Friday, October 29, 2010
So on Tuesday, I contacted her to find out how she would like to pay for November 1st. I didn't hear back from her on Tuesday. Nor did I hear from her on Wednesday. On Thursday, I still hadn't heard from her. Panic was definitely setting in. Had she run off somewhere? Was she avoiding answering me so as to avoid having to pay rent? Had she decided to end the lease and is trying to decide how to break the news to me? While taking the train home after work yesterday, I passed by the condo and noticed a huge looming black cloud hanging over the condo. The sky was otherwise quite blue, but the dark cloud was ominous and was a sure sign of an impending storm. I couldn't help but feel that the cloud was hanging over the condo as if to say "ooooh bad things are happening". I let my imagination get the best of me for the next 24 hours. And then tonight, as if all was normal (which it is), the tenant responded to say I'd receive an email transfer on or before the 1st.
I realized that the panic was all for naught. But it is just my nature to worry about this sort of thing. So I was VERY relieved to hear that we'd receive the money and that our tenant does not appear to be some sort of scam artist!
Has anyone else had similar moments of panic where they wonder about their tenants or the state of their property?
Wednesday, October 6, 2010
And this past weekend, we finally dealt with that pile, and held a garage sale! On Friday night, we set everything up in the garage, grouping things onto a few different tables. We had one table with bigger-ticket items (like printers, a Dust Buster, a full set of dishes, designer purses, etc.). And then the other tables were labelled with signs that said "25 cents each, or 5 for $1" and "$1 each, or 6 for $5". And we put all the trinkety stuff on those tables. We also had a "FREE" table. On that one, we included little trinkets that could not even be valued at 25 cents, but that to some people, might be useful (or, to a little kid, like finding loot!).
On Saturday morning, we just carried the tables out of the garage and onto the driveway, and I was amazed how many people showed up right as we began. We had advertised on Craigslist and Kijiji, as well as posting a few signs on surrounding streets. We put the "FREE" table closest to the street, and that caused a lot of people to stop and look around! We stayed at it for a few hours, and even though it threatened rain on and off, the true deal-seekers still came by. It was my first real Garage Sale experience, and pretty enlightening. I realized no matter how low something was priced, people would still want to negotiate - and I was fine with that! I went at this with the plan that anything that did not sell would be either immediately brought to Goodwill, or thrown in the garbage. So any price was a good price for me.
We managed to sell a very good chunk of the pile, and were happy to take the rest to Goodwill.
What did we do with our profits? We put them towards two new chairs from Ikea! We finally have somewhere to sit other than the condo-sized couch!
Sunday, October 3, 2010
It was a bittersweet feeling. It felt odd walking away, while she stayed there taking measurements and checking things out. All night I had this odd feeling that I hadn't locked the door behind me. Which of course was true, since the tenant was still in the condo, and it was her door to lock, not mine!
I can't help but feel that I should get in contact with the tenant to find out how things are going, if everything is as she expected, if she's encountered any issues, etc. I almost feel like I have a guest staying in my house, and I have to ensure I'm a good host. But I do know that I have to respect her space, and just let her be.
I think I know how my mother must have felt when I moved away to University!! How do you know when to let go, and what the right amount of contact is, in order to be appreciated?
Monday, September 27, 2010
Basically, whenever we do decide to sell the condo, we will be taxed on the capital gain from the time that it was not our own residence.
So as far as I understand, this is the way the tax will be calculated:
Tax Rate (assume 50%) x 50% of Capital Gain.
So, if the capital gain was $100,000, we'd be taxed on 50% of that, and assuming a 50% tax rate, we'd be taxed $25,000 on the $100,000-gain.
However, there is also an exemption for the time that the residence was a primary residence. That exemption is calculated as:
# of years as primary residence / # of years owned x Capital Gain.
So let's say we sell it in 10 years. I would have lived in it for 5 of the 15 years I owned it, and so the exemption would be: 5 / 15 x 100,000 = $33,333.33
So the exemption is $33,333.33, meaning the taxable capital gain is:
$100,000 - $33,333.33 = $66,666.67
So in this case, with the exemption, the tax on the capital gains, assuming again a tax rate of 50%:
$66.666.67 x 50% x 50% = $16.666.67 paid in taxes
In any case, I have to have the appraisal done. Our realtor is working on one for us as we speak. But does anyone know if I need a licensed appraiser to also step in? What holds up in the CRA's eyes?
Thursday, September 23, 2010
So why is it, that the new fridge didn't fit when it was delivered?
Maybe it's just that I'm tired lately. Because technically the fridge DOES fit. But only after some adjustments. Last week, when Matt and I went fridge shopping, I quickly jotted down the dimensions of the spot that the fridge fits into. It was only after the too-large fridge was delivered, that I realized I had measured from cabinet to wall - not accounting for the counter overhang, which evidently limits the space by about an inch:
|The counter overhangs the cabinets by about an inch... limiting the opening for the fridge. Note: this is the old fridge.|
So I CAN measure... sort of...!
Wednesday, September 22, 2010
At about midnight on the night before the couch was to be delivered, it occurred to me that the chaise part is wider than the rest of the couch, and I was basing all the measurements on the couch part. The entire couch and chaise would have both fit no problem in the TV room. But despite all my careful measurements, pivoting on the landing of our U-shaped stairwell would have been impossible. At 2:00 am I was still standing on the landing, tape measure in hand, dumbfounded as to how I could have screwed up so incredibly. I was right though. The delivery guys showed up early in the morning, and while they left us with our super cool new desk chair, they drove away with the couch back on the truck. It was pretty disheartening. I envisioned us having a forever empty TV room, and watching movies on lawn chairs for the rest of our years in this house.
My Mom kept saying "go to Ikea, go to Ikea, it might just work". We had been resisting Ikea couches. And I am pretty familiar with every single Ikea item, and never felt much affection for any of them anyway. But yesterday, we went to Ikea to "check them out". And didn't we realize that the Karlstad was not nearly as bad as I remember it being! (Were we starting to see couches through beer goggles after 2 failed attempts?) I shocked the pants off Matt when I said "let's just take one home tonight!". He looked at me as though we'd met for the first time, and he wanted to know who this person was that was making such spontaneous and definitive decisions. I was so determined to get a couch, that I was even basing choices on stock. I said "we'll get the Sivik Dark Grey, but if they don't have that, we'll get the red". And while we were debating between an L-shaped and a chaise option, we chose the chaise, mainly because it was in stock, whereas the L-shaped would require 10 days of ordering time.
Of course, we’d gone there with no intentions of actually buying a couch. So when we got to the stockroom and looked at the boxes, we realized another flaw in our plan – how would we get them home? We called Matt's Dad, and at 8:30 pm on a Tuesday night, that generous, very understanding, and patient man showed up with his van to help us drive the boxes home. We were so thrilled to have a couch that comes in pieces! It fit, it fit! We had it assembled by midnight!
|At some point, maybe we'll stain the legs to match the ottoman?|
Friday, September 17, 2010
We took this as an opportunity to get a sectional, which will be ideal for TV watching! And maybe for some foot rubs too! For the sectional we chose, our only choices were black upholstery or brown, and I went to the showroom fully expecting to pick the black, since the online image of the brown was quite a chocolate-y colour, and not really our taste. The only loophole is that Matt had an ottoman with his couch, which he desperately wants to keep, as it holds all his DVDs and cables and remotes and video games. And quite frankly, I don't think any of that stuff needs to be displayed on a shelf, so I'd be happy to keep the ottoman too. It has an insane amount of storage space; but it's dark brown leather. I thought that maybe we could get the black couch, and then I could make some cushions with a fabric that has both brown and black in it, to tie it all together? Anyway, when we got to the store, I saw the brown swatch, and realized it wasn't nearly as chocolate-y as I thought it would be, and might actually look quite nice with the brown ottoman. But I still wasn't sold on brown fabric. The basement walls are a light grey, and the carpet is also grey, so the black matches with that better. However, the black is so crisp that it would probably show every little mark of dirt, while the brown might hide spots better. I deliberated and deliberated and I think I caused Matt a serious headache. And in the end, I told him that the decision is up to him, because I really just couldn't let go of one colour over the other. So - he chose black, reasoning that it was my gut instinct before we even got there.
The new one arrives tomorrow. I have measured this thing to death, I taped out the area in the TV room to see how it will feel, and I measured the stairwell, landing, doorways, and every angle I could think of. PLEASE let me have not screwed that up!!
We also ordered this desk chair while we were there. I'm pretty smitten' with it.
I am very excited for the delivery tomorrow!
Thursday, September 16, 2010
First, just a few things we've had to deal with so far:
- The bed broke at 11 pm one night as Matt was getting into it, so we adjusted it; then, at 4 am, the bed broke again when Matt got up to go to the bathroom. We adjusted it. The bed continued to break night after night until Matt's Dad stepped in and helped fix it properly. Fingers crossed for some restful nights here on in?
- Fridge died - I woke up on Monday thinking that our house was on fire, and was sure the smell in my nose was smouldering or electrical, or some huge disaster, and definitely worthy of calling 911. Matt's reasoning prevailed, and convinced me maybe it was a dead animal in the attic or chimney? When I got home late Monday evening, and discovered everything in the freezer was thawed, I realized the true source of the smell - a burnt-out fridge. Like the truly determined new homeowner that I am, I googled the death out of that fridge, and tried everything I could. And in the end, both of the repair guys I called gave me the same prognosis I had determined myself: compressor is done, buy a new fridge! Delivery this Friday... more on that some other day!
- Sprayed a bee hive
And a few things I've learned:
- Grass grows fast and lawns require mowing on a regular basis. And to quantify that, regular means ONCE A WEEK?!
- Claw-foot tubs require TWO shower curtains for full coverage, otherwise, water everywhere. Duly noted.
- The outside hose on the west side of house leaks into the guest room.
- Our beautiful, huge tree in our backyard leaves mini helicopters EVERYWHERE.... in the bedroom, bathroom, kitchen, all over the car windshield... I even found one in my bag at the cottage on a recent weekend trip.
- How to plunge a toilet - and that some plungers are better than others.
- That I would ever accept a new plunger as a warmly received gift (thanks Dad!)
- That I can see straight into the kitchen of the neighbours' house from the shower(!!)
- That the previous owners preferred Rogers to Bell, and in the process of renovating, removed every single phone jack and telephone wire from the house. That was a fun surprise when Bell came to install our services.
- That Matt will inevitably bang his head on the ductwork every single time he enters the furnace room.
- That our doorbell will ring when someone is at the door of the house across the street
I feel like we are going to learn something new for every single day we live in this house, and that both excites and terrifies me - since a lot of what we will learn are lessons we find out the hard way! While the house is in very good shape overall, I know that every house is full of surprises, and nothing is exactly as it seems.
|Matt keeping up with the mowing.... at night....|
I realized after yesterday's post, that I never mentioned how the move itself went. We have amazingly supportive families, along with a great group of friends, and the amount of help we received that weekend is beyond words. We knew that the Gardiner Expressway was going to be closed all weekend, and that the majority of Saturday could be spent stuck in traffic. So on the Friday night, Matt and his family loaded all his stuff into the truck (while I worked on last-minute packing at the condo with my Mom). That way, the moving truck was already half full by the time it arrived to the condo at 9 am on the Saturday. Matt friends and my brother loaded all my stuff in very quickly, and we were on the road and into the gridlock by about 11 am. We were at the new house and unloaded by about 1:00 pm, and were able to sit down for a great big lunch in the new backyard! The boys had definitely worked for it! Everyone kept commenting that it was insane how much stuff I managed to have, considering the size of my condo. Let's just say I was pretty good at creative storage!!
|All packed and ready to go!|
I owe a HUGE thank you to all of our family and friends who helped with this move, whether it be the heavy lifting, the packing, the unpacking, hanging mirrors and shelves and hanging rods, putting furniture back together, the cleaning/scrubbing/dusting/soaking (my Aunt, cousin, and Mom must have had prune hands by the end), providing lunch and patio furniture to enjoy the lunch on, etc. Any contribution was GLADLY accepted. We also had many drop-in visitors throughout the weekend, and while our house was in less than presentable shape, it was so nice to have so many family members and friends eager to share in our excitement. You are all welcome any time!
Wednesday, September 15, 2010
Tenant: Well, after the last post I thought the couple would take the place for sure. We communicated back and forth many times, and I sent them the lease application. Then, after about 4 days of vague emails from them, they told me they had learned that they can stay in their current place after all, and thus, I was back to square one. Keep in mind, that at that point I was 3 days away from closing on the new house, and was now buried in boxes and newspaper and bubble wrap. There was nothing nice about the appearance of the condo. I decided I had no choice but to keep packing, and would have to do any future showings with an empty condo. It wasn't ideal in my opinion; because of the size of the condo, I felt basic furniture is necessary to illustrate what fits and how spacious it can actually feel. Anyway, as luck would have it, a few days after officially moving out, another potential tenant asked to see it, and when I said "I'm sorry, it feels a bit sad since it's empty", the prospective tenant responded with "I see it as opportunity". Hooray, it's leased!! The references have been checked, the papers signed, and the deposit is in the bank.
New house: I LOVE our new house. I mean I really, really admire it! Most days, I find myself telling Matt how much I love it. Once, I caught him sitting on the couch in the living room, and just looking around taking it all in, and he said "our house is HUGE!". Now, I have to tell you - this is just a tiny little 2-bedroom bungalow, with a very simple layout. But in comparison to the condos we were living in, we've got places to eat, a whole room in the basement just dedicated to TV watching, a "guest room" (room in the basement big enough for a bed), an office, a storage room, a tool area, and a whole laundry area with space to put up an ironing board and a drying rack (no stackable washer/dryer for us anymore!). Add to that a (somewhat rickety, but still invaluable) garage, a driveway long enough for at least 3 cars, and a very spacious backyard, and we are in heaven!!!! And all just a few minutes from downtown! I can still take the streetcar to work and now I actually get a seat.
Condo: Tomorrow night I am having the condo painted with an eggshell finish (rather than the flat builders' paint that I've had on the walls since I moved in.... you'd think I would have chosen something nicer after 5 years?), so that it can be wiped and cleaned easier. We could have painted it ourselves, but as far as I understand, this cost can be written off, and I am SO happy to not have to worry about edging and taping, and the stress I cause myself by not being as good of a painter as I wish I was!
I've got tons more I can update on, but I will ease back into it. I can't even begin to summarize all that I've already learned as a homeowner, so I'll save that for it's own post, tomorrow!
Thursday, August 5, 2010
The first potential tenant who came through, brought a friend with her, who happens to be a residential real estate agent. He asked me to send all the forms over to him yesterday afternoon - rental application, lease agreement, etc., so that he could review them. So basically, as soon as they left, I had to make a trip to Staples to pick up some software! I've had a few people with rental properties offer me the forms they use - but each person also said it might be best to start fresh, as they have all manipulated a number of things in the ones they've used.
Anyway, when I got to Staples, the rack for the lease software was empty and nearly caused me to have a panic attack. But luckily I found one lonely version, tucked behind some Will-writing software. Here's where it gets better - it's not mac compatible! And yes, I have a mac. Grrr... I started to run different possibilities through my head. My fiance's PC laptop conveniently just died a few weeks ago, never to be revived. I currently have a work PC laptop at home, but I don't have admin rights to install software. And then I remembered my old 2002 IBM Thinkpad that has (literally) been collecting dust under my bed. The Acadia Advantage pays off yet again! I decided to buy the software, priced at a reasonable $19.95, and hope for the best! (This is not to say that I didn't stop at Grand & Toy on the way home, just to see if they had anything different... they don't have any lease software as it turns out).
After what felt like a 15-minute boot-up, I managed to install the software on the IBM, and that's when I figured out I wasn't in such a bad place after all. Once the software is installed, it's just a bunch of folders of different MS Word forms and some links - there is nothing that requires you to continue running on the PC. The PC is really just required for the installation. So I copied all the folders and files over to my Mac, and am now a much happier landlord for it! The IBM, in its senior citizen stage for computer lives, was painfully slow even to copy the files to a flash drive.
Here is what I've noticed about the software so far.
- Has forms for each province
- Fully editable Word documents
- Comes with more forms than I would have known I need - credit check release forms, Pet agreements, Bad cheque notice, Notice of arrears, Moving out guidelines, etc., etc. etc.
- Not entirely foolproof. It is so editable that it is hard to know what must stay and what can be removed
- It would be nice if it offered different forms for different situations - i.e. the forms all refer to one applicant, and ask for only some details on a spouse. But I wanted to customize it for the unmarried couple that came yesterday, so that I could collect enough information about each of them. I had to duplicate and copy and paste quite a bit.
- The software comes with a link where you can check for updates to the form before you use them. The link didn't work for me, and unfortunately I suspect one paragraph is out of date (it refers to the Last Month's Rent Deposit, and says the landlord must pay the tenant 6% interest on these funds - but a google search leads me to believe this is out of date).
I would be very interested to hear if anyone has dealt with any other similar software that they would recommend?
Wednesday, August 4, 2010
So it is crunch time -- closing day on the new house is just 2 days away, and the big move is 3 days away.
After 11 days away in Nova Scotia, we made the insane decision to head straight from the airport up to the family cottage, so that we could enjoy one night there before all the chaos ensues. All my family was up there, and there was a cousin's birthday dinner to enjoy as well, and since it was the Civic Holiday long weekend, it seemed like the only logical place to be....
...except that now, 3 days before the move, I don't have much to show for as far as packed boxes go. Thankfully, my Mom is coming over tomorrow to help me out!
But I think it's time for an update on where we stand on various fronts:
I had left for holiday feeling quite pleased that the mortgage was finalized. Upon arrival back home this Tuesday, I received a note from our banker, telling us that she had tracked the interest rates just in case there was one last chance for another drop before our closing date. Although there was no further drop, I was happy with our final rate of 3.99% and appreciated her thoroughness and follow-through.
And then -- she surprised me with a call today and told me that the rate dropped again!!! This time to 3.89%! It was JUST in the nick of time. Apparently if your lawyer was moving any quicker, it probably wouldn't have been doable to update the rate in our files. But she succeeded, even with a broken-down computer - it sounds like she really put the rush on for us, and I don't even know where to begin thanking her.
The condo's rate stays at 3.99%, because it went into effect on August 1st, but we are all set with this incredibly low rate at the new house!
So I re-posted all the rental ads last week while we were still away, and dropped the rent by $50. I had had tons of interest at the previous rate, but not a lot of follow-through. I had also had one couple offer to lease the place, but only for 4 months. I decided that that would be less than ideal, since I would then be trying to find new tenants around Christmas time, and in the ugly winter months. The condo holds much more appeal in the summer, due to the big windows, private patio, and BBQ. So I declined that offer.
Immediately after re-posting the ads, we got tons more interest, and lots of requests to view the condo over the weekend.... poor planning on my part, since we were still away. But I was able to defer most of the appointments until today, and a number of potentials were screened out without even having to meet them. So today I had three separate people through:
- The first was a pretty good candidate, with one exception - she has a bulldog, and I was trying to take a no-pets stance. I don't feel good eliminating her yet, since otherwise, she seems like a suitable fit.
- He came in ranting about Toronto traffic, and immediately opened my microwave, fridge, and dishwasher. Didn't step into the bedroom or bathroom. Told me the condo was a bit smaller than what he was looking for, but that I look like Jennifer Connolly, and thanked me and left....
- A couple, who phoned first and sounded like they'd lost interest before they even got here. But once they got here I think all 3 of us felt they were a good fit, and they admitted they were pleasantly surprised, as they had expected something different, based on what they've seen already in the area. I have sent them a rental application and credit check release form, and I am now hoping for the best!!
If we can get this condo rented before Saturday, then we will be able to move all the furniture into the new house and really get ourselves settled. But we've agreed that if the condo isn't rented by then, then we'll have to leave the furniture here since it really makes it a lot easier for potential tenants to envision themselves here.
So here is hoping for an all-in-one move on Saturday!!!
Wednesday, July 28, 2010
But now that I am out here with so many great friends, and having already participated in one beautiful wedding, I can't imagine missing this for anything. Everything will get done when we get home! We have four days between our arrival back home and our big move.... that's enough, right?!
The day before we flew out East, we met with the bank to sign the mortgage papers., and I can now happily report that that aspect of this mayhem is complete!!! We realized that in order to do a refinance on the condo, we would have had to get a lawyer's assistance, an appraisal, lots of paperwork, etc. - and all within about 4 business days (while also packing for and organizing the details of our trip). And having run the numbers multiple times, we decided in the end that going with the BMO mortgages was the best option for a number of reasons, but namely the interest rate, and our sanity. We have gone with 5-year fixed rates of 3.99% on both the house and the condo, and amortization periods of 25 years and 20 years, respectively. That will keep us on track to paying off the condo, keeps the payments fairly reasonable for both, and minimizes the interest paid over time. We are able to make additional payments of up to 10% of each mortgage each year. So the plan is that any additional funds we find ourself with will be put towards the house, since that is the one that is not tax-deductible, and should be our priority as far as paying off.
Another bonus to signing with BMO was that we will be getting some bonus Air Miles, free bank accounts for 5 years, and the chequing accounts are also tied to Air Miles. Maybe we will get a free flight to Nova Scotia for the next set of weddings!
It was quite the morning we spent at the bank. I had told my boss I would be a "little late" for work, since our appointment was at 9:00 am. Little did I know I would still be sitting in the bank at 11:30 am, having never even had my morning caffeine jolt! Nevertheless, it was a HUGE relief when we walked away from there with all the papers signed, knowing that we could come away to Nova Scotia and enjoy ourselves. I haven't had a single email about mortgages the entire time I've been here, and my inbox looks almost ghostly because of it. Things are falling into place!!!!
Thursday, July 15, 2010
Every few days I re-post the condo to craigslist, and generally remove any prior postings so that it doesn't appear too stale. Usually, within a day of posting it, I will get about 1-3 emails enquiring about more details and requesting to see it. That is when I send my list of questions (mentioned here). And from there, it tends to be completely random whether I hear back or not. I'm not taking it personally if I don't hear back - it just proves that the person was probably just testing the waters and was not completely serious. I can relate - after spending the past 4 months trying to choose a wedding venue, I know what it's like to send a million inquiry emails, and after reading the responses, feel the need to respond to far less than half of them.
I've shown the condo twice now. The first potential tenant was a great match, and she really loved the condo. The poor girl had moved twice in the past few years though - her landlord is selling the condo she lives in now - and she really didn't want to leave the building she was in. Her furniture had been carefully chosen for that specific floorplan, and a move elsewhere would be a pain. After leaving here, her building manager found out about another condo unit that was available in her building, and that just made everything easier for her, so she made the obvious choice.
Then I showed this condo to a couple, but I could tell as soon as they got here that they were not interested. It was just written all over their faces. They are in a significantly larger condo now, but wanted to save some money. I think they were surprised what a sacrifice they would be making on space if they want to pay lower rent! I have had a few other emails from couples, and I try to always gently mention that the condo is ideal for 1 person but might be a bit cozy for two. It really all depends on their situation though. If they are looking for a place to rest their heads while they are on a one-year work transfer, or while one of them goes to school, then I think anyone can make a sacrifice for that long. But if this is meant to be a long-term home, they might find themselves getting cabin fever here. There is a bedroom and a living room, and they are a few steps from each other. Literally. So if you want to get some "alone time" away from your significant other... well, you are just plain out of luck!
I've heard from a few other young, single men and women - those are really the target market for this neighbourhood - and so I just have to hope that one of these works out! I've had a good look at craigslist, and I'm competing fairly - there are a few similar units to mine, but without parking, so there is a slight premium on mine over those - but in general the competition is priced comparably.
I had a walk through the neighbourhood on Sunday, and I have to say - now is a great time to be entering the neighbourhood. There are three brand new condo towers, each only a few months from completion, that will bring a surge of new energy to the area. Along with the new condos, the neighbourhood's landscape is also really taking shape. A little playground just appeared in the park across the street from my condo, which I'm sure will be a huge hit with families and dog owners alike. A few new restaurants have only just recently opened, and I have seen their patios bursting with activity each time I've gone by. And a new retail development is due for groundbreaking any day now.
This is all a huge change from the construction-zone-meets-dirt-pile that the neigbourhood was when I first moved in. What changes I've seen! Hopefully some lucky guy or gal will move in soon and enjoy the next wave of changes!
Check out some of the before and afters from my time in this neighbourhood. The "befores" are from March 2006 and 2007. The "afters" are this week!
Tuesday, July 13, 2010
Now it seems we would be paying more than $4,000 extra in interest over the next 5 years if we go with Invis, due to the double-whammy of the higher interest rate and the longer amortization. Another conversation leads me to believe this may not be such a bad thing though. In fact, it may be beneficial for tax purposes - ideally, the expenses for the condo will come close to the income, so that we are not reaping a huge profit. So dragging out the payment of the rental property makes a bit of sense in that case. But if both properties are amortized over 35 years (which doesn't make sense to me), we are looking at an additional $160,000 in interest over the course of the mortgage, compared with the BMO option. I think there is a very fine line between an amount of interest that is actually helpful to have and the amount that would make me feel like a complete idiot for just continually giving the bank/lender money. But I gather the question is really would I rather give it to the bank via interest, or the government via taxes?!
Even if we got the rental property amortized over 35 years, and our home over 25 years, we are still looking at more than $60,000 in additional interest over the life of the mortgage compared to the BMO scenario. I just wish I really had a handle on which was truly the better option for tax purposes.
In any case, I put in a call to BMO to see if it's worth one last try to see whether we can get a refinance through the bank, and so Caroline has kindly agreed to try one more time. You just never know! I can only hope.
7 days until we go away now, and apparently if we DO end up getting a refinance, we've got to get an assessment and a lawyer's review all between now and then.
I feel like I need time off from my day job just to sort out the mortgage!!!
Monday, July 12, 2010
Crazy 9 days ahead! We are headed to the East Coast next week for two weddings. This adds a bit of a wrench to our already chaotic plans, since the condo's mortgage is up for renewal during the 11 days we're away, and the new house closes 4 days after we return. So lots to sort out before we go next week!
After Friday's phone call from BMO, you would think our mortgage decision should now be an easy one. Not so! I actually spent a good portion of Friday evening on the phone with the Invis Mortgage Broker (yes, this is what my Fridays have become lately) going through all kinds of numbers (Math and Stats was my major after all!). Here is where we are at:
- Can get us a 3.99% 5-year fixed rate on both the renewal and the purchase.
- Can't refinance the condo, so that means we are only putting 10% down on the new home, and will be paying CMHC.
- Offers free banking (and I think Air Miles too! Definitely have to double-check on that!)
- Can get us 4.34% 5-year fixed rate on the renewal, and can refinance that one, getting us an extra 10% to put down on the purchase, and saving us the CMHC premium on the new house.
- He feels that a rate of 3.99% is not really attainable for the new home, but is willing to take a cut of his own commission to match that rate. (From what I understand, BMO is on a huge customer service kick right now, and has unbeatable low rates!)
So where does that put us? Well, I put together some pretty involved spreadsheets today (honestly, I LOVE Excel), and compared all the different scenarios. The differences appear to be pretty negligible. The higher interest rate, despite saving us the CMHC premium altogether, would cost us about $1,600 extra in interest over the first 5 years. What is more notable, is the distribution of interest - with Invis, more interest would be paid on the income property, where we can claim it on taxes.
So the answer to where that leaves us? Optimistically waiting for even more rates drops? But also... caught in a huge moral dilemma. Caroline, who I've been dealing with at BMO, and Bill at Invis, have both been exceptionally helpful. Both have spent endless hours talking with me on the phone - evenings and weekends included. And both, in my opinion, deserve the business. The catch, is that I really don't think there's anything in it for Caroline if I go with BMO, whereas Bill's income hinges on commissions. My fiance and I have both been debating whether there is a benefit to going with a big bank rather than the more obscure/less-known lenders that the mortgage brokers find. Anyone have any thoughts for/against either side? I'm getting pretty stuck here, and like I said, the rush is on! I've got to have the renewal finalized by next week, and everything really hinges on which option we go with.
You know, my parents have bought me a variety of "decision makers" over the years, and go figure they are the one thing that I've actually packed into boxes already!
Friday, July 9, 2010
But I quickly cheered up when BMO called to tell me their rate for the 5-year fixed mortgage is down to 3.99% Yahoo!! Even sitting there in my soggy dress, I was feeling pretty good about that news!
Having a long closing date has really paid off, because we've really been able to play the mortgage rate game... with a few weeks still remaining before closing, there is still a fraction of a chance that it could drop again!
Wednesday, July 7, 2010
It just worked out by pure coincidence that the mortgage on my condo came up for renewal at the exact same time that we decided to purchase the new house. Matt’s condo, which we have now sold, had about 8 months remaining on the term, and so we are discharging that one early and are stuck paying the associated penalty.
So we have been shopping around for rates for the house and the condo, in what seems like the endless task. We’re trying two different routes for this challenge: the big bank (BMO), and a mortgage broker (Bill Dietrich from Invis). Both have been extremely helpful, and are constantly in touch with rate updates, news, requests for additional information, etc. Expect a further update on both soon!
There are a few things I have learned in this process:
- I wasn't aware that on the rental property, we can claim the interest portion of the mortgage payments on our income taxes. Since the rent itself also has to be claimed on our taxes (as income), it is to our benefit to have a higher interest portion on the mortgage, to lessen the profit at tax time.
- One option we have faced is the possibility of boosting the mortgage on the condo (through a refinance), and taking the difference (between the new loan value and the balance remaining), and putting that towards our downpayment at the new house. Since the condo mortgage interest can be claimed for taxes it is beneficial to have the mortgage higher there and lower at the house we live in. Here is where the catches are:
- a new rule was passed this year that says that CMHC will not insure a loan on an investment property unless a minimum of 20% has been put down. No problem - I already owe less than 80% of the purchase price of the condo. And if a new assessment was to be done on the condo, I think we would find that I'm already down to about 50% - the value of my condo has skyrocketed over the past few years, as it is in a hugely "in-demand" area with lots of new development, gentrification, and just overall coolness taking place.
- Despite the now very low ratio mortgage on the condo, it seems that the size (400 square feet) and the fact that it will not be owner-occupied are a deterrent for the lenders, and is enough for the bank to decline me a refinance?! I know that similar units are selling for more than 35% more than what I paid 5 years ago... but the bank doesn't feel good about giving me a few more thousand dollars on the mortgage?
- The bank and the mortgage broker seem to come up with entirely different options and ideas from each other!
- We have been advised that if we are going to put 10% down on the house, we pay less CMHC fees than if we put down 5%. If we put down 20% we pay no fees. But if we put down 15% we are fools? Basically, the thinking is that 15% is so close to the 20% threshold and no fees, but yet so far. Apparently many homebuyers, if they end up with 15% downpayment, will only put 10% down and keep the other 5% as cash on hand... very handy if you are furnishing/decorating the new home. I don't know though... i'd rather have less cash on hand if it also means less for CMHC.... what do you all think?
I have learned quite a bit more in the process, and like I said - both the bank and the mortgage broker have been very helpful and have been really great at explaining everything to me.
I will share more from them soon!
In the meantime, I feel like I have spent a great majority of the past few weeks sending emails and speaking on the phone with both, and I have found it excruciatingly difficult to keep track of all the details. Realistically, we could sign the papers on the renewal any day now, but I find myself constantly juggling out the options, the rates, the downpayments, etc. I cannot wait until all this is finalized! Come on banks, show me the money!
Wednesday, June 23, 2010
I've breezed through books and websites to quickly educate myself on the process of finding a tenant, but I can already tell that there is SO much I need to learn. For one thing, I have to get my hands on a reasonably useful application for prospective tenants to fill out. I've found a few online like this one from CHMC, and another one from OREA (Ontario Real Estate Association). But the trouble is, I'm not sure about copyrights and the legality of using these forms - especially the OREA forms which I gather for use by licensed agents. I have been told again and again that the number one rule is to do a credit check - but I don't know if the CMHC form asks for enough information to even make that possible - I would have thought a Social Insurance Number would be required (anyone know?). So here is my first real question - does anyone have a great form that they suggest using for tenant applications?
I've had some interest from a few people already, and I've started asking a fairly standard set of questions right off the bat - this helps screen prospective tenants out before taking the time to show them the condo. The questions I am asking are:
- What type of work do you do, and how long have you worked there? [I read a tip somewhere that pointed out simply asking "do you currently work" will generally get you a "yes, I work"-type response, which could mean anything... even 3 hours per week at minimum wage.... so it's more helpful to ask a specific question]
- How long would you be looking to lease for?
- When would you be looking to move in
- How long have you been at your current address?
- Will you be living alone, or with others?
I would also love to ask about smoking and pets, but I have heard from various sources that in Ontario, a landlord is not allowed to discriminate based on this. I will be looking into that for sure - I personally feel that a landlord should have every right to discriminate on both fronts - as both pets and smokers have the ability to really cause wear and tear to a property. What are your thoughts on this?
Tuesday, June 22, 2010
For one, I am entirely passionate about real estate in so many ways. I have worked in both residential and commercial real estate offices (in the former as an office assistant during high school, the latter is my current role as a researcher). One of my absolute favourite pastimes is visiting open houses and model homes, and I have enjoyed doing this since I was a young kid. And when a friend or family member is involved in a real estate deal, I secretly hope that they will include me in the process, or else I struggle to restrain myself - I just can't help but want to know the comparables, the wishlists, the deal-breakers, the choices, the limitations, the asking prices, the offer prices. I have lived in Toronto my entire life (minus 4 years for university), and I feel like I know most neighbourhoods very well - right down to the street level for some. I endlessly look to see what is out there, what is selling, how one compares to another, etc. And so when somebody consults with me during their search for a new home, I love to show off my knowledge of the houses, the streets, the condo buildings, the floorplans - all that information I have stockpiled into my mental Filofax.
I made my first purchase - a 400-square foot condo - at the age of 24. Now, 29 and recently engaged, my fiance and I have purchased a 50's-style bungalow, and will be moving in the coming months. So what are we doing with the condo? Well - I am hoping to foray into the real estate investment world, and would love to turn the condo into a rental property. It's been a long-time dream of mine to own a number of rental properties, and I know I have to start somewhere! This is a whole new world to me, as I am only learning as I go. I am hoping that via this blog, I can share my experiences and my learnings, while also welcoming others to comment and share your experiences and advice.
And that is where the second meaning of the word comes in - I am a notorious over-thinker, analyzer, ponderer, and generally a slow decision maker. So this blog will likely end up featuring some of the dilemmas that I find myself in, all dealing with the real estate world.
And so here, I will dwell on my dwellings!