Can navigating the real estate market in British Columbia be your ticket to financial independence? This week on "Keeping it Real," we break down the essential government incentives that first-time homebuyers in BC can't afford to miss. From the First-Time Homebuyers Incentive to the GST Housing Rebate, we've got your roadmap to making homeownership a reality. We also dive into unique scenarios where life changes like divorce may still qualify you as a first-time buyer. And for those eyeing high-cost areas like Vancouver, discover cutting-edge strategies such as co-ownership that can help young people build wealth, all while emphasizing the importance of having airtight legal agreements.
Switching gears, we put property investment under the microscope, using Ted's potential purchase in Merritt as our case study. We'll show you the financial nuts and bolts, illustrating how rental income can make your investment cash positive even from day one. We also touch upon the risks and rewards of property management and the necessity of thorough home inspections. Plus, we'll sprinkle in some local flavor with news about the new gondola project at Grouse Mountain and share lighthearted personal updates, including my newfound pickleball obsession and a glowing recommendation for the show "Hacks" on Crave. Tune in for a blend of actionable real estate advice, personal stories, and local updates!
Can navigating the real estate market in British Columbia be your ticket to financial independence? This week on "Keeping it Real," we break down the essential government incentives that first-time homebuyers in BC can't afford to miss. From the First-Time Homebuyers Incentive to the GST Housing Rebate, we've got your roadmap to making homeownership a reality. We also dive into unique scenarios where life changes like divorce may still qualify you as a first-time buyer. And for those eyeing high-cost areas like Vancouver, discover cutting-edge strategies such as co-ownership that can help young people build wealth, all while emphasizing the importance of having airtight legal agreements.
Switching gears, we put property investment under the microscope, using Ted's potential purchase in Merritt as our case study. We'll show you the financial nuts and bolts, illustrating how rental income can make your investment cash positive even from day one. We also touch upon the risks and rewards of property management and the necessity of thorough home inspections. Plus, we'll sprinkle in some local flavor with news about the new gondola project at Grouse Mountain and share lighthearted personal updates, including my newfound pickleball obsession and a glowing recommendation for the show "Hacks" on Crave. Tune in for a blend of actionable real estate advice, personal stories, and local updates!
Hey everybody, welcome back to Keeping it Real, the Vancouver and area residential real estate podcast that aims to cut through all of the baloney that you hear about real estate in the Lower Mainland. All right, I'm not even going to cut it there. My name is Jackie McCarnan and I'm your host for Keeping it Real. I am a Lower Mainland residential real estate specialist and I am always happy to take your questions, help you figure out what you're going to do and just you know, no gatekeeping here. You get all the straight goods. Whatever you want to know, I'll tell you, just ask. With every Keeping it Real episode, I add in a disclaimer to keep my manager happy. This disclaimer says that anything you hear on this podcast is my opinion, based on research and experience. Lots of different opinions, lots of different experiences. Realtors are not all the same. I'm always happy to listen to the experience of other agents and get their take on things, particularly for this episode.
Speaker 1:
This week's episode is part two, so a continuation of last week's episode on how to buy a home in British Columbia. And I say British Columbia because all of the rules that apply in Vancouver apply to the rest of the province as well. So let's dig right in, dig, right in. Okay, so last week I left you kind of hanging because I talked all about the government incentives that are available to first-time homebuyers through both the federal government and the provincial government. So as a quick little recap, I will do them super quickly and just to remind you. So we have the first time homebuyers incentive, which is five to ten percent of the purchase price that you can use as part of the down payment and you don't have to pay it back until you sell the house. It's an interest-free loan from the federal government. There's the homebu amount, a non-refundable $1,500 tax credit. There is the GST housing rebates. If you're buying a new home where GST is owing, you may be eligible to get part or all of the GST back. We've got the homebuyer's plan where you can pull up to $60,000 out of your RRSP to use as a part of your down payment, which is great because that's all interest-free in there tax-free. And finally, from the federal government side, we have the first home savings account where you can add up to $8,000 a year to a total of $40,000 in a tax sheltered savings account and that money can be used for a down payment as well.
Speaker 1:
Then, from the province. We have some deal where you can save money on the property transfer tax. If the purchase price of your place is under $500,000, you don't have to pay property transfer tax at all, and then that's on a sliding scale up to $859,000. But you have to look that up. I can't do the math here for you and it changes obviously with each price and there may even be I don't know, there might. I guess it's that first $859,000, then anything over that you might get a you might have to pay the full amount of property transfer tax. Each individual is different, so we would have to look at each listing, each property that you're looking at and each individual situation to figure out what you could save on property transfer tax.
Speaker 1:
All right, so that quickly sums up what the incentives are for new first-time homebuyers and I want to reiterate something I brought up in the last episode. If you had a house and you're married and then you guys got divorced, sold the house and you no longer own a house, you may qualify as a first-time homebuyer. So that was something I learned in my research and I would want to pursue that with people who are interested. It's definitely something that I did not know, and I think it would be really useful to people to to be able to take advantage of that, because there are a lot of incentives for first time home buyers and it's it's not fair if you don't get to take advantage of them if you qualify. So there you go. Tell anybody you know who might need to know that.
Speaker 1:
When last we spoke, I told you that I would regale you with some stories of how you might use the money that you have to get into the real estate market and start to build wealth, even though you may not be able to afford to purchase in Vancouver, and I think this is something that a lot of people don't think about. They in Vancouver and I think this is something that a lot of people don't think about. They, particularly kids of people my age, like in their 50s, the kids are in their 20s and a lot of times the kids are like, well, I just I'm never going to be able to buy anything, and you may not be able to buy anything in Vancouver, but that doesn't mean you don't have options to get into the real estate market. So we're going to talk about a couple of ideas for building wealth through real estate. I think the first thing that I would say to any young person thinking about getting into real estate is that you should really max out your RRSP contributions. I know that sounds so boring and grown up and even I think it's boring and grown up and I'm 58 years old but you really should max out your RRSP contributions. If you can, you should put some money in a tax-free savings account. You should use that, all those government incentives that you can because I think that they're there to help you, and if you can utilize those, you could probably get ahead quite a bit faster. And if you can utilize those, you could probably get ahead quite a bit faster.
Speaker 1:
The first strategy I want to talk about is becoming increasingly popular in bigger cities where the cost of housing is really really expensive, and that is co-ownership or collaborative ownership. So obviously this requires a lot of legal work so that you don't get bowled over by somebody you don't know, somebody who is interested in buying property together, and then you just pool your resources. So you pool your down payment amount and you split the property in a way that makes sense for whatever your situation is, and then you split the expenses. You split all the maintenance on the home, you split the insurance, all that sort of thing. This is we're seeing this so often that there is actually a website dedicated to co-ownership or collaborative ownership in British Columbia.
Speaker 1:
Now I haven't looked into this super deeply yet, but I am going to start because I think that it is really a wonderful way for people to, for both buyers and sellers. Because sellers, it gives them more opportunity to sell to families, and for buyers, it gives you the opportunity to live in a house rather than a condo, if you have kids, for example. I guess it all depends on what's important to you, but I mean, I think that this would be a really great solution for some people. I mean, I think that this would be a really great solution for some people. You'd have to give up a whole lot of your expectations of what privacy is like, I think. But I mean, I guess if you're on the same page with the people that you are going into co-ownership with, it could be a really great solution. And who knows, you know the way that Vancouver real estate goes. You live there for four or five years and you build enough equity and then you can go off and buy your own individual places. I don't know, it could be great, but again it would have to be heavily papered with legal documents and contracts, particularly for someone like me who I just would need to make sure that everything was taken care of, like written into the contract. After I check out this website, I may or may not put the link in the comments. If putting the link in the comments means that anybody who's interested in co-ownership uses a different realtor, I'm probably not going to put that link in there. Is that selfish, maybe, but if you're interested in this, let's dig into it together. I'm very, very interested to see how this works.
Speaker 1:
Another option is rent to own, and I'm sure you've heard of this lots of times. I mean, you often rent to own appliances. You know you. You go to the appliance store, you put a down payment and then you pay monthly until you own the thing. Now the thing with rent to own is it sounds like a super simple concept, but 100, it is not that simple. It isn't just a case of it is not that simple. It isn't just a case of you see a condo you like, it's a million dollars, you pay $2,000 a month and all of that goes into becoming your down payment. That's not how it works. It's usually a portion of the rent that you pay and it's usually over and above what the market rent would be. Now, that's not the case for every single one, but just know that require a lot of due diligence.
Speaker 1:
There are some buildings that are rent to own. You need to know a lot about the developer or who the person you're paying the rent to is the property manager, the property management company or the owner and what their setup is, and different places have different setups. It might be a really great option for some people who don't have access to extra money in a lump sum but make good money, or maybe even it's good for somebody whose credit rating isn't all that great, which is going to bring me to a whole section on credit rating, which I will talk about in a second. There are some websites out there that are dedicated to rent to own, and I think it's worth a conversation with somebody if that's something you think might work for you. But please, please, please, don't just think, oh my gosh, I could rent a place and all the rental income is going to become my down payment. That's definitely not how it works. All right, as promised, I just want to talk a little bit about credit rating.
Speaker 1:
A lot of kids, young adults, even older adults, don't really understand how credit works or how credit ratings work. It's important to understand what your credit rating is before you even start thinking about saving or buying a home, or researching buying a home or talking to a mortgage broker, because if you have a terrible credit rating because when you were 25 years old you bought a microwave oven at the bay and then you just never paid for it after the first few payments I'm not mentioning any names here, but that happened to somebody I know really, really well Okay, it was me, but anyway, if you do that and you get a big nasty red mark on your credit bureau which is another way to say credit rating then and you might not even know it you might be in trouble and you need to know too. A lot of people don't know that every time a company does a hard pull on your credit, it reduces your credit rating. So you can find out all this information online now, which is really handy. It used to be in the old days you had to go downtown Vancouver, across from the library, and sit in a little room and talk to a credit specialist to figure out why your credit rating was bad or what reports on your credit rating were bad. There are companies like borrowwellcom, ca borrowwell, and they'll allow you also to input your rent as a monthly payment. So it shows that you are responsible and you pay your rent every month, and I believe the federal government has actually added that as a way to help Canadians build their credit rating up. So you definitely need to make sure that you have a healthy credit rating somewhere over 700, for sure, and over 730 is great. But go and sign up for BorrowWell it doesn't cost anything and find out what your credit rating is, because that is an excellent place to start before you even create the strategy of how you're going to buy a home, before you even create the strategy of how you're going to buy a home. All right, this third strategy is the one that I end up talking about more often than the other two. I am not super well familiar with collaborative or co-ownership and I'm not trustful yet of rent to own. I'd have to know more about it. But the one that I do understand and I do talk to my clients about is the idea that you do not have to buy the place that you're going to live in as your first home. So your first home could be up in Clearwater, british Columbia, or in Merritt, british Columbia.
Speaker 1:
And I actually did a little research and it's story time Story time I know you guys like the stories, so this story time is about a little house in Merritt. So my character in today's story, his name is Ted, after Ted Lasso, because you know I love him. As you all know, ted is a 28-year-old living and working in Vancouver. Maybe he even lives at his mom and dad's still, because he can't afford to buy a place in Vancouver and he doesn't want to rent because he doesn't want to throw money away on someone else's mortgage. So mom and dad have him pay a nominal amount of rent and Ted finds himself with quite a bit of money. So he's thinking that he would like to get into the real estate market but he doesn't want to give up his beautiful space in mom and dad's house for a crappy little apartment with no parking and no storage.
Speaker 1:
So Ted is looking at other options and Ted and I sit down and I say hey, ted, have you ever heard of Merritt and Ted's a country music fan? Not, I am not a country music fan, but Ted's a country music fan and he has been to the Merritt Mountain Music Festival, which is, by all accounts, a country music festival. So I have never been there. But guess what? Ted and I start looking at listings in Merritt and we find a really cute little bungalow or I think it's a bungalow, maybe it has a basement. Anyway, it has four bedrooms, two bathrooms, it's 1900 square feet and it's on half an acre of land in Merritt. And I actually did find this particular house I just didn't look to see if it was a bungalow before I started the podcast but anyway, it costs $320,000. So, holy smokes, it's only $320,000, first of all, and it maybe it has a bunch of stuff that has to be done to it. But for the sake of this story, we are just going to assume that it is perfectly inhabitable and that it can be rented for about $2,500 a month to one renter, perhaps a family.
Speaker 1:
My favorite part is coming up. Let's math this out. I'm using math as a verb now. What the heck right? So the purchase price of this place is $320,000 and 5% is $16,000. So Ted's going to put 5% down. He's going to need about $18,700 to close it, which is less than $20,000. The monthly amount to pay the mortgage is about $2,100 a month for Ted to service the mortgage, which is including taxes and insurance. There are no strata fees because this is a single family home. So if Ted rents that for $2,500 a month and he only needs $2,100 a month, then he is cash positive of about $400 every month, which is not nothing. I mean, that's $4,800 a year that he could then maybe turn around and if he has an open mortgage he could put that on his mortgage or he could go on vacation or, better yet, he could send his mom and dad on vacation as a thank you for letting his lazy ass live in their house while he becomes a land baron. But anyway, whatever, for whatever reason, ted can afford to purchase a home in Merritt and have it be cash positive for him.
Speaker 1:
I want to just make sure that you know that this is not without risk. Of course there's risk here. Definitely would have to do a home inspection on such a place. Ted would probably have to have somebody on the ground that he trusts that could take care of emergencies. Or maybe there's a service in merit. I suspect there is like a property management service, which would eat up some of that $400 a month that he is paying or he's making, but it might be worth it to do that. The point is that Ted could get into the market and have his money earning something at some point.
Speaker 1:
When it comes to investing in property, there are some other things you need to know, and you could look back at some of my other podcasts or some of my blog posts about cap rate, capitalization rate, but for now, just know that there are options to purchase property that is not inside the lower mainland, where properties are very, very expensive, or there are some pockets in the lower mainland where things are cheaper too, but you don't have to live there. You can rent it out and rents are pretty substantial across the board. So it's not like renting a one-bedroom apartment in North Vancouver is not going to cost a whole lot more than renting a one-bedroom apartment in Poco, but the prices for a one-bedroom apartment in Poco are less to purchase. You get it. I really wanted to do this subject as a podcast because, like I said, I have two daughters who are in their early 20s and they are both starting to think about how they might position themselves to be homeowners, and it is daunting for young people when they don't have all of the answers or all of the knowledge or even just all of the information, or even just all of the information, which I'm hoping that this podcast will help, and the one before it will help provide younger people who are looking to buy with some context and some strategy and some ideas.
Speaker 1:
In the last two years, I've actually helped two of my eldest daughter's friends buy property. Both of them had a little bit of help from family, but they are making the monthly payments themselves on their mortgage. They're paying their own mortgage rather than paying somebody else's mortgage, and one of them is rented out and one the person lives in and they are really happy, even though the first one that's rented out, the they got it. He bought it in 2021. And then the rents went or the interest rates went up, but he's okay. He's actually been able to maintain that and the rent has covered more or less. He's had to pay a little bit out of pocket, but not so much that it would really make a big difference in his life. It would really make a big difference in his life. So, even though there's risk in buying something and renting it out. There are definitely some options there for people, and exploring all the options and understanding how the markets work is really helpful when making decisions about real estate, and obviously I can help you.
Speaker 1:
And what I really love to do is sit down and work out a strategy, particularly for young people or people who are leaving a marriage or people who are downsizing. That's kind of my, my gig. I really love that stuff. Obviously, let me know if you have any questions about anything you heard on any of my podcasts, but particularly this one. As always, I like to talk about something very particular to North Van at the end of the podcast, and this one is so exciting. All right, did you guys know that Grouse Mountain is getting a new state-of-the-art gondola that is going to replace the aging Blue Skyride and mark I'm reading it now and mark the start of a new chapter for the resort leading up to the 100th anniversary in 2026. The new lift system, which includes a total of 14 towers and 27 eight-person gondola cabins oh weird will allow Grouse Mountain to return to just above its original capacity when both the blue and red sky rides were fully operational. Huh, that's pretty cool. It's due to be finished winter 2024-25. So like at the end of this year. That's amazing. I only know because a friend of mine did the grouse grind today and mentioned that he saw the construction happening Very exciting.
Speaker 1:
In the last episode I talked to you a little bit about my new pickleball obsession episode. I talked to you a little bit about my new pickleball obsession. Yeah, so that's not getting any better. I just want you to know that probably the entire summer of podcasts you're going to hear about my pickleball. But I also want to talk about a show. Have you heard of the show called Hacks on Crave? It's Jean Smart and oh my god, she's amazing. She kind of plays this aging female comedian who has been very inappropriate with her content in the past and hires a young writer. Anyway, it's amazing.
Speaker 1:
I really enjoyed the series. I just finished the final episode of the third season. I didn't binge watch all seasons, I watched it as they came out, so settle down, but I really, really enjoyed it. I'm you know. You know me. I always like to share the things that I'm doing with you guys. That's it for this episode. I hope you enjoyed keeping it real. I hope you learned something and, if you did, I hope you're able to pass this on to anyone you think might benefit from this knowledge. You can get Keeping it Real on Spotify or anywhere you get your podcasts, or you can mosey on over to my website, northvanhomesalescom slash podcast. Once again, thanks so much for listening you guys. I really appreciate it and I appreciate all the feedback you're giving me. Much for listening you guys. I really appreciate it and I appreciate all the feedback you're giving me. I endeavor to take it all in and present you with even better content going forward.