Welcome back, everyone! Today, we’re diving into an important but often overlooked aspect of real estate: grading. Whether you’re buying, selling, or building, understanding grading can make all the difference in terms of functionality, aesthetics, and property value. Let’s learn!

What is Grading?

Grading in real estate refers to the slope or level of the land around a property. It determines how water drains, the look of the property, and even accessibility. There are different grading types that can significantly impact the usability and marketability of a property. Think of grading as your home’s first line of defence against water damage—it’s that important! Proper grading ensures water flows away from your home’s foundation, preventing issues like flooding, leaks, and structural damage.

There are two types of grading,

    •    Positive Grading: The ground slopes away from the home, directing water safely toward drainage systems. 

    •    Negative Grading: The ground slopes toward the home, which can lead to water pooling around the foundation and damage to foundation walls. 

Standard Grading (Split Lot)

A standard grade, often called a split lot, is when the land slopes gently. You’ll typically see 3 or fewer steps leading from the grade to the main floor. This setup works well for traditional homes, offering an accessible and balanced look. This is common for flat lots with minimal elevation changes.

Stoop Condition

A stoop condition features 4 to 6 steps from the grade to the main floor. It’s a middle ground between standard grading and more dramatic slopes. This type works well for urban areas, offering compact designs while still accommodating basement functionality. Many older neighbourhoods in Toronto, particularly those in the downtown core and older suburbs, feature homes with stoop grading. This architectural style was common in the early 20th century and can still be found in many historic homes. Like Toronto, Hamilton has a history of industrial development and older neighbourhoods with homes that often feature stoop grading.

Walk-Out Deck/Look-Out Deck Condition

In a walk-out deck condition, the grade drops further at the rear, creating the need for 7 to 12 steps from the grade to the main floor. This design is ideal for properties with sloped lots, and it’s perfect for adding outdoor living spaces like decks or patios. Larger basement windows are also common here.

Walk-Out Basement Condition

Walk-out basements are a game changer! Here, the grade falls significantly at the back, requiring 13 to 14 steps from the ground to the main floor. This setup creates a full-height rear entrance from the basement, adding significant livability and value. It’s particularly popular in areas with hilly terrain. The cities, such as Mississauga, Brampton, Vaughan, and Oakville, often have diverse land topography, including sloping areas. This geographic characteristic makes them prime locations for building homes with walkout basements.

Why Grading Matters?

Protects your Foundation: Grading isn’t just about aesthetics. Proper grading prevents water from pooling around your home, reducing risks of cracks, leaks, and basement flooding.

Accessibility: Flat or minimal slopes are ideal for easy access, while steep grades may need additional features like retaining walls or decks. Poorly graded lots with steep slopes can make parts of your yard unusable for patios or landscaping. Proper grading maximizes functionality.

Market Appeal: Features like walk-out basements can boost a property’s value significantly due to extra livable floors with abundant natural light.

Ontario Building Code Considerations:

In Ontario, building codes play a significant role in grading. For example, A deck is required when you exceed 3 steps above grade. Basement windows in walk-out or look-out conditions often need to meet size requirements for emergency exits. Understanding these codes ensures you avoid costly mistakes during construction or renovations.

Key Takeaways for Buyers and Sellers

If you’re a buyer, grading affects the functionality and potential of the property. For sellers, it’s all about showcasing the benefits—like increased light in basements or the ability to add outdoor living spaces. Remember, a walk-out basement or premium grading can command higher prices in competitive markets like York or Halton.

Grading might not be the most glamorous part of real estate, but it plays a huge role in protecting your home and maintaining its value. Whether you’re buying, selling, or building, understanding grading is key! 

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome friends, today were will try to unravel the financial implications of condo vs freehold ownership. There is always confusion when we meet clients,  which is better and what it takes for owning these two diverse style of assets. Lets begin.

Condo Ownership: Long-Term Financial Implications

Maintenance Fees:

Condo owners pay monthly maintenance fees to cover shared amenities, building upkeep, and contributions to the reserve fund. These fees can increase over time due to inflation or unexpected repairs, as seen in the GTA where fees rose by 5.51% in 2023. Special assessments may also arise, requiring additional payments for major repairs or budget shortfalls.

Lower Upfront Costs:

Condos are often more affordable upfront compared to freehold properties, making them attractive for first-time buyers 14.

Predictable Expenses:

Maintenance fees provide predictability for shared expenses like utilities, landscaping, and building repairs, reducing the need for individual planning. However, these fees can offset the lower property taxes typically associated with condos.

Appreciation Potential:

While condos appreciate over time, their growth may be slower than freehold properties due to additional costs like maintenance fees and potential buyer hesitations about rising fees. This filters the buyers when we decide to dispense a condo, and it finally reflects in the appreciation. 

Freehold Ownership: Long-Term Financial Implications

No Maintenance Fees:

Freehold owners avoid monthly maintenance fees but are fully responsible for all property upkeep, including repairs and landscaping. This can lead to higher out-of-pocket costs over time. Maintenance costs for freehold homes can average $6,500–$10,000 annually for major repairs spread across decades (e.g., roof, windows, heating and cooling equipment etc).

Higher Upfront Costs:

Freehold properties generally require a larger initial investment but offer greater long-term value due to full ownership of both the land and the property.

Greater Appreciation Potential:

Freehold properties tend to appreciate more significantly over time because land value typically increases faster than building value. This makes freehold ownership a stronger option for long-term wealth accumulation.

Flexibility and Control:

Freehold owners have full control over their property without restrictions from condo boards or shared governance. This autonomy allows for renovations or upgrades that can further enhance property value.

Key Takeaways

Condos: Offer lower upfront costs and predictable shared expenses but come with rising maintenance fees and occasional special assessments that can impact long-term affordability.

Freeholds: Require higher initial investment and ongoing maintenance costs but provide greater appreciation potential, flexibility, and financial independence.

Which Is Right for You?

The choice between condo and freehold ownership depends on your financial goals, lifestyle preferences, and ability to manage ongoing costs. If you value convenience and shared amenities, a condo might suit you better. If long-term growth and full control are priorities, you have budget, a freehold property is likely the better option.

For personalized advice tailored to your situation, feel free to reach out and we will be happy to help. 

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome friends to Elixir Talks, and today we're exploring a topic that might dampen your spirits - wet basements. But don't worry, we're here to shed some light on this common issue and help you navigate it like a pro.

First, let's talk numbers. Did you know that over 98% of houses have had or will have basement leakage at some point? That's right, it's practically a rite of passage for homeowners.

Identifying a Wet Basement

Now, let's talk about how to spot a wet basement. It's not always as obvious as standing water. There are certain telltale signs for which one needs to keep an eye out.

1. Efflorescence:

This white, chalky deposit on the basement walls is more than just an aesthetic issue. It's a sign of water intrusion. When water seeps through concrete or masonry, it dissolves minerals within these materials. As the water evaporates on the surface, it leaves behind these mineral deposits. While efflorescence itself isn't harmful, it indicates ongoing moisture problems that could lead to more serious issues if left unchecked.

2. Rusty nails in baseboards or rusty appliance feet:

Rust is a clear indicator of persistent moisture. When you see rusty nails in baseboards or rusty feet on appliances, it's a sign that the humidity levels in your basement are consistently too high. This excessive moisture can lead to wood rot in structural elements, compromising the integrity of your home.

3. Mold and mildew:

These fungi thrive in damp environments and can pose serious health risks. Mold can cause respiratory issues, allergic reactions, and other health problems, especially in children, the elderly, or those with compromised immune systems. The musty smell associated with mold is very typical and you cannot miss it as soon as you enter the affected area.

4. Lifted floor tiles or peeling paint:

When water accumulates in the soil around your foundation, it can seep through tiny cracks and pores in concrete or masonry. This moisture can cause adhesives to fail, leading to lifted tiles. In the case of peeling paint, the moisture pushes from behind the paint, breaking its bond with the wall.

5. Storage on skids or a dehumidifier running 24/7:

These are often signs that homeowners are aware of ongoing moisture issues and are trying to manage them. Storing items on skids keeps them off a damp floor, protecting them from moisture damage. However, this is a band-aid solution that doesn't address the root cause of the dampness. Similarly, while dehumidifiers can help manage humidity levels, running one constantly indicates a persistent moisture problem.

Let us now talk in terms of solutions, here are some best practices for maintaining a dry basement:

1. Improve drainage around the foundation:

- Ensure the ground slopes away from the house at a rate of 1 inch per foot for at least 6 feet.

- Install and maintain proper gutters and downspouts, directing water at least 6 feet away from the foundation.

2. Seal cracks and waterproof walls:

- Inspect and seal any cracks in the foundation walls or floors.

- Apply waterproof coatings or sealants to basement walls and floors.

3. Control indoor humidity:

- Use a dehumidifier to keep basement humidity levels below 50%.

- Ensure proper ventilation, especially in bathrooms and laundry areas.

- Insulate cold water pipes to prevent condensation.

4. Install and maintain a sump pump:

- Have a properly functioning sump pump to remove excess water.

- Consider a battery backup system for power outages.

5. Proper landscaping:

- Avoid planting trees too close to the foundation.

- Ensure flower beds and mulch don't trap water against the foundation.

6. Regular maintenance:

- Clean gutters and downspouts regularly.

- Check and maintain exterior drainage systems.

- Inspect the basement regularly for signs of moisture or leaks.

7. Address plumbing issues promptly:

- Fix any leaking pipes or fixtures immediately.

- Ensure proper venting for appliances like dryers and water heaters.

8. Consider professional waterproofing:

- For persistent issues, invest in professional exterior or interior waterproofing systems.

9. Improve air circulation:

- Use fans or open windows (when humidity is low) to promote air movement.

- Consider installing an exhaust fan in the basement.

10. Monitor and respond to weather conditions:

- Be extra vigilant during heavy rains or snow melts.

- Have a plan in place for potential flooding events.

By implementing these practices, homeowners can significantly reduce the risk of moisture problems in their basements, protecting their property value and ensuring a healthier living environment.

For more serious issues, there are professional solutions available:

1. Sealing foundation cracks from the outside is the most effective method, costing between $500 to $900.

2. For poured concrete walls, interior repairs using urethane or epoxy injection can work well, running about $400 to $600.

3. In extreme cases, excavating and waterproofing the exterior might be necessary. It is pricey, but it's a long-term solution.

Remember, as a buyer, you have the power to negotiate. If you're in love with a house but it has basement issues, don't be afraid to ask for repairs or a price reduction.

At Elixir Real Estate, we believe in empowering our clients with knowledge. A wet basement doesn't have to be a deal-breaker, but it's crucial to understand what you're getting into. Always get a professional inspection and don't hesitate to bring in a basement specialist if needed.

Before we wrap up, here's a quick pro tip: When you're house hunting, pay attention to how the basement feels and smells. Trust your senses - they can often pick up on moisture issues even before visible signs appear.

Remember, buying a home is a journey, and we're here to guide you every step of the way. If you have any questions about basements or any other aspect of home buying, drop them in the comments below or give us a call at Elixir Real Estate.

Don't forget to like, subscribe, and hit that notification bell to stay up-to-date with all our real estate insights. Take care and will see you soon!

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome! Today, we’re discussing one of the most debated topics in real estate: What's more important when buying a home - location or size? This age-old dilemma has puzzled homebuyers for generations, often, when I work with clients, this question is asked, and I thought it would be good to create a vlog on this.

Why Location Matters

Let's start with the classic real estate mantra: "Location, location, location." There's a reason this phrase is repeated so often in the industry.

Property Value: A home's location is often the most important factor in determining its value. A great neighbourhood can help sell your home faster and for more money than similar houses in less attractive areas.

Quality of Life: Your home's location affects your overall quality of life, including school choices, commute times, and social opportunities.

Future Appreciation: Homes in desirable locations tend to appreciate more over time. As demand for a location increases, so does the property value.

Key Location Factors

When considering location, keep these points in mind:

Centrality: Cities with limited room for expansion, like Toronto, often have higher property values.

Amenities: Proximity to grocery stores, restaurants, entertainment, recreation centres, libraries, parks, trails and public transportation can significantly impact a home's value.

School Districts: Even if you don't have children, the quality of local schools can affect your home's value.

Safety: Low crime rates make neighbourhoods more desirable and can increase property values.

Future Development: Plans for new schools, hospitals, or commercial areas can improve property values in the future.

The Argument for Size

Now, let's look at why size matters in home buying.

Growing Families: If you're planning to start or expand your family, a larger home provides the space you need.

Entertaining: More space means more room for hosting guests and social gatherings.

Work from Home: With the rise of remote work in recent times, extra space for a home office can be critical for a family.

Storage: Larger homes offer more storage options, which can be a significant advantage for many buyers.

Size Considerations

Larger homes typically cost more, not just in purchase price but also in maintenance, utilities, and property taxes.

While size does affect value, it's not always proportional. A well-designed smaller home in a great location might be more valuable than a larger home in a less desirable area.

The Verdict: Location vs. Size

While both location and size are crucial factors in home buying, location often edges out size in terms of long-term value and lifestyle impact. However, the best choice for you will depend on your specific needs, budget, and future plans. Let’s explore some finer points,

Flexibility: You can always renovate or expand a home, but you can't change its location.

Long-term Value: Location tends to have a more significant impact on long-term property value.

Lifestyle Fit: Consider your daily life and what matters most to you - proximity to work, schools, or amenities versus having more space at home.

Remember, a home is more than just an investment - it's where you'll build your life. So, consider both factors carefully, but don't be afraid to follow your heart a little too!

That's all for today, folks! If you found this information helpful, don't forget to like, subscribe, and share your thoughts in the comments below. Take good care and I will see you soon!

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Hello everyone, Today, we're diving into some exciting news that’s probable to shake up the real estate market here in the Greater Toronto Area. The Bank of Canada has just cut interest rates by 50 basis points. But what does this mean for you as a buyer, seller, or investor? Let's break it down!"

On October 23, 2024, the Bank of Canada lowered its key interest rate to 3.75%, marking the fourth consecutive cut since June. This move is aimed at boosting economic growth and easing inflation, which recently fell to 1.6%—back in line with the central bank's target.

Impact on Buyers

So, what does this mean for homebuyers? Well, lower interest rates generally translate to reduced borrowing costs. This could be a golden opportunity for those with variable-rate mortgages, as their payments might decrease in the coming months. Plus, if you're considering a fixed-rate mortgage, keep an eye out—rates might drop further if market conditions continue to improve.

For first-time buyers, this rate cut combined with new mortgage rules—like increased price caps for insured mortgages and extended amortization periods—could make homeownership more accessible. It's a promising time to explore your options!

Impact on Sellers

Now, let's talk about sellers. With lower interest rates potentially increasing buyer demand, we might see more activity in the market. However, it's important to note that while demand may rise, the prices would need to be within reason to generate traction as the market has lot of inventory already.

If you're thinking about selling and have urgency, this could be a strategic time to list your property as more buyers enter the market looking for opportunities with this cut. If your situation allows you to wait, then 3-4 months wait for the Spring time could be well worth it, with couple of more cuts impending and busier Spring market. If you are in a move-up situation, it would be better to list it at the earliest, to make more benefit on the higher priced buy side due to the slow market.

Market Dynamics

The GTA housing market is currently experiencing a surge in new listings—up 35% from last year—which has pushed inventory levels to their highest since November 2008. This means buyers have more options and negotiating power, making it crucial for sellers to price competitively. Despite this influx, prices have seen moderate declines when you consider yearly numbers. The average home price in September was down just 1.1% from last year. This stability indicates a balanced market where both buyers and sellers can find opportunities.

In September alone, home sales in the GTA rose by 8.5% year-over-year, indicating that buyers are already beginning to take advantage of more favorable market conditions.

In summary, this rate cut is likely to stimulate more activity in the GTA real estate market. Whether you're buying or selling, staying informed and prepared is key. As always, consult with your real estate professional to navigate these changes effectively.

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome, today we will discuss information that simplifies Real Estate and enables you to achieve your goals better. Today, we're diving into a topic that's reshaping the Greater Toronto Area's real estate landscape: the impact of remote work on real estate trends. The shift to remote work, accelerated by recent global events, has significantly altered how we view our living spaces and where we choose to call home. Let's explore the key ways this change is influencing real estate in the GTA.

Remote work has redefined what many people look for in a home:

Home Office Space: There's an increased demand for properties with dedicated office spaces or extra rooms that can be converted into workstations. Homes with this feature are seeing higher interest and potentially commanding premium prices. A working couple who 5 years back was happy with a 1 bed plus den setup, now looks for a larger condo footprint to ensure two work desks can be set up without conflict.

Larger Living Areas: With more time spent at home, buyers are prioritizing spacious living areas. Open-concept layouts and larger square footage have become more desirable. Condos or homes with a cozy living room is not that preferred with the changing trend.

Outdoor Spaces: Access to private outdoor areas like balconies, patios, or backyards has become a must-have for many buyers, as people seek spaces for relaxation and a change of scenery during work breaks. The young first time home buyers get more attracted towards condo townhomes where they get that additional backyard open space to spend some time in open nature. The high-rise condos due to absence of a private backyard, are less preferred.

Suburban and Rural Migration

The GTA is experiencing a notable trend of people moving away from the downtown core. With daily commutes no longer a concern for many, suburbs are seeing increased interest. Areas like Brantford, Woodstock, Courtice, Barrie and Hamilton etc are benefiting from this shift. Even areas further from GTA, such as Caledonia, Georgina, Collingwood, Grimsby, Welland, St Catherines are seeing increased demand as buyers seek more space at a lesser price point and a connection to nature.

Impact on Downtown Condos

The condo market, particularly in Toronto core, has faced some challenges. With less need to be close to offices, some buyers are opting out of the downtown condo lifestyle. Rental Market is shifting with many condos available to lease and this increased supply and reduced demand is putting downward pressure on the rental prices. Currently we are in Sep 2024, and we have 5,000 plus active lease listings available across City of Toronto, and from these 1,800 plus are just from downtown Toronto.

Long-Term Implications

While some of these trends may moderate as we move forward, it's likely that the impact of remote work on real estate will have lasting effects. Many companies are adopting hybrid work models, which may sustain the demand for homes that can accommodate both in-office and remote work. Cities and developers may need to rethink urban planning, potentially leading to more mixed-use developments and decentralized business districts.

As we wrap up, it's clear that remote work has become a significant factor in shaping real estate trends in the GTA. Whether you're a buyer, seller, or investor, understanding these shifts is crucial for making informed decisions in today's market.

Thanks for tuning in to this episode of Elixir Talks. If you found this information helpful, please like, share, and subscribe for more insights into the GTA real estate market. Until next time, stay informed and make your real estate decisions with confidence!

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Today I want to share some big news that could affect many Canadian homeowners. The Office of the Superintendent of Financial Institutions, or OSFI, has just announced a significant change to mortgage stress test requirements. Let's break down what this means and why it matters.

The Big Announcement

On September 25, 2024, OSFI revealed that it will no longer require borrowers with uninsured mortgages to undergo a stress test when switching providers at renewal. This is a major shift in policy that could have far-reaching implications for the Canadian housing market.

What is the Mortgage Stress Test?

Before we dive into the changes, let's quickly recap what the mortgage stress test is:

Introduced in 2018, the stress test requires borrowers to qualify for a mortgage at a higher interest rate than their actual rate.

The qualifying rate is the higher of 5.25% or the contract rate plus 2%.

This test aims to ensure borrowers can handle their mortgage payments if interest rates rise significantly. Stress guidelines introduced in 2012, initially only for those with less than 20% down payment. In 2018 Stress test was expanded to all mortgages, insured as well as uninsured.

Under the existing rules:

Borrowers with uninsured mortgages (those with a down payment of 20% or more) must pass the stress test when switching lenders at renewal. This has often made it challenging for homeowners to shop around for better rates, potentially trapping them with their current lender.

The Change:

Now, here's what's changing:

OSFI will eliminate the stress test requirement for "straight switches" of uninsured mortgages. A straight switch means renewing with a different lender but keeping the same loan amount and amortization schedule. This change will take effect on November 21, 2024.

Why the Change?

OSFI cites two main reasons for this policy shift:

Addressing the imbalance between insured and uninsured mortgages at renewal. The uninsured mortgages are allowed to switch lenders upon renewal, whereas consumers with uninsured mortgages where they have in fact have 20% or more as their contribution towards the property had to go through the stress test on switches.

The second reason is the data showing that the risks this policy was meant to address haven't significantly materialized.

Impact on Homeowners: A Practical Example

Let's consider a practical example to illustrate the impact of this change:

Imagine a homeowner, Jane, who bought a house in 2019 with a $500,000 uninsured mortgage at 3% interest. Her monthly payments were about $2,366.

Fast forward to 2024, and Jane’s mortgage is up for renewal. Current rates have risen to 5.5%.

Under the old rules: If Jane stayed with her current lender, she wouldn't need to pass the stress test. If she wanted to switch lenders, she'd need to qualify at 7.5% (5.5% + 2%). This made it difficult for Jane to shop around, even if other lenders offered better rates.

With the new rules:

Jane can now switch lenders without the stress test, as long as she maintains her original loan amount and amortization. This gives her the freedom to find the best rate available, potentially saving thousands over her mortgage term.

Broader Implications

This change could have several effects on the Canadian mortgage market and would see increased competition among lenders. There would be more options for borrowers at renewal time. Potential for lower mortgage rates as lenders compete for business. There could be a possible increase in refinancing activity as homeowners take advantage of the new rules.

While this is a significant change, it's important to remember that the overall goal of financial stability remains. OSFI has stated they'll continue to monitor the market and make adjustments as needed.

This change represents a major shift in Canadian mortgage policy, potentially offering more flexibility and better options for many homeowners. As always, it's crucial to stay informed and consider your individual financial situation when making decisions about your mortgage.

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Today, let us explore a crucial concept in real estate investing: the Capitalization Rate, or Cap Rate. Whether you're a seasoned investor or just starting, understanding Cap Rate is essential for evaluating property investments. This episode will definitely help you understand this concept very well and will try to make it simple.

So, what exactly is Cap Rate, and why is it important?

Cap Rate helps investors assess the potential return on an income-generating property. It's a quick way to compare the profitability of different real estate investments. Cap Rate is a ratio that measures the annual return on investment, based on the property's net operating income (NOI) and its current market value.=

The formula is simple: Cap Rate equals to NOI divided by the property's value. In other words, Cap Rate shows what percentage of your investment you can expect to earn back in a year, excluding financing costs. It's expressed as a percentage, making it easy to compare different properties. For understanding NOI better you can review our last episode here.

To calculate the Cap Rate, you need two key numbers: the property's Net Operating Income and its current market value.

Suppose you have a property valued at $500,000, and its annual net operating income is $50,000. To find the Cap Rate, divide the NOI by the property value.

In this example, the Cap Rate is 10%. This means you're earning a 10% return on your investment annually, based on the property's income and value.

Now, how do you interpret the Cap Rate? Generally, a higher Cap Rate indicates a higher return and risk. Conversely, a lower Cap Rate suggests a lower return with less risk. It's essential to balance these factors based on your investment strategy.

For instance, a property with a Cap Rate of 10% might be in a less desirable area, implying higher vacancy rates or maintenance costs. On the other hand, a 5% Cap Rate property in a prime location might offer more stability and consistent income. For example, properties in emerging suburban markets might offer higher Cap Rates due to the increased risk, while properties in stable, high-demand areas might have lower Cap Rates due to lower risk.

In downtown Toronto, you might find properties with Cap Rates around 3-5%. These lower Cap Rates reflect the high demand and stable market conditions. On the other hand, properties in developing areas like Hamilton or Oshawa might offer higher Cap Rates, say around 6-8%, reflecting the potential for higher returns but also higher risk.

These examples highlight the importance of understanding the local market conditions when evaluating Cap Rates.

Several factors can affect a property's Cap Rate. These include the property's condition, location, market demand, and overall economic conditions. Improvements and renovations can also impact the NOI, thus affecting the Cap Rate. For instance, upgrading a property's amenities can increase its NOI, leading to a higher Cap Rate.

Cap Rate is a valuable tool for comparing investment opportunities. It helps you assess whether a property aligns with your investment goals. However, it's crucial to consider it alongside other metrics like cash flow, appreciation potential, and financing costs.

Now let us look at some scenarios from the Greater Toronto Area to see how Cap Rates play out.

A multi-family property in Mississauga is valued at $1,500,000 with an annual NOI of $105,000.

This property has a Cap Rate of 7%. It's a solid investment with a good balance between return and risk, considering Mississauga's growing population and job market.

A retail space in downtown Toronto is valued at $3,000,000 with an NOI of $180,000.

This gives us a Cap Rate of 6%. While the return is lower, the prime location in downtown Toronto offers excellent stability and potential for long-term appreciation.

An industrial property in Brampton is valued at $2,200,000 with an NOI of $198,000.

This property has a Cap Rate of 9%, indicating a higher return. However, industrial properties can have higher vacancy rates, so it's essential to consider all factors.

Several factors can influence Cap Rate, including location, property condition, and market conditions. Let's take a closer look.

1. Location: Prime locations generally have lower Cap Rates due to higher demand, higher value and lower risk.

2. Property Condition: Well-maintained properties attract better tenants and higher rents. This directly impacts the NOI and Cap Rates.

3. Market Conditions: Economic factors, interest rates, and local market trends impact Cap Rates.

4. Lease Terms: Long-term leases with stable tenants can lower risk, affecting the Cap Rate.

5. Vacancy Rates: Higher vacancy rates increase risk and can result in higher Cap Rates.

Let us also consider some ballpark estimates for various commercial real estate categories,

Office Buildings: Typically range from 4% to 8%, with higher cap rates for properties in secondary markets or with lower-quality tenants.

Retail Properties: Can vary widely from 4% to 12%, depending on location, tenant mix, and lease terms. High-street retail in prime locations often has lower cap rates.

Industrial Properties: Generally range from 5% to 9%, but can be higher for properties in less desirable locations or with older buildings.

Multifamily Residential: Typically between 4% and 8%, with lower cap rates for properties in desirable urban areas and higher cap rates for properties in suburban or rural areas.

Single-Family Homes: Cap rates can vary significantly based on location and market conditions. As an investment property, they typically range from 4% to 8%.

Understanding Cap Rate is crucial for making informed real estate investment decisions. It helps you evaluate the potential return and compare different properties effectively. Remember to consider all factors and use Cap Rate as a guide, not the sole determinant.

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Today, we're diving into an essential topic for real estate investors: Understanding Net Operating Income, or NOI. Whether you're a seasoned investor or just starting, grasping the concept of NOI is crucial for making informed decisions. So, let's break it down and I will try to make it simple for you to understand!

What is NOI and Why Does it Matter?

Net Operating Income is a key metric used to evaluate the profitability of an income-generating property. It helps investors determine the potential return on investment and make comparisons between different properties. But what exactly is NOI, and how do you calculate it?

First, let's define Net Operating Income. NOI is the total income generated from a property, minus the operating expenses required to maintain it. It excludes costs like taxes, mortgage payments, and depreciation. In other words, NOI focuses on the property's operational efficiency.

The formula for NOI is straightforward: Gross Operating Income minus Operating Expenses. Let's break this down further.

Gross Operating Income, or GOI, includes all the revenue generated from the property. This typically comes from rental income but can also include other sources like parking fees, laundry machines, advertising signs, or vending machines.

For example, if a property generates $80,000 in rental income, $2,500 from parking fees, $1,500 from laundry machines, and $1,000 from vending machines, the Gross Operating Income would be $85,000.

Next, we have Operating Expenses. These are the costs required to keep the property running efficiently. Common operating expenses include property management fees, maintenance and repairs, legal fees, utilities, property insurance, and marketing costs etc.

For instance, if in our example the property incurs $8,000 in management fees, $4,000 in maintenance, $3,000 in utilities, and $1,500 in insurance, the total operating expenses would be $16,500.

With a Gross Operating Income of $85,000 and operating expenses of $16,500, the NOI would be $68,500. So, the Net Operating Income for this property is $68,500. This figure gives us a clear picture of the property's profitability, excluding financing and tax expenses.

But why is NOI so important? For investors, NOI provides a snapshot of a property's financial health. It helps in comparing different properties, assessing potential returns, and making informed investment decisions. It's a measure of a property's ability to generate income from its operations. Understanding NOI is essential for:

Property Valuation: NOI is a key component in determining a property's value using capitalization rates or cap rates.

Investment Analysis: Comparing NOI from different properties helps investors assess potential returns.

Cash Flow Estimation: While not identical, NOI is closely related to cash flow, which is the ultimate goal for most real estate investors. To calculate cash flow, you subtract debt service (mortgage payments) and income taxes from NOI. Positive cash flow is essential for most real estate investors.

NOI and Capitalization Rates

The capitalization rate (cap rate) is a key metric in real estate investment. It's calculated by dividing the NOI by the property's value. A higher cap rate generally indicates a higher potential return, but it's essential to consider other factors like property location and market conditions.

Let's consider another example from the Greater Toronto Area. Suppose you own a multi-family rental property in downtown Toronto. The property generates $250,000 in rental income annually, with additional revenue from parking and storage fees totalling $25,000. Your total Gross Operating Income is $275,000. After accounting for operating expenses like property management, maintenance, and utilities amounting to $85,000, your NOI would be $190,000.

In this case, the NOI of $190,000 indicates the property's profitability, which you can use to compare with other investment opportunities in the GTA.

Understanding Net Operating Income is essential for anyone serious about real estate investing. It helps you evaluate properties, make informed decisions, and ultimately achieve your financial goals. If you have any questions about NOI or need help with your real estate investments, feel free to reach out.

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome back, Elixir Family! Today, we’re going to look into some ground-breaking changes in Canadian mortgage rules that are set to reshape the home-buying landscape. These updates are not just minor tweaks; they're the most significant reforms we've seen in over a decade. So, let's break it down and see what this means for you, especially if you're a first-time homebuyer.

Historical Context

Before we jump into the exciting changes, let’s rewind back to understand the impact of these new regulations. Back in 2006, you could get an insured mortgage with a 40-year amortization period. Imagine that! But things changed and in 2008 we saw it drop to 35 years. 2011 brought it down to 30 years. And in July 2012, we hit the 25-year mark, which has been the standard until now, i.e. 2024.

Also in 2012, the government capped insured mortgages at $1 million. Despite skyrocketing home prices specially since 2015, this cap hasn’t changed... until now.

Now, let's talk about what are the new big changes and when it's happening:

Extended Amortization Periods

As of August 1, 2024, first-time homebuyers can already access 30-year amortizations for newly built homes. This is huge for those eyeing fresh developments!
Mark your calendars for December 15, 2024. That's when 30-year amortizations expand to all first-time buyers, whether you're looking at a new build or a amazing resale opportunity.

Let us try to understand with an example: if you take a mortgage for principal of $800,000 from financial institution, say with a fixed term of 3 years at 4% rate and amortization of 25 years, the mortgage amount will come at $4,208 per month. With the new rules and for same figures, if we just alter the amortization to 30 years, the mortgage commitment per month would reduce to $3,804.

Increased Insured Mortgage Cap

Effective December 15, 2024, the insured mortgage cap jumps from $1 million to $1.5 million. Or in other words we have reduced minimum down payment requirement for homes priced between $1M and $1.5M. This is a significant change, especially in our pricier markets. Buyers can now look at homes between $1 million and $1.5 million with less than a 20% down payment. This opens up a whole new segment of the market for many buyers. Significantly reduces the upfront cost of buying a home in these price ranges. Right now the buyers were just limited to sub-million purchases due to this restriction on insured mortgages.

Overall, these changes are expected to benefit first-time homebuyers in several ways:

Lower monthly payments: The extended amortization periods can reduce monthly mortgage payments, making it easier to afford a home.  

Increased affordability: The increased insured mortgage cap and reduced minimum down payment requirements can make homeownership more accessible in high-cost housing markets.  

Greater flexibility: The changes provide more flexibility for first-time homebuyers in terms of the size of the home they can afford and the down payment they need to save.

Potential Market Impact

    1    Increase Competition While these changes are exciting, they could have broader effects on the market: Increased Demand: We might see more buyers entering the market, potentially increasing competition. 

    2    Price Pressure: This could put upward pressure on home prices, especially for in-demand metro markets like Toronto, Vancouver, Montreal, Calgary, Ottawa etc. 

    3    Market Stimulation: These changes could energize the market which was developing lot of fatigue in terms of buyers sentiments for good 2 years plus now, possibly leading to more construction and development. 

It's important to approach these changes with a balanced perspective: Longer amortization periods mean more interest paid over time. The potential for increased demand could offset some affordability gains as it might lead to increase in property prices.

As we wrap up, I want to say that these reforms represent the most significant changes to Canadian mortgage rules in over a decade. They're designed to make homeownership more accessible, but they also come with considerations that need careful thought. At Elixir Real Estate, we're here to help you navigate these changes. Whether you're ready to jump into the market or just starting to consider homeownership, we can guide you through the process and help you make informed decisions.

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome, we will explore a topic that many homebuyers struggle with Fixer-Uppers vs. Move-In Ready Homes. Which one is the right choice for you? Let's break it down and find out. Let's get started!

When it comes to buying a home, you generally have two primary options: a fixer-upper, which may need some tender love and care or in short TLC, and a move-in ready home, which is ready for you to settle in from day one. Each option has its own set of pros and cons, so let's explore them in detail.

First, let's talk about fixer-uppers. These homes typically need repairs or renovations but can offer unique opportunities. Here are some key benefits:

Lower Initial Costs

Fixer-uppers are usually priced lower than move-in-ready homes, which can make them more affordable upfront. Since the home would require updates, you will have the upper hand in negotiation and would be able to get it at a reasonable price, irrespective of the market conditions. There are always fewer takers of properties which need some work, and that is where you score if you have finances, resolve and time on your side to take up the project.

Customization:

You have the freedom to renovate and design the home to your exact preferences and needs. There is no need to settle with aesthetic choices which previous owners have made. The painting, flooring, kitchen cabinetry, bath vanities, lighting, ceiling finishes, door inserts, appliances etc. Everything would be based on your choice and how you want to define the aesthetic of the home.

Potential for Equity:

With the right improvements, you can significantly increase the home's value, building equity swiftly. At the time of dispensing the property, all of this equity can be realized.

When we speak about the challenges for Fixer-uppers, they have a fair share, they need a lot of cash and sweat equity which is needed to plan, manage and execute the renovations. This whole process requires money to pay for the labour plus material along with the opportunity cost during the vacation time when the property is empty and being built. In fixer-upper projects, there is also a fair potential of discovering some unforeseen issues, which might increase the overall project cost.

Now, let's shift our focus to move-in-ready homes. These properties are fully updated and require no immediate work. Here are the benefits of choosing a move-in ready home:

Convenience:

You can move in right away without worrying about renovations or repairs. The whole premium paid is for this ease of living right of the bat after closing on the property.

Predictable Costs

There are fewer surprises with move-in ready homes, so you can budget more accurately. With the renovations, the previous owners would have majorly taken care of other issues as they surfaced.

Of course, there are some downsides to consider as well: Move-in ready homes typically come with a higher price tag compared to fixer-uppers, there is always a premium for that shiny kitchen and quartz counters with built-in appliances, the custom glass shower enclosures in bath, or the spic and span interlocking on the driveway. The customization opportunity to tailor to your taste is limited, as you are less likely to delete a recently replaced floor or fresh painting with a new one, and would wait for some time to do any net new updates. And, finally, the potential for up-side is less, the possibility of increasing the price of the property with some updates is limited as already premium is paid for the reno's in the home.

Here you can see a quick comparison between these two approaches. There is no right or wrong answer, if you are willing to invest some sweat equity into the project want to have additions as per your liking, and have some cash on hand to implement the updates, its always beneficial to buy a non-updated asset.

If you are of the kind where you need something ready to possess and start enjoying from day one, or have limited cash reserves, the ready-to-move-in properties should be your go-forward path. At Elixir Real Estate, we're here to help you navigate the process and find the perfect home for your needs. Have any questions about fixer-uppers or move-in-ready homes? 

Remember, buying a home is a significant investment, so take your time and do your research. 

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome friends, Today we’re discussing an essential topic for every home seller in Ontario: the legal disclosures required when selling your home. Whether you’ve sold often or are a first-timer, understanding these disclosures can save you from potential legal troubles and ensure a smooth transaction. Let's get started!

Ready to sell your home? Let's ensure you know what must be disclosed legally to potential buyers!

In Ontario, certain disclosures are mandated by law to protect both the buyer and the seller. These disclosures are essential to ensure that the buyer is fully aware of the property's condition and history. The thumb rule to follow is: When in doubt, disclose it! Transparency is key to a smooth real estate transaction. Here's a breakdown of the main disclosures:

    •    Latent Defects: You must disclose any hidden defects that make the home dangerous or unfit for habitation, even if they are not immediately visible. Examples include structural foundation issues, mould, or faulty electrical systems. Any defect which is latent and not seen by the naked eye should be disclosed. Sellers are obligated to disclose latent defects. On the other hand patent defects are something which can be seen, like chipped-off paint, missing roof shingles, cracked ceramic tiles, cracked driveway, damaged downspouts, broken windows, stained carpets, broken fixtures etc. Generally, buyers are expected to discover the patent defects through reasonable inspection and due diligence; and for patent defects, the reasonable expectation is that the Seller will provide a disclosure, where required. 

    •    Property Condition: Any material facts that could affect the property's value or desirability should be disclosed. This includes past flooding, foundation issues, fire incidents, or termite infestations. 

    •    Renovations and Repairs: Any major renovations or repairs that have been done without proper permits or that may not comply with building codes need to be disclosed. This helps buyers understand the scope and legality of the work done on the property. 

    •    Environmental Hazards: Disclose the presence of any environmental hazards such as asbestos for insulation, lead paint, or radon gas. This is crucial for the safety and well-being of the potential buyers. 

    •    Neighbourhood Issues: Any known neighbourhood issues, such as frequent noise disturbances, ongoing disputes, or upcoming construction projects that could affect the quality of living, should be communicated. 

Selling your home? Make sure you're fully transparent with these disclosures! Share it with anyone you know who's planning to sell their property. Understanding and adhering to these disclosure requirements not only protects you from potential legal issues but also builds trust with your buyers, making the entire selling process smoother and more efficient. At Elixir Real Estate, we're here to guide you every step of the way. If you have any questions or need assistance with selling your home, don't hesitate to reach out.

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome back, friends! Today, we're discussing an exciting topic that's been gaining traction in the real estate world: Virtual Staging vs. Traditional Staging. Whether you're a seller, a buyer, or just curious about the real estate market, this one's for you! Let's get started!

Traditional Staging

[show one after the other images of traditionally staged living and bedrooms]

Let's start with traditional staging. This is the classic approach where you bring in professional stagers to transform your empty or cluttered space into a stylish and inviting home. They'll bring in furniture, decor, and even artwork to create a space that appeals to the widest range of buyers. The goal is to help potential buyers envision themselves living there.

Pros:

Staging done in traditional manner creates a strong first impression, when the prospect comes in to view your property, they can feel the usability of the spaces with the staged furniture, it becomes experiential. When you are in process of doing traditional staging, by process you are able to identify any other shortcomings of the property and take care of those and make it more appealing.

Cons:

Traditional Staging setup can be expensive, it takes time to plan, transport and setup the furniture and lastly it needs you to first empty the living space with existing infrastructure and furniture, or decluttering your home.

Virtual Staging

This is where technology comes in to save the day. With virtual staging, high-quality images of your empty space are digitally transformed to show what the room could look like with furniture and decor. This is usually done by virtual stagers, or these days lot of great AI software's do their magic to turn spaces and areas to professionally looking spaces.

Pros:

Cost-Effective: Virtual staging is generally much cheaper than traditional staging since there's no need to rent or move physical furniture.

Quick and Flexible: It's faster to implement and allows for easy changes to the design style without the need to physically rearrange anything.

Less Time to Market: The turnaround time is must faster which enables your listing to go live that much quicker to market

Cons:

Buyers cannot physically experience the space.

Some buyers may need traditional staging to determine the usefulness of the property during their in-person visit.

Which one is better for you?

Budget: Virtual staging is generally more affordable than traditional staging.

Timeline: If you need to sell your home quickly, virtual staging can be a faster option.

Flexibility in terms of options on how you want to showcase a living area.

Buyer Interaction is better in the traditional model, as the prospect can walk around the furniture and visualize better.

Consider the preferences of your target buyers. Some may prefer to see a physically staged home. If your home needs significant repairs or updates, traditional staging might help to address these issues during preparation time.

Hybrid Approach

Often there is a hybrid approach one can utilize by doing a traditional staging at the main level living areas and a virtual staging at the bedroom level. This would cut down on costs and at the same time give the benefits of traditional staging, and the impact when one enters the property for in-person review.

I hope this blog helped you better understand the differences between virtual and traditional staging. Remember, the goal is to create a space that appeals to the widest range of buyers and helps your home sell smoothly for top dollar.

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome, Today, we're talking about something that could be very helpful in your homeownership journey: the First Home Savings Account, or FHSA. If you're looking to buy a home in Ontario, this might be the financial tool you've been waiting for.

So, what exactly is the FHSA? The First Home Savings Account is a new savings program introduced to help first-time homebuyers save up for their dream home. Think of it as a hybrid between an RRSP and a TFSA, combining the best features of both. It's a government-registered savings account designed specifically to help you save for your first home. Think of it as a supercharged savings account with extra benefits.

Key Features of FHSA

Tax-Deductible Contributions: Just like an RRSP, the contributions you make to your FHSA are tax-deductible for that year where contributions are made. This means you can reduce your taxable income, which can be a big bonus at tax time.

Tax-Free Withdrawals:

Similar to a TFSA, when you withdraw funds from your FHSA to buy your first home, those withdrawals are completely tax-free.

Annual Contribution Limit: You can contribute up to $8,000 per year, with a lifetime maximum of $40,000. This can significantly boost your savings over a few years. You are able to carry forward your unused contributions to the next year. For example, if you contributed only $4,000 in one year, you’d be able to carry forward your remaining $4,000 contribution to the next year, in addition to your new annual limit of $8,000. This would mean you will be able to do a tax-deductible contribution of $12,000 ($8,000 + $4000 = $12,000) in the following year.

After opening an FHSA account within 15 years you can utilize it for your first home purchase, or until you turn age 70.

Opening an FHSA is simple. You can open an account at most major banks and financial institutions in Ontario. You'll need to provide proof that you're a first-time homebuyer, and then you can start making contributions right away. Also, I want to mention that if you open an FHSA account and didn't decide to buy a home, it can still be converted to a RRSP, this flexibility makes it even more appealing.

And to top it all FHSAs allow to hold similar type of investments as we have in RRSPs or TFSAs, you can buy GICs, Mutual Funds, Stocks and government bonds etc.

FHSA is an individual savings plan, so you and your spouse can open your own FHSAs and maximize the reduction in taxable income and leveraging the funds towards your first home purchase.

FHSA vs. RRSP Home Buyers' Plan

You might be wondering, how does the FHSA compare to the RRSP Home Buyers' Plan? While both are great options, there are some differences:

Repayment

With the RRSP Home Buyers' Plan, you can withdraw up to maximum of $35,000 to buy your first home, but you have to pay it back over 15 years, beginning in second year following withdrawal. You can review more information on RRSP Home Buyer Plan in this blog here: RRSP Home Buyer Plan .

The FHSA, on the other hand, does not require repayment, making it a simpler and potentially more attractive option for many buyers.

Holding Period

In FHSA there is no minimum holding period or lock-in period before the money can be withdrawn for purchase, in RRSP Home Buyers Plan there is a 90 days hold and funds need to be in the account before any withdrawals are made.

Maximum Annual Contribution

In FHSA the limit is $8,000 per year, upto a life time maximum of $40,000. For RRSP its lesser of 18% of your income or annual limit set by the government for that year.

In summary, while both FHSA and RRSP offer tax advantages, the FHSA is specifically tailored to help first-time homebuyers, while the RRSP is focused on retirement savings. And yes you can combine both of these programs, and if both spouses are contributing they can maximize their withdrawals to fund contributions for their first home purchase.

The FHSA is a fantastic tool to help you save for your first home. By taking advantage of the tax benefits and the ability to withdraw money tax-free for your down payment, you can get a head start on your homeownership journey.

Wish you all the very best! Reach out to our dedicated team at Elixir with any queries you have about real estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Hello everyone, and welcome back to Elixir Talks! Today, we're addressing a common dilemma that many homeowners face when selling their property: Should you price your home competitively or slightly higher to attract offers? Let's review into the pros and cons of each approach to help you make an informed decision."

First, let's talk about pricing your home competitively. This strategy involves setting a price that is in line with or slightly below the current market value of similar homes in your area. Here are some benefits of this approach:

 Attracts More Buyers: A competitive price can generate more interest and increase the number of potential buyers viewing your property. This can lead to multiple offers, driving up the final sale price. I always say that a well presented property will automatically bear its price in the given market and attract a credible buyer.

 Sells Faster: Homes priced competitively tend to sell more quickly because they attract serious buyers who recognize the value. This reduces the time your home sits on the market, which can be advantageous in a dynamic market.

 Avoids Price Reductions: By pricing your home competitively from the start, you minimize the risk of having to reduce the price later. Frequent price reductions can make buyers skeptical and less likely to make an offer.

Now, let's consider the strategy of pricing your home slightly higher than market value. This approach can also have its advantages:

 Room for Negotiation: Pricing slightly higher gives you some wiggle room to negotiate with buyers. It allows you to accommodate offers that come in below your asking price while still achieving a satisfactory final sale price.

 Perceived Value: Some buyers may perceive a higher-priced home as being of higher quality or having more desirable features. This can attract buyers who are willing to pay a premium for what they believe is a superior property.

 Targeting Specific Buyers: Pricing slightly higher can target a different segment of buyers who are looking for a certain price range. This can be effective if your home has unique features or amenities that justify a higher price. If your property has substantial updates, it could very well work if those updates are reflected well in the marketing material.

However, it's important to be aware of the risks associated with overpricing your home:

Fewer Showings: An overpriced home can deter potential buyers from scheduling showings. They may view it as out of their budget or not worth the asking price, leading to less traffic and fewer opportunities to sell.

Longer Time on Market: Homes that are overpriced tend to sit on the market longer. The longer a home sits, the more it can develop a sentiment in the prospects, making buyers wonder if there's something wrong with the property.

Potential Price Reductions: Ultimately, you may need to reduce the price if your home doesn't attract offers. Multiple price reductions can make buyers think you're desperate to sell, which can result in even lower offers.

So, should you price your home competitively or slightly higher? The answer depends on various factors, including your local market conditions, the unique features of your home, and your selling timeline. Here's a balanced approach to consider:

 Market Analysis: Work with a knowledgeable real estate agent to conduct a thorough market analysis. Understand the comparable sales in your area and the current demand to set a realistic price range.

 Highlight Unique Features: If your home has unique or desirable features that justify a higher price, make sure they are prominently highlighted in your marketing materials and during showings.

 Flexibility: Be prepared to adjust your pricing strategy based on feedback and market response. Flexibility can help you find the sweet spot that attracts serious buyers while achieving your financial goals.

To recap, whether you choose to price your home competitively or slightly higher, understanding the pros and cons of each approach is key. At Elixir Real Estate, we're here to guide you through every step of the selling process, ensuring you make the best decision for your unique situation. If you have any questions or need personalized advice, don't hesitate to reach out to our team. Thanks for watching, and be sure to like, share, and subscribe for more real estate tips and insights. See you next time on Elixir Talks!

Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Hello everyone, Thinking of selling your home and needing it gone smoothly? You're not alone! Today, we will uncover some winning strategies to get your "For Sale" sign replaced with a "Sold" one in no time. So, grab your pen and take notes, because we're about to make your home a hot commodity!

Selling a home quickly requires a multi-pronged approach. Here are some key strategies to consider:

Pricing Power:

Market Research is Key. Understanding current market trends and recent sales of comparable properties in your neighbourhood is crucial to strike the sweet spot. Overpricing can scare away buyers, while undervaluing leaves money on the table for us as a Seller. A competitive price attracts more interest and drives faster sales. Pricing right will reap compound benefits in the timeliness of the sale.

Declutter and Depersonalize:

Like with everything else, First Impressions do matter in Real Estate. Buyers want to envision themselves living in the space. Pack away clutter, minimize personal items, and create a clean, spacious feel; the buyer prospects should be able to freely walk in the living spaces.

Consider strategic furniture placement by taking assistance from a Staging expert, add colours with decorative accents, and enhance curb appeal with landscaping and a welcoming freshly painted front door. A well-staged home creates a positive first impression and makes buyers emotionally connect with the property.

Best in Class Marketing Material

Professional Photography is a Must: High-quality photos are essential for grabbing attention online. Invest in professional photography to showcase your home's best features.

Adopt Multi-Channel Marketing. Advertise your listing on major real estate websites, social media platforms, and local publications to create the awareness of your new listing. Consider running virtual tour campaigns to showcase your home to a wider audience.

Open House Advantage:

Showcasing Your Gem to active prospects. Schedule open houses at convenient times for potential buyers. Weekends and evenings typically see higher traffic. Have informative flyers and property details available. Make minor repairs and ensure the house is clean and inviting. Consider offering refreshments to create a welcoming atmosphere. Open Houses are traditionally not known for attracting the buyers, however, at times it does help to lengthen the time property is available to show to a wider audience. And it has happened that someone visiting an open house has recommended the property to a qualified buyer.

Negotiation Edge:

Work with an experienced real estate agent, who can guide you through negotiations, present offers effectively, and advocate for your best interests. Be Flexible, but Firm: Be prepared to negotiate, but don't undervalue your home. A good realtor can help you find a win-win solution with a qualified buyer.

To recap, the best strategy to sell your home quickly involves pricing it right, staging it beautifully, marketing it effectively, being flexible with showings, and having a skilled negotiator by your side. At Elixir Real Estate, we're committed to making your home-selling journey smooth and successful. If you have any questions or need assistance, don't hesitate to reach out to our team. Thanks for watching, and be sure to like, share, and subscribe for more real estate tips and insights.  

Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome back, today, we're tackling a common question for homeowners: Seller's market vs. Buyer's market – what it means to deal with these markets. Whether you're thinking of selling or buying, understanding the market conditions can make a big difference.  So, let us examine the key differences and how we should navigate them as a buyer or seller.

Seller's Market:

Imagine a scene with multiple offers flying in, bidding wars commonplace, and homes selling above the asking price.  That's a seller's market in a nutshell!  Here's what it means for you:

High Demand, Low Supply: Buyers are plentiful, and homes are far few. This creates fierce competition, driving prices up. In the GTA region, this was the norm in the last quarter of 2021 and the first quarter of 2022.

Multiple buyers vying for your property can significantly increase your selling price, more often in such markets you will see classic multiple offers situations. 

Quick Sales: Your home is likely to sell quickly, sometimes within hours of listing coming up in the market.

Negotiation Power: The seller holds the upper hand. You have more leverage to negotiate terms favourable to you, like closing dates and inclusions.

If you are a Buyer in a Seller's Market, it can be challenging. You'll need to act fast and be prepared for competition. It’s crucial to have a cushion in the budget and be ready to make quick decisions. But, do not get overboard in the price you pay, as if the market subsides you have lost your immunity and pricing advantage. So, if you are a buyer in a sellers market, still remain as objective as possible in the whole process and do not get emotional on a property. 

Buyer's Market:

Now, picture a calmer scene with more houses on the market and less competition.  That's a buyer's market!  Here's how it plays out:

More Choice: Buyers have a wider selection of properties to choose from, allowing them to find their dream home. They can take their own sweet time to compare properties and settle for the best one that meets their aspirations.

Lower Prices: With less competition, sellers may be more open to negotiating a lower price for a credible buyer.

Better Negotiation: Buyers have more leverage in negotiation and in addressing deficiencies identified during the home inspection.

Objective Decision-Making: The urgency to buy or sell is lessened, allowing for more focused decision-making.

But what if you're a seller in a Buyer's Market? It can be tough. You may need to price your home more competitively, be patient with the selling process, and be prepared to make concessions to attract buyers. The marketing material, brochures, social media campaigns, staging elements - All of these become far more important for us as Sellers in a Buyer's market. As a seller, we need to make sure our listing stands out in the sea of listings.

If you are Selling? A seller's market is ideal. You can potentially sell quickly and for top dollar. And if you are in for Buying? A buyer's market offers more options, potentially lower prices, and greater negotiating power. The current market is more tuned towards Buyers, for both first-time home buyers and move-up. If you are a Seller in the current market and don’t want to buy or enter again, you should hold on and not sell at this time.

At Elixir Real Estate, we're here to help you navigate both Seller's and Buyer's Markets. Whether you're buying or selling, our team is dedicated to ensuring you get the best deal possible. Thanks for watching, and don't forget to like, share, and subscribe for more real estate tips and insights. See you next time on Elixir Talks!

Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome back, today, we're tackling a common question for homeowners: Seller's market vs. Buyer's market – what it means to deal with these markets. Whether you're thinking of selling or buying, understanding the market conditions can make a big difference.  So, let us examine the key differences and how we should navigate them as a buyer or seller.

Move-Up Magic in a Slow Market

In a move-up scenario, homeowners upgrade to a larger or better property.  Maybe you're a family in a townhouse moving to a semi-detached home, or a semi-detached family transitioning to a detached home. Or moving from a Single Garage Detached to a Double Garage home. Or moving from a high-rise condo to a freehold asset.

Understanding the Current Market

First, let's get a sense of where we are. Here's a graph showing yearly TRREB MLS sales for the past 13 years. As you can see, 2023 and 2022 were slow years with significantly lower sales volumes, specially when compared to 2011, which saw around 89,000 units sold. Cut to 2023 and we had only 65,884 sales in the GTA. This highlights the market's sluggishness, even after thirteen years worth of population growth and new subdivision developments, the quantum of sales reduced dramatically.  Even in 2024, so far the first half saw only 36,586 transactions despite an interest rate cut announced in June, proving the slow nature of market.  Two more cuts are likely this year, and up to four expected in 2025.

This slower market allows us to negotiate well for buyer clients, with properties generally available at credible prices. So, if you've been contemplating a move-up, this could be the perfect opportunity!

The Move-Up Advantage

In a move-up scenario, you're selling your current home and buying a better one in terms of location, size, specifications and lot. Yes, your existing home will sell at the current market price, which might be lower than a peak market. However, the property you're purchasing will likely be at a higher price point, offering greater potential for appreciation. Ultimately, the gains you make on the purchase will outweigh the discount you might give on the sale, since both transactions occur in the same slow market.

Downsizing vs. Move-Up

This logic doesn't apply to downsizing.  In a downsizing scenario, you'd likely lose more on the sale of your larger home and gain less on the purchase of a smaller one due to the lower price point.

Benefits of Moving Up Now

The current market offers two key benefits for move-up buyers:

Price Saturation where Prices for larger properties are also saturated, minimizing the potential loss when selling your current home.

Inventory Choice with less competition, you have a wider selection of properties to find your perfect fit.

Selling First, Buying Second is Key

Now the questions comes when in a Move-Up scenario should I Buy First or Sell First. In a slow market, prioritize selling your current home first. Secure a sale with a longer closing to give yourself time to find your ideal move-up property. Once your sale is firm, you can confidently purchase your new, bigger home. Listing your current home while searching allows for continued viewings and potential offers. This strategy minimizes pressure and ensures a smooth move-up experience. You will be in the commanding position, to sell your home at a reasonable market price, and then negotiate well for the move-up.

Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

 Today, we'll focus on the second type of appreciation in real estate: Forced Appreciation. Let’s go into the basics and see how this influences asset prices. 

In our last blog, we covered how natural growth in regions and economies, coupled with regular inflation, translates to price increases, known as 'Market Appreciation'. Conversely, 'Forced Appreciation' occurs when growth is driven by the owner's efforts to enhance its use and appeal. Let's explore the various ways an asset owner can induce Forced Appreciation, which I will clarify through several examples in addition to the property 

Increase the number of Baths

This is a typical case where a property gets functionally better when we enhance its specifications. Let us consider an example of a 2-storey 3-bedroom single garage home, which has 3 bedrooms at the upper level and has only 1 full bath. For such properties, if our upper floor plan allows us to add another full bath with a permit and if we implement that. This immediately does two things, firstly it enhances the usage of the property and pushes its market value upwards. With changes, the property is a 3-bedroom/2.5 Bath home. It is much more usable to a wide variety of buyer families/investors. They are willing to pay more for the same property, and this immediately increases its value. The second impact is that the change increases the property to attract more rent as now the tenant is willing to pay more for the same property. Due to the increase in rent potential now the investor community is better attracted to the property. 

Increase number of Bedrooms

This is a scenario where there is a potential to carve out an additional bedroom in the property. One of our clients purchased a detached 1,150 sq ft bungalow above grade which had only 2 bedrooms at the upper level, the owners had changed the original 3 bedrooms to a 2-bedroom setup to make them bigger. Our clients bought this specifically for this upside potential in an otherwise bigger home. They applied for building permits with the town and changed it back to a 3-bedroom layout and made it contemporary open concept plan. As you can see here, the old plan had a kitchen and that was changed to a bedroom and the huge living area in the newer plan now had an open-concept kitchen. This enhancement of one bedroom increased the appeal of the property and it impacted the market value positively as usability was enhanced.

Increase the Footprint of the property 

There are cases where the lot of a property is substantial enough that it allows you to increase the built area of the property. We recently had a similar instance where one of our excellent clients purchased a bungalow detached with had 3-bedroom 1 full bath at the upper level. They modified the plans to create a spacious ensuite for the primary bedroom with a complete walk-in closet, this addition of almost ~350 sq ft above grade, gave them an additional 350 sq ft of space in the basement as well. And it enhanced the usability of the property by leaps and bounds, for their living and also for future saleability. Almost, 700 plus sq. ft. of extra livable space was created. When lot is big and it allows as per zoning the ability to expand the current home, the new size increases its livability and appeal. These things are mostly possible in older bungalow-type dwellings where the lots are spacious both in terms of width and depth. This allows such lots to extend the current footprint of the dwelling and force appreciation. 

Kitchen Remodelling

A kitchen is another awesome way to increase the appeal of a property, as soon as you remodel and change the cabinetry, back splash and countertops of a kitchen, it immediately enhances the overall appeal and attraction. The kitchen is a sure centrepiece of any property and having an attractive Kitchen increases usability and gives an instant appreciation to the property. In my experience if the kitchen is updated in a home, it makes the sale process smoother and attracts best dollar for you as per the relevant market. 

The second Unit in the Basement

For major municipalities in the Greater Toronto Area, where the population is huge and there is a lot of rental demand. In such locations and in compliance with local zoning by-laws, if they allow for the creation of a second unit dwelling in the basement. It could be a very solid way to engage the upside potential of the dwelling. Here you can see the before/after plans for a typical basement and its evolution into a second-unit dwelling. This gives a possibility of an additional income stream from the lower unit and it serves as a mortgage helper for families buying the property for their own living. For investors, it gives them the benefit of dual cash-flows from upper and lower levels. Due to this increase in potential, the market price gets an immediate push with the creation of second units in the property.  There are also ADUs or additional unit dwellings which if permitted by the local municipality – planning and building departments, can add an upside potential. The discussion on ADUs would require a completed dedicated talk and we will create it in one of our upcoming episodes.

Curb Appeal Updates

This is a technique where you update the landscaping elements in the front/rear of the property and make them look more appealing. Or update the front façade of the home with stucco or stone chips and make it look more contemporary. Replace or paint the front door/garage doors to make them look appealing. These changes even though sound minor but they go a long way to help increase the value of a property when put on market. 

Here you got a glimpse of how the appreciation can be forced on a Real Estate asset and now let us discuss the requirements of such an endeavour, its something which is not made for everyone.

Capital Requirement

This form of appreciation is capital intensive, anything updates/additions you do to an asset require money to make it happen. This is the reason mostly you would see people not going for this route and just waiting for organic ‘market appreciation’  and building equity.

Under-Renting

During the time you do the updates/renovations to enhance the property, and specially when it is an investment property. It might mean that the property is vacant during the time of renovation. This is another financial loss due to the vacancy time. 

To round up our discussions on ‘Natural Appreciation’ and ‘Forced Appreciation’ I want to say that the ideal combination is a mix of both. If as a homeowner, you do some remodelling to enhance the appeal of assets and then also be in the market for the foreseeable future. It would reap the compound benefits of both forms of appreciation. And this is coming straight from my experience in dealing on ground and assisting our clients during the journey. 

Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.

Welcome back, friends! Today, we will start a two-part series exploring the basic forms of appreciation in real estate. We'll start with a market appreciation or natural appreciation, using real-life examples from the Greater Toronto Area to enrich our understanding of this topic.

Market appreciation refers to the organic growth a real estate asset undergoes over time, influenced purely by market forces. Let's examine the factors that impact the growth of an asset:

Inflation

Inflation is a primary driver of market appreciation in real estate. As the cost of services, goods, materials, and labour rises, so does the value of real estate assets. They become costlier to rebuild over time. This natural hedge against inflation makes real estate an excellent investment vehicle. As the perceived value of the asset is bound to rise with inflation dynamics. This reason alone make Real Estate a great investment vehicle as it provides an inbuilt inflation hedge.

Rental Rates

With the advent of time and inflation, the purchasing power of money decreases with time. The Rental rates increase and they are a second big reason which drives up the value of a Real Estate Asset. For an investor along with the monthly appreciation which happens in the asset due to inflation, they get to benefit from the rental payments to pay up their mortgage commitments. The principal repayment part in the mortgage increases their equity in the asset month over month. The increase in the rental prices, definitely helps the property appreciate.

Economic Growth

In good and progressing economies with the rise in inflation, there is also movement in terms of economic growth. New jobs and industry sectors are established pushing the economies which indirectly makes the Real Estate assets appreciate with the economic stimulus. More jobs mean higher income levels, which bolsters consumer confidence and ultimately leads to growth in the Real Estate sector.

Infrastructure Development

Properties in metro areas or regions anticipating significant infrastructure investment typically see greater market appreciation. Easy access to highways and public transit can significantly influence an area's growth compared to regions with less developed infrastructure. After spending almost a decade in real estate, I can confirm that 'location' is indeed critical to natural growth.

Population Growth

In a place like the Greater Toronto Area, there is a lot of population growth in the form of immigration which takes place in Canada. And GTA being the biggest job market in Canada, which makes a lot of net new people choose to live in such regions. This population growth is very simply put directly proportional to market appreciation. Another reason Location plays a key role is that population growth will be centred around in-demand locations where job opportunities and chances of growth for a newcomer are abundant.

Supply Constraints

Supply constraints are another reason price growth happens in Real Estate. If you observe major municipalities like Mississauga, Burlington, Richmond Hill and Brampton, their landscape doesn’t allow for more sub-divisions as already they are saturated with constructions to the boundary of these towns. When the land is saturated, and the market forces keep the area in demand. The progression of time makes the prices increase due to this saturation in the land development; as there is limited supply of new development. 

Government Policies and Interest Rates

Any government or municipality should be instrumental to make it easier for first-time home buyers and investors in form of tax breaks and incentives. These policies help sustain the buy/sell of the assets and increase their demand, which pushes the appreciation. Schemes like First-time home buyer RRSP Advantage allow prospective homeowners to leverage interest-free money from their RRSP savings. There are couple of other policies like the Land Transfer Tax Credit on the first home for $4,000, or the First time home buyer tax credit. All of these policies help flourish and promote home ownership. 

Federal bank's interest rate policy changes are another major factor. They can go either way, as you would have noticed the historically lower interest rates in the Covid-times pushed the prices way above, and then the tightening of borrowing rates in 2022/2023 also brought them down. The fine balance of interest rate policy changes and the market prices continue. In the short term, they are inversely proportional. However, in the longer term with the above other reasons we laid down, the inflationary pressures, drive up the asset prices in a growing economy.

Real World Case-Study

Let us now consider an example where we can understand how natural appreciation can come into play. For this case study, I have chosen detached 2-storey single garage dwellings in couple of municipalities across GTA that got sold in June of 2010. The next step is to determine their median sold price and then look at the median sold price for similar categories of properties in June of 2023.  I have chosen this 13-year duration as it covers the highs/lows we observed in the 2017 market and similar occurrences we observed in the first quarter of 2022. 

This tabulation highlights the power of Market Appreciation in the Greater Toronto Area, just by virtue of the growing population base here in the GTA, booming economic considerations in the last 13 years overall, and sustained employment opportunities, all these have a combined reflection on the market prices. 

Based on the data we can safely say that GTA had almost ~200% of natural appreciation due to these factors and after surviving two market downturns, and this is all organic growth and ‘market appreciation’ in action. In the next episode I will continue our discussion to the second type of appreciation which is ‘Forced Appreciation’ the factors involved there and how it takes place in Real Estate. It would be an interesting one and will completion our discussion on the topic of appreciation. 

Wish you all the very best! Reach out to our dedicated team at Elixir for any queries you have in Real Estate, and we will do our best to help.

Mudit Mehta 

Broker of Record

ELIXIR REAL ESTATE INC.