Investment Property: Buy only When the price is below the market value - Warren Buffet

Not long ago I read a book about the billionaire Warren Buffet and he says in it that you buy a property, only, when the selling price is below the real market value. And he went on saying that we have to be pacient and wait for the right opportunity, and always live within our means.

So, the Real Estate selling prices in Toronto (Canada) are not falling as they are in the USA, but with such low interest rates being presently offered by the lenders in general, my wife and I, too, had to take advantage of the great opportunity that popped up in the market.

We bought an Investment property located south of Rogers, West of Dufferin that was being sold by a Bank under Power of Sale. It's a property with a Detached Home with 3 units (3 kitchens, 3 washrooms) with 3 separate entrances, an independent laundry and 2 possible parkings. A few renovations are needed but we are really taking care of it (wheeping tile, water service, few new appliances, painting, new faucets, new doors...) in order to preserve the great value.

The Best June on Record for GTA Resale Housing Market

According to Toronto Real Estate Board (TREB), in June 2009, Great Toronto Realtors reported a record 10,955 sales, up 27 per cent from June 2008. The seasonally adjusted annual rate of sales in June was 100,700.
The record result in une is testament to the fundamentally sound housing market in the GTA. An increasing number of households have been confident in purchasing a home in the region's affordable and diverse resale housing market.
The average price for June transactions was $403,972 - up by two percent compared to the same month last year.
The re-emergence of seller's market condition has exerted upward pressure on home prices. Look for sales to remain high relative to listings in the second half of the year. This will keep home prices growing.

May Resale Housing Sales Higher Than Last Year

Greater Toronto Realtors reported 9,589 sales during the month of May. Up almost two percent from May 2008 - the first annual increase since December 2007.
The Resale housing market in the GTA has remained resilient in the face of challenging times globally. Many home buyers have taken advantage of extremely low Mortgage rates.
The Average Price for May Transactions was $395,609 - down less than one percent compared to the same month last year.
The average resale home price has moved in line with last year's level because of tighter market conditions experienced this Spring. Home Sales have increased strongly relative to new listings, bolstering home prices.
The Average Price in the area of W01 was $426,141, in W02 - $466,642, W03 - $288,564, W04 - $305,786 and in W05 - $281,441.

Harmonized Sales Tax - The Impact in Real Estate Market

When it seems Toronto's real estate market begins to recover, realtors and home builders are worried Ontario's new harmonized sales tax could send sales plummeting again.

The number of home sales in the GTA in the first half of May was up 3% over the same period last year, after a series of year-over-year drops. The average price was $399,811, about the same as last May.
"We're out of the trenches for sure," said a senior manager of market analysis.

But the harmonized sales tax looms on the housing horizon. The tax will come into effect in July, 2010, combining the 5% GST and 8% PST into one 13% tax. The HST will apply to new homes and to all home closing costs, creating thousands of dollars more in taxes.

Currently, new homes are exempt from PST. Under the HST, new homes worth less than $400,000 will qualify for a 6% tax rebate, but new homes worth more than $500,000 will be subject to an additional 8% tax. This would mean an additional $30,000 on a $500,000 home.

The HST will hit new home buyers in Toronto harder because real estate prices are higher here, said Ontario Homebuilders Association president Frank Giannone.
"A $500,000 new home in Toronto doesn't get you much," said Mr. Giannone, who is also president of the Fram Building Group.
Mr. Giannone said the HST is a good idea, but current plans mean the entire purchase price is taxed once the $400,000 threshold is reached, and that could discourage middle-income earners from buying a new home.
"If you don't have your own place yet, or you have your own place and you're planning on moving up, you've hit a wall," Mr. Giannone said.

Only 7% of home buyers will be affected by the new tax, said Alicia Johnston, spokeswoman for the Ontario Ministry of Finance.

The HST may only apply to new homes, but closing costs on all homes will be hit with the 15% tax.
This will add approximately $2,000 extra in taxes per sale for costs such as home inspectors, lawyers and real estate commissions, said Toronto Real Estate Board chief government and media relations officer Von Palmer.
The additional $2,000 could hinder buyers who already struggle to save enough for a down payment, Mr. Palmer said, adding new taxes are not what the industry needs during a recession. "There is never a good time for a new tax, but this is bad," Mr. Palmer said.
He suggested the closing costs be exempt from the HST, but the government isn't considering that option.
"We can't exempt everything, otherwise it wouldn't be a harmonized sales tax," Ms. Johnston said.
Not everyone in the Ontario housing business thinks the HST means gloom and doom for the housing industry in the GTA.
"The HST is one factor that will impact sales next year, but it is only one of many factors," said Ted Tsiakopoulos, regional economist for the Canadian Mortgage and Housing Corporation.The Canadian Mortgage and Housing Corporation predicts sales in Ontario will pick up next year by 4.1% for resale homes and 1.9% for home starts

Toronto Condo Market Update

Condo Sales in Toronto are Down.
Despite a record number of construction cranes gracing the horizon, Toronto’s once thriving new condo market hit a dismal sales low in the first quarter of 2009.
The number of sales recorded during the first quarter dipped to 917 units – the lowest level since 1996 and a far cry from the high of nearly 7,000 units sold in the second quarter of 2007, the peak.
It’s a decline of 73% over the performance of last year, of 2008. The market really came to a halt in October, November and we haven’t picked up momentum through the first quarter.At the same time, ground has been broken on some 36,255 units now under construction in the region – a market high point. These are building projects that came to market in 2006 and 2007.

First Thing, Get Pre-Approved

Very often, potential home buyers have approached me, asking me to show them properties without being initially pre-approved by a Mortgage Broker. This is incorrect.
The first thing anyone, who plans or thinks to buy a property (home or Condominium) must do, is to get a written pre-approval from a Real Estate Mortgage Broker (either independent or who works for a Bank). This comes before location, finding a home or making an offer.
There is nothing complicated about it and it doesn't take too long. You just have to provide the Mortgage Broker with your (and/or your spouse's) Social Insurance Number, Date of Birth and a few of the most recent Pay-Stubs.
The reason why this must be done in the first place, is that you, as a potential buyer must know exactly how much you can buy for and at what interest rate, before you go out there viewing properties. And that is important because you'll be able to know what your limit is, and on other hand, you'll never end up frustrated after knowing that you can't buy the property you found because you either can't afford it or an irregularity was found in your credit history, or anything else.
The decision to buy a house, is usually an emotional one. Therefore, is very important that you, as a buyer, have the numbers checked out before making the decision. Remember you're not buying a T-shirt.
You should know that beside the mortgage (good debt) you have to pay back, you also have other immediate expenses associated with the buying of a property: You'll pay Land Transfer Tax, Home Inspection, Lawyer's fee, Fire Insurance, Moving expenses. There are some other, smaller expenses related to tranferring or opening accounts for phone line(s), Internet Service, Hydro, Gas (Enbridge or Direct Energy), Water and Sewage (Water Bill).

Shift of Economic Power

The United States of America dominate almost all international markets because their Companies (GM, Microsoft, Apple, Google, Yahoo, Wal-Mart, IBM, GE, Citigroup, McDonald's, JP Morgan, Morgan Stanley...) that raise funds and use them as large investments from individuals and institutions from around the world and that generate significant amounts of jobs, grew and spread their roots all through out the world becoming absolute giants. This is the reason why the economy of most countries does well when the American economy does well. And if any of those Companies goes Bankrupt the consequences are naturally devastating for a lot of people (investors, employees...).
During the past two decades, people, specially in USA, Canada, Japan and Europe had this consumption illusion that they could spend, spend and spend, thinking that they actually had any money available, when all the consumption was mostly done by using credit cards and/or loans facilitated by financial institutions.
Obviously that in reality, people never had as much money as they thought, but believed that they'd be able to pay off their debts in a near future or make the minimum payments, forgetting though that jobs are not a permanent or guaranteed thing. This is the reason (among others), why many Americans are losing their homes and other goods.
At the same time, many Companies of all industries were closing their doors (leaving thousands unemployed) and gradually moving part or all the production to countries in East Europe (Russia, Hungary, Poland, Check Republic...etc) and developing countries, particularly China and India (Mexico, Brazil, Vietnam, Bangladesh...) where the production costs are much more attractive. Which means that the salaries are much less, although the workers are as educated and qualified, taxes, benefits and Unions are almost nonexistent and consequently the profits are much larger.
Therefore, the money that used to be in the hands of the financial institutions of the industrialized countries was little by little being transferred to other countries. Today the markets of the industrialized countries are completely inundated (naturally) with goods and products made in China, India, Mexico, Pakistan, Vietnam, Taiwan, Bangladesh and others and the profits of the sales, obviously end up in the safes of the financial institutions of those countries.
So in order to survive, the financial institutions in the USA (Bank of America, Wells Fargo, Goldman Sachs, JP Morgan, Citigroup...) had to receive over 250 billion dollars from the Federal Government because there was no liquidity for credit, loans, lines of credit that many companies and individuals need for their day-to-day business activities.
The interesting part is that all the money that the American Federal Government provided was borrowed from China because the USA carry a debt load of more thanb 10.6 Trillion (also due to expenses incurred with the wars in Iraq and Afghanistan). This situation means that each US citizen is currently in debt in more than $37 thousand.

Radio Talk-Shows - Great Social Value

One of the best tools you can use to help yourself to faster integrate a new environment (society) and improve your communication skills is to listen to Radio Talk-Shows. Specially when you are a newcomer. There is a tremendous flow of useful information and the conversations are fun, very dynamic, alive and helpfull. I mention the Radio, not the TV, because the Radio demands more concentration, focus, attention from the listener. Consequently, the listener retains and learns more of what is being discussed. The TV is less effective because there's too many distractions. You hear the music, background sound, you see the faces of the people, how they smile, how they dress, etc.
My preferred Radio Stations in Toronto are AM 640 and CFRB 1010 which are available online as well. It's almost 24 hours of discussions. One day doesn't pass by without me listening to one of this or both. And often I find myself yelling at the Radio.

Integrate New Environment
With the Radio Talk Shows, you learn about what are the most important issues the community, or the different members of the different communities face in their day-to-day life and what worries them about the present and the future. In general the host and participants provide real situations and solutions based on their own life experiences. Many of the stories that are discussed in the air waves are picked up from the newspapers. So listening to these shows, will definitely put us in touch with the surrounding reality, and who knows, you can actually use other people's ideas and experiences and apply them or adjust them to your life.
You realize there are people out there who share the same problems as you, but who have different opinions from yours regarding the solutions for those same problems, usually due to particular circumstances, experiences or environments. And you start to understand that you are not the owner of the true.
In life, I realized that if we want to live together, in peace and progress, we all have to compromise because we are all different from each other. My freedom ends where yours starts.

Communication Skills
You learn about how people think and how people express themselves. You learn lots of new words and expressions. Your ears start to get used to how people pronounce the words and build sentences.

Toronto, The City I Love

If you've never been to Toronto, I must tell you that this place rocks. I love it so much. I have all the reasons to say and feel this way, because Toronto gave me everything and more that I ever wanted and dreamed about.
There is nothing strange or complicated about Toronto, but none of what I got and/or achieved came easy. Specially when you're a newcomer, you must understand that no matter how well educated you are, you are going to close you mouth, open your eyes and ears and pay lots of attention to what people talk about, how they behave, how things work and are done, etc. Toronto is a different place like any other place in the world and consequently, we must learn a couple of things here and there that will actually help us integrate and understand the society better. Once you've learned how to live here, you probably won't be able to leave this place for ever.
The last 11 years of my life taught me so much about so many things. I grew and matured faster than ever before. Specially, because I (and my family) never count on anybody to solve our problems and never procrastinated facing them head on in order to be able to move on. We became very resourceful and developed great problem solving skills. The more you know the more you grow, they say.
Although I already was a Journalist, after arriving in Toronto, I had the opportunity to go back to School and learn about Computers, Business and Investments (Real Estate). I worked for different companies and was laid-off several times, until one day my wife and I decided to start our own little thing and be the owners of our jobs. Basically we decided to take control of our lives and make our own decisions.
We never thought or planned to go on vacation anywhere in the world before nine years of hard work. Both my wife and I had to build some financial stability. After that we were finally able to take our kids and enjoy some time in places such as Cuba, Mexico, Florida, Buffalo, Boston, Atlanta (Georgia). As we learned here in Toronto "No pain, No gain" or "Hardwork pays off".
There's all kinds of people here, what makes it a very Cosmopolitan society, very dynamic and modern. You can have a tremendous amount of fun if you are an open mind person and want to experience new and different things, peacefully. Toronto is a gorgeous City during Christmas time. Christmas decorations are literally everywhere you go. Learn and skate on ice is great fun. I did it after being an adult already and I don't regret a bit. Places like Canada's Wonderland, Niagara Falls, Toronto Zoo, Centre Island, African Lion Safari, Ontario Royal Museum, Art Gallery of Ontario, Centre Island among other places are a must see and experience if you come to Toronto. If you don't like Chinese, Arabs, Blacks, Latinos, Gays, Lesbians, atheists, Muslims, etc, etc, than Toronto is not a place you'd like to enjoy or live because we have all that and more. You might not like to be working for a Boss who you hate. Toronto is a City of 2.5 million people, the largest and most economically developed among all Canadian cities. The crime rate is very low, when compared to other large cities in the USA so in general we feel very safe. One of the reasons is that is illegal to manufacture and sell guns in the stores. There's lots of opportunities for everyone, who wants to work hard and is serious about succeed in life. Now, make sure your definition of success doesn't go against the laws, like becoming a Pimp, Drug Dealer, Rapist, Child Molester. We have those too. But the bottom line is as they say "hard work pays off".