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Ottawa, ON (March 21st, 2022) – Mortgage Professionals Canada (MPC) is in Ottawa this week to meet with key political decision-makers to reiterating the need for the Federal Government to implement housing commitments to support first-time homebuyers and relieve constraints in the housing market.
“In the leadup to the most recent Federal election, MPC was very encouraged by the clear commitments made by Canada’s major political parties related to supporting homeownership and first-time homebuyers. These promises included changes to mortgage insurance qualification and re-evaluating the mortgage qualification stress test,” said Paul Taylor, President and CEO of MPC. “Today, and through this week, we are meeting with ministers, senators, members of Parliament, and senior staff to discuss these and other policy levels that should be implemented as a means to provide support for aspiring Canadian homebuyers.”
This month, MPC also released its semi-annual report on the State of the Housing Market. The report, authored by Oxford Economics, affirmed how the vast majority of Canadians expect housing prices continuing to rise, and continue to consider home ownership as a good long-term investment.
“On behalf of our almost 15,000 members and their tens of thousands of clients, we are pleased to be here to continue our advocacy,” added Joe Pinheiro, MPC Chair. “It’s quite clear to policymakers and the Canadian public that urgent action is needed to allow certain first time homebuyers access to homeownership, which will help the government meet its stated priority of growing the middle class. The implementation of MPC’s recommendations can help achieve this. For instance, MPC has long advocated for the introduction of 30-year mortgage amortizations for insured mortgages, which, through lower mortgage payments, would provide a sensible and reasonable option for otherwise qualified first-time homebuyers to better compete with the well-capitalized who already have access to 30-year amortizations. This practical step would also not alter the sound underwriting practices of Canada’s mortgage financing sector.”
“The status quo is not working for those Canadians, but we recognize that the federal government and opposition parties, through their own messaging and our conversations with them, want to change this,” noted Veronica Love, MPC Vice Chair. “Our almost 15,000 members across Canada work every day to help thousands of clients buy their first homes, but certain policies prevented many otherwise qualified Canadians from benefitting from home price gains, especially over the last 18 months. These Canadians still want to help grow our country’s middle class through homeownership, and we hope to help them achieve their goal through our conversations with parliamentarians this week.”
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About Mortgage Professionals Canada
Mortgage Professionals Canada (MPC) is the national mortgage industry association representing almost 15,000 individuals and over 1,000 companies, including mortgage brokerages, lenders, insurers and industry service providers. Our members make up the largest and most respected network of mortgage professionals in Canada. MPC represents members’ interests to government, regulators, media and consumers. With our members, the association is dedicated to maintaining a high standard of industry ethics, consumer protection and best practices.
The mortgage broker channel originates almost 40% of all mortgages in Canada and 55% of mortgages for first-time homebuyers, representing approximately $120 billion dollars in economic activity annually. With our diverse and strong membership, Mortgage Professionals Canada is uniquely positioned to speak to issues impacting all aspects of the mortgage origination process.
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Christian von Donat
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Despite inflation rates dropping to 6.3 per cent — the largest dip since Feb. 2022 — the economy’s volatility isn’t fading anytime soon.
In fact, experts predict another year of rising inflation, hikes in interest rates and a mild recession for 2023.
Finding a safe investment to act as a hedge and bulk up your income is essential during economic uncertainty. The right investment can support you in an emergency and safeguard the future of your finances.
As a tangible asset with plenty of cash-flow potential, commercial real estate is a great place to invest to protect your money and your future.
Commercial real estate is an enticing investment that can diversify your portfolio and generate consistent passive income.
Forbes reported that over the past 25 years, commercial real estate has outperformed the S&P 500 Index with average annual returns of 10.3 per cent.
Plus, because of the income it generates and its tangibility, commercial real estate acts as a hedge against inflation. When the value of the dollar drops, property values tend to increase and your real estate investment returns prove themselves lucrative.
It’s a solid investment choice for people looking to build their portfolios and protect their wealth for the future, but it hasn’t always been accessible.
Because commercial real estate investing is not typically offered on a fractional basis, the barrier to entry has been prohibitively high for most investors.
In the best-case scenario, a lender will ask the investor to put down a minimum of 20 per cent in equity before acquiring a property.
But, through tokenization, HoneyBricks has made commercial real estate investing available to accredited investors looking to build their wealth.
You don’t need to be a millionaire to invest in real estate that produces strong, stable returns. In fact, all you need is a minimum of $100 to invest in your first property and start reaping the rewards of a consistent passive income.
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With investments both vetted and managed by their experienced team, you don’t have to stress about the status of this stable investment available right at your fingertips.
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This article was created by Wise Publishing. Wise is devoted to providing information that helps readers navigate the complex landscape of personal finance. Wise only partners with brands it trusts and believes may be helpful to the reader. This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
If you came across a four bedroom, 3.5 bathroom home listed for sale recently on a quiet cul-de-sac in Cedar Rapids, Iowa, you might not think twice about the online listing. It included typical real estate descriptions like “ideal for entertaining” and “ample space for relaxation.”
But JJ Johannes, the realtor for the home, created the description in less than five seconds by typing a few keywords into ChatGPT, a viral new AI chatbot tool that can generate elaborate responses to user prompts. It’s a task, he said, that would otherwise have taken him an hour or more to write on his own.
“It saved me so much time,” Johannes told CNN, noting he made a few tweaks and edits to ChatGPT’s work before publishing it. “It’s not perfect but it was a great starting point. My background is in technology and writing something eloquent takes time. This made it so much easier.”
Johannes is among the real estate agents experimenting with ChatGPT since it was released publicly in late November. Some residential and commercial agents told CNN it has already changed the way they work, from writing listings and social media posts to drafting legal documents. It could also be used to automate repetitive tasks such as answering frequently asked questions and doing complex calculations.
ChatGPT is trained on vast amounts of online data in order to generate responses to user prompts. It has written original essays, stories, song lyrics and research paper abstracts that fooled some scientists. Some CEOs have used it to write emails or do accounting work. It even passed an exam at an Ivy League school. (It has, however, raised concerns among some for its potential to enable cheating and for its inaccuracies.)
In less than two months, ChatGPT has sparked discussions around its potential to disrupt various industries, from publishing to law. But it’s already having a tangible impact on how a number of real estate agents around the country do their jobs – where much of the written work can be formulaic and time consuming – to the extent that some can no longer imagine working without it.
“I’ve been using it for more than a month, and I can’t remember the last time something has wowed me this much,” said Andres Asion, a broker from the Miami Real Estate Group.
Recently, a client reached out to Asion with a problem: the woman had moved into a pre-construction home and couldn’t open her windows. She had attempted to contact the developer for months with no response. Asion ran a copy of one of her emails through ChatGPT, asking it to rewrite it with an emphasis on the liability implications.
“ChatGPT wrote it as a legal issue and all of a sudden, the developer showed up at her house,” he said.
Asion has also used the tool to draft legally binding addendums and other documents, and sent them to lawyers for approval. “I fine-tune all kinds of drafts with ChatGPT,” he said. “Sometimes I’ll tell it to make it shorter or funnier, and it gives you so many samples to pick and edit from.”
ChatGPT is free for now, but OpenAI, the company behind it, is reportedly considering a monthly charge of $42. Asion said “it’s not even a question” he would pay for access. “I would easily pay $100 or $200 a year for something like this,” he said. “I’d be crazy not to.”
Frank Trelles, a commercial real estate agent at State Street Realty in Miami, said he’d also pay to keep using the tool, which has already impacted the way he does business. “As soon as I tried it out, I was sold,” he said. “I went to sign up for a package, thinking it would be at least $100 a month, and was blown away that it was free. Nothing in this world is free though – and that made me a bit nervous.”
Trelles said he uses ChatGPT to look up the permitted uses for certain land and zones in Miami-Dade County, and calculate what mortgage payments or return on investment might be for a client, which typically involve formulas and mortgage calculators.
“I can be in a car with a client when they ask me what their mortgage payments might be,” said Trelles. “I can ask ChatGPT what a mortgage payment would be on a $14 million purchase at a 7.2% interest rate advertised over 25 years with two origination points at closing, and in two seconds, it gives me that information. It also explains how it got the answer. It’s amazing.”
There are some limitations, however. The tool has, for example, struggled with some basic math before. Trelles said it’s helpful for approximations on the go, not for exact numbers.
Serge Reda, a commercial real estate executive and adjunct professor at the Fordham Real Estate Institute, said some use cases for ChatGPT are better than others. ChatGPT may help save brokers time when writing listings or responses, but automating client responses may not be the best tactic because generating leads and closing transactions typically requires a personalized approach.
“It’s accessible to everyone right now because it’s free and they can get a taste of how this powerful tool can work. But there are definitely significant limitations,” he said.
While ChatGPT has generated a wave of interest among realtors, incorporating artificial intelligence in the real estate market isn’t entirely new. Listing site Zillow, for example, has used AI for 3D mapping, creating automatic floor plans and for its Zestimate tool, which can scan pictures to see if a home has hardwood floors or stainless steel appliances so its price estimation better reflects market conditions. Earlier this week, Zillow rolled out an AI-feature that lets potential buyers conduct searches in a more natural language (something that’s long been mastered by Google).
Matt Kreamer, a spokesperson for Zillow, said the real estate industry has been slower to innovate, but “I think we’ll be seeing much bigger strides very soon.” He said Zillow sees no clear concerns with agents using ChatGPT to help streamline the work they already do and save time.
“We aren’t promoting or weary of ChatGPT but are interested in how it’s being used and watching it,” he said.
Although it’s too early to say if the tool will become a mainstay in real estate, realtor Johannes believes AI in general will transform his industry and others.
“It may not be with ChatGPT,” he said, “but I believe some form of artificial intelligence like this will become a big part of how we work and live our lives.”
Despite the volatility and uncertainty of the housing market over the past three years, real estate remains a valuable part of an investor’s portfolio.
Potential owners are understandably left uneasy as mortgage rates are sharply higher and home prices have slowly declined after a decadelong advance. However, over the long run, we’ve shown that real estate returns tend to fare well. Ideally, your investment portfolio should allocate between 5% and 20% to real estate, but the best avenue for reaching that exposure depends on your situation.
Below, we showcase a continuum of real estate investments by the degree of personal involvement and responsibilities. And here, we break down the benefits and drawbacks of each.
REITs can be a good choice because:
Finally, the issue of taxes. REITs enjoy favourable tax treatment, avoiding them entirely if they pass along an adequate share of earnings directly to investors.
However, this typically means REITs have large dividend yields, and dividends are unfavorably taxed relative to capital gains for high-income investors. For those in higher tax brackets, this could be unpalatable. In contrast, direct real estate ownership provides exceptional tax benefits if managed carefully.
On the other hand, if you prioritize agency in an asset by limiting intermediaries, then directly purchasing a property could be right for you.
When you own, manage, and eventually sell an investment property, there are advantages in the tax department related to expense deductions and capital cost allowances. There’s also a wider range of potential outcomes, depending on your property’s type and location, relative to diversified REITs.
Directly investing in real estate can be financially rewarding, but it usually requires significant cash, due-diligence work, and time. Some may rely on a property manager, but this comes at the cost of profit margins. If you need cash, selling a property can take months and be costly, especially if you are not reinvesting the proceeds in another rental property. This investment strategy may be appropriate if you have extra time and cash.
Unraveling the nuances of the housing market can be confusing. Below, we leverage different personas to guide investors toward the right choice.
A successful and busy professional: Property ownership could be costly or infeasible if you don’t have time to deal with tenants or maintenance, so passively investing is likely the right choice, as REITs minimize time and effort while improving risk-adjusted returns in a mixed-asset portfolio.
Sophisticated or wealthy investors could consider becoming a silent partner to an active investor, which could generate higher returns but comes with substantial risk.
A flexible professional: Early careerists or those with flexible jobs may consider making real estate into a part-time job or hobby. Risk appetite, liquidity needs, and your willingness to earn sweat equity will inform the appropriate choice.
Purchasing a rental property could make sense if you’ve already built a traditional investment nest egg and have excess savings. Your spare time and capital can be invested into a specific asset in the right market, and you can leverage real estate’s tax treatment to boost your aftertax returns. Choosing tenants and working with maintenance providers is the time cost of actively investing in real estate.
Active investors have a wide range of opportunities to pursue. For example, if an investor has an appetite for remodeling, a fixer-upper could be an option. Between the tax benefits and leveraged nature of housing, this approach can compound returns quickly.
However, purchasing an illiquid asset could be a costly mistake if you don’t have an adequate financial cushion or suddenly need cash. On the other hand, buying shares of a diversified REIT at the right price could provide the diversification benefits you’re looking for without limiting portfolio liquidity.
Retired or self-employed: Professionals planning for retirement or without guaranteed income may lean toward real estate for steady income. Depending on the investor’s willingness to get hands-on, either a traditional investment or a REIT may be appropriate.
Empty nesters who plan to downsize or those who want to relocate may benefit from turning their current home into a rental property, especially if property prices are soft. If you purchase a home with a low interest rate and transition it into a rental, your investment property retains this perk and increases your positive cash flow. In addition, since a rental property is not treated as earned income, it is exempt from self-employment tax, or FICA tax. If time is a factor, then hiring a property manager for day-to-day decision-making could be right for you but will offset returns and may still take some of your time.
Shifting your investment strategy to REITs might be appropriate if free time is important to you but you desire a steady income. Perhaps you already have a passive income stream or a sizable investment portfolio. Taking advantage of diversified REITs is a strong choice for keeping your real estate assets liquid and easily investing in properties in various markets.
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