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'Still thriving': Realtors reboot for a real estate market up against the coronavirus – Yahoo Canada Finance

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Like many workers in Canada, realtors are shifting how they do business as they adjust to a new reality in the face of the coronavirus.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Ontario — one of Canada’s hottest markets — declared realtors an essential service, so they will be exempt from the province’s shutdown to limit the spread of the virus that causes COVID-19.” data-reactid=”24″>Ontario — one of Canada’s hottest markets — declared realtors an essential service, so they will be exempt from the province’s shutdown to limit the spread of the virus that causes COVID-19.

But it’s not exactly business as usual for the province’s realtors.The Ontario Real Estate Association (OREA) asked open houses be put on hold. But people are still buying homes, which means realtors need to get creative.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“For open houses, buyer showings, and home evaluations we are using Skype, Instagram, and Facebook along with our standard virtual tours and photos,” Bill Brach, realtor at Bill Wendy Homes told Yahoo Finance Canada.” data-reactid=”26″>“For open houses, buyer showings, and home evaluations we are using Skype, Instagram, and Facebook along with our standard virtual tours and photos,” Bill Brach, realtor at Bill Wendy Homes told Yahoo Finance Canada.

“For those clients in need of consultations for staging, we are using video calling applications for real time assessments.”

Brach says he’s also using digital signatures for paperwork and contracts. He says despite the COVID-19 pandemic — for now — the “real estate market is still thriving”. New data show more deals were signed this March break versus last year, in the Hamilton, Burlington, and Niagara region that he operates in.

In spite of efforts to show homes digitally, some buyers insist on seeing a property in person before making a final decision. 

“Currently in those circumstances showings have been approved, providing the participants in both parties are not showing any symptoms, have not travelled outside of the country or been in close contact with someone who has recently travelled,” said Brach.

“Gloves and hand sanitizers are placed in the home and viewers are asked to limit touching anything as much as possible – door handles, light switches, etc.” 

<h2 class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="A shifting landscape” data-reactid=”32″>A shifting landscape

Doug Vukasovic, an Ontario-based realtor with Zoocasa says he was surprised Ontario deemed his industry essential, unlike Quebec. He’s also surprised bidding wars are still going on and so many active buyers have been scooping up properties on the first day they get listed.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="“I expect to see a quick shift to conventional pricing from the bidding war strategy as listings will no longer be getting the same level of foot traffic,” he told Yahoo Finance Canada.” data-reactid=”34″>“I expect to see a quick shift to conventional pricing from the bidding war strategy as listings will no longer be getting the same level of foot traffic,” he told Yahoo Finance Canada.

“It’s inevitable that demand will decrease as consumers are confined to their homes.”

Vukasovic says the effect on the market will depend a lot on how much longer the COVID-19 situation continues. He says the market is resilient enough to remain strong over the short-term but prolonged social distancing measures could make it a buyers’ market.

“A simple ban on open houses will not impact sellers but any additional future measure could – like a complete government enforced market shutdown.” he said.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter&nbsp;@jessysbains.” data-reactid=”38″>Jessy Bains is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jessysbains.

<p class="canvas-atom canvas-text Mb(1.0em) Mb(0)–sm Mt(0.8em)–sm" type="text" content="Download the Yahoo Finance app, available for&nbsp;Apple&nbsp;and&nbsp;Android.” data-reactid=”39″>Download the Yahoo Finance app, available for Apple and Android.

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Forget Real Estate Investments, Buy REITs! – The Motley Fool Canada

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With the stock market crashing and interest rates tumbling, now seems to be as good a time as any for real estate investments.

However, investing in real estate isn’t the only method of generating passive income — buying REITs is just as good, or better, depending on the investor.

Real estate investments

Of course, there’s no denying the earnings potential of a good real estate investment.

In theory, you simply front the down payment, charge more for rent than you pay for the mortgage, pocket the difference and eventually sell the house for much more than you bought it for.

However, there are a lot of finer details and things that can go wrong along the way.

For one, you have to be able to afford the down payment. Even if the housing market cools with a recession, a 20% down payment is still going to be at least $50,000-100,000 — depending on the area of course. This hurdle can take a lot of investors out of the running right away.

Now, even with the down payment covered, there can be a lot of issues surrounding renting the property out. Staging and showing the place, carrying out repairs, footing bills, property tax, and so on and so forth. These things simply eat away at your time and your bottom line.

So, in order to avoid these types of issues, REITs can be preferable to traditional real estate investments.

Advantages of a REIT

REITs generally don’t require a minimum investment, as they trade just like a stock. So, you needn’t worry about being able to put six figures down from the onset.

As well, when you buy into a REIT, you’re not going to be directly managing any property. You won’t be responsible for going out and fixing a busted fridge or finding a new tenant.

You simply invest your money with the REIT and they take care of all of that.

Disadvantages of a REIT

Obviously, you don’t have control over the properties the company chooses to buy. It’s therefore important to choose REITs that align with your investment philosophy from the beginning.

As well, you generally aren’t going to make a ton of money on your principal investment with a REIT. While the monthly income you can generate is quite substantial, REITs tend to just bounce around in price rather than outright grow over time.

So, come time to sell, you’ll more or less be getting your principal investment back, whereas someone making a real estate investment will generally sell for more than they bought for.

Choosing a REIT

Choice Properties REIT (TSX:CHP.UN) is Canada’s largest REIT and has over $16 billion in assets under management.

Most of its real estate investments are in the retail space, with a small but growing portfolio of other properties.

While its main focus is not on residential, but rather retail property, Choice is still well positioned to succeed in the near term.

This is because its retail locations are anchored by Loblaw, Canada’s largest grocer. Thus, Choice’s income and stability should be secured as Loblaw should continue to perform well as a vital service provider for Canadians.

Currently, Choice is trading at $12.87 and yielding 5.75%. At that yield, an investment of $20,000 would generate $100 a month in passive income.

Real estate investment strategy

Before making a real estate investment, consider whether it’s the best action for your situation. Under some circumstances, investing in a REIT can be a far better option.

As far as REITs go, Choice is one of the most stable options for Canadians, as its anchored by its main tenant, grocery giant Loblaw.

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How Do Real Estate Valuation Metrics Work? – Baystreet.ca

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For real estate investments, the metrics used to quantify how certain properties or portfolios/Real Estate Investment Trusts (REITs) are valued are different than the typical valuation metrics used on most conventional stocks on the TSX or S&P 500, for example.

This is because real estate has unique characteristics to that of operating businesses in the sense that real property tends to be long-term, bond-like physical assets with a “coupon”-like cash flow structure, most of which is paid out to shareholders (REITs tend to have payout ratios in the 90%+ range).

For REITs, assessing Net Operating Income (NOI) rather than earnings in the norm, with a REIT’s NOI representing rental/lease revenue less operating expenses.

A REIT’s cap rate is the yield an investor receives on a given property, and is equivalent to the NOI of a building dividend by the value of the building.

Lower cap rates mean higher building values, so comparing cap rates across REITs with similar geographical/property type mixes can tell an investor which portfolio of properties may be undervalued relative to each other.

Vacancy rates are another important metric to assess knowing how full a given portfolio of properties is, on average, relative to the overall market can tell an investor if said properties are well managed or not.

Invest wisely, my friends.

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Real estate industry taking precautions during COVID-19

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Jason Yochim, CEO of the SRA, holds a conference call with agents three times a week to share news, advice and protocols.

“With no more open houses, we’ve advised our agents on what we call essential sales activity,” he said in an interview. “For example, if I want to move to that bigger house I’ve always wanted, maybe now is not the time to do that.”

On the flip side, some people need to move. Life changes such as divorce, or settling an estate, or moving for employment purposes are considered essential housing transactions, Yochim noted.

“We’re guiding our members that way. We’re (also) encouraging them to utilize technology for showings, whether it’s Facebook live or virtual tour products.”

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