Ray Petro - Blog

Can You Play Monopoly?

ray.petro@century21.ca — Thu, 28 Jan 2010 00:00:00 GMT

All the Monopoly hype lately has me reminiscing about the old days where my cousins and I would sit around and play for hours, until evidently the game ended in a fight. My strategy, not unlike most of yours, was to buy as much property as I could and sit back, relax and collect the rents. If only the real world were that easy.

Thinking about a rental property? Here are just a few things to consider.

Make sure you’re handy. When a tenant calls with a leaky faucet or a broken pipe, most if not all of your profits can be easily eaten up by an emergency call to a trade person. It always helps your bottom line when you can fix and maintain the property yourself. If you’re not, don’t worry. Make sure you budget repairs into your equation and call around for quotes if necessary as part of your plan.

Be willing to learn the T.P.A. or Tenant Protection Act. This is an extremely lengthy and detailed document available to anyone and in my opinion, if you want to stay out of court, it must be adhered to. It addresses things like eviction notices and even the proper way to gain access to your property to inspect it. As most government documents, it’s quite confusing and requires some expertise. Consider hiring a local property manager. It may cost more up front but can end up saving you thousands in legal fees.

Are you able to pay the carrying costs of the property in the event it sits vacant or even worse your tenant is unable to pay? There’s nothing more deterring than finally making that investment purchase only to have to sell it to avoid financial hardship.

I’m not trying to discourage anyone from investing in Real Estate or renting out property. I think it’s a great way to invest and secure a solid financial future. Just make sure like any investment, you proceed armed with all the knowledge you need to do it right.

Who knows? Maybe the new Monopoly will include things like unpaid rents, maintenance fees and even retrofit certificates. Nah, we'll leave that for the real world. For now we'll just keep fighting over who gets to be the car and who has to be the bank.

Include The Exclusions

ray.petro@century21.ca — Mon, 20 Jul 2009 22:47:52 GMT

One of the elements of a Real Estate transaction that I find myself spending time negotiating more and more these days are chattels and fixtures.

With flat panel TVs being mounted on walls and stainless steel appliances being strategically used to stage homes, buyers are including more and more chattels in their offers.

Chattels are items of movable or transferable property, unlike land and buildings that are fixed and immovable. If the items are neither land, nor permanently attached to land or a building, they are, by definition, chattels. (The word chattel dates back to feudal times when cattle were the most valuable item of property - except for land.)

A fixture is a piece of equipment which has been attached to real estate in such a way as to become part of the premises, and its removal would do harm to the building or land.

Using these definitions, a mirror that is hanging on a hook is a chattel and can be removed by the seller.

The same mirror becomes a fixture if it is permanently attached or mounted to a wall in the house.

Fridge, stove, microwave, toaster etc. are all chattels. If you're viewing a home, make sure to take a look at these items. You may want them and if you do, your agent should specifically list them in the Chattels Included section of your offer.

Built-in dishwasher, exhaust fan, faucet and hardware are all fixtures. They're expected to stay unless the seller has specifically listed them in the Fixtures Excluded section of the offer.

So it's safe to assume that if a fixture is not listed as an exclusion, then it's automatically included with the property. Let me explain why that may not always be the case.

As mentioned earlier we have all been seeing a lot of wall mount TVs lately. My wife and I have recently made the move to an LCD and purchased a wall mount bracket to hang it on.

Lets say my home were for sale, some buyers came through, loved it and we accepted an offer. They're very excited about having my LCD all ready for them when they move in. These buyers have never owned a flat panel TV or mounting bracket and have no idea how they're hung. All they know is that if an item is permanently attached to the home, it's assumed to be included. Looking at the TV, it sure does appear to be permanently attached.

Technically, my wall mount is attached to the home and considered a fixture. My TV is attached to 2 simple hooks that hang from the mounting bracket, thus making it a chattel. Very similar to the example used earlier about the mirror. Both items appear to be fixtures but the TV is not.

We can only imagine the day the buyers move in and see my TV is gone but the bracket is still there. They're on the horn with their lawyer and the legal fees for both parties start to rack up quickly.

I'm sure after a lengthy explanation, a few photographs and probably a lot of added stress, the buyer's would realize that the TV was not included and the deal would close anyway.

As a seller I'm left with a larger legal bill and an upset buyer. The buyer's left with having to go out an buy their own TV they thought they had already bought with the house.

The point is that if you want something, include it. If you're not sure, include it. If there's any doubt, include it. The inclusion portion of the offer is there for a reason. It may sound funny to put a storage shed, central air or even a garage door opener as inclusions, but full disclosure for both parties will ensure everyone knows what stays and what goes.

The end result should be a smooth transaction where both buyer and seller get what they expect.

When Is The Best Time To Buy?

ray.petro@century21.ca — Mon, 20 Jul 2009 15:32:09 GMT

I'm often asked by both clients and friends if it's "the best time to buy?" I've always had difficulty answering this question and probably always will.

I can only assume that by "Best" they mean "Cheapest." For me to answer that, I'd have to know exactly what the market will be doing at all times, essentially forecasting world markets, unemployment rates, etc. making me both extremely talented and extremely wealthy. Unfortunately for me, (and any other human being for that matter) that's impossible.

I will tell you why now is "A Great Time To Buy!"

Plenty of Property to Choose From. We've seen a slight shift in the ratios of Buyers to Sellers over the last few years resulting in more houses on the market. Not too long ago you had to offer full price the day a property was listed. That didn't even guarantee your offer was accepted! Now things are moving at a different pace. Buyers can take the time to look carefully, weigh pros and cons, compare and most important, negotiate.

Government Kick Backs. I call them kick backs but they come in the form of rebates and grants. First time Buyers can borrow against their RRSPs for their down payment and apply for a rebate on their land transfer tax. Home owners can apply for a rebate on certain improvements made to their property. We also have numerous energy saving grants and rebates offered for making your home more efficient. Some of these programs are new and are in place to help Buyers on a budget.

Interest Rates are Low. If you are of the small minority paying cash for your home, please skip this part. The rest of us find ourselves shopping the banks for a mortgage. The only good thing about borrowing money, if I had to pick one at all, is borrowing at a low rate. We are seeing percentages right now that almost make me feel sorry for my bank. Almost.

To answer that age old question, is it the best time to buy? I don't know. Is it a good time to buy? In my opinion it is.