Investing in real estate for your future

If you need a reminder of what a sound investment real estate can be, consider the good news in the Ottawa Real Estate Board’s report on sales for the month of August 2019.

Buyers who purchased a house or condo just a year ago have seen an average sale price increase in August up more than 10 per cent over the past year. 

Home salesIn Ottawa the average sale price for a residential-class property in August 2019 was $484,921. That’s up 11.8 per cent from the average price in August 2018. The average sale price of a condominium unit was $308,781. That was an increase of 11.5 per cent over the previous August.

Looking at the year-to-date increases in Ottawa, which are more reliable indicators than monthly average prices, there was an 8.4 per cent and 7.9 per cent increase in average sale prices for residential and condominium units respectively. (Source: OREB)

I was happy to share these numbers with my buyer clients who purchased a year ago and are already realizing they made a good choice to get into the market.

I’ve always enjoyed helping clients take that step - with more than 30 years as a Realtor in Ottawa I still love to share in the excitement of finding that perfect property!  

Some clients are first-time buyers purchasing a dream condo unit or house after years of renting. They’re happy to start building equity in their own property rather than paying thousands of dollars to a landlord every year.

Other clients have had their own home or condo for many years and have decided to purchase a second property as an investment for rental income. 

If you’re thinking of buying your first home or an investment property here are some helpful tips to keep in mind:

First-time buyer incentives

First-time buyers are frequently concerned about putting aside the funds for a down payment and the other expenses involved in purchasing their first property. If you are a first-time buyer, the good news is that there are several incentives from the Government of Canada that were created to help buyers with some of the expenses involved in purchasing your first property.

These include:

Home Buyers’ Plan (HBP) 

The HBP program is designed to help you beef up your down payment by borrowing from your Registered Retirement Savings Plan (RRSP) funds. This loan is tax-free, but requires that you repay the amount back into your RRSP over a period of 15 years.

HBPThe program recently increased the amount you can withdraw from your RRSP to $35,000 per person, or $70,000 per couple. 

One may also qualify if they haven’t owned a home in the past four years. The government also announced that after 2019, the plan will extend to couples who owned a home but have separated and now want to buy again individually. The plan has helped many first-time buyers, but keep in mind that you have to budget for the repayment costs along with your mortgage expenses.

First-Time Homebuyers Tax Credit 

When you purchase a home, there are additional expenses including legal fees, disbursements and land transfer taxes. The Government of Canada introduced this tax credit in 2009 to help with some of these expenses. Eligible buyers can receive up to $750 in federal tax relief.

For more details and other incentives for first-time buyers, visit the Canada Mortgage and Housing Corporation page on incentives, at Government-of-Canada-offers-Homeownership-Incentives

Buying an investment property for rental income

If you are considering an investment property, there are a few things to keep in mind as this purchase is different from buying your principal residence. 

You should be aware that when purchasing an investment property, you will need a minimum 20 per cent down payment to secure financing, and not just the five per cent minimum needed when buying a property as your own residence. If you already own a primary residence, you may be able to borrow up to 80 per cent of your current home’s value to help finance the purchase of a rental property. 

RentalIn order to ensure that you have a sound investment, sitting down to review the expenses that will occur at your income property with both your financial advisor and myself in a private meeting is important to ensure that you investment aligns with your goals. 

A good location is also key, as you want to secure a rental in neighbourhoods that are in high demand among renters.

With more than 30 years of experience as a Realtor in Ottawa, I’ve helped hundreds of first-time buyers and buyers who want to purchase a rental property. I know our city’s neighbourhoods well, and can advise you on the areas that are popular with renters, and also on the rent you can command. 

As an added service, my team and I will also advise you on how to screen tenants and the intricacies of the Residential Tenancies Act that you will be bound by as a landlord.  

If you find yourself needing assistance to break into the market and make a purchase, I’d love to sit down with you to chat about your goals and give you some guidelines on how to build wealth in real estate. You can read about my team and I through my website, www.nancybenson.com. Here, you can also see my current listings, regular blog posts, and helpful links.

Nancy Benson operates a full-service office at RE/MAX Hallmark Realty and specializes in unique homes in the most desirable neighbourhoods of Ottawa. Whether you're buying, selling, acquiring an investment or a secondary home, we have a system that will work for you. Feel free to give me a call at 613-747-4747.

Nancy Benson