Posts by Ralph Case:

    What are the implications of holding or selling?

    January 31st, 2014

    Q: We own our home outright and it is valued around $850,000. We are considering holding our home as a revenue property and have been told it can rent for $3,500-4,000; and buying a new condo around the $1 million mark. We can qualify for the condo value. What are the implications of holding or selling?

    A: Good Question! The gain in equity on your personal residence has been tax free and will be until you switch it over to a rental property. If you choose to hang on to it you have to notify Canada Revenue Agency. I would discuss the nuts and bolts with an accountant but basically come up with a value for the property on the date you move into your new condo. Any subsequent gain in value will be subject to capital gains tax after that date.

    The main question to ask yourselves will be: “is the $850,000 house a good investment or would it be better to buy a different type of revenue property?”

    The tricky part of the transaction if you decide to keep the house is how can you make your new mortgage tax deductible. Talk to your accountant to see if you can borrow money against the revenue property and be able to write off the interest against rental income if you use the funds to buy your new condo. I don’t think you can do this. You may have to sell the house, pay for the condo with cash, and then take out a mortgage for a downpayment on a revenue property. Only then do you have the proper trail to claim the interest as an investment expense.

    I think you are on the right track. Good luck!

     

    1 Comment "

    November 15th, 2012

    Q: We have a commerical property in Cranbrook that is fully leased and brings
    in over $103,000/year plus NNN. There is a large retail tenant that has the
    bulk of the revenue (about $86,500/year) with 7 years remaining on the
    lease. The remainder of the property is leased to a landscaping firm on a
    one-year lease (stable tenant, has been with us for a couple of years),
    previous tenantwas with us for about 5 years. The property is 2.24 acres
    within three blocks of the downtown core of Cranbrook.

    We have tried using a local realtor to sell this property, but it sat on the
    market for a year. We need our investment out of the property to develop
    another property we own on Vancouver Island. Who should we contact and what
    kind of cap rate should we use to realise a fairly swift sale?

    A: Commercial properties in small cites can be difficult to sell in a climate
    of economic uncertainty like we find ourselves in now. Too few buyers
    willing to risk investing in areas far from their home base. The best bet
    is to find someone local. If I were selling a property in Cranbrook or any
    smaller city in BC I would try a multi faceted approach. Here are some
    ideas: First step is to identify a competent Realtor. Try phoning the
    local Real Estate Board and ask for a list of commercial Realtors. Next
    would be to Google “commercial Realtors Cranbrook BC”. Check out their
    websites and testimonials. See if your friends or colleagues have any
    recommendations. Next I would look in the Western Investor newspaper and
    see if there are any Realtors who specialize in similar product. Next I
    would advertise your property on Craig’s list and Kijiji. Next see if
    there are any local investor clubs in Cranbrook to promote your deal. Go to
    Meetup.com for this. Try and meet local investors through the Chamber of
    Commerce, service clubs such as Rotary, local accountants, property
    managers. It will take rolling up your sleeves and putting in some work but
    the results should make it worthwhile. Good luck!

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    Where in the world to invest for new ‘Dubai-style growth’?

    October 31st, 2012

    Q: My question is, as we stand in late 2012, from your expert R.E point of view, what would be the ‘new Dubai growth’? In other words, where in the world would be the place to invest, it can be a bubble or not, flips or not. Qatar? China? Mongolia? Alberta? Are there any places / territories that come out of the background like Dubai did in 2000’s until 2006 I would say.

    A: I teach my students to look for areas where there is population growth and jobs growth. Areas where there are large infrastructure projects. Areas where people with money like to live.

    One of my favourite places right now is Northern British Columbia. Kitimat, Prince Rupert, Terrace, Smithers, Dawson Creek, Fort St. John. The whole corridor should do well because of the race to build liquefied natural gas export facilities, pipelines, container port growth and more.

    I own properties in Kitimat, Prince Rupert, Terrace, and Smithers.

    When looking for potential areas for appreciation in the rest of the world, these are the things I suggest you look for.

    Hope this helps! – Ralph

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    We are looking at Investment property

    February 17th, 2012

    Q: We are looking at Investment property. Can you give us information regarding

    1. Mobile Home Park
    2. Four/Six-plex

    Live in Kelowna, but would look at other areas for sure.

    A: Thanks for the question regarding the Mobile Home Park and 4/6plex. I do not have specific listings but can put you in touch with some top notch Realtors if you like. If you want more clarity in what to invest in you might consider taking the Real Estate Action Weekend that Ozzie and I are presenting on February 24th and 25th. Info can be found at www.reag.ca. For Realtor referrals send me an e-mail at: ralph@worldwidereferrals.com

    Much Success!

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    Bought a home with critical defects, what are our rights?

    February 21st, 2011

    Q: If we bought a house without legal warranty and after we took possession we found a critical defect in the house (water damage and mold) and we had a home inspection, what are our rights?

    A: You may be able to take action against your home inspector.  My recommendation would be to talk to a lawyer who specializes in Real Estate and has experience with this situation.  If you don’t know of anyone try calling Richard Ledding in Vancouver at 604-742-2288.  Tell him Ralph sent you!

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