“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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