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Tuesday, 30 October 2012

Condo Questions You Never Thought to Ask

Written by  Jemima Codrington
Condo Questions You Never Thought to Ask
Beyond the basics meant to ascertain the property type, market and potential tenants, there are a few other factors investors should consider before signing the dotted line. Here are five “other” questions every investor should ask when considering a condo.
1.    Get the scoop on the Reserve Fund 
First, reserve funds requirements vary from province to province, so if you’ve invested primarily in Ontario and are now looking at a property in B.C., be sure to check what the provincial stipulations regarding the review of reserve funds are. In Ontario, it is mandated a condo has to undertake a Reserve Fund Study “periodically”, but this can be anywhere between 3-5 years. Make sure the reserve is proportionate to the age of the building – the general rule of thumb is to invest in condos that have a reserve fund comprised of 10% of their operating budget.

2. Who is the developer? 
It should go without saying, but do due diligence on who’s building your condo. Hot markets bring several developers to the area to start setting up shop, but have they a reliable portfolio?  What is condition of their existing inventory? Which contractors do they work with? The CMHC advises reviewing paperwork such as a disclosure statement, technical audit, and documents regarding bylaws and zones, etc.

3. Research the company’s financial and legal history
Take a look into the financial and legal history of the developer. Many major markets will have independent bodies that collect research on these kinds of statistics, plus you can utilize tools like the Better Business Bureau and your local condo board. Whether there are lawsuits between condo owner and developer, manufacturer, architect – it pays to get the facts to see what is being contended, and if it could wind up being a deal breaker.

4. Who manages the condo association?
The days of self-governing condo associations are fading as developments grow in size and scale. Many condo associations are opting for the help of a registered firm or individual to take care of issues such as budgeting, physical building maintenance and handling homeowner complaints. Knowing who takes care of these issues will help you gage how long it will take for them to be resolved.

5. What Does Master Insurance Cover? 
A portion of monthly condo fees are put towards insurance for common areas, whilst individual homeowners can insure their own units and renters can opt for tenant insurance. Make sure to note which areas specially count as “common areas” and are therefore covered, and more importantly, which are not. Master Insurance policies can either be “Bare Walls-In”, which covers the physical property but not necessarily things like countertops and fixtures, or “All-In”, which covers installations as well as construction.

Monday, 29 October 2012

Mark Carney to give ample notice of any interest rate hikes

Bank of Canada governor Mark Carney is promising that he will be transparent about any moves the bank makes to raise interest rates in the future.
In a speech delivered in Nanaimo, B.C., Monday, Carney told a Vancouver Island economic summit that Canadians will know exactly what the bank is doing and why.
He said the bank is preparing to release its Monetary Policy Report within the next 10 days that includes its outlook for economic growth and inflation in Canada.
"It will take into account the impact of the uncertainty that I have been discussing today," Carney said. "The bank will take whatever action is appropriate to achieve the two per cent consumer price index inflation target over the medium term."
He later told reporters that raising interest rates was a "hypothetical question," but one he didn't categorically rule out.
'While we obviously cannot determine events over which we have no control, we can be transparent about what we expect and how we would react to different scenarios,'—Mark Carney, Bank of Canada governor
The central bank governor said in his speech if he were to raise interest rates to stem mounting household debt, for instance, he would clearly state how long he expected the measure would take to work.
"The bank provides as much certainty as it can in the conduct of monetary policy," Carney said. "While we obviously cannot determine events over which we have no control, we can be transparent about what we expect and how we would react to different scenarios."
"That certainty is our contribution to ensuring that Canadians can invest and plan with confidence," he said.
It was unclear whether Carney was setting the grounds for a policy shift, but the example he chose was telling in that it targeted the one aspect of the economy that he has described as Canada's top domestic vulnerability.
"If we were to lean against emerging imbalances in household debt, we would clearly declare we are doing so and indicate how long we expect it would take for inflation to return to the two per cent target," he said.

Canadian households in dire debt

Revised figures from Statistics Canada now find Canadian households are even more in debt than anyone imagined.
The revisions place household credit market debt in the second quarter at 163 per cent of disposable income, well above the previously reported 152 per cent, although the two levels are no longer a direct comparison.
Carney said Canada's economy is being affected by what he called global angst, related to uncertainties in Europe, China and the United States, but Canada should consider itself in a state of justifiable confidence when compared to other economies.
"Canada's financial system showed itself to be among the most resilient in the world through crisis," he said. "Since then, it has strengthened further. One thing Canadian businesses can expect is that their financial system will be there if times get tough again."
He said the uncertainty facing global economies holds back demand for Canadian exports and tempers national business activity, but Canada should focus on improving its economy during these uncertain times.
"As Canadians, we need to focus on what we can control," he said. "We can improve Canada's low productivity growth and sharpen our focus on emerging markets. And we can continue to invest in our greatest resource — our people."
He said he has more than two years left in his Bank of Canada post and he intends to fulfill that commitment.