Wednesday, December 8, 2010

Tuesday, December 7, 2010

Shopping Mall Observations

I was in the Rideau Center this past weekend and was astounded by how different the world has become in the past 5 years.  Walking around the mall, the amount of speciality stores I saw shocked me - LaCoste, Banana Republic, Lululemon, or Michael Kors.  I remember when the biggest and most popular store in the mall was GAP and the only "designer" stores were Harry Rosen, Guess and Le Chateau. 

I noticed in the La Senza store, every Christmas they put out flannel pyjamas at the front of the store and usually have these big discounts on the pyjames. This year, there were very few pairs of flannel pjs and were replaced by fancy undergarments. This was another weird citing at the mall.  FYI - I wasn't comfortable buying my mom's gift at La Senza anymore, as flannel pjs are fine, that other stuff is just weird for your mom!

I started to ponder this, when my wife was busy Christmas shopping.  It then dawned on me, the biggest clothes buying age group is 15 to 30, meaning Generation Y (Echo Boomers) are enmass entering this age group.  They are individualistic and are defined as the "now" generation, not enjoying the benefits of delayed gratitude (does anyone really enjoy delayed gratitude?). 

Baby boomers who dominated the clothing market previously are not as individualistic and are looking for quality at a good price.  Unlike their children, boomers will sacrifice style for substance and cost.  The difference in the stores and prices was shocking to me.  Gone are the days of the large retailers with many sizes of the same shirt, here are the days of designers, less selection and higher prices.

One last antedoct from my day of shopping, I went into a "new retailer" in the mall and looked at a pair of shoes for my wife.  They were pretty cool and the sales girl happened to be wearing them.  I asked her the normal questions about comfort, style, etc.  It was quite normal, until the sales professional said to me, "These are great as they only come in one size run, they are so exclusive!".

I thought about that as I left (without the shoes, sorry honey, I promise I will get you something cool for Christmas), I can remember working in retail clothing stores to pay for my education and one of the most important things, heading into Christmas was overstocking the warehouse with extra sizes, so you could accomodate the hordes of Christmas buyers.

Strange stuff happening in the shopping mall and it is all due to the changing demographics.  Keep watch, it will continue happening!

Law of LARGE numbers and investing

In probability theory, the Law of Large Numbers (LLN) - Gerolamo Cardano (1501–1576) - is a theorem that describes the result of performing the same experiment a large number of times. According to the law, the average of the results obtained from a large number of trials should be close to the expected value, and will tend to become closer as more trials are performed. Conversely, a small number of trials might be skewed.

Think of flipping a coin. With a coin, there are two sides, so you have a 50% chance of flipping heads as you do tails. Where the law of LARGE numbers takes hold is, if you flip the coin 4 times, there is a greater likely hood of having a disproportion number of heads than if you flipped the same coin 400 times.

Another great example is rolling a die. If you roll a dice 6 times, logically, you should get each different number once 1, 2, 3, 4, 5, then 6. This is what logic tells you, but it is highly unlikely you will actually roll these numbers. You have a 16% chance of getting that number on each roll. Now, if you roll the same die 6000 times, you are more likely to get that more even distribution.

So, you ask, how does this apply to real estate? Simply, it applies to vacancy. When buying cash flow real estate, one of the biggest problems a client can face is vacancy. Vacancy is when your unit is empty. Empty units produce no rental income.

If you have one unit, and it is vacant you are out 100% of the income. If you have 10 units and one is vacant, you are only out 10% of the income. Extrapolate that to 100 units, you would need 10 vacant units to equal the % loss of having one unit empty in 10.

Professional investors, who retire on portfolios of real estate, tend to view more units as better than less units. The other factors they look at are more mortgage reduction and more value increase across 100 than 10 or 1.

The Law of Large Numbers is a valid consideration when looking at investments, as it proves that more units are better than less units when looking at cash flow. Just imagine, there are people who take this to the extreme levels, for instance a fellow in Smiths Falls owns over 200 units and a fellow in Cornwall owns over 700 units. These people have definitely taken the Law of Large Numbers very seriously!

Saturday, December 4, 2010

Home price increases inside the Greenbelt outstripped their suburban and rural counterparts

I am not usually that big on posting articles, but I thought this one was very timely and important. 

Just a comment on this, from 1989 to 2001 Ottawa houses went up $22,056.00 or about 12.5% total.  So, cumulatively, over the past 20 years, houses in Ottawa are increasing at a normal pace.  From 1989 to 2009, houses increased in value by $183,812 or 2.8% per year.  With the implementation of the GST and a focus on paying down the deficit in the 1990s, some of the run up in the 2000s has been reflective of the stagnation of the 1990s.

Golden neighbourhoods
By Robert Bostelaar, Ottawa Citizen December 4, 2010 •Story•Photos ( 4 )

Ottawa Citizen, Ottawa CitizenHomes within the Greenbelt -- and especially in some key Ottawa neighbourhoods -- gained far more value in the past decade than their suburban and rural cousins, a City of Ottawa analysis reveals.  And the appreciation gap could widen further as city intensification policies and downsizing boomers bring more people into central Ottawa.

The downtown price surge, which Ottawa shares with many other North American cities, won't be a surprise to anyone who watches real estate ads. But the City of Ottawa data, presented to a Canada Mortgage and Housing Corporation conference last month, reveals both the extent of gains and which areas are hottest.

Across Ottawa, the value of the average home rose 92 per cent between 2000 and 2009, city planning official Court Curry told the conference. That increase pushed the average price to $321,267 from $167,246 -- well above the decade's cumulative inflation rate, which is pegged by the Bank of Canada at 21.6 per cent.

Some neighbourhoods far surpassed the average rise.
Westboro, the trendy Richmond Road district that is home to bike shops and bakeries, old houses and new condos, was the biggest winner, pushing up average prices by 164 per cent. The average price in Westboro jumped to $457,253 last year, from $173,414 in 2000.

Courtland Park-Rideau View, a neighbourhood south of Baseline Road and east of Fisher Avenue, was second with a 159-per-cent rise in values, taking the average price to $336,626 from $130,208.

Next was Chinatown-Little Italy-Mechanicsville (157 per cent) and two Westboro neighbours: Wellington Village (155 per cent) and Highland Park (129 per cent).

Even Vanier, a mixed commercial and residential district east of downtown that has earned its share of negative press, appreciated more than the Ottawa average, at 129 per cent.

So if these areas appreciated more than the average, which neighbourhoods came in below the 92-per-cent figure? Neither the city nor the Ottawa Real Estate Board, the source of the data, would say.

Given the close-to-the-bull's-eye positions of the big gainers, however, it's probably safe to assume that the slower areas are in the outer rings of the amalgamated city.

Curry was willing to predict which areas could show the biggest increases, residential and commercial, in the coming decade. These neighbourhoods line Ottawa's planned light rail transit (LRT) route, of which the first phase, from Tunney's Pasture through downtown to Blair Road, is expected to begin operating by 2019. The line will tunnel under central Ottawa and have 13 stations.

A projected annual ridership of 76 million, almost double the ridership on the current bus transitway, should spur "significant positive effect on the value of lands around stations," he told the conference.

Even before LRT construction starts in 2013, a boom in condominium projects, spurred by the city's housing intensification strategy, is encouraging young professionals, baby boomers who have consolidated their households, and others to live downtown.

Within two blocks of Rideau and Cumberland streets, for example, 1,200 housing units are under construction or completed and another 670 are planned, boosting the area population by 3,100.  "That's the equivalent of the town of Almonte," Curry said.  Some 2,100 units are under way or complete in the downtown-Centretown district, with another 2,000 units planned. In Westboro, 505 units have been added and another 1,110 are proposed.  Still another hot area is Little Italy by the Carling station for the O-Train, forerunner to Ottawa's LRT service. There, 725 new dwellings will accommodate as many as 1,200 incoming residents, while new office and retail space will provide up to 1,650 jobs.

"We really think that Little Italy and the whole Somerset (Street) area is a sleeper," Curry said.

The general rise in property values is good news for homeowners, less good for buyers -- especially first-timers facing increasingly high initial and monthly payments to get on the property ladder.  Ottawa broker Pierre de Varennes, however, suggests that wage hikes in the past decade have helped buyers keep pace with the price increases.  As well, with a six-decade record of steady but moderate increases in resale values, Ottawa remains the second least-expensive large Canadian city in which to buy a home, he noted in an interview. Montreal is the cheapest.  "From that perspective, Ottawa tends to be a relatively safe place to invest in home ownership, relative to some other Canadian cities," said de Varennes, who just completed a term as president of the Ottawa Real Estate Board.   "We're not vulnerable to the large swings as may be seen in, for example, Calgary, Edmonton, Toronto, Vancouver."

As in other cities, he says, the downtown should continue to be desirable to older buyers who want to be in walking distance of shops -- especially if they have health problems that could limit their ability to drive in coming years. Others are simply tired of daily traffic jams.  "They're willing to pay a little more for convenience -- the time-savings. Certainly there are people who have moved in from the periphery, and that may allow them to go from two cars down to one, or three cars down to two."

For first-time buyers seeking a "starter" home, rising downtown prices could steer them to neighbourhoods outside the Greenbelt, where larger townhouses or even single-family homes are attainable.  More affluent first-timers, "especially if they're being helped by mom and dad," tend to gravitate to the downtown.

"They tend to be young professional people. They're not necessarily, in their first property, interested in mowing the lawn, that sort of thing, because they're focused on their career.   "They're looking to be closer to the nightlife, the activities, and be in a condo," said de Varennes.

© Copyright (c) The Ottawa Citizen
Read more:

Is real estate a good retirement strategy?

In the recent poll on this site, 97% of respondants said that real estate is an effective piece to include in a retirement puzzle.

This gets me to thinking, how many people actually have a strong retirement plan.  Have you taken the time to sit down and actually plan, see how much money you should have, what type of lifestyle and how you are going to make things happen when you retire?

I have been analysing my plan and have been constantly updating my retirement plan.  I am using real estate as the major source of my retirement planning.  Going forward in 2011, I think the question we all have to ask ourselves is "How am I going to retire?"

With almost 9 million babyboomer (approximately 1/3 of the Canadian population) heading into retirement in the coming 15 years, this will have a major effect on the availability of funding for younger Canadian's retirement.

UPDATE: Train Yards to build federal office

It has now been officially announced that the Public Works building located at the Trainyards is a go.  This will bring 1000s of jobs to the North Alta Vista area, meaning demand for properties in the area.  PublicWorks is attempting to move employees out of the downtown core and into other areas within the green belt, specifically areas that are withing 600 meters of major transit areas.

Published on December 3rd, 2010
Peter Kovessy
Ottawa Business Journal

A poorly kept secret in Ottawa’s commercial real estate community concerning the location of the federal government’s next office building has been confirmed by Public Works.  The Ottawa Train Yards – a sprawling retail power centre with more than a half-million square feet of retail space over 92 acres – has won a contract that could be worth up to $89 million over two decades to build a new office building.

Train Yards officials were not immediately available to provide details about the contract, which was in response to a request for 25,000 square metres, or approximately 269,100 square feet.  The original solicitation called for space within 600 metres of any Transitway station between St. Laurent station in the north and east and Heron Road station in the south and west.

The Train Yards meets this requirement, but the nearest Transitway stop is the Via Rail station, which is separated from the commercial plaza by train tracks. Currently, Transitway passengers appear to have to exit the train station and walk along Tremblay and Belfast roads to reach the Train Yards – which is served by a local bus route – by foot.

Public Works will pay $199.95 a square metre – roughly $18.58 per square foot – in net rent, which excludes operating costs.  Bruce Wolfgram, a vice-president at Primecorp Commercial Realty, said that right seems a bit high, noting Bentall is marketing space at Blair Place for $17 a square foot.

Additionally, the average asking net rent for existing class-A space in the general vicinity of the Train Yards varied between $13.58 and $18 a square foot at the end of the third quarter, according to a recent report by Colliers International.  Mr. Wolfgram said he suspects the federal government is receiving a certain amount of office space build-out.  “That number must include some incentives. They must be receiving more than just a base building,” he said.

The lease runs for 15 years, with an option for an additional five-year term. The Train Yards will retain ownership of the building during and after the lease term.  The federal government has made it clear for more than a year that it wants to move more bureaucrats out of the downtown core.

In October, Public Works’s top property official told the city’s commercial real estate community in a speech that he wants to vacate 10 per cent, or roughly one million square feet, of the government’s current leased and owned space downtown.

“We want to have access to cheaper space,” said Claude Seguin, who is the director general of portfolio management in Public Works’s real property branch.  In the coming years, the federal government will need to vacate several aged office buildings that no longer meet government standards and are in need of extensive renovations.

Public Works has actively been procuring new space, namely purchasing the former Nortel Campus and constructing three new office buildings in Gatineau.  The recent solicitation won by the Train Yards started two years ago, when Public Works published a massive request for information on the availability of 3.875 million square across the National Capital Region, including a specific inquiry about east-end space.

Nine proposals were submitted, six of which met the requirements set out in the RFI.

Only four of those six proponents responded to the government’s subsequent request for qualifications. Three firms were qualified to submit a bit, all of whom responded by the July 9, 2010 deadline.  The federal government refused to comment on this project this fall, even though rumours that The Ottawa Train Yards had won the contract began circulating over the summer.  In response to an inquiry from OBJ, Public Works confirmed in November that a contract was in place, but refused to identify the location or vendor until this week.

Monday, November 29, 2010

Teaching money smarts to your kids, your never to young to start!

I have been researching gifts this year and one has come across my desk that is really interesting. The kit is based upon the children’s book. “The Four Little Pigs”.

The kit contains a copy of the book and four separate piggy banks each with a different name (spending, sharing, saving, schooling). Any money your child/grandchild receives is divided into the four banks.

“Spending” piggy bank is money that is put aside for “pocket money” to make small purchases like candy, stickers or baseball cards.

“Sharing” piggy bank is for donations that are both gifts and giving back to others. These can be large or small donations, but teaches the value of giving an hand up to others in need.

“Saving” piggy bank saves for more costly purchases. Saving teaches your little ones that they do not always getting what they want right away. It teaches them the value of delayed gratitude and working towards a goal.

“Schooling” piggy bank helps start the process of saving for post secondary education. Actively involving your children helps them understand the value of an education and promotes hardwork in school. Currently, a year of post secondary school is approximately $9,000 dollars, it is never to early to start!

Monday, November 22, 2010

Hot List

Pre-Construction Opportunity
In the very popular WESTBORO neighbourhood, there is a new condo launch happening in the coming two weeks.  It will be the most unique new building in Ottawa's history.  It is a pre-designed community with quaint "courtyards" and a 35,000 sqft community ammenities center.  There will be units starting below $200k.

Income producing triplex
I have found an income producing triplex, about 1 hour from Ottawa, in a picturesque community, that after all expenses and mortgage payments should net a positive income of $1,100 per month.  The purchase price on this property is $220k and contains 3 two bedroom units. 

Kanata Town Home
In Kanata, I have found some new build townhomes for less than $300k.  The announcement of DND moving to the Moodie campus of Nortel means an influx of new people to the Bells Corners/Kanata market in the near future.  Currently town homes in Kanata rent easily in the $1500 plus per month.

Alta Vista Duplex
Found a great duplex in the Alta Vista area with a top notch top floor unit with four bedrooms and a brand new designer renovation.  The basement has two bedrooms and is currently tenanted at almost $1100 per month.  New steel roof just installed and has a lifetime warranty.  With 25% down, it will produce approximately $1000 per month and costs $495,000

Flipping in the USA
I have secured access to the home auction in Phoenix, Arizona.  Through this auction, you can purchase homes for approximately 30% below currently MLS prices.  These homes are foreclosures, before they go to the open market, hence the great savings.

Wednesday, November 17, 2010

Using Demographics to invest

I find it fascinating to look at the demographics of a nation or of a particular city.  The census growth of Canada over the past 70 years is pretty interesting - click here to see the table.

Demographics can help us with our investment ideals as well.  People do generally the same things, at the same ages.  Most people select a mate between 18 and 35, so expenditures on clothing and grooming products are at their highest in those years.  Young males between 16 and 25 tend to be the biggest buyers of motor cycles.  Over 55 people, without children, tend to be the #1 buying segment for condominiums.  What age buys family homes?  What will happen to that market?

Understanding demographics will help investors to be able to plan and understand where the new trends are in investing.  Knowing the relative age of the population in the coming decade can help shade you in the correct direction.

I am going to use the following rough guidelines for talking about different age demographics. 

BABY BOOMER - 1941 to 1966
GENERATION X - 1966 to 1986
GENERATION Y - 1966 to 2001

The baby boom generation is aged 44 to 69.  They are the largest generation comprising 8,460,000 people.
Generation X is aged 24 to 44.  They are the smallest generation of only 6,134,000
Generation Y is aged 0 to 24, with a total number of people being 7,793,000

As you can see the massive baby boom generation is going to exit the work force in major numbers over the next decade.  Estimate have it that in North America, a baby boomer retires every 8 seconds.  This causes a major effect on the work force. 

The Generation X, often referred to as slackers, cannot match the Baby Boomers due to sheer number.  There are 2,326,000 less Generation X members than Baby Boomers.  This is a decline of over 27% from one generation to the next.

The positive news, is that Generation Y, the Echo Boomers (children of baby boomers) are a huge generation as well.  They are 1,659,000 people larger than the Generation X before them.  That is an increase of 27% in size. 

In the case of demographic research, size does matter!  It is important to get out in front of the largest segments.  Marketers look like geniuses by positioning their clients in front of the wave, as opposed to behind it.  Investors should as well study the demographic waves that are hitting the real estate market.

For instance, if sporty cars are the bought mostly by young male demographic of 16 to 30, a car manufactor with hot styles and high performance automobiles will do really well in the coming 20 years as there will be 27% more buyers in their demographic.  Whereas, if you are marketing expensive furniture, you will see a decline in your market for the coming decade and a half as the much smaller Generation X enters the expensive furniture buying age.

1940 - 11,382,000
1941 - 11,507,000
1942 - 11,654,000
1943 - 11,795,000
1944 - 11,946,000
1945 - 12,072,000
1946 - 12,292,000
1947 - 12,551,000
1948 - 12,823,000
1949 - 13,447,000

1950 - 13,712,000
1951 - 14,009,000
1952 - 14,459,000
1953 - 14,845,000
1954 - 15,287,000
1955 - 15,698,000
1956 - 16,081,000
1957 - 16,610,000
1958 - 17,080,000
1959 - 17,483,000

1960 - 17,870,000
1961 - 18,239,000
1962 - 18,583,000
1963 - 18,931,000
1964 - 19,291,000
1965 - 19,644,000
1966 - 19,967,000
1967 - 20,500,000
1968 - 20,701,000
1969 - 21,001,000

1970 - 21,297,000
1971 - 21,963,000
1972 - 22,219,000
1973 - 22,494,000
1974 - 22,809,000
1975 - 23,143,000
1976 - 23,449,000
1977 - 23,727,000
1978 - 23,964,000
1979 - 24,203,000

1980 - 24,517,000
1981 - 24,821,000
1982 - 25,118,000
1983 - 25,367,000
1984 - 25,608,000
1985 - 25,843,000
1986 - 26,101,000
1987 - 26,449,000
1988 - 26,798,000
1989 - 27,056,000

1990 - 27,512,000
1991 - 27,945,000
1992 - 28,377,000
1993 - 28,682,000
1994 - 28,997,000
1995 - 29,303,000
1996 - 29,611,000
1997 - 29,965,000
1998 - 30,158,000
1999 - 30,404,000

2000 - 30,689,000
2001 - 31,021,000
2002 - 31,373,000
2003 - 31,676,000
2004 - 32,048,000
2005 - 32,359,000
2006 - 32,723,000
2007 - 33,115,000
2008 - 33,506,000
2009 - 33,894,000

Real estate implications make the forecast for the next decade more logical.  As we have an abundance of Baby Boomers, they are likely to be buying downtown condominiums, bungalows on acreage and vacation properties in the South.

Generation X is a smaller generation, they are not going to be able to pick up the slack from the Baby Boomers who are downsizing.  There is a good chance that many Baby Boomers will want to/be forced to, sell their homes to their children, the very large Generation Y. 

Immigration will play a part as well in helping Generation X take over the homes from the Baby Boomers.  Remember there are 2,326,000 less Gen Xers than Baby Boomers. 

Generation Y is an interesting group.  Their first home is likely a condo, as they are not interested in a lot of maintenance and upkeep.  Since jobs will be more scarce for the Generation Y, they are likely to put off children of their own into later years (early 30s), so the condo market should stay strong longer term, as the front end of Gen Y is only 24.

There also is a high chance Gen Y will rent a bit longer until they are firmly established in having a career, this will create many happy returns for property owners.  Less jobs, more competition and wanting a lifestyle of living in the right neighbourhood with little to no maintenance is a recipe for lots of renters. 

An area I do not see growth in, is the retirement homes.  Baby Boomers are generally speaking vain and will try to stay "young" as long as possible.  They will avoid the retirement home as long as possible, so with the next decade, front end baby boomers will be reaching 75, I think that retirement home investment is at least a decade to a decade and a half too early.

CMHC Forecast for 2011

The annual CMHC forecast for the Ottawa housing market came out yesterday.  Sandra Pérez-Torres did her insightful presentation predicting the future of the local marketplace.  I have had the pleasure of meeting Ms Perez-Torres in the past and she definitely does her research and understands the marketplace. 

I am in line with her thinking, I find the below summary to be a very well researched prediction of what the coming year will have in store for local investors.

No boom, no bust, no bubble — Ottawa’s housing sector in 2011 is expected to be a model of stability.
For builders and buyers, investors and sellers, that’s good news, even if it doesn’t prompt the buzz that accompanied the post-recession runup that is expected to push average resale prices up 7.6 per cent this year.
“Sales will not reach the peaks we saw early this year and late last year,” warns Sandra Pérez-Torres, the Canada Mortgage and Housing Corp.’s senior analyst for Ottawa.
But the slip shouldn’t be accompanied by any drop in values, she told the CMHC’s annual Ottawa Housing Outlook conference Tuesday. The agency expects prices to increase at the rate of inflation, about two per cent, as the sector moves to more balanced territory from a buyer’s market.
Stability is also forecast in the new homes sector, with a slight increase in starts this year over 2009, followed by a 3.4-per-cent drop next year. Multiple-family units will continue to outpace single-family dwellings, with townhomes leading the way.
Keeping Ottawa on the real estate level is a diversified economy (public administration, though the most visible local employer, represents just 22 per cent of jobs) and steady — if moderate — population growth.
Employment growth in 2010 has wiped out recession job losses, and further gains are expected in 2011, CMHC said in a report.
As well, average weekly earnings should rise 4.1 per cent next year after remaining flat in 2010.
“Ottawa is definitely the best place to be,” Pérez-Torres said.
The income growth will keep the housing sector healthy, though more sales could come early in the year, driven by the prospect of increased borrowing costs.
CMHC’s forecasts aren’t infallible.
Last year, for example, it predicted an average 2.3-per-cent rise in resale prices in Ottawa in 2010.
Pérez-Torres said continued low interest rates spurred more first-time buyers to enter the market, contributing to an average increase now expected to reach almost eight per cent.
Similarly, unexpected layoffs in Ottawa could make the 2011 market behave far differently than predicted, she said in an interview.
Even with this year’s increase, CMHC predicts an average price of $328,000 for a home sold through the Multiple Listing Service in 2010 — well below the cost of a comparable home in more volatile markets like Vancouver or Toronto.
For new construction, the average detached home is expected to reach $422,750 this year, up 4.0 per cent from 2009, while the average semi-detached unit will slip 1.9 per cent to $375,000.
In the rental market, an already low vacancy rate is expected to drop even further next year.
CMHC predicts an October 2011 vacancy rate of just 1.2 per cent, down from 1.7 per cent in October 2010.
In three previous Octobers, the rate varied from 1.4 to 2.3 per cent.
Average rent for a two-bedroom apartment reached $1,065 last month, up 3.6 per cent from a year earlier, and is expected to rise another 3.8 per cent to $1,105 by October 2011.

Read more:

Monday, November 15, 2010

Investing in the United States

"I tried bidding on one property and it was so easy and profitable, that I have now bought and sold 7 properties. Easy and fast paced, rehab has been minimal, and no problems, just profit. I love the photos of the properties prior to the bid." - Larry

"I bought a home and sold it back to the original home owner and profited $19,000. It took 3 weeks. The homeowner was happy because he never even had to move out. Wow, this was an easy one!" - Hal

Sunday, November 14, 2010


Construction firms in Ottawa usually take 12 to 18  months to build a high rise building.  In China, the new ARK hotel in Changsha was built in just 6 days!  A 15 storey building in SIX days!!!  Check out the link to this story....

Saturday, November 13, 2010

How you like to earn your return?

I just finished a poll on the blog, asking what is the most important area of a real estate return.  The four areas are

1 - Cash flow
2 - Mortgage reduction
3 - Equity growth
4 - taxable advantages

60% are looking for cash flow
36% are looking for equity growth
4% are looking for tax deductions

Wednesday, November 10, 2010

Ottawa Fourth in Canada

Ottawa was ranked the fourth most popular city in Canada to invest in, after Toronto, Vancouver and Calgary ...

Referral for sound advice

Hello Greg,

I met him on Monday and he said he was looking for investments in rental properties with cashflow, naturally I thought of you since you have always given sound and valuable advice with professionalism.


Thursday, November 4, 2010

Some interesting tips for Landlords

I attended a seminar yesterday entitled "A Landlord's Rights & Obligations in Ontario"

The Residential Tenancies Act (RTA), 2006 is what governs Landlord/Tenant relations.

- 80% of rental units owned by Landlords in Ontario are by "small investors" with less than 6 units
- 32% of people in Ontario are renters (1.35 million renters)
- 2% of the tenants in Ontario are considered "professional tenants" who seek to profit off unsuspecting landlords (27,000 tenants)

Tenants are provided free representation under the RTA, Landlords are expected to have "higher level of understanding".

You cannot have more than one month's rent in your possession.  If you rent to a tenant, you get their last month's rent, ask for a certified cheque on the day you provide the keys.

NOT COVERED under RTA - Living units in which the roomer/boarder does share kitchen/bathroom facilities with the owner/landlord (includes the landlord's spouse, child or parent)

A rental complex or building of which no part was rented for residential purposes before November 1, 1991 is not subject to rental controls under section 6 of the RTA.

Landlords must provide to each tenant with an information pamphlet on the responsibilities of Landlords and Tenants.  It is advisable to get the tenant to sign an acknowledgement of receipt of this document. 

There are NO rental increases allowed to be carried forward.  For 2011, the rental increase is 0.7%, if you do not increase the rent by this factor, it is lost, there is no carry forward.

Landlords cannot demand 12 postdated cheques.

When giving notice, if you send through mail, the accepted timing is it will take 5 days for notice to arrive, 3 days if done by courier.

Landlords can increase the rental deposit each year by the allowable rental increase.

Each year, landlords must pay the tenant the interest on their last month's deposit.  Interest is calculated by using the number for the Consumer Price Index.  If you do not pay annually, it is compounded interest, not simple.

Landlords must provide their full legal name and address to the tenant within 21 days of their taking occupancy.  If you do not want the tenant to have your home address, you can provide your lawyer's office as an address. 

All paperwork signed by tenant must be provided to them, including the rental application form.

1 - not harrass the landlord
2 - pay the rent
3 - pay for any repairs for any damage they have done
4 - cannot change locks without giving landlord a key

On a rental application, make sure you verify all details, do not use their information, get the information direct from the source. 

Previous landlords, not current landlords are the best source of information.  In an independant survey, 80% of landlords in the Middlesex county, said they would give an dishonest reference for a current bad tenant.  Get minimum 3 years and preferrably 5 year tenancy history.

Check their drivers license to verify their information.  People can use aliases and give nicknames, not proper legal names.

On student rentals, get parental guarantees.

Under RTA, landlords can give upto 3 month's rental discount per year, without dropping the rent.  That allows the annual increase on the actual rent, not a lower rent.

You cannot charge late fees, but you can give 2% prompt payment discount.

If tenants are not paying rent, you can refer them to the "rent bank" (Minstry of Community and Social Services).  They can also help tenants with utility loans, rather than the landlord taking over the service.

Properties have to be kept at 21.1 degrees

For common information and forms -

Condos to provide good investment in 2011, report says

Another article out in the Financial section with PriceWaterhouseCoopers endorsing real estate.  Interesting read.   

Condominiums and greenbelt space will provide among the best investment opportunities in Canadian real estate next year, with the overall outlook remaining positive as long as U.S. woes don’t spill over the border, a report found.

It may also be the time to consider selling low-yielding assets in favour of buying properties in the U.S. as the market there recovers, the report by PricewaterhouseCoopers and the Urban Land Institute found.

Apartments, if any are available, offer the best security, it said. Investors should also look for underperforming retail or commercial space to redevelop as condos as Canadian cities grow vertically, it said.

A separate report by RE/MAX released on Monday found that condos are the number one choice for first time home buyers as the price of a detached home is unaffordable.

Condos represent one in every three homes sold in the Greater Toronto area, it found.

The Canadian market for real estate investment has held up better than the U.S. because of strong bank balance sheets and a sound economy. That said, while many investors say it’s a good time to buy, few are willing to sell at these levels.

The report was based on interviews with 875 of real estate experts, including investors, developers, lenders, brokers and consultants in both Canada and the U.S.

Tuesday, November 2, 2010

Condominium market heating up: report - By Derek Abma, Financial Post, Ottawa Citizen, November 2, 2010

Each week, a new report is released that either supports or is against the notion of the Canadian real estate market being overvalued.  This article, taken from the Ottawa Citizen, is another example of the undervalued side of the equation.

"As one of few affordable housing options available to first-time buyers, the condo concept is poised for dramatic growth in years to come," says Michael Polzler, executive vice-president for Re/Max's Ontario-Atlantic Canada operations.

OTTAWA — Condominiums have become a hot sector of the Canadian real estate market, particularly as an option for first-time homebuyers spooked by high prices for single-family homes, says a report released Monday.

Real estate-services firm Re/Max says affordability, lifestyle, investment opportunities and urban renewal efforts are among the reasons condo sales have spiked over the last year in some Canadian markets.

"As one of few affordable housing options available to first-time buyers, the concept is poised for dramatic growth in years to come," Michael Polzler, executive vice-president for Re/Max's Ontario-Atlantic Canada operations, said in a statement.

Re/Max said condo sales in the Greater Toronto Area are up 10.4 per cent, year-to-date, as of September, and now represent one out of every three homes sold there. In Ottawa, condo sales are up 11.9 per cent.

"The lifestyle has also gained a foothold with younger, hipper audiences as the definition of home ownership evolves with the changing demographic," Polzler added. "Dreams of the small home with a white picket fence are being replaced by the funky loft apartment in proximity to shops, restaurants and entertainment."

Price comparisons provided by Re/Max for Ottawa showed the average price for condominiums had risen 12.9 per cent to $252,641 over the last year, but was still more than $100,000 cheaper than the average price of $366,587 for a single-family home.

While the Re/Max report focused specifically on Ontario and Eastern Canada, Gregory Klump, chief economist for the Canadian Real Estate Association, said condo sales are becoming a bigger share of more expensive housing markets across the country, such as Toronto and Vancouver.

"(Condos) have been accounting for a greater percentage over time of all sales activity," Klump said. "Condo units are an affordable alternative to single-detached home ownership."

The Re/Max report said other factors driving the condo market include urban redevelopment that favours intensification over urban sprawl, empty nesters seeking low-maintenance retirement properties and investors hoping to sell when prices appreciate, the report said.

Re/Max said the "vast majority" of newly built condominiums in Toronto are purchased by long-term investors from Asia and the Middle East, who will often rent them out until they find their desired sales price.

Ottawa Resale Market Becomes More Balanced

Members of the Ottawa Real Estate Board sold 1,042 residential properties in October through the Board's Multiple Listing Service® system compared with 1,197 in October 2009, a decrease of 12.9 per cent. Year to date, the number of properties sold has declined 2% compared to the same period last year, a record setting year.

Of those sales, 221 were in the condominium property class, while 821 were in the residential property class. The condominium property class includes any property, regardless of style (i.e. detached, semi-detached, apartment, stacked etc.) which is registered as a condominium, as well as properties which are co-operatives, life leases and timeshares. The residential property class includes all other residential properties.

"Six months ago we were in a strong seller's market, now we have moved into a more balanced market position," said Immediate Past President Rick Snell. "Some properties are still receiving multiple offers but this is happening much less often than was the case in the spring."

The average sale price of residential properties, including condominiums, sold in October in the Ottawa area was $340,719, an increase of 6.8 per cent over October 2009. The average sale price for a condominium-class property was $263,292, an increase of 13.4 per cent over October 2009. The average sale price of a residential-class property was $361,560, an increase of 5 per cent over October 2009.
“Source: OREB”

Remove HST from Hydro Bills

Below is a link to the petition circulating to take HST off Hydro bills.  With the winter coming, hydro bills have already doubled for most Ontario residents, so those with electric heat could be facing astronomical bills heading into the cold months. 

For landlords, raising electric charges have already changed properties performance, a little relief would be very nice.

Just click on the link and fill out the survey on the right hand side!!

Saturday, October 30, 2010

Future outlook on Canadian Housing Market

Got the following email this week. 

Another article that came out yesterday, analyzed the prospects of a Canadian housing bubble by not looking for similar underlying reasons that led to the U.S. housing collapse but by comparing against the back-drop of 1985-1989 Canadian housing bubble.

The key take-away of this article is reiteration of what other articles have also predicted that "home prices will decline, although as not as violently as the home prices in the US did, and then stagnate until fundamentals catch up, similar to the 1990-2000 period".

However what is more concerning is the statement "...upcoming price stagnation should be of the most concern for those whose well-being directly correlates with appreciating home prices. Property developers, real-estate agents, “buy-and-flip” investors and other market participants should take a note and make necessary adjustments."

If you read the attached report and check through the accompanying documents, I find the data a bit misleading.  The first issue is that the data from 1985 to 1989 was a five year period, 2000 to 2010 is a ten  year period.  Comparing the quick five year run up with a slower increase over ten years seems a bit like apples and oranges. 

In the data, there is no consideration of the impact of governmental policy and the implementation of the GST.  These two items lead directly to the slowdown in the 1990s. 

I also found his research was indicating problems in Calgary and Vancouver, but not so much in Ontario.  In the 1990s, Ottawa had three down years, which totals about a 5% drop.  Within three years, the 5% was completely recouped and property values increased.

Thursday, October 28, 2010

Most Ontarians confused about HST and resale homes

56% mistakenly believe HST applies to purchase price Toronto, Ontario, October 27, 2010 –

An Ipsos Reid survey commissioned by the Ontario Real Estate Association (OREA) and released today reveals that fully 56 percent of Ontarians mistakenly believe that the new Harmonized Sales Tax (HST) applies to the full purchase price of a resale home. In fact the HST is only levied on the various transaction fees associated with the purchase of a home that has been previously occupied (i.e. not a newly-built home).  Currently, the average price of an Ontario resale home is around $330,000.

Therefore, this confusion leaves the majority of Ontarians wrongly believing that the HST will add more than $40,000 to the transaction cost. There is growing concern among real estate professionals that this misperception about the HST is dampening the Ontario housing market.

“We see it on the front lines every day. Clearly, Ontarians still don’t know what the HST covers and what is exempt,” noted Dorothy Mason, President of OREA. “This is not helping the housing market, and it’s not helping the Ontario economy. This confusion means that many buyers think the cost of a resale home is tens of thousands of dollars higher than it actually is.”

The results of the survey conducted earlier this month were consistent across all age groups. However, there were some differences across other demographic categories. For instance, of those surveyed half of the university graduates, 71 percent of northern Ontarians, 59 percent of those living in eastern and southwestern Ontario, and 54 percent of GTA residents all mistakenly believe the HST applies to the full purchase price of resale homes.

“We’re doing our part to inform our clients, but we shouldn’t have to do it alone. We’re calling on the Ontario government to launch an immediate public awareness campaign to educate taxpayers and end the HST confusion,” concluded Dorothy Mason. “For average homebuyers, learning that the HST does not apply to the full purchase price means a $40,000 saving they weren’t expecting.”

Ipsos Reid conducted the survey among 830 Ontarians from Ipsos’s online panel, between October 4th and 11th, on behalf of the Ontario Real Estate Association. The estimated margin of error is +/-3.8 percentage points, 19 times out of 20.

Thursday, October 21, 2010

Tenant turn over

I got notice mid-month that a tenant of mine is moving out.  They gave me 45 days noticed instead of the requisit 60 days from the first of the month.  I made a deal with them not to charge the extra month if I could find a suitable tenant in the meantime. 

Yesterday, a nice young lady employed at the government rented my unit for $200 per month than the previous tenant.  What a wonderful day!

I have wished the previous tenant well and released her with the 45 days notice and the bonus will be an extra annual income of $2400.

Turnovers are not always bad!

Wednesday, October 20, 2010

Has this changed my life?

Hi Marnie,

I just wanted to send you a quick email to thank you and the team at Bennett Pros. I went a seminar of yours last Oct 09, received the info from that seminar, met with Greg the following week, and I was hooked, investing in real estate was want I wanted to do for some time but did not know what type of investing that would met my goals. After meeting Greg, he lead me in "MY" right direction of investing which landed me at the doors of a packaged investment product, since then I currently own 3 investment properties and closing on 2 more next month. For my personal goal, that's 5 down and 5 more to go!

Has this changed my life, is the question I am asking my self every day, I often wonder how my life will change in the future because of what I did last Oct by going to your seminar, but right now I live as nothing has changed enjoying every bit of what I do now and look forward to many things in the future like paying off my mortgage for the house I currently own 6 years earlier, taking a extra trip(s) with my family to the Caribbean per year, having the money for my children's post secondary education,moving into the house of our dreams once I pay off my mortgage and renting out my house I currently own to help to pay off my new mortgage, looking forward to retiring maybe 10 years earlier then what I thought we would be, so lots of great things ahead for me and my family which I thank you and your team once again.

Thank again!
Gary, Tracey, Rebecca and Lauren

Thursday, October 14, 2010

New pre-construction condominium opportunity

Launching October 21, 2010
Prices starting in the $230s
Be part of the Bennett VIP Program

Send me an email to get more details -

Wednesday, October 13, 2010

Phoenix Auction Purchase - typical scenario

I have worked out a typical scenario for a buy and flip investment in Phoenix, Arizona.  These homes are bought from the trustee auction, through our exclusive relationship with

The effect of the Baby BOOM!!!

Over 10 million people ... # of Canadian baby boomers.
Over 76 million people ... # of US baby boomers.

There are over 86 million people between the ages of 45 and 65 living in North America today.  These people are the most powerful force in the purchasing community.  Approximately 1/4 of the population of Canada and United States are baby boomers, a large percentage that any other 20 year grouping. 

Think of some of the booms ...
- American muscle cars in the late 1960s/early 1970s - Ford Mustangs sold  over 400% better than originally predicted.
- Viagra pills ... enough said
- tennis in the late 1970s
- golf in today's market place
- Minivans in the late 1980s/1990s - Chrysler revitalized their business solely on this product
- Baby/Children stores - Toys R Us, Baby Gap, etc

Just to give you some perspective ...
If the baby boom in Canada and the US were a country, it would be the 13th largest country in the world, behind the Philippines and ahead of Vietnam, Ethiopia, Germany, United Kingdom, France and Italy. Almost 2 and 1/4 times larger than the population of Canada.

#1 question all investors should be asking themselves now is ....

Where are Baby Boomers headed next?
Trend #1 - Smaller properties
Studies also show that roughly 70% of baby boomers will be downsizing to an apartment style condominium or bungalow.  Most baby boomers have an interest in moving into the core of the city being walking distance to amenities.  About 3 out of 10 are predicted to move to cottage type properties, smaller communities or stay in their current neighbourhoods.  Assuming two people per dwelling, this would equate to 60 million dwellings need in urban areas in the coming decade or so.

Trend #2 - Warmer climates
Studies show that 58% of retirees want to have a property in a warmer climate (either primary or secondary residence).  Assuming two people per household, that should be 25 million households needed to fulfill the demand.  About 56% of downsizers (Snowbirds) buy on the Eastern Seaboard (Florida, Georgia, Carolinas, etc), which would total  14,000,000 households and the other 44% buy in the SouthWest (Arizona, Nevada, Texas, New Mexico, California) which would be 11,000,000 homes.

Closer to home ...
 In Ottawa, we have approximately 900,000 people housed in 260,000 homes.  Estimates have about 35% of the population falling into the Baby Boom category, which means 315,000 baby boomers in the city of Ottawa.  Assuming two per household, and assuming 1/3 of baby boomers have already downsized, there will be an influx of 75,000 more apartment style condos and bungalows needing to satisfy their needs. 

Tuesday, October 12, 2010

Legal Rent Increase 2011

Hi Ontario Real Estate Investor,

On August 31st the new statutory guideline for rent
increase came into effect for Ontario rental properties
under the Ontario Residential Tenancies Act.
Landlords may now increase rent by upto 0.7% of the
current rental rate charged to the tenant.

However, under certain conditions Ontario landlords
can legally increase rent amounts by much more
than 0.7%.

Further, if investors or Ontario realtors representing
them aren’t aware of the new rules governing listing
tenant occupied properties you may needlessly
costing yourself or your client thousands of dollars.

Get the very latest updates on Ontario landlord tenant
law by taking my course “A Landlord’s Rights &
Obligations, Ontario 2010”. Below are the upcoming
course dates and locations:

Ottawa, November 3
Ajax, November 4
Mitchell, November 9
Markham, November 16
Kitchener, November 23
London, November 25
Scarborough, December 2
Windsor, January 11

For more information on the course content visit
our website. For course registration visit our
online registration page.

Katherine Paliwoda
Katherine Paliwoda & Associates
P.O. Box 174,
Mitchell, ON.
N0K 1N0

Online Registration:

Sunday, October 3, 2010

Why Phoenix?

Phoenix, Arizona is the fifth largest city in the United States, with growth continuing ongoing. Phoenix has grown by more than 100,000 people per year over the last 25 years. This is astonishing growth. Through the economic downturn, change in population in major markets across the US shows that Arizona, resource-rich Utah, Colorado, Texas, and tech hub North Carolina led the nation with greater than 2% growth in population from mid-2007 to mid-2008. An April 2010 report from University of Arizona forecasts population increase of 875,000 persons, pushing total Greater Phoenix population to approximately 5.2 million by 2016.

Job growth and diversity of employment both have a positive impact on the local market. Phoenix has a diverse employment base with jobs in high tech, government, farming, education, warehousing, manufacturing, natural resources and mining, construction, travel and leisure. The Phoenix area has a lower unemployment rate than the United States average (8.6% to 9.5%). An April 2010 report from University of Arizona forecasts an increase in employment of 409,000 by 2016.

The other reason people move to Phoenix is the great climate, golf courses and lack of natural disasters. Being in a desert, there is limited humidity and temperatures are great year round (except August when it is 110 degrees Fahrenheit plus). Phoenix also contains a very diverse employment base and all six major sports (football, baseball, hockey, basketball, golf and Nascar). The Greater Phoenix area has become a destination for second homes with 37% of MLS sales in 2010 coming from Canadians and people from the Northern States.

Simple economics state that if supply is low, demand is high and vice versa. The years of 2007 and 2008, in Greater Phoenix area there were massive amounts of foreclosures and excess resale inventory that drove the MLS active listings to more than 60,000. A healthy market in the Phoenix area should have 35,000 active listings. Currently, in Phoenix, there are 37,000 active listings on the market right now and 30,000 of those are single family homes. Out of those approximately 1/3 of listings are short sales, those 12,500 active listings cannot be purchased in a traditional sense and require a six plus month negotiation with a bank. Short sales are homes that are in pre-foreclosure.

As the inventory has declined, the average sales price per square foot has shown a promising growth at certain price points. There is evidence that home prices at certain price points have stopped falling and are bouncing along the bottom. They are neither growing nor declining. With the per square foot price of active listings and pending listings stabilizing and the affordability index climbing, the evidence of market recovery begins to become quite convincing. Phoenix is now a very affordable city to buy a home in, which fuels corporate relocations to the city. Experts predict the market will reach an 80% recovery by 2013.

Phoenix also contains the second largest university in North America – Arizona State University, which consistently brings new people to the Greater Phoenix area. The major fortune 500 corporations, such as Honeywell, Wal-Mart, Intel, Wells Fargo, Home Depot, Target, US Airways, IBM, Verizon and many health care facilities routinely provide sectional lectures to the university for the opportunity to recruit the best and brightest. The average age of people in the city of Phoenix is 34 years old.

In my recent online poll, 66% of respondants thought it was a good time to invest in US real estate and 100% thought that the Southern states were better investments than the Northern States.

Tuesday, September 28, 2010

First time

“Greg - thanks very much for all your help in making my first home purchase an easy one! I’m loving the condo, but look forward to having everything unpacked!”


Turkey hunting

I was out at an apple orchard this past weekend and saw an older gentleman hunting turkeys.  I watched with awe the process of hunting wild turkeys, he had a box, propped up with a stick and a string attached to that.  Then he placed seeds under the box. 

Eventually, about a dozen turkeys wandered by.  I have a lot of spare time, to stay and watch all this.  Immediately, about 10 of the turkeys go under the box and start eating the seeds.  I am about to leap across and pull the string for the older fellow, but I decide to watch what happens.  I guess I am just too much of an Aesop personality (a bird in the hand is worth two in the tree).

Two turkeys leave the box.  The old man looks dejected.  I am disappointed he still hasn't pulled the string.  He still has eight turkeys, but you can tell from his expression he is disappointed.  "Pull the stupid string and catch the eight" I yell silently to myself, but he stays steadfast.  He is waiting for two turkeys to return, but in the mean time another four leave. 

He is now down to four turkeys.  He is hopeful some turkeys will return now that it is less crowded.  I am livid with his stupidity!  I am screaming at him, silently, inside myself, to pull the string, but I can tell he is thinking back to his ten turkeys.  In the time he reflects on the ten he had, he now has one as three more left. 

From the expression on his face, I can tell he now just really wants to get one more.  So he patiently stares at that lone turkey, waiting for one more to enter.  I have given up all hope on this guy and start betting inside me head, with myself whether he will get any turkey tonight.  His poor wife must end up making a ton of vegatarian dishes if this is the quality of hunter logic her husband exhibits.  The lone turkey now waddled out, none are left.  The brood of twelve turkeys disappeared into the orchard and were no longer.

The little old man now has no turkeys, instead of the ten he could have had.  He was chasing the twelve and ended up with none.

I try to remember this story when I am investing as sometimes you have to be happy with what you have, instead of chasing that ellusive last penny.

FYI - embellishment note - This is an old parable and did not really happen, but the story is better told in first person

Foreclosure property

“Hi Greg, we got the keys yesterday for our first investment property.  It is a great property, that you found from a foreclosure.  Just wanted to drop you a note to say thank you. We appreciate your help, and will definitely use your service again in the future.”


Power of compounding

What would rather get: $1,000,000 in cash or $1 doubled every day for 30 days?

Many people automatically think the million dollars is the better offer until they do the math.
One dollar, doubled every day, for 30 days, is over $530 million! Staggering isn't it?
Albert Einstein is quoted as saying, "The most powerful force in the universe is compound interest."
Now imagine, the average home in Ottawa compounds by over 6% annually.  The results are staggering, the average house in Ottawa will double every 12 years.  The average house in Ottawa is now about $330,000, so in twelve years, that house will likely be worth $660,000

Monday, September 27, 2010

Professional and personable in difficult circumstances

“I was very pleased with the service I received from Greg of the Bennett Team - they were very professional, yet personable and helped me to resolve some difficult circumstances with a potential buyer and dealing with my emotional ties to the property.  His indepth knowledge and experience in dealing with a foundation issue on the home I was selling was impressive to say the least.  The Bennett Team by far outshines any realtors I have worked with in the past and I look forward to working with them in the future as a real estate investor."


Ontario Ministry of Revenue - HST

Hello Greg,

My name is Rachael from the Ontario Ministry of Revenue. As you may already know, on July 1st the harmonized sales tax (HST) began in Ontario. Based on the focus of your website, I thought the information below might be helpful to provide your readers.

Did you know?

About 93 per cent of all homes sold in Ontario are not subject to an additional tax amount under the HST.

It’s important to note, the HST is not charged on resale homes.

In addition it is not charged on:
home insurance
mortgage interest costs

HST is charged on:
real estate commissions
legal fees
new homes

(There is a full list of what changes and what doesn’t change is available on the website (23 languages), PDF format and for free download as a mobile application. )

There are also many tax credits and incentives available that benefit homebuyers:
New housing rebate
New rental housing rebate
Providing up to $1,000 for families (including single parents), or up to $300 for single people, in Ontario Sales Tax Transition Benefits.
Creating the new Ontario Sales Tax Credit that gives each member of your family up to $260 a year.
Increasing the energy and property tax relief provided to low- to middle-income people by 70 per cent.
Delivering an additional $500 a year to help senior homeowners pay their property taxes.

For more information about the HST visit (FR) or (EN).

Thank you,

Saturday, September 25, 2010

Informed - quickly

“This is to confirm that I have been completely satisfied with the professional service I have received from Greg Blok.  Greg has kept me informed of potential properties which become available on the market and has responded quickly to my emails and phone messages to enquiries on such properties. I feel very comfortable dealing with Greg and would highly recommend him to family, friends and colleagues looking for a contact in Real Estate”.


Friday, September 24, 2010

Globe and Mail ... top growth cities in Canada

Free at last! Retired at 33.

After deciding to change careers and leave my comfortable, profitable but less than stimulating business, I decided I was prepared to chase my dream of becoming a real estate investor. Although I had been educating myself for years and had a general passion for everything real estate, I knew I needed some help. After attending one of Marnie Bennett's seminars I recognized that this group may be exactly what I was looking for. I got in touch with Marnie and when she recommended I work with Greg Blok, I have to admit, I was a little hesitant. After all, I wanted to work with the Boss! The Radio personality! The self-made millionaire!! Well now that I have been working with Greg, I understand why Marnie recommended him. It's no secret in business you need to surround yourself with a great team. After starting my own business at 21 and leaving last year at 32, running a company with over 60 employees and annual sales over 100 million, I recognized early on that you can't do it all yourself and the most successful people hire even more talented people to work with them.

So I met with Greg, talked about my situation and my goals and immediately he got to work. Even when I felt like I may be asking stupid and/or annoying questions he was genuinely happy to help where I expected I might be wearing on his patience. Over the past few months he has become more of a mentor to me than an agent. (one of the reasons I wanted my agent to also be themselves an investor). Greg has shown me opportunities I never knew existed! He has been willing to share members of his own team of experts with me. Spent countless hours working on small deals. Even when nothing comes from them, he has always had the right attitude and sees the big picture in everything. He continues to impress me and has earned my confidence, which is not easy. His knowledge has been an incredible resource for me. He sees the properties we look at from an investors point of view and not just as an agent. Thanks to Greg's hard work, patience, dedication and knowledge, I am set to close on my first investment property in a couple of weeks and 6 more a month later! We continue to search together for the next one and I'm am more excited about going to work now than I was leaving work a year ago! After working with Greg, I expect this time next year to be making passively more that I was making working 80-100 hour weeks running my own business.

For helping to make my dream of being (semi) retired at 33 a reality, a sincere thank you Greg!

Free at last!

Ottawa, On



Tuesday, September 21, 2010

Just a few weeks

"It’s amazing what can happen in a couple of weeks. Thanks to your patient guidance, and a bit of encouragement from Greg, and great financial support from Lilliane, my wife and I have decided to invest in 2 condos. I truly appreciate the time you’ve taken to work with me and look forward to making more investments with you and the amazing Bennett Team. Wishing you all the best!"


What do you fix up?

I get a lot of clients asking what do I fix up, what do I get the biggest bang for my buck from?

Check out this brief blog, with some great ideas on what to do to give your house the quick make over for sale or tenant turn over - KIKI Interiors

Pleasant learning experience


“I have been remiss in thanking you for your assistance in my recent investment reconfiguration. Since our first meeting at the Bennett Real Estate Professionals seminar on the 24th of May, you have provided me with excellent advise and cautiously guided me through the process of intelligent property investment. I have followed your guidance with military precision by first equally redirecting my RRSPs into purchasing shares from two Bennett recommended organizations: Walton Capital Management; and Raymond James under the calculating and savvy outlook of Kash Pashootan. Both these investments have already yielded promising dividends.

You also provided me with the necessary information for me to spear ahead fearlessly and purchase not two but three rental properties in three different cities in the period of only one month. Each of these rental properties have differing but complementary attributes contributing to a balanced portfolio aiming at reconciliating long-term and short-term growth and cash-flow aspirations. This feat required a great deal of coordination and communication, and would not have been possible without the outstanding services provided by Lilianne Eid. Under the cover of an irresistible smile, she provided me with competitive rates easily dismissing her rivals; and worked with care to ensure contractual closing went as well as reasonably possible given some extenuating circumstances.

I will now slowly and wisely learn the intricacies of property management and fiscal accounting before attempting the next wave of investment. It has been a pleasant learning experience and I hope we can work again together in the future. Again, please accept my sincerest appreciation for your assistance in this endeavour.”


Thoughts on the Fed announcement

Data Release: Much of the same or is it?

· As expected, there were no major changes to the Federal Open Market Committee (FOMC) statement from their previous statement in August.
· The Fed maintained the target range for the federal funds rate at 0.0 to 0.25 percent and retained the reference that economic conditions warrant “exceptionally low levels of the federal funds rate for an extended period.” They also maintained their policy of reinvesting principle payments in treasury securities.
· The Fed did give a hint that further quantitative easing may be in the pipeline with a line that “the Committee…is prepared to provide additional accommodation if needed to support the economic recovery.”
· Another noticeable change was in their discussion of inflation, where they stated “measures of underlying inflation are currently at levels somewhat below those the Committee judges most consistent, over the long run, with its mandate to promote maximum employment and price stability.” It also added that “inflation is likely to remain subdued…before rising to levels the Committee considers consistent with its mandate.”
· The statement also recognized that while “bank lending has continued to contract” this has been “at a reduced pace in recent months”
· Once again Thomas Hoenig dissented to both the policy to maintaining the extended language commitment as well as the policy of reinvesting principal payments.

Key Implications

· This statement makes clear that quantitative easing has not been taken off the table, but that it is not a sure thing either. There appears to be little consensus within the Fed on whether to go forward with additional asset purchases, which puts the onus on the economic data to either confirm the Fed’s expectations or push them towards further action.
· The recognition that the contraction in bank lending has eased in recent months should not be overlooked. The Federal Reserve is cognizant of the impact of financial conditions in either impairing or improving the transmission of monetary policy to the real economy. An improvement in credit growth implies less need for the Fed to step in with additional quantitative easing.
· By focusing on trends in inflation and recognizing that recent levels have moved below their implicit target, the Fed has signaled that inflation outcomes are likely to be the threshold that would move the Fed towards a second round of quantitative easing.
· It is telling that the Fed chose not to focus on downside risks to the economic outlook. This likely reflects a desire not to spook markets with disappointing expectations for future growth, while appearing vigilante in fighting deflationary expectations from becoming entrenched.
· Nonetheless, with economic growth likely to maintain at a sub 2.0% pace over the next several quarters, speculation about the Fed doing more to support growth will continue to be on the forefront of the agenda for the next several meetings.

James Marple, Senior Economist

Indepth knowledge and successful experience

“As a young professional I am constantly looking at various investment options and strategies to build long term wealth. I found the seminar hosted by the Bennett Real Estate Pros to be very inspirational as it illustrates how attaining wealth through real estate is a realistic goal for any motivated individual determined to take financial control of their lives. Since the seminar I have been working with Marnie Bennett and Greg Blok, looking at various investment properties that are aligned with my current financial and personal position.

Having recently purchased an investment condominium with the Bennett Real Estate Pros I can definitely attest to the high quality of their service. Their patience, friendliness and in-depth knowledge of the Ottawa real estate market are all factors that contributed to the positive and successful experience I had with their company. I plan to continue my business relationship with the Bennett Real Estate Pros and would highly recommend their services to any home buyer or real estate investor.”

I now own 3 properties in addition to my primary residence.


Canadian Fed decides to hold rates

Not surprising ...

Time to think things though ...

“I commenced dealing with Greg Blok in April, 2008 and was immediately impressed by his professionalism and knowledge of the local real estate market. Greg has been highly accessible and I never feel hurried in my verbal dealings. I appreciated the fact that Greg initially seemed more concerned with uncovering my real estate investment goals than simply selling me something fast and moving on. It is evident that Greg values long-term relationships with his clients and, as such, strives to understand and meet their needs."

"I would not hesitate to recommend Greg to a friend or family member and, in fact, have done so.”


Outlook for US economy going forward ...

"I'm a huge bull on this country ... we won't have a double dip recession. I see our businesses coming back almost across the board." ....Warren Buffett, Berkshire Hathaway

"GE is now finding it profitable to build manufacturing and service centers in the United States rather than overseas, because it is more competitive to do so." ... Jeff Immelt, CEO, GE

"I am very enthusiastic about what the future holds" .... Steve Ballmer, CEO, Microsoft

Needs based investing

“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!”


Saturday, September 18, 2010

Small Town Condos

“As an experienced investor in the stock market, I was looking at a way to diversify into the “right” real estate opportunity.  I personally had limited knowledge in the real estate field and searched out an expert who had significant experience in the market.  I researched and found Greg and his impressive resume.  He introduced us to Kyle court.  It is a great fit as the values had not appreciated as much as the rest of the smaller city they are located in.  Greg taught me about the numbers from a monthly cash flow basis, and these worked very well.

These properties are low maintenance with high demand for rents. We have not had any vacancy issues. Greg Blok has a lot of experience with investing in real estate and I found him to be an invaluable resource in helping better understand this investment. I am comfortable owning units in this building and plan on keeping them for a while to come.”

The best part, the units are well under $100,000, so we could buy multiple units, to spread our vacancy risk out.

Jaleh and Kelly

Friday, September 17, 2010

How NINJAs ruined the United States economy!

Open to a small home, in the wrong part of a large US city.  Smiling in front of the home is the new buyer.  They put $0 down and provided no documentation on their income, expenses or verification that they have a job.  This is the modern day NINJA - not some bad 80s movie with fast moving people covered in black cloth or some Jet Li movie, these are real, everyday people, who through the system's greed, got in over their heads ... so the story begins ...

In the aftermath of the terrorist attacks on September 11, 2001, Alan Greenspan, Chairman of the Federal Reserve of the United States, decided to lower interest rates to stimulate the US economy. This lowering of rates had the perfect effect on a nation that was in disarray. Consumer spending went up and household savings dropped drastically.
Resulting from this, Americans started using their homes as “debit cards”, increasing their consumer spending and then refinancing their home to pay off high credit card debts. This refinanced debt, on home equity lines of credit, was tax deductable, meaning the higher the debt, the more write offs average American households had. The tax laws in Canada are different, we are not able to write off mortgage debt on our taxes, unless that debt is used for investment purposes.

With this increased emphasis on consumer spending, mortgage requirements were relaxed further, starting the popular NINJA mortgages (no income, no job, no assets). This accounted for about 22 percent of the United States mortgage market (compared to less than 5% of Canadian mortgages). The American system also did away with requiring documentation supporting income, expenses, etc.

These no doc mortgages were doomed to fail, evidenced by the story about Alberto and Rosa Ramirez. They are the migratory strawberry pickers from San Bernadino, California who purchased a home for $720,000.00. Their combined annual income is $30,000 USD. They bought this home with $0 down. It was a miracle of 'sub-prime' - a real life NINJA in action.

The Ramirez's make $300 per week each, which totals $2400 per month in income. Each of these people make approximately $15,000 per year. In Canada, regulations state that approximately 1/3 of our earnings could go towards housing debt, or in this case $10,400 per year in principle, interest and tax payments ($867 per month). In Canada, this couple could likely purchase a home in the $180,000 range (assuming they have limited other debt and a 5% minimum down payment). A far cry from $720,000!

For this property that was purchased by the Ramirez's, the mortgage payments would work out to approximately $5378. The taxes are approximately $750 per month. The couples monthly income does not even cover their housing expenses. They bought the house with a two year teaser rate, with negative ammortorization, meaning the value of the mortgage grows each year, instead of declining. At the end of two years, the idea was to re-finance the property and pay out the balloon payment due and get another super low teaser rate.

In many parts of the United States mortgage debt is handled differently than in Canada. Mortgage deficiency judgements (failure to pay your mortgage and entering into repossession) are handled differently in Canada than those states. In Canada, a lender can go after other assets you own if the proceeds from the sale of the property do not cover their losses. In many States, this is not the case, so if a person defaults, they keep their other relevant financial assets and only lose the house.

Where things became catastrophic, is that these mortgages were sold to Wall Street in bundles. Traditionally, mortgage debt was considered rock solid debt, as it was backed by an asset and had loan to values in the 80% of better range. This sub-prime debt was sold under the same assumption, but in many cases, the majority of these debts were ‘C’ level debt, not the ‘AAA’ that Wall Street thought they were buying.  So Wall Street was overwhelmed by the NINJAs, never a good situation!

As the market fell, large companies that bought these portfolios for income, were now losing millions and millions of dollars. This spidered through the economy and cast a destructive path through the whole US economy.  These NINJAs became responsible, in part for the collapse of Wall Street giants Bear Stearns, Lehman Brothers and others.  The underlying greed of Wall Street magnified the problems caused by these deadly NINJAs.

Thursday, September 16, 2010

Grass roots Ontario

I have been investing in real estate since my early 20's, I started doing this at time when money was scarce, and against all of the advice of the people close to me. At the time, I had limited funds available, and the real estate values in Ottawa were out of my reach. I had a difficult time qualifying for a mortgage that was high enough to purchase a reasonably good quality property.

I had a friend at that time who lived in a grass roots community approximately 45 minutes outside of Ottawa. He told me that values in his community were far more reasonable, and that rents were comparatively high in relation to Ottawa. Before long, after some due diligence, I purchased my first triplex in the town of Smiths Falls for $118,000. My cash flow at the time was approx $750 per month, and the rents were slightly below market. Through turnovers and renovations, I have managed to get my cash flow up to the $1000.00 mark.

At that point I began to realize a great opportunity for myself, I was making money in a place where the average investor from Ottawa wouldn't think about going. I didn't have any bidding competitions for the properties I was purchasing, I was able to afford to invest there, and it really wasn't a big inconvenience to own property out of town, I managed to make good contacts with people who could do repairs for me, and go to my property when I needed them to.

This opportunity in grass roots Ontario is what sparked my real estate investing career. From there I began purchasing investment real estate in Brockville, Prescott, Cardinal, and Newington. After 6 years of experience, cash flow, and knowledge, I began to invest in Ottawa real estate. Until this day however, my primary focus is still on small town Ontario "if it makes sense once, it makes sense 100 times." So today I own close to 100 doors and growing, and approximately 90% or more of my assets are within a 1 hour drive from Ottawa.

I just want to say thanks to Greg and the team at Bennett Professionals for all their help in building my business and helping me retire in my early 30s.