How to Price a Kitchener Waterloo Apartment Building

Value of a Kitchener Waterloo Apartment Building

One of things I find myself talk to real estate investors about these days is how to value a Kitchener Waterloo Apartment Building.  Seems there are lots of people looking to acquire high quality apartment buildings, but there is small supply of these buildings for sale, especially when we start talking about more than 50 units.

Most owners are happy to hold their buildings now  – multi family real estate is a notoriously stable investment during good times and bad (and stable investments are held in higher regard during recessionary times), but buyers are eager to deploy their capital into a stable asset.

This spread between available supply and current demand makes it a great time to sell your Kitchener Waterloo apartment building; case in point, we have recently seen quality multi family investment properties come to market and receive multiple offers in the first few days.

How to Price a Kitchener Waterloo Apartment Building

If you were going to sell your Kitchener Waterloo Apartment Building, how would you price it?

Right now, there is a large difference in ‘per suite’ asking prices for comparable apartment buildings online, with several active multi-family listings being priced considerably higher than comparable recent sales.

(Note: there are some properties, like brand new buildings or luxury apartment buildings, that sell for outside the normal range. For example, see: Two Waterloo Region Apartment Buildings Sell For $45+ million)

Click play to watch this quick video we put together looking at the prices of apartment buildings in Kitchener Waterloo

If you own a Kitchener Waterloo Apartment Building

If you have any questions about the multi-family investment market in Waterloo Region, call me directly at 519-772-4376 or email me at Benjamin@BenjaminBach.com

KW Commercial is your one stop shop for commercial, investment, retail and multi family advice and brokerage in Waterloo Region.  

We have buyers currently looking for a large Kitchener Waterloo Apartment Building – call us to discuss the sale of your property.

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KW Market update, June 2010 – Kitchener Waterloo MLS data

A smart real estate investor is one who is educated on what’s going on with the market.

So, what is going on with the residential real estate market in Canada? Let’s turn to my friend Jay Papasan, with this month’s update

This Month in Real Estate – Keller Williams International

Canada’s economy continues to remain stronger than many other major national economies, and is affirmed by the Bank of Canada’s first rate increase since the beginning of rate cuts in 2008.Cana

As rates begin to rise, experts believe the housing market is poised to soften. Incomes rise at a relatively constant rate, while the housing market tends to rise in steps with periods of stability followed by periods of more rapid appreciation. The past decade has been one of appreciation following the 1990s (when prices were fairly flat). Thanks to a solid mortgage market, prudent lending, and responsible borrowing, experts anticipate the market will generally remain more balanced and prices will stabilize. This is a positive indicator for the long-term health of the market and for the wealth accumulated by homeowners.

While it’s important to keep in mind that the country’s commodity-based economy leaves it somewhat more susceptible to external forces such as global demand, currency rates, and commodity prices, things continue to look up for Canada from a year earlier.

Housing Market:

Home Sales

Existing home sales activity totaled 42,078 units in April, up 20.1% from last year and down 2.6% from last month. Experts believe there will be a gradual calming of the recently “hot” home sales activity over the next year, citing rising interest rates and a change in mortgage regulations that may have encouraged some buyers to push their timeline forward to purchase before the regulations took effect on April 19.

Average Home Price

Low supply and strong demand continued to boost prices. The national average home price was $344,968 in April, up 12.2% from April 2009 and up 1.2% from March. Experts anticipate home price appreciation will slow, but prices will remain stable – a positive sign for the long-term health of the housing market.

Inventory

Sales-to-Listings Ratio

In April, 79,678 new homes entered the market. Presently, buyers continue to have a wider variety of options as the uptick in new listings draws the market back into solidly balanced territory on a macro level. As is always the case with real estate, the micro level of locations differ from place to place.

Mortgage Rates

Average for: 25-Year Amortization, 5-Year Term
In April, the Bank of Canada lifted its conditional commitment to keep rates steady until July and made its first increase at the beginning of June. Rates are expected to continue rising but are anticipated to stay within a range that will leave homeownership in reach for many buyers.

(see: Whats going on with Mortgage Interest Rates in Canada?)

Sources: Conference Board, The Canadian Real Estate Association, Royal Bank of Canada, Canadian Mortgage and Housing Corporation, Bank of Canada

Notable News:

Canadian Borrowers Well Prepared for Rate Hikes

As interest rates are trending upward and housing activity is expected to cool down, a survey by the Canadian Association of Accredited Mortgage Professionals (CAAMP) shows that Canadians are in a strong position to weather the new mortgage market condition.

•Increasing home equity is easing consumer concern about rising mortgage rates.
•Many Canadians have used cost savings from historically low rates to make higher-than-required payments and will now have more breathing room as rates increase.
•Mortgage debt is a priority for Canadians with the vast majority, 93%, having never missed a payment.
•Many mortgages were renegotiated at significantly lower rates, one percentage point or more on posted interest rates.
•A high percentage of Canadians remain positive about the housing market and are bullish about house prices.

Sources: Canadian Association of Accredited Mortgage Pro

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Kitchener Waterloo Apartment Buildings & Multi-Family Investment Property

Apartment Buildings in Kitchener Waterloo

Want to buy an Apartment Building?

Apartment Buildings and Multi-Family Investment Property can be great investments.

Stable cash flow, low vacancy, and the ability to farm out the management and just collect cheques.  These are just a few of the reasons our clients are investing in multi-unit buildings, student housing and townhouse complexes.

There are several apartment buildings available in Kitchener Waterloo between $1 million and $10 million. Due to the nature of the Multi-Family market, we’re unable to provide a full list of available listings on our website.

For a full list of investment property currently available, click here.

Selling an apartment building in KW

KW Commercial specializes in helping investors acquire and dispose of investment property to maximize their return on investment.  We have worked with clients from across the world to profitably buy and sell property.

We have a list of qualified investors waiting for apartment buildings to buy, and we want to connect them to owners like you.

Whether you would like to sell a walk-up apartment building, or need to dispose of a national portfolio of multi-family housing, Benjamin Bach & KW Commercial can serve all your needs.

Interested in what apartment buildings are selling for? Take a look at How much for the apartment building in the window? and Two Waterloo Region Apartment Buildings Sell For $45+ million

Sold Apartment Buildings in Kitchener Waterloo

(New!) Two Waterloo Region Apartment Buildings Sell For $45+ million (225 units at $207,600 per suite)

Here are a few apartment buildings that our firm has helped real estate investors dispose and acquire. For a full list of properties, contact us.

31 Units on Belmont Avenue in Kitchener Waterloo

LOCATION: Kitchener,

SIZE: 31 Unit Multi Family Walk-Up Building

SERVICES PROVIDED Benjamin Bach, Director with KW Commercial, consulted with the owners to list & market the investment property across Canada. The goal was to maximize profit in a quick sale. Building was listed for $2,200,000 and had a firm agreement of sale within seven days Keller Williams also represented the buyer to acquire the property and find new management.

20 Student Apartment Building on University Ave in Waterloo, Ontario

LOCATION: Waterloo, very close to Wilfrid Laurier University

SIZE: 20 Students in 4 units. Recently constructed & purpose built, this property is in very good condition.

SERVICES PROVIDED Benjamin Bach represented the investor to acquire the property for $45,000 below list price. Benjamin also connected the buyers to the banking professionals who underwrote the new first mortgage; and helped buyer (a first time real estate investor) arrange for property management

New Mortgage Rules for Investment Property in Canada, Down Payment Requirements go up

Mortgage Rules & Down Payment Requirements in Canada for Investment Properties

We’ve been talking a lot recently about CMHC’s new changes to mortgage rules and down payment requirements for investment property.

This morning, the Globe and Mail has a story that I’ll file under “Ya Right…”

Limited impact seen from mortgage rules

Ottawa’s tougher mortgage rules have sparked a rush by home buyers to get in before the new regulations take effect Monday, but may not dampen the real estate market to the extent observers believed.

“When the new mortgage insurance rules were announced, there was widespread expectations that this could help to cool the market,” said Toronto-Dominion Bank economist Craig Alexander. “But the true impact should prove limited.”

The rule that was expected to have the most widespread effect says all borrowers must meet the qualification standards for a five-year fixed-rate mortgage, even if they choose a variable-rate mortgage or one with a shorter term.

Wrong – the change that will have the biggest impact is that CMHC is now making real estate investors put down 20% on an investment property (up from 5%), meaning many prospective property investors will not be able to get into the market.

The government designed the new rule to help ensure that homeowners will be able to afford their mortgage payments when interest rates rise. Rising rates are less of a worry for a borrower who has locked in for five years than for those who have three-year mortgages.

“The government stressed that the rule changes were not to deflate the housing market, but rather to diminish speculation and provide greater incentive for buyers to take mortgages that were less vulnerable to rising rates,” Mr. Alexander said.

I think the change to the mortgage rules that the article talks about – making people be able to afford the fixed rate 5 year payments, even if they take a variable rate mortgage – is a good thing for most people.

The bad changes are the ones not mentioned here.

As Robert McLister said this morning on twitter ““The true impact [of the new mortgage rules] should prove limited,” says TD. Yeah…as long as you don’t need a variable or rental mortgage.”

For questions about the current real estate market in Kitchener Waterloo, call me now at 519 772 4376, or email me at Benjamin@BenjaminBach.com

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New CMHC Mortgage Rules

New Mortgage Rules for Real Estate Investment in Canada

by Benjamin Bach, the Wealth Team on 16. Feb, 2010 in Real Estate Investment { Edit }

I want to pass along a few articles my friend Jeff Zabel, with Mortgage Alliance in Kitchener Waterloo emailed to me.  They are about changes to the mortgage rules, and will affect real estate investors and anyone buying Kitchener Waterloo investment properties:

This morning Finance Minister Jim Flaherty made the following three announcements to mortgage insurance rules

1. Variable mortgages qualified at five year fixed rate;

2. Refinancing limited to 90% instead of 95%;

3. Non owner occupied residences [I read this as single family properties bought for rental purposes -BB] require 20% down payment;

This announcement is the result of a review process on debt levels undertaken by the federal government that CAAMP has been actively engaged.  We released Will Dunning’s debt report, consulted with members  and took a position with decision makers in Ottawa that while we opposed changes to the current 5% down payment rule and 30 35 year amortization rates for primary residences, we were open to other changes if the government deemed there to be a problem.  The changes announced this morning reflect CAAMP’s position and do not affect primary mortgages except for the first point where many lenders are already qualifying at 5 years anyway.

Jeff is being told that these rules will be effective april 19th, 2010, so we may be able to still take advantage of the current terms and rates if you’d like.  Contact me for more information regarding that.

Jeff also sent me this article from the Canadian Press, which came out before the initial announcement, so it contains speculation, not fact:

New mortgage rules introduced to lessen mortgage crunch risks: sources say

By Julian Beltrame, The Canadian Press

OTTAWA – The federal government is expected to announce new rules Tuesday that would make it more difficult for first-time buyers to enter Canada’s hot housing market.

Sources have told The Canadian Press that Finance Minister Jim Flaherty is ready to move on the issue because of concern Canadians may be taking on too much debt.

Economists have advised the minister the best way to protect Canadians is to institute a debt affordability test in order to qualify for a Canadian Mortgage and Housing Corp. insured mortgage.

Currently, prospective home owners can qualify for a CMHC insured mortgage if they put at least five per cent down on the cost of a home.

But bank officials say they usually apply a cushion to ensure home buyers have sufficient income to meet payment requirements if floating rates rise, in some cases by more than two percentage points.

Flaherty is expected to make such an income test a condition for acquiring an CMHC insured mortgage.

Another possibility is for the minister to reduce the amortization period from 35 years to 30, which would have the effect of raising monthly payments. [note: it does not appear this happened -BB]

It is believed Flaherty rejected more radical measures to cool the housing market, which has reached record levels in sales and near record levels in average home prices despite the weak economy.

Economists have cautioned the minister against putting on the brakes too strongly. They say raising the minimum downpayment requirement to 10 per cent, one of the suggestions given the minister, could cause a crash in a key mainstay of the fragile economic recovery.

The Bank of Canada has been warning for months that homeowners should ensure they can absorb an increase in their floating rate mortgages once rates start rising, likely as early as this summer.

By the central bank’s own stress test calculation, almost one in 10 households would have a debt-service ratio that makes them vulnerable to economic shocks by the middle of 2012 if current trend continue.

In an address written for deputy governor Timothy Lane last month, the bank suggested the government has all the tools it needs to address the problem.

“An array of supervisory and regulatory instruments can be used by the government to restrain a buildup of systemic risks,” said notes the address.

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