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July 16, 2019 | Homeless

A best-selling Canadian author of 14 books on economic trends, real estate, the financial crisis, personal finance strategies, taxation and politics. Nationally-known speaker and lecturer on macroeconomics, the housing market and investment techniques. He is a licensed Investment Advisor with a fee-based, no-commission Toronto-based practice serving clients across Canada.

Today’s needy Blog Dog is a solid guy with a squeeze, a canine and (regrettably) a cat. Charlie lives in Oakville where, after two years, he‘s just been booted out of his rental. Suddenly, everything changed.

“Unfortunately, our landlord has informed us that his father will require the house, and as such, we are to be evicted on September 1 (the end of our lease). He’s always been a decent guy, but I have to admit, I’m suspicious that he’s looked around the neighborhood, realized he can probably get about $600-700 more per month, and figured he’s better off to boot us out and get a new tenant at a higher rate.”

So what has Charlie done in response?

“I’ve pushed back a little bit, requesting an N12 form, as well as the required one month’s rent as compensation, but this is going to be a losing battle. So, we’re looking for a new place to live. As mentioned above, market rent has crept up, while we’ve spent the past two years sheltered by rent control. In addition, while living in this house, we’ve acquired a dog and a cat. Many of the available rentals do not want pets, so I can either cross them off the list, or lie to our prospective landlord and claim not to have any pets. Neither option seems particularly appealing.

“My partner and I had been quite content renting, saving, and investing. We had hoped to purchase a home eventually, either once we had a very solid nest egg, or some sanity returned to the GTA market, whichever came first. Now, we’re not so sure. Real estate still seems quite expensive, but I have to admit, getting kicked to the curb with 60 days’ notice doesn’t feel great. It definitely is causing a rethink of our strategy.

“For reference, our annual household income is about $205k, and we have approx. $360k saved up, in RRSPs, TFSAs, and non-registered accounts. No debts. We’re 30 and 28 years old. Guess I’m just looking for an opinion here. I’ve attached a couple photos of our dog (as a pup) in an attempt to endear you into answering.

“Thank you again for your daily insights, and any opinion you can offer. I greatly appreciate it, and all you’ve done for the improvement of Canadians’ financial literacy, and mine.”

Yes, this is one of the most powerful nesting moments. Others include getting hitched and having a kid. Suddenly a heady mix of fear and house lust makes every single waking hour another opportunity to check The irrational thought of living in your vehicle and showering in a car wash drives people to make quick, unstudied, panicky decisions. So just chill. We’ll figure this out.

The first thing to do is buy time. If you suspect the LL is tossing you just to get more rent, then offer more rent. Duh. You can afford it. Another $600 a month is $7,200 a year – which is a mere pimple on the rump of a typical Oakville house. Land transfer tax alone on a $1 million townhouse is almost $16,500 (even after the first-timer rebate). House prices are going down, not up, so waiting another year would save you far more than the additional rent. Besides, you need time. Finding a house and closing on it in five or six weeks is just silly.

Second, prepare in case your offer of extra money is rebuffed. Scour the rental market. Grab an Airbnb for a few months, if you have to. Just try to extend the period of time you’ll have to rationally contemplate a purchase.

Third, prepare. Go and get pre-qualified for a mortgage – a commitment which should remain in place until November (120 days). That will allow you to make a clean, quick and decisive offer if the perfect place materializes. Now, establish a relationship with a seasoned local realtor and, for the love of Dog, stop pouring over MLS stuff all day.

Hiring an agent to represent you costs nothing. He/she will be aware of every new listing before you even see them online, then able to advise you on neighbourhood, comparables, price history and overall value. Take your stress, FOMO and anxiety and unload them on someone else. Let your guy research listings, call the agent involved, pre-inspect and set up a viewing schedule. Then, if you offer, that person will help you write it, pluses argue for your interests during negotiations. All for free. Oakville, by the way, has a slew of seasoned house-slingers to choose from.

Can you afford to buy?

Depends. Income‘s good. Savings (for your ages) are epic. You can always sell the cat, of course, and prosper more. You can use the HBP to drain $70,000 from your RRSPs for a tax-free downpayment and defer any repayments for two years. And you can borrow five-year money now for just 2.8% (after the stress test is passed). But remember that the housing market is weak. Sales locally year/year are flat. Prices locally are declining (the median dropped $20,000 last month), and this may well continue.

Be in no hurry. Lose feelings of anger or apprehension. And you can always call your mom. She has to take you.

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July 16th, 2019

Posted In: The Greater Fool

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