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Oct 3 16

Brexit and Canada’s CRE Market: What May Lie Ahead

by John Brydon-Harris

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After the UK voted to leave the European Union this past summer, an endless slew of questions arose about how the decision would affect employment, the economy, travel, and culture – not only in Europe, but also around the world.

In the past few months, questions in Canada have focused on real estate; experts wonder whether the referendum decision will drive up Canadian Real Estate (CRE) prices. Why? The continuing state of uncertainty has investors from Britain, other European countries, and Asia looking to channel their investments to the more certain North American markets.

Pierre Pequegnat, a Canadian mortgage expert and university professor, published the following, post-referendum: “As Brexit and economic concerns have heightened short and long-term uncertainty, investors are now more likely to maintain above average interest in North American markets relative to Asia, the EU, the UK and the emerging market.”

However, in an article in Canadian Property Management, Chris Langstaff, senior vice president of research and strategy with LaSalle Investment Management, disagreed.

“Canada has long been viewed as a safe haven by foreign investors, but, at the same time, many are aware of the strong depth of institutional ownership here that tends to dominate and hold the best assets for the long term,” Langstaff said. “If the shine has worn off the UK for the time being, it could make other markets around the world more appealing, but I’m not sure that will drive a lot more capital towards Canada.”

Seems the only certainty about the effects of Brexit is its uncertainty.

Sep 12 16

Great Signage Can Set Your Property Apart

by John Brydon-Harris

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Property owners and investors are always on the lookout for opportunities to stem the cash outflow that comes with maintaining a property. Unfortunately for them, signage often ends up on the chopping block (or ignored when it’s time for renovations).

But signage plays a vital role, and not just for reasons of safety or code requirements.

Attractive, useful signage increases your property’s curb appeal and user experience. Both are value-adds for tenants eager to impress existing and prospective customers and employees. And increased value enables you to ask higher prices for your property.

Good signage also brands a property, enabling prospective tenants to easily identify your company’s role in the marketplace (as well as potentially increasing its value).

The following are a few guidelines to follow before investing in expensive signage.

Talk to professionals

The easiest way to assess your signage situation is to consult a professional architectural signage company. These professionals can do a walkthrough of your property (or review blueprints, if it’s still under construction) and provide you with a list of required and recommended signs. They can also offer guidance on the materials and designs most appropriate for your building and your budget. 

Remember that code is just the beginning

While code requirements are a great starting point (they let you know what signage you absolutely need), always consider your property’s end users such as tenants, visitors, even vendors. While new codes may not apply to older buildings, applicable signs will improve users’ experience. 

Never assume the previous owner kept your property up to date on signage requirements, and check to see if there are any new ordinances you should follow. Also note that many inspectors tack on their own requirements, even if they’re not code-required.

Think in the long term

Signage isn’t forever, but it can last a long time, so plan (and design) accordingly. Remember that trendy designs and materials can date a building. Opt for streamlined designs and materials, and avoid noisy colour combinations. Well-chosen signage should last through multiple carpet and paint updates.

Go with quality

Signage, especially exterior signage, will quickly show signs of wear if you choose low-quality materials. While interior signage doesn’t need to stand up to the elements, you want it to stand up to time. Save yourself time and money by investing in quality materials for all signage.

Quality design is equally important. The more complicated your signage (think moving parts, electricity, and fancy materials that aren’t durable), the more likely it is that you’ll need to order repairs and replacement parts.

Ask yourself whether you would get lost

If you’ve ever been lost, you know signage can make the difference between instant relief and frustration. Don’t let your property frustrate tenants and visitors. Take a look at it through visitors’ eyes.

Assess whether your current signage is properly sized and visible. Also, does it accurately represent your company? Does it provide the clear directions necessary in case of emergency? If not, it’s time to rethink your signage and increase the value of your property.

 

Jul 17 16

Great Parking Is Key to the Success of a CRE Investment

by John Brydon-Harris

When it comes to commercial properties, it’s easy to overlook an important component of your investment: parking.

The parking facility/lot is the gateway to your property. More important, it houses expensive vehicles belonging to your tenants, their employees, and their customers. So it’s safe to say that parking is one of the most important areas that you need to secure and maintain. These are four things to consider when assessing a potential (or existing) investment in terms of its parking:

Safety: The best way to eliminate parking lot drama? Don’t set the stage for it. Make sure your parking area is well lit and easily monitored. Alarm systems, gates, and private guards add value to existing and potential tenants (and can also lower your insurance premium).

Well kept: A dilapidated parking area can create a poor perception of your building. Don’t ignore eyesores such as potholes, poorly marked spaces, and missing signage. They’re easy fixes…and they can make a tremendous difference to how your property is perceived.

Upgraded: Covered or reserved parking and valet service aren’t just convenient, they’re valuable add-ons that existing and potential tenants can tout to their customers and employees. Upgraded parking services may also mean you can charge more for your property.

Fully utilized: Do you anticipate a lot of downtime or empty spaces in your parking area? Consider making it earn its keep by renting lot space to mobile businesses like food trucks and auto detailers. Just be sure to check local ordinances for any restrictions.

Parkinglot

Jun 6 16

CRE Crowdfunding Is Attracting Small Investors

by John Brydon-Harris

As most investors know, there are three main asset classes in which to invest: stocks, bonds, and cash. But those who think outside the box have found another good investment opportunity: commercial real estate (CRE).

StripPlazaIn the past, many investors have ignored the awesome potential of commercial real estate as an investment vehicle, primarily because most know very little about CRE. Others who saw the potential were discouraged because of rules governing who can invest in CRE and who can’t. Now, however, there are crowdfunding portals that welcome the small investor and allow small operators and startups the chance to raise funds to help them grow.

In Canada, six provinces made it easier for startups to raise money by allowing equity crowdfunding. Like the United States, Ontario’s legislation, introduced by the Ontario Securities Commission and effective this year, caps the amount an investor can “risk.” Caps are based on the individual investor’s income.

In fact, according to a report by Manulife Asset Management published in April 2016, investing in CRE is anything but risky. “Direct investment in commercial real estate has on average generated higher returns than other standard asset classes on a risk adjusted basis,” the Manulife Report noted, adding that, “Between 2000 and 2014, Canada outperformed the global index in 14 out of the total 15 years. It also was the top performer in six of those years.”

Manulife’s report is bullish on CRE in Canada as a strong investment opportunity for Canadian and foreign investors.

Investments can range from office buildings, retail and industrial properties, and multifamily residential buildings to self-storage facilities and parking lots. Office properties in particular are high-profile investments. They are not for everyone, however, as many areas currently have high office-vacancy rates.

Multifamily residentials are a more stable investment; people always need a place to live, and the loss of a single tenant would not impact the investment the way it would, for example, if a shopping center lost an anchor tenant.

Generally, real estate tends to be a relatively stable investment, especially compared to the stock market, and North American CRE is attracting foreign investment fleeing the up-and-down markets in Europe and Asia.

Also, it allows for portfolio diversification as it spreads out beyond the more traditional asset classes.

Individuals can still invest even very small amounts of money in commercial real estate through crowdfunding platforms.

Still, with opportunities come risk, and fledgling CRE investors in North America should note that commercial real estate investments generally are not liquid or as easily traded as stocks.

But with the opening up of CRE investments to the smaller investor through crowdfunding, the big winners are undoubtedly those companies able to access a new source of income.

As Nav Athwal comments in a Forbes article: “Coming out of the great recession with banks becoming more regulated and credit getting tighter, real estate crowdfunding has filled the gap by connecting real estate entrepreneurs with a new base of investors and capital.”

May 8 16

Looking for a New Home for Your Growing Small Business?

by John Brydon-Harris

Has the best-before date expired on the space where you started your business? Do you now need a bigger office or more warehouse space? If the answer is yes, it may be time to purchase a commercial property to house your growing business… time to consider a commercial mortgage.

Business men and women with boxes

A commercial mortgage enables you to finance a real estate purchase without tying up short-term credit or diverting cash flow needed to operate the business. Plus, once you have a commercial mortgage, you can leverage the equity you build up to use as a source of funds to finance future growth.

When shopping for a commercial mortgage, consider both short-term and long-term needs. Here are some things you’ll need to know in order to make the decision that’s right for your small business:

  •  The total loan amount necessary to acquire and customize the premises
  •  Costs associated with securing the loan, including fees and environmental assessments if needed
  •  The down payment amount
  •  Prepayment flexibility
  •  Interest rate options (fixed or floating)
  •  The loan term and amortization schedule
  •  Is the loan assumable?
  •  Will there be a balloon payment?

Be aware that commercial loans undergo extensive underwriting and due diligence prior to closing, and there may be ongoing reporting requirements to maintain the loan in good standing. Also note there are lending practice differences between banks and private lenders; in considering your options, it’s important to do your research.

The benefits of owning commercial real estate can be significant. These include tax advantages, predictable overhead costs, and asset appreciation. However, be sure you know what you’re getting into. An experienced commercial real estate agent can help you size up your situation and recommend some next steps.

Apr 11 16

Age in Place Later; Make Good Design Choices Now

by John Brydon-Harris

Whether you’ve found the home you want to grow old in or you’re planning for an elderly relative to move in with your family, the design choices you make now should be made with a weather eye to the future.

You’ll want to consider adding those independent-living accessories now that will make life easier and safer for you or a relative down the road. Here are some suggestions.

Keep the kitchen safe and accessible by skipping trendy remodels that could transform it into an obstacle course.

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Round the edges of countertops and shelves to reduce the risk of bumps and bruises. Place the microwave at or below counter height to eliminate the need to reach for hot dishes; frailer individuals have difficulty lifting and carrying cookware, which may cause spills and slipping hazards. Also, make allowances for walkers or wheelchairs with lower countertops and extra space.

Consider installing a pull-out pantry with drawers that display all contents at a glance and permit easy access.  Drawer dishwashers also offer better ergonomics and can be most helpful for those who use wheelchairs.

Mar 3 16

A Garage Remodel Can Pay Back Big Time

by John Brydon-Harris

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The garage is a catchall, right? Right. But should it be? According to recent statistics, a clean, bright, updated garage may be a big selling point with today’s buyers.

Currently, remodeling the kitchen will return 70 cents for every dollar spent and a renovated bathroom will give you a return of 60 cents on the dollar. But updating the lowly garage, including a good storage system, will net you 65 cents per dollar spent…more than a bathroom!

Take the homeowner who added to the value of his property by building a garage. This homeowner spent $10,000 on construction, but when the home was reappraised, the garage had added $30,000 to its value.

Even purchasing an upscale garage door will generate a return on investment of more than 70 percent by improving your home’s curb appeal, according to a recent article in RISMedia.

Why the popularity of garages? Quite simply, buyers want the extra space. Downsizing baby boomers, in particular, want a place to store possessions they can’t fit inside.

Or lack of inside space could turn the garage into a dual-purpose man cave/storage area with a big-screen TV and comfy couch.

We’re talking clean, well-finished spaces, however, not the usual dusty, dark, and dingy garage.

Some buyers, particularly those with dreams of a workshop, are bringing in heat and light with their workbenches, and using cement paint in current colours to brighten it up.

Tips for renovating your garage: Get everything up off the floor and into a well-designed storage system, hang bikes on the walls, add lighting and flooring, and paint inside and out.

According to contractor Scott McGillivray, you can do a basic renovation for $10,000, although with add-ons you can spend a great deal more. However, it’s the best of all worlds: a well-appointed garage that can be a joy while you own the home and a moneymaker when you sell.

Feb 1 16

RENTAL PROPERTIES

by John Brydon-Harris

The Upgrade Issue: Choose Health & Safety Compliance First!

Landlords are never quite sure how much to invest in upgrading their properties; it’s a balancing act between making the property comfortable and pleasant for tenants and overspending on remodels that may not provide you with the return on investment you might be expecting.

For landlords of larger residential properties, this is doubly important. Upgrades can be a significant expense in larger buildings, and it’s unlikely you can raise your rents sufficiently to gain back any significant portion of your investment.

There are levels of upgrades that you can undertake, and it only makes sense to start at the highest level, by spending your renovation dollars to meet health and safety regulations and local bylaws-particularly those dealing with fire safety, accessibility, energy savings, and structural problems. Know the regulations in your area, and ensure they are met before even considering cosmetic changes.

Feb Blog Post

Know your tenants, too. For every tenant who complains about the dark garages or outdated washers and dryers, there are many who won’t complain; they’ll leave. If the same issue keeps cropping up, consider it a second-level renovation to be dealt with sooner rather than later.

Then make cosmetic upgrades in common areas: redo the laundry area or paint the halls (in a neutral colour, please). You also may want to consider replacing older toilets in all units with low-flush versions.

Finally, know your neighbourhood. Don’t invest so much that you’ll have to price yourself out of the local market to recoup. But don’t underinvest and lose good tenants to other buildings.

Jan 5 16

Tips for Buying That First-ever Income Property

by John Brydon-Harris

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First-time investors with limited income or reservations about real estate investment often start with an income property that can serve as both their residence and a source of income. This is an asset for first-time buyers with limited income as well as an opportunity for new investors to jump into the real estate market. Following are a few tips that first-time investors need to be aware of when buying a home with rental income:

Research the Neighbourhood: Areas where there is substantial investment being made usually indicates that a neighbourhood is on the upswing. The potential for appreciation over time is as much a benefit to the investor as the ability to gain rental income.

Know What You’re Buying: The condition of the property is an important consideration when buying a duplex or a home with a secondary unit. A home inspection report will give you a detailed accounting of the condition of the property.  You also should consider checking with your local fire department to see if it complies with the fire code, especially important when arranging for insurance coverage.

Identify Whether the Property is a Conforming Legal Use: The rules regarding homes containing in-law suites, granny flats or duplex conversions vary from town to town. Buyers intending to rent all or part of a property will want to ensure that the work was done properly and that they can legally rent the premises.

New investors looking to jump into the market can capitalize on low interest rates and stable real estate markets. Even with a limited budget, they can realize significant returns on their investment by looking for profits in smaller-income properties.

The knowledge and experience investors gain will allow them to grow their real estate investment portfolio over time.

Dec 1 15

Crowdfunding Major Projects Works: Just Ask NYC Investors

by John Brydon-Harris

Vector crowdfunding concept in flat style

Previously, approaching large-scale institutional lenders face-to-face, and playing by their rules, was the best way to accumulate the funds needed to launch commercial property projects. Now, there’s crowdfunding.

As a source of capital, crowdfunding is changing the way money is raised for projects. Crowdfunding is the process of gathering many small lenders, usually via the Internet, to fund projects. There are two main types of crowdfunding platforms applicable to real estate investors:

Equity-based crowdfunding works much like the stock market, where the investor purchases ownership or company equity. The U.S. JOBS Act, which loosened security rules to make it easier for individuals to invest in small businesses, has given crowdfunding a boost.

Debt-based crowdfunding is also known as “peer to peer” lending. Borrowers’ online applications are reviewed and verified, and their risk and credit rating established. Investors buy securities in a fund that then loans money to applicants, who pay interest to the investors.

The list of real estate-specific crowdfunding companies is growing, and investors can get involved for as little as $500 (although some projects require an investment of $5,000 or more). A popular method involves selling shares in commercial projects; one of the first major ventures funded this way – a New York hotel/condominium – was recently completed and is currently accepting guests and selling condo units. True, crowdfunding options have lower fees than those of traditional commercial lenders, but risks remain, and investors must be diligent in researching the projects as well as the platform providing the service.

For more details on the diversity of real estate crowdfunding opportunities check out CROWDFUNDINGS LATEST INVASION: REAL EASTATE: http://www.crowdfundbeat.ca/crowdfundings-latest-invasion-real-estate/