Quotations by Douglas Gray

Most investors hold real estate for at least one cycle of the real estate market. A market cycle is the period in which a market goes from high to low, from a buyer's market to a seller's market. A standard cycle in the real estate market typically lasts as few as 5 and as many as 12 years. Some observers believe market cycles are actually lengthening, which means longer holding periods before you'll be able to realize a return. [2020] - Douglas Gray

A standard rule for determining where to invest rules out properties located more than four hours' driving distance of where you live. This ensures you can easily reach the property in a timely fashion if required. [2020] - Douglas Gray

In syndicates, money from investors support a property's acquisition for investment purposes. Buying into a syndicate requires that the investor get an independent legal opinion and a clear understanding of the risks involved. Syndicated properties offer several benefits, including potentially a lower degree of risk because the syndicator rigorously scrutinizes properties before investors join the syndicate. Syndicated properties also typically offer a higher return to investors than comparable properties investors manage themselves. A wise investor must know the syndicate's track record and read the prospectus carefully. [2020] - Douglas Gray

Crowdfunding is a new twist on the syndicate. Crowdfunding takes place via a public platform online and investors plunk down $500 or $1,000 for a stake in the next big development. It's a way for small investors to gain exposure to real estate. The platforms typically serve as intermediaries that connect investors with opportunities or developers with capital. Because the platforms themselves aren't selling securities, they're largely unregulated. It pays to research the terms of each site thoroughly and endure your interests are protected. [2020] - Douglas Gray

One-industry towns do well so long as their industry prospers, but economics diversity is better for a community's long-term prospects. Communities, especially smaller ones, are also more subject to demographic changes and other shifts in local character that can affect the prospects for real estate. These changes are sometimes sparked by events in the local economy (a plant closure, for example, or the creation of new jobs), whereas others reflect the age of the incoming (or outgoing) owners. [2020] - Douglas Gray

An enduring power of attorney gives the legal right to one or more designated persons to look after your financial and legal affairs if you lack the mental capacity to do so (due, for example, to a stroke or severe head injury). [2020] - Douglas Gray

Normally, a lender won't grant mortgages for properties on leased land unless the lease runs significantly longer than that of the mortgage. For example, if a condo is on leasehold land with a 30-year lease and 5 years remain after the scheduled end of the mortgage, the lender will likely consider the risk too high. Buyers typically want an assurance of the terms of leased property when they buy. Five or ten years is rarely long enough to reassure potential purchasers that a property will have the value they saw in it when the time comes to sell. [2020] - Douglas Gray

Even though first-time homebuyers can withdraw RRSP funds to finance an initial home purchase, every buyer can lend themselves money from their RRSP and pay themselves interest. A self-directed mortgage has to be set up through a licensed lender and be competitive with the posted rates. It also will be registered on title. In addition, the mortgage must be insured in order to comply with the requirements for RRSP. The money you're paying as interest doesn't count as a contribution to RRSP, so you can charge yourself an above average interest to max out your requirement savings.  [2020] - Douglas Gray

Mortgage brokers frequently get the best discounted rates from lenders due to the volume of business they command. Some common sources of funds include: 1) Banks, trust companies, and credit unions; 2) Canada Mortgage and Housing Corp. (CMHC); 3) Private and union-sponsored pension funds; 4) Real estate syndication funds; 5) Insurance companies and private lenders. We recommend the use of mortgage brokers to save your time and money. The mortgage broker you choose should be a member of Mortgage Professionals Canada (https://mortgageproscan.ca). [2020] - Douglas Gray

When the term of your mortgage ends, you have the option to renegotiate or seek refinancing. Refinancing is a good move if interest rates have decreased. It also makes sense if you've experienced a significant improvements in our gross debt-to-service ratio. On the other hand, refinancing may not be such a wise move if changes in the value of your property and your personal financial situation conspire to limit your ability to borrow. Speak with your mortgage broker and, if you wish, your accountant and financial planner before you refinance. [2020] - Douglas Gray

If you're looking at residential rental properties, have a gander at the annual rental housing market survey the Canada Mortgage and Housing Corp. (www.cmhc.ca) produces. The Conference Board of Canada (www.conferenceboard.ca) is one of several organizations that issue business and consumer confidence surveys. For a fee, the Board provides detailed analyses for specific regions. The information gleaned from these sources, like interest-rate projections, can help you gauge whether markets are in for a boom or a downturn. [2020] - Douglas Gray

Statistics Canada (www.statcan.gc.ca) collects data from each census into profiles for communities across Canada as well as specific tracts within communities. These community profiles provide detailed information on the age of residents, the housing stock, as well as income levels and other demographic and socioeconomic information. [2020] - Douglas Gray

You can find listings of court-ordered sales, either at the local courthouse or through services that collect such data and distribute it for a fee. Websites such as www.foreclosuresearch.ca exist, but as often as not vendors facing foreclosure are actively trying to avoid the circumstance and working with brokers who will be able to tip you off to potential opportunities in your locale. [2020] - Douglas Gray

Owners of properties with more than 12 units, as well as absentee owners, manage their properties through a professional management company. You'll pay a fee for the service - typically 2-5% of the property's gross monthly revenue - yet have the advantage of working with a company far more experienced in management than you are. If your rental property is a condo unit, you may have the option of assigning management to the management company the building council employs. This is advantageous because you get to work with a company that comes with a solid reference, and which knows the building. [2020] - Douglas Gray

Running a credit check on prospective tenants through Equifax (www.equifax.ca) or TransUnion Canada (www.transunion.ca) can reveal shortcomings in a person's financial history worth knowing. Whatever the outcome, it will confirm the applicant's trustworthiness or highlight an area of concern. Because credit checks will cost you, it's worthwhile to reserve a credit check for a short list of applicants. [2020] - Douglas Gray

Reverse mortgages don't let you tap the full value of the house. Typically, you can access only 40% of its assessed value, a measure that ensures the lender receives both the value of the house and interest owing even if the property declines in value. [2020] - Douglas Gray

A living trust places your portfolio in the hands of an independent manager, usually a trust company, with family members as co-trustees. The trust receives your investment portfolio and the trustees manage it such that you receive a stable income for life, similar to an annuity. The remaining capital is distributed to family members on your death. The provision of the trust agreement should provide instructions for the financing of your care should you require long-term medical attention. The main requirement for trustees is that they be competent, independent parties who will manage your affairs in your best interest. [2020] - Douglas Gray

The Canadian Estate Planning Institute Inc. (www.estateplanning.ca) offers articles on financial and estate planning. It also provides several checklists and charts that give you a head start on drafting a succession plan for the real estate empire you've built. The National Real Estate Institute Inc. (www.homebuyer.ca) is another excellent source of information. [2020] - Douglas Gray

A standard rule of thumb is to invest no more than a three- or four-hour drive from where you live. This allows you to visit the property if something requires your immediate attention. [2009] - Douglas Gray

A furnished apartment typically commands a higher rent than a non-furnished suite, sometimes as much as 10-15% more. An apartment building that attracts younger tenants in a college or university town is an ideal opportunity for providing this kind of accommodation, at a higher fee. [2009] - Douglas Gray