5 Things to consider when investing in a Muskoka Property with a friend

Friendship HandshakeBuying a cottage or a rental investment property in Muskoka can be a smart financial move. As you pay down the debt, you build equity in a property that will in all likelihood appreciate in value over time.

There are the tax benefits in most cases as you can deduct your rental expenses from any income you earn, including items such as mortgage interest, property taxes, insurance, repair and maintenance costs, and property management, all of which saves you money at tax time. The primary benefit of course is the revenue stream it will generate. However, as owning investment property requires an investment of time and effort as well as money, choosing to share that burden with a friend can make sense. This is definitely appealing but it will come will with some challenges.  Here are five things to give serious consideration to before investing in real estate with a friend.

 1. Your Mortgage Rate Will be Tied to Both Credit Reports

When applying for financing on a property purchase both you and your friend’s credit history will be used.  If one of you has bad credit it can negatively affect the mortgage terms, including the interest rate that you pay on the loan. Remember that even a minor change in interest of even 0.5% will make a big difference in the amount due every month on your mortgage and in the total interest you’ll pay over the life of the loan.

2. You Risk Your Good Credit Rating

When both you and your friend are listed on the mortgage, you are both responsible for making payments. If the mortgage falls behind for whatever reason, the lender will report both of you to the credit agencies for non-payment even if it is not you personally in default. Because both names are on the mortgage, your friend’s non-payment could end up costing you big on your credit report and significantly affect your future potential to borrow money for your personal requirements.

3. You May Have Challenges Getting Other Loans

Assuming there are no issues and you and your friend split the mortgage payment each month 50-50 with no defaults you still need to know that each of you alone is responsible for the entire mortgage payment.  To a new lender, say, for a car loan or a personal home purchase, this can have a substantial impact. They will include the whole payment amount of that mortgage in the debt-to-income ratio calculation and it may make it difficult to qualify for other loans.

4. No “Easy Button” for Moving Out

If you rent an apartment or house with a friend, it’s usually easy to walk away if the two of you no longer get along, or if you just decide to move. Not so with a mortgage. Since both of your names are on the title of the property and the mortgage, you are both responsible for making the payments. To get one of the names off the mortgage and deed, you have to sell the house on the open marker or one to another. Selling on the open market can take time and sometimes even result in a loss if the market conditions are not ideal.

It’s a good idea to have a written agreement in place that details your agreed-upon exit plan should one of you decide to move on. The agreement should also cover what happens if either of you dies. Does the survivor become the sole owner, or does he or she need to buy out the heirs of the deceased partner? What percentage of the property you each own? Will the property be sold, and if so, how will the proceeds be divided?

Another good idea for financial protection is for both parties to purchase life insurance on the mortgage in case of death.

5. Disagreement Over Responsibilities

A great friendship can be quickly tested if there are any disagreements over who is responsible for a property related undertaking.  Payment of utilities and taxes, maintenance, hiring support help when required, budgets for work required and other items that need attending to in a timely fashion are all potential sources of conflict.  To avoid this, include in your written agreement details regarding the breakdown of expenses, how repairs and maintenance will be handled (who will do the work, and how the costs will be shared), plus how deductions will be claimed (e.g., who gets to claim the mortgage interest deduction or whether you split it in some way).

The Bottom Line

Buying an investment property with a friend will have lots of benefits:

  • It should be easier to qualify for a mortgage
  • you get to share all the monthly expenses, including utilities, maintenance/repair costs and the mortgage payment.
  • you get to build equity as you pay down the loan.

This kind of purchase will also have some challenges and it is important to make a well thought-out and informed decision.  Do your homework ahead of time, and make sure you and your friend both have the income to meet the monthly expenses of the investment without relying on any potential income from it.

Most importantly, protect your friendship and avoid trouble down the road by having a written agreement.  It is a good idea to hire a lawyer to write a comprehensive agreement that details who is responsible for what, what happens if one of you wants to move on, and how the property will be handled if one of you passes away.

If you and a friend have been pondering this type of partnership I would be delighted to help you find the perfect property, call or email me today!

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How to Buy a Muskoka Home While Still in Your Twenties

Karen Acton 20 somethingsI have got to give it to you the millennial generation, you are an educated, tech-savvy group and you typically knows what you want. The last few years I have been noticing that many of you “twenty-somethings” have decided that what you want is to buy your first home.

Of course, there are apps galore on just about everything out there, but swiping right isn’t going to get you into your first home – though it probably will help you locate the ones you want to see!

For a more realistic and practical approach however, these five time-tested tips may work better for you.

Are Your Ready to Commit

It has likely been said more than any other piece of home-buying advice out there… Buying a home may be the largest and most important purchase you’ll make in your entire life. You need to know you’re ready for that type of commitment. Millennials have been deemed a nomadic bunch – so, it’s important to note that most home buyers stay in their homes for at least five years – and, that’s just so they can recoup the costs of their purchase.

Buying a home also means you must be ready to get your hands dirty. Handy work like replacing smoke alarm batteries, maintaining landscaping and even changing air filters typically falls in a homeowner’s hands not to mention painting and decorating.

If you can commit to this then you just might be ready!

Understand Your Finances

When it comes to buying a home, a mortgage broker will consider every part of your financial picture. From your current income to your bills and spending habits to the savings you have for your down payment. Since a lender is going to have to verify your finances its good that you know exactly what they will find before they get there. Find out how much money you have coming in and going out and how much you will be able to devote to a monthly mortgage payment.

When you’re considering your finances and budget, also consider the fact that homeownership expenses do not end with the monthly mortgage payment. Home owners are responsible for insurance, property taxes, utilities and any money it costs to cover routine maintenance or unexpected home repairs.

Consider Credit and Savings

Your first brush with credit may have been when you were inundated with credit card offers on your first day of college classes. By now you have probably established some type of credit – and, hopefully it is good. Lenders will consider your credit score when it comes to mortgage approval. Remember – the better your credit score, the better interest rate you’ll be offered. You can improve this score by making sure you carry small or no balance on your cards and pay them on time every month.

In addition to your credit a lender need to see your savings. When you’re buying a home, you’ll need to have money available for the down payment as sufficient to cover closing costs.

Have you saved the money you’ll need when it comes time to buy?

Get Preapproved

I am sure you can see that buying a home is largely a financial process, so it only makes sense that the mortgage process may be a long one, right? So, before you start to look at possible homes it is wise to seek out several lending institutions. They will compete for your business if you have got all your affairs in order, so you can shop around and settle on the one you’d like to use.

Just like every buyer is different, so is every lender. Some may be more lenient when it comes to credit history. Some credit unions or banks if you are a current customer may offer lower rates than other lenders.

Consider all options before choosing a mortgage lender.

Work with Realtor You Trust

The ever-important last piece of the home-buying puzzle. This is one area where I would not advise following a DIY mentality. Professional real estate sales representatives have the training and know-how to lead any first-time home buyer to a home that’s right for them. A trusted Realtor will help you make up your “needs and wants” list when it comes to a home; they will help you consider your long-term goals for your new home; and, they will search for homes, show you homes, negotiate and walk you through the entire offer and closing process… right down to the point where those new home keys fall into your hands.

There will be plenty of DYI to do once you own your new home, especially when it is your first time, a guide through the process only makes good sense. Let me be your guide!

To see current listings in Muskoka click here

5 Tips to Make Your Plan to Buy a Muskoka Home a Reality

pexels-photo-461024.jpegDid you start your New Year off with a plan to buy a Muskoka home? Well here are some tips to help you whip your financial resume into shape to improve your home-buying odds.

1. Keep your employment stable
Your employment history and income are the two biggest factors most bankers and mortgage brokers are going to look at once they have verified your deposit. While a new job may be a great career move and very exciting prospect it is not what they will want to see on an application. This is especially relevant if you are changing career paths completely. A mortgage lender wants to see stability and if you plan to buy in 2018 you should consider this before accepting a new opportunity. A steady job history and few or no gaps in employment over the past two years are ideal as it helps lenders more easily
forecast your future income.

There are times when it can be beneficial. If you’re moving from a commissioned or hourly job to one that is salaried with equal or more compensation, it may help your application, as banks tend to prefer applicants with steady, predictable incomes.

If you do get a new job while home shopping, let your bank or broker know as soon as possible. It doesn’t mean you won’t qualify for the mortgage, but you are much better off being transparent than having them find out and not advance funds at closing.

2. Keep tabs on your monthly spending
Credit cards are almost a necessity in building a credit rating but keep the maximums low. Even if you pay off your credit card every month, you could be flagged for high credit utilization if your credit report is pulled mid-cycle. In addition, if the available balances are high then many banks will factor that into their calculation when working out the amount of debt you can service.

Monthly subscription services are very common now and are certainly convenient, but they can add up and affect your qualifying ratios.
3. Build yourself a solid credit history
One of the first things a lender will look at is your credit history which is different from the credit score. A bank or broker is going to want to see that you have a history of paying off debts, like credit cards, on time because it signals that you’re less of a risk and a responsible borrower.

If you don’t have credit, securing a home loan may be significantly more challenging and maybe even impossible or very expensive.

4. Monitor your credit score
Your overall credit score can have a significant impact on your ability to buy a home. A low credit score can negatively affect how much money a lender is willing to loan you, as well as your interest rate.

Just a few percentage points difference in an interest rate can cost you thousands over the life of a mortgage. Monitor your credit closely, especially for fraudulent activity, to prevent any surprises that could delay the loan application process. There are many services available that are both free and subscription that can be used to see your score. Most of these sites give tips on how to improve it too, but remember the very best way is to pay on time and in full.

5. Save your money!
Avoid taking on large new debts — whether it’s buying a car or planning a large vacation consider waiting, even if you’re already preapproved.

Your debt-to- income ratio, or how much money you make compared to how much debt you have, can significantly affect how much money a lender is willing to give you. Keeping debts to a minimum can help make the home-buying process go a lot more smoothly.

Just like proofreading your resume before you apply for a job, improving your financial resume can help better your chances of buying a home.

Take advantage of online tools and resources. Speak with a bank or mortgage broker who can help you determine how much home you can afford. Find a Realtor who will guide you through the process and be willing to take the time needed to do it right. Remember that often the difference between a good credit profile and a bad one if just a few moths of personal discipline and the reward will be fulfilling your dream to own your own home.

Enjoy the Holidays Without Spending the Down Payment for your Muskoka Home!

Gifts - Karen ActonHave you been saving like crazy to buy your first Muskoka Home or Cottage?  As a Realtor, I often see buyers, diligently putting as much away as they can, hoping to be able to buy that special fist home only to get their saving hopes hijacked with the holidays and the inevitable gift buying season!

It is easy for this time of year to make a dent in of anyone’s savings my own included. So, I have done my usual google research and complied a listed of good spending habits to help me enjoy the holiday season while staying on a budget and I think it will help you too.

Understandably each person’s budget may look different, and what might work for me may not work for you. So here are some tips to help you survive the holidays without blowing your budget. You can use them all or just one or two.

Have a realistic holiday budget

Determine how much you can afford to spend during the holidays. It is best to create a realistic budget for yourself. Record and add up all the projected costs of your holiday events, gifts, decorations, travel and anything else you can think of.

Then you need to look at the cash you actually will have available for the holiday season. Since you don’t want to go into debt or blow you budget, you want to make sure that you’ll have enough money for all your holiday expenses. If the budgeted expenses are greater than the actual expected income you need to adjust the budget. This may mean taking a hard look and deciding where can cut back.

The idea is to trim your holiday expenses until you have a budget that is easy to manage and will prevent you from getting into debt.

Shop early and shop sales

Planning your gift list in advance will give you the chance to watch and see when these items go on sale either in the local stores or on-line.  Shopping early also ensures that you have the best selection, since items can sell out closer to Christmas.

Check the many websites

Sometimes the best shopping deals can be found online. While we all love to shop local sometimes you do not have that luxury.  Amazon, E-Bay, Pintrest are all great places to find what you want. Most major stores have order on-line shopping many with pick up in store options. You may want to investigate shopping on the cash back sites like Ebates. Ebates represents over 2,000 online stores, including Amazon, it’s easy to save money and get cashback on your online purchases.

Compare prices in store and online

Sometimes you can find special promotions happening online only.  Some of the bigger online retailers have lots of special offers and offer memberships that get you free shipping so if you are buying a lot from that source a membership may be a good investment.

Not all gifts cost money

If your holiday budget is tight or you want to buy a gift for the person who already has everything, consider giving the gift of time or experience this year. Life is about relationships and giving the gift of time allows you to invest and nurture those relationships. You could cook a meal or two, decorate their tree, take care of their children while they shop or go on a date. There are so many options, and all will be appreciated.

Consider a gift exchange

If you have a large group of friends or family, it can get very expensive buying gifts for everyone, especially if money is tight. I recommend suggesting a gift exchange or secret Santa where you draw names. This way everyone can receive a nice gift, which is probably more thoughtful, and saves everyone a lot of money.

NO GIFTS

I know many people who are starting to boycott gifts during the holidays. This is not just to save money but often a way of getting back to the real meaning of the holiday season. Of focusing on spending time together being thankful rather than stressed. There’s no shame in letting others know that you won’t be participating in gift exchanges this year because you’re saving up for a down payment or one of your other financial goals.

In fact, people are probably experiencing a similar financial situation and will be thankful that you started the conservation. It’s important to set expectations though for family and friends if you choose to boycott gifts this year. And remember that the true meaning of Christmas is not about gifts.

Last years dress will do!

We all feel the pressure to buy a new outfit for each holiday event or party that you need to attend. Buying a new outfit feels good and we think we cannot be seen wearing the same thing as last year. However, it is simply not important. While a few people may remember what you wore last year it is not important. Your friends will be far happier to see you than what you are wearing.

Plan for each holiday event you wish to attend

It’s important to make a list of all the holiday events you plan on attending and include them in the budget. Whether it’s a family gathering or a fancy work party, each event has the potential to cost you money.

Consider how far you need to travel and the cost of fuel and perhaps accommodations, food or drink that you need to contribute, host/hostess gifts and any other hard cost. This will allow you to determine how much money you need to set aside to attend each event, so you can stay on budget.

The Holiday Season is a wonderful time filled with fun, family and social activities but it is wise to not let is take control of your plans. After all the holidays are a few days long and the home you are saving for will be yours for many years.

How to Choose a Great Muskoka Handy Man

Karen Acton - Muskoka Handy Man

We all know how busy the skilled handy man in Muskoka is and how hard it is to find one when you need one. The temptation is always there to go the route of letting the friend of a friend fix or renovate for you. But when things go wrong you are left in a difficult position. Whether it’s a big project such as a bathroom remodel, something small like putting up shelves, or just simple repairs and routine maintenance, many busy home and cottage owners need to turn to a capable handy man to get the job done. Finding a qualified, professional, and reliable handy man can be a real challenge.

Here are some tips for you to help ensure that you find the right person for the job:

ARE THEY QUALIFIED FOR THE WORK

Unfortunately, all handy men are not created equally! If your project requires specific skills make sure that the handy man you hire has the qualifications and experience to do the job. Don’t forget that in Ontario some jobs require that a person, other than the home owner, performing certain work must be licensed; electrical and plumbing often fall into this category.

GET REFERENCES

Request at least two local references from previous customers. Any good handy man should be willing to do this without hesitation as his reputation is his stock in trade. Don’t just ask for them, check them! Inquire about the quality of the work, timeliness, professionalism, and how the handy man handled any changes that may have occurred during the project.  I find it good to ask if they would hire him or her again.

PUT IT IN WRITING WITH A PROPER ESTIMATE AND A CONTRACT

If you can find 2 or 3 handy men with good references then you should ask them for written estimates for the work you have in mind. Be sure that each estimate contains enough detail that you can make a comparison between them, after all it is not fair to compare apples with cabbages. For example, are the specified materials of the same quality? Does the cost include cleanup and hauling away any debris or old/broken items? Read all contracts carefully and be sure to ask about anything that you are unsure of.

DON’T FORGET ABOUT INSURANCE COVERAGE

Liability insurance is always important. If the handy man or maybe an employee of his/hers is injured while working on your property, you may be held liable for their medical costs and other expenses. Ask for evidence of their WSIB coverage before agreeing to any work. If they only work directly for home owners they do not have to have WSIB and may be depending on your policy for protection. They should also have insurance against their errors and omissions so you are protected if they do damage to your home or cottage accidently when working on the project. Uninsured handy men often charge less for their services because they lack the overhead expense of insurance, but using them could cost you in the long run.

BE CLEAR ABOUT THE PAYMENT SCHEDULE BEFORE YOU SIGN

Be cautious if you are asked to pay for the entire job up front – this is not an accepted business practice and could leave you open to fraud. Handy men will often ask for 50% up front to allow for the purchase of materials. You may have agreed to a “Time and Materials” contract with a weekly invoice being submitted or you may have even set up an account at the supply store so the materials can be billed directly to you and only need pay the handy man his weekly labour cost. Whatever the details are, be sure you are all clear on them and request receipts for all payments.

Whatever your project once you have found that great Muskoka Handy Man you will keep him or her close to your heart! A capable honest and dependable handy person is golden – someone you will recommend to friends being confident they will not let you down.

 

 

Net Zero Homes and Muskoka

Net-Zero-highres Image

Net Zero Home by Reids Heritage Homes in Guelph Ontario.

In May 2017, the Canadian Home Builders’ Association (CHBA) officially launched the Net Zero Home Labelling Program, which is focused on building fully energy efficient communities.

Kevin Lee, CEO of CHBA said “The Net Zero Home Label will help to meet the energy efficient housing aspirations of Canadians, and renew Canadian industry leadership in high performance housing. CHBA members have always been leaders and innovators – this program continues that trend.” He went on to say “Our National Home Buyer Preference Study confirmed that consumers want and expect an energy efficient home. Our members have a long history in delivering high performance homes and are ready and eager to deliver the next generation of high performance housing to discerning Canadian home buyers. Our Net Zero Home Labelling Program provides third party confirmation for both the industry and the consumer.”

According to the CMHC web site a Net Zero Home (NZE) is one that is designed and built to reduce household energy needs to a minimum and includes on-site (not all definitions require on-site but CMHC does) renewable energy systems, so that the house may produce as much energy as it consumes on a yearly basis.

According to the CMHC a Net Zero home is not necessarily an “energy autonomous” one. It does not have to be “off-grid” and can be connected to electrical service. This is so that it can supply electricity to the grid when it is producing more than it needs and draw from the grid when household demands exceed the amount of electricity produced on site.  The NZE designation is about the net annual consumption of energy being zero.  The intention is that  over the course of a year, the energy supplied to the grid balances the energy drawn from the grid, therefore giving a  net- zero annual energy consumption.

Kevin Lee said that the CHBA is “ showing support for leading-edge innovation in the residential construction industry that with the goal of having those innovations as a voluntary and affordable choice for consumers,”  CHBA feels that the Program benefits builders and buyers by clearly defining the two-tier requirements for Net Zero and Net Zero Ready Homes. It also identifies the builders and renovators who provide Net Zero services.

So what do the designation actually mean?   Most of us are familiar with the ENERGY STAR designation which indicates that the home is 20% more energy efficient than the Building Code requires. A Net Zero Ready home will have to be up to 80% more efficient than code, and a Net Zero home will be 100% more efficient than code requirements.  The reason a Net Zero home is 100% more efficient is because it produces as much energy as it consumes.

Special training has been developed for members of the building and land development industry who are interested in achieving Net Zero. There are CHBA Net Zero Qualified Service organizations, energy advisors, and trainers that will work with builders and renovators to plan their next Net Zero project.

It’s becoming increasingly important to build and market energy efficient homes and communities. The CHBA conducted a nationwide home buyer preference study and discovered that four out of the top 10 ‘must have’ features in a new home were energy efficiency related.

So where in Muskoka can you find a Net Zero home you may ask. Well as far as I can tell nowhere yet! But because Muskoka, by its very nature, attracts people who desire to give more than they take I believe this is something we will be seeing more and more of. Builders like Mattamy Homes and Reid’s Heritage Homes are already offering Net Zero options in their developments.  Many more custom builders in our region are taking the required training to be able to offer this option to their clients. So, if you are planning to build a home or cottage in this area ask you architect and builder about Net Zero construction.

Curb Appeal 101 for your Muskoka Property

Front Door EntranceSpring seems to have arrived at last and maybe you’re thinking about selling your home or cottage so here are some of my tips to enhance that ever important “Curb Appeal”.

  1. Have a front door that pops!Your front door should be an exterior focal point so ramp up the appeal by giving it a fresh look. Try painting it a rich colour and consider updating the hardware or adding a new knocker. Depending on the style of your home or cottage you may want to add a seasonal touch. Hang a spring wreath or craft item that shows your visitors a little of your creativeness but do not be tempted to make it too cluttered. Pots of bright and fragrant flowers are always a great addition if your entrance way has room but don’t make it difficult to enter and exit.
  1. Add some bright flowers or plants to the entrance side. Remember, in Muskoka curb appeal does not always mean there is a curb, but the exterior is the very first impression a potential buyer will have of your property—I suggest planting perennials and spring bulbs around your home especially on the entrance side. The extra layer of foliage and colour will create a sense of depth, making your front yard appear larger.
  1. Road numbers should be easy to see. If you live in a rural area make sure you can clearly see the 911 number as you approach from both directions. If you are in town, walk across the street from your home to get a better idea of how easy it is to find your house numbers. Pick large numbers in a clear font that are the easy to read from a distance. Try to install them where they are not blocked by trees, foliage or verandas and position the numbers horizontally rather than vertically as they are easier to read that way. If possible consider lighting your street number to make it easy to find when it is dark.
  1. Consider a front garden sitting area. If you have a large front yard and find you rarely use it, consider whether it would be a suitable location to put a sitting area that can work as a fun and functional hangout zone. A bench curved around an outdoor water feature or fireplace is sure to become a favorite gathering place for friends and family!
  1. Keep it neat and tidy. If you’re planning to sell, remember that an untended garden screams “work” to a potential buyer. If you have a lawn, early spring is a good time to reseed or add sod where it’s coming back patchy. Cover flower beds with a natural mulch to help retain moisture and give the beds a finished look.
  1. Look up! Make sure the roof is in good repair.If the shingles are curling at the edges or have crumbling bits, it is time to investigate further. Have a professional roofer take a look. If you need a new roof covering, check references and get at least three competing estimates before hiring someone for the job.
  1. Clean windows and siding. Give your siding a fresh start this spring by washing off the dirt, road salt and cobwebs using a power washer or a regular hose with washing attachment.  The latter can get windows shiny and clean but remember to clean inside windows as well for the most sparkle. 
  1. Remember the garage and driveway. If you can see it, it should look as good as the home. The garage and driveway often take up a lot of visual real estate, so if they don’t look good they can seriously detract from curb appeal. Have any driveway cracks repaired or the gravel graded and topped up. Freshen up the garage with a coat of paint and consider matching the door to the front door of the home. Don’t forget the finishing touches and add some sconce lighting and flower boxes.
  1. Make the garden path a feature. If your home’s walkway is a straight line from the sidewalk to the front door, you may be missing out on an easy curb appeal enhancement; the curving path. Even a slight curve in a front walk helps move the eye through the landscape, making the front yard seem more spacious and welcoming.
  1. Keep it in the spotlight.A well-lit porch is a welcoming sight to come home to and more fun to hang out on. It can also make the space look bigger. If your porch has a single light, consider installing one or two additional lights. If you have a long pathway leading to your door, consider adding landscape lighting as well — your guests will thank you.

In this current, highly competitive market, details matter.  The first time most prospective buyers see your property is when it is listed on www.realtor.ca Ensure that the exterior photo your Muskoka property makes a great first impression!