Answers To The Most Googled Real Estate Questions

[00:00:00] Welcome to The Canadian Real Estate Investor, where hosts Daniel Foch and Nick Hill navigate the market and provide the tools and insights to build your real estate portfolio. Have you ever wondered what the world is curious about

[00:00:16] when it comes to real estate? From first-time home buyers to seasoned investors people are turning to Google to find the answers to their most pressing real estate questions and in today's episode we're uncovering the most googled real estate questions providing you with our insights and our

[00:00:37] takes on the answers. Welcome back to The Canadian Real Estate Investor podcast this is Canada's number one real estate podcast and we're very grateful for all of you listening who helped us achieve that and in today's episode

[00:00:50] we're going to explore the burning questions that everybody seems to be asking to the legendary Google. First one is how do I buy a house? How much can I afford? What is a mortgage and what are current interest rates? Whether

[00:01:07] you are looking to buy, sell or invest understanding these common questions can give you a significant edge in the market. But that's not all we're also going to do a deep dive into buyers and sellers markets, the home inspection

[00:01:22] process, we'll look at tips on improving your credit score, understanding closing costs and much more. So if you are ready to demystify the real estate world and get the answers that you've been searching for stay tuned. This episode is packed with both practical advice and insights

[00:01:39] that will help you and navigate your real estate journey with confidence. I think confidence is definitely something that you need to operate in today's real estate market as well it's been exceptionally volatile we've seen

[00:01:53] major price swings both up and down and that's resulted in people making a lot of money on the way up and losing a lot of money on the way down. We've seen interest rates at historic lows than those same rates being raised at

[00:02:05] historic speeds which is causing people to lose money in a different way by a negative cash flow. We've seen unprecedented levels of population growth and immigration at the same time that we're not building enough home and we finally watched the craziness in the pre-construction market

[00:02:22] fade into an almost panic selling that's forming with condo listings, resale condo market being at record supply. Exactly Dan I mean all that being said I think something you need confidence now more than more than ever right and

[00:02:37] so how do you get the confidence to do something is the question well it's pretty easy you do it once and you're good to go right? Yeah just like working out you know you go to the gym one day do a couple squats

[00:02:49] and then you're just you look like Arnold Schwarzenegger. So you're telling me I can get abs if I go to the gym once? I gotta go, I'll be right back. Yeah like that's just how it works right so but I mean you know not unlike that I

[00:03:01] think a lot of people lose the will to go because they don't see results right away so how do you build confidence? How do you build this is the same way you would get good at a sport or the same way

[00:03:11] you would get results in the gym you got to do it multiple times you got to get the reps in right confidence builds with repetition so to be a confident player in today's market you need to be educated you need to keep

[00:03:23] doing the work and ideally you would surround yourself with experienced people who can give you a little bit of an efficiency advantage on those reps that you're getting in right maybe a personal trainer or a mentor

[00:03:34] as an example. You know what if I can't get abs in one day I'm not even gonna bother so forget it. Didn't Drake do that? Didn't he get ab implants? Did he? I'm not sure he did. There's a lot of Drake implant stories

[00:03:46] floating around but that's a different podcast so back to confidence yeah again Dan completely agree you got to have the right people around you you got to have the repetition so take it from this listener of ours who named

[00:03:58] themselves your most grateful listener who left us this awesome review titled Unreal Education five stars I quote this is my all-time favorite podcast No this is my all-time favorite form of education I'm a newer realtor and I have

[00:04:15] literally landed clients because I was able to talk about things that I learned from this show. Nick and Dan really make you feel like a part of the conversation when you're listening and in my experience that is the best

[00:04:28] way to learn thank you guys keep up the good work from in quotes your most grateful listener well we are very grateful to have you and so happy that we have given you the confidence by educating yourself and putting in those

[00:04:43] reps to go and service your investor clients that just puts a big smile on my face yeah we only charge a 50% commission on that close yeah I guess we're still waiting for that in the mail most grateful listener so cough it

[00:04:58] up no honestly though that like you know it says your most grateful listener I would say that we are your most grateful hosts really take to hear a review like that I mean we said a couple of times here but like our shows

[00:05:10] a little bit different than a lot of the other ones we don't just show up and do interviews not no disrespect to people who do that they all do it very well and we felt that there wasn't a lot of room in the space for

[00:05:18] us to do to add much to that and so we do a research-based show that is Nick and I doing a ton of work and do it mostly Nick to be honest with you he writes like these amazing episodes and does a lot of work and

[00:05:31] and hearing things like that I think really makes it worthwhile right like it 100% and so so thank you we are we're equally grateful for you taking the time to give us that review and it's sincere thank you to everybody who

[00:05:47] takes the time to leave a written review we love them it really keeps this going gives us a little dopamine hit that you know sometimes when we're running out of steam it can help a lot so anyway let's start off with

[00:05:58] the most googled question how do I buy a house well there are several steps to buy a house in Canada so it all starts with I would say having money probably because to buy stuff you need money yeah so saving for a down payment

[00:06:14] probably would be step number one typically that's five to twenty percent of a home's purchase price five percent really only being if you're an owner occupied and using a CMHC insured mortgage mm-hmm so this down payment could vary substantially depending on what market you're in your

[00:06:29] credit score will also need to be in good shape and you'll need income to substantiate the monthly mortgage payments that are gonna be required to pay for the home and that income can be both yours and or the income of an

[00:06:41] income property for you know the real estate investment in many cases it's both like where you know we were I was just talking to some students that we have in our coaching program and I was saying you know you when

[00:06:52] you go to the bank for your first investment property they're not they typically don't use the income of the property exclusively to qualify for the mortgage they also want to know that you as a borrower or a business owner

[00:07:04] will also be there and be able to service that debt if the rent stops getting paid which you know is not uncommon for that to happen by the way so between saving for a down and you're gonna get to this a little

[00:07:16] bit more but saving for a down payment as well as building your credit you need some financial literacy what would be sort of like the next step once you have that money Nick yeah exactly so you've you've done a

[00:07:27] good job you've built that financial literacy you've started to do some of the research you've saved money congratulations now if you are serious about buying a home the next real step is to go get a pre-approval so go get pre-approved for mortgage this helps to determine your budget

[00:07:46] which is pretty important and it allows you to realistically go shopping for a home so your mortgage agent or your bank will provide you guidance and insights into things like fixed versus variable term length and other factors that will affect your payment and overall strategy but the

[00:08:03] first thing you need to do before you get to the next step which Stan's gonna talk about because those professionals don't appreciate going out and looking for people looking for houses with people that that don't have a pre-approval go and figure out your finances step number one

[00:08:18] pre-approval yeah for sure after that I would say you can hire a real estate agent so a lot of a lot of real estate professionals are going to want you to have a pre be pre-approved for a mortgage and and you know some people

[00:08:36] like all like that's sort of douchey that they you know they wouldn't trust you that you're approved it's like well we're in a pretty volatile financial environment and it helps to also establish your budget and know what

[00:08:46] you can afford like most people base what the the top end of what they're buying off of what they can afford on a monthly basis which is really not up to us it's up to your lender and so it's not just to make sure that you're a

[00:09:00] qualified buyer and so the real estate professional isn't wasting their time but it's also to make sure that you're actually buying something or looking at something that's in the realm of affordability for you because

[00:09:09] it would suck if you know if you find the perfect investment property only to go realize that you know and you're super fired up and maybe you know you want to make an offer and then you now go to the bank and say hey I want to

[00:09:23] buy this property and they say no absolutely not right so ideally you would get the no absolutely not range before you go to start looking at the deals right exactly I mean that you don't want to be at that point

[00:09:36] you're just wasting your time the yeah time and yeah yeah yeah and so the real estate professional after that point will guide you through the process kind of help you find properties tour them with you or on your behalf I

[00:09:48] mean we do like a lot of remote investing and we do so we get we've built really strong relationships with agents in the markets that we're in and they will FaceTime tour properties for us these professionals

[00:09:59] will advise you on markets property types and pull comparables for you so kind of like give you a pricing advice on what what these properties that you're looking at are worth as well as much more right they find a

[00:10:10] I would say like in in the real estate investment process a lot of this is like I have an investment thesis so this is my idea is my bit like my business plan maybe it depends on these key assumptions happening and then I need

[00:10:24] to gather a bunch of information to validate those assumptions and the mortgage professional and real estate professional are very much that in that information gathering role for you to validate that assumptions to work back to okay this fits my real estate investment thesis yeah exactly

[00:10:41] Dan okay so let's say you've gotten to that you've gone through that whole process and you've now found something that you love and that you want to make an offer on okay good this is where your agent really comes into

[00:10:54] play because your agents gonna help you put together that offer and guide you through the whole offer process which includes things like your legal name and the name of the seller and the address of the property the amount

[00:11:06] that you're offering which is the purchase price and also the amount that you plan on making a deposit any extra items that you want to include in the purchase whether it's like furniture or other chattels that that exist in

[00:11:18] the property the date that you want to take possession your closing day a request for the current land survey the date the offer expires and of course any other conditions that need to be met before that contract is finalized for example financing conditions and home inspection conditions

[00:11:35] are the two most common yeah and then I guess after that point you would you would actually work to fulfill those conditions so you would take if you if you end up getting a financing or maybe a insurance condition or an

[00:11:51] inspection condition then or you know maybe you're buying conditional on I want to know if I can fourplex this property or I want to know if I can do plexus property those are you know good conditions for investors to

[00:12:03] include once you've take once you have an accepted offer on a property you would go to fulfill those conditions so conduct a home and you know you're mentioning conduct a home inspection this is kind of one of those things

[00:12:13] that's just coming back into play right where we just crazy in a by I know where we're cut we're in a but I know it is crazy because like that's when we talk we kind of open the episode talking about people

[00:12:23] losing money it's like well people buying properties sight unseen with no financing or inspection conditions like it's I saying it again right now I'm like this is like it sounds insane but that was happening we're in a market

[00:12:36] that was in the state of mania so people stopped doing that for a while back in 21 22 you need to do this to ensure the properties in good condition yeah I mean you don't want to be all fired up and go by that

[00:12:48] first forever home or that your first property or that investment probably only find out that there's major plumbing issues or structural issues or the roof needs to be redone and guess what a simple inspector will go and

[00:13:03] fix all of that so if your offer gets accepted take that offer to the lender with the inspection if everything is good to go firm up on the on the conditions and then usually at that point you can close the deal

[00:13:22] so you finalize the paperwork chance for the title and you know it's not this simple but you know you get the keys and congratulations you have bought a house so that is the home buying process in like four minutes yeah a

[00:13:36] little like definitely simplified obviously like there's a usually there's a period between when you firm up your conditions and you take possession like you know I don't I think the average closing in today's

[00:13:46] market would be like 45 days yeah so to you know you so you what you fulfill your financing condition you fulfill your inspection condition after you've had a conditionally accepted offer you go and get those boxes checked by

[00:14:03] those individuals the inspector in the lender let's say your realtor will submit something called the notice of fulfillment I think is sort of like around what it's called in most provinces that's what it is in Ontario and then you could also waive those conditions so just say I

[00:14:15] don't need them anymore usually not not the right way to do it but then your firm you've committed to buying the property it's no longer conditional on anything that's when you would be at risk of losing your deposit if you

[00:14:28] failed to close and then you wait like 30 days the paperwork kind of gets handed to the lawyer and they close the deal I think yeah exactly so there you have it that is the first answer to one of the most googled

[00:14:41] real estate questions the next one here Dan is a question about affordability which is a hot topic in which actually one of our next episodes dives deep into affordability and what that means in different places across

[00:14:56] Canada the next question that we are going to answer is how much house can I afford yeah so this is a good one let's start with I think there's like a couple of different frameworks you can use here let's

[00:15:10] start with the famous 30% rule what is the 30% rule I know you think that it's that you can afford 30% of properties on the market no I wish yeah it's it's the idea that you should budget a minimum of 30% of your gross monthly income

[00:15:27] before your before you pay taxes so you're before tax income for housing costs and it's practically a personal finance gospel this is what like CMHC and the government and lenders would use to determine whether or not

[00:15:39] you can afford a property as well when lenders are saying like can you afford the mortgage payment they're kind of using ratio similar ratios they're a little higher but they they use different different income figures rent calculators will often use the 30% rule as a default assumption to

[00:15:56] determine how much house you can afford yeah totally and and let me re-clarify obviously none of this is financial advice and this is all very subjective to your personal situation you know you might be looking at

[00:16:11] something that might not fit within some of these metrics but maybe you've got help from the bank a mum and dad maybe you're expecting an inheritance maybe you're an expecting a raise maybe you're planning to put a basement

[00:16:21] sweet who knows but we're just going over the really high-level stuff so other things to consider when trying to calculate your affordability is what gross annual income do you make and what is your risk tolerance what kind

[00:16:36] of down payment can you put down obviously the more put down the better in a lot of cases because then you actually own more of the home rather than the bank owning it right going back to that 95% loan to value if you

[00:16:51] only put 5% down well realistically the bank owns the home the other thing to keep in mind here is debt-to-income ratios right lenders prefer your monthly debt payments be less than 39% of your gross income and this

[00:17:05] is all part of your GDS and TDS which is your gross debt service and your total debt service which are calculations that determine your affordability that your bank or mortgage broker will go through with you when you are doing that process and we'll get to that next because

[00:17:20] that's one of the next questions also consider what are your current debts and current financial obligations like is it a good idea to go buy that home that's really stretched out at the top of your budget if you're

[00:17:32] planning a big expensive wedding if you are expecting a first or second or third child or anything like that you have to be aware of the actual cost of owning a home and those also include interest rates mortgage terms those

[00:17:48] will also have a direct impact on how much house you can afford so really this is so important do your research and act accordingly well said there Nick so the next most googled question I guess we should move on to

[00:18:03] what is a mortgage this is funny because I yeah I mean a simple it's not even like what is the best mortgage or what kind of mortgage it's like what is a mortgage it's a death pledge that's what it is yes exactly

[00:18:16] buy that t-shirt by the way yeah for those of you listening who are who listening when we came up with the idea for the death pledge shirt it is available I think we know re I oh the website the domain that I have it hooked

[00:18:30] up to is dead co dad hats calm by the way which is funny because I also sell the dead co dad hats on my youtube channel like the ones that I wear in

[00:18:38] my in all of my videos for those of you who don't who haven't seen me on video I'm not anymore I'm usually wearing a realist dot CA hat which is a future dead co just kidding but I'm usually wearing like a FTX hat or

[00:18:52] Silicon Valley Bank or something like that it's so funny because occasionally catches people off really off guard they go do you work for that company yeah no this company's been dead for three years brother it's like this

[00:19:03] company's been dead for like 15 years right or or there yeah or they're like you know it's kind of it's kind of what's the word that how do you say it's is it just sus sus like it's kind of sus that this guy's

[00:19:16] wearing a dead co hat anyway what is a mortgage when when you buy a home you probably cannot pay for the entire home cash if you can congratulations that's a very great position to be in and I'm happy for you but for the rest of us

[00:19:31] the amount that you're typically putting towards the house is a down payment and to cover the remaining costs of the purchase you may need help from a lender so the loan you get from a lender to help pay for

[00:19:43] is a mortgage the mortgage is a legal contract between you and a lender secured against the title of the property it specifies the details of your loan and is secured against the title of a home condo or land or

[00:19:57] investment property when you shop for a mortgage your lender or mortgage broker provides you with options make sure you understand those options and features a very good example of this being materializing and risk is what happened in the last couple of years where you know borrowers were

[00:20:15] taking on these static payment or fixed payment variable rate mortgages and they're now amber on like 99 year amortizations by accident and paying one dollar of principal a month yeah so the goal is for this to help you choose a mortgage that best suits your needs but also

[00:20:32] understanding how all these products work would help yeah exactly and there's a couple key components that everyone should be aware of when you are looking at a mortgage and again any good mortgage agent or bank or lender

[00:20:47] will help walk you through this and if you need help with your mortgage please reach out to myself this includes your mortgage principal amounts the principal is the amount of money that you borrow when you originally

[00:20:59] take out that loan from the lender that Dan was mentioning your payment then is broken up into two categories principal and interest the principal which is the original amount board is divided into equal monthly payments and the interest is the fee that that lender charges you for

[00:21:17] borrowing and that's calculated on the outstanding principal each month now this means that the monthly interest amount declines over time as the outstanding principal declines as well so slowly as you pay you end up

[00:21:31] owning more of the home and you pay a hefty price in interest for that for the privilege of being able to borrow that money from a lender the other thing that Dan just mentioned amortization and unfortunately people find themselves in negative amortization well amortization is the

[00:21:50] period of time over which the mortgage will be paid off now the most standard we're seeing in Canada here is 25 years but there are 30 year options and if you get certain CMHC products more in the purpose-built

[00:22:03] rental and multifamily space you can actually get 50 years plus on some of those the other thing you need to be aware of with your mortgage is your payment frequency payments can be monthly semi-monthly bi-weekly and weekly and those do make incremental differences in the speed of which you

[00:22:26] are able to pay that back so just these are the questions that you need to be answered don't Google them go and answer sure go and ask your mortgage broker your mortgage agent your bank your lender or whoever you are

[00:22:36] dealing with now Dan there's one other part of a mortgage before we get to the interest rate there's one other part of a mortgage that people should be aware of what is that the the big piece is your mortgage term right so

[00:22:50] you know when I talk to people in the US like I do a lot of these Twitter spaces with folks from the states and when we explain like how Canadian mortgages work they're like oh you guys didn't learn anything from

[00:22:59] us in the global financial crisis so the the mortgage term is the length of time your mortgage contract is in effect it consists of everything your mortgage contract outlines including the interest rate so you're you get a

[00:23:14] hold on your interest rate during that term period what whether it's a fixed or variable and then after five years usually the average term would would be five years I would say there's although we're seeing it kind of

[00:23:25] people taking shorter terms based on Bank of Canada data now because I think people are hoping that rates will be lower after a two-year three-year period but five years is historically the most common mortgage term that people

[00:23:37] would would take at the end of each term you have to renew your mortgage if you can't pay the remaining balance in full which means that you know you typically would get another mortgage you'd get a renewal offer

[00:23:48] from your existing lender and you'll might most likely require multiple terms to repay your mortgage so like five five-year terms would equal to 25 year amortization so you still have four different you know after your first mortgage term you still have four different terms that will have a

[00:24:04] different interest rate and a different principal payment and a different total payment so the length of your mortgage term has an impact on your interest rate and the type of interest you can get fixed versus variable the penalties you would have to pay if you break the mortgage

[00:24:18] contract before the end of the term and how soon you have to renew your mortgage agreement yeah that's a big one you really want to be aware of of the penalties and and you know it's not just about the rate which we're gonna

[00:24:32] get to it's really about the structure of what act the product that you're getting that actual mortgage moving on the next most Google question is what is the current interest rate so let's talk about interest rates the interest is the fee that you pay to the lender for

[00:24:48] borrowing that money which we just discussed the higher interest rate guess what the higher your mortgage payments will be and every time you renew your mortgage term you can renegotiate that mortgage as Dan was just saying you know multiple five-year terms that gives you

[00:25:00] multiple opportunities to go in renegotiate ideally get a better rate for whatever strategy you are trying to achieve when you apply it for your mortgage the lender offers you an interest rate and you can negotiate

[00:25:12] that rate to see if you can get it lower actually you don't usually do but people such as myself mortgage brokers and agents that's what we do now the interest rate your lender offers you depends on many different things and

[00:25:26] this differs with many different lenders so the first thing would be the length of your mortgage term the type of interest you choose the current posted interest rate offered by your lender versus other lenders your

[00:25:38] credit history which is a big one if yourself employed another big one if you qualify for any type of discounted rate and of course the type of lending institution you go to so whether it's a bank a credit union monoline lender or

[00:25:53] a MICK a mortgage investment company and then of course the specific lender always has different nuanced ways that they do things so today currently we'll timestamp this as the standard are doing that a nice Saturday episode today Saturday June 15th the prime rate in Canada today and likely

[00:26:12] for the next few months is currently six point nine five the prime rate also known as the prime lending rate is the annual interest rate Canada's major banks and financial institutions used to set their interest rates for

[00:26:25] variable loans lines of credit and mostly variable rate mortgages yeah and the prime would typically lead into business financing as well which is why we're seeing like a lot of developers and businesses struggling and that

[00:26:42] sort of where that when people like you know in real estate a lot of people are like oh rate cuts are gonna help the economy it's like I mean most of the mortgages that people are using today are fixed so they're not going to be

[00:26:53] impacted immediately by interest rate cuts but business financing will and so bail out and kind of hopefully stimulate the economy a little bit the prime rate is typically the big piece that's influenced by the policy

[00:27:05] rate set by the Bank of Canada known as the overnight rate target and usually the primary is based off of that which is the overnight rate is the rate at which banks can lend money transferred to one another overnight

[00:27:16] like on a day-to-day basis while these rates are not the same they are closely related when the Bank of Canada changes the target for the overnight rate lenders will generally adjust their prime rates within a couple of

[00:27:26] days rates are hovering around the fours to sevens all the way up to double digits depending on the type of asset loan borrower and more sorry I should have said high fours probably low fives I would say like really posted

[00:27:41] rates are low fives high fours would be kind of where we're seeing I don't know if we're seeing deals happening in that space but if you want to know about what you're pre-approved for have any lending or mortgage questions I

[00:27:51] would highly recommend that you reach out to Nick who is my co-host here on this podcast the other boys that you hear here thanks Dan because he's good at that stuff and and he can kind of give you a better idea so

[00:28:02] let's keep going through the list here the next one is what how do I sell my house so some pretty easy takeaways here you know the first one being take some time to prepare your home whether you're you know fizz bowing this

[00:28:18] which is for sale by owner or working with a lovely realtor such as my co-host Dan the other voice that you hear they would likely advise you to do all of this stuff as well and if they don't maybe go find a

[00:28:31] So the first thing would be clean declutter make your house look spacious and appealing repairs and upgrades you know if your if your house isn't disrepair and there's major issues that need to be fixed and it's not really

[00:28:44] worth it then maybe don't bother with those but guys paint goes such a long way little things little things can go such a long way so fix up any minor improvements that could add that face value if you want to get the

[00:28:58] professionally staged in your home goes a long way or at least rearrange you know declutter and then rearrange that furniture to make the space look more inviting to really highlight its attributes the next main thing and we'll

[00:29:11] come back to this all just touch on it is a price in your home correctly right this is very important I got to look at comps and really do some market analysis here you know an appraiser a realtor will definitely

[00:29:24] come into play here but I'm gonna stop there because that is another another question further down the list here and then market your home so this is it's hard to even say this because this should be such an obvious one high

[00:29:39] quality photos right that seems like a pretty obvious one well if it seems obvious to you I dare you to go on realtor.ca and start looking through and you will see you know hundreds of this five six seven hundred

[00:29:52] thousand dollar listings million dollar plus listings and there's a little thumb in the bottom of because someone's taking them on their iPhone or it's blurry or there's someone in the mirror or whatever it is you know I

[00:30:02] mean take some pride in this and hire a professional photographer to take these pictures and to get them to be the best that they can obviously list online use social media and then open houses and showings are always a

[00:30:18] great way to attract some buyers now there's a few more points here Dan you've sold a couple houses and in your day can you can you can you jump in here yeah I would say one of the things that people tend to do on the

[00:30:32] sale side is hiring a real estate agent right so find a reputable agent choose an experienced agent who knows your local market you know a lot of people I think shop on price as well so negotiate on the fee I think

[00:30:44] there's been some rule changes around what real estate professionals are allowed to say or not say in regards to like commissions being fixed or like there's being some sort of standardized pricing and so you're seeing some

[00:30:57] competition I would say in that space but in that would just be part of the process discussing and agreeing on the agents fee once you've got a listed your you know idea if you're priced appropriately and the listing is

[00:31:07] marketed well you should see some offers so review those offers carefully consider the price the conditions in the offer and try and get an understanding of the buyers financial situation and ability to close you can always sign back right or counter the offer and negotiate to get

[00:31:22] the best possible deal but also like understanding that you and everybody's objective in the in the in the process is to get a transaction done right the buyer wants to buy a house the seller wants to sell a house both

[00:31:33] agents obviously want the transaction to take place because it's the only way that they get paid the next one is also about the sale of a home we went from from how do I sell it to what is my my house worth we all want

[00:31:47] to be worth a lot more at the very least more than we initially paid for them right so how do you determine what your home is worth and how to get the top dollar for it and and especially so when it comes to investment properties

[00:31:59] because you know there's one of the easy ways for us to create value is to increase the income of property too right so let's let's quickly jump in here on the on the what is my home worth being the next question you

[00:32:14] would typically determine the value based on market conditions appraisals and comparable sales as well as using the income approach to determine what a property is worth based on how much money it makes so you would review comparable comps or sales sales comps analyze recent sales of similar

[00:32:32] properties in the area you can also do that to say oh this property soul up the road sold for a five point two five percent cap rate or and so I would expect that mine would be the same and my income is this much and you kind

[00:32:44] of apply the cap rate and that's another way of kind of using comparables and the income approach market conditions is another important piece evaluate the supply and demand if there's a lot of competition you know condos being a

[00:32:56] great example right now Toronto condo market has the most listings it's ever had and so crazy yeah you know if there's excess supply you're gonna have to be competitive on price economic factors considering current mortgage interest rates and broader economic conditions obviously especially

[00:33:10] when you're thinking about the income approach given that right so like the income approach would be on the cap rate basis is the cap rate even lower than than the interest rate in the market or say even higher than the

[00:33:22] interest rate in the market right now can people afford to buy this at a you know seventy five eighty percent loan value where it would be compelling if not it might be tough to sell and then that's just one of those

[00:33:31] things where it's like okay well I guess I'm gonna be holding this until I see we see cap rate compression or rates come down or whatever right yeah exactly Dan so the last piece I'll add to to this question the how do I

[00:33:41] sell my house question is you really want to make sure that you are listing at the right price now listen the property high will likely result in it sitting on the market or it getting offers far below your asking price or

[00:33:56] not even your asking price but your desired price right there's asking price there's a higher price there's market value there's all these different components and you really need to nail down what it is you're trying to

[00:34:06] whereas listen the property below could or lower than it should be could garner many offers but could complicate things with a ton of missed price offer so the best thing to do this is just not play games to be honest and to aim to

[00:34:23] prices close to market value and as close to what you actually want it sold for as possible now speaking of selling a home the next question on the list here is what is a buyer's market versus a seller's market well this is a

[00:34:38] prick pretty quick and easy one that we've covered many times in the show before but here's a quick refresher a seller's market happens when there are is a shortage in housing or more potential buyers than homes a buyer's

[00:34:52] market on the other hand occurs when there is a surplus in housing or more homes for sale than buyers and a balanced market happens when there is the same number of homes for sale as there are as buyers so really it's just

[00:35:05] supply and demand metrics yeah I think that there's really two ways you can measure that one would be months of inventory and the other one would be sales to new listings ratio so you can find these on like a lot of the

[00:35:18] websites like house sigma Zolo where in hours ask your local professional like your local professionals job is also to know the values sorry those values those metrics values so if we're in a buyer's market or seller's market

[00:35:32] so if you kind of want to get an idea for whether or not the markets in your favor as a seller or a buyer look for and ask for the month the current months of inventory it or the current sales to new listings ratio in your

[00:35:46] market typically with the months of inventory the more months of inventory the more favorable the market is to a buyer with the sales to new listings ratio the lower sales to new listings the more favorable market is to a buyer

[00:35:59] right those are both signs that there's less less competitive market yeah great points the next question is how does a home inspection process work so typically conducted by an home inspector although a lot of us use

[00:36:13] contractors that we work closely with who are gonna end up doing the work and you you know you want to carefully choose someone who's actually going to go through and there's there's kind of two purposes for for an

[00:36:24] inspection one is figure out all of the problems that could prevent you from buying the home or think you know as an investor add value opportunities or things that you could do to or might need to do that would come up as

[00:36:35] expenses along the along the road along the investment like the ownership tenure but the other pieces are you almost kind of get like an owner's manual of your property you know where you're you're familiar with all of the different mechanical systems and all of the different

[00:36:49] maintenance issues and you can kind of start like modeling and scheduling these things in to your investment so if you have a I don't know like a roof that inspector says oh the roof will need to be done the roof has a ten

[00:37:04] year life you know the amount of times where I see somebody who oh the roof has a ten year life and they just forget about it they don't they don't put like oh in ten years I have to spend you know ten thousand

[00:37:14] dollars to redo the roof of this property into their pro forma you know because like and that to me is that those are things like if you want to model properly like the way most professional funds would model deals

[00:37:26] you can't just throw those things out because either you're going to sell the property and the next buyer is going to look at that roof now that now has five years or two years of life left on it and say I'm not

[00:37:36] going to pay or it's going to cause a problem where it's going to leak and blah blah blah and either way that's money that you eventually need to spend to run your business properly so put it into your business

[00:37:47] plan or your finance your finance forward-looking financials your pro forma your financial model when buying properties that's just one example but it's a good example yeah no I love it and so just on on back to what the

[00:37:58] homeless better actually does they show up at the property usually takes them a few hours to go through everything and Dan I love how you said that it really gives you that owner's manual like you literally get like I've seen

[00:38:09] binders you know they're not they're not all that big but it usually takes the home inspector a few hours to go through everything interior exterior I were talking like attic basements bathroom ceilings doors and wood trim

[00:38:22] electrical systems is a big one a lot of the exterior surfaces right how's the foundation look how does the brick or wood or siding look the state of the garage the HVAC kitchen and appliances plumbing the roof another

[00:38:36] big one the actual physical structure of the property windows can be a big positive or negative and then of course the yard and the landscaping and even the grading of the yard right it's like if it rains is that water

[00:38:49] pooling up against the side of the foundation so they will provide you with detailed information on all of that stuff then what do we have next here the second last question here yeah what is a home appraisal so a

[00:39:05] home appraisal is typically what the bank uses to value the property right so it's a professional assessment of the properties physical and functional characteristics and detailed comparison of the home to recent comparable sales in nearby areas so similar to like what a realtor would do to help you

[00:39:21] value property but typically done by a professional appraiser where they don't really have a vested interest in I was gonna say yeah realtors maybe a little bit of a conflict of interest with this one

[00:39:31] yeah so a bank typically won't rely on a realtors opinion of the value and so they will hire their own professional to create that value which is an appraiser or an appraisal right exactly and those you know an appraisal

[00:39:45] which is a line item in every transaction usually cost between three and six hundred dollars something to account for in your closing costs the appraisal usually takes place right after the buyer and seller have agreed on the price and the agreement has been signed and after all the

[00:40:00] details regarding the agreement have been finalized the lender will then send that appraiser that Dan was mentioning to determine the actual value of the home so there we go and Dan now on to our final most googled question

[00:40:16] we were answering this today and this is kind of the closer if you will it is what are closing costs so why don't you tell us this and close us out yeah so closing costs are typically additional expenses incurred by the

[00:40:30] buyer to close the property and take ownership total closing costs can range between one and a half percent to four percent of the purchase price closing costs may include legal fees land transfer taxes home inspection fees title

[00:40:42] insurance etc so you want to prepare for these because the last thing you want to do is run out of money at the very last step of your transaction and and you know sometimes these can come up like the

[00:40:52] other pieces adjustment so like if you're on a property that has a whale or propane as an example there's like if they pre-purchase the the if they filled the propane tank as an example you have to buy that propane off of

[00:41:08] them with your purchase or if they prepaid that property taxes for the year you have to buy that off of them and so those are things where you know that like that can be a lot of money you know ten thousand five

[00:41:17] thousand dollars for taxes you know propane is not cheap like a full year's worth of propane or full seasons worth of propane if you're buying all of that in the tank those adjustments can also add up and

[00:41:26] typically aren't added into your mortgage so they're things that actually you end up paying cash so be aware of what these closing costs potential closing costs can be yeah really great point in I think that's it the last thing

[00:41:36] yeah again the last thing you want to do is have an extra ten thousand dollar propane bill at the very end of the transaction so yeah that is it that is there wasn't the full list of the most Google questions real

[00:41:48] estate wise because there's a whole bunch of them but that was the top of the list we hope you found that very helpful and if you have any questions about these or any other burning questions that you may have

[00:41:59] please reach out to Dan or myself or send an email to the show the emails in the show notes and we always look forward to hearing from you thanks so much we'll see you soon the Canadian real estate investor podcast is for

[00:42:13] entertainment purposes only and it is not financial advice Nick Hill is a mortgage agent with Premier Mortgage Center and a partner in the G&H mortgage group license number 10317 agent license M2 100 4037 Daniel Foch is a real estate broker licensed with rare real estate a

[00:42:37] member of the Canadian real estate Association the Toronto real estate board and the Ontario real estate Association