Phil Amero

Royal LePage Alliance

Office 204-885-5500

Fax 204-885-6600

Email: philamero@gmail.com

“Location, location, location...” Probably one of the oldest sayings in real estate and in business; the tough part is identifying where to actually locate, and why?!... Unfortunately, there is no magical formula to answer this, and you’re just going to have to do some research, or some soul searching, to attain the desired outcome.

That been said, here are a few key points to get you well on your way:


1. Before you can begin to answer the where, you should first tackle the “WHY?”

The reason lies with two primary components, which change the focus of the purchase from strictly logical, based on statistics, to partially personal, based on emotions and sentiment. These components are; personal values VS public demand, and Long-­‐term VS Short-­‐term ownership.

1. For instance, if you are building your dream home and are planning to raise a family and/or retire in it, your decision will undoubtedly be based on sound logic; safety, vicinity,

and cost, but personal/family values, such as belongingness, privacy, and traditions will also play a strong role in the decision.

2. The timeline for the possession (long VS short) will determine how much weight the personal values will hold on the decision as a whole.


2. Once the “WHY?” has been answered, or understood, the choice is based on whether you’re purchasing for living or investing purposes.

  • In this evaluation, you must view the points (listed bellow) from the position of the purpose for the purchase.

  • Three points to consider here:

1. Prestige/popularity:

o The more popular the area, the higher the demand to be located there, which not only drives prices up on the building and land, but also increases the likelihood and timeliness of future resale opportunities.

o These areas also bring people of similar mindsets (synergy), which breeds shared values and community.

o Layout:
o Landscaping and aesthetics

Paths, town center...etc. o Security

o Exclusivity

  1. Vicinity:
    o How close the home is located to: work, hospitals, fitness

    facilities, good schools, parks, places of worship, stores, and adequate forms of transportation.


  2. Trends:
    o Economy:

    o No matter how close the location is to work, or how prestigious the area is or was, if the economy is doing poorly, people eventually will look elsewhere to reposition themselves.

    o Area:

o Knowing what’s to be developed in the area, or

surrounding areas, may add or subtract from the perceived value of the property

I.E. there is going to be a sewage treatment plant located 5min from the development...

o Property taxes:

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o Property taxes play a factor in the type of properties available (how lucrative), aesthetics, and the types of amenities available near by.

The cost must be justified to entice new purchases.


o Guidelines:
o Some developers have specific guidelines that

promote or restrict the type of homes being built and what you can or cannot build on your property.

I.E. restrictions of front elevations of homes, the amount of stone that must be used on the home, or the height of the fence.


Hope this has helped you in formulating your decision-­‐making criteria. As always, please post your questions and feedback! 

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Renting Vs Buying


“If you rent, you’re throwing away your money!”

tensioned concrete used to transfer the load from a structure through an upper (weak) layer of soil to a stronger, deeper layer of soil.

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...Its just common logic that dictates buying is better. After all, you’re building equity, instead of wasting your money, right?

Of course many factors can and do play a factor in the result of this decision:

  • Location

  • State of the economy

  • Prestige

  • Interest rates

  • Age of property

  • Quality

  • Property taxes...

    But for curiosity’s sake, I did some research of my own, and ended up finding an excellent Internet based tool, (http://www.canadamortgage.com/calculators/rentvsown.cgi) to help shed some light on this age old issue:

    This tool was really quick and easy to use, and it outlines the cost benefits of renting VS buying. For example:

    Criteria I used:

    Buying
    o Purchase price -­‐ $300,000
    o Down payment -­‐ $30,000
    o Interest rate – 4.05%
    o Term – 3yrs
    o Amortization – 30yrs
    o Salesfee–5%
    o Taxes-­‐$300/month
    o Maintenance costs – $200/month

    Renting

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o $1500/month The results were as follows:

  • Rental alternative:
    o If you took the $300k down payment and the monthly rental

    savings, and after a 36-­‐month term, your before-­‐tax investment

    would be an estimated $45,000 (at savings rate of 5%/yr).

  • Purchase alternative:

o For this option to perform as well as the rental option, the

appreciation per year on the property needs to be at least 2.37%. o Total appreciation of the property would need to be at least 7.3%

(with principal repayment, less 5% to market the home)


Summary:
o If the value of the Purchased home increased by more than

$21,803 (7.3%) in 36 months, purchasing would be the better

financial option than renting.
Note: All financial information and findings were generated by canadamortgage.com

As with any decision in life, it is always best to educate yourself on the issue at hand, and not follow just suit with traditional logic.

I wish you success on either endeavor, and please post if you have any questions. 

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a.     This one is mostly based on personal preference:

1.     Bungalow or 2-Storey

ü  Keeping in mind that it is cheaper to build up than it is to build out. Therefore, bungalows will be more expensive per square foot than 2-storey houses.

2.     Total Square Footage of home

3.     Size of garage (based on usage and how many vehicles being stored).1.     Location, size, and type of rooms (sunrooms, offices, library, exercise, theatre…etc.)

2.     Number of washrooms (full or partial)

3.     Basement layout (finished or unfinished)


b.     The standards and options offered by the builder (varies from builder to builder):

1.     This will determine what is included in the square footage price, the allowances given for floor, electrical (lighting), and cabinetry.

ü  Some items to keep note of (which may or may not be included in the build) are:

·      Structural beams used - steel beams will alleviate the number of teleposts needed for structural support.

·      Type of stucco finishes – Acrylic Vs. Traditional

                                                                                                     i.     Both systems of finishes are adequate for our climate, but one thing that definitely stands out is the variable colors that can be used with Acrylic finishing (almost any color under the rainbow), while Traditional finishing’s are limited to the lighter tones.

·      Higher basement ceilings:

                                                                                                     i.     Typically 9 feet high in the basement

1.     NOTE: if you are getting a concrete pad as your basement floor, then the height drops by the thickness of the pad. However, with a structural wood basement floor, you are able to retain the 9-foot height.

·      Driveways:

                                                                                                     i.     Believe it or not, some builders do not include the driveway – make sure to address this before you sign the contract!

                                                                                                    ii.     Traditional broom or Stamped finish

·      Foundation

                                                                                                     i.     Piles Vs Footings

1.     Footings (shallow foundations) – are embedded about a meter into the soil, which transfers weight from walls and columns to the soil or bedrock.

2.     Piles (deep foundation) – impact driven reinforced, or pre-tensioned concrete used to transfer the load from a structure through an upper (weak) layer of soil to a stronger, deeper layer of soil.

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 a.     Budget for a lot – a safe assumption should be about 25-30% of your total new build budget (some restrictions may also be made in the size of home to be built on a specific lot (this could be based on lot size or prestige).


b.     Desired Area – the area should reflect your values and your lifestyle;


1.     Suburb or rural?

2.     Privacy or active community?

3.     Amenities in the area:

ü  Schools, shops, buildings of worship (churches, synagogues, mosques…), access to transportation, traffic, playgrounds, parks…etc.

4.     Proximity to work– most of our day is spent at work or commuting to and from work. 

 

c.      4 typical types of lots in Manitoba

 

1.     Walkup Lots – Front entrance is above street level.

2.     Walkout Lots – Basement leads out to back yard.

3.     Lookout Lots – Basement windows are at about eye level.

4.     Visitable Lots/Home designs - A combination of lot variation and home design in order to make entry and movement more convenient; for instance, no-step entries, and wider doorways and hallways.

·      For more information on this please visit: www.gov.mb.ca/housing/pubs/visitable-design-factsheet.pdf

 

d.     Other characteristics that tend to drive lot prices:

 

1.     Aesthetics of the lot:

ü  Forest

ü  Lake

ü  The view

ü  Prestige and demand

 

2.     Size and shape of the lot:

ü  Extra deep

ü  Pie shaped

 

3.     Land developer:

ü  Designs

ü  Reputation

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a.     Custom VS Production:

1.     Custom Builders – construct an originally, or uniquely designed home for a particular client in a desired location.

ü  Because these homes are uniquely designed, most custom homebuilders will allow for more freedom to alter plans, and customize layouts with minimal or no cost to the client (before the actual build).

ü  An architect or a professional home designer creates these original designs (in-house, or subcontracted).

2.     Production Builders – construct a home picked from a selection of floor plans, which is built in a designated area/ development that accommodates a similar style of home.

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a.     Assets – what do you currently have?

1.     Long term: Bank accounts, investments, equity… etc.

2.     Short term: Monthly revenues (salaries, payouts, dividends…)

b.     Debts – What do you currently owe?

1.     Long term: Mortgage, loans, leases…etc.

2.     Short term: Monthly expenses (Bills, maintenance costs, living expenses, tax, insurance…)

c.      This evaluation can be done on your own, or preferably with a financial advisor (more accurate).

Note: if done with your Bank (financial advisor) you can also attain an exact amount for mortgage approval – then you really know what you’re working with!
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