Can't afford to buy investment real estate? Think again!

We meet people all the time that wish they could get into the lucrative residential rental real estate market but just don’t see how they could ever afford it. After all, you need a minimum of 20% down! That’s a far cry from the 5% needed when buying your personal home. But for most, there is a way. And it’s quite simple…

The first question is “Do you own a home?”. If so, “How long have you owned your home?”. An answer of yes to the first question and more than 2-3 years to the second are the key to unlocking this lucrative investment.

If you are a homeowner with a few years of home ownership under your belt you have built equity in your home. And it is likely that your lender will lend you up to 80% of that equity at a very low interest rate via a Home Equity Line of Credit or HELOC. Unlike a personal home where you cannot borrow the necessary 5% down, when purchasing a rental property you can lend yourself the entire downpayment via a HELOC. That means you can put the equity in your home to work making you more money! It’s really that simple.

And we have done this ourselves. We just closed on our fourth rental property with a tenant moving in next month. What other investment has someone else pay for the whole investment while you reap the rewards? None that we are aware of. The tenant pays for the downpayment, taxes, mortgage payments and any possible condo fees.

The great thing about owning rental properties is that they are building equity as well. And before long you can put HELOCs on these properties as well and use those to buy additional properties. And in no time at all you will have your own little real estate empire. Chances are if you know someone that has accumulated substantial wealth, a large portion of their portfolio will be held in real estate.

If we look at Woodstock as a place to invest in residential real estate, the numbers tell a wonderful story. Looking at numbers from the Woodstock/Ingersoll Real Estate Board, we see that the average sold price in Woodstock in June 2020 was $484,948. That is up 43.6% from June 2017. So, in 2017, the average home price was $337,707. That’s a difference of 147,241. If you are buying a $300,000 condo townhome, a 20% downpayment is $60,000.

And voila, you are in a position to purchase your first rental property.

We recently had a young couple who were first time buyer do exactly this. We sold them their first home three years ago and it took every penny they had worked so hard to save just to get that 5% down. But a few short years later they had a HELOC and purchased their first rental property and are excitedly thinking about when they will be in a position to purchase their second. And it won’t take long!

If this has piqued your interest we are always available to discuss your options. We have experience working with all types of real estate investors and love helping people on the path to building their own empire. We would love to help you get started too!

Is the Woodstock housing boom over? Remember: Location, Location Location!

Ontario has been on a rocket ride over the last couple of years when it comes to housing! The City of Woodstock has been right in the thick of things. Recently, buyers and sellers have seen a softening of the market and are questioning what the future holds. None of us holds a crystal ball, but we see Woodstock and Oxford County as a fantastic investment moving forward. No market can sustain the year-to-year gains that we have seen recently. The recent slow down has several contributing factors, and a return to a more level playing field is a good thing for a healthy market.

Toronto - Many think that the hot Toronto market has been the only contributing factor to housing prices here at home. Although the Toronto market has certainly been a force in the market, pushing consumers further from home in search of affordable properties. The recent government intervention has certainly been showing signs of cooling that market, although many experts would argue that the signs were there of the market levelling off without the government measures. When you look at the areas further from Toronto, you actually see that the further a market is from Toronto, the less the market has cooled. This is because there are always multiple factors driving any market. The Toronto market does have an effect on our local market, but it is not the whole picture.

Foreign Buyers Tax - Many foreign buyers have been investing in Toronto and surrounding areas for years. And they have made a lot of money! The recent 15% tax has made them start looking at other markets. The border for this tax extends from the Golden Horseshoe all the way to Waterloo and Brant counties. But not to Oxford County! We have essentially become a tax haven for foreign investors. And they know a good thing when they see it.

Summer - We have been in such a strong Seller's market for such a long time, it is hard to remember the traditional ebbs and flows of the real estate market. Summer is traditionally a slower period, as is January because of Christmas holidays and debt load. We are seeing a much more traditional summer than the past couple as the market stabilizes a bit. We will see what happens as we head back into late Summer/ early Fall.

Recent Sales - The Woodstock-Ingersoll & District Real Estate Board recorded near record sales in April, falling just one sale short of breaking a 12-year old record. The average home sale price was $355,135, up 31.6% from the previous year. There was a new all-time record set in May. There was also a record low amount of inventory in May. These numbers point to a market that buyers are still very much interested in. Properly listed homes are still selling in a relatively short amount of time.

Future Industrial Development - The City of Woodstock is currently in the process of attempting to annex a large portion of real estate on it's Eastern and southern borders. The purpose is to develop new industrial land packages as current supplies within city limits are in short supply. Woodstock is in an ideal location for industry because of its location on the 401/403 corridors. We are also within a two hour drive to almost all major manufacturing centres in Ontario plus the US border. As was seen with the addition of Sysco and Toyota, this type of development can have a major positive impact to the value of real estate independent of what is happening in neighbouring markets. High paying jobs bring in buyers willing to spend money on housing.

Future Residential Development - Because of such intense interest from buyers wanting to get into the Woodstock market, we almost ran out of residential building lots with many builders being well over a year to get a buyer into a new home. The City of Woodstock is attempting to annex land on its west side from the County of South-West Oxford. We desperately need new lands added for new construction to compliment the new areas recently added in the 11th line area. Buyers want to be here and builders need land to bring them in. On the upside for resellers, the lack of new construction lots, the long timelines and the high price tags make resale properties look better than ever.

Location, Location, Location - We Realtors always talk about location, because it's almost always the most important factor in buying real estate. When it comes to the City of Woodstock, we have location in spades. All of the above factors point to a market that will make for a great place to invest for years to come! 

The Reality of "Sold Over Asking".

There are so many stories of homes that have sold for 70, 80, 90, even 100,000 dollars over the asking price. It makes the current market confusing for both buyers and sellers. And a lot of it is smoke and mirrors. Don't get me wrong, it is a strong seller's market in Oxford County, with many sellers hitting home runs when it comes to offer day! But many times, the stories being told, although true, are missing critical information.

This is where "Sold Over Asking" needs to be addressed. We should be talking about "Sold Over True Value". In the current market, the list price can be almost irrelevant. Realtors are listing homes with a soft list price. If we think the home is worth, $500,000, we might list the home at $480,000. This exposes the home to as many buyers as possible. When offer day comes, buyers will offer as much as they think the home is worth. If we received 5 offers in this scenario, and a couple of offers are over the $500,000, and they probably will be, everyone is happy! If we receive an offer of $510,000, we just sold the home for $30,000 over asking price, but the home sold for $10,000 over VALUE! And that is the critical missing piece of information.

If the same property were to be listed at $430,000, it would sell for $80,000 over the asking price, but still only $10,000 over VALUE! Nothing has changed except the list price. Oh, and one more thing, the story has changed. The Realtor has a great story to tell, and the seller could not be happier!

Soft pricing is good for the seller, but listings a home with an overly soft price can poison the minds of buyers and sellers. I have heard of sellers turning down fantastic offers for their homes because they didn't get $60,000 over their asking price. And it is because of these stories. The truth is, their home was listed with a proper list price. The offers they received were great offers. But these offers were turned down, the school of buyers moved on, and their home sat for a week. And the next offers were lower than the original offers received. All because of the "Over Asking" stories they had heard.

For buyers, it is even harder! What do you offer on a home when you don't know what it is really worth? Do you go over asking by $20,000 or $100,000. Most buyers need to be looking at homes that are listed $40-50,000 less than what they actually are approved for so they have room to offer over asking. If the soft prices were all closer to reality this would be an easier market for them to deal with. Not all Realtors are listing severely under market value, but it is difficult for buyers to know when they are and what is happening from one listing to the next. It is frustrating and confusing!

A great local Realtor can help with this. We are in the market every day with buyers and sellers and we can help weed through the myths and legends! It is hard for us to even show good comparables right now due to the vast swings, property to property, between list and sale price. But we can help you understand VALUE! Again, some homeowners are truly hitting home runs on offer day. And usually it is an offer from an out-of-town buyer that is being represented by someone that does not truly understand the market. If you are a buyer, you need someone to lead you away from these situations and help you understand what homes are truly worth. 

The market does seem a bit like the Wild West right now. But there are strategies and information that can make it easier to understand and deal with. The truth is out there...

Here we go!

The Sherman Group is striving for new ways to better represent our clients and ourselves.

We have recently purchased the exclusive rights to the new digital billboard on Norwich Avenue in Woodstock. This high visibility billboard will allow us to promote our listings in a brand new way and to so many drivers and pedestrians every day. We are so excited to see this board in action and you will be seeing our very large faces there in the next few days. The digital aspect of this billboard also gives us the ability to change the artwork on a regular basis and keep the attention squarely on your listing, without the sign becoming stale to passers by.

We also know that to stay current in the Real Estate market of today, visibility on the internet is of the utmost importance. We have routinely been making use of Facebook, Kijiji and Twitter. Today we add a brand new, custom website to the mix. We want to be able to showcase our listings and have a clean and attractive way of interacting with all our clients, buyers and sellers. We are so excited about this new website, and thanks for stopping by and taking a look. Please let us know what you think!