Renting Vs Buying Real Estate - Calculate and Evaluate!

So the New Year is upon you and you're probably thinking about making changes in your life. One of those, whether single, with a family or not, is thinking about whether you should keep renting or perhaps time to buy a house. Great goal for sure!
So by now you're scouring the internet, checking out Realtor.ca aka MLS.ca and other sites to see what the going prices are, what pretty houses you like, etc. But really, can you AFFORD it and is home ownership right for you at this time in your life? This is a Part 1 Series and Part 2 will follow immediately tomorrow.

Before you make hasty financial decisions, you're a smart person so analyze before just jumping in. You've probably come across a rent vs buy calculator or two which is also a great start. However, the problem with most rent versus buy calculators is that they fail to account for the additional costs that come from moving from an apartment or townhouse with little to no yard or driveway, into a 2,500 square foot home complete with a yard and a driveway.

When you move into a home that is double the size of your rental home, there are costs  you need to be aware of that Mortgage Brokers, Real Estate Lawyers and Realtors may or may not be bringing to your attention. Facts to consider are:

• You will now have to pay the utility bills on heating and cooling twice the square-footage.
• You have twice the space to furnish and decorate (and you WILL buy more furniture to fill up that space)
• You will now have a yard and driveway to maintain (if moving up from an apartment - more grass to cut, trees to plant, gardens and flowers in wanting to "showcase your home to be proud of).
• You will now be paying property taxes on the value of the entire property.
• You will now have to get homeowner insurance to protect you from loss (requirement of having a mortgage)
• You will now have to repair, maintain, and replace ALL fixtures, appliances, heating-cooling equipment, plumbing, landscaping (lawnmower/shovel/snowblower/rakes and such equipment), floor coverings, windows, shingles/roof/eavestroughs, brick, siding, driveway, etc as they break down or experience wear and tear, dated or, or become obsolete. And if you fail to properly maintain your property, don't plan on the value appreciating as much as the real estate agent is boasting it will.

Don't have your head in the sand....really. Just don't bury your head and always ask are the expects having your best intentions at heart of ulterior motives in wanting to sell you a house. If you don't have the down payment, don't take a second mortgage out just because you want to own a home. It may sound good at the time but then you're also paying more interest and your monthly out of pocket expenses are higher.  Unfortunately,  home buyers failed to recognize that those experts do stand to gain so make sure you research and have the right team that will disclose to you the costs of home ownership and also disclose the right neighbourhoods that suit your needs. Ask questions and always trust your gut instinct (but that will be another blog one day)

The choice is yours, you can choose to ignore the costs of home ownership when contemplating a home purchase, or you can take painstaking steps to accurately forecast and budget for them now, while you can, in the save haven of your rental that you've already budgeted for. 

So, with that in mind, take a look at this Rent Vs Buy Mortgage Calculation on the image below. Calculations and values were entered to calculate and compare the cost of renting to the true cost of buying a home. It's not honestly all bad and yes, absolutely beneficial but IS IT RIGHT FOR YOU?

Let's say you pay $1100 per month and you stay in that home for 5 years.  You've spent $66,000

Now, let's pretend you were paying $1500 and that was a mortgage. If you put $500 away each month in the same amount of five years, that's $30,000 you could have saved. That's right. That's more than the minimum 5% required** (see note) for a down payment if you were to purchase a home for $250,000.  You can use that money to allocate for closing costs and/or use more towards a down payment to reduce your monthly mortgage amount or put that into a savings account for "a rainy day" and any unexpected maintenance costs.

**(downpayment definition:  A mortgage down payment is a specific sum of money deposited towards the purchase of a new home. It is not required in all cases, however, in the case that it is, there is a minimum amount required. This amount is relative to the value of the home you are looking to purchase. 

Note: the bigger your down payment is, the more affordable your mortgage loan will be. This is because a larger down payment results in smaller overall interest payments (a smaller loan). Down Payment Requirements For a Mortgage in Canada - Minimum Down Payment

For home buyers that are paid hourly or earn a regular salary, a minimum of 5% is required as the down payment for a home. For self employed home buyers a minimum of 10% is required to purchase a home. More could be required if your credit is poor (learn more about your credit score). Anyone choosing to put less than 20% of the value of the property as a down payment will be required to obtain CMHC (Canada Mortgage and Housing Corporation) mortgage default insurance. This protects the lender from losses in the event that you were to default on your mortgage.

Ok, don't want to overwhelm you. Not here to talk you into or out of buying. Again, just want you to make a well-informed decision because don't want you to be taken advantage of. The world is not all about Barbie's, sunshine and rainbows. Part 2 tomorrow


Happy New Year and happy new you!


sources: 
Mortgages Canada
Canada Revenue Agency


(The comments contained on this site are for information purposes only and do not constitute legal advice or intended to solicit anyone with any written agency agreement.)

Financial Planning Series - Time to Take Action! It's Not As Boring or Intimidating As You Think!

All credit to Kerry K. Taylor, Author of the book "397 Ways to Save Money" and the Creator of SquawkFox.com Excellent suggestions and ideas on how YOU can get started today. This information is never dated and can be implemented now. It's never too late to move forward. So here's her take and hopefully you'll get some valuable insight.

*************

Despite it’s reputation for being boring, time consuming, and out-right tedious, creating a budget can actually be a liberating experience. Now, I’m not squawking about the kind of liberation where you’re running around naked with millions of dollars flying around you. Yeah, that’s my dream too. Sigh.

But seriously, keeping on track with a budget can show you where your money goes and help you plan for life’s expenses — whether you’re saving for a home, buying a car, going on vacation,saving for school, getting out of debt,starting an emergency fund, or just finding ways to save money. Whew!

A simple budget can also help you reach your financial goals sooner with less stress and worry.

About the How to Make a Budget Series

I want to make budget planning fun by squawkifying the process in a useful way. I would love for you to experience the many financial benefits from keeping track of your money. It is your money, after all. I want the “budget word” to cease being a 6 letter monstrosity by demystifying the process and making it simple to follow.

What is a budget? Simply, a budget is a financial plan for tracking the flow of money into and out of your life. The idea is to find the sneaky money outflows, plug the lucrative leaks, and save more of the inflowing cash for the stuff the really matters in your life. A budget will also expose the spending habits you’re not aware of and help you to better plan where to spend your money.

The How to Make a Budget series can help you to:

• Learn how to set up a budget
• Find your net worth
• Set financial goals, define your needs, know your wants
• Start expense tracking and track household expenses
• Get tips on budgeting for any income
• Make a household budget
• Download free budget worksheets and budgeting spreadsheets
• Benefit from budget planning tools
• Discover financial budgeting software
• …and have fun with it! 

I’ve been thinking a lot about budget spreadsheets. I don’t stay awake at night dreaming of Excel cells and mathematical equations — because that’s weird — but back in my days of student debt I did lose sleep over accounting for my missing money. What a nightmare!

I turned things around when I started a simple budget to track my spending, income, and expenses. Knowing how much I earned and spent on a monthly and yearly basis helped me catch those needed Zzzzs and find my financial way. If you’re losing sleep over missing moolah or can’t account for your expenses, then getting on track with a budget may be the secret to a six-figure slumber. Ka-ching!

How to use the Budget Spreadsheet


What is a budget? A budget is a financial plan for tracking the flow of money into and out of your life. A simple budget can expose where you’re leaking money (the outflows), plug those drips, and find ways to save more of the inflowing cash for the stuff that matters. A budget can also highlight the spending habits you’re not aware of and help you better plan for future spending. The hard part is getting started. After a bit of practice though budgeting becomes easy.

The Budget Spreadsheet is pretty darn easy to use. I’ve kept things super simple by listing the biggest budgeting categories and showing you how it all adds up. Here’s what you can do:

• Budget by month: List your monthly expenses, track your income, tally your monthly averages, and see how it all adds up. Helpful for those with variable incomes too.
• Yearly budgeting: Get an annual snapshot of your success by entering all the monthly budget details. Yearly totals are listed below.
• Make a personal budget: Single and loving it? No worries. This budget spreadsheet works for individuals too.
• Household budget: Families can budget too. Just tally your spousal income and set your total household budget.
• Budget worksheet: If you’re not fond of spreadsheets, then go ahead and print it out as a monthly budget worksheet. Stick in a binder and keep track of your moolah by writing it all down.
• Budget calculator: Adding everything up can be a pain in the purse. Use the budget spreadsheet as a calculator to show you when you’re in the red. Just scroll to the bottom and see if your Total Difference is positive (black) or negative (red).
• Customize like crazy: Go ahead and customize this Excel budget spreadsheet by adding your own categories.

Download: Free Budget Spreadsheet

Step 1: Download!

Click to download your copy of the Budget Spreadsheet.

Step 2: Track your spending

Tracking every cent you earn and spend sounds like work, but it’s easy to do if you carry a notebook with you or save all your receipts. The idea is to track your cash, credit card, and debit card purchases to identify the costly culprits.

• Get a notebook. Place a small notebook and pen in your purse. OR carry an iPhone, iPad, or iWhatever with you.
• Write it down: Every time you spend money — write it down. Make a note of each and every purchase (grocery, coffee, shoes) and add the date. Ask for a receipt.
• Add it up: Tally your expenses during the month and add them to the Budget Spreadsheet under the right category. See where your money is really going. Results may shock you.

Step 3: Get budgeting!

Grab your receipts, sort your bills, and check your bank accounts. It’s time to fill in the blanks and account for your cash in the budget worksheet. Here are the columns to consider:

• Income: Enter your monthly salary, all bonuses, and investments to get a grip on your total income. Did you make enough? Do you need to earn more? Be sure to include your spouse’s income too.
• Home Expenses: Doesn’t matter if you rent or own. Enter your housing costs, insurance, maintenance, and property taxes.
• Transportation: Enter all your automobile costs, transit passes, fuel, and maintenance. If you’ve got a bike that needs a spare tire, enter it under Other.
• Utilities: There is no mystery in this category. Go through your bills and find the REAL costs to surfing the internet, watching TV, and chatting on the phone. Enter your electricity and water bills too!
• Medical: Not my favorite category, but we’ve all got something medical, right? Add up your prescriptions, dental bills, and health insurance.
• Financial: Tally all your financial bits and pieces, including: bank fees, interest payments, debt repayment, and various savings accounts.
• Enjoyment: Yay! Time for fun stuff! Keep track of all gifts, holiday expenses, pet costs, entertainment (don’t forget your liquor), restaurants, and hobbies.
• Routine Expenses: Groceries, clothing, and all anti-wrinkle creams need to be listed here. Yeah, wrinkles happen. Grumble.
• Family: Get the kids involved by showing them how the money is spent. List childcare expenses, allowances, activities, sports, books, toys, tuition, school supplies, and field trip costs. A financially savvy kid is likely to grow into a financially wise adult.

Phew! It seems like a lot, I know. But budgeting gets easier as time goes by. So get downloading, tracking, and take the time to see where your money goes each month. You may just find some lost loot.

All credit to Kerry K. Taylor, Author of the book "397 Ways to Save Money" and the Creator of SquawkFox.com 

All credit to Kerry K. Taylor, Author of the book "397 Ways to Save Money" and the Creator of SquawkFox.com 

Prince Charming is Not a Financial Plan

When we were younger girls, it was all about romance and playing with Barbie™. Do you ever remember having your Barbie™ sit at the play table with her friends and witness them discussing how they were going to finance that dream camper vacation or afford that brand new convertible they wanted? After all, that was the land of make believe and all in good fun, right?

Now that we’re older the reality sets in and we’re dealing with challenging life lessons and responsibilities. Does this mean fun is over? The answer to that is an outstanding no! It doesn’t mean that your dreams have to be put on hold. In wanting or waiting for Prince Charming doesn’t exactly mean you should be held back nor truly, is that the way to creating wealth, financial independence or monetary gain we’re all deserving of. Making those dreams a reality is possible.

Whether or not “Prince Charming” is in your life doesn’t mean your financial goals should be put on hold. In what used to be a heavily male-dominated industry, many women are finding success in real estate and investing. There are many ways to create wealth and achieve the lifestyle you desire.

Some of the steps to get started on your financial path of happiness are aligning yourself with like-minded individuals, networking, having a mentor, reading local real estate articles and books, and educating yourself and having the right team behind you. Develop an understanding about Real estate investing and know that it’s not as intimidating as you think. The purchase of the first property is the biggest hurdle and challenge. Each opportunity and deal will be different, but essentially, the fundamentals are all the same and with each deal, you’ll gain more confidence.

 It’s important to note that it’s not about “being rich” but creating wealth and securing your future. Essentially the goal is that whether you’re single or with a partner, financially, you’ll be ok. There is absolutely nothing wrong with this forward thinking. I’m sure even Barbie™ would agree with that while she’s off to pick up Ken™ for their date!

Happy investing!

Shannon Murree is a Realtor® with RE/MAX Chay Realty Inc Brokerage, Property Manager and Real Estate Investor. Her main focus to motivate, empower and educate all women the importance of creating wealth and financial independence through real estate investing.

InvestingInBarrie.com

*Logos belong to their respective trademarks

Barrie Market Overview with Shannon Murree By Andrew C. MacDonald

Barrie Market Overview with Shannon Murree

Thanks to Andrew C. MacDonald!

In the Real Estate Investment Network’s new Top Ontario Investment Towns Report for 2011-2015, Barrie has once again come in as the #3 town (alongside Orillia). Last week, I had the opportunity to interview Shannon Murree who is an investment focused Realtor in the Barrie area. In this brief  (3min 40sec) Shannon shares her local expertise by covering the following:

• What’s going on in Barrie?
• What’s going on with the GO Train?
• What are the best investment areas?
• Which areas should investors stay away from?

If time is a constraint for you, I’ve also summarized some of the key points below the video.

Video Summary

Here are a few facts from my interview with Shannon which anyone interested in learning more about investing in Barrie will find useful.

What’s going on in Barrie?

• Park Place – one of Canada’s first “open air” mixed use centres
• New malls & retail in development
• Expanding student residences
• Royal Victoria Hospital (RVH) expansion
• Laurentian@Georgian partnership
• What’s going on with the GO Train?
• Currently resurfacing the stage of the Allendale GO station
• Recent GO Train improvements have already had a positive impact
• What are the best areas for investment in Barrie?
• Freehold properties or downtown waterfront condos are some of the preferred property types for Barrie investors
• Great income properties exist all across the city depending on what tenant profile investors wish to target
• What areas should investors stay away from?
• There are bad pockets scattered throughout Barrie so it is important to work with a geographic specialist

Are Women Too Independent?

Are Independent Women Too Strong for today's Man? Can strong women be too independent?

Should married or coupled women have their own bank accounts or does that mean they aren't committed to the marriage/relationship?

Are strong women.... married or single... TOO strong for today's man?

Should finances even play a part in relationships or does that kill the romance?

From a personal view (and know my business partner Amber feels the same), as business women we believe in having seperate bank accounts and one for house expenses. Personally for me, I much rather have it this way (though I know a lot of people ask my why).

There are many reasons and one, itt's my Independence and financial freedom. I have my own earnings and don't need to justify what personal expenses or purchases I pay. I pay for children's things (school supplies, lunches, sports, shoes, clothing, etc) and have my own business to run. I've set my own budget and if I want to buy a pair of shoes or pack of gum, I do so.

When we go for dinner, we go Dutch, or I'll treat or he'll treat. We have open communication in our relationship and trust me when I say it was a lot of growing pains and finding balance but after nine years of partnership, we've pretty much got all the kinks work out. Honestly, it causes less fights too and in my opinion, no, doesn't make me any less committed to my relationship. Money and finances are just an additional fuel and if this can be eliminated from an argument, well all the more power to you!

I am certainly in no means a relationship expert. This is what has worked for me and after speaking with other women and learning the downfalls they have had in their relationship or the same sentiments of keeping seperate accounts where partners know or they don't (guys, some hidden so don't fool yourselves thinking they're not smart cookies!), it's truly up the individual.

So, would love to hear your feedback and what you find what works and doesn't work. Creating a network and support is a wonderful thing and benefit as additional resource in today's world.

Also, from a business standpoint, don't forget that my team and I are never too busy for your referrals! If buying, selling, renting or relocating to Barrie, give me a call! Oh yeah I have to fulfill my obligations by including this disclaimer - for informational purposes to inform and provide insight. I'm not intending to solicit you and most especially if you have a written buyer agency agreement with another Realtor. Other than that....Much success in health, health and happiness!

Shannon P. Murree, Sales Representative RE/MAX Chay Realty Inc, Brokerage

"It's not just about buildings, it's building relationships"

Ready, Willing and Able...

In a few days I will be challenging myself with a physical test.  Hitting a certain age - things become surreal and for the most part, it's just a number. In others, gentle reminders of things you set out that you want to do at certain stages of your life.


I will be participating in an event called "Warrior Dash". It's never come here to Canada. It's over 3miles or rather, over 5 km of running through rough terrain at Horseshoe Valley Resort. Not even that, it's through various obstacles that are meant to challenge you throughout the grueling course.


Laurie Watt, reporter with the Barrie Advance wrote an awesome article about it found here: 

Realtor gets down and dirty to help abused women

That's right. That's my why...I'm going to get "down and dirty" and step out of my element, my little 'box' of wearing pretty dresses, shoes, makeup nicely done, nails painted and be a WARRIOR. Warrior for those women and children caught in a daily life of suffering at the hands of an abuser. 


Abuse can be at the hands of anyone. It can affect anyone. It could be a friend, co-worker, aunt, mother, sister, daughter...anyone.


So I will wear my warrior gear, have a black eye, bruised lip and carry on and persevere through the rough terrain all the while thinking about those that feel they're stuck and can't leave. Those that are being abused mentally, physically, financially. There is another life, there is another way and even with one baby step, it is possible to flee and start a new life...just have to be a warrior!

Quick Thoughts for the day to leave you with...

How to conquer evil with good-Buddha style:

One day a man walked up to Buddha and said insult after insult to him.

Buddha just turned to the man and said: "If someone offers you a gift and you decline to accept it, to whom then does it belong?"

The man said: "it belongs to the person who offered it."

Buddha smiled and said "That is correct. So if I decline to accept your abuse does it not then still belong to you?"

The man was speechless and walked away.

Awesome strategy to live by don't you think? Don't be afraid to decline that "gift".

Love, be loved, live your life on your terms.
Wish you much success in health, wealth and happiness :)