Tembo Financial for Business Owners and Entrepreneurs

During uncertain times, Tembo Financial understands that businesses and personal matters may be affected.

Many businesses are currently facing struggles that were unanticipated, and extremely sudden. Having to close, or operate from home for some is extremely tricky for several businesses.  

How are you going to pay rent? How can you continue to pay your employees? Will your business be able to survive the ongoing and uncertain changes happening? Many new questions arise as different life events take hold of what was your successful and growing business.  

It is in times like this where Tembo Financial may have the product and solution for you, to help you save your business with little risk. Tembo Financial is offering business loans against your personal property, to ensure that you can keep your business afloat. With flexible solutions, this product can assist you in getting your business back up to full speed. Our loans are simple, registering against your personal property, and releasing funds to keep your business the way it was moving before it slowed down.  

Interest will be deferred or prepaid so that you don’t have to come up with the payments until you are ready to pay off your short term, 4-6 month fully open loan. If 4-6 months isn’t suitable for your business, Tembo Financial can assess if your business would be right for a 1-year term.  

If you are a business owner, with equity in your personal home and are looking to tap into the equity in your home to save your business, contact Tembo Financial today to find out more information on how we can help you keep your business afloat!  

What is bridge financing and how does it work?

In the simplest terms, bridge financing is a short-term lending option that helps homebuyers bridge the gap between their old and new homes. It is often a short-term solution for the buyer in order for them to arrange the mortgage for their new purchase.  

Recently, conventional banks have released guidelines, which make it increasingly hard to qualify for a bridge loan.  

The advantages of bridge financing are that you can get the funds you need before your home sells. This can give you the ability to purchase a new home and have some liquid money before your sale closes. The bridge may also give you some money to do some touch-ups or renovations to your home before listing for sale. See our blog on home renovations and increasing your property’s sale price before listing by visiting our blog: https://www.tembofinancial.com/2020/03/03/5-ways-to-increase-your-home-value-before-listing-for-sale/ 

How does it work? 

At Tembo Financial bridge loans are offered to clients without a lengthy list of criteria. We are able to assist clients with the funds that they need to bridge the gap between their purchase and their sale. Bridge financing works by putting a mortgage on your current property and sometimes your new property also, and only pay us back once your property has sold and closed! With flexible payment structures available, you may not have to make any monthly payments! 

 Need more of an explanation? See the example below:  

You are currently a homeowner at 12 Oneway Avenue and have just accepted an unconditional offer from a buyer for your current property, which has a closing date of September 18th. The purchase price was $700,000.00, and after paying off your mortgage, closing costs, and other costs such as moving or renovations, your net proceeds will be approximately $300,000.00. 

You’ve already placed an offer on a new property at 32 Ridgeway Crescent for $500,000.00, which is accepted, and your new property’s closing date is August 29th, 20 days before the closing date of your existing home

On your purchase, you’ve made a $25,000.00 (5%) deposit, and have decided to use $300,000.00 of your net proceeds from your sale towards your purchase. You’ll need that $300,000.00 on your closing date (August 29th), however, you won’t receive the proceeds from your sale until September 18th. What do you do?  

This is where bridge financing would be used, as you would take out a short term $300,000.00 loan for the 20 interim days between your purchase closing (August 29th) and your sale closing (September 20th). Although this situation is quite common, as exact closing dates aren’t always possible, such financing can be difficult to obtain from a bank, especially if the gap is greater than 30 days. 

Getting a loan for a house deposit

Getting a loan for a deposit on a new home is very common. The equity or savings that many people do have for a deposit is tied up in their current home. Luckily, there is an option for you to get a loan and put a deposit on a new purchase before selling your current home. 

Tembo Financial offers deposit loans to clients looking to sell, but wanting their deposit money sooner. The way that they can do this is by confirming that their home will be sold in the next few months, and with just a few documents, Tembo Financial can release funds.  

Best of all this loan often requires no monthly payments and no credit checks! 

In uncertain times, when you aren’t sure when your home will sell, don’t worry about not having money in your pocket. Tembo Financial is able to release your funds when you need them the most.  

Regulators are concerned about the real estate market – again

The activity we’re seeing the real estate market is raising red flags with federal regulators and the Bank of Canada. When the 2016-17′ boom reached its peak governments at all levels rapidly intervened to cool activity.

We all remember the introduction of the foreign buyers tax, tighter mortgage approvals, the mandating of mortgage insurance at certain levels, etc. These government interventions succeeded, eventually precipitating what was effectively a flat-lining of prices and a slowdown in demand. Once the shock subsided and the market adjusted, the recovery kicked in though, rendering the government action a grand delay. We’re now not far off from the 2016-17′ boom peak. The boom is back, and the apprehension is back with it.

Bank of Canada Governor Stephen Poloz summed up his opinion on the present status of the housing market with one word – “froth.” The BOC (Bank of Canada) notes that the rise is unsustainable and expects the market to naturally self-regulate if the rise in prices becomes excessive for prospective buyers. As always, the BOC is standing by to raise rates in the event that inflation and housing price growth becomes excessive. This is a worst-case scenario, and in many ways, softening national economic growth would spur the BOC to cut rates instead. The BOC will definitely monitor real estate stats closely in Q1 & Q2 2020 and will review its options if the housing momentum we’ve discussed intensifies. 

As for the provincial government in Queen’s Park, it is unlikely to interfere in the housing market in any way other than stimulating the growth in supply (cutting developmental approvals). The federal government is also limited in its capacity to address a hot market as it must balance affordability with controlling demand. A federal election is also soon on the horizon, which will see activity designed to increase supply and facilitate easier buying of housing, not the opposite. At the end of the day, if regulators and bureaucrats feel that the housing market is getting out of control they will move rapidly in concert with the BOC to add new measures, despite any political pressures. 

Galleria Mall is in the dustbin of history

The corner of Dufferin and Dupont is a working class, generally blue collar area not far from the mid-Toronto rail track. The area has always been busy, heavily transited, and Dufferin St. has continuously grown as a major north-south thoroughfare of the city.

The Dufferin bus route is one of the busiest in Toronto and use continues to grow. Two decades ago, houses in the area were extremely affordable and the neighbourhood was a major magnet for new immigrants while also being home to more established Italian, Portuguese, and Anglophone communities. Dufferin-Dupont was served locally by Galleria Mall, a 5 acre patch of retail and shopping locales. Galleria was built in the early 70s, and while regarded with affection by many locals, had a reputation as being run-down and outdated. The mall was a shadow of Dufferin Mall’s scale and shape just south of Bloor. Dufferin-Dupont’s close proximity to the Bloor subway line and the downtown and midtown cores and the Annex have benefited it greatly, and equity in homes in the area has soared, especially in the last 10-12 years. The gentrification of the area has been ongoing for some time, and young professional families have been moving in. But all of that is now intensifying.

Galleria Mall was bought in 2015 by Freed Developments and ELAD Canada, by September, ELAD took over total control of the site. The new owners spent years consulting the community and trudging through the regulatory, zoning, and approvals processes to have an ambitious and bold plan prepared. The derelict mall with considerable parking space will be transformed into a network of eight residential buildings with 3,400 housing units, 150 of which will be ‘affordable’,  considerable retail space and a redesigned and enlarged park space and community recreation centre. The new project will see 3.3 million square feet of space, up from the present 227K square feet. While the already significant congestion in the neighbourhood will only worsen, the project will likely spur further densification and gentrification in the area and will see many jobs and investment poured in. Galleria’s poor reputation and derelict condition at the time of the sale likely netted ELAD and Freed a good sale price. The area was once an aircraft manufacturing plant that was transformed into a car plant and then eventually retail and parking space. Construction of the project will take a decade to complete.

 

Buttonville Airport is going for sale!

Buttonville Airport is a privately owned, public airport just north of Markham. It covers over 170 acres of the primest of prime suburban 905 real estate. The airport is a half hour drive from downtown Toronto and is just east of Highway 404, Buttonville’s strategic proximity to the rapidly growing GTA and the massive growth in air traffic over the last several decades helped transform the site from a ‘grassy strip’ to the largest, most dynamic privately owned airport in the nation. 2018 saw the airport achieve just over 44K aircraft movements, down from over 80K in 2014. In comparison, the large publicly owned Billy Bishop Airport in downtown Toronto has aircraft movements over 125K. In 2009, the family who then owned the airport announced that they wanted to initiate a broad redevelopment of the site into a mixed use commercial, retail, and residential development. This was highlighted as a golden opportunity to unlock tremendous value for a huge tract of strategic real estate. The family sold in 2009, forming a ‘partnership’ with Cadillac, and the price has not been disclosed, but the value of the undeveloped acreage was believed to be worth between $100-150 million at the time.

Cadillac’s plan would have created 10 million square feet of overall multi-use space worth billions. In comparison, the total size of the Yorkdale Mall is just under 1.9 million square feet of retail space. 6-7K new residents would have been accommodated, generating tremendous property tax revenue for the City of Markham. At least a dozen mid and high rise towers were to be constructed. In all likelihood, the ambitious scale of Cadillac’s strategy would have made the airport family billionaires. However, the immense rezoning work required to approve the project was never completed. The deal was shifted off to the Ontario Municipal Board, but negotiations involved too many stakeholders and too much work. Delays kept pushing back the project. The uncertainty and complexity of the project proved too cumbersome for Cadillac and it appears the partnership have now agreed to wash their hands of the property and to put up the holdings for sale.

The sale will create opportunities but also challenges. Significant corporate jet traffic uses the airport and will have little room to transition to as Billy Bishop is limited in its traffic and Pearson is bursting at the seams. The sale will likely up pressure on the federal government and federal transportation regulators to finally and definitively approve construction of Pickering Airport. The GTA is growing to the extent that a second international airport will be necessary, barring that, Pearson will have to be rapidly expanded. Pickering Airport’s construction will intensify development in Durham Region, create many jobs, and spur additional construction, rezoning, and densification. The recently elected Mayor was strongly supportive of airport construction and won election with over 60% of the vote on a pro-build campaign.

 

Employment in Toronto

Toronto’s economy supports 1,569 million jobs. 1,178 million are full time and 390K are part time. The average wage of a full time worker in Toronto is just over $60,000. Job growth in Toronto has been healthy and consistent for over two decades.

Throughout the mid to late 1980s, Toronto saw impressive economic growth, real estate appreciation, and strong performances by financial firms and pension funds. Employment reached a peak of 1.4 million in 1989 and then fell to under 1.2 million by 1997 as the real estate bubble burst and the early 90s recession kicked in and ran its course. A recovery followed, buoyed by the dot-com bubble. Since 2010, however, the rate of employment growth has been rapid and consistent year-on-year.

The institutional sector is seeing significant job growth. Universities, Colleges, private education employers, and hospitals have collectively added 17,000 jobs in the City in the last two years. Growth is at three times the rate of inflation in the institutional sector. Office jobs went up by 23,000 in the last two years, while the rate of growth over the last five years was 16.7% in that space. This impressive job growth underpins the ambitious construction of commercial office projects throughout the City that Tembo has outlined in numerous blog posts. It is driving a very low commercial vacancy rate which has been falling for many years and which sends a clear signal to developers on opportunities in the market.

Manufacturing, retail, community and entertainment, and the service sector all saw gains but these were mode modest than the office and institutional sectors. There are over 77,000 businesses in Toronto, up from a decade ago but lower than its absolute peak of just under 85,000 in 1990 at the height of the late 80s boom. 48% of Toronto jobs are office jobs, with the institutional sector coming in at number 2. Health care and financial service jobs are seeing the biggest gains in the last five years. Obviously, most of the jobs are in the downtown core.

2020 set to be red hot for real estate in the GTA

Housing website Zoocasa recently got a decent amount of media attention when they released a blog outlining reasons for 2020 being a very hot year for real estate. In summary, Zoocasa is pointing to a lack of supply as the main reason prices will soar this year. Zoo is also making the point that the measures implemented to cool the rapid price growth from 2016-2018 are now well and truly spent. The foreign buyer tax and stress tests are not going to cap prices anymore, the market has priced them in and found ways to accommodate the extra burdens.

The TREB is echoing Zoocasa’s prediction and argue that buyers are now back and much more engaged in the market than before. The psychology of the market has shifted from perceptions of lukewarm activity to a once again hot and steamy outlook and prices are on the up. The market had a brief re-balancing away from sellers to buyers but has now shifted back to being a much more assertively sellers’ market. The average home price in Toronto is now just over $910K, this includes homes and condos medians.

All the data points to sales and prices now having fully hit the highs which inspired the drastic and sudden government intervention in the market some years ago with the foreign buyers tax and the stress tests. Tembo predicted that a recovery, if ignited, could easily have the market rapidly gain back the ground it lost. And we were right. What has been impressive is that the recovery has occurred at a faster pace than even we imagined. Both Vancouver and Toronto have led the way in making sharp gains and returning to the historic highs experienced in the last boom.

Nothing is pointing to a sudden and massive increase in supply. Even though the provincial government is extremely pro-development, there is little capacity in the market to build tens of thousands of extra homes and condos to meet demand. Developers have no reason to swamp the market when they can continue to anticipate and pocket bigger and bigger gains. Interest rates will remain low. There is also some possibility that the Feds will move to make it easier for people to take on mortgage debt given they are in minority government and need to bolster their standing with swing voters.

An Overview of Toronto’s HousingTO 2020-2030 plan

The City of Toronto is unveiling a broad, ambitious 10 year plan to address the major issues of homelessness, housing stress, and a lack of affordable housing options for tens of thousands of City residents.

The plan seeks to pool together resources from many City divisions, the province, and the federal government to invest over $20 billion in the next decade. At its heart, the plan seeks to bring together government, non-profits, and banks to cooperate on models to get as much affordable housing built as is possible. Pressure on politicians to address public housing repair bills, the lack of cheap aparments and homes for Torontonians, and increasing rents and housing prices is steadily building. In many ways, the housing crisis is augmenting inequality and is reinforcing poverty. A serious chunk of Toronto’s population is spending massive chunks of their disposable income on rent.

The plan has the following key goals:

Creating 40,000 new affordable rental homes approvals including:

·         18,000 new supportive homes approvals for vulnerable residents including

people who are homeless or at risk of being homeless

·         A minimum of 25% (10,000) of the 40,000 new affordable rental and supportive

homes dedicated to women and girls including female-led households

·         Preventing 10,000 evictions for low-income households through programs such as the City’s Eviction Prevention in the Community (EPIC) program

Improving housing affordability for 40,000 households:

·         31,000 households to receive up to $4,800/year/household in Canada Housing

Benefit

·         9,000 households to continue receive housing allowances

·         Maintaining affordability for 2,300 non-profit homes after expiry of their operating

agreements

·         Providing support services to 10,000 individuals and families in supportive housing

Improving housing conditions for 74,800 households by repairing and revitalizing

Toronto’s rental housing stock, including:

·         Repair of 58,500 Toronto Community Housing units

·         Revitalization of 8 TCHC communities to add 14,000 new market and affordable

homes with 5,000 replacement homes across the city

·         Bringing 2,340 private rental homes to state-of-good repair

·         Assisting 10,010 seniors remain in their homes or move to long-term care facilities

·         Providing property tax relief for 6,000 eligible seniors

·         Providing home repair assistance for 300 eligible low-income senior

homeowners

·         Redeveloping 1,232 City-owned long-term care beds and creating 978 new beds

utilizing provincial investments

·         Supporting the creation of 1,500 new non-profit long-term care beds

·         Creating 4,000 new affordable non-profit home ownership opportunities

·         Assisting 150,000 first-time home buyers afford homes through first-time Municipal

·         Land Transfer Tax Rebate Program

Is this enough to solve Toronto’s affordable housing crisis? Probably not, but the scale of the initiatives outlined in the plan and its aggressive nature in tying together a wide array of agencies, levels of government, and private and non-profit players shows how serious the city’s leaders are in trying to make tangible impacts in addressing what is the paramount socio-economic challenge our City faces. The HousingTO 2020-2030 plan will be voted on by Council next week. 

Canada’s population is exploding

Out country has had an interesting history of immigration stretching back hundreds of years. Throughout the late 19th century, immigration was modest compared to modern levels.

Annual immigration averaged roughly 25-50,000, topping 130,000 in the early 1880s but then falling to 80,000 in the 1890s and dropping precipitously in the late 1890s and early 1900s. A huge surge then occurred from 1902 to right before the start of the first World War. With the prairie provinces Alberta and Saskatchewan admitted to Confederation, elites recognized the urgent need and positive opportunity of settling the Western prairies and activating the agricultural potential of the region. Sizable grants of effectively free prairie land were advertised to European migrants, particularly those from Ukraine, Germany, and Poland, on the condition of long term settlement and productivity inducement. 400,000 people entered the country in 1912, an all time single year record.

In the 1920s and through the Second World War immigration began to fall until it recovered in the post-war boom. Over the last 20 years immigration levels have been high and steadily increasing, with both main political parties supportive of the trend. Average increases varied from 200-250,000, but the current Liberal Government has shown a zeal to increase this number further to 350,000+. Statscan has released data that shows recent increases in population have hit all time historic highs that have topped the traditional pre-WW1 figure of 400,000. From August 2018 to July 2019 the population of our country increased by 531,000. 60% of those immigrants settled in Ontario and British Columbia. These kinds of increases show that our immigration system is moving aggressively to address the most serious demographic issue we have; an aging population. Hopefully many of the new entrants are family sponsorship individuals who have likely been waiting for years to join with family members who are already here.

One can imagine the impact of this population increase on a housing market that is already squeezed from demand pressures. Even if immigration levels fall from this record high, they will still be significant in the years to come. The consensus on high immigration levels is shared by most of the political class, big business, and a significant chunk of the population. This won’t change anytime soon. Record high immigration are the new norm and this will continue to fuel rapid growth and housing prices.