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Financial Strategies

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Category: Financial Strategies

RBC Plaza

RBC’s Preferred Builder Program

Why RBC’s Preferred Builder Program for Presell Units Provides Peace of Mind

RBC has provided a very notable program for clients who are purchasing pre-build condominiums, including our Triple Crown Community project. It is called the RBC’s Preferred Builder Program – in essence a long-term financing package for presell units.

With more than 25 per cent of sales is coming from new construction, it is a market RBC has been serving well for over a decade, though few are aware of the program or how it works.

The package offers long-term financing packages for presales. And if you’re considering a pre-build condominium purchase, this program offers key advantages and protections.

First, RBC will approve you up-front with no conditions.

What does this mean?

It means you will not be asked to reapply with the approach of the closing date. You don’t have to requalify 30 days before approval. You’re insulated and protected from banking changes, government regulations, or changes in your own life situation; you are approved based on your situation right now.

RBC Knows Life Happens

Your application approval is based on what is happening now. If 30 days before closing, you end up losing your job or you become disabled, or you break up with your spouse, you don’t have to worry. You could have purchased an F150 along with a $500 per month payment towards the truck. It doesn’t matter. You’ve already been approved.

RBC also offers long-term close rates that are protected until the completion of the unit. They give a slightly discounted rate based on today’s rates, and they will honour it for two to three years out. They will hold the rate. And, 120 days before the closing date, if rates are better, if rates have gone down, they will provide the better rate, without having to requalify you.

That’s real peace of mind.

Another important fact about the Preferred Builder Program is the appraisal. RBC often appoints an appraiser to a building who will evaluate all the units and get to know the building inside and out to ensure accurate pricing in the current market.

What happens if the market changes?

Fast forward two years from now, if the market actually dips down a bit, you do not have to worry about making up the difference between the purchase price that they paid and potentially the new appraisal that is lower.

Most banks lend based on whatever is lower; the actual purchase price or the appraised value. If you are not dealing with the Royal Bank’s special financing package where the evaluation is completed in advance, and the prebuild is reappraised two years later and it’s lower, the client has to make up the difference between the purchase price and the actual appraisal, and that will be above and beyond the actual down payment they planned on putting down.

But how does RBC appraise a property that hasn’t been built yet?

Their assigned appraiser visits the location, looks at surrounding amenities, look at plans for the current units (all which have risen in value), talks to the builder and discuss the quality of finishing to find out if they are building in quartz counter tops, hardwood floors, high end appliances (hint: we are) and comes up with an up-front value.

Yes, but do I pay a higher interest rate?

RBC’s interest rate on a four-year fixed, to hold it for two years, is higher than today’s rate. However, the Bank of Canada is extremely interested in raising rates. In two years, if the four-year rate climbs higher than RBC’s four-year fixed rate, you will be thanking your lucky stars that you locked in. Conversely, if in two years, the four-year fixed rate is lower at 120 days before closing, RBC will offer you the lower rate and reset the commitment start date.

RBC’s Preferred Builder Program is a Win/Win.

Why isn’t everyone using this pre-build package? Because not a lot of people know about it. Do your research and consider locking in with this program. You will certainly sleep better for the two years that it takes to build!

Another benefit: RBC offers free mortgage insurance. For example, if a couple are purchasing a unit together, we can offer free life and disability insurance. If one person passes away, and even if the condominium has not been built to completion and has not been funded, the survivor will have a free and clear home. It costs $0 for the duration of the build, and there are zero payments. Mortgage insurance is free and can be cancelled at any time. (But why would you?)

You can also include critical illness, if you are diagnosed with one of the big three: heart attack, stroke, or cancer. If diagnosed, you receive a $300,000 lump sum towards your mortgage. That’s just a diagnosis, you don’t have to be terminal to receive the payout. And this insurance is also… you guessed it…Free.

RBC really takes care of their client and provides real peace of mind in presale.

We do not receive any benefit from sharing this information with you, except that we can help our clients make more informed financial decisions.

To your health and wealth!

Todd Mahovlich and Justine Connor

in Financial Strategies Posted by Mathieu Powell
Millennial couple searching for home

First Time Home Buyers Thinking Like Investors

First Time Home Buyers Thinking Like Investors

FIrst time home buyer questions we hear often include, “Is it a good idea to get help from family?” According to a survey conducted by Pollara Strategic Insights for the Bank of Montreal (BMO), the answer is “yes’. Their survey revealed 56 per cent of first-time homebuyers in Canada will rely on family for financial assistance to purchase their home.

New buyers in the provinces of British Columbia and Ontario are most likely to look to family for help – 59 and 58 per cent respectively. That makes sense considering the cities with most expensive housing markets in Canada are Vancouver, British Columbia and Toronto, Ontario.

Millennials (24-39 years old) are more likely to seek help than Gen Xers (40-55 years old), according to the survey. (Millennials have obviously had less time to save for a down payment). Of those seeking assistance, one-quarter are looking for between $10,000 and $50,000. Millennials are seeking $100,000 or more. The average ask was just over $45,000.

Before you borrow from a parent, consider the fact that many report they are not comfortable with their retirement savings and haven’t been able to save enough as a result of supporting their adult children financially. If you ask them, they are likely to say “yes” for emotional reasons. Make sure they can afford it unless you want to support them in retirement!

Even with the help from family, affordability is a challenge with Canadian banks requiring mortgage holders spend no more than 30 per cent of their monthly income on housing. With the prices of single detached home rising out of reach, first time buyers are stepping into the real estate market with condominiums.

The First-Time Home Buyer Incentive is useful for some, though its benefits are limited. The maximum amount the program allows borrows is four times their qualifying income if household income is less than $120,000 per year. That means the maximum amount of a mortgage may be and still be eligible for the incentive is $480,000. That significantly limits the kind of housing first time buyers can purchase in Canada’s more expensive real estate markets.

Savvy millennials are thinking like investors. A pre-construction condominium purchase is becoming more popular among this generation because it allows them to invest in housing now and save money towards the building completion and the closing date.

A five percent deposit to hold the property sale gives Millennials more time to save more towards the down payment. Read our article on RBC’s Preferred Builder Program for more ideas on how to finance your purchase

Note: The First-Time Home Buyers Survey was conducted via an online survey between August 25 and August 31, 2020, with an online sample of 801 adult Canadians. The margin of error for a probability sample size of 801 ± 3.5% is 19 times out of 20.

Reference:

https://newsroom.bmo.com/2020-10-22-BMO-Housing-Survey-COVID-Has-First-Time-Homebuyers-Leaning-Towards-Fixed-Rate-Mortgages-and-Many-Will-Look-to-Family-for-Financial-Help

https://www.ratehub.ca/blog/first-time-home-buyer-incentive

in Financial Strategies Posted by Mathieu Powell
Real estate investment checklist

Triple Crown Meets 8 Essential Criteria for Real Estate Investors

Real Estate Investors Taking Note of Triple Crown

Real estate investors look for property that will perform well in equity appreciation and also have a good cash flow when they rent it out. As they search for such a property, they use these eight criteria: The quality of the build. The economic health of the community. A good employment rate. A low vacancy rate. Excellent local amenities. A well-developed transit infrastructure. Future plans for development. And finally, low monthly costs.

Triple Crown community performs very well in all of these criteria.

Here’s why:

Top Quality Build & Amenities

Those already living in the Triple Crown community have discovered the quality of the fit and finish and have testified to that fact in reviews and in video. They love where they live.

This is important because better builds ensure better quality of life for real estate investor’s tenants. That equates to higher satisfaction and longer rental durations.

Our next and final phase – Residence IV and III feature high end appliances and stylish finishing such as quartz slab counter tops, better quality cabinets, Euro-laminate flooring, rich carpeting and more. We worked with Spaciz, one of Victoria’s best interior design teams to ensure top quality in function and aesthetic.

The two buildings will also feature roof top patios, indoor amenity rooms and a gymnasium. Each building will have a quick elevator (350 feet per minute), plenty of parking, storage and bike lock up.

Good Economic Health

The City of Langford led the Capital Regional District in housing starts for years and continues to be one of BC’s fastest growing communities. The resulting solid commercial tax base fuels dynamic, innovative policies for live-work environments as detailed in the Official Community Plan. Langford’s Council wisely invested in excellent amenities, mixed-use and multi-family residential developments, façade upgrades and beautification upgrades to enhance the city’s livability and economic vitality.

High Employment

Victoria now has the lowest unemployment rate in the country. It dropped from 5.4 per cent in June 2021 to 4.2 per cent in August according to Statistics Canada as reported in a September 10 Times Colonist article.

B.C. is the only province with pre-pandemic employment levels for the second consecutive month, according to Statistics Canada’s July 2021 Labour Force Survey. B.C.’s minimum wage rose from $11.35 per hour to $15.20 per hour on June 1st. Our province now has the second highest minimum wage following Nunavut. Employment prospects are good for our region’s work force.

B.C.’s current average hourly income for a full-time employee is $29.34.

Low Vacancy Rate

The vacancy rate is the percentage of all available rental units that are vacant. Greater Victoria’s vacancy rate has been well under 1 per cent for years, finally tipping over 1 percent in late 2018 due to the uptick in purpose-built rental units. In 2020 the Canada Mortgage and Housing Corporation (CHMC) pegged Victoria’s apartment vacancy rate at 2.2%, due to progress being made to overcome the south island’s chronic lack of housing supply. That supply was picked up quickly and the vacancy rate has fallen substantially.

When vacancy rates are low, there is more competition for available units which can drive up rental prices. Currently, one of the lowest prices to rent a one-bedroom apartment in Langford is $1,350. A two-bedroom unit in Langford currently rents between $1,824 and $2,350 per month.

Excellent Local Amenities

Amenities close at hand include Costco, Home Outfitters, Best Buy, Aldo, Pet Smart, and The Market on Millstream to name a few. The Millstream Village Shopping Centre has a selection of coffee shops, restaurants, groceries, a bakery, a wine shop, a pharmacy and more.

Outdoor amenities within a five-minute drive include Florence Lake, Thetis Lake Regional Park, the Westin Pacific Bear Mountain Golf Resort, Royal Colwood Golf Club and the Highland Pacific Golf.
There are plenty of businesses and services for every need and enjoyment.

Transit Infrastructure

Langford is committed to building excellent transit infrastructure. Since 2006 when the City of Langford and the Ministry of Transportation commissioned the West Shore Transportation Plan, it’s grown easier to get around safely by bus, car and bicycle.

Leigh Road takes motorists directly from Langford Parkway to the Leigh Road overpass or up Skirt Mountain on Bear Mountain Parkway, which alleviated congestion on the Millstream Road overpass.

Future Plans for Development

A new commercial development and a middle or high school along McCallum Road opposite Costco will deliver City Gate Boulevard, spanning between McCallum Road and Treanor Avenue. Social infrastructure such as schools help make neighbourhoods more welcoming to new families and will have a profound impact on real-estate investments.

Low Monthly Costs

Efficient, ductless heat pumps are being installed which extract heat from the air instead of burning fuel. That translates into big savings. Your tenants will appreciate a lower strata fees which includes all heating and cooling. Include hot water on demand, gas stove, efficient appliances and LED lighting for an even lower monthly amount.

The rent amount you can command can easily cover monthly expenses. The rental amount tenants are paying Landlords in Residence I and Residence II provide good case studies. We cannot share details in this article, but our Realtors® have details.

Increasing Equity

A ninth, and most important reason to invest is equity growth. Here are the straight numbers as reported by the Victoria Real Estate Board (VREB). “The MLS® HPI benchmark value for a condominium in the Victoria Core in August 2020 was $483,400, while the benchmark value for the same condominium in August 2021 was $540,600, an 11.8 per cent increase.”

Conclusion

For these reasons, condominiums in Triple Crown Residence IV and III are excellent investment for real estate investors. If you want to expand your real estate portfolio, this location is excellent and will only continue to improve. Check out all these details and more. Contact Todd Mahovlich or Justine Connor to set up a private tour.

in Financial Strategies, real estate investment Posted by Mathieu Powell
5 per cent deposit

The Final Phase of Triple Crown Community is an Excellent Opportunity for Condo Buyers

There are plenty of good reasons to consider purchasing a pre-construction condominium and Triple Crown’s builders have added more unique advantages to purchase here.

5% Deposit

To our knowledge, McCallum Developments Inc. is the only construction company allowing buyers to secure the right to purchase a condominium with a 5% deposit.
When the two buildings of the final phase are completed, the 5% deposit will become part of your down-payment. Meanwhile, over the next year while your condo is being built, you and your family can plan and save more money to increase your down payment and reduce your mortgage.
This will be an especially beneficial strategy for those who can save enough to move from a CMHC insured high-ratio mortgage (down payment of less than 20%) to a low-ratio mortgage (down payment of 20% or greater). This can save thousands of dollars in mortgage insurance premiums alone.

Rescission Period

We provide you with a seven-day right of rescission period. This is a seven-day period from the time of an accepted contract that allows you to read the disclosure statements and complete your due diligence before committing legally to the purchase.

Property Transfer Tax

When you purchase a resale home you are subject to property transfer tax (exemptions apply through programs such as the first-time home buyers’ program). With a pre-sale home, you are exempt from paying property transfer tax if the purchase price is under $750,000.

Warranty

Our pre-sale condos come with a 2-5-10-year New Home Warranty: Two years on labour and materials (some limits apply)’ five years on the building envelope, including water penetration; and 10 years on the structure. Your new appliances also have a manufacturer’s warranty.

A brand new, well-built home means you will have minimal maintenance costs or unforeseen and expensive special assessments or levies for building repairs.

Quality Build

Those already living in the Triple Crown Community know firsthand the quality of the fit and finish. Building better ensures better quality of life for our customers. Our Final Phase – Triple Crown’s Residence III & Residence IV, will feature high end appliances and stylish finishing such as quartz slab counter tops, quality, quiet close cabinets, Euro-laminate flooring and more.

Affordable Living

The Builders have affordable living and lifestyle firmly in mind, and the features and amenities in Residence III and IV will provide a real edge for a better lifestyle for those who buy a condominium here.

Efficient Appliances

We are installing energy efficient appliances such as a gas range that will save you money on your electric bill. Gas is more efficient because it delivers instant heat and gives you more temperature control for better cooking. A stainless steel, water-and-ice refrigerator with an efficient bottom mount freezer, a top control dishwasher and a high-efficiency, in-suite laundry centre. Check out the appliance package for details.

Lower Utility Bills

We are using environmentally friendly technology to make sure your cost of living at Triple Crown Residence II is low. For instance, the Builders are installing earth-friendly, ductless heat pumps which effectively move heat around the building to cool your condo down in the summer and warm it up in the winter.

Strata Fees

Residence III and Residence IV will share their strata. Monthly strata fees pay for your building maintenance, insurance, common area upkeep automatically. With larger costs planned and scheduled, there are far fewer surprises such as unpleasant costs and assessment. Additionally, the larger strata with two buildings and 132 units will greatly reduce maintenance and repair costs for each condo owner.

Lifestyle

Living in a brand-new condominium means little thought or energy needs to go towards maintaining your home, and Triple Crown Community’s location on the outskirts of Langford provides quick access to transit routes and any amenity you want and need.

Book now, because we expect presales to be brisk. Get in touch with Todd Mahovlich (P.R.E.C.) or Justine Connor today to book an appointment in our show suite.

in Financial Strategies Posted by Mathieu Powell
Looking for Property in the Westshore Area?Contact Todd Mahovlich