Real Estate

Ottawa Real Estate market discussion

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  • Nov 23rd, 2020 6:55 pm
Deal Addict
Sep 2, 2009
1085 posts
765 upvotes
Ottawa
canabiz wrote: We checked this one out last week and thanks God we did not put in an offer as it went for 80% of asking price! Virtually unheard of in today sellers' market!

It is in a really solid location, close to everything and is on a quiet street. The house was extensively renovated and the owner probably took a bath on this one as my agent told me the owner got it for $450K or thereabout.

Can anyone guess the reason it went way under asking?

https://www.redfin.ca/on/ottawa/1910-So ... /148862062
Right off the bat: corner lot and the highway should eliminate a lot of potential buyers. But I haven't looked at the price nor pictures :)
Deal Guru
User avatar
Jun 28, 2003
10119 posts
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Ottawa
cloak wrote: Right off the bat: corner lot and the highway should eliminate a lot of potential buyers. But I haven't looked at the price nor pictures :)
Yup, we were there and the noise from the highway was just unbearable even when we were in the backyard. Once you are inside the house, you don't hear anything because the windows and insulation are new. It could be a good rental although I don't know how long the tenants will stick around because the noise can affect the quality of life.
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Jr. Member
Oct 21, 2007
113 posts
35 upvotes
jk9088 wrote: I didn't go there but knew many people who did and that was my impression as well--many people who went there actually lived in the suburbs. For the longest time Lisgar was seen as the undisputed #1 high school in Ottawa and Asian parents especially did everything they could to send their kids there (I even knew of parents who bought a downtown condo and left it vacant just so they could send their child to Lisgar; although to be fair they did eventually move in themselves after kids grew up and they retired so perhaps it could be seen as half-investment). In recent years though, with schools in the suburbs catching up in the rankings and also viewed as top schools, I'm curious if this trend will continue into the future. After all, there is no point to send your child off to Lisgar downtown if Earl of March close to home is just as good. I'm wondering what the ranking would look like if Lisgar only pulled students from its own catchment area.
I went to Lisgar and thought it was highly over-rated...especially the gifted program. I remember when I was in grade 8, my classmates (and their parents) were falling over themselves to get into the gifted program just so that they could go to Lisgar. The gifted program itself I found to just equate to more academic pressure and inflate egos - especially boys. "I'm smart, therefore I don't have to study" was a common attitude that some of my classmates took years to get over. Many of my "gifted" classmates crashed and burned late in highschool or university... in some cases, they even fell well behind where they should have been. Ironically, some of the most "gifted" kids had the most problems in life. In general, I think the whole concept of a gifted program is more damaging than helpful for most kids (read "mindset" by Carol Dweck). That said, I also knew of a few kids in the regular program who flunked out or got into substance abuse issues as well - though they didn't seem to get set back in life as far as the ones in the gifted program, and I know more people from the regular program who seemed to have success in business. The classmates I've stayed in touch with all felt it took their universities years (and then some) to get over their time at Lisgar, though perhaps that's just common with high school.

All that said, I don't think Lisgar is a bad school - just overrated. It's not worth extra effort to attend. All schools have their issues, including the ones where parents dump $70k/year. For us, (looking for a house in Ottawa with school zones in mind), it's just a matter of avoiding some of the lower tier schools where the teachers spend more time trying to control students than teach. I wish it wasn't the case, but that is often correlated with low income areas. I wish Canada had an education system like Finland (which actually bans private schools..and homework) where there was enough investment in public education that it didn't matter where you live. Hopefully we move more in that direction in the future - everyone benefits from quality public education in the long run.
Sr. Member
May 23, 2017
787 posts
522 upvotes
William W wrote: What I'm curious about is whether the seller would have walked away with the same/similar amount of profit in real dollar terms if he/she were to buy something cheaper. ie, the rate of return in % would have been higher. In another word, would the amount of profit would have been the same if it were a smaller single garage SFH.
I don't have any solid members to compare but I do suspect that, as freeman93 mentioned, a better % return could've been made with a cheaper precon. But probably not a huge difference...
freeman93 wrote: That's a good observation, that is very possible. I must say walking by, no one ever had things in there though(so as you mention it was vacant). They also advertised on their listing, a never lived in the home. From my understanding of something to have been deemed a primary residence in the eyes of the CRA you would have had to live in the home for at least sometime within the year.

If it's no longer deemed a primary residence in the eyes of the CRA, they would not only lose out on the HST rebate... but they would pay tax on the profits as if it were business income... meaning fully taxable. Lowering their overall profit on the sale.
While not technically correct, it definitely happens a lot where someone claims principal residence without actually truly living in it. And if they did it right it is honestly rather difficult for CRA to prove otherwise. But you do have to make sure you don't have any other principal residence, change your address to the new house, and make it look like like you lived there (get mail/packages delivered there etc). However if that's the case, probably not the smartest thing to do to advertise in the listing "never lived in before"...on the offchance they do get audited by CRA down the road, I wonder if CRA can use the listing history to go after the owner for tax fraud. As you mentioned, they would get dinged with a big tax bill if that were the case!

It is still possible this was an honest change of mind which CRA allows, if they deem it reasonable that the intention at time of purchase was to live in this house (e.g. due to a work relocation) but they better be prepared to prove this to CRA if that's the case. And no need to leave it vacant for several months if that were the case either (though perhaps the owner did that just to be on the safe side, who knows).
Sr. Member
May 23, 2017
787 posts
522 upvotes
Jay31 wrote: I went to Lisgar and thought it was highly over-rated...especially the gifted program. I remember when I was in grade 8, my classmates (and their parents) were falling over themselves to get into the gifted program just so that they could go to Lisgar. The gifted program itself I found to just equate to more academic pressure and inflate egos - especially boys. "I'm smart, therefore I don't have to study" was a common attitude that some of my classmates took years to get over. Many of my "gifted" classmates crashed and burned late in highschool or university... in some cases, they even fell well behind where they should have been. Ironically, some of the most "gifted" kids had the most problems in life. In general, I think the whole concept of a gifted program is more damaging than helpful for most kids (read "mindset" by Carol Dweck). That said, I also knew of a few kids in the regular program who flunked out or got into substance abuse issues as well - though they didn't seem to get set back in life as far as the ones in the gifted program, and I know more people from the regular program who seemed to have success in business. The classmates I've stayed in touch with all felt it took their universities years (and then some) to get over their time at Lisgar, though perhaps that's just common with high school.

All that said, I don't think Lisgar is a bad school - just overrated. It's not worth extra effort to attend. All schools have their issues, including the ones where parents dump $70k/year. For us, (looking for a house in Ottawa with school zones in mind), it's just a matter of avoiding some of the lower tier schools where the teachers spend more time trying to control students than teach. I wish it wasn't the case, but that is often correlated with low income areas. I wish Canada had an education system like Finland (which actually bans private schools..and homework) where there was enough investment in public education that it didn't matter where you live. Hopefully we move more in that direction in the future - everyone benefits from quality public education in the long run.
Very interesting, thanks for your insight. I know this is getting very off-topic (sorry!) but the people I know who went to the gifted program all did go on to become very successful in life...but, in my experience, not necessarily any more so than many people I knew in the regular program (so my conclusion is success is really down to the individual, not the school program). So it's interesting that you mention you think the gifted program was actually detrimental to many people you knew.

I tested gifted as a child but did not attend the program in elementary school (I don't think it was as widespread back then). My parents did send me to a gifted program for 2 years in middle school but debated for awhile between that and French immersion...honestly in retrospect I think it would've been way more useful to go to French immersion (especially living in Ottawa) but oh well. I really didn't enjoy my experience--academically I didn't really find too much of a difference in the quality of education (though obviously I didn't have a direct comparison to a regular middle school program) but socially I found the students there to be rather snobby/elitist, "clique-y" , and overly competitive (as you mentioned, there was definitely a sense of being "better" than others). Being a shy, introverted, and not really competitive kid, I disliked that environment and had a hard time making really good friends, just didn't "gel" very well.

For high school I went back to the regular program (mostly because I was a lazy kid and didn't want to spend an hour on the bus to get to the gifted school, whereas the regular one was minutes from my house; and my parents weren't that particular about it so let me do whatever). I found students there way more laid-back/chill and accepting, and generally just enjoyed the social aspects of school way more there. Again, I know very successful people from both programs...however, my mom later regretted not making me go to a gifted program in HS--she thinks the more competitive environment would've made me a less lazy student and feels I could have done better in life if I were more hardworking. Given what you said though, I'm thinking my laziness is just inherent in my personality and wouldn't have been affected by schooling. :P I'm mostly happy with where I ended up in life anyways. ;)

You have got me thinking though...I always figured if my child tests gifted down the road (big "if" of course and still too early for that now) I would send them to the gifted program. Just wondering, having had the experience you did, would you choose to send your child(ren) to a gifted program or just a regular program at a decently-rated school? As a parent I'm very curious. I will definitely go check out that book you mentioned as well, thanks for the recommendation!
Jr. Member
Aug 15, 2007
148 posts
57 upvotes
I didn't go see this property because of the highway. I noticed that in a strong sellers market, any house will sell like hotcakes, buyers overlook issues more easily like being close to a highway, backs onto hydro lines, corner lot, on a busy street, small backyard etc. These type of home sell for as much as, or almost as much as a home without these fixed "issues". But as soon as that strong sellers market weakens, the price gap increases. I personally want to avoid homes with these "issues" from an investment perspective even if I don't mind it myself.
canabiz wrote: We checked this one out last week and thanks God we did not put in an offer as it went for 80% of asking price! Virtually unheard of in today sellers' market!

It is in a really solid location, close to everything and is on a quiet street. The house was extensively renovated and the owner probably took a bath on this one as my agent told me the owner got it for $450K or thereabout.

Can anyone guess the reason it went way under asking?

https://www.redfin.ca/on/ottawa/1910-So ... /148862062
Deal Guru
User avatar
Jun 28, 2003
10119 posts
3224 upvotes
Ottawa
golfyfan wrote: I didn't go see this property because of the highway. I noticed that in a strong sellers market, any house will sell like hotcakes, buyers overlook issues more easily like being close to a highway, backs onto hydro lines, corner lot, on a busy street, small backyard etc. These type of home sell for as much as, or almost as much as a home without these fixed "issues". But as soon as that strong sellers market weakens, the price gap increases. I personally want to avoid homes with these "issues" from an investment perspective even if I don't mind it myself.
Yes, this one was on the market for over a week and did not receive any offer, which again was unheard of in today's market, but not entirely surprising, considering the particular location.

I am guessing the $460K offer was as good as it could get so the listing agent advised the owner to take a loss and move on. You can't hit home runs every time when it comes to real estate so once again it boils down to location, location, location.

On a related note, I am seeing more properties now where the owner also happen to be real estate agents and in most cases, they are representing the properties themselves. Nothing wrong with that but my guess is they want to cash out and make some hay when the sun shines.
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Member
Jan 29, 2020
293 posts
318 upvotes
jk9088 wrote: I asked you for proof to back up your claim that banks would demand a $50k cheque from homeowners upon renewal. You provide a study on a different topic altogether.
Shrug. The literature I've read says high LTV = high default risk. Bank does not have to renew you at the end of the term unless the math is favourable. And they won't, their obligation is to the shareholders, not you.
"Bigger risk = bigger reward" is a basic rule of investing (RE or stocks), not my personal opinion.
Hahahahahaha. Risk is quantified as price standard deviation, it goes in both directions. Otherwise everyone would invest in penny stocks.
Deal Addict
Sep 2, 2009
1085 posts
765 upvotes
Ottawa
golfyfan wrote: I didn't go see this property because of the highway. I noticed that in a strong sellers market, any house will sell like hotcakes, buyers overlook issues more easily like being close to a highway, backs onto hydro lines, corner lot, on a busy street, small backyard etc. These type of home sell for as much as, or almost as much as a home without these fixed "issues". But as soon as that strong sellers market weakens, the price gap increases. I personally want to avoid homes with these "issues" from an investment perspective even if I don't mind it myself.
At the "lowest" point in April (based on observation not data) there were basically only corner lots left where I was looking since anything else was getting snapped up quickly. I even joked / bet with my spouse where a listing was located on a street before looking at the map.

Mind you, these houses did sell but definitely nowhere as quick as the non-corner lots.
Deal Guru
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Jun 28, 2003
10119 posts
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Ottawa
Hey guys, when you pick up an investment property that already has tenants and existing lease in place, do you need to get the tenants to sign a new lease before closing with your name on it as the landlords?

Or do you simply go with the existing lease (with the current owner as the landlord) but has a condition in the offer that all rent payments will be redirected to you, post-closing?

Is there one approach better than the other? What about the tenants? They probably don't care who the owners/landlords are, as long as they have enough $ in the bank account to clear cheques and/or e-transfer.
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Deal Addict
Nov 13, 2013
2340 posts
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Ottawa
canabiz wrote: Hey guys, when you pick up an investment property that already has tenants and existing lease in place, do you need to get the tenants to sign a new lease before closing with your name on it as the landlords?

Or do you simply go with the existing lease (with the current owner as the landlord) but has a condition in the offer that all rent payments will be redirected to you, post-closing?

Is there one approach better than the other? What about the tenants? They probably don't care who the owners/landlords are, as long as they have enough $ in the bank account to clear cheques and/or e-transfer.
They don’t have to sign a new lease with you. I really prefer to screen them myself.
Last edited by fogetmylogin on Jul 5th, 2020 12:16 pm, edited 1 time in total.
Member
Feb 7, 2018
246 posts
313 upvotes
canabiz wrote: Hey guys, when you pick up an investment property that already has tenants and existing lease in place, do you need to get the tenants to sign a new lease before closing with your name on it as the landlords?

Or do you simply go with the existing lease (with the current owner as the landlord) but has a condition in the offer that all rent payments will be redirected to you, post-closing?

Is there one approach better than the other? What about the tenants? They probably don't care who the owners/landlords are, as long as they have enough $ in the bank account to clear cheques and/or e-transfer.
I went with 3rd option - I asked for vacant possession and the owner paid for tenant to leave. This extended the closing by 3 months but more than worth it because previous tenants were paying way under market rent. This was pre-Covid so may not be possible in the next year or so.

Only benefit with keeping existing tenants is that banks prefer you having guaranteed income on closing.
Deal Addict
Nov 13, 2013
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Ottawa
wiab89 wrote: I went with 3rd option - I asked for vacant possession and the owner paid for tenant to leave. This extended the closing by 3 months but more than worth it because previous tenants were paying way under market rent. This was pre-Covid so may not be possible in the next year or so.

Only benefit with keeping existing tenants is that banks prefer you having guaranteed income on closing.
You mean you essentially paid them to leave. Obviously your seller would have taken a lower offer if they didn't need to do this. This market they will just go to the next buyer unless it's a tenant only kind of property near U of O or something.

I would also want to know where they work to avoid a string of months with no rent.
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Jun 28, 2003
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fogetmylogin wrote: They don’t have to sign a new lease with you. I really prefer to screen them myself.
Yes I also prefer to screen my own tenants. That said, if you are buying an investment property that already has tenants and a lease in place, you are legally required to honour that lease.

Unless you are planning to ask the tenants to move out so you can move in yourself or have other family members doing so and we covered this scenario a few pages back.
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