Aeriol: If you're in a major city where prices have been quite high, might make sense to sell that home and buy a less expensive home in a smaller city.
Sean: Sell your assets and rent while you travel - it might make sense for people who have owned for a long time.
Shifting gears to the booming condo market...
Sean: A lot of people are moving from the suburbs and buying downtown, walking distance to theatres etc.
What effect does that have on the rest of the market?
Ben: We're not seeing a lot of that in the Toronto market, but you're seeing it more in markets like Winnipeg, larger condos available.
Aeriol: A lot of older clients are trying to find ways to stay in their homes, e.g. creating a rental unit in their house. It really depends on what you have in RRSP and TFSAs.
Sean: Look at other projects the developer has created. How long does it stay on the market. Go into other buildings and chat with people who live there.
Sean: condos are very different if you're used to living in a house.
Ben: Reputation is huge, location is huge.
Ben: compare prices on per square foot basis. How much does parking cost, condo fees etc.
Benefits of buying old vs new?
Sean: biggest benefit is size.
Sean: You're typically getting larger units.
Aeriol: One of the complaints with older buildings is that the maintenance fees are much higher.
Aeriol: But with some new developments, those low maintenance fees can double by year two or three. So you really have to do your research.
Ben: Yes, fees generally go up in year 3 or 4, hopefully not double.
A question from Jen: With all the options available in our current economy what would be the ideal route on purchasing rental properties?
Sean: if you can afford to do it, it's a great way to create equity in the home - but it comes with a lot of risk - it's not for everybody
Ben: I recommend getting a good property manager, worrying about contracts and following up with tenants, so you don't have to worry about those things.
Are the banks being too generous?
Aeriol: I don't think we have a big problem, compared to other countries we have very low foreclosure rates, but I always advise people not to stretch themselves to the very last penny.
What happens when interest rates creep up?
Ben: If you're worried about that risk, get a 10 year, fixed rate mortgage - there are solutions there.
Ben: Canada has one of the top ranked banking systems.
Ben: I think we are being fairly conservative, but some people are getting priced out of the market, so they want to blame someone, they blame the banks.
From Umar: What is an acceptable minimum rate of return for a successful real estate investment in the short or long term?
Sean: 4-6%. Keeping in mind real estate is a long term investment.
Aeriol: 5%. But bottom line is for people to really crunch the numbers and make sure you're not in the red.
Ben: You want someone with expertise and someone who can customize your mortgage.
Sean: It's great to have someone you trust. Today, mortgage brokers have many more options, access to different lenders, etc. Mortgage brokers get the best rates etc.
A question from Nicole: What are some things we need to be aware of when signing a contract for a house? Interest rates? Fine print?
Sean: It's very important that you're reading through everything.
Aeriol: Your agent should be your consultant. They should help read through things, explain things.
Aeriol: Everyone is different, i would say it's 50-50.
Sean: There are a lot of advantages with a house, it's tax-free. People who maybe didn't have a retirement plan, but bought a home for $50,000 and the home is worth a lot more now.
Question: Are millennials in trouble? Will they ever be able to afford homeownership?
Ben: You need to get into the property ladder, e.g. start by buying a small condo. Potentially do this with a roommate to build up equity.
Aeriol: Pay off your debt first.
Sean: Save, save, save and pay down your debt.
From Sarah: My husband and I are looking to buy a mobile home in the Maple Oak Community on 17th Street in Edmonton - what are the advantages/disadvantages to this type of investment?
Sean: They are very popular and offer a great sense of community.
Sorry we couldn't get to all of your questions, but thanks for sending them in! We'll be posting the entire chat right here shortly.
