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We Talks Too Much ? Michele Talks Inflation And Selling Investment Properties
February 22, 2022 | Posted by: Michele Cummins
Warning! ;) This is a digitally automated transcript of the show so there will be mistakes throughout - including the spelling of Michele's name!
Curtis Pope:
Real Estate Group show with Michelle Cummings who is our local realtor Rockstar and myself, Curtis Pope. Good morning, Michelle.
Michele Cummins - PREC:
Good morning Curtis. So I have to say okay, how do you okay, this is the morning after the morning after what?
Curtis Pope:
After my birthday?
Michele Cummins - PREC:
Yes. And I hope you celebrated it fine.
Curtis Pope:
You know what we actually we had to go to my my kids hockey game Cody had a hockey game at the Killarney community center in Vancouver so I spent my birthday in a cold rink.
Michele Cummins - PREC:
I mean, come on, you can wear your your snow hat or your you know, our What do you know hats called a
Curtis Pope:
tuk? Yeah, there you go. You see your your climatized after 20 odd years you becoming a Canadian. You've got the word down. That is like my favorite Canadian word is took
Michele Cummins - PREC:
23 years. Okay, so. Okay, did you have cake though?
Curtis Pope:
I did have some cake and some dessert. Things like that. Yeah, we the kids took you know, maybe they made sure to take care of their dad. You still eat cake? Yeah, exactly. You don't have to have some cake. Or you know, normally we try to go for the ice cream cake. But we didn't have time for that this year.
Michele Cummins - PREC:
Oh, homemade ice cream cake is amazing. I've never had it. But I know. It's amazing. I've
Curtis Pope:
heard the same thing. Although I don't think I've ever had it either.
Michele Cummins - PREC:
Maybe next year is next year. Your big? I'm not gonna say it. Yeah, let's
Curtis Pope:
just leave that one alone. You know? Because you know, me and your and your your, your better half. I mean, oh, no, you're the better half sorry, your other half. Richard in the same age, and we just want to talk about our age anymore.
Michele Cummins - PREC:
Well, I have plans for my special day. But you know what, I'll always be younger than both of you. Yeah,
Curtis Pope:
we got a year on. Yes. So you'll always have that going for you for sure.
Michele Cummins - PREC:
Talking about celebrations, a really good friend of mine and my listing and transaction coordinator. Assistant actually, she just got engaged last week. Oh, wow. times. Yes. So I wanted to say congratulations to Debbie and Mike. Their engagement.
Curtis Pope:
Absolutely. Congratulations. You've ruined yours and somebody else's life. I'm kidding. I'm kidding.
Michele Cummins - PREC:
Hey, hey, if you and Kelly can last as long as you both have and, and I and Richard his last is over 23 years.
Curtis Pope:
Yeah, we're coming up to 22 this year. So yeah.
Michele Cummins - PREC:
These there's love. There's love out there. You gotta choose love not hate.
Curtis Pope:
Exactly. I completely agree.
Michele Cummins - PREC:
So any plans for the Family Day long weekend?
Curtis Pope:
Well, we will have a tomorrow night we'll go have a little my my wife sister also just had her birthday. But we've all been so busy and going a million different directions. We haven't had a chance to get together. So I think we're going to do a little double up family birthday at the inlaws tomorrow night. So, you know, we'll have that going for us. And, you know, whatever else. I mean, I'm still only a couple of weeks removed from having my surgery. So I'm, you know, not allowed to carry anything too heavy or moving too much. I still gotta take a 10 pound weight limit. So I can't do a lot.
Michele Cummins - PREC:
You listen to that advice. Yeah, I already made
Curtis Pope:
that mistake. I picked up a bag of potatoes not thinking about a week and a half after my surgery. And I was like, Oh, that kind of hurt a little bit. I don't think I did any damage cuz I'm fine now. But I'm like, Yeah, I'm like, alright, that's kind of that was like a 20 pound bag. That's twice what I'm supposed to be carrying.
Michele Cummins - PREC:
Ouch. As soon as you start thinking you're feeling better. Just no, no, just say no.
Curtis Pope:
That's right. That guy got another week and a half or so to go before I can start. You know, worrying about lifting anything. Plus has been great to be able to make the kids do stuff.
Michele Cummins - PREC:
Oh, yeah. You're not paying them for it though. Right?
Curtis Pope:
I'm not paying for it. They're all teenagers. They they they don't pay rent, they don't pay for anything around the house and pay for their phone bills.
Michele Cummins - PREC:
Exactly. They do it because they love you. Exactly. So I am gonna Well, unfortunately, I'm going to not be able to spend Family Day long weekend with my family. However, I'm going to sit back and I'm going to relax and I'm going to read my new Magnolia Journal magazine that just came in the mail I just picked up Yes, yesterday. Oh, very nice. Very excited about that.
Curtis Pope:
Well, you know, Monday is supposed to be nice if you got insurance on your bike yet.
Michele Cummins - PREC:
No, I actually have storage insurance until March and I was going to I think I'm going to renew early, but I'm looking at the future. forecast and it looks like starting like February 28. Like March 1, it's gonna be sunny, sunny. So
Curtis Pope:
yeah, it's looking like we may have a little bit of a cold snap coming up like next week. And then after that looks like the sun's coming out and it's gonna warm up a bit. So yeah, give it another week, then you can get the bike out in the road.
Michele Cummins - PREC:
That's, that's how I'm thinking. Because when I, when I start, I'm not going to want to stop exactly every day write it, I'm going to write it to listing appointments. I'm going to write it everywhere. I don't care if I have to go to a special event and wear a bowl down. I'm going to ride my bike.
Curtis Pope:
You're gonna have to add a sidecar to that thing just to hold all your stuff.
Michele Cummins - PREC:
Yeah. Oh, I have to say on YouTube, we had a comment on one of our our posts or videos of the show. And he's like, stop talking too much. I'm like, it's a talk show. Is that the funniest comment? Yeah.
Curtis Pope:
Are you talking too much? Um, oh, okay. Well, just don't care. Do we have to give everybody a moment of silence now? And then just to kind of catch up to us? Is that we have to do or
Michele Cummins - PREC:
Oh, that made me laugh. I knew what makes you laugh.
Curtis Pope:
Well, every tell you what, every four or five minutes, I'll ring a little bell. And then from there, I'll hear you know, I got one right here. I'll do that. And we'll just pause for 30 seconds.
Michele Cummins - PREC:
Oh, that's beautiful. Oh, my goodness. Oh. Our first segment here we're going to talk about Oh, get into them right away. Canadian inflation. Oh, my gosh, it's the talk of the I'd like to say world this is talk of our Canadian government right now. And and everyone's talking about the inflation that's happening. And then our second segment, we're going to actually talk about something that everyone's thinking about selling right now because it's been a crazy seller's market. And it's like, we're on the top of the mountain right now. So is it time to sell that? How many can you sell your investment properties to buy a new home, because in some cases, some people have to because prices are so high and they need a home and in order to afford it, maybe they have to sell more than one of their investment property. So that's our second segment. So without further ado, this article I'm going to read from is something is better dwelling, I like better dwelling. There's a few you know, specific places I really like going for really good information because I know that they really look into their, their their posts and stats and everything. So this one is headlined, Canadian inflation pressure is broadening across categories as it hits three decade high. So Canadian inflation didn't hear your traveling transitory call apparently, it's why do you mean two other categories of Statistics Canada, data shows the consumer price index the CPI soared in January, the annual growth rate reached five 1/10 Of The Month advancing from 4.8% A month before, to Canada's inflation hasn't grown this fast and convert 1990 born three decades ago. To make things worse, high inflation is being felt across categories, making it harder to slow down. Canadian inflation is spreading to more categories A new VMO and less analysts. Can I talk?
Curtis Pope:
I believe that what you're looking for is analytics.
Michele Cummins - PREC:
You're closer than me to how wide it is as of inflation has become. Only a few weeks ago, people were under the impression inflation was temporary view believe that now. Not that you need another way to look at inflation along with a host of measures used by the Bank of Canada. But here's one that highlights how widespread price pressures have become the most senior economist Robert can kick. He looked at 18 categories of CPI and found most are much higher than target of the 18 major CPI categories 83% annual inflation rates above the 2% mark in January. That's the highest year in 30 years. He says Canada ever seen four in five inflation components rise above target. For those unaware, the BOC. The book annual growth target for CPI is only 2% and has been for some time. The goal is to keep it around that mark. But for inside CPI, subcomponents are growing faster. It's also worth noting that almost two thirds of categories are above the 3%. Mark he called out so the 2% annual growth rate is already an issue in breach above 3%. The CPI component has breached the upper tolerance band while the BOC is unlikely to mention it out loud. This has had the nervous above their call, oh Canadian provinces have seen over 4% growth. I can go on and on about this, but just have a look. Do some research yourself and realize where we are at and just prepare yourself. And as long as you prepare yourself for what you know is ahead of you by the staff in front of you, you will be okay because you will be able to make wise decisions moving forward. So I suggest you do that and be prepared so the BOK has vocally reinforced his belief that high prices are transitory. Governor Macklin even reiterated he sees supply chains being behind high prices is not a popular opinion these days. The US Federal Reserve has openly said it's time to kill the use of the word transport. Instead, they've begun referring to the recent surge as an inflation shock. transitory inflation resolves on its own, but an in flat inflationary shock requires policy tools, DMO also appears to be skeptical of the idea that inflation is transitory all this to say that inflation pressures widespread across categories and regions not driven by any particular special factor that will just go away. So that's what has kicked in his notes by saying so just be prepared. And that is the end of our first segment. Well, you
Curtis Pope:
know, you don't have to look far to see inflation you just have to go to the gas pump and I'm sure glad I don't drive anything with a Hemi engine or anything.
Michele Cummins - PREC:
You know what I have about 10 kilometers left on my tank and I'm almost refusing to fill it up.
Curtis Pope:
Another reason you might want to break that motorbike out.
Michele Cummins - PREC:
Back Lee All right,
Curtis Pope:
well, that's some food for thought for sure. We'll take a quick break here. We'll come back with segment number two. If people want more information, where can they go?
Michele Cummins - PREC:
Michelle coming.ca
Curtis Pope:
We're back with more right after this? becomings Real Estate Group Shawn Michelle is currently trying to calculate how to get more than 18 kilometers out of a gas tank. Well that's all it's showing. You keep working on saving your gas mileage up a little bit. Michelle.
Michele Cummins - PREC:
I didn't have to run or jog or you know, couldn't get really healthy here real soon.
Curtis Pope:
Your car you're coasting a lot in neutral for some reason.
Michele Cummins - PREC:
I refused the web at $1.72. Right? Like that's crazy.
Curtis Pope:
I you know what I was I was thinking the other day I remember when I was going to broadcast school back in 1999. So I know sound like an old man. Now. We had a bit of a gasp we're in Vancouver for like six months. And gas in Vancouver was 30 990. My in 1999. It was 39 Nine, which I believe was about the same price when I was working in a gas station and like 1991 92 That was like 39 Nine back then. So we're now a lot more expensive than that.
Michele Cummins - PREC:
That's almost like a rhyme like that could be a country song. It could be I used to pay gas in 30 What was that? 39 or
Curtis Pope:
nine nine? Yeah. Tell you what, go talk to your husband. Give him a task to do and then tell you what, I want a credit. Even though I've done nothing, but bring up a gas price.
Michele Cummins - PREC:
That's right. about gas prices today.
Curtis Pope:
Yeah, well, you know, it's gonna just push people out. to buy those electric cars at this rate, but this isn't a show about cars. This is not like Top Gear on the radio or something. Oh, that wouldn't be fun. No, this is about real estate. I know you had something else you want to talk about?
Michele Cummins - PREC:
Yeah. If you have more than your primary residence, and you have investment properties, you might want to sell them. No, not for a new home, but may need to just pay for your gas for your vehicle. That's right. Ours this segment here, we're going to talk about being all serious here. Can you sell more than one investment property to buy a new home? And you know, you would think of course the answer is yes. But there's more to it than just the answer. Yes. So, winning multiple investment properties is arguably the best possible way to create wealth. It truly is. Because there's never a shortage of people looking for a place to live. It's a relatively safe investment, especially in our area of the Lower Mainland Fraser Valley in Greater Vancouver area. With real estate, it's usually possible to generate a positive or at least neutral cash flow. And since the value of properties almost always increases, you can be sure to turn it significant profits. When looking to upgrade your primary residence. selling off investments is a superb way to fund your purchase without incurring heavy debt. The question is, should you sell multiple properties to upgrade your family home? Well, maybe it's better to use the equity you've built and take out another mortgage. You wonder these things. Of course, you will talk with a financial advisor will talk with your mortgage broker and you will talk with your realtor, namely Michele Cummins, - prec Shelton the stock ca as with any financial decision, both scenarios that have advantages and disadvantages, you want to look at the boat. If you take on more debt, you'll have to pay interest on the loan increase that also raises your debt to income ratio, which may make it harder to obtain financing when you want in on a new investment opportunity. The advantage of selling multiple investments, let's look at that because that could be key. When you sell your investments to buy a new primary residence, you may be able to afford a cash purchase. In the case of a bidding war, which we have been seeing for the last how many years? Oh, crazy. It cash offers extremely attractive to sellers. Some developers may even offer a discount or other concessions on new build homes. However, selling a few of your investments gives you more than an influx of cash flow. You also have more free time to spend with your family doing the things you love. Fewer properties to manage means fewer headaches and more peace of mind. Trust me, I know the downfalls of selling your investments. Let's look at those. The most immediate disadvantage is the loss of income that your investments generate. The more properties you sell, the more income streams you lose, not to mention the loss of generational wealth for your children and grandchildren. And let's not forget the dreaded capital gains pack. investment properties aren't covered by the primary residence exception, which means you have to pay tax when you tell them isn't this has been news and bad news. The good news is that the government wants you to invest your earnings back into the economy. So only 50% of your gains are taxable. The bad news, you have to pay tax on the other 50%. I was just speaking to a client about this a few days ago. To make the math easy. Let's say you bought an investment property for a million dollars. It has now doubled in value and you sell it for 2 million, you have just made a profit of 1 million and that 50% 500,000 is now subject to that capital gains tax. This means adding 500,000 to your income for the year, which can hurt come tax time. You have even more profit when you sell multiple properties and will get hit even harder. But take heart there are several beneficial and legal ways to minimize the impact of the capital gains tax contributes to a tax sheltered investments like an RRSP S P Fs a or are you E SP? This is where you want to talk with your financial advisor and your accountant about the best ways for you. To release that equity you need to either buy this new home and can move forward with the sales of maybe multiple investment properties. All through programs allow you to reinvest your proceeds without paying tax until you withdraw the funds offset your gains with tax loss harvesting. Have you ever heard of that? No. I have no Okay, so I recommend consulting with a professional financial advisor, as I've said a few times now, but before, you got to do that, before I took the strategy, however, it may be worth looking at to avoid paying massive capital gains taxes in a nutshell, you sell an investment that has decreased in value and then purchase a similar investment immediately afterwards. And that is a special tax loss harvesting way of doing it. And capital gains reserve, that's another, if you've made a significant profit by selling investment, you'll want to look into the capital gains reserve, how does it work? Well, instead of claiming an extra 500,000 for the year, you can claim 100,000 Over the next five years, because the Canadian tax rate increases with your income, spreading your profit out will save you 1000s of dollars in taxes. I gotta tell you, Curtis, my accountant just told me what I need to reserve right now put aside to pay come tax time when when my corporate taxes are due. And my eyes just doubled in with like, Wow, are you serious? Okay, I'm glad I didn't buy another investment property. I was just about to buy a drone that is like, whoa, right? Your taxes could be a lot. So any way of saving it, you know, is is gold. Beautiful. So another way is donate to a charity. You can you can decrease your tax amount by up to 20%. When you donate to a registered charity, make sure they're registered. You save money, and you also help a worthy cause. Talk about a win win. I mean, who doesn't love win wins. So why act now? Well, the tax rate for capital gains is at 50%. and has been for some time however, there is nothing to stop the government from raising the tax rate. And they do it all the time with the debt and cured from billions of dollars in COVID assistant programs, they are undoubtedly looking to find ways to recoup those funds. Raising capital gains is one way they could do it. They've done it before in 1988. If you remember no you don't remember we're younger than the know our birthday. somebody's birthday was yesterday. Be curious poke. The Canadian government raise raised the rate up to 75%. Back in 1988. Any profits from selling your property before this happens was still only get taxed at 50%. So selling off some of your investment properties might be the best way to fund your new dream home. But it isn't a decision to make lightly. It's always best to consult, like I mentioned with the real estate agents and experienced investments financial advisor before taking any action so there you have it, and I do have a great financial advisor and we had to had him on the show here before if you need help with an accountant. I'm happy to refer you my accountants and all my service providers to help you know exactly what you should do before you make the decision to do something. So let's move on to my new listings because I have a brand new listing off with an avenue this last week and it is a really cool house. It's got views it's an admission as mentioned 8000 square foot lot. The two storey it's got side RV tray and trailer parking. It's landscaped yard is really pretty it was built in 1986 and it's got strong construction because they built them strong back then to buy fifth construction and the house is a little over 2600 square feet. And then the announcement just yesterday we released three of our nine ledgeview Park row homes in the upscale East Abbotsford by the beautiful ledgeview trails and across and a few steps away from legend Golf and Country Club. And right next to the ledge View Tree Farm it's going to be fully finished. Estimated dates of Completion is the year from now. So February or March of 2023. The two storey with a walkout basement or freehold homes, no strata, and the inside units are priced at 1.3 million and the end units are priced at 1,350,000. And we only have nine in our first of two phases. So just hit the market yesterday the first three units and a few more. The rest will be hidden all next week. We're going to start looking at offers because they've been so popular. We're going to start looking at offers next Thursday by 4pm. So if you have a realtor, make sure they know if you don't have a realtor than just contact me at Michele Cummins. - prec 47788854659 might be easier just to Google Michelle, come in realtor and I will help you out. And new listings coming up next week is one admission of Mallard place it's an amazing end of the cul de sac half acre with private backyards nicely renovated home with lots of parking a little over 2200 square feet level home and tweetable it's got five bedrooms and three bathrooms and it was built in 1981 but again renovated nicely with an open concept. And then I have Sam stone drive and East Abbotsford coming up this is a really beautiful nice rancher home with a full walk out daylight basement that has a three bedroom in law school it's a family suite so blended family this beautiful home it's completely private backyard well maintained and again renovated. So don't miss out on this over 12,000 square foot lot in the home is over 3600 square feet. And we're gonna end our show this Saturday was a quote of the week as we love to do and the quote is light hearted storms prove the strength of heart anchors
Curtis Pope:
like that one and we shot although i Right now I'm still I'm still stuck on the fact that we talk too much and I'm trying to see how we can do a talk show next week with less talk.
Michele Cummins - PREC:
Oh my goodness, sometimes I thought you know we got to we got to work on that Curtis
Curtis Pope:
No, I'm second guessing myself. I laughed earlier now I'm concerned. We'll tell you what, we'll work on that that'll be your homework for next week. We'll figure out a way to talk less and get the same amount information on so we'll we'll work on that. Yeah, we yeah, we got work to do we do. All right. Well, if people want more information about you and what you do as a realtor, where can they go? Michelle, come in. And join us again next week when we will talk real estate in order to unlock your real estate potential on the show real estate is maximized. Thanks for listening
If you missed last weeks episode where Michele and Curtis talk Stats and chat with Linda from the Cooperators, please go back and take a listen - it's well worth it!