The Riz Team Blog

The end of every year is a good time to see where you stand financially, and get organized for the coming year. December is busy with holiday parties and family,  but doing a few small things before Jan. 1  could significantly increase your financial success in 2013.
Here are six things to do before the end of the month:

Roll over your vacation days If you didn’t use all of your vacation days,  check with your HR department to see how many days you can roll over into 2013. Some companies don’t allow employees to roll over vacation days – so be sure to inquire about cashing out your vacation days instead.

Maximize your extended benefits Insurance deductibles on extended health care plans usually reset on January 1st, so if you haven’t already reached your plan’s annual limit, you might want to renew prescriptions, and schedule any doctor, dentist, optometrist, or supplementary healthcare appointments before the end of the year.

Check your credit score Once a year, Canadians you can get a free credit report from both of the two main credit bureaus in Canada, Equifax and TransUnion. Checking your credit score on an annual basis will help you monitor your financial health, and make sure there aren’t any mistakes on your report that could negatively impact your score.Since Equifax and TransUnion are separate companies, they collect financial information from different sources. That’s why it’s important to receive credit reports from both companies on an annual basis.

Make charitable donations If you haven’t already done so, consider contributing to your favourite charity. Donations must be made by the end of the tax year in which you want to claim the deduction. Anything you donate after December 31 will count toward next year’s deductions.
Related: How to give to charities on a tight budget

Make RRSP and TFSA contributions The money you invest in an RRSP is tax deductible, which means you can claim them as a deduction when you file your tax return. Contributions made to your RRSP on or before March 1, 2013 can be deducted from the previous year’s income tax return.
Use your refund for next year’s contribution or to pay down debt.
Related: 10 end of the year tax saving strategies

Re-balance your investment portfolio Part of any  investment plan should be to re-balance your portfolio on a regular basis. Look at re-balancing your portfolio to keep it in inline with  your plan.
This will also give you a chance to re-evaluate your priorities. If you plan on getting married, having a child, or buying a home –your investment portfolio might need to change to reflect your new goals.

What year-end money moves will you be making this year?

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If the real estate market is headed for a correction, then it presents a historic opportunity for buyers of investment properties. The main reason is that interest rates should continue to remain at historic low levels, even as prices fall. The key thing to remember is that the property must have positive cash flow.

What I mean by positive cash flow is that after you make your down payment, the income you receive from tenants is more than what it costs for your mortgage payment, property taxes, maintenance and utilities (if not paid by your tenants). Budget an additional 10 per cent for unanticipated repairs, as these always come up.

If you’re going to take a dip into commercial real estate, make sure, you must have the right team of people working with you. Who do you need? Here are some suggestions:

The right real estate agent: You want to find a real estate agent who specializes in this area and preferably owns investment properties themselves. They can introduce you to their contacts, such as insurance brokers, home inspectors, mortgage brokers and property managers, to protect you when making this investment.

A knowledgeable mortgage broker: You need someone who understands your personal financial situation in advance so that you are aware as to how much you can afford on any mortgage needed to finance any property.

A home inspector: You want a firm that specializes in the type of property that you are interested in. Ask for references and check them out. You need to have an unbiased opinion as to how much you may have to invest in the property itself after taking ownership.

An experienced lawyer: Depending on the type of property, you may need special clauses to protect you regarding verification of income, tenants or even the condition of the property. You will also need advice as to whether to hold title to the property in your own personal name, a partnership or a limited company.

An accountant: Besides tax advice, if there are commercial tenants involved, then you will need to be registered for HST purposes.

Private planner: If you are considering any changes to the property, whether it is an addition, basement apartment, to bring in more income, you need to know before you buy as to whether this is permitted under the local zoning by-laws and what applications may be necessary to get this done.

A building contractor: Renovations to improve your cash flow require someone experienced who can bring any project in on budget. Make sure that you check references and that a proper building permit is applied for in advance on any job. Put everything in writing so that there are no arguments later.

An arborist: Sometimes there are trees on the property that will have to be removed in order to do the renovations that are needed. There are many restrictive tree by-laws out there that may prevent taking down a tree. A lot depends on the diameter of the trunk of the tree. You need an experienced arborist who can advise you in advance how difficult it may be to remove any tree from the property.

A local property manager: You do not want phone calls in the middle of the night to fix something on the property. You need to hire an experienced manager with local ties to where the property is to make sure that your investment is well cared for and that all tenants are properly qualified in advance. Again, ask for references and check them out. Budget approximately an additional 10 per cent of your total expenses to pay for the manager.

By having the right team assembled, you can do the homework you need to do in advance of making such an important investment decision.

Mark Weisleder is a Toronto real estate lawyer. Contact him at mark@markweisleder.com

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