Edmonton Real Estate Investor: 2006

If you were worried that Edmonton is too far away to put your money into think again.

International investors and business elite have a new stop on their flight plan. The new Edmonton -London non stop flight tickets are now available from Air Canada. The flights operate three times weekly and daily service is planned for 2007.

Proof that the new development is related to Alberta's Oil Economy all flights are timed to ensure no glitch connections to Fort McMurray, Grande Prairie and Yellowknife.

"Air Canada’s announcement further signifies Edmonton’s expanding economy plus its growing importance in both business and leisure markets." www.edmonton.com

The holidays are a great time to show appreciation to your equity building partners - tenants. Good tenants can really make or break your investment. They take pride in their home and it shows in the neighbourhood and in your returns. We often give our tenants gift certificates, movie passes and long term tenants get turkeys or other holiday fare. Of course the tenants that call at three am with the toilet plugged get a plunger.

"Faced with long lines and slow service, Albertans are shunning the province's clerk-starved malls and clicking through their Christmas gift lists online." - CBC NEWS

Alberta`s hot economy and it`s labour shortages are affecting the Christmas rush. Albertans already shop online more than most other Canadians with 45% using online services to do their shopping.

Now with Alberta`s legendary winter in full swing, it is much easier to shop on line than drive to the mall to deal with parking and long waits.

"In September, six Alberta retail chains put expansion plans for the province on hold because of the difficulty in finding staff. The provincial government and the Retail Council of Canada are working on recruitment drives, expanding access for disabled workers in retail, and awareness campaigns for students of the possibilities of a retail career. "

So if you need a job head out to Alberta, you are sure to get hired and if possible bring 150,000 of your friends because that is the estimated labour shortage Alberta faces.

"Canadians are among the richest two per cent of the global population who control more than half of the world's wealth, a United Nations study released Tuesday has found."

Canada was ranked in at number 11 in the wealthiest countries in the world study.

"Building up wealth in the form of your house, (for example), is very important, but that's very difficult to do in a lot of countries." Canadians are very lucky to be able to easily buy properties, obtain mortgages and hold assets.

"The World Institute for Development Economics Research of the United Nations University, the UN agency that undertook the study, said it's the first time that household wealth - rather than just income - has been measured in a global study."

With house prices appreciating in many parts of Canada, many Canadians are house rich.

"If you hit a recession, or a drought, your income disappears, but if you have assets, savings and so on, you're in a much better position......."

Canada is a stable G7 country, it has a strong economy and a great social system and infrastructure.

"Still, there are many countries in the world where you can't depend on the bank on the corner - maybe it's not going to be there next year."

We are lucky to live, be born or to become Canadian. Now we have to start giving back or tithing our wealth back to those who are in the other 98%

Edmonton's market is still hot but the listings are cooling down.

"Edmonton-area home prices resumed their ascent in November after a brief pause in October.
Average prices rose to $334,039 for detached houses, and $282,434 for all housing types.
Compared to one year earlier, those figures are up 47.7 per cent and 42.5 per cent, respectively."

"Weaknesses in the U.S. or eastern Canada housing sectors are not present in the Edmonton market......." Madeline Sarafinchan, president of the Edmonton Real Estate Board

The frenzy we saw over the summer is slowing down and as a result less than 15 per cent of last month's sales were sold for over the list price. A big drop from the 37% seen in July.

Listings are down 21 per cent and sales are also down 16.7 per cent from October. The demand is still strong in Edmonton so prices are bound to increase. Especially since 2007 will see the city with historically low levels of inventory. The market is going to heat up next year but not to the level we have seen in the last twelve months.

So what? If you buy in Edmonton now you will still have a lot of opportunity to buy properties that make sense as an investment.

Sure they will be on the market for a shorter time and there will be multiple offers but Edmonton is still the NUMBER 1 city to invest in in Alberta. The market still has a lot of room to grow at least 5 years as the Alberta Oil Sands Development is still poised to take off. High demand and low inventory always means price increases.

"One in three Edmontonians say they haven't benefited from good economy"
Mike Sadava, The Edmonton JournalPublished: Friday, December 01, 2006

One third of Edmontonians say that they haven't noticed any economic change in their situation even though Edmonton's economy is the envy of the rest of Canada.

Mike Sadava, in his article in The Edmonton Journal, says this may depend on factors such as age, education and income. Things like a university education, owning your own home and having a yearly income of over $100,000 per annum were more likely to affect your benefits from current Edmonton economy.

"... many people who own homes are likely doing better than they think they are because they forget that they are sitting on an asset that is appreciating in value.

They might notice that the price of a coffee at Tim Hortons has gone up a dime, but they won't think about how much the value of their home has risen, at least until they think of selling....."

The fact is that home values have increased by 53% over the last year, unemployment is at a national low, salaries a national high,taxes the lowest in Canada and the economy is on fire. Sure prices may be increasing for daily commodities but there is so much opportunity in Edmonton now, that we are in a world model economy. The best thing to do is take or make an advantage of it.

The poll is deemed to be accurate within 5.7 percentage points 19 times out of 20.

JOB SURVEY

You have personally benefited from the boom

Stongly or moderately agree 60%
Strongly or moderately disagree 37%
Don't know / Not applicable 2%
Your wages have increased more than the cost of living
Strongly or moderately agree 32%
Strongly or moderately disagree 57%
Don't know / Not applicable 11%
Have rising real estate prices been good or bad for you?
Very or somewhat good 37%
Very or somewhat bad 20%
Did not make a difference to you 43%
Don't know Less than 1%

Nanotechnology - the science and technology of building devices, such as electronic circuits, from single atoms and molecules is a growing area in science and technology. "Edmonton has recently staked its place as a focus of international attention in the growing field of nanotechnology, with the University of Alberta at the forefront since the new National Institute of Nanotechnology (NINT), a partnership between the National Research Council and the U of A, officially opened their new facility in June 2006."

Edmonton and the University of Alberta are making major headway and a name for themselves in this field. "Nanotechnology has a multidisciplinary effect on the fields of medicine, science and engineering. Projects currently being developed range from improving the efficiency of the oil sands industry to targeting diseases in more effective and less invasive ways for patients. All done with particles 50 000 times smaller than the width of a human hair."

Alberta's energy resources, top quality work force, desire to diversify it's economy and the provinces wealth due to the Oil Sands will all contribute to U of A's success in this burgeoning field of science.

See "Small Science May Mean Big Boom To The City OF Edmonton" from The Gateway to read the entire article

Even with a 52% price increase over the last twelve month Edmonton is still number one in Canada. This is not a bubble either the economic stability of Alberta and the future of the Alberta Oil Sands proves there is still a lot of profitable investing left to do.

analyst

Ron Chalmers, The Edmonton Journal

Published:�Wednesday, October 18, 2006

EDMONTON - Edmonton may be the world's best city for real estate investment, says Vancouver analyst Don Campbell.

"Fundamentally speaking, Alberta's economy is as good as it gets," he writes in his latest issue of Top Ten Alberta Investment Towns, released Tuesday.

High energy prices, rapid population growth, low unemployment, good infrastructure and affordable housing make our province "the number one region in Canada -- if not the world -- in which to invest," he writes.

Campbell's "top ten" list actually contains 15 Alberta municipalities -- counting Sturgeon and Strathcona separately. Edmonton is number one for the fifth consecutive year.

PricewaterhouseCoopers recently credited Edmonton with "one of the most diverse economies of any city in North America," Campbell notes.

"Economic diversity provides economic stability, meaning that Edmonton is no longer prone to major upward or downward swings," he writes. "This type of stability is what long-term real estate investors are seeking."

Campbell points out that "Edmonton is strategically located between one of the world's most stable oil supplies (the oilsands) and the United States -- the world's largest energy consumer."

On his standard scorecard, Campbell gave Edmonton a perfect 13 out of 13 for factors such as rising population, jobs and incomes, economic diversity, affordable housing, political leadership, infrastructure and lifestyle.

He upgraded Grande Prairie, "a city that is poised for greatness," from eighth to second position. "Grande Prairie has become an economic power, diversifying its economy away from just forestry by becoming a major service centre for the growing oil and gas exploration industry," he writes. "Most major retailers and restaurant chains have set up shop to service this growing population."

Campbell cites Money Sense magazine as recently naming Grande Prairie the fourth-best place to live among 108 Canadian cities.

The Bank of Montreal chose it as number three for small business activity.

But Grande Prairie's tight real estate market squeezes some residents. "The city has recently entertained an idea to build 'garages' to enable residents in the cold winter months to continue living in the trailers and tents that they stayed in over the summer," Campbell reports.

Calgary placed third on his list.

"However, housing prices are becoming increasingly expensive for the investor as they search for potential cash-flow," Campbell cautions. "With the difficulty of new migrants finding a place to live in Calgary, we will see these people start to focus on other regions of the province."

Campbell is president of Real Estate Investment Network and author of Real Estate Investing in Canada, the bestselling Top Ten Investment Towns, which sells for $49.97 at (888) 824-7346.

TOP ALBERTA INVESTMENT TOWNS

1. Edmonton

2. Grande Prairie

3. Calgary

4a. Red Deer

4b. Sturgeon-Strathcona

5a. Lacombe

5b. Sylvan Lake

6a. Okotoks

6b. High River

7a. Devon

7b. Fort McMurray

8. St. Albert

9. Cochrane

10. Lethbridge

Source: Real Estate Investment Network

"Country's market poised to show growth throughout 2006"

Royal LePage

Edmonton's booming local economy continued to thrive in the third quarter
as activity in the oil sands north of the city continued to flourish. Edmonton
remained the hub of activity for those coming to work in the oil industry,
maintaining tight inventory levels across the city, resulting in prices
increasing at record levels. However, as inventory levels continued to improve
in the third quarter the rate of price appreciation should moderate slightly
towards the end of 2006.

The Globe and Mail Online

In Alberta we’ve had a tremendous year of appreciation and I’m hoping for a little market fear, just enough to create a wave of sales or a slight dip in prices. Why would I want that? Well, to buy more property of course. A slight cooling off of the market will give us the chance for another round of purchases. There’s no need to worry about the economy. Oil prices weakening (they can drop to $20 p/b and Alberta is still profitable), a glut of supply a new source- whatever it may be- bring it on. Alberta is sitting in a long-term stable situation that is only getting better, thus increasing house prices due to the insatiable demand for housing.

If you’re panicking now and you own property in Edmonton, give me a call and I’ll buy your house before the crash ;)

“They all contribute to a money making opportunity,” says Todd Millar,
President of Glenn Simon Inc, a Canadian company based in Japan that provides a very unique twist on investing and profit sharing for its ex-patriot and Japanese clients.

Millar explains that the province of Alberta, Canada is home to the world’s second
largest proven source of oil. Alberta is currently producing more than 1.1 Million
barrels per day and is expected to triple to over 3 million barrels per day by
2015. This increase will push Canada ahead of Saudi Arabia, currently the world’s
number one supplier.

But, it isn’t oil or even oil stocks that his company invests in. It’s real estate.
Glenn Simon Inc provides completely hands free investments that give ex-pats and
Japanese the ability to purchase revenue real estate in this oil rich region.

Husband and wife founders, Todd and Danielle Millar have been living in and investing from Japan since early 2000. Their company’s strategy is straightforward- targeting revenue producing residential and commercial properties in the economic powerhouse regions of Alberta.

Glenn Simon Inc. was created out of the Millar’s own desire to invest in real estate. “Once we built a solid team and got our proven system working our results were incredible. When our friends started seeing our returns compared to their returns in more conventional investments, we had a great response. Our next thought was ‘Imagine if we could bring this opportunity to all the other dissatisfied investors’”
Says Danielle Millar.

By teaming with the Millar’s company, investors are provided with detailed analysis;
property inspection, insurance, impeccable property management, financing and the
market timing necessary to successfully sell, maximizing profits.

“We wanted to offer something more than just property. Anyone can buy real estate
and lose money. The skill needed to be successful in real estate investing requires the foresight to see the investment through to the end. We found that by forming a
partnership directly with our clients, we could offer a totally unbiased, win-win
scenario. Like our mission statement says ‘Making Investors Successful One Property
At A Time’. We succeed by making our partners succeed.”

Already going at full tilt, Edmonton and other Albertan cities need more workers,
who in turn need more housing. With more businesses both national and international
setting up shop long term, high salaries and a high standard of living create an overall long term demand for housing. Engineers from Germany and England, in-migration from Eastern provinces, Chinese oil company executives and others are all making Alberta their home. With the lowest taxes in Canada, highest incomes and best healthcare system it is an easy choice.

It’s not just oil either. The IT sector is booming. Dell computers has just opened up a call center; nanotechnology, agriculture, lumber and manufacturing all enjoy
consistent, healthy economic growth as well.

“A lot of people will tell you that Real Estate investing is speculative. And for them it is. What we do differently is we invest and manage in economically strong and
fundamentally sound areas of Alberta. We also put each property through a set of
systems to make certain that the property can carry itself as well as make a decent return in an up or down market. "There is nothing speculative about our approach”
Says Millar.

Glenn Simon Inc’s website is full of economic facts and links detailing Alberta’s
unique and diverse economy. For more information or to subscribe to the free
monthly newsletter visit http://www.glennsimoninc.

About Glenn Simon Inc: GSI has been specializing in Canadian residential real estate
for more than 5 years while residing in Japan. GSI and its associates have over 50
years of combined legal, real estate and accounting experience, making them experts
in the field of investment real estate. GSI was formed out of the desire to bring,
decent, honest and profitable returns to ex-patriot and Japanese clients who are
seeking something more.

“In the last 12 months Edmonton real estate has appreciated over 52%”
-Royal LePage, Canada.

And with over $100 Billion dollars invested into Alberta and the strong demand for jobs and housing, you will continue to see real estate prices increasing, well into the future due to this sustainable, fundamentally sound economy.

Example: 12 months ago an average Edmonton condo sold for $132,000, now the same condo sells for $200,640.00, an increase of 52%. If you had purchased that condo with a 25% down payment of $33,000, factored in closing costs and additional expenses at say $7,000, your profit (excluding taxes and realtor fees to sell) would be about $61,640.00 or $169.00 per day. An ROI of 187%.

Now, imagine if you had a tenant paying down your mortgage for you.....

This Post is taken from More Good News October 2006 Glenn Simon Inc's Free Monthly Newsletter

Do you want the good news or the bad news first?

The bad news is the house you wanted has just been sold, and it sold for $45K above what you wanted to pay. The good news is that you can expect the next piece of property you buy in Alberta to substantially increase in value too.

Let me tell you a little secret…. Come closer, it’s a good one. I just gave my friends a house today. Well, not exactly ‘gave’ it to them, just sort of created it. Have you read those real estate books that tell you can buy a million houses with zero cash down and make a fortune? Of course you have. We all have. You turn the pages, tongue in cheek waiting for the catch or waiting to say ‘Yeah…but, you can’t do that here.’

And sometimes that may be true. But, back to the secret…

My friends (partners as it were) invested (I’m loathe to tell you how little), $32K with us wayyyy back in ’04 to buy a duplex in the North East of Edmonton. After spending $5K for reno costs out of the initial investment, we had a nice, simple, $157K property. Adding fresh tenants, both up and down, we pulled a modest $1100 per month in rent. Our property is carrying itself and just breaking even after all expenses.

Now the fun part…

September, ’06, we asked the bank for an equity take out in the form of a line of credit. The first thing the bank did, was ask the City to assess our property. City assessments are always low. Bank Appraisers tend to be better, but they still appraise buildings at about 20% less of actual value (hey, bankers like to be safe!).

So, what are we worth? $237,000.00 at the City Assessed price. Now, the appreciation alone is $80K.That makes an ROI of 250% If you don’t know real estate, you can stop you rolling your eyes in disbelief now, because this does happen and I haven’t even got to the best part yet…

So, we have a self-sufficient rental duplex worth $237K. Our friendly banker, who is just such a peach, will happily lend us the $65K needed to buy another property.

Are you going to ask me what I bought? Well, I put that $65K into a great, town house that is worth about $235K (and there is even $25K of equity in this property from the long close). Does the whole deal balance? No, it doesn’t. (Ah Ha! You got me!) In fact, it negatively cash flows about $150 per month, until we increase the rent to market value next year. What about the line of credit you ask? Well, we have to pay that too (interest only payments), but we factored in a little extra cash from the original property as rents have increased, to ease the equity loan repayments. What did it cost them to get this new property? Zero. That’s right. Zero down and small payments every month. That looks like $32K bought $472K of quality real estate or gave them a ‘free’ house. Not to mention the $25K instant profit.

Can we do it all the time? No, way! But when we can, we will and that rocks!

Living in a country where English is not the first language enforces a learning curve that you don`t get when you can communicate in your native tongue. When I came to Japan 6 years ago my Japanese extended to Domo Arigato Mr. Roboto courtesy of Devo`s hit in the 80`s. I had to assimilate to live. Now that I can speak Japanese I look back on those days cringing at what passed for "speaking Japanese".

The same holds true for investing in Real Estate. I started investing 5 years ago, I read all the books, joined Cashflow circles and ventured boldly ready to make "deals". With all the information and opportunity available on the web it seemed mere months until I held my dream portfolio.

Boiling down my experiences to the purest essence. I have come up with 5 tips for Learning Another Language and corresponding tips for Purchasing Investment Real Estate. They surprisingly overlap!

5 Tips For Learning Another Language vs. 5 Tips for Purchasing Investment Real Estate

1. Never ever repeat words until you know the meaning - I once had a catchy tune that a few little boys were singing stuck in my head. They roared with joy when I repeated the song and sang along with them for the remainder of our time together. For the next few days I would alternately hum and sing the easily pronounced words feeling quite pleased that I had picked up the language. It wasn't until days later a concerned co-worker actually explained the meaning of the dirty ditty did I learn this valuable lesson.

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1. Do your own homework - It doesn't matter if the property you are looking at is in a great area and really cheap. You are responsible for your financial future. You must never take anything at face value. My mentor Don Campbell always says "What's behind the Curtain?" Research your property, the area where you are, go there at different times of the day. Research other houses on the block or in the area, How much did they sell for? Ask impartial realtors, lawyers and people in the know for their input then sift the results. In the end only you will be paying for your real estate negligence or reap the benefits of your diligence.

2. Mimic the language of people around you- A direct contradiction to my first tip! However you can be sure that if I had emulated my successful 60 year old business lady friend I would have been singing a different tune. In Japan especially, age and sex are very important in determining the type of speech you use. If you hang around 50 year old business men your Japanese will reflect that. So choose with care whose speech you emulate.

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2. Mimic successful people around you - Research the people in your area who are doing what you want to do. Find the multi-plex buyer and take him to lunch that meal could make you a millionaire or at least help you on your next deal. The best way to succeed at anything is to copy the people who are already successful at it. Most people who are successful want to give back and help people who are starting out.

3. Supplement a formal education- You CAN learn new languages by yourself. In fact I spent my first two years in Japan watching Japanese T.V. with a dictionary and notebook so that I could learn the colloquial Japanese. Speak what the real people speak. It paid off I have excellent listening comprehension and can converse readily on many t.v. celebrities and programs- a useful ice breaker. However, my spoken Japanese didn't really take off until I attended a formal language school. The teachers guided me around pitfalls and I could practice with people that spoke that language rather than talking to my T.V.

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3. Join an investment group and take seminars - Sure it costs money, sure there are scams out there. Some gurus only hold seminars to sell their products or courses. That is a chance you have to take but when you find the right group you will be connected to a wealth of experience, information and like minded people. I am a member of REIN- Real Estate Investing Network in Alberta. That allegiance has propelled my business like nitro in those cars in the Triple X movie series. My sphere of influence now includes best selling authors, people who hold millions of dollars in real estate and some of the best tax specialists, lawyers and realtors in Canadian Real Estate. I have avoided some mistakes because someone in my group already made them and that resource was readily available to me.

4. Making mistakes makes you a better speaker - This only works if someone corrects you! If you don' t say anything then your speaking ability won't improve at all. In my first baby steps in learning the language I know I said some pretty far out things. Times when I wanted to say "This meal is delicious!" I came out with " I am delicious" or my favorite pointing to a little girl and saying "scary" when I meant to say "cute" actually it could have gone either way with that one. It happens but luckily I had friends who took me aside and pointed out the grammatical, pronunciation or syntax errors of my ways. Now I only say "I am delicious" when I want to.

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4. Making mistakes makes you a better investor - You cannot learn until you make a mistake. Granted you can have a mentor who helps you and guides you around the mines of investing. What you are getting there is the benefit of him or her making mistakes in the past. Babies don't walk without falling, bicycles aren't mastered without scraped knees and investors aren't made without those "Holy #&("! " deals. Be thankful for them. They are what separate the Trumps from the chumps.

5. Speak Speak Speak- Just do it. Talk to the grocer, the mailman, the neighbour and anyone who will humour you. It is learning by action. Immerse yourself in your new language. I listen to the NHK National Japanese Radio whenever my ipod's batteries die while I am driving. I watch Japanese T.V. and study in my free moments. And you know what? Sometimes I can speak Japanese pretty darn well.

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5. Just do it- Don't be a perpetual student. Go out there and invest. If you don't have the finances just look at properties on the MLS. It is free and you can quickly get a feel of the market and what is availabe. Using a city map you can compare market values for properties in the same neighbourhood, street or complex. If funds are low then partner with friends or other people who want to invest in the same area. You can always Joint Venture with a professional so that your first deal isn't so daunting.

With time you will be surprised at how far you have progressed in becoming a polyglot or an investor.