By Ozzie Jurock
This article appeared in The Vancouver Sun on September 14, 2002
I have received hundreds of questions in the last few months. Actually too many. Will Rogers said: "Everything is funny as long as it is happening to somebody else." And much of the following is "happening" to someone else. Here is a sample of - hopefully - general interest. I have abbreviated your questions and taken out all the "I like your story" stuff - I love it ... but as I said before - I am a legend in my own mind already.
Q: I have made an offer on a 30-year-old rental property. We counter back and forth and out of the blue he said he would take the offer plus GST. The law says no GST on residential rentals, the vendor said that when he bought the property it was a working farm and he had to pay GST but that in the last few years he let the farm status go. Now the land is zoned RR#1. My accountant seems to have very little knowlege of this scenario. Should I pay the GST?
A: When the use of property changes and originally GST was due it is quite possible that GST has to be paid. If your accountant does not know, fire him ... find one who does. More important for you is the question "why should you pay it?" If the property makes sense to you at the price without it and not with it ... it then becomes a matter of negotiation. In life you do not get what you deserve ... you get what you negotiate.
Q: I want to own my own home, but am not sure whether I can afford it. I want to stay within my means. Is there a rule of thumb for a point beyond which I should not make payments?
A: I am with Oscar Wilde who said: "Anyone who lives within their means suffers from a lack of imagination." Kidding aside, your mortgage company has rules. Essentially they will let you pay some 32% of your gross income on mortgage, tax and strata fee payments. Also your total debts cannot exceed 40% (car and other payments). So, the bank will make the decision on ‘means’ for you.
Q: I have heard that if I am self employed I can make my residential mortgage interest tax deductible, like in the US?
A: I am not sure about "like in the US", but yes, there are ways to structure your business income in such a way that over a period of say 4 - 6 years ANY personal mortgage interest could become tax deductible. See your accountant.
Q: I have qualified for a "zero down" program but the interest rate is higher than I'd like. Is there another way to obtain a zero down and how do I go about it?
A: You don’t say what rate you were offered. You can currently get a ‘zero’ down mortgage in Vancouver at approx. 9.65% (5 year term) and yes, that is higher than the 5.65% offered at some institutions. But it is still 4% lower than EVERYBODY paid in 1990. The question is NEVER the rate you pay, but the DEAL YOU make. Who cares what interest you pay, if it is a great profitable deal and it is the only way you can get the property?
Q: Hi, first time on this site. Find it very informative. Our question is: We've been approved for 330k, 5 yr. term for 5.5% with Bank of Montreal (guaranteed for until Dec/02). Unfortunately we don't have the downpayment yet. We are just renting now for $1000/mo and can probably raise $40k in 6 mos. We decided if we're buying our house it would be our dream house. We sold our house a year ago and now upgrading. With the market trend right now is it advisable to buy a New house/or newer house or build our dream house from scratch (which we really prefer)? We have no idea how financing works on buying a lot and building on it (and the procedure too). Will our savings (40k) be enough for it? Are we qualified? They say builders/developers make a lot of profit selling new homes. Will we be ahead if we find somebody to build it for us? We just have so many questions. Any response would be greatly appreciated. Thanks a lot in advance. -Eager Housedreamers. P.S We're planning to have the basement rented. Area is in Cloverdale, Surrey, BC.
A: Save 40k in 6 months, eh? Teach me how. It doesn’t matter whether it is a good or a bad market ... what matters is that you have a good deal for YOU. You can have a lousy deal on a new house or a used one. Qualified? You said you are for the mortgage, if you are asking whether you are qualified to build, look in the mirror, are you? Who is ‘they’? Check out builders at the BBB and go to the www2.jurock.com/directory/builders-contractors and look up builders there.
Q: We live in a condo in in Upper Lonsdale, North Vancouver. We've listed our place for just over a week with about 18 couples who have gone through it. So far no offers, how do I know if we listed too high (which according to the agent and other places around the same criteria) we're not? Am I getting to panicky too early, if so, when should we re-evaluate?
A: Agents like a well priced home and would tell you if you were overpriced (better price, easier sale). If YOUR agent says you are well priced you likely are. If YOU think you are well priced based on ‘other places’ you likely are OVERPRICED. 18 couples in a week? Looks like you have a working agent and a reasonably priced unit.
Q: What are your views on Port Alberni?
A: It is a great place to live. One of our subscribers just bought a 3 level townhome for $38,000 AND a 5-acre ranch for $105,000. For retiring - great. For making a profit ... not until the lumber situation clears.
Q: What are the pros and cons of listing a property with realty companies that offer 1% commissions compared to standard realtors?
A: Pros: If it works, you pay less commission. Cons: 'Standard' Realtors won’t show your house. Remember that everyone always will want to save the commission. More important question is this: Does your professional agent have the ability to get you the best possible price in the fastest period of time with a minimum of inconvenience.
Q: What does one look for in a good mortgage broker? We want to take advantage of the low interest rates and renew our mortgage early.
A: I salute you that you will check for the best rate BEFORE renewal. Last fall the Mortgage Brokers Association of Canada found that 61% of Canadians renew their mortgage w/o question at the same institution even though rates can be up to 1.5% lower elsewhere. Institutions fight for new customers, but their faithful 'renewal ones' they zap. Check out a broker at www2.jurock.com/directory/financing/mortgage-brokers.asp
Q: I would like to know whether Campbell River is a good investment, the reason being that I am currently holding 2 townhomes under contract for just under $50,000 each. The townhomes are approx. 1000 sq. ft. 3 bedrooms + 1 bath and is approx. 9 years old. A: Holding under contract? Do you mean owning? The average townhome price in August is 10% higher at $96,000. No one can answer that question w/o seeing the units. Campbell River has units for sale as low as $28,000. What is your goal - flipping or earning unearned income? On the face of it, it sounds like a good hold. Ask these questions of yourself: Who manages it? (Read previous SUN story on out of town property management) What is the vacancy rate for 3 bdrm townhouses in Campbell River (Call CMHC)? How much will it rent for ... does it cash flow?
Thanks for your questions. I try to answer all, but most weeks there are just too many. Remember: There are no stupid questions ... Well, there is this one: "How many ducks would it take to equal the weight of an average human?" See! But you get the idea. Ask away, research, grow a real estate portfolio - look around you - for the last 40 years EVERYONE investing in real estate has done very well - and they likely started by asking questions.
E-mail this story to a friend Print this story Save This Page to del.icio.us
Recent Articles by this columnist:
Debunking the Myths of Yuletide Home Selling
Mortgage Interest Rates - Whither Do They Go?
Should You Sell Your Old Home Before Buying a New Home?
What's a cap rate anyhow?
Developers ignore Feng Shui at their peril
All articles by Ozzie Jurock
Check out this week's Jurock Real Estate Insider Special deal
Have a real estate question? Ask an Expert