The metaverse isn’t just another Bitcoin. It’s not even a recent concept! The metaverse simply describes integrated 3D virtual worlds — imagine games like Roblox or World of Warcraft. These games have been around for decades!

But as technology advances, companies are finding new ways to put the metaverse to use. McKinsey believes that the metaverse could drive physical product sales, reduce the need for physical stores, and enhance in-store experiences. The consulting firm further found that 64% of consumers surveyed were excited about shopping in the metaverse.

This article discusses the metaverse and how it may affect the real estate industry.

What is the metaverse?

The metaverse is any online 3D world where you can interact with others via an avatar. We’re used to metaverses through video games. But companies now want to apply the technology to industries beyond gaming.

For example, instead of using a video conference to meet with someone halfway across the world, you could meet in a metaverse and engage in new ways. Integrate this experience with virtual and/or augmented reality and create a much more immersive experience than just a ZOOM call.

You could also create better digital shopping experiences. Instead of flipping from webpage to webpage, consumers may someday visit virtual malls from the comfort of their homes. Here, people could purchase real-world items in a more mesmerizing shopping experience, and this better user experience could translate to more sales.

The possibilities for the metaverse are endless. And the industry is only beginning. That’s why everyone has high hopes.

Many people are already investing in the metaverse by purchasing land in specific digital universes, hoping that the value of these digital properties will appreciate.

How does buying metaverse land work?

Some metaverses let you purchase unique digital land and other properties. Big names like Snoop Dogg and Steve Aoki already own properties in a metaverse called Sandbox. Decentraland is another popular network where people can purchase unique parcels of land.

Metaverses usually have their own cryptocurrency used as a medium of exchange. Decentraland’s currency is called MANA, for example. To purchase real estate on Decentraland, you ultimately need MANA.

After obtaining the necessary currency, the land purchase process depends on the specific metaverse. Each has its own procedures.

Many assign you an ownership ID to the digital land parcel, similar to an actual deed. Buyers may need to show proof of their real-life ID and address too. Your virtual deed could also come as an NFT.

Like the real world, these properties can be anything from houses to apartments to commercial storefronts. It can also be a plot that you develop into a customized residential or commercial space.

Unlike reality, land in metaverses is infinite. There’s also usually no travel time between two points in a metaverse. In the real world, land scarcity and a property’s location determine a building or land parcel’s value and cause it to appreciate.

A particular area of a metaverse might appreciate for other reasons, however. If you own the digital parcel beside Snoop Dogg, you could expect that that land could fetch a nice premium. High-traffic areas are generally the ones that sell for big dollars.

For example, one parcel of Decentraland land sold for $2.4 million worth of MANA in late 2021. This piece of land was located in the “Fashion Street” area of Decetraland, making it highly valuable. The purchaser, tokens.com, hopes to one day build a virtual shopping centre to sell virtual clothing for digital avatars.

In addition to infinite land, there’s also the potential for infinite metaverses. If Google, Meta, and other large tech companies all started a consumer-targeted metaverse, this could reduce the popularity of Decentraland or Sandbox and then reduce the value of all land there as investors rush to invest in a new metaverse.

Just think of the rise and fall of other websites and networks! You don’t know if your metaverse will be the next MySpace or Tumblr.

How Could the Metaverse Affect Tangible Real Estate?

While the potential for a new way to “invest” in real estate might become viable someday, how can the metaverse affect the real estate we know? One way is through more immersive showings and the ability to meet online in the metaverse.

Realtors currently use many ways to display a property. Photos are the most common. But videos, 3D renderings, and 360-degree cameras are increasing in popularity too.

But imagine a metaverse where potential buyers can walk through online replicas of houses on the market. Suddenly, buyers in foreign locations can view a listing as if they’re there. This could help increase the draw and attraction of a house and encourage more buyers.

Simultaneously, a realtor can take buyers through the property and interact with them in the metaverse as if it was a real-world showing.

The metaverse could also change home buying by giving buyers, sellers, and brokers a place to meet. As a buyer or seller, you may someday have an initial consultation with a realtor in the metaverse when an in-person meeting isn’t viable. Or, suppose you meet your mortgage broker in the metaverse. The ability to show and view facial expressions and body language could help you explain your needs and allow realtors or brokers to reveal how they can help.

The metaverse is not a new technology. But many companies are now trying to apply it to new industries. Buying and selling real estate in the metaverse has significant actual dollar values, though it comes with numerous risks.

For real-world homebuyers and sellers, the metaverse has numerous applications in how we’ll someday view a home or meet with the people who help us in the home purchase or sale process.

The post Real Estate and The Metaverse: Unique Potential for the Industry first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

PriceWaterhouseCooper (PWC) released its annual report describing real estate trends in Canada. While investors must consider some new or increased risks, PWC found that there is still great optimism in the sector, “with business prospects for 2022 returning to above pre-pandemic levels in almost all categories.” The cause for a bright outlook is pinned on population growth and efforts to increase supply to address demand. As a result, there are still many opportunities to invest from now into the coming years. REMAX predicts that by the end of 2022, average residential prices will have risen by 9.2 %. RBC has predicted Canada’s housing market will cool in 2022 but will stay strong due to lack of supply, demographic shifts and immigration.

This article explains both why and how to invest in Canada’s flourishing real estate markets in 2022. We look at the appreciating values and rising rental incomes of Canadian properties and what to look out for when making your investment. 

Why Canadian real estate? 

There are pros and cons of investing in Canada, of course, and then there are also pros and cons of investing in particular provinces and cities. But generally, Canadian real estate has continually appreciated property value and rental earnings over the past years. As mentioned earlier, the national MLS Home Price Index has increased over 25% since the dawn of 2020. The headlines show that real estate prices have boomed in Toronto and Vancouver, but since 2020 buyers’ markets and balanced markets have transformed into sellers’ markets. Alberta, for example, has seen Calgary and Edmonton switch to sellers markets, and Moncton and Halifax on the east coast are expected to go up from 16-20% in 2022.

While appreciation is great, rental income is also an important part of your real estate investment. According to rentals.ca, the national average rent has gone up over the past year. In February 2022, the average rent was $1820, 6.2% higher than last year. Especially due to inflation and rising interest rates, rent prices are predicted to continue their slow upward trend.

In terms of regulatory risk, municipal and provincial jurisdictions are looking to pass more tenant-friendly regulations and also specifically target short-term rentals. Sicamous, B.C. is planning a short-term rental regulation that would limit potential revenues for Airbnbs or similar services. London, Ontario, is also looking at various ways to limit Airbnbs. Due to the lack of affordable housing, such regulations will be increasingly likely to be implemented in 2022.

How to make money investing in Canadian real estate 

With residential real estate, the increase in property value and rental income are the two main ways to produce a profit. As mentioned before, Canadian real estate excels in both categories. But there are also other costs to worry about aside from the property’s price. Interest payments, transaction fees, taxes, and more can eat into how much you make. 

Property value

Canadian properties have gone up a lot over the past few years and will most likely continue to appreciate in the long term. But it’s a mistake to assume that property values will consistently go up. The real estate market experiences highs and lows, and investors who can’t stomach volatility or need to sell quickly in a down market may lose money. While Canada’s housing boom has been “unprecedented,” Oxford economists predict there will be a 24% correction within two years. However, keep in mind that housing prices have gone up 50% over pre-pandemic levels. Like the stock market, housing tends to go up in the macro picture. Still, speak with a real estate professional to see whether it’s a good time to buy or if you should wait for the market to go down. Although a realtor isn’t some sort of oracle, they can provide insight into whether prices may go higher or lower in your area. If you get into an investment when the market is low, it’ll be easier to make money. 

Rental income 

In many Canadian real estate markets, you can expect at least $1,000 of rental income a month for just an apartment. When you look into Toronto and Vancouver, this can easily reach over $2,000 a month. Although vacancy rates are tightening, there are a few things to keep in mind to make sure that your rental is the top choice among tenants. Aside from a low price, tenants value property with a good location and a reputable builder. 

As the saying goes, location, location, location. A property at the centre of the Toronto financial district will ultimately fetch more rental applications and a higher rental price than a spot in the suburbs—of course, it’ll be more expensive to purchase. But also keep in mind locations that may be noisier, such as those close to a railroad or areas with higher crime rates. This can turn off tenants and make your property less desirable.

The builder of your property is especially important if you’re renting out a condominium. Finding a condo from a reputable builder is important. As real estate development has become so profitable in many Canadian cities, new real estate developers with little experience have continually built massive condo complexes. Because new developers lack a reputation in the market, it could be a risk to purchase a unit from them. The building could end up poorly constructed or have poor management, deterring tenants. A realtor can guide you on how a builder’s past projects have gone.

Keep down fees

There are a lot of fees associated with real estate investing that you can’t forget about. If you do, they’ll eat into your profits. A major one is the closing costs associated with purchasing the property (and later selling the property). This includes realtor commissions, lawyer fees, the cost of inspections, and more. These closing fees can total a few thousand dollars.

Then there are taxes. You’re taxed on your property’s appreciation and any rental income you earn. When you decide to sell your property, you’ll be charged a capital gains tax on the difference between your purchase and the selling price. You’ll also be charged property tax which varies from city to city. To increase housing supply and affordability, jurisdictions are also raising taxes on real estate speculators and non-residents. Nova Scotia, for example, is increasing taxes on 27 000 non-resident property owners. However, expenses can reduce these taxes, such as interest payments on your mortgage or other monies borrowed. 

Canada has many great real estate markets to invest in—from the Metro Vancouver area to Halifax. The appreciation of property value combined with rental income can make you a healthy profit. But make sure to watch out for all the fees. 

The post How and Why You Should Invest in the Canadian Real Estate Market in 2022 first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.

In this article, we explain the different forms of co-ownership—joint tenancies and tenancies in common. We also explore the ins and outs of co-owning a property in a parent-child relationship and with friends or other family members. 

Joint Tenancy and Tenancy in Common

When you purchase a home (or any property) with a friend or family member, there are two basic ways to do so: through a joint tenancy and through a tenancy in common. A joint tenancy is usually the way to go when purchasing with your spouse or significant other because, in the instance where one tenant dies, the survivor takes full control of the property. The people in a joint tenancy must also have an equal stake in the property. This may not be the ideal situation if you’re looking to purchase a property with friends since most people would want their assets going to their heirs. Additionally, you and your friends/family members may have a different initial investment which would ideally result in different percentages of ownership. 

A tenancy in common overcomes these rules. A tenancy in common lets you and other owners have equal or different ownerships in the property. Your shares would also go to your heirs instead of the other owner(s) if you were to pass away. This is why a tenancy in common is ideal in most co-ownership situations. 

Co-ownership with Your Parents or Children

For children who are first-time homebuyers, many housing markets may seem daunting at their current prices. A study found that although millennials enter the housing market at the same pace as prior generations, they did so with 2.5 times as much mortgage debt. Parents fear that without their help, their children will never break into housing markets like Vancouver’s or Toronto’s. 

If you’re a parent that wants to help their child break into the Canadian housing market, co-ownership can be a way for you to invest your money while helping your child. In an ideal situation, you would own part of the home’s equity and sell it back to your child later on. The fact that you own equity in the house means that, in a divorce or death, your child’s partner would not have any right to your investment in most cases—a concern for many parents who help their children purchase a home through a cash gift. 

There are a few ways that you can finance this investment. As your child or children move out, your need for space decreases. Therefore, you could downsize and use the remaining capital to finance your child’s first home. If you’re retired, your prime location home that’s easily accessible to downtown offices may no longer be needed for your retiree lifestyle. By moving further away from the city, you could also find some additional capital without downsizing.

Another popular method for parents is to take out a second mortgage on your home to help finance the purchase of another property. If you live in a place like Toronto or Vancouver where housing prices are the highest in the country, then a second mortgage could easily provide a large amount of capital. This method is especially effective if your child is looking to purchase somewhere in Canada that’s not as expensive. 

If you need your parents to help purchase your first home, co-ownership is a great compromise for parents who don’t want to or can’t afford to provide a cash gift to finance your property. This co-ownership is really an investment for your parents, who now get to tap into a hot real estate market in preparation for retirement. However, if your parents genuinely can’t afford to co-own a property with you, it’s better not to pressure them into it. If they spend money that they don’t have, they could become financially dependent on your later on. 

Co-ownership with Friends or Other Family Members

Another way to break into the real estate market is to co-own with friends or other family members. Many real estate agents have noted an uptick in clients inquiring into co-ownership. Companies like Meridian and Vancity have even created new mortgage products for those looking to pool resources together to buy a property. These products provide buyers with competitive mortgage rates and certain features that provide additional flexibilities for friends and families to buy together.  

As tenants in common, you and anyone else purchasing the property can purchase in different amounts of ownership. If you and your co-owners decide to live together, as opposed to renting out the property, then this could affect the amount of exclusive space each person has. To ensure that this relationship works, make sure to write all the terms and conditions into a legally enforceable contract. 

This contract can include terms regarding exclusive areas of the home and also what happens when someone sells their equity, becomes disabled, gets married, or passes away. The contract should also cover who’s responsible for repairs and renovations.

Although it may be expensive to get a lawyer to look over a contract, it can save you tons of trouble in the long term. A lawyer will make sure surprises don’t arise when the tree in your front lawn falls onto the roof of the house. 

Lastly, don’t forget the basic courtesies of living with a roommate. Unlike college or university, it’s not as easy to just move out because of a bad roommate. You’re now in a joint venture with this other person or other people. Removing yourself from the relationship will include paperwork and legal and realtor fees. Therefore, you should make sure you’re co-owning with someone you trust and live well with. 

If you’re trying to break into an expensive real estate market but can’t afford to, then co-ownership may be one way to go. Its increasing popularity is a testament that people are getting more creative in how they purchase real estate. Co-ownership can also be a great way for some parents to help their children break into the real estate market. Lastly, if you’re purchasing with a friend or another family member, make sure to establish a legal contract so that no surprises come up. 

The post Co-ownership: the New Way to Think about the Canadian Real Estate Market first appeared on RankMyAgent - Trusted resource about Buying, Selling and Renting.