Once the contract has been negotiated and the closing papers are about to be signed, you will need additional items for the transaction to close. When you go in to sign the papers, you will need:

* Photo ID, either a driver’s license or passport.

* A cashier’s check for the down payment and closing costs. Personal checks are not acceptable because they take time to clear.

* A hazard or fire insurance policy ready to put in place upon closing.

Needless delays in closing have been caused by lack of insurance or waiting for a personal check to clear. Many buyers think that they will receive the keys to their new home when they go in to sign and pay their money. But it may take a few days past signing for the paperwork to be processed. Plan your moving date accordingly. Check the possession date on your contract.

So perhaps you understand the concept of income-producing property.  And perhaps you’re interested in getting involved in what amounts to an incredible investment.  But how do you run the numbers on a potential opportunity?  Here is a quick guide on how to ‘do the math’.

The formula is simple: you want to analyze income versus expenses. A property with high income and low expenses is the ideal, which should be fairly obvious.  What may not be obvious immediately is the scope of line items you’ll want to account for when looking at a potential property. 

Income

Rents – The main source of income will likely come from your tenants’ rents.  In general, more units are better, because it mitigates your risk of income loss from vacancy (lack of tenants) and because it spreads fixed expenses out over more income streams.  In Toronto it is becoming somewhat hard to find properties that ‘carry’ themselves (cover all expenses with internal revenue) with only one rentable unit.  Though it is still possible, I would generally recommend looking at properties with more than one separate unit to rent.

Parking – You may be able to make a separate monthly income from any parking spaces you own – especially in the downtown area near desirable and high-traffic areas.

Laundry – Laundry and other coin-operated devices will serve as an additional source of income.  Be sure to make a realistic calculation of what these may add to your bottom line.

Other – If your tenants pay utilities, for example, you could count that as income – as it will negate the utilities expense on your cash flow statement.  Keep an eye out for rental agreements that include the tenant paying for some or all utilities.

Expenses

Debt Service – Also known as a mortgage, your monthly debt service will commonly be your largest expense on an income property.  Be sure to know your carrying costs in this category before you commit to a property.  Also watch for the direction lending rates are moving if you are going to select a variable mortgage product.

Taxes – You can’t avoid them, unfortunately, and they are never likely to go away - even when your debts are paid entirely.  Along with maintenance and insurance, be sure to factor these into your calculations for permanent ongoing costs.

Maintenance – No matter how new and fabulous a property appears, there are going to be ongoing maintenance costs.  Be realistic.

Insurance – You will have to have insurance on the property if you are financing the deal.  Banks require it so that you don’t burn their investment collateral to the ground – literally.  Ask your insurance professional for an estimate as rates vary greatly depending on the property.

Utililties – Make sure to account for utilities costs unless you’re absolutely certain you can get your tenants to pay for them.  They’ll fall back on you if you can’t.

The rest is fairly simple.  To get a rough idea of your cash flow (profit/loss) just simply add up your sources of income and take a small percentage off for vacancy and credit loss (tenants not paying their rent – it happens) and then subtract your expenses.  I would use 5% as a reasonable number for my vacancy loss when calculating.

Is the result a positive number?  Great!  If your numbers were accurate, then you stand to make money!  This may be a property to consider if all other factors look sound.

While your home is for sale, whenever the phone rings it could be someone who wants to take a look. Here are some guidelines to follow when a prospective buyer asks for a showing:

* Set an appointment for a specific time.
* Always prepare the home before it is shown, even if you have to leave work to do so. Make sure the kitchen and bathrooms are spotless, dishes are in the dishwasher or put away, beds are made, and everything is picked up.
* Turn on lights in every room, open curtains or blinds, and have soft music playing.
* Verify that valuables are put away. Lock up guns and medicines.
* Have copies of your property brochure or flyer available.
* Ask visitors to sign a guest register so that you’ll have their name and contact information.
* Introduce yourself at the front door, but then invite them to tour your home by themselves. Buyers will feel uncomfortable making comments about your home in your presence, so give them as much privacy as possible.
* When they’ve completed their tour, ask them if they have any questions or would like to take a second look at anything.

One of the quickest ways to spend less time traveling to and from your workplace is to work from home, or telecommute!

To maximize your productivity when working at home, you can set up a home office, creating a protected environment away from normal household distractions where you can concentrate on your work.

Here are some suggestions for setting up a successful home office:

* Create your office in an area away from the general household activities.
* Have enough electrical outlets to handle your computer, lights, printer, and so on.
* Make sure there is plenty of light.
* Install a phone jack for your business line.
* Get organized with filing cabinets, storage space, and bookshelves.
* Plan the space in your office to avoid tripping over electrical and phone cords.
* Include a sound system. Many experts believe that music encourages productivity.
* Keep track of all your home-related business expenses for possible tax deductions.

It’s no surprise that the number of people who want to telecommute continues to grow. Earning a good salary at a good job that allows you to work from the comfort of home does seem to be an ideal situation.

Recent news stories about so-called ‘subprime’ loans illustrate that it’s a good idea to shop carefully for a loan, especially one whose payment amount won’t abruptly increase and jeopardize your ability to make monthly payments and possibly lead to foreclosure.

If you’re shopping for a loan, here are some important things to ask a prospective mortgage broker:

• What will his total compensation be from you and the lender for the loan he helps you to get?

• How will her compensation vary depending on what type of loan you choose or which lender makes the loan?

• Is he willing to work for a flat fee agreed to in advance and to rebate to you any additional compensation he receives from the lender?

• How many lenders does she work with on a regular basis? Do any of them account for a majority of her business?

When the move is over and you have unpacked, you’ll finally be able to relax and enjoy your new home.  While you’re unpacking, it’s a good idea to make sure you have your transaction records in a safe place where you will be able to find them. You’ll want to keep these records for tax purposes.

You’ll need to securely store:
* Closing statements
* Property deed
* Receipts for home improvements
* Warranty information
* Loan papers
* Insurance policies

One of the decisions most prospective homebuyers have to make is whether to buy a brand new house or a previously owned (“resale”) home. Here’s a comparison of some advantages to each choice:

New house:
Modern floor plans that could include a “great room,” bigger closets, more baths, etc.
The opportunity to choose upgrades and customize floor coverings, colors and more
More energy-efficient insulation, windows and heating/cooling systems
The added protection of a warranty from the home builder

Resale home:
Existing features, including window treatments and mature landscaping
Location — existing homes are often closer to metropolitan areas
Established neighborhoods that provide a sense of community
The opportunity to use an existing home as a base to remodel and create a unique property

Most people eventually need to hire and work with a contractor to perform maintenance, painting, remodeling, landscaping or other project. Here are some tips on how to best work with the contractor you’ve chosen and make sure you’re treated fairly during the process.

• Like marriage, communication is the key to a successful relationship with your contractor. If you’re unsure about any aspect of the project, just ask.

• Meet regularly with your contractor during the project and review his progress. Depending on how extensive the project is you might meet weekly or even daily.

• Nobody likes surprises, especially when they cost money. If your contractor has encountered anything unexpected once he’s started your project or if you’ve asked for anything extra that was not covered in the original estimate, ask for a supplemental written estimate.

• When the project is complete, meet with the contractor and perform a ‘walk through’. Items not up to your satisfaction are referred to as a ‘punch list’ and should be repaired or redone by the contractor before the project is complete.

• Once you’re satisfied with everything, write a check for the final payment. Never make a final payment before the project is completed to your satisfaction.

• If you’re pleased with the way your project turned out and with the contractor you chose, ask for some business cards that you can give to friends or neighbors who may be interested in a similar project.

Sooner or later you may need to hire a contractor to perform maintenance, painting, remodeling, landscaping, or other project. Here are some tips on how to choose a contractor to ensure you get a fair price and are treated fairly during the process.

• Start by writing down exactly what it is you want the contractor to do and when you want it done. Be specific.

• Make a list of prospective contractors. Ask friends and neighbors, check the phone book, your local newspaper, or online classified ads like Craig’s List.

• Meet with the contractors you’ve selected to show them your property and discuss the project in detail. Use your written description of the project to make sure you cover all the points on it with each contractor you meet.

• If a contractor suggests additional work, ask for his estimate in two parts with the second part covering the additional work he suggests beyond what was on your original project description.

• Ask exactly who will be doing the work and the extent of the contractor’s personal involvement in your project.

• For small projects, payment is usually made in full on completion. Larger projects usually require making interim payments on a weekly or monthly basis. Make sure you both agree on when interim payments will be made.

• Get an estimate in writing. Be sure it specifies all labor and materials that may be required. If subcontractors are required, be sure the estimate includes their cost as well.

• Choose your contractor based on whatever factor you’re most comfortable with: lowest price; reputation; or ‘gut feel’.

• It’s good business practice for both of you to sign a copy of the estimate and for you to give the contractor a deposit before the project begins. The deposit can be either a flat fee or a percentage of the total estimate amount.

• Never make full payment for a project up front.

If you’re thinking about making a move, are you considering buying a condominium or a single-family home?

The number of condominium owners has risen dramatically in the last few years. Condos are a popular option because they are often more affordable, require fewer maintenance and landscaping chores, suit busy lifestyles, and serve well as a first home or downsizing from a larger house. Here are some differences to consider:

Condos
*There are usually fewer maintenance requirements.
* They can be less expensive than a single-family home.
* You own the space between the walls.
* There may be more security with neighbors close by.
* The exterior of the building, landscaping, surrounding roads, driveways and common areas are owned by the condo association, a group made up of all unit owners.
* Special assessments by the association for painting or repairs can add significant expense.

Single-Family Homes
* They usually offer more storage space.
* You own the interior as well as the exterior.
* You have to do the maintenance, landscaping and repairs.
* Unless you live in a gated community, you don’t have condo association dues.
* You don’t have to worry about special assessments.
* You have room to grow plants, flowers, trees, veggies, etc.

Look at your lifestyle and consider how your household may change over the next few years. Will you have enough space in a condo? Or will you be happier in a house with room for a garden?