Edmonton Real Estate Investor: June 2007

If it isn't global warming then it is certainly the oilsands use of potable water that has enviromentalists in an uproar. The industry consumes 2–4 barrels of water for every barrel of oil it produces, if oil sands production triples to 3 million bbl/day by 2015, as predicted, the industry would require 15 cubic meters of water per second.

“The Government of Alberta is very interested in making sure our resources are extracted in a fashion that’s environmentally friendly and has long-term potential to enhance recovery,” says Alberta Energy spokesman Tim Markle.

A polymer which increases waters viscosity is hoped to be one of many solutions.
This polymer is a solid, imported from the United States and blended at the site. It thickens water to a jelly like syrup that reduces the difference in viscosity between water and oil, improving H2O's ability to displace oil when producing wells.

“We’re using polymer to create elasticity in the fluid,.... If you think of pushing molasses with water, water will break through molasses. On the other hand, molasses will push water like a piston. If the two were a more similar viscosity, the push would be smoother."
“We believe we’re going to get very good recovery factors. Every per cent counts....”
Canadian Natural Resources Limited exploitation manager Rob Richardson
Full Article

It is almost Canada Day! (and a slow news day) so....

What Do Canadians Have To Be Proud Of?

Canadian Inventions, Products from Canada and Etc.

1. Smarties, Crispy Crunch, Coffee Crisp and Apple pie are products from Canada.

2. Baseball, Hockey and Basketball are Canadian inventions.

3. Mr. Dress-up kicks Mr. Rogers butt

4. Tim Hortons beats Dunkin' Donuts

5. We have the largest English population that never ever surrendered or withdrew during any war to anyone, anywhere.

6. The Hudsons Bay Company once owned over 10% of the earth's surface and is still around as the worlds oldest company.

7. We invented ski-doos, jet-skis, velcro, insulin, penicillin, zambonis and short wave radios that save countless lives each year.

8. We invented Superman.

9. The handles on our beer cases are big enough to fit your hands with mitts on.

10. Canadian Tire money, Vachon cakes, the Jolly Jumper, and Botox were all invented by Canadian women.

11. The word cyberspace was coined by Canadian writer William Gibson

12. The baseball glove was invented in Canada in 1883.

13. The electric light bulb, the electric range, the electron microscope, standard time, the television, the telephone, and the zipper are Canadian inventions.

Thank You Canadian Beauts

Is it better to rent or buy? How much will my mortgage payment be? What will I have paid down on my mortgage by 2015? If you are plagued by these questions then I suggest you head over to ATB Financial for their great mortgage calculators.

ATB

Here is my favorite appreciation calculator. It's easy to use and very accurate.

Appreciation Calculator

The first Eskimos challenge of the new season was the Edmonton housing crisis but 20 new Eskimo players have found many leads on places to live.

"Every second call we took to our administration office yesterday at the Edmonton Eskimo facility was someone in the Edmonton area, either offering up a place for a player to live, or telling us that they knew a friend of a friend who had a place, a basement suite and that kind of thing," Dave Jamieson Spokesman for Edmonton Eskimos

In a city with record low vacancy rates and high rents this situation is not uncommon.

"The province of Alberta's ascendant economy has meant that real estate prices have risen dramatically. The 40.5 per cent increase in the price of a new home over the past year in Edmonton is the highest anywhere in the country according to a Statistics Canada report." Click Here For More

Great to see that Edmontonians pulled together to help their city's CFL players find a place to live.

To those that say they aren't benefiting from the Alberta Oil Sands, perhaps your children can.

"The Alberta government is using some of its energy revenue windfall to add $227 million to the province's largest scholarship fund.

Premier Ed Stelmach has announced a 35 per cent increase to the Alberta Heritage Scholarship Fund, bringing its total value to $851 million.

The program provides annual scholarships to high school students as well as undergraduate and graduate students.

Interest from this new money will allow an additional $10 million dollars in scholarships to be paid out, starting in the fall of 2008.

This year alone, a record $57 million in scholarship funding will be paid out to about 33,000 students across Alberta." Read More

Women are leading men in entrepreneurial-ism and have contributed nearly $18B to the Canadian economy. Especially Albertan women where the number of self-employed women has risen almost 5%.

"Canadian women's entrance into self-employment and small business ownership in recent years has been nothing short of dramatic," professor Karen Hughes, at the University of Alberta, wrote in a recently published paper that explored their motivation and success.

"In a relatively short period of time, they have established themselves as a formidable presence, contributing an estimated $18 billion to the Canadian economy."Full Article

Some relief is in sight for buyers into the Edmonton market. We are still having stellar appreciation with price growth slowing only slightly to 21.6% from 28.9%. Genworth Financial estimates that the average new home price in Edmonton will reach $388,694 in 2007.

They also predict a 5% increase in 2008 and 4% annually to 2011.

Let`s do the Math

So if your house is valued at the average price now

$388,694 and it increases 5% in 2008 = $408,128.70

Then 4% every year to 2011 compounding of course

2009 at 4% = $424,453.84

2010 at 4% = $441,431.99

2011 at 4% = $459,089.26

At the end of 2011 your house would be worth $459,089.26 a $70,000 dollar increase

$48 per day.

$2 per hour

$0.03 per minute

I made $.66 just writing this post. Now that is passive income.

To be honest I think housing prices will do much much better than 4% a year. That seems incredibly conservative for this market.

Somewhere, someone is saying, "I told you so" because Edmonton Real Estate prices dropped over the last three weeks. Keep in mind the market has doubled over the past two years. Edmonton real estate skeptics aren't in for the last laugh yet, because the market isn't falling just softening, a little.

The market is less frenzied and we can say goodbye to multiple offers and offers with out conditions - a very dangerous practice. Buying houses without inspections is a good way to purchase someone else's headache and moneypit.

"Edmonton buyers were getting used to bidding wars and buying homes without inspections, but today buyers have more choice." READ MORE

If you are an investor now is the perfect time to get into the market before the next big rise in prices.

The new LRT and proposed Bitumen upgraders in the northeast are two more solid reasons why Edmonton is the No. 1 city in Canada for long-term real estate investment.

Any improvment in transportation for renters will improve property values as commutes shorten. The Bitumen upgraders set to employ 4,000 labourers during construction will put the squeeze on an already tight housing market. Full Article

Don Campbell also put out his list of Alberta Top Ten Towns:

Alberta's top places for real estate investment

1. Edmonton

2. Grande Prairie

3. Calgary

4. Red Deer

5. Sturgeon & Strathcona

6. Lacombe

7. Sylvan Lake

8. High River

9. Devon

10. Fort McMurray

Source: Real Estate Investment Network

We are in our Japan office now and after a week of trials and tribulations, successes and our wedding anniversary we went out for a celebratory dinner.

Japanese food is quite mainstream in North America but what we get there is the "mild" version. Todd and I are adventurous eaters so we always try the "wild" side of Japanese food. I think we topped it all this weekend with these culinary challenges:

1.raw horse meat thinly sliced with slivers of raw garlic dipped in wasabi soya sauce
2.raw Bonito innards (guts) mixed with olive oil, gorganzola cheese, pink peppercorns and cilantro

To be honest I have eaten horse sashimi many times but the fish innards were a challenge. It was a very complicated dish, and the texture could put some off but I appreciated the chef's chutzpah.

In our seven years in Japan these are some things we have eaten:

sweet and salty grasshoppers

raw chicken

raw pork uterus

raw liver

whole pregnant fish- eyes everything

raw everything basically

a sea creature that is orange and purple- sea squirt SEE IMAGE ABOVE
fish flavoured ice cream - surprisingly good!

pumpkin flavoured ice cream - delicious

raw octopus innards in sauce - sorry back to raw again!

fermented soya beans with mustard - Natto SEE IMAGE ABOVE

Now the odd thing is when we go to Canada I miss some of it! Anyway our motto is never say never!

The website Wealth address is doing a reality blog/podcast/show where they will turn an average guy into a millionaire by giving him the opportunity to study with the best gurus in the business.

"Each day, visitors to the site can log on to Wealth Address, read Wes’ blog, watch his podcasts, see the daily videos of his adventures, watch his bank account grow and follow him step-by-step on his journey to earning big money. Better yet, they can mimic his actions and make a huge income right along with him. It is an incredible opportunity for anyone serious about making a name for themselves in the world of real estate investing and wealth building." Read Article

What a great opportunity. To become a real estate investor with a solid portfolio takes about 5 to 7 years in my opinion. I wonder if they have the staying power? Or will it be a "get rich in a year" type thing. Granted if he is doing it full time with the help of the best gurus in the business....

New to land lording?

It isn't a walk in the park but it also isn't all 4am broken toilets. In fact it has never been 4am broken toilets for me. One reason is that our properties are managed by an outstanding property manager. Caroline is incredibly efficient and really good at anticipating any work that may have to be done. She deals with all the day to day stuff so we can focus on the big picture.

So my first bit of advice is:
1. Get a property manager- if you are too busy now with work, kids etc then adding property management into the mix will be too much. A good property manager is hard to find so get references and check them. Their rates vary but are in no way indicative of the PM's quality, an expensive PM isn't necessarily the best- just the most expensive.

Tenant blues?
Tenants are your business partners. They take care of your investment and hopefully leave it in a condition that builds equity into the property rather than decrease value. Singularly the most important part of your real estate experience should be to find quality tenants. The ideal situation is to build a relationship with your tenants where you provide safe, clean, attractive housing and they proctect your asset.

2. Screen, Screen, Screen
Check your tenants out like your are going into business with them because you are.

*Get references and call them. Past landlords not current as they might try to pass along a problem tenant with a good reference

*Photo copy their ID and keep it on file. If you can't spell their name you can't take any legal action against them.

*Know everyone who lives in the property and get their names first and last. If the person who is on the lease leaves but her roommate, who isn't stays, you are in a bad way legally. Get everyone on the lease again get ID.

*People look good and dress nicely but it doesn't mean they keep their homes that way. Visit your potential tenant at their current residence so you can see them on their home turf.

IF You have good tenants, TREAT THEM WELL.
They are like gold. Let them know that you appreciate what they are doing.

3.Treat Good Tenants Well-We give our tenants rewards for long contracts or for a house well maintained. If they have to move we try and help them get into one of our properties in their target location.

Useful Links:
REIN-an incredible group of investors who together own over $1 Billion in Canadian Real Estate
Landlord Source Center-a lot of resources for landlords including a bad tenant list.

If house prices go up then insurance prices will go up. As the Japanese say "Shoganai" which translates to "It can't be helped" or "There is no ginger" ( I am referring to the former not the latter)

I guarantee you that you would be much more upset if something happened to your home and your insurance company only covered to last year's values.

Taxes and insurance costs increase when your property value does. Think about the $82,500 you made last year and weigh it out.

A helpful tip:
"Karen Hopkins-Lee, chief underwriter at Canadian Direct Insurance, said homeowners can reduce their premiums by raising their deductibles -- from $200 to $500, for example -- and by updating roofs, plumbing and hot-water tanks." Full Article

ROARING ALBERTA FUELS RECORD MAY SALES!!
Yup, we did it again.

As I have said before, "Where Calgary goes Edmonton follows". Calgary is hitting new housing highs and Edmonton will follow the leader. CMHC released a forecast in May projecting that single detached homes in Calgary and area will hit $474,000 by the end of this year.

"Only Edmonton is forecast for a bigger percentage hike, with prices expected to jump $90,000 to $340,000 by the end of this year, up 35.5 per cent.

"We (in Alberta) have the strongest economy in the country," Vinay Bhardwaj, manager of market analysis for the prairies region of CMHC, said.

"We have virtually full employment ... just about everybody in our province who can work and who has a skillset has a job," he said, noting that makes people more likely to consider home ownership. "On top of that, you have people who are moving here."

Although Alberta has been known for its boom or bust cycles, there is little expectation of a major correction that would see housing prices collapse."Click Here For More

Good time to get into the market? Strong Yes!

Now instead of furtively trying to get into you side door basement suite apartment, you can enter your home like any full fledged member of society. Well soon anyway.

Edmonton is finally moving ahead with making basement suites legal in most residential areas of the city. Although illegal, many many people had them and just tried to hide the fact that people were living under the stairs.

"An estimated 10,000 homeowners rent out suites in their homes, but the majority are illegal. For the plan to work, thousands of existing illegal suites would have to conform to new zoning rules."

A Few Things To Keep In Mind:

*Edmonton is SERIOUSLY pressed for housing. It is so bad that even engineers can't find a place to live

*Just like in Prohibition if something is illegal, there are no rules to keep unscrupulous people from exploiting the situation - renting any hole under their house to people desperate for housing.

*Fire codes, points of access and egress and ceiling heights may not be up to standard; endangering lives.

Legalizing basement suites and standardizing them will open up a valuable source of housing for people who desperately need it. The main point is to bring the suites that are not safe up to an acceptable level of safety for their occupants.

"We need these affordable suites; we need the secondary suites approved so that they can come into the market at the fastest possible pace to assist us in the housing crisis that we're facing." Read Full Article

Edmonton prices are slowing for a mini plateau, but that doesn't mean that the prices are going to fall. In fact, Edmonton is still on track for it's 2nd best year on record. In April Edmonton led Canada with a 4.4% increase for the price of a new home.

"A tight housing market coupled with rising materials and labour costs powered Canada's largest increase, of 4.4 per cent, in Edmonton, the federal agency said.

Edmonton also led the country with the largest 12-month increase, at 40.5 per cent." Full Article

This comment came from a disgruntled Edmontonian. I planned to email him directly but Dustin's email address was a dud.

"Dustin's email: Your "real estate investments" are going to put me on the street. Unfortunately, real estate has now become something that only investors can afford. I am a professional engineer making good money and housing in Alberta is simply unaffordable. I have absolutely no idea how it is affordable for a grocer or the rest of the working class to afford a home. Why not focus your business on helping people find affordable housing regardless of socioeconomic status? Your greed disgusts me."

Hello Dustin,

Thanks for your email.

I know how you feel about the rental and real estate market in Edmonton and Calgary, it is tough!

But, I think your impression of what we do is unclear.

We help people. We're the problem solvers that help folks moving into Alberta from other provinces, people who live in our cities, and others who need housing find a home. We provide, safe clean and affordable homes for people of all incomes, especially people just starting out or having financial difficulties.

In fact, we're active in helping the city come up with solutions to offer more housing and suites in the province. That way we can ease the pressure to renters and prevent unruly landlords from jacking their rents up $400 per month. We're the guys that are trying to stop the excessive rent hikes.

We help many folks of various income brackets and social classes invest in real estate too. Many of these people are looking for a way to grow what money they have and by investing into real estate are able to afford their own homes when they couldn't otherwise do so.

Another way we help out and other groups of investors do is by helping Habitat for Humanity. In fact, a group that I belong to raised of $65,000.00 to build homes for underprivileged people in Edmonton. Perhaps you'd like to get active and donate yourself?

Habitat For Humanity

Lastly, I think you'd be surprised to see the affordability of Alberta at the moment. Please go to RBC and take a look. Housing prices are actually quite affordable for many people despite the increases.

Thanks for your email.

Sincere regards,

Todd Millar.

"Japan Canada Oil Sands Ltd. (Jacos) is pressing ahead with a three-year seismic and delineation program to drill more than 100 delineation wells and shoot over 65 square kilometres of new 3D seismic data at its lease in Athabasca's oilsands."

The efforts will be the first step toward setting up a commercial venture with capacity of up to 35,000 barrels per day -- and which ultimately could help the oil starved industrial giant meet its demand for energy." Full Article

The move was made to allow Jacos to diversify away from Middle East Oil.

So far France, China, Norway, the Middle East, America and now Japan have shifted either millions or billions of dollars to get into Alberta and the oilsands. They know this is where the next big supply of oil is coming from. Why not put your dollars in with the "smart money"?

Not only prices, but sales.

"Edmonton-area real estate sales through the multiple listing service hit $1.2 billion in May and $4.3 billion for the first five months of 2007."That's more than the entire year of 2005."Full Article

So, yes, things are really moving in Alberta. There is a large demand for housing in that is not going to slow down anytime soon.

Don't think you have missed the boat, though. The Edmonton Real Estate Boom isn't over in fact it is just beginning.

Watch What You Say About Your Competitors

"It’s easy to admire Apple’s stylish TV spots, which personify the Mac as a smart hipster bemused by the luckless PC’s endless problems. The ads highlight a Mac’s pros and a PC’s cons with irreverent glee and—some might suggest—a degree of smug self-satisfaction.

Apple can get away with it, but not many companies can take on the “leading brand” with such panache. Before using marketing dollars to call out your own competition, blogger Spike Jones has some advice: Don’t. Why?

* You’re spending your money to highlight a competitor’s features and benefits. Even worse, if you mention the company by name, you’re reminding your target audience of other options.

* It looks like you’re nervous about the competition. Small companies send the message that they’re being trounced by the big boys and larger companies give the impression that they’re losing market share. In either case, you lose. Potential customers will assume you feel threatened for a good reason.

Another point to consider: No company exists in a vacuum. Jones claims, “People are savvy. They shop around. Compare on their own. And, above all, ask their friends what they think."

The Po!nt: Dissing the competition might do you more harm than good, and the cost of doing so comes straight out of your marketing budget.

To learn more, read Spike Jones’ post at MarketingProfs Daily Fix.

If you own a home or investment properties in Alberta you made $82,500 last year. That is $226.03 per day.

"Alberta's average resale price of $359,640 was up 29.8 per cent over the April 2006 figure — the biggest percentage increase among any province. Put another way, that means that the average homeowner in Alberta made $82,500 on paper simply by living in their home over the past year." Read More

The amazing thing is in Alberta housing is still affordable. Sure it is harder to get into the market but compared to Vancouver, where an astonishing 73% of the local average household income is required to get into a two storey home and condos require 35%, there is much better affordability.

If you are worried that Alberta's hot economy will freeze any minute - don't. Taking into account the $100+ Billion of smart money investmented into the province, economic growth rivaled only but China and immigration numbers that are leading Canada; this province is in for a long hot economic run.

IF Alberta was only about oil the above graph courtesy of www.Rigzone.com should quell your fears. We aren't even at the beginning of the big increase in oil production. Alberta has an incredibly diversified economy, oil is big, but other industries like nanotechnology will help keep the boom alive.

"Strathcona County’s manager of economic development says there is still at least five to eight years left in Alberta’s red hot economy.
According to Gerry Gabinet this cycle will continue for several years because of the huge amount of oilsands investment in Alberta as well as in Strathcona County.
“We are now more of a player in the world marketplace than we were before,” said Gabinet, noting the recent investments of huge oil companies like Statoil of Norway and Total of France."

"When this economic phase ends, Gabinet said he doesn’t believe it will be a huge crash.
“It’s not going to be a downturn but a levelling off of activity,” he said.
Gabinet said he sees it more of a “plateau” as the prices for things like real estate can only go so high.
He said the levelling off won’t be a bad thing, when it finally does come around.
“We see it as a breather. All this growth has happened and we’ll have a chance to catch up on all the other projects,” he said."Full Article