How To Pick The Right Realtor

realtor-home-value-397x223Realtors are the life blood of the Real Estate market and I work with them everyday. A good realtors knowledge about the market and homes in general makes them an invaluable resource. On the other hand, I’ve talked with many homeowners who feel cheated by realtors they’re currently using or have used in the past. The choice in realtor can mean the difference in so many important factors when selling your house I thought it was necessary to mention some important signs that will tell you if the realtor giving you his/her sales pitch in your living room is a good or bad choice!

Personal Brand

Does your realtor have their own website? Many do but if you find one that doesn’t this is a red flag. Just because a Realtor is middle aged it does not mean they have been working in the market for long. Always ask your Realtor how long they’ve been working for. A realtor who has been working for a while will have the name brand and personal connections to get your home sold fast, they will also understand & price your home the most responsibly. If they are on a team rather than working as a singular realtor this is just as good but ask them what their team specializes in. I cannot stress this enough, realtors will take listings no matter what, but if you’re a Condo owner in Millwoods listing with a realty team that sells bungalows in the west end you’re unlikely to get the quick sale you desire.

Sales Pitch

Realtors work off a 7% commission for the first 100K and a 3% of the rest in Edmonton Alberta. This is normally split between 2 realtors; your realtor and the buyers realtor. If you’ve got a realtor coming to you saying they will sell your home for a flat rate commission of 2% or 3% this usually means a few things (all of which are not good). 1) this realtor is hoping to sell your house without another realtor involved on the buy side, this means they’ll just market it through the web which is a slow & ineffective way to sell real estate. A greedy realtor on the buyers side may even ignore the listings with a low commission. 2) The realtor is new to real estate & does not want you going with a better prepared realtor who would expect the normal fee’s. Be wary of cheap realtors!

Side Hustle

As surprising as it may sound, you want a realtor who has another ‘job’ in the real estate industry. Some of the best realtors I know are also developers, investors or renovators. So please ask your realtor what they do besides sell houses! This is an important questions because many realtors will say “your house is a perfect for _______  and I could sell it instantly to eager investors!” but unless they’re actually connected to the market from the other perspective this statement could be completely false or a misunderstanding of the current market or important aspects of your property like zoning!

These are a few key signs to help understand whether you’re getting paired up with a quality realtor or someone who’s making a lot of promises they cannot follow through on. Lastly, never sign more than a 60 day contract many realtors will have you believe they need 90 days, but if it is not sold in 60 then it’s your realtor who’s at fault! (Edmonton average days on market is currently 48).

Is Your House built for a Basement Suite?

image_6483441This morning I walked through a house with a few investors who focus primarily on ‘Fix n Flip’ investments. The house was priced seemingly low, but the property had some serious maintenance requirements. The saving grace of this deal was the homes design as it was a 4-level split with a door connecting from the garage to the 2 bottom levels while the main & upper floors could use the main entrance.

If you think of it from a creative perspective, this 2,400 SF (total) house was actually 2 homes in one!

The homes layout allowed the original owners to walk away with 288,000 for their dilapidated property while the renovators were happy to sink the extra 20-40 grand it would take to repair the deferred maintenance on this home, as they new they could still make money! Below I’ve listed important aspects of your homes layout that would make your house perfect for a cheap basement suite reno!

2 Entrances: Does your home have a back door? or even better a door directly into the basement? A personal entrance is the first step to a quality basement suite. Even if you have a mud room with 2 entrances, 1 leading down stairs & 1 leading to your main house, that area can be blocked off with a door & used only by the renters.

furnaces
Dual Furnaces

2 Furnaces: For your basement to legally qualify as a suite you need to have a secondary furnace (one heating upstairs the other heating the basement). This is an expensive renovation and it can cost anywhere from 10 – 15 thousand dollars. If you are unwilling to pay this expense you can always risk a illegal basement suite, or not create a full kitchen in the basement but rather kitchenettes for the tenants. By having kitchenettes the renters are actually not defined as living in a basement ‘suite’ but as roommates.

Windows: Each sleeping space needs to have at least one window in it to fit with windowsgovernment safety regulations. On top of that, Alberta has decided that the area of basement suite windows needs to be greater than 3.57 feet.

Plumbing: Do you have capped plumbing in your basement? This is important as plumbing is fairly cheap unless ground needs to be broken to install extra plumbing attachments. A way to cheaply install new plumbing if you’re creating a new bathroom is to do the plumbing above the concrete level then build a wooden box above it, creating a small step before the bathroom begins.plumbing

Odds your house is perfectly fitted for a basement suite are low; although in my experience, if even a few of these needed improvements are in place you’re in a good position! My last word of advice is to understand your rights and your tenants rights. If you’re living in the house while maintaining the tenants the Alberta Tenancy Act does not apply to you, but if you do not reside in the house, I suggest reading the Act to better understand the type of relationship you must maintain with your tenants.

If you have any questions please get in touch!

The Real Estate Concept of Appreciation

locationAppreciation, Cash Flow or Tax Shelter. These are the three ways people use Real Estate to make money & a good Real Estate investment may harness all three of these yet many quality investments specialize in just one.

This post talks about appreciation – the easiest methods to make money from your home yet the most commonly misunderstood. Appreciation is the slow increase in the value of your home, it’s often cited as 2-3% on the macro scale, yet people forget that is just an average! There are many neighborhoods in Edmonton appreciating at 5-7% (Per Year) while others may never appreciate a single % over a 10 year period.

As an investor, or current home owner, what indicators will tell you the percent of appreciation to expect from your investment?

Location – The location of your property is the main aspect of appreciation. So how do you tell if you’re buying in a good location that offers high appreciation?

  1. Crime Rate: Check Edmonton’s Crime Mapping service to see what sorts of criminal activity has been going on in your neighborhood. This will give you an idea of the levels currently and in the past, is it going up? Or down? this will give you a good idea as to whether or not your neighborhood is ‘on the rise’ or slowly become a less exciting neighborhood to raise a family in.
  2. Development Permits: Check the cities Weekly Building Permit Report or simply drive around your neighborhood. Is there any new development going on? This is a good sign! A redeveloping neighborhood such as Grovenor or Forest Heights is appreciating at levels of to 5-8% per year!
  3. Transit Development: Is transit actually good for your neighborhood? It will definitely make the area busier but it can also largely increase the value of your home. Check the Cities Transit Projects to see if you’re in luck! The year after an LRT stop is built even 7-10 minutes from your house expect a 15% bump in the value of your Land.

Lastly:

Appreciation of your land is constantly fighting the Depreciation of your house.

Your LAND appreciates your HOUSE Depreciates, if you’re not maintaining your home as it grows older, that beautiful 3-12% appreciation gets eaten up. Let me explain this from a commercial buyers perspective: A rent-able house allows for ‘land banking’ which means holding their purchase for a few years before building and it also keeps their GDS the same as the company does not have to take on non income generating debt.

To get the most out of appreciation ensure: Your Home purchase is in an up & coming neighborhood, the government is putting money into the area I.E Transit, and you maintain your house as to ensure it can maintain renters once you choose to sell!

Your Living, Breathing Investment

This Blog was created for the purpose of showing Edmontonian’s the financial benefits their Real Estate has to offer with the hope of inspiring a small % of readers to to one day use Real Estate as an investment vehicle.download

The main reason I hope to encourage people to use Real Estate as an investment is because of the entrepreneurial aspect involved in the business. Have you ever tried to learn about investing in the stock market? There are hundreds of ‘tips’ or mind numbing formula’s yet the average return rate from professionals, who have given their lives to learning the ins and outs of investing, is just 10%. What does that leave the rest of us with? Our 6% return mutual funds? I would rather pass: yet that’s what is so great about Real Estate.

Real Estate allows you to gain high returns on your investment because you’re allowed to use other peoples money to work for you, much like a financial investor is using your money to work for him, you’re now using the banks money to work for you! But there will be many blog posts to come about the financials of Real Estate investment; the second and best part about Real Estate is that what you learn about the business has a direct affect on your returns. Every hour you put into learning about what makes a good or bad Real Estate investment has a direct effect on the investment decision you make, and unlike financial investing the systematic risk of your investment is substantially reduced.

I am eager to teach you not just about your homes value, but also about the value your idle cash could have in the real estate market!

Logan Patterson

Maximize your properties Sale Price in a Buyers Market

This post will review, the best tactics for 3 of the most common house selling methods. Remember! When selling your home a $10,000 difference in the price you sell means $10,000 extra in your pocket. To the buyer, that extra $10,000 is simply +/- $50 in mortgage payments each month.

Use a Realtor – Realtors are great for introducing your home to motivated future home owners; although their fees are substantial. How do you make money on the sell side of your Real Estate while still using a realtor? Make sure your house is what a future home owner expects in their house. This can include, a fresh coat of paint, a well-kept yard, a clean home, and most importantly: a good smelling house. Remember those Glad commercials? Nose blindness is a thing. Ensure your house smells fresh when people are walked through the property. These are some often overlooked points of selling your real estate as we like to convince ourselves these massive financial investments are decisive, rational decisions; yet we all know a house is something many people fall in love with.

For Sale by Owner – Choosing to sell yourself is the cheapest method of sale but also invites sharks into your midst. First you need to decide on a price, get a realtor to inspect your home and tell you how much it is worth, you can also check comparable prices in your area through the MLS system. Next you will want to establish your marketing channels: Kijiji, Craigslist as well as a few ‘for sale by owner’ signs on your street. This should draw enough traffic that you are able to get several offers. Lastly, if you have time to create a drawn-out sales process you should do so, the first few offers you get will likely be lower than the next couple.  I would suggest spending less time on the overall quality of your hose if you choose to go this method, many times the buyers looking for FSBO are a little more entrepreneurial in their real estate purchase, they’re looking for a house they can add value to.

Sell to an Investor or Builder – This is the fastest way to sell your home if you are looking for a quick sale. Commercial real estate investors look for ‘fix & flip’, re-development or investment properties. The best way to sell your home by the end of the week would be to find a current under construction property in your neighborhood and give the number on their sign a call, if they do not buy it they will know someone who will. You can sell your home in 48 hours for the right price (normally about 85-90% of what you’d get selling normally). This is not optimal if you have time to wait but if you’re at risk of foreclosure, your home is too structurally damaged to sell as a livable property or any number of reasons, this is an option often overlooked by distressed home owners.