Is a "Fixer-Upper" Home a Good Investment?

Buying a fixer-upper home can be a nightmare, punctuated by a series of unexpected disasters, or it can be a profitable venture. You can snag a rundown place in a good neighbourhood for way below the market price, invest some time and money renovating it, and end up with a like-new house that's worth a lot more than what you paid for it.  So before you take the plunge, make sure you have a realistic idea of what you're getting into.

Do the math
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Figuring out what you should pay to buy a fixer-upper starts with a simple equation. First, add up the costs to renovate the property based on a thorough assessment of the condition of the house. Be tough with this estimate, which should include materials and labour — yours and other people's. Next, subtract that from the home's likely market value after renovation, drawn from comparable real estate prices in the neighbourhood. Then deduct at least another 5-10% for extras you decide to add, unforeseen problems and mishaps that have to be dealt with, and inflation. What's left should be your offer.

It's essential that the real estate contract include an inspection clause. At best, the inspection will assure you that the house is a good investment; at worst, it will help you back out of the deal. Often with fixer-uppers, it's something in between. The inspector will document a serious problem or two, and you can use the findings to get the seller to pay for repairs or negotiate the sale price downward.

If the house needs significant structural improvements, many real estate experts recommend avoiding it altogether. Major repairs like plumbing and electrical system overhauls, foundation upgrades, and extensive roof and wall work are usually "invisible" and hardly ever raise the value of the house enough to offset the cost of the renovation.

Pick projects that pay
The ideal fixer-uppers are those that require mostly cosmetic improvements — paint touch-ups, drywall repairs, floor refinishing — which generally cost much less than what they return in market value. New lighting fixtures, doors, window shutters, and siding, as well as updated kitchens and bathrooms, are also lucrative improvements.

The perfect fixer-upper is the home that everybody wants when fixed up but few can see past its imperfections to buy.

Be prepared to roll up your sleeves
Whatever renovation is required, it's usually most cost-effective when homeowners pitch in. A fixer-upper is for people who are willing to be do-it-yourselfers because it can save them a lot of money and they can keep the increase in home value for themselves.

If you're not the hands-on type, be prepared to devote a considerable amount of time — months or even years — to closely supervising contractors. But remember that all of your financial gains could be wiped out if the project goes over budget because of mistakes or unnecessary delays.

Line up the money
One of the most challenging aspects of purchasing a fixer-upper is paying for the renovation. Understandably, most people don't have much extra cash after making the down payment and paying closing costs, so coming up with the additional money to cover repairs or remodeling can be difficult.

If you have money set aside for repairs or you plan on taking out a loan, make sure you get an accurate estimate and then add another 20% on top of that. If you’re doing everything with borrowed money with no margin for error, there will be extra expenses no matter how carefully you plan.

Enlist help 
Make sure you have a network of helpers and never do the work by yourself. If you’re fortunate to have handy family members or friends, definitely enlist their help. Make sure to enlist the help of people you trust and know their level of experience and expertise in what you’re asking them to do.

Lastly, prioritize your projects and don't tackle them all at once, especially if you're doing it yourself. You don't want to start working on both the bathroom and kitchen and wind up getting stuck or out of money halfway through when your counters are all ripped out.

Buying a house is a stressful experience. Throwing a renovation on top of that, especially for a lot of first-time buyers, isn’t always ideal. Many people move into houses soon after they’ve entered a long-term relationship, and it can be tough on a relationship if you’re trying to figure out these difficult things that have big implications for your finances and how you want to spend your life.

Add Value to Your Home with Stone Veneer

Whether you want to increase the resale value of your home, or you just want it to look its best inside and out, nothing does both like the look of stone-crafted designs. Yet, natural stone can be prohibitively expensive.

 Most new homes that appear to have a stone facade are actually stone veneer which is a manufactured stone that looks like real stone. Stone veneer has become very popular because it weighs less eliminating the need for wall ties or footings and making it cheaper to install. It also costs less and is available in a variety of colours and designs making it easier to coordinate with the style and colour of your new home. A quality veneer is also extremely durable, ensuring it will protect your structure with little maintenance giving your home lasting appeal.
 
You can create a striking, beautiful contrast by combining brick and stone. Brick endures longer than virtually any siding material and will maintain its beautiful look. Another benefit to brick is that it is more soundproof than other sidings to create a quiet and cozy interior.
 
If you’re performing a home renovation, stone veneer can easily be applied over wood or stucco. The relatively simple upgrade adds tons of curb appeal and increases your resale value.
 
How to Install Stone Veneer Siding
Get the look of real stone without the high cost by following these easy step-by-step instructions:
 
Step 1: Create Your Design
First, create the pattern you want on your exterior by drawing it out on graph paper or using computer software.  Next, lay the veneer stone on the ground in the pattern you have designed to ensure you have enough stones.
 
Step 2: Create a Moisture Barrier and Add a Wire Mesh
If you’re covering wood you’ll first need to create a moisture barrier by applying roofing felt or house wrap over the surface with nails. This step is not necessary for masonry walls. Attach a wire mesh to the wall with nails or screws. This will become part of the base that holds the stone veneer to the walls.
 
Step 3: Apply Mortar and Attach Stones
Once the wire mesh is attached, apply mortar approximately 1/16" to 1/8" thick with a trowel. Apply mortar to the stone and attach it to the surface working in a horizontal pattern and leaving a small gap. Hold the stone against the surface until it sets. Be careful not to get mortar on the surface of the stone.
 
Step 4: Finishing Touches
Since laying stones is a bit like putting a puzzle together, not all the pieces will fit perfectly. Use a power saw with a masonry blade or grinder to reshape the stone to fit. Fill gaps and small spaces with grout to prevent moisture from getting through.

Tips for Preparing Your Home for Winter

As the winter season approaches and the air grows crisp, it's time to start thinking about preparing your house for the season. Once winter blows in, homeowners have to get serious. It is important to consider the fact that the winter season means spending a lot more time indoors. Roofs must shed rain and snow, windows and doors must reject the cold, and the heating system must keep rooms comfortable. If any of these components don't hold up, you might be faced with scrambling around in the wet, cold, and dark to fix them.

By handling these important yet reasonably easy tasks, you can avoid considerable grief later.

1)  Inspect the roof
If possible, go up onto the roof to check its condition. Look for cracked or missing shingles, bald spots on shingles, missing or damaged flashing, and other conditions that might allow leaks. Replace any roof shingles that are missing or damaged. You can also seal minor cracks or tears with roofing cement or do the minor repairs yourself. 

2) Check the gutters
While you're on the ladder, look into the gutters. If they are clogged with leaves and debris, clean them. Gutters prevent basement and foundation flooding and water damage to siding, windows, and doors. When clogged with leaves and debris, they will fill with rainwater and overflow. 

3) Look at the siding
Check the siding for cracks or damage. You can seal up any leaky spots with a clear caulking compound. But, if close inspection of the paint reveals problems such as blistering, peeling, wrinkling, or chalking, either touch them up or call a painting contractor.

4) Investigate weather stripping
Also, look to see if windows and doors are effectively sealed with weather stripping. Weather stripping will prevent drafts and winter heat loss. If the weather stripping is damaged, it's usually easiest and most effective to entirely replace it rather than to repair it.

5) Check your heating system
Have your heating system checked by a licensed heating/air-conditioning professional. Most furnace manufacturers recommend at least annual inspections. 

6) Sweep the chimney
Have your chimneys inspected by a chimney service and, if necessary, cleaned. Cleaning is generally recommended at least once a year for an active fireplace. 

7) Trim the trees
Trim trees away from the house. Have dead trees and branches removed by professional tree trimmers, or do it yourself.                                    

8) Check the smoke and Carbon Monoxide detector
Buy extra smoke detector batteries and change them when daylight savings ends. Also, test smoke and carbon monoxide detectors to make sure they work and buy a fire extinguisher or replace an extinguisher older than 10 years.

9) Store plenty of salt
Make sure you are stocked with rock salt, snow shovels, and any other items you will need during the winter. 

10) Drain and shut off outdoor water faucets remove and store garden hoses,

11) Examine the basement floor and walls for cracks or leaks; seal as needed.
 

If you plan to reside elsewhere during the winter months, you may want to partially shut down your home. In addition to the tips above, consider the following:

• Leave the temperature at its lowest setting, usually between 5 to 7 degree Celsius or install a low-heat thermostat to maintain the air temperature at approximately 5 degrees Celsius
• Turn off and drain the water heater; leave a reminder to refill before restarting.
• Keep the electricity on so lights will continue functioning (put them on timers).
• Unplug the microwave, clothes dryer, televisions (not on timers), and other appliances not in use.
• To avoid large repair bills and the hassle associated with breakdowns, take the time now to develop an action plan for the coming months. You'll feel secure in your warm home or while you're away from home.

The fall season is a good time for you to start thinking about preparing your home for winter. As temperatures begin to drop, your home will require maintenance to keep it in tip-top shape through the winter. By following the easy steps above, you will ensure to have a warm and comfortable winter at the peace of your home!

Tips for First-Time Home Buyers

The pride of home ownership is the number one reason why Canadians desire their own home. There is no landlord looking over your shoulder. You are able to make home improvements knowing that any appreciation that results will be to your benefit. Home ownership gives you and your family a sense of stability and security. It's making an investment in your future.

Home ownership is the cornerstone of financial independence and security. It may seem a daunting prospect to younger people or first-time buyers, but it is achievable.

Like many would-be homeowners, you may be wondering how you can possibly afford to buy your first home. Even if you think you can’t afford a home, these saving tips and financing strategies can take you there sooner than you think and turn you from a renter into an owner.

Develop a culture of saving
The first priority for you should be to develop a culture of saving. This not only helps you in budgeting and planning for the future, but also to satisfy banks and other lending institutions that you have a clear commitment to save.

Start an automatic saving plan
Saving for a down payment can be a financial challenge but it’s a step forward to owning your dream home. Make saving automatic by setting up an automatic savings plan at your bank to regularly move a specific amount of money directly from your chequing account to a savings account. You’ll be surprised at how much you can save and how quickly the “pay yourself first” approach adds up.

Borrow from yourself
The federal government’s Home Buyer’s Plan (HBP) lets you borrow from your Registered Retirement Savings Plan (RRSP) to help purchase your first home. You and your partner can each withdraw up to $20,000, provided it’s not locked-in and the money has been in the RRSP for at least 90 days.  You have to repay the loan in installments over the next 15 years to avoid a tax hit. 
 
Take a holiday from tax
If you open a new Tax-Free Savings Account (TFSA), you won’t pay any tax on earnings, which will help you compound your savings. You can contribute up to $5,000 a year to a TFSA, and save for anything you like, tax-free.
 
Review your mortgage options
Once you make the decision to purchase a property, the next choice is the type of loan to suit your budget. The two most common types of loans are the variable interest rate loan and the fixed interest rate loan.  

You can now choose to pay back your mortgage over 25 or 30 years, instead of the traditional 20-year amortization period. This means you will pay more interest over the long term, but you can reduce monthly payments to get into your starter home. You can always change this later, once your income rises and you can pay your mortgage down faster.
 
Get into a starter house
Try to be as flexible as possible when choosing your first home. Unless you are status conscious, your first home doesn’t necessarily have to be your dream home. You could settle for a starter home, which you can afford with a small down payment and easy mortgage instalments. There are plenty of lower-priced houses out there in need of repair, with some "Do-It-Yourself" projects where you can add more value to the house. Just be careful not to buy a property where the cost of repairs will eat up any profits you might make when you sell.

In just a few years you will build enough equity in your starter home to make it easier for you to sell and move into to your dream home. Buying your first home is an exciting process. After all, your home could be the largest asset you’ll ever own. Being able to finance most of its cost will take a load off your back in the future.

Remember to look at the big picture. While buying a house is a great way to build wealth, maintaining your investment can be labour-intensive and expensive. When unexpected costs for new appliances, roof repairs and plumbing problems crop up, there's no landlord to turn to, and these costs can drain your bank account. So consider whether you're ready for the expense and effort of homeownership before making the commitment.

Housing Market in Ontario Continues to Adjust to Higher Mortgage Rates

With the Bank of Canada and other central banks around the globe hiking rates in an effort to stamp out inflation, the cost to borrow funds has risen substantially over a short period. This has resulted in a more challenging environment for borrowers looking to purchase a home, and home sales across the region have dropped accordingly.

September’s lower sales performance reflects continued hesitancy among Buyers as they watch interest rates rise and consider the speculation surrounding price trends. With rising interest rates, the mortgage stress test has sidelined some potential Buyers, while others are likely scrutinizing their budgets for affordability amidst inflation and cost of living increases.

Ontario - Housing Market Continues to Adjust to Higher Borrowing Costs.

Toronto, 04 October 2022 -- The Greater Toronto Area (GTA) housing market continued its adjustment to higher borrowing costs in September 2022. Sales for the month reached 5,038 but were down by 44.1% compared to September 2021. New listings were also down on a year-over-year basis by 16.7% to 11,237. This was the lowest number of new listings reported for the month of September since 2002. This is especially troublesome given that the stock of homes in the GTA increased markedly over the last 20 years.

We must ensure that the temporary dip in housing demand is not allowed to mask the critical shortage of homes available for sale in the GTA. Candidates running in the upcoming Ontario municipal elections must ensure home buyers and renters have adequate housing options in the years to come. Municipal council decisions have a direct impact on housing affordability, in terms of the protracted development approval processes, high development fees and other related policies that preclude timely housing development,= said TRREB President Kevin Crigger.

Elected councils must also reconsider existing policies that preclude homeowners from listing their homes for sale, including significant added upfront costs like the land transfer tax. Potential new policies like mandatory home energy audits could also create unnecessary interference and delays in the home selling process and dissuade some homeowners from listing their homes for sale,= said TRREB CEO John DiMichele. The MLS® Home Price Index (HPI) Composite benchmark was up on a year-over-year basis by 4.3%. Over the same period of time, the average price dipped by 4.3% to $1,086,762. The average price was up compared to August 2022.

Hovering just below $1.1 million, the average selling price may have found some support during the last couple of months of summer. With new listings down quite substantially year-over-year and well-below historic norms, some home buyers are quite possibly experiencing tighter market conditions in some GTA neighbourhoods. October generally represents the peak of the fall market, so it will be important to see where price trends head over the next month,= said TRREB Chief Market Analyst Jason Mercer.

Home Sales Decline in September, Market Moves Towards More Balanced Conditions

WATERLOO REGION, ON (October 5, 2022) —518 residential homes were sold last month through the Multiple Listing Service® (MLS®) System of the Waterloo Region Association of REALTORS® (WRAR), a decrease of 25.3 per cent compared to September 2021 and 30.8 per cent below the previous 5-year average for the month.

Total residential sales in September included 313 detached (down 18.9 per cent from September 2021), and 94 townhouses (down 39.0 per cent). Sales also included 60 condominium units (down 37.5 per cent) and 51 semi-detached homes (down 8.9 per cent).

“Home sales continued to decline in the wake of yet another interest rate hike by the Bank of Canada last month,” says Megan Bell, president of WRAR. “The property type that saw the biggest decline in sales was the townhouse segment followed closely by condos, which could indicate there are fewer entry-level buyers in the market due to the higher borrowing costs.”  

In September, the average sale price for all residential properties in Waterloo Region was $752,421. This represents a 4.7 per cent decrease compared to September 2021 and a 0.1 per cent increase compared to August 2022.

• The average price of a detached home was $862,435. This represents a 7.4 per cent decrease from September 2021 and an increase of 1.3 per cent compared to August 2022.
• The average sale price for a townhouse was $638,284. This represents a 2.7 per cent decrease from September 2021 and an increase of 4.4 per cent compared to August 2022.
• The average sale price for an apartment-style condominium was $455,262. This represents a decrease of 8.5 per cent from September 2021 and a decrease of 2.3 per cent compared to August 2022.
• The average sale price for a semi was $637,205. This represents a decrease of 6.5 per cent compared to September 2021 and a decrease of 2.8 per cent compared to August 2022.

“While sales were down last month, we seem to be moving towards a more balanced market; buyers now have more inventory to choose from, yet sellers can still expect their properties to sell within a reasonable timeframe. We’re also observing that sale prices are shifting closer to the asking price,” says Bell. Furthermore, she points to the sales-to-new listings ratio of 56.4 per cent in September compared to 70.8 per cent in August. (According to CMHC, a sales-to-new-listings ratio above 55 per cent is associated with a sellers’ market, while an overheating market corresponds to the upper range of a sellers’ market, with a ratio exceeding 70 per cent).

There were 918 new listings added to the MLS® System in the Waterloo Region last month, a decrease of 3.6 per cent compared to September of last year and a 15.9 per cent decrease compared to the previous ten-year average for September.

The total number of homes available for sale in active status at the end of September was 978, an increase of 108.5 per cent compared to September of last year and 35.4 per cent below the previous ten-year average of 1515 listings for September.

The number of months of inventory is up 180.0 per cent compared to September of last year, but still historically low at 1.4 months. Between 2009 and 2015, the average number of months of inventory for September was 3.7 months. The number of months of inventory represents how long it would take to sell off current inventories at the current sales rate.  

The average number of days to sell in September was 23, compared to 10 days in September 2021. The previous 5-year average is 20 days.