McClelland Group RE/MAX of Lloydminster

Midwest Minute - February 12, 2012

Vern McClelland — Mon, 13 Feb 2012 17:21:00 GMT

Building Wealth through Real Estate

Almost every week I get asked about the wisdom of investing money in real estate. The short answer is that it is definitely worth looking at; the longer answer is that it doesn’t come without effort and a business like approach. In other words you must “plan the work, and then work the plan”.

There are two main benefits to having the right real estate in your portfolio – capital gain and cash flow. Inflationary pressures push value up over time, thus hedging your savings against the loss of purchasing power in the future. Positive cash flow comes when rental income exceeds expenses thus generating a surplus.

The goal here is to incrementally accumulate surplus cash, then use it to possibly purchase more properties, or pay down debt, and ultimately become financially independent. One of our clients started with one four-plex and now owns three. Her objective is to get these mortgage-free as soon as she can, then retire using the net income as her pension plan.

Earnings from her current full time employment go to meet the day to day needs of her family. No matter how tempting it would be to siphon off some cash for vacations or other discretionary purchases, she is determined to plow any and all surpluses back. Pre-paying the mortgage gives her more equity, a greater cushion against recessionary pressures, and reduces the monthly interest commitment.

She also knows that as the value of the properties increases and likely so will the amount of rent she can charge. With mortgage rates locked in for five year terms, annually increasing rents mean progressively larger annual cash surpluses. She uses some of it to keep the properties in top condition. Her theory is that good looking apartments attract a better quality of tenant. Good tenants want to be proud of where they live, essentially helping her to look after the building. Lesson - the best money you make is the money you don’t spend!

Funds used to maintain the property, mortgage interest, and depreciation on the building’s cost, are all deductible expenses. Even if for some reason you don’t generate a surplus one year, the mortgage will eventually be paid off by others.

So let’s take a look at the numbers in today’s dollars and see if you could retire on this. There are three four-plex units, currently worth $700,000 each, for a total of $2,100,000. The initial down payment on the first structure eight years ago was 20% on $550,000 or $110,000. The net annual income from 12 three bedroom apartments, mortgage free, is over $140,000 giving a return on investment around the 7% percent mark.

The best part? Unlike an RRSP, you don’t have to cash the asset in at an arbitrary age. As long as you own the property it keeps chugging along providing you with cash. Don’t want the hassle of tenant relations? Hire a property management company. All you need to do is check your monthly online bank statement from wherever in the world you happen to be staying.

Vern McClelland is an associate broker with RE/MAX of Lloydminster and a partner with The Midwest Group. If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700, or through the website www.wesellmidwest.ca

Midwest Minute - February 06, 2012

Vern McClelland — Wed, 08 Feb 2012 22:39:00 GMT

Water – Fresh or Salty?

As we go about life here in the Midwest enjoying a relatively mild winter, local farmers and ranchers are starting to worry about the scant snow cover and the lack of ground moisture that may greet them this spring. Is this the beginning of another drought cycle like we experienced ten years ago, or will there be timely rains during the growing season?

We have just come back from a ten day vacation in Maui, and you may be surprised to learn that drought is also an issue there compounded by growing tension between the agricultural and tourism industries. Now Maui is an island in the Hawaiian archipelago and for as long as anyone can remember, it has always had sufficient fresh water to meet its needs. Just like our west coast, the moisture laden clouds come off the ocean, almost on a daily basis, and shed rain as they rise against the peaks of dormant volcanoes.

Early in the twentieth century, enterprising sugar cane farmers developed a network of ditches to trap the water and bring it down onto the plains to irrigate their crops. This consistent supply was also shared with the neighbouring towns that housed the workers, and of course, to the processing mills. It surprised me to learn that even today it takes well over 100,000 gallons of fresh water to produce a pound of sugar. Granted, some of the effluent is re-cycled with crop residue into livestock feed, however most of it is simply returned to the ocean.

Although Maui has long been a stop for outsiders seeking rest and recreation, starting the with the rowdy whaling crews of the 1800s’, it wasn’t until about forty years ago that there was significant residential development along the coastal areas encouraging tourists from countries all over the Pacific Rim to visit (and invest). From my perspective, there wasn’t a lot of thought given in the early years to how a community should be planned out, probably because no one anticipated the level of infrastructure that would eventually be required to meet the demand.

One thing I credit the native Hawaiians with is their unceasing determination to make all beach areas publicly accessible. Even the largest five star hotels have to provide free parking close by and maintain walkways, even restrooms and exterior showers, for anyone to use. This is certainly not the case in other locations, like the Gulf coast of Florida or much of southern California, where the private interests of the wealthy tend to trump enjoyment of the natural landscape by the average citizen.

The Hawaiian Islands have not been immune to the recession felt by the United States mainland. Their real estate board just produced a chart showing that after four years of slumping prices from the peak in 2007, that demand is now equaling supply. Location, like in any second home or recreation market, is key with an ocean view one bedroom / one bath condo in a thirty year old complex going for anywhere from $275,000 to $400,000; a downward adjustment between thirty to forty percent.

Last summer, farmers were told not to harvest over 25,000 acres of standing sugar cane because the fresh water required for processing was to be diverted to servicing the domestic population. I wonder what it must feel like to drive by beautiful grass green golf courses and impeccably landscaped gated communities, while watching your crop burn in the fields so you can plow them under?

Midwest Minute - January 29, 2012

Vern McClelland — Mon, 30 Jan 2012 17:12:00 GMT

More than Just a House

I had been invited to come and discuss listing their home. Her husband had told me on the phone that his wife of fifty years had cancer, and the outlook was not good, so they had decided to move into the city to be closer to the health services she needed.

To say the meeting was uncomfortable would be an understatement. Don’t get me wrong. After 23 years in health and human services, I have spent many hours with families in difficult circumstances. But this time she just sat in the living room with her back to us, refusing to participate until it came time to sign the listing agreement. He got up and wearily left the room.

I knelt down beside her and noticed the tears. For a few minutes we just held hands; then we talked. About how their three children had been raised there. The beautiful garden out back where her daughter had her wedding pictures taken. The pleasure she got from the abundant light that came in even on a winter day. How worried she was about leaving him alone; “he couldn’t boil water for tea!”

What can one say at a time like this? Only that I would do my best to find a family that would respect the home and build their own memories there; and we did.

It would be so easy in our work as Realtors to just think of lot sizes, structural features, and location. In fact, that is how we estimate value. But so many times, there is so much more than that. It’s the single woman who proudly learned how to install tile in her bathroom and kitchen; despite being told by an abusive ex that she had no talent for anything.

The young couple who fixed up the extra bedroom for a nursery; painting it yellow for an expected daughter, only to bring a husky young lad home. Laughing about it now as they packed to move to a bigger house to accommodate their third child.

The city girl who grew to love country life more than the farm boy she married learning to ride horses, raise sheep, and spending more time outside than in. The immigrant family that saved every nickel to buy their first home then laughing about how they had no money for furniture when they moved in, sleeping for months on the floor.

I could relate having built my first living room bookshelf from planks and cinder blocks (don’t laugh most of my friends used beer cases instead!). In fact, back in the early days our marriage, we had a black and white television with wallpaper on the sides given to us by a neighbour. He had planned to throw it out when he bought his first colour one.

It’s always more than just being a house.

Midwest Minute - January 15, 2012

Vern McClelland — Mon, 16 Jan 2012 17:39:00 GMT

Questions To Ask Before Buying a “Fixer-Upper”

I can’t watch renovation reality shows on television. For one thing, we see more disastrous retrofits than successful ones in our business. Don’t take me wrong, I think there are always opportunities in the market to earn decent payback by tackling the right properties. But that’s just it; you need to be sure it is a project that makes sense.

The first step is to be honest with yourself about what skills you possess, and how much time you will actually have to devote. Unlike many of the TV shows, very few of us have access to a professional coach that can guide us every step of the way. Some tasks, for example painting, are relatively simple if undertaken in a methodical manner. Others, like electrical, can be downright dangerous to both you and a future resident if not finished to code.

The second step is to have a friendly chat with your banker about purchase limitations, progress draws, and their expectations respecting repayment terms. Don’t forget to factor in legal fees, title and mortgage registrations, inspections, and most importantly, the cost of financing until resale. If you plan to purchase a dwelling for rental purposes, then you will also need to put a budget that addresses all the expenses that will be associated with carrying it in the longer term.

Ask your Realtor to undertake an initial search for candidate properties that meet your specifications, then to watch for new listings as they come on to the market. In my experience, the best deals often get snapped up before any substantial advertising takes place. Opportunity always finds people who are ready to buy.

When making the offer I recommend asking that it be subject to both achieving financing and practical period of time in which to conduct further diligence. This may include an independent appraisal for current value as well as estimated value after proposed renovations have taken place, as well as a very close look by professionals at the integrity of the structure and every mechanical system. Simply don’t buy a house with bad “bones”, it is rarely ever worth it.

Make a list of the repairs that need to take place in order to establish an acceptable cost for the project. If you have a good working relationship with an experienced contractor, hire them to do a walk through with you. Develop a detailed inventory of tasks that will be performed then proceed to price labour, permits, and supplies. Add at least another 20% because I haven’t seen a refresh project yet that didn’t encounter something that was unanticipated at the beginning.

Most importantly, don’t put any unnecessary pressure on yourself or others who may be assisting. Fix and flip, or fix and rent projects can be very satisfying if completed properly. You are taking a tired building and making it useful again. Done right, the family that gets to live in it next will be excited to have it as their home. Like most things in real estate, it’s not how quickly you start; it’s how well you finish. Have fun!

Midwest Minute - January 08, 2012

Vern McClelland — Mon, 09 Jan 2012 20:39:00 GMT

Four Steps to First Time Home Ownership

Step one – is this the right time? You just received notice at year end that the landlord is increasing your rent again. Your significant other survived the scrutiny of your family at Christmas. Heck, he even lets you drive his truck. Your best friend thinks he’s a keeper. You feel ready to take the relationship to the next level of commitment. Buying a home will be the largest financial decision that you will likely make to this point in life and it can be surprising stressful. So let’s talk about flattening out the bumps a bit, and ensuring it is as a good experience as we can make it.

Step two – consider all the costs, both one time and ongoing. You will need a down payment, probably equal to 5% or more of the purchase price. There are closing costs to finalize a transaction like lawyer’s fees, mortgage registration and title transfer, inspection fees, house insurance premiums, utility hookups, appliances, paint, draperies, beer and pizza for the movers; so for now plan another 2%. Your existing monthly payments on consumer debt - car, furniture, student loans, etc will be considered against your income and credit history along with new costs for mortgage repayment (principal, interest, mortgage insurance), utilities, and property taxes. If you are in a condominium, monthly fees for maintenance of the common space and other shared responsibilities.

So before getting serious about searching, choose a mortgage lender and work your way through a detailed pre-approval process. I am not talking about an online quiz either. Make a formal application and see what price range you can comfortably afford. Ask questions about interest rates, penalties for early buy-out, portability should you decide to trade houses before the first term is up, etc. At least one third of first time applicants are surprised to find that they are currently not in a position to actually get a mortgage. They may not qualify because their debt service ratio is too high, haven’t enough funds saved yet, or are seen as a poor credit risk by the financial institution because of past behaviour with unpaid credit cards or limited terms of employment, etc.

Step three – engage a good Realtor. He or she will act as a professional guide throughout the search and buying process. Honestly, this is not the time to rely on your third cousin once removed who is just getting into the business. You want someone who knows what they are doing, will give good advice even if you don’t necessarily want to hear it, and can help you avoid making painful mistakes. The best part? If you purchase a MLS property, you won’t have to pay directly for their services, the brokerage representing the seller will.

Step four – think it through logically. It’s a campaign. The best advice I received before buying my first home was to think ahead to the day when you will want to sell it. Is the location desirable? Does the structure have “good bones?” Am I paying fair market value? Does it fit our needs, not just our wants? And whether you are buying an older home, a new one, or building, try to allow extra time at possession. You may need it to paint some rooms before putting furniture in or to clean behind an exiting owner who doesn’t have the same standard of housekeeping that you do. It’s not how quickly you start that counts, it’s how well you finish!

Midwest Minute - January 01, 2012

Vern McClelland — Tue, 03 Jan 2012 20:55:00 GMT

Fatal Mistakes in Real Estate

My partners and I have facilitated hundreds of real estate trades and from time to time we have observed “deal killing” behaviour by both buyers and sellers.

One older multi-family complex has been on the market for several years, and it’s no wonder. Every time we go to show it, at least one of the units has sewer or plumbing issues likely due to the age of the building combined with deferred maintenance by the owners and lack of initiative by the tenants. It is sad actually because the quality of accommodation is so poor that it is only rented by single mothers forced onto welfare or persons struggling with addictions. See it from the buyers’ viewpoint; all they can see is a money pit that will require significant further investment to bring it up to a decent standard, never mind the social issues that they will have to contend with.

I saw much the same thing on an acreage a year ago. The sewer had apparently backed up into the basement, there was trash everywhere soaking wet. To me, it looked like the renters just threw empty pizza and beer boxes down the stairwell and closed the door. The main floor carpet was so dirty I wouldn’t take my shoes off plus there were empty beer bottles, cigarette butts, and dirty dishes everywhere. Just to get from the driveway to the front door required evading a big angry dog on a small logging chain.

Another rural site held a surprise in the shop; about three dozen pens full of small dogs apparently being bred for re-sale. Did I tell you how much I hate puppy mills? Over the years we have also seen dead pigs stacked like cordwood, starving cattle, lice infested cats, plus free range goats who apparently like to climb on visitors’ vehicles.

Some houses we go into could almost qualify for one of those hoarder shows on TV. I have had to use my shoulder in order to open the doors into bedrooms because of the amount clothes lying on the floor. I don’t know how many times I have kicked dirty underwear under beds so a buyer won’t see them.

Older homes often hold surprises for guests too. Dead mice on the family room carpet. Open electrical boxes that spark if you are foolish enough to touch them. Pigeons flying through broken windows in the second storey. Raccoons comfortably nesting in the crawl space. And yes, these houses were also inhabited by humans.

It’s not just how people live either. It may be a seeming lack of discretion. Enthusiastically announcing your intention to buy a home on FaceBook may reach another prospective buyer, or even the seller, before the offer does. Don’t laugh; it’s happened more than once!

Being so interested as a seller in what a prospective buyer and / or their Realtor is saying about your property that you place a recording device under a box on the kitchen counter or use binoculars from a vantage point in the neighbour’s home to watch the progress of a viewing. These actions are so creepy I guarantee the prospect will never return, and frankly neither shall I!

Midwest Minute - December 26, 2011

Vern McClelland — Wed, 28 Dec 2011 19:53:00 GMT

Number 250

This column celebrates the five year anniversary of penning a guest editorial on real estate in western Canada. Not only is it published in the weekly Midwest Real Estate Guide of the Lloydminster Source, it is circulated electronically to Group clients in five countries in an effort to stay in touch with them on a regular basis. It’s a rare day that I don’t receive some type of feedback on what I write both positive and negative; so I thought I would share some of that with you today.

After reading about the perils encountered in wandering around deserted homesteads, a retired farmer invited me over to her condo and gifted me with a walking stick made from the Ocotillo cactus. This is a spiny bush native to the southwestern United States, with sturdy branches that grow straight for about 10’ or more. Made for her by a Navajo craftsman, she had used it for years as a member of hiking group in their winter community, and not needing it any longer, thought I could benefit from it. I carry it with me full-time in my truck, and use it regularly to ensure that I don’t step into abandoned wells or such like. What a thoughtful present, thank you!

Offering an analysis on the amount of farmland that is being sold to non-farmers brought a quick response from a gentleman who felt that Canadian farmers and ranchers would soon go the way of those in England, becoming serfs of feudal-type corporate landlords who only have profit as motivation. It was an excellent point driven home recently by a sale in the area reportedly at 35% greater than any comparable. Every Realtor who works with rural property has a shortlist of investor clients that are willing to pay a premium for land, and if we look at Iowa as an example, there is only one direction prices will go, and it is certainly not always based on productivity.

An oil company executive phoned to challenge my concerns regarding the amount of fresh water being withdrawn from the North Saskatchewan River to support enhanced oil recovery through a process called Steam Assisted Gravity Drainage or SAG-D. I didn’t tell him, but several veteran managers within his own organization had already privately expressed agreement stating that recycling water used in these facilities was a proven technique, but since it would decrease the margin of profit, would not be done unless it was forced upon the industry. Don’t get me wrong, the oil production is very important to Canada, but as in all progress, there also needs to be an environmental balance.

A story about a Father’s Day river boat ride brought a call from a lady who had grown up in the Lea Park area. We had a pleasant chat about the history along the North Saskatchewan and her family’s role in it. A few months later, I received numerous comments about the impact of the sale of a ranch on an elderly owner once he realized that none of his sons or daughters would be coming back. Even now, several years later, some one will quote my assertion that one should always move when still in charge, and not under the direction of others.

The role of technology in the buying and selling of real estate prompted a caller to tell me that it was gratifying to see that someone my age (!) was still trying to keep up with the times. Like any business I believe that one has to invest in bringing the future to the present. Our professional video home tours are but one example of how good information available 24/7 can assist people to make better decisions. Although I’m still getting my head around the utility of FaceBook for business, I am a strong believer in the power of the Internet and its ability to connect people with solutions that meet their needs.

So thank you to all readers of this column for your encouragement, advice, and critique. Most days I love my career in real estate, and strive to share what I learn so it can help others. All the best for 2012!

Price Reduced on 3222 49th Avenue in Lloydminster

Vern McClelland — Tue, 20 Dec 2011 17:33:00 GMT

Lloydminster, Lloydminster (Part) - Announcing a price reduction on 3222 49th Avenue, a 1,152 sq. ft., 1 bath, 3 bdrm 1 1/2 story. Now MLS® $129,000 - .

Property information

Midwest Minute - December 18, 2011

Vern McClelland — Mon, 19 Dec 2011 21:09:00 GMT

Christmas Memories

It has been a rather gentle start to the winter this year with very little snow so far, allowing our granddaughters to explore the creek that passes by our home on skates. This brings back many good memories for when I was a child our cousins used to come over during the holidays for an afternoon skating party. And although there was at least twelve years between the youngest to the oldest, I don’t ever remember not having fun on the pond. It didn’t matter if the wind was blowing or cold weather had set in, for we were down below the creek banks with a good bonfire to stand by when necessary. It was a great way to blow off steam too from the excitement that Christmas can bring in the heart of a child, and I’m quite sure our parents enjoyed having us out of the house for a few hours.

As young adults, coming home from wherever we lived for a few days was like re-charging batteries, providing an opportunity (in those pre-FaceBook days!) to catch up with old friends, and to re-connect with family. I do remember how treacherous some of those trips were too though; one particular Christmas Eve found us on a very icy highway debating if we should keep going or find a hotel for the night.

When we moved back to the farm with children of our own, the holidays were enhanced with sleigh rides from a team of saddle horses reluctantly recruited into harness. Our parents always seemed to look younger after enjoying a ride through the fields, causing them to reminisce about travelling to dances at one room schools, who in the neighbourhood had owned a high-stepping team when courting, or how sleighs could overturn at the most inconvenient times.

Truthfully though, the events leading up to Christmas can also cause sadness and stress in a household. Like many others, we have lost family and friends at this time of year, and personally I try to devote some quiet time to honor their memory with thoughts about how each of them touched our lives. For me, it hit home last year just before we started supper on the 25^th, when I realized that for the first time in fifty-five years, I was to be the oldest member of the family seated at the table.

December can also be a stressful month in real estate. We see couples who want to quickly make changes in their place of residence even to the point of foregoing due diligence in order to take possession of a house prior to the holidays. Buyers sometimes ignore that in order for them to move in means someone else usually has to move out. Again it is a time of year that has so much happening in peoples’ lives within a short period of time. Clients can be so focused on their own circumstances, they do not realize their behaviour may be creating difficulty for some one else.

I sincerely hope you have the opportunity to share time in the days ahead with people who are important to you. Please don’t take it for granted that he or she will be there this time next year. Enjoy the spirit of the season, and always know that no matter what situation you find yourself in today, you are special in the eyes of the Creator, and there are people who care for you. Merry Christmas, and all the best in 2012!

Midwest Minute - December 11, 2011

Vern McClelland — Mon, 12 Dec 2011 17:44:00 GMT

Small Changes That Help Make a Home User Friendly

You can make any house more functional simply by thinking about the needs of the people who will use it. Take the front door for instance. Install one that is 36” wide and not only can someone who uses a mobility aid like a cane or walker able to enter more easily; it is also great for those half Volkswagen type strollers that children ride around in these days! It sure makes it a snap to move furniture in and out too.

If you have an attached garage, designate the interior doorway as the wider one. Extend the garage several feet if you can to allow space for an interior ramp up the common wall with the house. If you don’t have an attached garage, consider how you could landscape a zero-clearance front step to make the entry into the home welcoming and carefree.

In my opinion hallways, even stairwells, should be at least four feet wide to also accommodate the movement of furniture and people. In the “old person” house that we designed several years ago for ourselves on the farm, we even placed a three foot wide door to the master bedroom so that a hospital bed could be brought in if necessary some day.

If you have two bathrooms on the main level, place a five foot walk in shower with a built in bench and recessed grab bar in the one off the master bedroom. All plumbing fixtures should be single handle to accommodate arthritic hands. In fact, door handles should be levered too, but as we have found out lately this also lets toddlers easy access / exit, so that has to be taken into account too.

There are a number of features to be considered in the kitchen / dining area. Roll out pan drawers and storage shelves make the items easy to find. An island with comfortable, solid high back stools is not only great for casual conversations but creates a work space where one can sit down to prepare a meal, read the newspaper, or do crafts. Walk-in pantries make storing groceries a breeze. One of our clients has a large walk-in closet off the main door with a deacon’s bench so one can sit down to put shoes on, what a great idea!

One of the most important design elements in any home for an aging occupant is good lighting. Mature eyes may need three to five times more light than those of a teenager. Create zone illumination that can be turned on when needed with specific lights over the sinks, counter tops, and dining areas. Non-slip rugs and low piled carpets help people, young and old, avoid falls. Better yet, use laminate, hardwood, linoleum, or tile. If you can afford it, a heated floor surface is not only wonderful on bare or stocking feet; it helps to quickly dry up any unnoticed spills.

The main thing is designing flexibility into space. None of these enhancements will seem out of the ordinary, yet can make all the difference to a person who needs them in order to enjoy a decent quality of life.

Midwest Minute - December 04, 2011

Vern McClelland — Mon, 05 Dec 2011 17:49:00 GMT

What? List this close to Christmas? Are you crazy?

Many potential sellers we speak with at this time of year are surprised to hear a strong recommendation that they continue through with the listing and not wait for the New Year. Let me tell you from my experience why I believe you shouldn’t hesitate to get any property on to the market. It was only twelve months ago when a long time client was questioning my sanity. So I am going to say to you what I said to them.

You would be amazed at the sincerity of those potential buyers who are actively looking today. Frankly people are not going to be shopping this time of year unless they are really motivated. In fact, a good percentage of prospects are from out of area, and most likely have just received notice of a transfer into the community. If they have school age children, they would really like them to start the next semester with everybody else.

A second buyer group is young couples looking to purchase their first home together. Many are hard working folk who are getting a year end bonus and have decided to use it towards a down payment. In our oil and gas economy, the two weeks around Christmas may be the only days off they have had for months; now they have some time to look. And while it is true that a lot of relationships break down this time of year, there are just as many couples who want to take their commitment to the next level. I remember selling a new house late in the afternoon on Christmas Eve several years ago; what a happy occasion to share in!

The third buyer group is the young family that has just found out that another child is on the way, and they will soon need more room. A bigger home is something to look forward to in the Christmas stocking, and reinforces this joyous event as positive change.

Surprisingly enough, the other end of the age spectrum is often in the hunt this time of year too as Mom and Dad may feel it is time to downsize. They want to look at their options before their adult children come home for the holidays, then solicit further input and hopefully moral support, into the difficult decision that it is time to let the family home go in favour of one that is easier for them to maintain.

More than likely most potential sellers are thinking right now, “what a pain in the rear” it would be to keep your home ship-shape and show-ready this time of year. Stop and think of how your house presents - cheerful decorations, bright colorful lights, and maybe even the smell of baking; all of which serves to welcome potential buyers and make them feel right at home. Even the snow gets in the act by laying a soft and forgiving blanket of white over the yard.

Leaving for the holidays? This is actually is an advantage for us Realtors as we now have the flexibility to show during the daylight hours without worrying about disrupting your family’s schedule. Bottom line? Let the others keep or take their home off the market. Less competition for you!

And those clients last December who doubted my wisdom? They packed their tree and decorations directly for the move, as they accepted an offer on their house week before Christmas!

Vern McClelland is an associate broker with RE/MAX of Lloydminster and a partner with The Midwest Group. Contact him by phone at 780.808.2700 or through www.wesellmidwest.ca

Visit www.facebook.com/Lloydminstermidwestgroup for more tips on real estate.

Midwest Minute - November 27, 2011

Vern McClelland — Mon, 28 Nov 2011 17:41:00 GMT

What Money Will Buy

There is no doubt that there is large disparity between communities when it comes to the cost of housing; but it is also something worth putting into perspective. Compare the median price of $350,000 (in the middle of the range, as opposed to the average) that the Canadian reports for a three bedroom home, as to what is available today in the Midwest.

Ten thousand will get you a parcel of two side by side serviced lots in the village of Paynton, boasting an excellent building site framed by mature trees. It will also get you a similar, but slightly smaller, lot in the village of Marsden. Both are great places to raise a family, and under 45 minutes commuting time to Lloydminster. There is even a good sized lot in Marshall, just east of the city, at an asking price of twenty four thousand, five hundred.

Want a recreation property to kick back on? Thirty three thousand dollars is the asking price for a half acre lot at Laurier Lake, or for forty seven thousand, five hundred you can park your RV under the spruce at an 82’ x 98’ lot in the quiet subdivision of Evergreen Beach, Brightsand Lake.

There are number of older houses or mobile homes available for less than fifty thousand in smaller communities like Minburn, Lone Rock, Edgerton, and Paynton. Add ten to twenty five thousand more, and you can live in older, but still serviceable accommodations in Waseca, Maidstone, Paradise Hill, Marwayne, Vermilion, or Paradise Valley. If town living is not for you, acreages in this price range await construction of your dream home in the Hillmond, Marshall, or St. Walburg School Districts.

For around the hundred thousand mark, you can have a one bedroom condominium in Lloydminster, ten acres in the Lloydminster School District, a 1987 three bedroom mobile in Marshall, or an updated 1½ storey house in Waseca.

Modern three bedroom bungalows with garages range from one hundred and thirty five thousand in Paynton, one hundred and fifty nine thousand in Maidstone and Waseca, one hundred and eighty thousand in Chauvin and Wainwright, one hundred and ninety thousand in Paradise Hill, to over three hundred thousand in Lloydminster.

So what does the “national median price” actually get you in the Midwest? Well today it can buy you a brand new 1,335 sq ft modified bi-level with double attached garage on in Lloydminster. You still have to finish the basement, buy appliances, and landscape the yard.

Offering six hundred thousand will get you a beautiful lake front home at Turtle or one within a new development on the west side of the City. Two hundred more will allow you to start your own ranch in the Battle River valley, while two and half million will help you set up a family compound on 1,200 plus acres complete with three houses, shops, cattle shelters, dairy barn, supplemented by fifty thousand per year in oil revenue.

Still cheap by national standards!

Price Reduced on 208 - 5th Avenue West in Maidstone

Vern McClelland — Thu, 24 Nov 2011 16:42:00 GMT

Maidstone, Rural NW Saskatchewan - Announcing a price reduction on 208 - 5th Avenue West, a 952 sq. ft., 1 bath, 3 bdrm bungalow. Now MLS® $69,500 - .

Property information

Midwest Minute - November 20, 2011

Vern McClelland — Mon, 21 Nov 2011 21:51:00 GMT

How much longer can the Country remain Western?

We recently buried our three year old Australian cattle dog. He was the innocent victim of a hit and run. I am angry, and also concerned.

Our ranch has land holdings along both sides of a busy oil access road for about for 4 kilometers. A family member was riding her horse down the ditch between two pastures accompanied by two of our stock dogs. One stayed right up close and the other trotted ahead of her on the shoulder of the road. An oil service truck passed them at a high rate of speed, hitting the dog and killing it. The driver didn’t attempt try to slow down or swerve, simply just waved and kept going. It is a flat road with visibility for several miles.

Friends of a neighbour were bringing several hundred cows and calves home this fall along a back road, with vehicles front and rear with their four way flashers on, three riders on horseback and two stock dogs. A driver came through the herd without significantly slowing down, again killing one dog, then stopping to berate the riders in foul language telling them “that they had no right to have f***ing cattle in the way”. Good thing this isn’t Texas; somebody’s tires might have got shot out, or worse!

Back a few years when I was still actively training horses, I had a semi driver pull long and hard on his air horn just as he went by me and the young horse I was riding outside the arena for the first time. I guess he was hoping to get a free rodeo performance. It could have been a wreck if not for a level headed horse and a quick response on my part.

There have always been sources of tension between country residents and irresponsible folk. Pasture gates get driven over, rather than opened and closed, during deer season. ATV users cut barb wire fences to get from point A to point B in a hurry. Dirt bike and four wheel drive users tear up fragile sand hills. Hunters fire high powered rifles dangerously close to occupied farm yards. People dump garbage bags, appliances, and mattresses in the ditches because the municipal waste management site is closed.

Over the years we have had several batches of kittens left in our driveway. I guess the owners thought they would magically turn into mousers and live happily ever after in the loft of our barn?

When someone is considering subdividing an acreage or two off a quarter of land to free up some cash, I recommend they place a registered interest on title that forces subsequent owners to acknowledge that there will be agricultural operations next door. This may mean dust from cultivating or combining, chemical smell from spraying, noise from cattle operations, etc.

You are lucky when the acreage owner next door has grown up in the country themselves, and understands that from time to time they may be inconvenienced. Thankfully we have some great neighbours and local oilfield personnel who take the time to call you when a cow is calving out of sight in the back forty, or your bull has rubbed a gate down and is enjoying the green grass of their front lawn.

Price Reduced on 4811 - 40th Street in Lloydminster

Vern McClelland — Thu, 17 Nov 2011 16:44:00 GMT

Lloydminster, Lloydminster (Part) - Announcing a price reduction on 4811 - 40th Street, a 680 sq. ft., 2 bath, 2 bdrm bungalow. Now MLS® $171,900 - .

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Midwest Minute - November 15, 2011

Vern McClelland — Tue, 15 Nov 2011 20:36:00 GMT

Styled, Showed, And Sold

Clients often ask what they should do before opening up their homes to prospective buyers. Here are a few tips to make your house show-ready once the For Sale goes up.

From the time we park on the street in front to when the buyer and Realtor are standing in the kitchen / living area takes about three minutes. Just like that important first date, you have only a brief period of time to make a favorable initial impression. Pretend that you are walking up to the front door for the first time; what do you see?

Are we stepping over forgotten toys on the sidewalk? Is the lawn cut, hedge trimmed, or in winter, snow removed? Are the Christmas lights still up in July? Does the entry feel welcoming? How does the interior of the house smell? Prospective use all their senses, even if they don’t realize it.

Take out all energy saving light bulbs, and replace with the strongest wattage allowed in the fixture. Open up blinds and curtains, and if late in the afternoon or early evening, turn on exterior and interior lights, before every showing. Light is your friend.

Consider re-painting tired walls with fresh, neutral colors. Replace stained area rugs with new ones. Buy a new shower curtain to match. If your budget and time is limited, focus on the kitchen and bathrooms.

Reduce clutter on cabinets, counters, refrigerators, and walls. Clean out closets. You are going to move anyway, so start the process by removing many of your personal items as it is only distracting. Buyers need to see themselves in the space and the potential it provides, not the limitations brought on by overcrowding and years of storage.

Buy some medium sized tote bins with tight lids. Pick a room or a corner of the garage, and start stacking. Buyers often see that and realize that you are serious about moving. It gives them a sense of urgency, and if they like what they see will be prompted to make an offer.

Make any small repairs like baseboards, window trim, loose door handles, etc. Buyers start to worry when they notice deferred maintenance, often wondering what else may be left undone that they can’t see.

If you have appliances that don’t match, consider replacing them and adjusting your asking price accordingly. Re-arrange or remove furniture to present the space capability of a room. Hard to do I realize in some areas, particularly home offices, but it does make a difference.

Remember what we are looking for is a home that invites people to linger, and see the potential for their own family. I call it “finding a house that gives you a hug”!

Vern McClelland is an associate broker with RE/MAX of Lloydminster and a partner with The Midwest Group. If you have questions or comments on this article or other real estate matters, he can be reached at 780.808.2700 or through the website www.wesellmidwest.ca

Midwest Minute - November 07, 2011

Vern McClelland — Mon, 07 Nov 2011 20:39:00 GMT

Real Estate Myths

What with HGTV, dedicated sections in newspapers, and endless content on the World Wide Web, today’s home buyers feel pretty knowledgeable about real estate. However, there are still some topics that can be confusing, unclear, or complex.

Myth #1: What goes up, stays up. All you have to do is study prices over the last four years to realize that what goes up, can also come down. Residential real estate is like a pendulum and swings from high to low, and back again, depending on supply and demand. Even farmland can fluctuate, there were sales close to a thousand dollars per acre in the eighties, and it took until last year for that number to be achieved again in this region.

Myth #2: Realtors determine prices. Not a chance. We are students of the market, armed with appraisal principles, and supported by access to an expansive data base of actual sales. Realtors strive to identify what determines fair value for a given location at a particular point in time. Sometimes listening to the advice of a professional can substantially improve value or reduce time to sale though.

Myth #3: The purpose of an appraisal is to determine if a structure is in good condition. No, that would be the home inspection. Appraisals estimate fair market value.

Myth #4: You can save commission by selling yourself. If you are good at making people feel confident about what you are selling, have a decent product presented at a fair price, invest hundreds maybe thousands of dollars in advertising, signage, and Internet presence, plus hosting strangers and negotiating is fun for you, then by all means give it a try. Likely you will never know if you actually got the best results and terms of sale for your property but heh, you will feel a sense of accomplishment all the same by doing it alone.

Myth #5: Every fixer-upper is a goldmine waiting to happen. Some are great opportunities, but many have hidden problems that can be expensive to repair properly. Always do your diligence.

Myth #6: You own a home once you enter a purchase contract. Nope, that’s just the beginning of the closing process. You own a home when the title is registered in your name and all the conditions of the contract have been met, the major one being you have actually paid for it. Just because mom and dad are in town for the weekend, doesn’t give you the right to disrupt the current owners, park your holiday trailer on the street in front of their home, store furniture in the garage, or to move in earlier than agreed.

Myth #7: Being a Realtor is all about sales. Heck, even I thought this before I got into the business eight years ago. It wasn’t long before I realized it is mostly about problem solving. You need a bigger home because a baby is coming. You need a smaller home that doesn’t have the maintenance requirements of the present one. You can’t afford the home that you currently have due to a relationship breakdown or job loss. It’s a great career if you want to help people.

Price Reduced on 420 4th Avenue East in St. Walburg

Vern McClelland — Tue, 01 Nov 2011 19:36:00 GMT

St. Walburg, Rural NW Saskatchewan - Announcing a price reduction on 420 4th Avenue East, a 1,359 sq. ft., 3 bath, 5 bdrm bungalow. Now MLS® $269,500 - .

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Midwest Minute - October 30, 2011

Vern McClelland — Mon, 31 Oct 2011 19:20:00 GMT

How’s the Market?

Almost without fail the first question I will get when meeting people who know that I am a Realtor will be “how’s the market?” Everyone it seems have an abiding interest in sales activity around the region. It may be different types of property they are inquiring about or just action specific to their community.

According to year to date statistics issued by the Lloydminster Real Estate Board, which covers about an 8,000 square mile area including the NE Alberta communities of Wainwright and Vermilion, and NW Saskatchewan communities of Maidstone and St. Walburg, total sales dollar volume from January to the end of September exceeded $250,000,000 or 26% better than the same period in both 2010 and 2009.

Interestingly enough, the number of properties listed so far this year has been quite consistent with previous years, so it is no surprise to learn that 20% more have actually found a buyer. Personally I believe the demographic that sustains our local real estate market is the first time home buyer. Once they move out of rental circumstances into home ownership, they naturally displace those sellers, who in turn trade up, transfer, or move out to acreages. This can be confirmed by the number of residential properties that traded under $200,000 in smaller communities and below $250,000 in the city; comprising just over half of all transactions.

But how does this translate into value? In my opinion, that is a much harder question and one open to interpretation. As with any commodity, there is a distinct relationship between supply and demand. Right now it appears that we have more balance within the city than has been the case over the last four years. By that, I mean that an appropriately priced home will sell in a timely manner.

However, that may not yet be the case in the smaller communities, some of which suffered an overall 20% to 25% percent adjustment in sale prices from the peak of market. This will eventually correct itself as available “used” inventory is used up and new home construction costs kick in. Acreages have also been hard hit, due in part to mortgage companies tightening up lending policy on what they see as a higher risk property.

Farmland is another story altogether, particularly if it has oil or gas surface lease revenue. As a Realtor who is also a rancher, it has been hard for me to adjust my thinking on the value of land away from productive capability of a parcel to a “return on investment” focus. There is a distinct willingness of corporate players to use capital from non-agricultural sources to secure land as a relatively stable part of their portfolio. It’s here and very real.

Recreation properties are staging a slow comeback. Not everyone wants to invest in the Sun Belt region of the United States. The amount of inventory available, at or near our lakes though will suppress prices for several years to come. The trade in multi-family, commercial, and industrial properties is steady reflecting the confidence by entrepreneurs in the region’s fundamentals. One refreshing trend is the number of farm families that are involved in real estate activities outside of their core industry. This new generation knows from recent experience with BSE, uncertain grain prices, and wildly swinging input costs that having all your eggs in one basket may not be wise.

All in all, the Midwest, with its diverse supply of property, economic drivers from several large industries, and a vibrant, multi-cultural population serves as a market with something to offer everyone.

Midwest Minute - October 23, 2011

Vern McClelland — Tue, 25 Oct 2011 17:27:00 GMT

Seeing Value

“Beauty is in the eye of the beholder!” And frankly, so is value. What one person may see as a liability, another may see it as a potential asset. Let me give you an example.

It was a quarter section that was hilly and full of rocks, just far enough from the river that you couldn’t see it. The adult children of the deceased farmer had picked way too many stones on it in early years to think of it as anything but poor farmland. So they sold it quickly to a neighbour when he inquired about it.

The new owner bought an old back hoe and methodically dug holes in a grid over the entire property. Guess what? Just one corner has so far produced well over a million dollars in gravel, with plenty more yet to be revealed.

The corner store had seen better days. Out front was the retail section, while in back was living quarters that had once housed a couple and their five children. When the old couple could no longer work long hours they finally boarded it up and moved to an assisted living complex. Time passed and no one seemed interested enough to buy it.

Thing is, the building stood across the street from a new office building and next to a park. Along came an immigrant family with a plan, and before you know it, a cheerful coffee shop / bakery / delicatessen was borne. It became a very popular stop for locals, even expanding out into a patio along one side.

The point is that often there is value in property that transcends its current use. All it takes is imagination, planning, and of course, hard work. Tour some of the old buildings in downtown Moose Jaw, and see how they have been used to attract tourists. Take the Tunnel Tour; it’s a hoot.

Some communities are better at adapting than others. Old auto dealerships become steakhouses. Clothing stores turn into chocolate factories. Train stations morph into trendy wine retailers and flower shops. Unused churches house cooperative artist galleries.

In western Canada we have become incredibly focused on economic development; maybe because of our relatively short history and being beneficiaries of the pioneer spirit. But economic development has to parallel community development in order to be sustainable, and that means strengthening current initiatives, re-purposing buildings, and encouraging employee progression by making jobs more secure and meaningful through training and personal support programs.

The strongest communities have achieved a balance between the growth of wealth in their citizenry with offsetting recreational, cultural and artistic opportunity. All work and no play makes for a dull boy, so to speak. And who wants to live in a dull community?

Price Reduced on NE-33-53-22W3 in St. Walburg

Vern McClelland — Tue, 25 Oct 2011 15:58:00 GMT

St. Walburg, Rural NW Saskatchewan - Announcing a price reduction on NE-33-53-22W3, a lot / land. Now MLS® $69,500 - .

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Price Reduced on #30 Lakeshore Drive, Crystal Bay in Brightsand Lake

Vern McClelland — Mon, 24 Oct 2011 20:15:00 GMT

Brightsand Lake, Lloydminster (Part) - Announcing a price reduction on #30 Lakeshore Drive, Crystal Bay, a 2,016 sq. ft., 2 bath, 5 bdrm 2 story. Now MLS® $695,000 - .

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Price Reduced on 105 - 6th Avenue West in Maidstone

Vern McClelland — Tue, 18 Oct 2011 16:52:00 GMT

Maidstone, Rural NW Saskatchewan - Announcing a price reduction on 105 - 6th Avenue West, a 1,276 sq. ft., 2 bath, 4 bdrm bungalow. Now MLS® $159,500 - Quick Possession Possible.

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Midwest Minute - October 16, 2011

Vern McClelland — Mon, 17 Oct 2011 20:33:00 GMT

It was a Good Question

At a social gathering the other night the person I was chatting with asked me “what is the strangest thing you have ran into in your real estate career?” Well, it took me a minute but I came up with some examples that I thought I would share with you, being close to Halloween and such.

I was showing a rural property north of Lloydminster late one winter afternoon, and had arrived a few minutes in advance of the buyer. The seller had left the house open for me, so I stepped into the kitchen to turn on the lights. Immediately, I got the feeling that I was being watched but knew there was no one home … or was there? Then I heard a distinct growling and looked up. There, on top of the kitchen cupboard was the biggest cat I have ever had the pleasure of meeting, and he was distinctly unhappy with my presence in his house. Luckily he stayed put for the duration of our visit, but it really didn’t help sell it!

It started with a phone call out of Calgary from the owner of a property by the North Saskatchewan River asking me to provide him with an Opinion of Value in preparation for listing it. As I drove into the vacant yard the next day, it struck me odd that there was not just one, but two, 1000 gallon propane tanks. Once I looked into the shop I clued into what had probably been there; for from the ceiling hung plastic sheeting surrounding fluorescent light fixtures with several water hoses laid out on the floor. It was my first introduction to the art of agriculture known as the “grow op”. Thankfully the RCMP had already been there a week or two before. The owner had known too; he just never bothered to tell me. Nice.

Increasingly Realtors have to be alert to properties being used for criminal activities. Just last week in one rural community of the Midwest, the new owners of a house discovered on move-in day in amongst the debris left behind by the sellers what appeared to be a stash of chemicals that could have been used to make illicit drugs. Mind you, I wasn’t surprised given the baseball bat present at the front door, a second one in the master bedroom, and the three iron hung with care on the basement stairwell wall.

I remember Mike and I meeting with the seller of a house in Lloydminster a few years back. We were standing in his living room with our back to the window, when I noticed our client looking over my shoulder and suddenly “freezing up”. I turned around to see two tough looking characters slowly driving by in a truck, clearly interested in the house. Turns out, the residence had been used as a distribution point for a cash based business in the not too distant past. Our guy had just come out of rehab, and was selling in an effort to make a fresh start in another community. I am pleased to report that he has been successful too.

There has been the occasional run in with half starved dogs protecting their turf, pig carcasses piled up behind a garage, ghosts reported in old buildings, even uncovered wells and septic tanks that could easily swallow a child. I have seen occupied homes so full of trash that it would rank right up there with anything you see on the television show Hoarders. Dead mice on family room carpets. Sex toys left out on bedroom dressers. Video cameras hidden in a cardboard box on a kitchen counter recording what visitors were saying.

But I think the strangest thing I have ever came across was the day I noticed a depression in a large throw rug spread out in the middle of a kitchen floor. I lifted up the corner only to be greeted by the open entrance to the cellar underneath. To the unsuspecting visitor, it would have been a very quick ride to the basement. Did the former frail elderly owner place it there intentionally to guard against unwanted guests? I don’t know, but I am sure glad I spotted it before someone got hurt.

Price Reduced on 220 Main Street in Waseca

Vern McClelland — Mon, 17 Oct 2011 15:43:00 GMT

Waseca, Rural NW Saskatchewan - Announcing a price reduction on 220 Main Street, a 792 sq. ft., 1 bath, 2 bdrm bungalow. Now MLS® $75,000 - .

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