n-rany industry events

and n-i;: .:'.'t::1 investors along the way -each rr:-:- :::ir orvn wisdom to impart. But

throu::: :,:. os n experience, Trnpp has learnt

that ::i,: :-- adr-ice is necessarily good advice.'' S : i . :rr-estors will just say, 'Buy

absol::;-i' er-ervthing you canl' But I ve

learr,.i -.i-er time that things that you buy

cal b:;::le a headache for you ifyou're not

dili.::-: about what you're getting into. I had

the ::?.,rtunity to invest in about 16 duplexes

th.: ...-:le social housing and were about 45

nir::es out of town. It would have been

gre:: ; cash-flowing investment at face value,'o-lr ri ith all the maintenance and setting up

reirtionships with and managing tenants, Ipr,:rablr. would have only been home about

ir.-.. rveekends a year. I thought long and

h,:rd, and even though the numbers added

up. it just didn't work for our family."

While Trapp is a rent-to-own specialist

lor the most part, he does hold properties.

And although he has funded all eight doors

currently in his portfolio himself, he has

worked with joint ventures in the past,

finding money partners at events and through

word of mouth. "Your net worth equals your

network," he muses.

The p*rfeet e.ieaI

After 10 years of investing, tapp has

recently acquired what he describes as his

favourite deal, for several reasons.

Firstly, he points to the fact that the

property already had a legal suite, which

Trapp upgraded with $25,000 worth ofrenovations. "Secondly, the house is in a

neighbourhood that doesn't have many other

rentals in it, and thirdly, it's on two 25-foot

lots," he elaborates. The neighbourhood in

question is Lakeview, South Regina.

With the cash flow lrom this property,

along with his other doors, Trapp aims to

provide for his family while helping his team

and community achieve success. He explains

that helping would-be buyers currently shut

out of the market into homeownership is

one of the most rewarding things about his

particular investment strategy.

"I've learned not just to buy a property for

the sake ofit being a good deal," he says. "Ithas got to be a property r'vith a cause." r

96 npnrr zoB :.:::: canadianrealestatemagazina ca


26-31 FORECAST MANITOBA + SASKAT 26-31 FORECAST MANITOBA + SASKAT

Strong demand and solid economy combine to lift Saskatchewan’s real estate markets to a whole new level. Jemima Codrington reports

Strong demand and solid economy

2013 Property Forecast:

SASKATCHEWAN

KEY FORECASTS

ECONOMIC GROWTH expected to exceed national average

PROPERTY PRICES rising consistently since 2011

HOUSING STARTS 8,200 predicted for 2013

NEW MIGRANTS 10,000 expected to arrive per year

UNEMPLOYMENT RATE set to decrease to 6.3 percent

GDP expected to grow 4%, the highest in the nation. Saskatchewan is expected to post budget surplus this year

Saskatchewan has been steadily climbing the ranks among Western provinces in terms of economic and population growth. In fact, this is the year it’s expected to supersede Alberta to have the highest GDP growth in the nation, rising 4% over the year.

As a province, Saskatchewan has the second lowest Debt to GDP ratio in Canada. As the economy grows and draws a new labour force, it’s time for the property market to answer the call of thousands of new workers.

“Right now we’re seeing there’s a record level of migration to the province, from our records going back to 1970 – this year will set a high for infl ow to the province, a key driver to housing demand,” says Lai Sing Louie, regional economist for the Prairies and Territories with CMHC.

Economic growth will be supported over the next two years, with employment set to increase 2% in 2013 alone. International migration will account for an additional 10,000 residents to the province each year, with people arriving from both overseas and other provinces.

� e increasing demand situation is likely to continue to drive prices upwards, with the average cost expected to rise from $269,000 in 2012 to $275,000 in 2013.

“House prices are also moving to record levels, which support new home construction. � ere is an anticipated high level of housing activity in Saskatchewan this year,” says Louie.

As far as interest rates are concerned, the one-year posted rate is projected to be between 3.3% and 4.1%, with the fi ve-year posted mortgage rate in the 5.1% to 5.9% region.

FORECAST 2013

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30 JANUARY 2013 canadianrealestatemagazine.ca

26-31 FORECAST MANITOBA + SASKAT 26-31 FORECAST MANITOBA + SASKAT

THE BOTTOM LINE

If last year is anything to go by, chances are the housing market will be very active indeed. � e province performed stronger than the previous CMHC forecast, in terms of both housing prices and starts. “� e main drivers of that were employment and the population growth, both being stronger than we initially projected,” explains Louie.

� e Ministry of Agriculture is going to provide an additional $1 million to help develop the province’s already burgeoning international trade and development. As a supplier of potash and oil, Saskatchewan has two key products that many countries, including the United States, are keen to import. However, Louie notes that this can be a double-edged sword given the economic uncertainty that still presides outside of Canada.

“Europe is in a recession, there are defi cit issues, the United States isn’t growing as fast as expected, and obviously being Saskatchewan’s major trade partner when you think about oil and potash coupled with the demand for the commodities being exported out of that province, there is potential weakness down the road. � ere is still a concern from that perspective in terms of the economic growth of Saskatchewan, and indeed Canada,” he explains.

Sizing up SaskatoonSaskatoon in a prime position for growth in 2013, thanks to fast-growing migration. According to Alvaro Campos, a market research analyst with ICR Commercial Real Estate, “Housing starts in Saskatoon’s CMA are red hot; although recent mortgage standards have been tightened, a recent report published by Stats Canada shows the six-month seasonally adjusted annual rate of total housing starts at 3,598 units per month as of September 2012.”

� e upward trend that new starts in Saskatoon are experiencing is expected to continue into the New Year. “For the past two years, housing starts in Saskatoon have been hitting record numbers, and that is expected

GROWTH DRIVERS FOR 2013� Provincial Government is developing a tax incentive for the private sector to invest in multi residential rental projects

� Investment in business remains high, as do salaries and household income

� Province has invested $50 million into health care initiatives

Lai Sing Louie, CMHC regional economist, Prairies and Territories In terms of the housing market and demand, it will

remain elevated in Saskatchewan, and we’ll likely continue to see housing prices around the record level.

Robert Kavcic, economist, BMOSaskatchewan is one of the strongest places for economic growth in the country. That’s de� nitely positive

for the demand side, and if you look at housing valuations overall, they’re not nearly as stretched as some of the other major markets in the country. While we are expecting a modest correction overall, [Saskatchewan] is one market that will hold up relatively well.

EXPERTS’ FORECASTS

Of all the major real estate markets across Canada, none of them are as poised for growth as Saskatchewan is. This is

especially evident in Saskatoon, where a number of key factors are expected to rise sharply in 2013. The potent combination of high population growth, the lowest unemployment rates in the country and a strong forecast for economic growth over the next four years will most likely in� uence potential investors to add a number of Saskatchewan-based properties to their respective portfolios.

Of all the major real estate markets across Canada, none of them are as poised for growth as Saskatchewan is. This is

especially evident in Saskatoon, where

FORECAST 2013

Average Saskatchewan unemployment rates, 2007-2012

Sour

ce: C

MH

C, C

REA

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