Real Estate

Ottawa and Surrounding Area Real Estate market discussion

  • Last Updated:
  • Jan 17th, 2021 12:00 pm
Newbie
Apr 27, 2020
19 posts
2 upvotes
Hello, recently stumbled on this group while trying to research on flipping houses and have been tagging along while visiting this forum daily. Flipping houses is an area I have always had interest and would like to explore but currently have zero experience. Please Anu suggestions on how steps to take or who to approach? I don't mind volunteering some of my free hours to anyone in the business of flipping. Any Ideas please?
Deal Fanatic
Jul 4, 2004
5846 posts
1902 upvotes
Ottawa
I really thought COVID was going to slow down the market but things are still going very strong for sales (rentals are very different and the rental market looks to have dropped significantly). It will be interesting to see the stats but stuff I'm following is still selling very quickly and the prices are still very strong (I think there might have been an initial dip but I think it's gone back up again).
Sr. Member
Aug 14, 2007
524 posts
281 upvotes
Ottawa
michelb wrote: I really thought COVID was going to slow down the market but things are still going very strong for sales (rentals are very different and the rental market looks to have dropped significantly). It will be interesting to see the stats but stuff I'm following is still selling very quickly and the prices are still very strong (I think there might have been an initial dip but I think it's gone back up again).
I also surprise to see that the resale market is still pretty strong, of course it is not as crazy as Feb, but properties are still selling at Dec 2019 / Jan 2020 level.

For the rental market, I have a rental townhome listed in Orleans for June opening, I have got 10 application in three days. The good thing is I only let the qualified tenant to visit the house in this period, it is less work for me. I will have another rental townhome in Kanata for lease in July, seems like it will be a bit challenging to rent.
Deal Guru
User avatar
Jun 28, 2003
10206 posts
3290 upvotes
Ottawa
Friend of a colleague just got approved for 1.78% for 5 year variable with RBC. Money is cheap to borrow now and the mortgage stress test has been relaxed so I am not surprised to see a stable housing market.

Interesting to see April numbers from OREB which should come out any day now. I expect sales numbers to hold steady but inventory to be way down and the number of properties that got back on the market continue to rise, certainly more than before the pandemic.
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Deal Addict
Nov 13, 2013
2364 posts
1152 upvotes
Ottawa
audiorichard wrote: I also surprise to see that the resale market is still pretty strong, of course it is not as crazy as Feb, but properties are still selling at Dec 2019 / Jan 2020 level.

For the rental market, I have a rental townhome listed in Orleans for June opening, I have got 10 application in three days. The good thing is I only let the qualified tenant to visit the house in this period, it is less work for me. I will have another rental townhome in Kanata for lease in July, seems like it will be a bit challenging to rent.
Rental market better in Orleans than Kanata? I guess this is all the investors who bought in the West End over last year or two.

Downtown condo rental inventory way up and not much seems to be moving. I think relocations inbound have not started yet though.

I've been looking for a higher end condo in the market or Westboro for about 6 months now. I don't see many sales but I see even less new inventory so prices have not fallen much if at all. The coming fall in lower end condo market makes me too nervous so have basically stopped looking. But inventory also not increasing. People think market is temporarily down and are waiting to sell. We will see if they are right.
I'm in no rush as looking for investment to become retirement place. Honestly I'm probably in the Ottawa market enough with two other properties so will be looking to invest elsewhere for now.
Deal Guru
Feb 9, 2009
10055 posts
7985 upvotes
canabiz wrote: Friend of a colleague just got approved for 1.78% for 5 year variable with RBC. Money is cheap to borrow now and the mortgage stress test has been relaxed so I am not surprised to see a stable housing market.

Interesting to see April numbers from OREB which should come out any day now. I expect sales numbers to hold steady but inventory to be way down and the number of properties that got back on the market continue to rise, certainly more than before the pandemic.
my rate is 1.61% with TD. Wish I had this 10 years ago when i first got my mtg since its going to be paid off this year lol.

Money is very cheap now to borrow.
Deal Addict
Sep 2, 2009
1255 posts
904 upvotes
Ottawa
welcomelm wrote: I am gonna kill myself if someone bought it as an investment.
No sense doing that over someone else's mistake ;)
Deal Addict
Sep 2, 2009
1255 posts
904 upvotes
Ottawa
michelb wrote: I really thought COVID was going to slow down the market but things are still going very strong for sales (rentals are very different and the rental market looks to have dropped significantly). It will be interesting to see the stats but stuff I'm following is still selling very quickly and the prices are still very strong (I think there might have been an initial dip but I think it's gone back up again).
We had been looking for another place when this started - the 'slowdown' seems to have lasted about four weeks. Silly low ball bully offers accepted from scared sellers (lower prices) and a number of conditionals falling through (extra number of days on market) but selling again a week or two later.

The properties at the right price in the right locations didn't slow at all to sell (firm offers and/or 10to20+ percent above asking). The 'marginal' properties (okay price, okay/so-so location) are not or having conditions out then back on the market - those that were sitting longer anyways.
Member
May 6, 2012
358 posts
212 upvotes
KANATA
Why are you guys getting so low interests? Is it for residential rental? I am still getting p-0.15 from bmo :(
Deal Guru
User avatar
Jun 28, 2003
10206 posts
3290 upvotes
Ottawa
welcomelm wrote: Why are you guys getting so low interests? Is it for residential rental? I am still getting p-0.15 from bmo :(
The example that I used above is for residential. I am getting prime - 0.10 from National Bank for rental properties.

I was told (by different mortgage agents and brokers) that rental properties typically carry higher risk than primary residence so the interest rate tend to be higher. That said, I will reach out to my National Bank person and see if he could do better.
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Member
Nov 10, 2014
389 posts
534 upvotes
Ottawa, ON
welcomelm wrote: Why are you guys getting so low interests? Is it for residential rental? I am still getting p-0.15 from bmo :(
Cause we got them couple of years ago when prime was rising and was expected to rise further. Many banks were offering up to prime-1% in 2018. Borrowing money at 1.45% feels absurd.

Rentals are now more profitable than last year for landlords who are still collecting from their tenants, and have variable mortgages. Prime rate was 3.95% for all of 2019, and have dropped 1.5% within the last couple of months. For a 300k mortgage, that is 4500/year of savings or 375/month.

I was leaning towards selling a townhouse earlier this year before the Covid 19 as I felt that the rents in the area did not support the prices. Although homes are still selling quickly in the area (Kanata Lakes), the comps have dropped ~50k since early March. To be fair, I think price went up at least 50k from December to March, so it is just back to December/January prices. Good news is that holding costs have dropped significantly too with the rate cuts so I am now leaning more towards holding it and renting it out.
Member
Nov 10, 2014
389 posts
534 upvotes
Ottawa, ON
MSparrow wrote: Hello, recently stumbled on this group while trying to research on flipping houses and have been tagging along while visiting this forum daily. Flipping houses is an area I have always had interest and would like to explore but currently have zero experience. Please Anu suggestions on how steps to take or who to approach? I don't mind volunteering some of my free hours to anyone in the business of flipping. Any Ideas please?
I frequent this thread a lot and don't recall anyone here flipping houses.
I looked into flips myself, but quickly decided I couldn't get the risk and labour adjusted returns due to all the transaction costs involved.

On the buy side, you have to cover land transfer tax (~1% of property value) + lawyer closing costs (~2k) + utility setups
On the sell side, you have to cover realtor costs (flat fee+ 2.5% for buy side agent if you are going to the work yourself, more if you are going to hire a sell side agent) + lawyer costs (1k).

Then there is the holding costs (interest payments, utility payments, etc.), and then construction costs. You will also pay in time and sanity doing some work yourself and managing contractors.
Financing flips also tend to be expensive as lenders don't want to lend out 6 figures for two to three months. You are often looking at private financing which is double or triple the rate of A lender rates.
Final bill is the taxman. Profits from flips are not tax free (as they would be for principal residence), not capital gains (as they would be for rentals), but labour income which is taxed at your marginal tax rate.

To cover costs and make a profit, you need to buy as cheap as possible, renovate as cheap and quickly as possible, and sell quickly as possible while keeping commissions low. I am confidant in saying 99% of newbies trying to do this will take a bath. Many flippers were bailed out in recent years due to market appreciation (even with the current dip, townhouses went up ~30% in 2-3 years). You probably don't have that advantage now with recession, and risk of general market downturn is very real.

The people who can consistently making money on flips are those with significant construction experience who can do the work themselves, and have buddies who can do work at friends and family prices. It is very much like buying a job with the accompanying risks. You also have to negotiate best prices with realtors, lawyers, mortgage brokers, etc. to keep costs low as much as possible.
Deal Guru
User avatar
Jun 28, 2003
10206 posts
3290 upvotes
Ottawa
For the landlords screening tenants on your own, I would be curious to hear your experience moving forward.

Are you seeing less quality tenants now compared to before the pandemic?
Are you seeing less overall interest now compared to before the pandemic, as michelb alluded to in previous posts?
Are you seeing a dip in tenants' credit scores due to the pandemic and if so are you willing to take that into consideration?
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Deal Guru
User avatar
Jun 28, 2003
10206 posts
3290 upvotes
Ottawa
canabiz wrote: The owner for this property was previously asking $2,100 utilities included for the 3 bedroom upstairs and $1,950 utilities included for the 2 bedroom in the basement on various Ottawa FB Buy/Rent/ groups. I know the location is fantastic but with the uncertainty facing the students now, I thought what she wanted to get is on the higher side.

She has since dropped the asking to $3K + utilities, which is a significant drop from what she was asking earlier. I wonder if she wasn't getting the amount of interest she was looking for and need to find tenants asap, hence the immediate steep drop.

https://www.redfin.ca/on/ottawa/2306-Ry ... /148906339
The owner has now dropped rental price to $2,800 and had an *open-house* for potential renters earlier today. I don't usually come across such strategy for (personal) landlords but I guess desperate times call for desperate measures.

As a fellow landlord, I hope she will find (quality) tenants shortly. The worst thing that could happen is for her to let her guard down and bring in questionable tenants just so they can help pay the bill. That may cost her more in the long runs...
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Newbie
Apr 27, 2020
19 posts
2 upvotes
Thank you Tadalafil for this great insight. I guess with the look of things, I will continue my search for a rental property for now till I have good capital for flipping.
Deal Guru
User avatar
Jun 28, 2003
10206 posts
3290 upvotes
Ottawa
Does anyone else have more insight into this home?

https://www.redfin.ca/on/ottawa/1083-Al ... /171299101

It was listed for $525K and sold for $465K so that was 88% of asking price. That's a pretty wild swing and I don't imagine it received multiple bids.

Home was represented by an agent so it wasn't FSBO who didn't know anything about market eval or negotiations or anything of that nature. Very solid area and the upstairs look livable. Not too many pictures of the downstairs and the description did state home needs some TLC.
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Jr. Member
Aug 15, 2007
148 posts
57 upvotes
No insight for that home but also 1106 merivale was listed for $250k and sold $290k. The photos didn't look too bad either.
Deal Addict
Sep 2, 2009
1255 posts
904 upvotes
Ottawa
canabiz wrote: Does anyone else have more insight into this home?

https://www.redfin.ca/on/ottawa/1083-Al ... /171299101

It was listed for $525K and sold for $465K so that was 88% of asking price. That's a pretty wild swing and I don't imagine it received multiple bids.

Home was represented by an agent so it wasn't FSBO who didn't know anything about market eval or negotiations or anything of that nature. Very solid area and the upstairs look livable. Not too many pictures of the downstairs and the description did state home needs some TLC.
High-level: a semi with very poor/narrow looking yard and on a corner lot.

Extra: needs TLC (just look at the detached garage), transformer at the corner (not the cool kind), located at a stop sign (lots of braking and accelerating noise - including the buses that go by), all appliances "as-is" (abused by renters? didn't have money to properly maintain the property?), plus a non-legal unit (?). While a semi nearby and fully tenanted was 546,500 (no work to get it started, just buy and try to collect rent).
Last edited by cloak on May 4th, 2020 9:35 am, edited 2 times in total.
Deal Fanatic
Jul 4, 2004
5846 posts
1902 upvotes
Ottawa
canabiz wrote: Does anyone else have more insight into this home?

https://www.redfin.ca/on/ottawa/1083-Al ... /171299101

It was listed for $525K and sold for $465K so that was 88% of asking price. That's a pretty wild swing and I don't imagine it received multiple bids.

Home was represented by an agent so it wasn't FSBO who didn't know anything about market eval or negotiations or anything of that nature. Very solid area and the upstairs look livable. Not too many pictures of the downstairs and the description did state home needs some TLC.
It's hard to know why it sold at that price. It still sold for above appraised value (which means very little since that's not particular reliable) but it was also listed as "Needs TLC" and based on the pictures and description, it might have had a "non-conforming" rental unit in the basement. They also had some COVID related visiting rules and that might have pushed away some prospective buyers.
Deal Fanatic
Jul 4, 2004
5846 posts
1902 upvotes
Ottawa
golfyfan wrote: No insight for that home but also 1106 merivale was listed for $250k and sold $290k. The photos didn't look too bad either.
Seems quite cheap for an investment but also listed as "needs TLC" and I don't think it's a great location (but I've never lived in the area so just going from hearsay). Still seems like it was a good value.

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