Thursday, April 30, 2009

Rose coloured glasses

I was speaking to a potential investor this week and we were discussing the current economic state. He was mentioning job losses and uncertainty with companies, decline in manufactoring, etc.

I smiled.

That really bewildered him. How could I smile?

Where you see problems, I have trained myself to see opportunities. Low interest rates, consumer confidence (in sellers), this is an unprecedented buying opportunity.

True rental real estate is recession proof. Think of the Hierachy of Needs, at the bottom is food and shelter, the two basics needs. Residential real estate is a basic need. Commercial real estate is a bit more risky, because it is not essential.

Your rental property pays down a mortgage, puts some cash flow in your jeans and offers some tax advantages. In times of economic uncertainty, many people will hold off on buying a house for "better times" (there will not be a better time), this sways the supply and demand equilibrium toward the investor. More demand, for the same supply means higher rents.

My rose coloured glasses are telling me, that as an investor, now is the time to be buying homes and getting the most out of the current interest rate drop.

Tuesday, April 21, 2009

Eco-energy rebates

“Energy and persistence conquer all things”~ Benjamin Franklin

Dear Friend,

Over the past few years, the word “energy” has been heard frequently in the news. From issues of global warming and climate control to pollution and conservation efforts, we should all be aware of the importance that energy has on our lives. But one must ask themselves - What exactly is energy?

Energy is defined as the ability to do work and can be found in many different forms - chemical, electrical, thermal, radiant, mechanical and nuclear. Energy lights our homes, plays music on the radio, moves our cars along the road, airplanes through the sky. It helps our bodies grow and allows us to think. Fundamentally, our lives depend on energy and although we have exploitable reserves for natural gas and coal, those reserves are slowly running out. While we may have discovered renewable forms of energy such as solar and wind energy, it is important for us ALL to take precautionary measures in order to ensure that there will be supple amounts of energy for future generations. Therefore, energy conservation and energy efficiency are now more important than ever.

Energy efficiency, the use of technology that requires less energy to perform the same function, is the wave of the future. The Government of Canada as well as the Government of Ontario have each introduced several initiatives to help Canadians save millions of dollars in energy costs while contributing to a healthier environment. By making your home more energy efficient, you can help reduce high energy bills while improving comfort in your home, all the while helping to protect the environment. The Canadian Government’s Office of Energy Efficiency (OEE) as well as the Ontario Home Energy Savings Program have introduced several initiatives to help Canadians save millions of dollars in energy costs, while contributing to a healthier environment by retro-fitting your home.

The OEE`s ecoENERGY Retrofit Program which was launched April 1, 2007 and is scheduled to end March 31, 2011, provides financial support to homeowners, small and medium-sized businesses, public institutions and industrial facilities to help them implement energy saving projects that reduce energy related to greenhouse gases and air pollution.

By making your home more energy efficient, such as changing windows and doors or replacing your toilets, furnace or insulation, you can get big returns from the Government. Up to $10,000 to be exact. Factor this into your renovation costs and you can save a lot of money on potential repairs. And as of March 30th, 2009, for a limited time, the Honourable Lisa Raitt, Minister of Natural Resources, announced that grants for the ecoENERGY retrofit program have increased by 25%. Therefore, if you are thinking about home renovations, now is definitely the time to do it. For more information visit

In addition to the ecoENERGY retrofit grants, there is currently a home renovation tax credit (HRTC) which offers a 15% rebate (up to $10,000) on home renovations including finishing your basement or re-modelling your kitchen. That means that you can get up to $1,350 back from the government for repairs that will only add value to your home! For more information please visit

So get started because there’s no place like home!
But remember, the future is ours—we just need energy to get there!

Prime rate lowered April 21 2009

Bank of Canada lowers overnight rate target by 1/4 percentage point to 1/4 per cent and, conditional on the inflation outlook, commits to hold current policy rate until the end of the second quarter of 2010

OTTAWA – The Bank of Canada today announced that it is lowering its target for the overnight rate by one-quarter of a percentage point to 1/4 per cent, which the Bank judges to be the effective lower bound for that rate. The Bank Rate is correspondingly lowered to 1/2 per cent. The deposit rate - the rate paid on deposits held by financial institutions at the Bank of Canada - is left unchanged at 1/4 per cent and provides the floor for the overnight rate. Details of the Bank's operating framework at the effective lower bound can be found here.

In an environment of continued high uncertainty, the global recession has intensified and become more synchronous since the Bank's January Monetary Policy Report Update, with weaker-than-expected activity in all major economies. Deteriorating credit conditions have spread quickly through trade, financial, and confidence channels. While more aggressive monetary and fiscal policy actions are underway across the G20, measures to stabilize the global financial system have taken longer than expected to enact. As a result, the recession in Canada will be deeper than anticipated, with the economy projected to contract by 3.0 per cent in 2009. The Bank now expects the recovery to be delayed until the fourth quarter and to be more gradual. The economy is projected to grow by 2.5 per cent in 2010 and 4.7 per cent in 2011, and to reach its production capacity in the third quarter of 2011. Given significant restructuring in a number of sectors, potential growth has been revised down. The recovery will be importantly supported by the Bank's accommodative monetary stance.

The Bank expects core inflation to diminish through 2009, gradually returning to the 2 per cent target in the third quarter of 2011 as aggregate supply and demand return to balance. Total CPI inflation is expected to trough at -0.8 per cent in the third quarter of 2009 and return to target in the third quarter of 2011. While the underlying macroeconomic risks to the projection are roughly balanced, the Bank judges that, as a consequence of operating at the effective lower bound, the overall risks to its inflation projection are tilted slightly to the downside.

With monetary policy now operating at the effective lower bound for the overnight policy rate, it is appropriate to provide more explicit guidance than is usual regarding its future path so as to influence rates at longer maturities. Conditional on the outlook for inflation, the target overnight rate can be expected to remain at its current level until the end of the second quarter of 2010 in order to achieve the inflation target. The Bank will continue to provide such guidance in its scheduled interest rate announcements as long as the overnight rate is at the effective lower bound.

To reinforce its conditional commitment to maintain the overnight rate at 1/4 per cent, the Bank will roll over a portion of its existing stock of one- and three-month term Purchase and Resale Agreements (PRAs) into six- and twelve-month terms at minimum and maximum bid rates that correspond to the target rate and the Bank Rate, respectively. These longer-term PRAs will be issued according to the schedule released today.

Today's decision to lower the policy rate by 25 basis points brings the cumulative monetary policy easing to 425 basis points since December 2007. It is the Bank's judgment that this cumulative easing, together with the conditional commitment, is the appropriate policy stance to move the economy back to full production capacity and to achieve the 2 per cent inflation target. The Bank retains considerable flexibility in the conduct of monetary policy at low interest rates, consistent with the framework to be outlined in the Bank's Monetary Policy Report on 23 April.

Information note:
The next scheduled date for announcing the overnight rate target is 4 June 2009.

Canada wide housing stats

There is a difference between the Canadian and US housing market. We are trending in Canada away from a buyer/balanced market back to a seller market. See the video below:

Sunday, April 19, 2009

Open House - 180 York #1202

I am hosting an open house in the Byward Market this Sunday afternoon between 2 and 4 at 180 York #1202.

Hope to see you there.....

Saturday, April 18, 2009

Increase your Wealth (through Real Estate)

We are on the radio today, from 3 to 4. Turn you dials to 580 CFRA. Call in with your questions and have a chance to win some prizes!!!

Monday, April 13, 2009

Financial Sense

FACT: Did you know that 70% of Canadians renew their mortgage by simply signing their mortgage renewal statement without shopping for a better rate.

Wednesday, April 8, 2009

Water Damage

A $2.00 bidet valve's rubber stopper burst and left the water spraying in the house for between 2 and 11 hours. Remember to turn off your main water valve when leaving the house for periods longer than 24 hours.

Thursday, April 2, 2009

Streamlining the process

From our first meeting with Greg, we felt that he was very interested in determining our particular needs in an investment property, and that helped narrow down our search ... we were pleased that he was willing to spend time researching properties and presenting us with numerous options.

From our previous experience, we have found it very difficult to find a Realtor that is knowledgeable in investments, most just want you to buy something, but Greg provided us with assistance and guidance, making the process much easier and we are grateful!

Deborah in Orleans

Scott Street - transition neighbourhood

Scott Street is a gem neighbourhood in Ottawa, just waiting for further development. It is located just blocks from the main drag of Westboro, Richmond Road, and is conveniently located for transit purposes. The city has some excellent plans for this area.

A small building is being developed on Scott near Churchill (Stonework Lofts by Phoenix Homes) and there is the majestic 30 plus storey tower - The Metropole by Minto and a great community of townhomes called West Village by Larco Homes.

On Scott in this area there are some large lots and older business that will eventually be replaced by new buildings and an expanded Westboro crowd.

Little Italy in Ottawa - Preston Street

Little Italy, known as Corso Italia or Preston Street is defined by Carling in the South and Somerset in the North. This is an area of explosive growth in Ottawa for the near future. With a plethora of restaurants and proximity to Civic Hospital, the Experimental Farm and Dow's Lake, this is a gem of a neighbourhood, nestled in the heart of Ottawa.

For the most up to date plans of the Little Italy neighbourhood -

This is a dynamic and growing area that will soon be mentioned in the same sentences as the Glebe and Westboro. Check it out this weekend, drop into one of the great restaurants - Pub Italia, Prescott Hotel, Giovannis or the community pillar DiRenzo's Deli, you won't be disappointed.


Wednesday, April 1, 2009

Increasing cash flow

A great source of cash flow from rental properties are students. I was thinking back to my days in university at Lakehead and I realize how naive we were. Student's think in terms of monthly carry, not in terms of the global picture.

In Thunder Bay, the five bedroom bungalow house that we rented would have sold for $125,000 and we were paying $1500 per month in rent. We thought we were making a killing as students, as we each paid $300 per month. Now, as a real estate investor I was thinking about our house and I realize how badly we missed the opportunity.

Monthly P&I - $727.01 ***(assuming 100% financed, 25 year, 5% interest)
Taxes - $104.17
Insurance - $25.00
Total - $856.18


The landlord was making cash flow and mortgage reduction annually of $10,322.46. That means for the three years we lived in my landlord's house we paid down his mortgage by over $30,000 or 25% of the value of the home.

A similar example, right here in Ottawa would be buying a 5 bedroom home for $240,000 and renting the rooms for $400 per month.

Monthly P&I - $961.22 (35 year amm, 3.3% variable mortgage, assuming 100% financed)
Taxes - $200.00
Insurance - $30.00
Total - $1191.22





A couple suggestions on renting to students -
1 - Get the parents to co-sign the lease
2 - try renting the home room by room, instead of to an established group
3 - target international students, usually they are more serious
4 - do regular inspections - smoke detectors, furnace check up, etc
5 - do thorough background checking with former landlords, references from part time jobs, etc
6 - clearly layout your expectations