Edmonton Real Estate Investor: December 2008

What an interesting time we are living in. With news headlines hammering us everyday it's tough keep upbeat and positive. I don't need a crystal ball to predict that next year will continue to be a time of uncertainty and fear, at least until the economy finds its feet and investors gain confidence.

But, it's easy to sit back, criticize and succumb to the mass mindset that the world is ending and that there is no hope in sight. It's always easier to commiserate than to get into action and make a positive change. And that's especially what this New Year should be about. Commit yourself to 'Turn Crisis Into Opportunity'.

We all inherently know the old adage of 'buy low and sell high' but throughout time the general population retreat, hiding, laying curled in a ball or just plain tharn. And in Buffet's words "A simple rule dictates my buying: Be fearful when others are greedy, and be greedy when others are fearful."

As you know there are a lot of great deals out there. That's why we're moving full throttle forward and taking advantage of this downturn to add quality, cash-flowing properties to your portfolio. We can negotiate better terms and stay the long-term course, avoiding as many of the bumps along the road that we can. 2009 will remain gloomy, but I think we'll start seeing light and stability towards the end of the year and throughout 2010.

Here are three simple actions to enter the New Year with:

1. Stay Positive and Be Grateful: Its so simple, but yet so powerful. Choose to start your day with a good attitude; make a habit of forcing yourself to find the good in any perceivably bad situation. You'll be amazed at the results and opportunities you'll find. Be positive and effective in your speech, actions and thoughts. Be grateful for what you've already achieved. It may be something major that you've done or something that you take for granted everyday like the beautiful tree outside your home, the taste of a delicious meal or the fact that you have a healthy body and the ability simply to read this email.

2. Redefine Your Goals: Take the time to really boil down to the essence of what you want to achieve in the New Year and beyond. Look at your business, health and family goals. Force yourself to commit 110% and move forward with speed and persistence. Make monthly, weekly and daily goal lists to help you stay on track.

3. Take Action: Realize the opportunity before you. Resolve to learn 3 new skills and employ them systematically moving towards your goal. Take your goals from passive to active. If your goal is to increase your monthly income by $3000, write down and implement the actions needed to reach that goal. That may be to start the due diligence on three properties, research high dividend stocks to invest in, reduce costs at your business while increasing sales and revenue.

I hope that you've enjoyed the Super-Sized version of this month's newsletter. We'll be spending the holidays playing in the snow from 12/27-1/5. The next newsletter will be January 15th. Wishing you and your family a joyous Holiday Season and a very successful 2009! Thank you and warmest regards,

Todd and Danielle Millar-

P.S. Stay ahead by signing up for Alberta Oilsands Real Estate Investor Newsletter for all your cutting edge market news and information.

P.P.S. Wonder about the fears that kept others out of the markets? I don't want to invest now! Check this out.
P.P.P.S. Don’t forget to visit our website and take advantage of the Resource Tools and product section including REIN's #1 real estate books and Quick Start home study sets at a discount. Get your copy of the Canadian Success Stories book and the Top Ten Alberta Towns for 2008.

You can get a mortgage free house in Edmonton if you have $11 and a good enough reason why you deserve to own it.

A Edmonton lawyer/investor hopes to cover the cost of renovating a 4 bedroom house by receiving 25,000 entries for a contest to win the previously foreclosed property. It may be an $11 lottery ticket but the chance to win a home mortgage free is a great piece of marketing and a wonderful idea.

Visit The 11 Dollar House website and Facebook page.

Sorry only residents of Canada can enter!

....another opens.
I read an article today on how Hard Times Generate Entrepreneurs. Basically during an economic crunch we have to be more innovative and aggressive. Focus on a niche market within your customer base and serve them well.

"Small business have to adapt or die.So you have to look at your customer base, modify who you cater to if it's needed, and cater to that demand. . . . People will still need certain services, and the smaller the niche you serve, the more successful your business can be." Vance Gough, instructor of entrepreneurship at Mount Royal College's Bissett School of Business

In our case that would be helping people, who don't have the time to invest or to learn how, create wealth in Alberta oil sands real estate. It's pretty focused - it probably could be more focused like "... helping 30 - 50 year old professionals..." You get the idea - clarity is key.

If you aren't sure who you would be best serving look at your business and see where most of your revenue comes from. Pareto`s Principle (commonly known as the 80/20 rule) applied here would state that 80% of your revenue comes from 20% of your clientele or actions. Pinpointing that 20% would greatly increase the money you earn and decrease the time you spend trying to earn it.

Expert, Specialist, Veteran: Partner with a JV Commando

Ready to get out there and invest in cash flowing properties?

It's a bit of a jungle out there with stock markets going up, down and all around. I prefer to negotiate the less treacherous jungle of real estate on a daily basis; living in the trenches, crawling on my belly to source out the best deals for my partners both local and abroad.

Like a precious civilian life, I keep your cash and investment safe. I will lead you through the minefield of investing. Warding off the dangers of sloppy management, high mortgage rates and just plain bad deals. Being a veteran REIN member means keeping my partner's portfolio not just alive, but thriving in any market both hostile and friendly.

The bottom line is... I'm here to prevent you from any surprise attacks. I'm the kind of partner that if you were to get bitten by a poisonous black mamba, I'd suck the venom out and carry you 17 long miles on my own broken legs through the thickets of Lang Gon to safety... Well, you get the point.

Here Are A Few Ways You Can Protect Your Financial Fortress:

1. Invest in rock solid neighborhoods of Edmonton.Partner with a pro that has years of experience and a ton of happy Joint Venture referrals.

2. Own a great, headache free money making property where your partner takes care of all the details.

3. Maximize your capital by investing in properties that already have financing in place - financing that you don't need to qualify for.

Tactical Benefits That Put MORE Cash into your combat pants:

* Careful tenant selection - long leases in place

* Newer and already renovated properties - less maintenance cost

* Profitable from day one - each deal makes sense the day its bought

Current Property Target:

* 1987 Built

* 3 Bedroom home with attached garage

* Impeccable condition

* Great neighborhood with many high value homes

* Near not-yet-completed Anthony Henday Ring Road

* Highly rentable

Essential Data:

* Only $321K purchase price (other homes listed up to $363K)

* Your Estimated Profit: $55K

* Possession date February 28th

* Detailed Pro-Forma available

What Makes This Deal So Darn Great?

* You make an estimated $50,000.00 Profit over 5 years (16% Per Year)

* Low investment amount covers ALL expenses and down-payment. ONLY: $62K

* You can leverage your cash AND save your credit for future deals- ALL financing is arranged

* Low mortgage rate of 4.75%

* Rents for $1800

* Cash flow positive

* Less than 20% TOTAL down payment

* Completely 'Hands Free'

* Partner with a PRO in the KNOW: You get the peace of mind from our exceptional track record and experience

Partnership DEADLINE of January 30th/09

Wondering what to do?

I've already packed your parachute, all you have to do is jump.

Grab this quick and easy questionnaire and get started!

"Apparently KFC has come with a new bucket to support the new coalition: it will consist only of left wings and bums."

Wikipedia, the free online encyclopedia, is useful for checking facts on everything from historical events to rock stars to recipes. It's also a useful tool to research neighbourhoods where you are planning to invest. Pages like Neighbourhoods in Edmonton or Neighbourhoods in Calgary are excellent resources for your due diligence.

For example we bought a single family residence in Crawford Plains. I was able to research the dwelling mix, what types of housing are prevalent in an area, and what schools and shopping centers are nearby. This information is important to know for your tenants and for resale. I was also able to find major roadways and transportation hubs- which may positively or negatively affect resale real estate prices.

No, it's not an extra two zero mistake. The pooch palace will shelter a pair of Great Danes belonging to a surgeon in London, whose own luxurious house is to be constructed nearby.

"The three-room dog house (two bedrooms and a lounge) will be outfitted with temperature-controlled sheepskin beds, a spa, an expensive hi-fi system, and a 52-inch plasma television set.

Picture courtesy of The Globe and Mail

A retina scan at the entrance will enable the owner to keep out dogs who might try to pay unauthorized visits to the Great Danes. Closed-circuit TV cameras will provide the owner with round-the-clock surveillance of the dogs' comings and goings between their house and their adventure playground."

A retina scan? Too weird. Read the full article here

It's always a good idea to invest. Sure there appear to be many reasons not to and some of them huge, however, well placed investments especially in changing times produce profits.

Warren Buffet's philosophy is to buy stocks of companies he understands that have seen a decrease in their "real" value. It would seem that now with the stock market up and down there are many companies that are falsely low and are a great deal. The same holds true for real estate - take an economically sound region where prices are slightly depressed and you can find some great deals that will appreciate quite well. Edmonton, Alberta is exactly such a region.

Here is a list created by John S. Baen, Professor of Real Estate at the University of North Texas, of why people don't invest -- even though they know they should. I changed some parts to make it Canada-centric

Why People Don't Invest: 12 Humorous Reasons

They're already paying into Old Age Security Pension.
Their budget includes $20 per week for lottery tickets, which is bound to pay off soon.
They believe that inflation means their money will grow.
Old people don't eat much anyway.
They sit at home waiting for the Publishers Clearing House van to pull up in their driveway and deliver their check.
Their money is safely buried in the backyard.
Their rich Aunt Melba will die soon.
Little Matilda is sure to make it big in Films Canada.
They can cash in their Edmonton Oiler collector glasses when it's time to retire.
Their dot-com stocks will come back to life.
They'll write a book and live off the royalties.
They plan on marrying a young wife/husband when they're 60 and depend on their financial support.

..is the oilsands.

Although oil prices may be low now and sure you can say they have "plummeted" from the earlier high of $140/barrel to $50/barrel. The oil companies are not fazed, long term views make day to day oil prices irrelevant.

The oil sands are one of the biggest capital investment projects in the world, averaging $20bn a year over the past few years, and with more than $100bn of projects planned for the next ten years.

"It is the economic engine of Alberta and of Canada," "At this time of global economic turmoil, the one shining economic light in this country is the oilsands," says Alberta's conservative Deputy Premier Ron Stevens.

Although global economic worries have caused the price of oil to fall, the oilsands are still very profitable with and incredible 300 to 400 year production life span.

In fact by slowing down production investors, like me, are given more time to purchase and sell investment real estate in this incredible region. Instead of planning to sell some of my portfolio between 2010 I can extend the date to 2012 or 2015, pay down my mortgages further and receive a bigger pay out at the end.

Oilsands budget for 2009

Housing market hit by economic uncertainty - " A report out from RE/MAX today says the global economic crunch has made an impact on housing sales in major Canadian cities towards the end of 2008.

About 440 000 homes are expected to change hands in Canada this year, that's a 15 percent drop from record levels in 2007.

Here in Edmonton, just under 19 000 homes will have been sold by the time 2008 is said and done with. That would mark an 8 percent drop from last year's number of 20 437.

The average house price in Edmonton dropped only about a percent this year with the number sitting at $335 000. That number isn't expected to change in 2009."

After all is said and done the price of average house in Edmonton only dropped 1%. Think of your stock investments and how much they have dropped or rather plummeted in the last few months. Isn't it time to turn your paper assets into less liquid and volatile investments?

Alberta’s Government Fills the Province’s Labor Force Shortage with Temporary Foreign Workers - "Walk into a convenience store, coffee shop or supermarket in Calgary and chances are you’ll be waited on by a temporary foreign worker (TFW).

Though they come from many countries, they share one story: relocation for the chance to earn decent wages, and in some cases, the hope to reside permanently in Canada.

“There is a wide variety of TFWs that come to Alberta - from skilled laborers like welders and carpenters, to pipe fitters to semi skilled trades like cleaners. These are men and women from all parts of the globe,” says Avnish Mehta, Program Coordinator of the Calgary Catholic Immigration Society’s (CCIS) Temporary Foreign Worker Integration Advisory Office."

This is why Edmonton's economy is so strong. When the temporary workers decide to reside in Edmonton they will either rent or buy. Your investment property will either be tenanted or sold. It's not a greater fool situation but one where you are offering a necessary product.

We can't/don't want to go abroad this year with a 3 month old baby so we decided to spend our winter vacation in our prefecture in Japan. We are lucky because Tochigi is famous for onsen (natural hot-springs) and has many excellent and scenic places to soak in the healing waters.

As avid "onsen-ers" we have sampled some pretty fantastic baths in and around our home. This year we've found a special hotel to visit.

The Ranryo in Kawaji, Tochigi has a a history of more than 300 years as a spa ryokan and we were able to book a room there over the Christmas holidays. With traditional Japanese food like trout on a stick, winter vegetable hot pot and sashimi plus and assortment of excellent indoor and outdoor baths we hope to finish this fantastic year in style.

The best part of the story is we got an excellent rate. Since frugality is the new black we decided we were only willing to pay a certain amount of yen for this hotel. At first we were embarrassed to ask but once we did we easily got the discounted rate we had hoped for.

What's the lesson?
Be willing to ask! You never know what you might get by asking.

Tokyo ranks number one out of 20 Asian locations as less risky and having better prospects for real estate investors in 2009. The Urban Land Institute and PricewaterhouseCoopers report also states that financing will be the biggest issue facing the market. Another large problem is that the strong yen, which cause investment dollars to lose a lot of purchasing leverage.

One hundred yen buys $1.07USD, $1.41AUD and $1.28 CAD. You would be better off taking your yen and buying overseas, like in Edmonton, than using weak currency to buy property in Tokyo.

With everyone talking about the market and what it is doing, I thought I would look at how to most profit from the properties that you currently own. If your team isn't a smooth running machine then adding new properties to your portfolio may not be a good idea.

An investment team consists of Realtors, property management , insurance brokers, mortgage brokers, accountants, lawyers and bookkeepers. The best way to make your property run efficiently is to CONSTANTLY improve the way your team runs your properties. Reducing costs, effective marketing, bulk or discount rates and innovative thinking are all ways to fine tune how you run your business - because that is what each property is, a mini business and the tenants are the customers.

Cutting costs isn't the only way to do this in fact doing so may cause more trouble than it's worth. Although a bargain shouldn't be passed up, many services are worth what you pay and decisions should be made on the quality of service not the price (especially true for legal advice).

Market to find great tenants and then use incentives to keep them happy, long term renters that equity building. That is a tenant who makes your property their home not a crash pad, a tenant who say, puts in a garden, finishes the basement into a hobby room or just keeps the place looking great. What incentives? A Christmas turkey or tickets to the movies... You decide what it's worth to keep them.

As your portfolio grows get bulk rates on anything you can. Buying carpet? Then buy one roll for all your properties this works with paint and any other DIY product. It keeps your properties uniform and that means less headaches for you.