Real Estate

Ottawa Real Estate market discussion

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Newbie
Nov 14, 2014
30 posts
7 upvotes
SK
happyflower25 wrote:
May 9th, 2018 4:42 pm
We're most likely relocating to Ottawa (from SK) in summer 2019 and hearing about how it's become such a seller's market there is making me quite concerned! I know that no one can predict what next year will bring, but what are your general thoughts on if you think the market will be better or worse for a buyer next year?

What would you do if you were in my position? (Criteria is <$1M (if good as is, less if renos are needed), detached, 4bed above grade, no pool, good schools, thinking Beacon Hill North/ Hiawartha area, picky about layout but ok with renos)
1. Don't panic. Wait until next spring to sell existing home, buy whatever is on the market during a 1 week house hunting trip (work relocation process).
2. Contact a Realtor and start looking now. If something perfect comes up then take HELOC on existing home to top up down payment for Ottawa one and mortgage the rest. Risky and means paying interest+taxes+insurance for an entire year. But locks in price in case there are huge increases (would offset some of these payments) and guarantees a house we like.
3. Buy a new build now so that it's ready next year (eg. Waterridge Villiage). Downside is won't be an established neighbourhood, remaining lots don't look that big, need to landscape.
So I went with Option #2 and we'll be getting possession next month! Financially it might not be the "best" decision as relocation costs aren't covered now but it reduces stress of unknown and potentially not finding the house we want during the 1 week house hunting trip. The house is livable as-is but we'll be doing extensive renovations (gut and replace kitchen, all flooring, all bathrooms, all fixtures) before we move in or shortly after. We were happy to find a house that hadn't already gone through updates since this means we can customize what we want rather than having to live with new stuff someone else already picked to put in.

To help offset the carrying cost until we're ready to move to Ottawa ourselves (which will most likely be summer 2019 but remote chance 2020) we'd like to rent it out. I'm aware that property management companies typically charge one month rent for tenant placement plus I read something about having to pay the tenant one month rent for when we want to move in ourselves. That being said, I think it's still preferable to rent it out rather than leave it vacant...

Unfortunately I will need a property management company since interviewing tenants, showing the property or stopping by to fix things for them isn't something I can do from here. Any recommendations on who I should contact and who should be avoided?
Deal Fanatic
User avatar
Jun 28, 2003
9814 posts
2958 upvotes
Ottawa
My friend, who has a number of properties, use Dore Property Management (formerly called Locke Property Management) and he has been pretty satisfied with the services.

I believe he has to pay between 5-7% a month, depending on the type of the properties. In return, he got the peace of mind and can spend more time with the family.
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Newbie
Jul 2, 2018
84 posts
48 upvotes
GTA
I don't visit this thread as I'm not from the area, but I just seen the post above me mentions multi family.
If anyone has questions on multi family feel free to PM me or quote this post and I will try and reply and answer any questions.

Multi Family is an amazing way to grow your wealth and invest for the future, I prefer it over single family homes.
Real Estate Sales Representative
Member
Aug 6, 2011
408 posts
133 upvotes
canabiz wrote:
Aug 14th, 2018 8:24 pm
Good overview of investing in multi-family. I have not read too much chatter about this, hopefully there will be more discussions

https://ottawasun.com/life/homes/invest ... properties
The article mentioned a minimum down payment of 25 per cent to 30 per cent or more is required, and it's probably for 4 units or less. For 5 or more, it's commercial, so downpayment can be as low as 15%... I visited a few "commercial" ones in Gatineau and the agent was quick to tell me that, which I confirmed with a "regular" bank rep. Some buildings were cash flow machine . I lost one because of a bidding war. The seller was sick so wanted to get rid of it.
When you borrow money to buy the commercial ones, banks look more at the cash flow, and less your personal income. So you can buy actually very big ones, as long as it cashflow well and the building somewhat in good state.
Deal Fanatic
User avatar
Jun 28, 2003
9814 posts
2958 upvotes
Ottawa
cyberfreak123 wrote:
Aug 14th, 2018 9:08 pm
The article mentioned a minimum down payment of 25 per cent to 30 per cent or more is required, and it's probably for 4 units or less. For 5 or more, it's commercial, so downpayment can be as low as 15%... I visited a few "commercial" ones in Gatineau and the agent was quick to tell me that, which I confirmed with a "regular" bank rep. Some buildings were cash flow machine . I lost one because of a bidding war. The seller was sick so wanted to get rid of it.
When you borrow money to buy the commercial ones, banks look more at the cash flow, and less your personal income. So you can buy actually very big ones, as long as it cashflow well and the building somewhat in good state.
This is good to know. I just attended a real estate seminar where 1 of the guest speaker is a mortgage broker and he told the crowd he can do 20% downpayment for up to 6 units. Anything else more than that and you are looking at commercial mortgage and that is a different kettle of fish.

He also said 5 mortgages is the top ceiling for many investors, anything else more than that and it is quite challenging to qualify.

He touched a bit on the advantages of incorporation (reduce liability to the individuals) so all in all a good discussion.
[removed]
Member
Aug 6, 2011
408 posts
133 upvotes
canabiz wrote:
Aug 15th, 2018 8:59 pm
This is good to know. I just attended a real estate seminar where 1 of the guest speaker is a mortgage broker and he told the crowd he can do 20% downpayment for up to 6 units. Anything else more than that and you are looking at commercial mortgage and that is a different kettle of fish.

He also said 5 mortgages is the top ceiling for many investors, anything else more than that and it is quite challenging to qualify.

He touched a bit on the advantages of incorporation (reduce liability to the individuals) so all in all a good discussion.
an 1 year ago, I put an offer on a 6 units in Gatineau and I remember clearly it was 15% downpayment. In Quebec, you can also put the maximum mortgage interest rate in the financing condition, the rate was slightly higher than a regular house. Before submitting the offer, I called Desjardins mortgage to confirm those info. Anyway, I lost it. not big deal, I think it was too big for me to take care of and the building wasn't in good shape.

Maybe mortgage rules have changed for big multi family? Or is it in Quebec only, have no idea. I don't shop for big rentals often.
Deal Addict
Nov 13, 2013
1506 posts
579 upvotes
Ottawa
happyflower25 wrote:
Aug 13th, 2018 7:24 pm
So I went with Option #2 and we'll be getting possession next month! Financially it might not be the "best" decision as relocation costs aren't covered now but it reduces stress of unknown and potentially not finding the house we want during the 1 week house hunting trip. The house is livable as-is but we'll be doing extensive renovations (gut and replace kitchen, all flooring, all bathrooms, all fixtures) before we move in or shortly after. We were happy to find a house that hadn't already gone through updates since this means we can customize what we want rather than having to live with new stuff someone else already picked to put in.

To help offset the carrying cost until we're ready to move to Ottawa ourselves (which will most likely be summer 2019 but remote chance 2020) we'd like to rent it out. I'm aware that property management companies typically charge one month rent for tenant placement plus I read something about having to pay the tenant one month rent for when we want to move in ourselves. That being said, I think it's still preferable to rent it out rather than leave it vacant...

Unfortunately I will need a property management company since interviewing tenants, showing the property or stopping by to fix things for them isn't something I can do from here. Any recommendations on who I should contact and who should be avoided?
What general area and rental price range are you looking at? In the $3000+ rental range I think you need to have a property manager that will post your place on MLS/Realtor.ca as people doing corporate and diplomatic relocations usually have an agent. Any real estate agent can do this for you and you can use someone else for the actual property management. It might be too late now but you might get your Realtor to do the property management for free as part of the deal for using them to buy.
Deal Fanatic
User avatar
Dec 27, 2009
6399 posts
3590 upvotes
Ottawa, ON
happyflower25 wrote:
Aug 13th, 2018 7:24 pm
So I went with Option #2 and we'll be getting possession next month! Financially it might not be the "best" decision as relocation costs aren't covered now but it reduces stress of unknown and potentially not finding the house we want during the 1 week house hunting trip. The house is livable as-is but we'll be doing extensive renovations (gut and replace kitchen, all flooring, all bathrooms, all fixtures) before we move in or shortly after. We were happy to find a house that hadn't already gone through updates since this means we can customize what we want rather than having to live with new stuff someone else already picked to put in.

To help offset the carrying cost until we're ready to move to Ottawa ourselves (which will most likely be summer 2019 but remote chance 2020) we'd like to rent it out. I'm aware that property management companies typically charge one month rent for tenant placement plus I read something about having to pay the tenant one month rent for when we want to move in ourselves. That being said, I think it's still preferable to rent it out rather than leave it vacant...

Unfortunately I will need a property management company since interviewing tenants, showing the property or stopping by to fix things for them isn't something I can do from here. Any recommendations on who I should contact and who should be avoided?
Ugg, I would avoid becoming a landlord here in Ontario if at all possible (especially a long distance one). If anything I would just be trying to get the renos done in the time frame before I was moving into the house. I'm not sure what your rush was to buy though. When we were transferred here we found a rental during our house hunting trip and waited a year to buy so we had time to get to know the areas, where we wanted to be, etc.
Deal Fanatic
User avatar
Dec 27, 2009
6399 posts
3590 upvotes
Ottawa, ON
fogetmylogin wrote:
Aug 16th, 2018 3:22 am
What general area and rental price range are you looking at? In the $3000+ rental range I think you need to have a property manager that will post your place on MLS/Realtor.ca as people doing corporate and diplomatic relocations usually have an agent. Any real estate agent can do this for you and you can use someone else for the actual property management. It might be too late now but you might get your Realtor to do the property management for free as part of the deal for using them to buy.
I doubt it would be $3000+ on a place in need of major renovations/never been updated according to the poster.
Newbie
Nov 14, 2014
30 posts
7 upvotes
SK
Chickinvic wrote:
Aug 16th, 2018 11:59 am
Ugg, I would avoid becoming a landlord here in Ontario if at all possible (especially a long distance one). If anything I would just be trying to get the renos done in the time frame before I was moving into the house. I'm not sure what your rush was to buy though. When we were transferred here we found a rental during our house hunting trip and waited a year to buy so we had time to get to know the areas, where we wanted to be, etc.
Two things are making us hesitant of using the time between now and when we're ready to move to do the renos: 1. We won't be on site to check the work; 2. Work might be done before we're ready to move and then the house is sitting vacant (especially if we end up moving in 2020 vs 2019).
We've lived in Ottawa before so are familiar with the area. We've been watching the housing market there over the last few years and have come to the conclusion that a house with no upgrades, unfinished basement, no pool with a layout we like in this specific neighbourhood/location is pretty rare. The chance something like it would be available during our one week house hunting trip is quite small. This will be our 7th house in the last 14 years so the idea of renting until we find something and having an extra move as a result isn't appealing. Looking forward to finally settling down!

Area is Rothwell heights. My realtor said he'd estimate $3000/month rent but looking at comparables that seems high considering the house hasn't been updated since the early 1980s.
Deal Addict
Nov 13, 2013
1506 posts
579 upvotes
Ottawa
Chickinvic wrote:
Aug 16th, 2018 12:00 pm
I doubt it would be $3000+ on a place in need of major renovations/never been updated according to the poster.
Agreed and absolutely they have to do the renos before they rent it out. Makes some of it tax deductible anyway. Nobody decent will rent a place that needs updating and renovations or at least not for much. Maybe a place across from a good school in the Glebe could still be rented but probably half of it's post reno price.
Deal Fanatic
User avatar
Dec 27, 2009
6399 posts
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Ottawa, ON
You are wise to never trust what your realtor tells you. "My realtor said he'd estimate $3000/month rent but looking at comparables that seems high considering the house hasn't been updated since the early 1980s".
Deal Addict
Jul 4, 2004
4468 posts
680 upvotes
Ottawa
I wouldn't be surprised if you could get $3k / month for a single family home in Rothwell (a $200k townhouse in Beacon Hill will rent for close to $2k/month so it's logical that a $600k- $900k (or more) single family home will get you quite a bit more) but obviously it depends on the house and the condition. Looking at the other rentals available on MLS in the area, the range is $3350-$3850 / month.

As far as doing reno's before renting, I personally wouldn't do it as I'd be concerned it would be damaged by tenants although you could argue that tenants paying that price should be better about it. As far as doing the reno's before to be able to write them off, I'd talk to an accountant as CRA might have issues writing off significant renos for one year rental. Also, it would trigger a capital gain on the change of usage (from rental to primary residence) when you move in.

The other problem with renting is that, from my understanding of the Ontario LTA, there is no way of getting out of having to pay the tenant when you want to move-in if they decide they want to stay so the OP could be on the hook for 1 month rent.
Newbie
Nov 14, 2014
30 posts
7 upvotes
SK
michelb wrote:
Aug 16th, 2018 3:27 pm
I wouldn't be surprised if you could get $3k / month for a single family home in Rothwell (a $200k townhouse in Beacon Hill will rent for close to $2k/month so it's logical that a $600k- $900k (or more) single family home will get you quite a bit more) but obviously it depends on the house and the condition. Looking at the other rentals available on MLS in the area, the range is $3350-$3850 / month.

As far as doing reno's before renting, I personally wouldn't do it as I'd be concerned it would be damaged by tenants although you could argue that tenants paying that price should be better about it. As far as doing the reno's before to be able to write them off, I'd talk to an accountant as CRA might have issues writing off significant renos for one year rental. Also, it would trigger a capital gain on the change of usage (from rental to primary residence) when you move in.

The other problem with renting is that, from my understanding of the Ontario LTA, there is no way of getting out of having to pay the tenant when you want to move-in if they decide they want to stay so the OP could be on the hook for 1 month rent.
We'd only rent it out pre-reno's for the reasons you mentioned.

I'm aware of the 1 month rent penalty. Add that to the one month fee for a property management company to find the tenant and there's 2 months' rent lost in fees. But should still be advantageous compared to leaving it completely vacant. Assuming we can find someone that wants to rent this outdated home!

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