Edmonton Real Estate Investor: January 2010

If I've heard it once I've heard it a lot - the Olympics will increase sales in real estate. In Vancouver and surrounding areas there are those hoping to sell their homes during the two week sporting event.

They imagine that when millions of people come from across Canada and the globe to watch the Olympics they will fall in love with Vancouver, it's easy to do, and want to own property there.

Hunting for the Olympics Bounce: Any Evidence in Real Estate a new report out of UBC Sauder School of Business shows neither a positive nor negative impact from the Olympics on the value of real estate. This report focuses on cities in North America and Australia.

After living in Japan for ten years I did hear a lot of how Nagano was in serious debt from spending for the Olympics but no news of a real estate increase.

"If (the claim that the Games is an engine of economic growth is) true," the report states, "real estate in the host city will become more valuable. In this study we look at housing markets before, during and after a city hosts the Olympic Games to see if there is any evidence of an Olympic bounce through an increase in house prices.

"We find none.

"However, in contrast to the shrill warnings of the anti-games Cassandras, we also find no evidence of a downturn or slowing in price growth following the Games."

Instead they suggest the games might just be about enjoying excellence in the world of sports.

Check out our updated Why Alberta page. One easy location to get all your Alberta economic, housing and forecast information.

All new pdfs from 2009 and and as recent as January 2010!

"Alberta is blessed with an abundance of natural resources—agriculture, energy, forestry— which have formed the foundation of our province's thriving economy. The Alberta government has built on these strengths by creating an economic plan that can withstand market and resource volatility. The government has also created a positive business climate by developing a competitive tax system, encouraging investment, and empowering Alberta businesses to compete around the globe. The result is one of the world's most vibrant and competitive economies." March 2009

We've been able to turn the credit crunch into a positive way to give our joint venture partners more cash flow and less worries. We suggest that people move their capital into hard assets, like Alberta real estate, that produce income rather than sitting on funds out of fear of losses.

Three points to take into consideration:

1. People feel that the Alberta real estate market is too volatile but they couldn’t be further from the truth. It’s probably the most stable market in Canada. Fear that we'll see an American type meltdown is unfounded.

2. Market timing is for speculators. When you buy a quality piece of real estate your profit begins from day one. You’re not trying to time the market but you have an asset where tenants are paying down the mortgage and giving you passive income.

3. If you buy your property for cash flow and equity then take appreciation as a welcome bonus you can offset the losses in paper assets. Slowly the market is seeing appreciation again, you will get all three profit points.

If you analyze and recession proof your real estate, your long and short term investment plans and stay focused on the end result; your real estate portfolio will be a rock solid fortress that can weather any financial storm.

I missed this video ( video is a little wonky)because I was looking at Mt. Fuji on December 31st. As usual Don R. Campbell gives great advice for anyone interested in the Canadian real estate market.

His advice, "Market timing is a fools game." He promotes value investing. Looking for areas where you get good cashflow and good R.O.I. It's not easy to find these areas without a significant amount of research.

Real Estate Pitfalls to watch out for:
Forestry or logging towns in Canada - the industry is not doing well but may rebound in 2012-2013
Areas in the US - there are still many sub-prime mortgages coming up and the economy will remain weak for the next few years.
Pre-Sale Condos - it's not really investing it's speculating. If you line up and pay an agreed price for today's market on a product that isn't built yet it's too risky.

The Alberta website is an incredible source of information regarding everything from the province's economic forecast to investing to relocating there. For investors it provides an excellent resource for decision making.

Recent updates:
Alberta Weekly Economic Review - Some points include Alberta's inflation remains low, steady manufacturing growth, a slight decline in sales figures and Alberta leads in population growth

January 2010 Weekly Economic Review -"See monthly and quarterly indicators on the performance of the Alberta economy, and comparisons to other provinces, including":

agriculture
bankruptcies and incorporations
domestic trade
energy
exports
housing
international travel
labour force
manufacturing

This is the final part in our 4 part series Fear and the Investor. If you haven't yet go back and read Types of fear, Get educated and Get into action.

"Inaction breeds doubt and fear. Action breeds confidence and courage. If you want to conquer fear, do not sit home and think about it. Go out and get busy" Dale Carnegie

Make your plan and work back from it. First a 5 year plan, then break it down to 1 Year, then 1 month and then one day - today. These are your baby steps towards running.

I didn't say all this was going to be a walk in the park. In an upbeat market, there is less to fear. In an unstable market your biggest obstacle is also your greatest advantage - your mindset. Once you have adjusted your mind for success this new psychology will take over and guide you. Every supposed failure holds a success within it, as long as you learn from it. The better educated you are, the easier it is to identify potential risks and take advantage of opportunities and by doing that you'll lead a happier and more relaxed life.

Many folks get stuck before they start in the analysis-paralysis stage. Don't let that person be you.

No one ever bought a property they didn't make an offer on!

Most importantly set a time to get into action, i.e. within the next 60 days, after reading 2 books and contacting 2 investment professionals etc.

5 Great easy "get-started" actions:

1. Get a book on investing from the library.
2. Call a investor friendly Realtor and ask to buy some of their time and knowledge for lunch. Not everyone will do this but it's a great insight into the market.
3. Follow properties on the MLS learn prices for areas and property types
4. Work the numbers on a property. You can pick a property online and see how different scenarios affect cashflow, mortgage payments and sale.
5. Listen to free online or tele-seminars - they are everywhere!

Set a time and DO IT!

There are a million coulda, woulda, shouldas out there that spend their time pontificating about the market or why things won't work out. Shut out these negatrons or risk being pulled out by the tide of mediocrity.

Happy New Year! 2010 has been off to a running start. In Japan it is the year of the Tiger and you can feel a tempered optimism in the air. I say tempered because the Japanese are a fairly reserved people. Unless of course the sake is flowing and then all neckties become headbands as the warriors P-A-R-T-Y but that is another story.

I hope that your New Year is off to an amazing beginning. I was blessed to be able to watch the first sunrise of the New Year from the roof top of my good friend's 3-storey home and company. I stumbled up there early and was rewarded with the silence and stillness of a perfect winter day. In fact it was more like night as a huge waxy yellow moon hung off in the distance. It took me a while to make out the "Mon" peaks of the temple walls below.

My eyes were drawn down in that direction when an old man of about 90 teetered into the garden riding an antique bicycle. He zigzagged along the temple's pathway. He was laden with bags of gifts to welcome in the Gods. By this time I had jammed my frozen hands under my armpits so that I could keep enough blood in them to open the rooftop door and get back down after sunrise. And sure enough there it was. At first just the teasing rays appeared along the roofs and houses, then the full blown orb bobbed above the cityscape. I gave a quiet prayer for the year past and the one ahead, and turned to go back down. As I did I was astounded to see Mt. Fuji glowing behind me, luminescent with the sun glinting off the snow.

Later in the morning we all went up to the rooftop together and looked about. The old man in the temple below had been joined by five or six of his buddies. As it turned out not all of the gifts were for the Gods. Within the bags a few mikan oranges and sake had been tucked away for his friends.

I needed alarm to get up early on New Year's day. Today and yesterday, however, I woke up about 5 minutes before my 5:30 am alarm call. Why? Well, I gathered some info and it turns out that humans have an internal mechanism much like honeybees do. Combined with Pavlovian conditioning and "circadian rhythms", our body is able to get up before the alarm.

You are probably wondering why am I talking about this. Well, back on New Year's day we did our annual goal setting for the year. It is a basic overview of the four categories in our life and business that we set out to focus on for the year ahead. It's really much like setting an alarm clock isn't it? You make a plan, imprint it upon your conscious and allow your subconscious to drive it. With action and attention, you'll hit those targets. You decide on a time, set the clock and wake up when the alarm rings.

Revisit your dreams and goals for this year and see where you can add attention and let your natural energy work for you. It might be that extra bit more that helps you hit the ball out of the park in 2010.

Bank of Canada won't raise interest rates to cool housing - "Existing-home sales are up 73 per cent year-over-year, while prices have climbed nearly 20 per cent as buyers take advantage of historically low interest rates to finance purchases.

Those who fear a bubble worry that many people are taking advantage of cheap money to buy homes they wouldn't be able to afford once rates rise, leading ultimately to a crash in prices.
Mr. Lane said the bank understands the concern, but it uses its lending rate to keep inflation in check for the whole economy and the housing market is “only one of several factors” that influence inflation."

Those who are riding the variable rate can pad their bank accounts a little longer. Keep your eye on the interest rate though and lock in before the ride starts keeping you up at night.

In the Edmonton Sun article about a decade of change:

WHY DIDN'T I BUY REAL ESTATE?

- - Average Edmonton house price, 1999: $120,254

- - Average Edmonton house price, 2009: $318,482

My thoughts exactly, well, except I DID buy real estate over this period and helped many other people invest easily. Over the long run owning a quality property in a stable market with strong economic fundamentals is like having your own perpetual money machine.

Theodore Roosevelt said it precisely:

"Every person who invests in well-selected real estate in a growing section of a prosperous community adopts the surest and safest method of becoming independent, for real estate is the basis of wealth."

It's only 15 days into January of this year but the feeling everywhere is of positive expectation, the economy looks great, the real estate market is balanced and Edmonton is preparing to go off.

So tell me again, "Why don't you want to buy real estate?"

2010 is the year to prepare because the oilsands are going to really bounce back by 2011. Enbridge has planned $10.2B in oilsands projects between 2009 and 2013.

"THE GLOBAL recession has, at least temporarily, put the brakes on for Canada's oil sands industry. But it can bounce back, says a November 2009 report from the France-based International Energy Agency (IEA), if environmental and economic challenges are met.

Canadian oil sand resources are located almost entirely in the province of Alberta, occurring primarily in three areas - Peace River, Athabasca and Cold Lake. According to the Government of Alberta, current capacity is 1.757m bbl/day, up from 2008's 1.2m bbl/day - itself a doubling of 2000's capacity, and a tripling of 1990's capacity." Read More

"Because of the disappointing results in the US and the expansive reserves in Canada, the technical expertise and financial resources for oil sands development has shifted almost exclusively to Canada and [they] are likely to stay in Canada for the foreseeable future," Marc Humphries, energy policy analyst for the US-based Congressional Research Service.

In part one of the Fear and the Investor series we looked at the different types of fear. It's important to remember: F.E.A.R. - False Evidence Appearing Real

So how do you battle FEAR?

#1 Distinct Advantage - Get Educated

The best thing to do in today's market is to learn how to take advantage of it. Not everyone around you is losing money and if they are - run far away from them. Get online and search for an investment book that focuses on the fundamentals of investing. You don't need to buy an expensive kit or attend a $10,000 seminar. You must surround yourself with a knowledgeable team and follow a proven system.

The most important key to investing in real estate now is to target your area and invest where the economic fundamentals are strong. Buy for cash flow in a city with a strong future and hold for the long term. Find someone who has a proven track record of investing in real estate and ask them how they do it. Listen, write it down and do it.

Other options include investing with Joint Venture Partners and investing in REITs. Often teaming up with a company or individual who knows the market can leverage your time and knowledge further, faster. Always do your due diligence on the person and the properties.

For detailed strategies of how to find the right property and choose the right area read these How To Articles.

"The real estate market in Alberta appears to be on the rebound, experts in the field say.

House sales will increase as by as much as 10 per cent in many communities this year, the Canada Mortgage and Housing Corp. says, with prices in Alberta predicted to rise between four and five per cent.

That means buyers and sellers will be on a more equal footing, some realtors say.

"It was a buyer's market going into the year — in sort of the fall area it had slipped into almost a seller's market," said Gary MacLean of Remax.

However, he said, current conditions suggest the market has settled considerably. "Nobody has an advantage either way, buyer or seller."

Read More Click Here

We are born with only 2 fears in our inherent make up; the fear of falling and the fear of loud noises. Their purpose is to keep you alive by alerting you to danger. All other fears are learned. Fear is often connected to pain e.g. some fear heights because if they fall, they may suffer severe injury or even die upon landing.

Ok, so you're not about to get your leg torn off by a rouge shark and bleed to death on a nameless beach in the tropics. But there are a lot of scary things going on in the world today; not surprisingly, there always have been and always will be. Now, let's break down a few of these fears in relation to investing.

3:AM-Keep-You-Up-at-Night-Pain-in-the Gut-Fears:

MONEY

Losing all your money -Becoming destitute or at least losing what you've built up

having enough money to invest- Scarcity, afraid that you can't get started

Not being able to enjoy retirement -Having to eat cat food not only for breakfast, but also for dinner
health costs -Can't afford to go to the doctor

Stock or Real Estate crash -Have all your savings wiped away

Losing all your money -Being taken advantage of by a smooth criminal

Inflation -Rising costs and taxes are pretty much inevitable

KNOWLEDGE AND EMOTION

Fear of not knowing enough -Afraid you'll make the 'wrong' choice so you do nothing

Fear of taking action -Scared if you do, scared if you don't

Fear of failure- your friends, family and maybe even you will see yourself as a loser if you don't make it

Fear of the market- the economy is awful right now, how can I ever expect to make a profit? A.K.A 'I don't know the market well enough', 'I'll buy at the bottom'

SUCCESS

Fear of succeeding- Fear that you will accomplish all that you set out to, but that you still won't be happy, content, or satisfied once you reach your goal

Fear of losing what you created- your accomplishments can self-destruct at anytime.

Ah New Year's resolutions... Are you still sticking to yours? Every year I swear I will stop biting my nails. They are horrible. I've tried everything from bad tasting nail polish to bright red nail polish. It never works and soon I'm catching myself chewing away while watching a movie or deep in thought. Why are some goals so much harder than others?

Michael Neill - "If superman needed a coach, he’d hire Michael. In this action-packed hour, Michael teaches how to succeed from the inside out and have fun doing it!"

You can listen to Michael Neill live on streaming radio on Hay House Radio

From his newsletter:

When your goal is loaded...
• Getting fit isn't about being fit and losing weight is no longer about weighing less (if indeed it ever was) - it's about "overcoming your essentially lazy, good for nothing nature and proving that you CAN do it" or "if I lose weight, that will show that I'm 'good enough' to attract a man". 

• You don't just want to have more money (though that would be nice too) - you want to prove to your spouse/parents/colleagues/self that YOU do have what it takes and YOU will triumph in the end. 

• Writing a novel isn't about telling a story, it's about "being an author" or "fulfilling your potential"

Who knows why goals are loaded? Maybe it has something to do with the upper limit problem...

Anyway Michael goes on to say that if you have a loaded goal just let it go. Don't focus on it as it takes away from all the other wonderful achievable things you could be doing. Let it sit and you may work it out all without working on it! Cool!

This article from the Hamilton Spectator (my hometown) is about blame. How it's being dished out everywhere. I can see the writer's point....

It's amazing how many times I hear "somebody made me do it", or "it's Mr. X's fault" and this isn't in the schoolyard.

In my business working as the buffer between the investor and the real estate investment, the buck has to stop with us. If there is no rent the excuse doesn't matter. There either is rent or there isn't. We have to explain why we didn't manage the property manager or the tenant.

Being accountable for our actions and how we view and think about things is the first step to controlling our life and being more successful because every time it isn't your fault you miss a golden learning opportunity.

The best quote I've heard about this recently is:

"When you point the finger at somebody there are four pointing back at you."

Try it - it's true!

It's not just that Cher designed it but that she did it exquisitely. I love this property. It's perfect.

"A seamless blend of architecture and interior design, the strong, clean lines and calming, natural color palette are a nod to the Asian influence which has been a stronghold in Hawaiian design since the 19th Century. Rich, dark woods are contrasted with elegant fabrics of varying textures and accents of whites, grays, and blues. Each custom art piece and lighting fixture is distinct and substantial. Each accessory has a sense of purpose. The result is an elegant mix of formality, drama, and simplicity."

What a decade. It started with Y2K and ended with a global recession. It seems 2010 is bringing new optimism in it's wake and the news is reflecting that.

Alberta poised to lead in growth - "Following a sharp economic contraction this year, Alberta's economy is forecast to be one of Canada's fastest growing provinces in 2010.

Scotiabank economist Alex Koustas predicts that in 2010, the energy province's GDP will grow by 2.9% after shrinking 2.6% this year.

Only B.C., at 3%, is forecast to grow at a faster rate.

Come 2011, Alberta will be firmly planted ahead of other provinces, thanks to a growth rate of 3.5%, Koustas said."

Housing market rebounds - "It turns out, the Realtors Association of Edmonton president wasn't optimistic enough.

"We predicted residential sales of 15,550 this year and exceeded it in early October," Ponde said on Tuesday as the group released its final month of Multiple Listing Service figures for 2009.

"We anticipated that single-family prices would end the year at $352,000 and condos would be at $222,500."

The average prices turned out to be $364,032 and $240,322, respectively."

Real estate market expected to remain strong in first half of 2010 - "However, the Canadian real estate market has been much quicker to recover than its American counterpart, in part because of a more stable banking industry, historically low interest rates and improving consumer confidence.

Royal LePage executive Phil Soper says Canada's real estate market enters 2010 with "considerable momentum from an unusually strong finish to the previous year."

The stimulus effect of low borrowing costs has contributed to a sharp rise in demand that has driven activity to new highs, he said in a statement.

-Edmonton: Detached bungalow, $299,286 (down 0.7 per cent); standard two-storey home, $340,557 (down 1.2 per cent)"

This was an ad posted on Ontario's Kijiji site. A one day rental for a house party. Entrepreneurial idea and hey I might do it if the damage deposit was big enough. Heck you can even go to the party - sounds "win-win" to me. Love the smokers and tokers part! They'll probably be to hungry to destroy anything.

Wanted: House Needed For 1 Day

Date Listed 02-Jan-10
Price Please contact
Address Scott St, Whitby, ON, Canada
View map

I cant throw a party at my house, but im willing to pay someone to use their house for a party. they can be present, there will be a list, and people will not be allowed in if they are not on the list. if you want you can bring your own people to this party. it is my bday and i just wanna throw a huge party. house should have a backyard for those smokers and tokers.

What do you think rent or don't rent?

After a recent conversation with a potential client, I thought this topic was good to post here. He mentioned that his mentor told him to only buy 3-D (death, divorce, debt) motivated properties.

Many of the properties we buy are undervalue and most of the reasons fall under the 3-Ds as it is a broad blanket. In real estate you call it the 'grave dancers' people who only target sellers in hardship. I'm not a grave dancer but I do look to help sellers in hard times out of their situation with dignity and yes, that sometimes means that properties are purchased under value.

Not all seller's initially jump out and say 'Hey, I'm getting a divorce and I'm totally broke- take this property now!' Some Realtors may put that spin on things, but it is not always the case.

When you train your team to ask the right questions you'll uncover these and other opportunities.

As an investor you must be active in finding your deal, not waiting passively for it to come to you. If you are only hunting the 3-Ds you miss other opportunities or pass over what appears not to be a 3-D deal only to realize later it was.

For example, a mortgage broker I know has a property that he's been trying to sell for a few months on MLS. It's priced right, but there is a lot of competition for that product.

When I spoke to him about it he told me the listing was his, he's knock the price down $15K as he was just diagnosed with a serious health condition and wants to simplify his life. He doesn't want to blast his personal life out there to anyone and let the vultures set in.

One last and important point, being active in finding your deal means that you look at 100-50-25-10 properties in your target zone. You cull the numbers down to say 10 properties based on your investment criteria (profitability). Out of that 10 you may have 1 motivated 3-D seller and 2 regular solid deals. You then work the deals by priority. If you were only targeting 3-Ds you might have missed the other 2 viable opportunities. See, you still get the 3-D deal AND you get 2 more from being active.

It's really a chicken or egg situation as you could lump most motivated sellers in the market today, as motivated by debt. Either current or impending. The first two Ds usually cause the last one.

If you were holding rental property in Edmonton 2009 is not a year you will forget for a while. It's nothing new though just another trough in a city where up and down cycles come regularly like trains.

As prices on properties dropped more and more rental properties came on the market. Many investors were left holding properties that weren't selling at the price they hoped for. They had wanted to flip but market forces changed. Some of these impromptu landlords just wanted to get the money sucking property rented.

What do you do when the market is flooded with properties that don't sell? You rent for cheap! You offer stuff! You beg you plead and you cajole renters to get into your suite. The mortgage has to be paid right? I used every technique I knew to get rented and then some new ones too. Luckily we've seen this all before and were able to get get rented. For new investors it's a hard initiation for your first few properties.

Edmonton shuts down over the winter. It's one of the coldest places on earth and no one is going to be hauling a sofa around no matter how much beer they get.

It's only 5 days into the year and things just seem more positive. Consumer confidence is higher and hiring across Canada looks very optimistic for 2010.

High vacancy rates and price drops make for motivated sellers. As you become a more season investor these are the exact dips in the market you look for to increase your portfolio.

It takes mettle when all the news is bad but mettle IS what it takes.

The Sugimotos who own a few posh wine bars in Ginza always know the best places to get a gourmet meal.

This year they introduced us to the concept of a fresh tempura bar. We sat on the top floor of a luxurious hotel and watched as a tempura chef prepared fresh hot tempura in a brass vat right before us. The Kaiseki meal was full of pleasant surprises as each new dish was a work of art for both the tongue and the eye.

The last picture? Deep fried shrimp head and tiny crabs ~ I couldn't eat mine and was properly scolded.

What a great holiday! It seems as though everywhere there is more optimism for the next year. We had such a wonderful, relaxing time over our winter break.

One of the highlights was a trip to a 300+ year old resort hotel Ranryo in the Nikko mountains. It's the second year in a row we've come here and it's just a glorious place to relax and really zen out.

The meal was awesome but hard to cook with a squirmy one year old.