EP. 97 – Everything About The Housing Market In Toronto

[Intro]

Teacher Mike: All right! Hey, everyone, it is Teacher Mike here and I have with me today Lucas! Lucas is the realtor that found our apartment, the apartment that we're living right now. A lot of you guys ask me about this. So I decided, hey, why not have him on the show and ask questions about real estate in Toronto, and I think, overall, in Ontario, right? Yeah. And just have a fun conversation around this topic. So, Lucas, how are you?

Lucas: I'm good. I'm good. How are you?

Teacher Mike: I'm good, thank you. So introduce yourself a little bit, talk a little bit about yourself, what you do here in Ontario and a little bit about your story. When did you come to Canada? How long have you been here?

Lucas: All right. So first of all, happy to be here. It's a pleasure. So I actually came to Canada back in 2010, okay? I came here to do high school. I was in grade 10 at the time. Yeah, so I did high school here. I went to school for marketing and then decided it wasn't my thing. I always really worked with property management. So I was always doing some sort of real estate, until I realized: "Hey, you know, I might as well". That is something that I like, something that I'm passionate about. I was always looking for houses, especially buying and selling, even though I didn't have my license at the time, so I just decided it was something that, you know, I was into and decided to pursue. And, yeah, very happy. I love what I do now. It's great, love helping people find their homes, you know, either buying, selling or renting.

Teacher Mike: Let me ask you this: you said you worked with property management before, what was your job? What did you work with?

Lucas: So I actually did inspections for property management. Sometimes I would help the agents from the property management to show. So I did pretty much what a realtor does: except signing contracts and putting offers and stuff like that.

Teacher Mike: Of course.

Lucas: None of the negotiation part, right? But other than this, it is pretty much the same thing.

Teacher Mike: Oh, very interesting.

Lucas: Yeah.

Teacher Mike: How does one become a realtor? What do you have to do? Are there any requirements? Do you have to take a course? I honestly don't know.

Lucas: That's fine. That's a good question. So, back then, I got my my license a while ago and it was from OREA. So the real estate organization had their own course and they just closed that. And now it's at Humber, so I had to go to Humber for it. I'm not quite sure how the process changed. I have a couple of friends who are doing it now and they told me that you have to take about eight courses, that you can do in a time frame that is about a year and then you can get your license, at least a temporary one, and then you have to do another course, until you actually get the permanent license. So, yeah, I think that's how it goes now. But it changed. I know that it always changes the process, how it goes. They try to make it as uptight as possible, the new laws and regulations and all this. But yeah, that's pretty much how it goes now.

Teacher Mike: It makes sense that it's a little bit uptight, I think, because otherwise just anyone could get into the market.

Lucas: Exactly.

Teacher Mike: I believe that in Brazil there is some sort of regulation. I don't think it's that complicated though.

Lucas: No, it's not. I think you're going to go to school for one Saturday until you get it a temporary one.

Teacher Mike: And that's it.

Lucas:  And then you're allowed to... Yeah, here's a little bit...

Teacher Mike: A little bit complicated. You said Laurier and then you said Humber. So these are actual colleges or universities, right? You have to go through them.

Lucas: Actually, OREA, no. OREA is for Ontario Real Estate Association.

Teacher Mike: I heard Laurier.

Lucas: All right, sorry. I apologize. And yeah, Humber it is. I'm not too sure if they consider an actual course in college, because it's not a two-year program. It is only a few semesters, not like eight exams, but still, yes, you'd be, at least... I believe it's at least a year. I'm not sure if you can actually try to speed up the process and do it faster just because right now everything is closed and you do everything from home. But I believe that yeah, it should be done within like a year.

Teacher Mike: And you mentioned as well that you came in 2010 to do high school. Um, and did you come with your parents already or did you come by yourself and decided to stay? How was the family journey?

Lucas: Oh, it was actually funny. So I came here in 2010. My family came, so at the time my father, my step mom and my sister. So they stayed here for about three years until they decided that it wasn't for them!

Teacher Mike: No way!.

Lucas: And then they left.

Teacher Mike: And then you stayed.

Lucas: And I stayed. I was the tough one.

Teacher Mike: Dude, it required some bravery.

Lucas: Oh yeah. Yeah, you know what? It's not easy. I'm sure you probably had your difficulties when you came here.

Teacher Mike: Of course.

Lucas: At least for me. I remember my first day of high school. I did not speak a word of English. It was. I took English, there's a course for maybe like three or four years besides school, but it didn't really help me with a lot. You know, it's pretty much the verb to be.

Teacher Mike: That is true.

Lucas: Yeah, so I did the verb to be, but, you know, actually speaking, listening and trying to create a phrase, it wasn't easy for me, but it's like, after a while, after maybe like a year and a half, two years, I was more comfortable, you know, pretty okay with the English. And then after that, three years after that, when they left, I was like, yeah, there's no way I could get used to Brazil again.

Teacher Mike: Nice. That's interesting.

Lucas: Yeah. I'm just going to stay here.

Teacher Mike: That is really cool. That's such a nice part of your story, I had no idea. Because it definitely requires lots of guts to to see your step mom, your dad, your sister go back, which is also a good idea for some people, I totally understand, and, at the same time, deciding to stay definitely required some bravery. How old were you when this happened?

Lucas: I was 18.

Teacher Mike: 18?

Lucas: I was 18.

Teacher Mike: Super young. And had you already gone to college or not yet?

Lucas: No, I was actually just finishing high school when they left. So I actually worked for Hollister, the clothing company.

Teacher Mike: Oh yeah, yeah.

Lucas: I worked for Hollister at the time.

Teacher Mike: Did you work as a salesperson?

Lucas: I did, yes. So, you know, I was always into sales which is, which is good. And so I had, like, savings and I just decided to rent my own place and finish high school and then started going to Humber for marketing.

Teacher Mike: Really cool. That's really awesome. That's really awesome. All right, let's get into the the realtor side. Let's talk about... imagine someone that has no idea on what to do. They're coming to Toronto for the first time and they're trying to find a place to rent. What would you say are the best practices for them? Imagine that they are normal immigrant, people you deal with. So, you know... What should they have - documentation -, what should they think about, worry about, in general.

Lucas: Okay, so let's talk about first newcomers. Okay, so there's a little bit of a different process for newcomers. Usually it's pretty simple. You have to have a letter of employment with paystubs and the credit information. So, credit history. That's pretty much the documents that they require, okay?

Teacher Mike: Okay.

Lucas: In terms of rent, they want it to be between thirty or forty percent of your gross income, alright? And their credit score, they like it to be over seven hundred, okay? That's what they consider good, alright? Obviously, when you come here and you're a newcomer, most of the time, you probably don't have a job yet, unless you come with an offer, right? But you don't have a job and you don't have credit history, right? Which is kind of something big over here. It's more like fifty-fifty in terms of the weight.

Teacher Mike: Like job and credit history, it's like a fifty-fifty weight?

Lucas: Yeah. Fifty-fifty. So credit history and an income, right? If you don't have it, it's kind of like you're down very much and a lot of people don't feel comfortable renting to you. Of course, some landlords will definitely be okay. I'll give you a chance because I was an immigrant once and then I understand the struggle, so they do and this happens sometimes. It's not very often, but it does happen, okay? So usually for new immigrants, I do have a lot of clients that come here as international students, okay? In their case, they don't have a job or they don't have any history here. And most of the times they are actually supported my parents or somebody who is back in Brazil. So it's hard, because we can't put the person as a cosigner most of the time, at least, because in order to be a cosigner, they want it to be in Ontario, you know, if possible, within the GTA, right? Because if you don't pay, they can go after the person.

Teacher Mike: You can go after the person. Yeah.

Lucas: So, in that case, because you can't really put them as a cosigner, what you do is: pretty much, you offer more months upfront, right? Landlords cannot request that you put more months upfront, but that's something... that's a very common practice here, for them to have a peace of mind when you go into property, that you're just not going to miss payment and just leave or be living there for maybe three to four months and not paying rent, right?

Teacher Mike: Let me ask you this. The first and last, is this something that became common but is not necessarily needed?

Lucas: No, actually, no. The first and last, that's one of the few deposits that the landlord can ask.

Teacher Mike: They can? They can?

Lucas: Yeah, they can. So the first is regular. The last month's rent deposit, they can ask for this. One other deposit that they can ask for is a key deposit, it ranges from one hundred to one hundred and fifty dollars. Sometimes two hundred dollars for a set of keys. So if you have two sets of keys, about three hundred to four hundred dollars. So that's the other deposit they can ask for. A damage deposit, a security deposit, cleaning deposit, none of this they can ask for. You can always offer, but they cannot ask for it, you know?

Teacher Mike: Interesting. Interesting. I remember my first time I rented. So we didn't go through a realtor, which I regret, because it would have been much easier. And everyone who's listening to that right now, this is the first time. So Lucas is the realtor who found our place here and this is the first time we went through one because we never knew if we have to pay for it or not. This is something we learned and then you're like: well, why wouldn't have I used it before? But anyways, the thing is, the first time we rented we didn't have any of that. I was an international student, so we used my parents' information, of course. And he required for a damage deposit and we did not know that he couldn't require one. So he required and we happily paid because we thought: "Oh, maybe that's normal". So that happened.

Lucas: Yeah. So that's what sucks about it, because you don't really know your rights. So whatever they ask for, you just kind of give it because you think: "Okay, they are asking for it, so, you know, they know what they are talking about and that's not always the case.

Teacher Mike: Exactly. And another thing that happens, maybe you have already forgotten that, because you've been here for a long, long time, and I think I kind of already forgotten it, too, but when you come for the first time and you are Brazillian, you think that nobody's going to do something like this to you. Nobody's going to try to scam you into doing something wrong because you think: "I'm from Brazil, I'm from the place where people scam each other out of their guts, so they're not going to scam me here". And it happens a lot, like people get scammed here. So I have a story. And again, this is by not going through a realtor, like, you know, all of the mistakes that happen, they usually happen because you're not working with someone that knows the industry. I have a friend who - well, he's not my friend, I know him - that he rented this place and then they gave him the key and he gave the deposits, he put his furniture in. It wasn't the day of the moving yet, but he put everything in there, and then, a week later, when he was into the moving date, the person changed the key to the apartment, the lock and all the furniture had been gone.

Lucas: Gone. Yes. This is a scam that does happen here. So when you're renting direct with the landlord, right? The owner. You don't know who the owner is... The thing is: so we, as realtors, we do have access to that. So there is a page that we go to. So if there's any property that you want to know in Ontario who the owner is, you just go there and you just put the property address and it shows your name. If it's a company, it shows the company name. You can just call the company, see who owns the company. That's usually how it goes. As a tenant, you don't have that kind of access. So let's say my name is John, right? And then I'm renting this place here. I'm just at the end of my contract and I'm actually a scammer. So what I do is I post this this apartment that I'm renting out on marketplace, Kijiji, and I show this place as if I'm the owner, right?

Teacher Mike: Yes.

Lucas: I know that I'll be moving out of here in two months, okay? And I try to make some money out of it. So this happens more than we'd like to think.

Teacher Mike: No way.

Lucas: Unfortunately. Yeah. So they pay first and last. Sometimes even the furniture, they put all the furniture there and they disappear, right? The owner is not held responsible for it because you didn't deal with the owner, you just had an agreement with somebody - a random person, right? I mean, there's nothing you can do much, unless you actually find the person.

Teacher Mike: It makes sense. You know, the owner should not be held responsible. He has nothing to do with it. But it is so tough and it makes sense, you know? Most of the times... I'm going to say this, it's going to sound bad, but that's the truth. Most of the times when this happens is usually a really good deal. So maybe it's a downtown apartment for a thousand dollars and you should be a little sketched out, that it's too cheap.

Teacher Mike: Why is it that cheap, right?

Teacher Mike: Yeah, so I understand. I hope nobody goes through this, but sometimes just be a little extra careful. If it's too cheap, ask why. Try to understand. And you know, most of the times, just go with someone that understands the industry. Let me ask you this, okay? How does it work, how do you get paid? How do people get to you? Because that is a normal worry that people have. "Oh, I'm not going to go through a realtor because I'm going to have to pay him".

Lucas: Yeah. So we don't get paid until we find you. So let's say you, right, Mike?

Teacher Mike: Yeah.

Lucas: So, you're my client. So you're my tenant client and I'm trying to find you a place, right? Whatever apartment we find - so, let's say, we found yours - I'm actually paid by the landlord. So the owner of the apartment pays the two realtors. So every transaction, not every, but most of the transactions have two realtors. So one represents the owner, the second one represents the tenant.

Teacher Mike: Interesting.

Lucas: In an odd case, you find a one one realtor that represents both, which is okay, but it's not as good because there could be conflict of interest, right?

Teacher Mike: Makes sense.

Lucas: So, as soon as they find you the apartment, you drop off the check in the owner's brokerage, right? And after that, there's a commission split. So meaning that the owner pays half of the first month's rent to one brokerage and half of the first month's rent to the other brokerage.

Teacher Mike: Interesting.

Lucas: Which is the which is the listing agent, right? So the brokerage does take the part of the split. Sometimes it could be like an eighty-twenty split, sometimes a fifty-fifty split. It really depends on the brokerage, and then they pay you the rest, right? That's usually how it goes. So let's say you don't pay for anything if you're looking to rent a place. This is always the landlord or the sellers, right? They're always the one responsible to pay for the realtor's commission.

Teacher Mike: Very interesting.

Lucas: When you're looking to buy and you're looking to rent, you're not really charged for it.

Teacher Mike: Very cool. That makes sense. So when you're buying or renting, you don't need to worry. If you're selling or listing it for rent, then that's when you're going to pay for the realtor. Yeah. And is it beneficial? Like, of course, I'm asking the barber if I should to get a haircut, but is it beneficial for the landlord that has an apartment that wants to list? What are the advantages of using a realtor?

Lucas: It's funny you ask this, because you can actually get scammed as a landlord as well.

Teacher Mike: Oh, OK. How? Interesting?

Lucas: Yeah, you can. There are actually people who rent. They pay first and last, because... So, let's say I just moved to here, paid first and last and I'm not going to pay my second month and I already know that. So after twenty-eight days, the landlord can file for...

Teacher Mike: Eviction.

Lucas: Yeah.

Teacher Mike: Is it eviction the name?

Lucas: Sorry?

Teacher Mike: Is it eviction the name of the thing?

Lucas: Eviction, yes. So they file for eviction, but the process takes a while, right? Especially now with Covid, all the offices are closed, you could take maybe four or five months, so you can still be living there five months rent free and the owner still has to pay for the mortgage, right?

Teacher Mike: No, that is so annoying, man.

Lucas: When you have realtors, it's usually harder for you to apply, you know, in terms of all the documents and stuff like that, just because they're way more careful when they're analyzing your profile to see if you're fit or not.

Teacher Mike: True.

Lucas: Landlords usually choose to hire realtors to rent first so they don't have to deal with people like, asking questions, like it's already on the ad. You know, people just call you and message you: "Oh, is there parking? It says on the ad that there's no parking". That's actually what I hear the most: "I don't want to deal with..."

Teacher Mike: "I don't want to deal with the peasants."

Lucas: That's pretty much how it is, unfortunately. But, you know...

Teacher Mike: No, I understand. I sell things online. I know how it is. People talk to you and ask you the most simple questions that they could just find if they read for two minutes whatever you posted, so I totally understand.

Lucas: Yeah. And here in Ontario there's a lot of big investors. A lot of big investors.

Teacher Mike: That's true.

Lucas: Who own maybe not even five, but like I've met a guy who had sixteen apartments, right? He went to the mall. So, in that case, he just didn't have the time for it, so he had a realtor run it for them and then even managing the properties, because he just didn't have the time for it. It wasn't his full time. He had a couple other companies that he had to run, and because of that, he just didn't have time for it. So in terms of that, you just have the peace of mind that, you know, things are taken care of in the right way and you are not going to have headaches later on. It's not like: "oh, I'm going hire a realtor and I'm never going to have issues with my tenant not paying". That's not how it goes.

Teacher Mike: Of course.

Lucas: Unfortunately, we can't really see who is going to pay and who is not, we just see who is most likely to default, and who is not.

Teacher Mike: Okay.

Lucas: It's usually how it goes.

Teacher Mike: That makes a lot of sense. That's really cool. All right. So I'm going to take some questions from listeners. So people that listen to the podcast, they have some questions to you. I think now we can go into the process of buying and selling, because initially, you know, when I came to Canada, I thought: "Oh, you know, is it common for Brazilians to buy and sell stuff here?" And it actually is. I found a lot of Brazilians that buy and sell stuff here. They have their own property. So I think it's really cool. So one of the questions that I got from this is how much is necessary for a down payment to start your process of buying a property?

Lucas: Okay, so that will depend, okay? If you're a Canadian resident or if you are a permanent resident, you can buy with probably five percent down, as long as you work and have good credit. That's much how it goes.

Teacher Mike: What is the good credit for a mortgage? Seven hundred as well?

Lucas: Actually, it's funny you ask. Credit for a mortgage is 680. Yeah, 680. So landlords require more than banks.

Teacher Mike: But this makes sense, this makes sense.

Lucas: Yes, because they want to make it more affordable for people to buy their own.

Teacher Mike: Yeah, yeah, yeah.

Lucas: Yeah, 680 is the credit that you need to buy a home. So it's not a lot. And I'm all in favor of buying just because... so let's say, somebody that pays two thousand dollars for rent, you know, if they paid maybe twenty-three hundred a month...

Teacher Mike: Twenty-three, twenty-four.

Lucas: They could own, right? The thing is that, after twenty-five years, that's paid off, right? And we're still not talking about appreciation that... Usually, for condos, it goes between six or 10 percent a year and for houses it could go up to 16 to 18 percent on a year, which a pretty big appreciation. That's a really good investment.

Teacher Mike: Well, 16 to 17 percent in a year for a house. That's insane.

Lucas: Oh, yeah. Yeah. There was actually three years here that some places in Toronto - not only Toronto, the GTA -, they had a fifty percent increase. So, fifty percent.

Teacher Mike: Fifty?

Lucas: Yeah, fifty. A couple houses went from five hundred to seven hundred fifty in three years, which is pretty crazy. So, really good investment, right? So I even have some clients who are not Canadian, and, in case you're not canadian, you can still buy.

Teacher Mike: Not Canadian and not even a PR, right?

Lucas: Yeah, exactly. So when I say Canadian, Canadian or PR. You are a temporary resident, alright? So in that case, you can still buy. The only thing is, at least in the greater golden horseshoe, which is around the GTA, there is a tax that's called foreign investor tax, which is fifteen percent of the amount of the property. So, if you pay a million in the house, you're going to be paying a hundred and fifty thousand in taxes, right? You pay that and you could still qualify for five percent, right? There's a couple of programs that will make you qualified. It's just harder. You're going to need documents from your banks in your country and from your employer as well. And you need to have some sort of some stability, right? In order to qualify, especially from a foreign country.

Teacher Mike: Interesting.

Lucas: Which is still a good, because, if you think about it, fifteen percent, yeah, it's a big amount of taxes, but as I always tell my clients, you know, after the first year, the appreciation pretty much covers the fifteen percent. So even if it's a bad year, the past seven years that we had, in no more than a year and a half, they will have the appreciation over fifteen percent. So the house right now is worth more than they paid for and already covered the fifteen percent they initially paid.

Teacher Mike: Yeah, this definitely makes sense. And you just mentioned we had a few bad years in the past. How is the market right now? Is it bad? Is it good, is it average.

Lucas: The market's really good. The market, it's been going up. So I'm talking about houses now, ok?

Teacher Mike: Houses, yeah.

Lucas: So, houses... The market has been going up for the past maybe seven years.

Teacher Mike: OK, so those are good years.

Lucas: Oh, yeah. Really good years. And a lot of people talk about "it's a bubble. It's a bubble". We just went through a pandemic and the...

Teacher Mike: The housing market continued growing, yeah?

Lucas: Exactly. I mean, there could be a bubble. I don't like to say that there is or there isn't. But the thing is if it's a bubble that's growing, it's a really strong bubble, because you went through over a year of pandemics and the prices are still going skyrocket. I just saw property last week that was listed for five hundred thousand and sold for six sixty-five with twenty-one offers.

Teacher Mike: Twenty-one offers?

Lucas: Twenty-one offers.

Teacher Mike: Yeah, that's not a bubble. You know, when you think about the concept of a bubble, if you think about it in the terms of what happened in 2008, it wouldn't be the same because in here when you are asking for a mortgage, you are asking for it and the bank is looking at your credit history and giving you a good mortgage because you can pay. It's definitely very, very different from what happened in 2008, which was indeed a bubble because they were giving mortgages to everyone and then there was money... how do you say that? Money instruments on top of those mortgages, right? So it was a much more complicated scheme, which I don't think that's what's happening. I just think that, you know, it's very simple. A lot of people say this, you know: "Oh, Toronto is incredibly expensive". It's true. It is incredibly expensive, but it's because there's a lot of people coming here. So it's a supply and demand. So, you know, if there's a lot of people buying houses and not as many houses being sold in the market, prices are going up. So imagine twenty-one offers. On average. I think that's a good ...I have a student right now, she's going through the process of buying a house. If I knew I would definitely have pointed you to her, but she already had a realtor, sorry.

Lucas: Oh, that's fine.

Teacher Mike: But she is having a hard time. She has the budget. She has a credit history. She already has a condo here. But she's still going through a hard time. On average, how many tries does it take to get an offer approved?

Lucas: Okay, it really depends. Usually you have a preapproval on the mortgage that says "hey, you can paid this amount". So anything within that price, it should be okay to approve, okay?

Teacher Mike: Okay.

Lucas: It's not everyone. I have a really good contact of a mortgage broker that lets me waive conditions. So when you're buying it, especially when there's multiple offers, it's really important that you don't put any conditions, which is kind of a gray area, but just be upfront.

Teacher Mike: What is a condition?

Lucas: A condition is like: so you can either buy a house firm or conditionally, okay? Conditionally is like you put an offer. You say: "Hey, I want to buy this house conditional upon home inspection or conditional upon mortgage approval". Okay? So those are conditions, okay? On the market, on the seller's market that we have right now, with a lot of people trying to buy, if you have conditions on your offer, they just kind of get overlooked.

Teacher Mike: They barely look at it.

Lucas: Exactly.

Teacher Mike: This makes a lot of sense.

Lucas: Yeah. When it's conditional, that doesn't mean sold unless that's fulfilled, right? So, when you have firm offers, they know that they sign back the offer and it's done.

Teacher Mike: It is sold.

Lucas: It's sold. So that's why they have firm offers. Actually, I worked with a lot of brokers before and they said: "Hey, Lucas, I can't really just recommend that you just waive the the finance condition, which is the mortgage approval".Because it's something big and it's not safe. So let's say, if they don't know what they're talking about and they say "hey, go for it", and then you just go without a condition and you can't approve the mortgage, you lose the deposit. The deposit could be up to two and two and a half percent of the value of the house.

Teacher Mike: When you put an offer, you put a deposit?

Lucas: Yeah, well, actually, the deposit, it's done within twenty-four hours.

Teacher Mike: Okay, so you put an offer, you put a deposit within 24 hours?

Lucas: Exactly. Yeah. But you don't know. Sometimes the condition is only fulfilled two weeks from now.

Teacher Mike: Yeah. So maybe you put a deposit for 2.5 percent, so a house of one million, that would be twenty-five thousand?

Lucas: Twenty-five thousand.

Teacher Mike: Twenty-five thousand.

Lucas: Actually, fifty... oh, yeah, two and a half percent...

Teacher Mike: Yeah, I put one million just to make it easy. So twenty-five thousand and then, if in two weeks you don't have your mortgage approved, then you lost the twenty-five thousand.

Lucas: Exactly.

Teacher Mike: Wow. This is tough.

Lucas: Yeah. So that's why it's really important for you to have a realtor with a lot of experience and a really good mortgage broker because we're talking about twenty-five thousand dollars that you could just lose like that. And in terms of saying how long it takes, how many tries, it's really tough just because, my last two deals... actually my last three deals. So the last two that I did, the first offer that I put on it was accepted. It was multiple offers and we still got it.

Teacher Mike: Nice.

Lucas: Yeah, I was able to negotiate it really well with the listing agent of where we were buying a place, like we're able to meet halfway there. And multiple offers, but we still got it. The one previously, the third last that I did, we buy nine times. We only got it in the tenth time.

Lucas: Nine times?

Teacher Mike: So this is nine different houses, right?

Lucas: Yeah, offers that we put on. Sometimes, it really depends on the client as well. It doesn't always depend on the realtor, just because. So I try to explain to my clients that it's a seller's market and it's hard for us to get a property with conditions, right? I just said, right? So, for this one that I just said that we lost nine was because the nine offers that we did put...

Teacher Mike: They had conditions.

Lucas: They had conditions. The first one that we did without conditions, everything went great, right? There was no issue with the house. We got the mortgage, no worries, and we got the house, right? So it really depends on the...

Teacher Mike: So it really makes to get pre-approved first.

Lucas: Oh yeah. Definitely. Definitely. I would probably recommend that, because you don't want to go into a bidding war without knowing how much you can afford and how much the bank will be able to back up, you know, in case you get the property. It's strongly recommended. And right now, the pre-approval, like some banks will have it for three months the lock rate; some banks will have four months the lock rate. And I mean, it's more than enough time, right? The last close that I did, it was 10 days. That's how much it took us to... Actually, so ten days plus seven, so seventeen days total. We had a week to find it and then the close was ten days after. And it doesn't really take that long, you know, unless you're looking to buy something with the tight budget and, because of the multiple offers, that makes it a lot harder. Of course, you know, this situation happens a lot, but it should it should be easy, it should be fast for you to find your home.

Teacher Mike: That is nice. That is really interesting. Let me ask you this. This question is interesting, okay? So a lot of people that are listening right now, I know you guys are in Brazil, I know that a lot of you will look at this number and think it's crazy, but let's just talk about it. What is the average selling price of a house in, well, let's say, GTA. Do you have this number? Do you know on average?

Lucas: I have the stats for Toronto that I was just looking. I do not have the updated...

Teacher Mike: Okay, let's go for Toronto, because I think Toronto is going to be higher.

Lucas: Yeah. It's just over a million.

Teacher Mike: Over a million, okay. Average price, average selling price is around over a million. I thought it was going to be a little bit higher. I thought it was going to be 1.5, 1.6.

Lucas: You know what? It's because there are still like a lot of cheap houses in terms of like, going farther to a cubicle and older houses than need renovation, that's why. But, as you said, that's a number that I also expected to be higher, just because you see a lot of properties now selling for...

Teacher Mike: 1.8, 1.9.

Lucas: Yeah, 1.8, 2 million.

Teacher Mike: Yeah, my students, this student of mine, she's going for a 1.8 million property, which is, in my view, a lot, but that's... You know, she's already here for a long time, she has built her career, she has great credit scores, she has a job, you know? Much easier in that scenario. And she's going to be approved for it. That's why I thought, my headspace was a little bit higher. But yeah, one point something, that makes sense to a house in the market of Toronto, you know, it's not that crazy. And do you know anything about condos?

Lucas: Condos. So, condos... I do. Condos, right now, they're going about seven or eight thousand on an average. You can probably find... it really depends on the one bedroom, two bedroom, three bedroom rate. So the one bedroom right now, you can probably find within 550. You want to go for a two bedroom from 550 to about 690 or 700 thousand. It will depend on how much, how big, what's the region, right?

Teacher Mike: Of course. Of course.

Lucas: So that's usually how... for a condo in Toronto right now. And it's funny you mention condos, because there's actually a price drop for a while there for condos. I actually have had two clients just kind of take the opportunity to buy extra condos just because they dropped a little bit, and when you go back up... and it's really going back up now, we can see the market trend.

Teacher Mike: Oh, interesting. It's already going back up?

Lucas: Yeah. And it's funny. I feel like people are more comfortable with the market and they know nothing crazy is going to happen to it just because the border is still closed. So I would expect this when the border is open and see nothing changed. It was right in the middle of the stay at home order. And, you know, you can still see prices going up. Just one more thing, I would like to mention. You asked here, in terms of the GTA, it's nine hundred sixty-seven thousand, eight hundred eighty-five dollars, but the average. I actually posted on my Instagram. You can find it.

Teacher Mike: I have another question. So I kind of asked most of the questions, because, as we were talking, I just asked many of the questions that people had. There's one I hadn't asked. Can you buy property... I think you kind of mentioned. But let's be more clear about it. Can you buy property being in Brazil and then buy it here?

Lucas: Yeah, you most definitely can. So, as I said, it's a little bit of a different process. You have to get approved by a bank as well. There's the investor tax that I mentioned, 50%, okay? And, most likely... you might be able to get five percent, but most likely it is going to be 20% down, okay? But you can definitely do the whole process from Brazil. You don't have to be here. I do have clients like that, they are investors and they just want to buy and rent.

Teacher Mike: You have investors from Brazil?

Lucas: Sorry?

Teacher Mike: You have investors from Brazil?

Lucas: I do, yeah.

Teacher Mike: Very interesting.

Lucas: Not all of them are here in the GTA. Some of them, because they decided not to pay the 50% foreign investor tax, they go further, they go to North Bay, they go to Thunder Bay, they go to Windsor.

Teacher Mike: There is no investor tax on those areas?

Lucas: No, there is no investor tax. So, the government here, they want to assimilate the market, the real estate market in those areas. so that's why they allow for foreign investors to buy with no taxes, which is awesome. You actually might be able to get something for 5%, though, being a foreign investor. And the thing is, with 5% down, in those areas, sometimes you break even. So you buy 5% down, you're still financing 95% percent, but once you rent, the rent is usually good for your mortgage payments and also your kind of fees. So are you able to break even.

Teacher Mike: Wow, this is pretty epic.

Lucas: Yeah. In some cases, you actually are able to break even, so you don't have to put anything towards that property and, in 25 years, you have a paid off condo or house.

Teacher Mike: This is really epic, really interesting. Another person asked a very interesting question, too, which is: what are some extra expenses that we can expect when we rent? So that's the first question, and then the other question will be when we buy. So when we rent... I know the answer, but I'll let you go for it. So what are the extra expenses that we usually can expect when we rent or then the rent, of course, when we rent for the first time.

Lucas: Okay, so are you talking in terms of, like, the rent money or are you talking about utilities, moving?

Teacher Mike: Let's talk about the whole first month, right?

Lucas: Okay. So you just rented something. You're going to have to pay first and last month, at least first and last, okay? Usually a three hundred dollars key deposit, okay? You have to take into consideration that there's going to be the moving cost, it doesn't matter if you hire a company or if you do it yourself. you're going to hire a truck.

Teacher Mike: Of course.

Lucas: So there's booking the elevator as well. This really depend on the condo you choose to move to. In the house, of course. there's no fee.

Teacher Mike: Of course.

Lucas: So some condos, they don't charge anything for you to book the elevator. They only ask for a security deposit. I have seen some condos being thirteen hundred dollars of security deposit.

Teacher Mike: Wow. Just so people understand... that are listening. I don't think that's very common in Brazil. I don't remember this being common in Brazil. But just so that they understand, when you're moving into a condo here, you have to book the elevator so that you can use it. I think you kind of book it in Brazil as well, but here you have to pay a certain amount or maybe just keep it there as a security deposit for them in case you break something in the elevator. So, in my case, it was in this condo here, it was five hundred dollars.

Lucas: Five hundred? Yeah, yeah, which is the average, which is the average. It's usually around that price.

Teacher Mike: So booking keys, of course, first and last, moving expenses. What else? Anything else?

Lucas: So utilities, right?

Teacher Mike: Utilities.

Lucas: The utilities, you've got to transfer, you have got to put it under your name. And some of the utilities., there's a set up charge of 40, 50 dollars that you pay for. There's also insurance that you need to put on. So let's talk a little bit about the utilities that you put on. Usually, condos are pretty much hydro. That's what you pay for. Some of the newer condos, they actually don't have any of the utilities included in the condo fees, so you'd have to pay heat, water and hydro. So, besides that, there's usually tenant insurance, which is about twenty-five to thirty dollars a month, it really depends on how much you choose to be covered. And also I feel like everybody hire that nowadays.

Teacher Mike: Of course.

Lucas: They definitely taking it into consideration. Yeah. So that's pretty much the cost that you're going to have for the first month. And I really can't think of anything else right now.

Teacher Mike: No, that is definitely it. Just out of curiosity, our hydro provider here, it has a different name. It's called Provident. Do you know which one it is?

Lucas: Yes, Provident.

Teacher Mike: And they have a security deposit, but I think it has to do with the fact - well, that's what they told me, but I'm not sure -, I think it has to do with the fact that I have, myself, my name, Michel Marcelino, had never had a name in the hydro before. I had never had anything in my name, yeah? So they charged a hundred and fifty dollar deposit, besides the actual price for the...

Lucas: Oh, really?

Teacher Mike: Yeah. Which is really annoying, but, you know, there's nothing I can do, so we just paid. But it was this, you know, I kind of... I am a Virgo, so I kind of had everything blend, I knew all the costs I was going to have and even though I knew all the costs I was going to have, I didn't see this one coming.

Lucas: Yeah, surprise.

Teacher Mike: Surprise. So it's really interesting, because most of the times you really want to have things down and you want to know every cost that you're going to have because, you know, just be careful and have that extra cushion, because this might happen and it happened to us, but always have that extra cushion. Like, having an extra cushion to save you on those times is what's really going to take the headache off.

Lucas: And besides, it actually helps a lot, you know, having savings. So not twenty thousand, thirty thousand, but if you do have savings, when you try to put an offer to rent something, it's going to help you, right? Because even if your income is not sufficient or your credit is not the best, having savings could actually save the deal, you know, showing that you do have some extra cushion just out there, just in case something happens, you lose your job or...

Teacher Mike: Perfect. That makes a lot of sense. That makes a lot of sense in the next question and I think that's going to be the last one. I already took 40 minutes of your time today.

Lucas: No worries, happy to be here.

Teacher Mike: But it was a really good, really good conversation. I solved many of my questions myself. Last question is, what are the extra expenses? So now, in this case, extra expenses for buying a house? What someone can expect? Just... I think, you know, through the course of a year, there's many extra expenses, but that's just considered the process of buying... sorry, the process of... yeah, let's do the process of buying and the process of selling so well. Are there any extra expenses for the process of buying a house?

Lucas: Yeah. So buying a house, if you're a first time buyer, there is actually a rebate that applies to you and usually the cost that we give is one and a half percent of the cost of the property, right?

Teacher Mike: Interesting.

Lucas: So what's the closing costs? That's what we call it, closing costs.

Teacher Mike: Ah. closing costs.

Lucas: Closing costs or land transfer taxes, insurance and lawyer fees. That's most likely what you're going to be paying for it. If you don't pay with 20%, there's also mortgage insurance. It's called PST. Usually, it depends on the price of the house. It could go for like fifteen hundred, two thousand. It's an one time fee that you pay.

Teacher Mike: Okay, not a big deal. How about the land transfer taxes? Is that the name?

Lucas: Yeah. So that's one thing that I should mention. So land transfer tax is the one that you are going to be paying the most, right? Land transfer tax, in Toronto right now, you have to pay two: provincial and municipal, okay? And they're both the same amount. So if you were to buy a house in Oakville, you'd pay twelve thousand in land transfer tax, okay? If you pay in Toronto, you pay twelve thousand times two, because you not only pay provincial, you pay municipal as well. 

Teacher Mike: Wow, man this sucks, it sucks balls.

Lucas: It sucks.

Teacher Mike: Sorry, I'm going to interrupt very quickly. You said twelve thousand, that's a fixed price?

Lucas: No, no, no. It really depends on the price of the house.

Teacher Mike: Okay, it depends on the price of the house.

Lucas: Like, twelve thousand is just an average of what you typically pay for it.

Teacher Mike: Okay. So land transfer tax, you're going to pay the... what are the other two things you mentioned?

Lucas: Title insurance and lawyer fees. Yeah. And, as I said, if you're paying with less, if you're buying with less than 20 percent down, there's mortgage PSD as well.

Teacher Mike: Okay.

Lucas: That's usually how it goes. Yeah, that's pretty much the fees that you are going to have.

Teacher Mike: The mortgage PSD is a common thing to pay, even if you are a permanent resident or Canadian, if you're buying with 20 percent, less than 20 percent down, five percent.

Lucas: Yeah, that's common for everyone who's paying less than 20 percent.

Teacher Mike: Which makes sense, you know, you would be spending much more, so two thousand dollars, it's not a big deal.

Lucas: Yeah, it's called mortgage insurance in case you default on that first 15 percent, because the regular amount for you to actually apply with and get approved is 20 percent. So when you do five percent, it is actually a special program that you have to go through and, you know, get approved.

Teacher Mike: Is this program something that Canada has created, something that Ontario has created?

Lucas: Oh, it's for the longest time, you know? I know that Toronto stopped doing this, the five percent down for a while, because they were trying to motivate people to go to other cities, but ever since I came here, the five percent down is a thing, so that's the thing that it's been around for a while.

Teacher Mike: That makes sense, that makes sense. And then lastly, when you're selling a house, what are some costs that you're going to incur?

Lucas: Okay, so when you sell, you obviously don't have the PSD on mortgage, right? You don't have to do that. You also have to pay for a lot of fees. You also have to pay for a land transfer tax.

Teacher Mike: Oh, both pay land transfer tax?

Lucas: Yeah.

Teacher Mike: Man, I hate the government.

Lucas: And the biggest thing actually that I should mention, it's the commission that you pay, which really ranges nowadays. It could go from four percent to six percent. Of course, depending on the realtor you choose, there are cases that I have seen of eight percent, right? But, in my opinion, there is no need for you to be paying eight percent of the cost of your home to a realtor or two realtors, regardless of their experience in the market. You know, eight percent is just too much.

Teacher Mike: A bit greedy.

Lucas: Yeah, a bit greedy. Yes, that's the word.

Teacher Mike: Yeah, I know you cannot say, because you are their colleagues, but I can say it, so...

Lucas: Yeah, I mean, like, I don't like to judge and I feel like people... it's their job and their service, they know how well they do it and they just charge accordingly. But I feel like eight percent, you know...

Teacher Mike: Maybe a little bit too much.

Lucas: Yeah. Just a little bit. Yeah.

Teacher Mike: Yeah. Very good. Very well. Lucas, thank you so much. Where can people find you if they're trying to rent in Toronto, in Ontario? In Ontario, do you work across Ontario?

Lucas: I do work across Ontario, yeah. So, rentals, I usually try to focus more in the GTA.

Teacher Mike: Because you have to go and look at the properties, yeah?

Lucas: Exactly. Because it's something that you do often. You've got to go and sit it. So selling and buying I do across Ontario.

Teacher Mike: Across Ontario? Okay. So if you're selling and buying across Ontario, if you're renting within Toronto or GTA, so that's Greater Toronto Area, how do they find you? Instagram or...

Lucas: Yeah, Instagram. My instagram is Lucas Souza realtor.

Teacher Mike: OK, I'm going to put it on the bio here.

Lucas: Yeah, if you can put, you know, my cell phone number, you know, in case it's easier for them.

Teacher Mike: I am going to put it, but be ready, man, because if I put your cell phone number, some people may call.

Lucas: Yeah, that's fine. I'm ready for it. I've got actually used to it.

Teacher Mike: Okay, very good. Okay, just to finish off then, since we're going to talk about this, what are some questions sometimes that you receive on your WhatsApp that you think it's, you know, a little bit annoying? Is there anything annoying that people should and shouldn't ask you?

Lucas: Yeah, it's like, they're like: "Hi, Lucas. I'm trying to find a two bedroom condo in downtown with park included for a hundred dollars a month".

Teacher Mike: Okay, Other than that, they can say anything?

Lucas: I mean, like, I do understand that some people just don't know how the market is, especially if they are coming from a different country. But, usually, the persons to ask for this are here and they know how it goes.

Teacher Mike: They know how it goes, but they're just with crazy expectations.

Lucas: Yeah, they're like: "Okay, I have a realtor looking for me, so I might as well try it, you know?" I mean, like, if I had a condo for a hundred dollars a month, than I would probably rent maybe 30 of them, even more, a hundred of them, because, you know, that's what everybody would be happy to pay, but unfortunately, you know, it's just the price conditions that are in the market right now. We don't sell them. We just work with them, right?

Teacher Mike: That's true. Very good point, man. Very good point. And, you know, as a bright side, if you are looking to rent in downtown Toronto now, prices are kind of going down. Maybe they're going up again now, but when we rented, when you found this one for us, it was perfectly within our budget, which was beautiful. This one is 1950, so it's very good for a two bedroom in downtown. It's very good.

Lucas: It is really good. Right now, it's funny actually that you said that, so, a condo like this, probably during 2019 and the beginning of 2020 would go around twenty-four hundred, twenty five. And, as I said previously that the rents are going back up, they're going up, but they're not going back up to the...

Teacher Mike: That same standard.

Lucas: Yeah, right. So if you got that one for 1950 and they used to be 2500, now they're roughly 2050 to 2100.

Teacher Mike: They're not going to go as crazy as it was before, so there's still time to to join the right.

Lucas: Exactly. Just try to come and try to move as soon as possible, so you take advantage of the deals, right?

Teacher Mike: Very cool. Very good man. Thank you so much for joining. And guys, you can check his Instagram on today's podcast description. And I'm also going to put it on my Instagram. I see you guys in the next episode. Thank you so much, Lucas.

Lucas: Thanks, Mike. I appreciate it.