Wednesday, February 24, 2010

Residential Housing and Abraham Maslow ?

Often I get asked why I invest in residential real estate.  The answer might surprise some of you.  Abraham Maslow is the basis of why I invest in residential real estate.  Maslow created the Hierarchy of Needs, a theory in psychology about human motivation.  It was published in Maslow's 1943 paper entitled, "A Theory of Human Motivation".

Maslow's hierarchy of needs is often portrayed in the shape of a pyramid.  At the bottom, are the largest needs but also the most basic needs.  The higher up the pyramid, the less essential the need, therefore the smaller the shape.  At the top is the need for self-actualization - this a point of complete self fulfillment.

The lower four layers of the pyramid contain what Maslow called "deficiency needs":
A - physiological (including shelter),
B - security of position,
C - friendship and love, 
D - esteem.

With the exception of the lowest (physiological) needs, if these "deficiency needs" are not met, the body gives no physical indication but the individual feels anxious and tense.  The base needs, or the physiological needs are physical needs - food, shelter, etc.  The rest of the needs are mental and self esteem based. 

As a real estate investor, you can see the having a home is a basic need in a human's life, therefore it is one of the first two motivations a person has - food and shelter.  If you are a Survivor buff, you will always see the castaways look for food and a warm place to sleep before they worry about anything else. 

Commercial real estate is a more of a luxury and appears higher up the pyramid of needs.  In the middle of an economic crisis commercial stores can close, industrial plants can suspend shifts or product lines, but ultimately people will still need to eat and have a warm place to sleep.  Residential real estate is that warm place to sleep.

Tuesday, February 23, 2010

High Cash Flow from Small Apartments

Coming back to a popular feature here, I have started my high cash flow, small apartment listings again.  I have decided to up my criteria significantly this time around, to weed out some less desirable listings.  In my first attempt at the new format I bring to you a whopping 2 listings. 

Both have above average cap rates and produce very good monthly cash flows.

Eganville - $1,235.04 (fully rented)

Brockville - $2,136.55 (units are empty and need to be rented)

*** based upon a fixed 35 year mortgage with 3.25% interest rate

Friday, February 19, 2010

4-plex opportunity

Here is an opportunity to own a ONE year old fourplex apartment building just on the cusp of Ottawa in Rockland. There has been significant development in Rockland including 1/2 million sqft of commercial space, a huge new community center and soon the new Hockey Canada school.

This property is actually 4 seperate individual condos within one building meaning in the future, the property can be sold as one 4 unit building or as 4 individual condominium flats. The units are two bedroom and one bathroom.  It is a one year old - brick with siding highlighted building - click here to see the exteriors.

Wednesday, February 17, 2010

Own a 2nd Home/Vacation Property in the USA

Finally, I have put the final touches on my 2nd Home/Vacation property program for Southern US properties. I have been working for a few months on this program and I am excited to role it out.

I have finalized a program with a US lender, a Canadian tax accountant (living and working in the US) and other experts based in the United States to help clients buy second homes/vacation properties in the US.

I am very excited about this opportunity. You can buy houses in the US currently for ridiculously low prices, including 2,000 sqft properties in West Palm Beach for as low as $75,000. Properties in Phoenix, Arizona for prices starting in the $30,000s.  In Fort Lauderdale, Florida - I have seen a 3 bedroom, 2 bathroom bungalow home that was built in 2009 for $39,900.00

If you are interested please contact me and I can start the process.

Here is an example -

13614 W Solano Drive
Litchfield Park, AZ 85340

4 bed, 3 bath
2030 sf
built 2002
2 car garage
pebble tech pool with water fall
backs to Dreaming Summit park/green area
Need no rehab

This home is in mint condition and is located in gorgeous Dreaming Summit in Litchfield Park. The backyard is resort like and backs to a park/green area.

The current occupants are willing to sign a new lease for up to two years at $1275/mo. This is the perfect buy and hold deal because I think there is a lot of upside with this home. Sell in 2 to 3 years and make lots of money!

PRICE $125,000

Obtaining property tax rebates for vacancies in 2009

In the depths of the economic downturn of 2009, many landlords and businesses found portions (or even all) of their properties vacant for significant periods of time. Whatever the reason for the vacancy, the cost of maintaining that unused space continued for a landlord who lost tenants or a manufacturer who shut down a plant or a portion of a plant. One component of those expenses were the property taxes.

There is a way by which a portion of the property taxes can be recovered.

Commercial or industrial properties located in Ontario may be eligible for a refund of up to 35% of the property taxes paid for vacant units or properties. It is however not an automatic refund. A landowner must make an application for that refund, backed up by appropriate documentation and satisfy the conditions for the refund.

The vacant area must either be the entire building or a physically segregated part of the building. The vacant area must not have been rented or occupied for at least ninety (90) consecutive days in 2009. The property must be assessed as being either in the commercial or industrial property classes. The amount of the rebate is dependant upon the property class of the unit or building that was vacant and the period of time it was vacant. If the building or portion of the building was not used because renovations, repairs or construction was being carried out, it may still be eligible for the rebate.

There is however, a deadline. The application must be made no later than February 28, 2010 for vacancies in 2009. Failure to apply by that date is fatal.

The municipality normally responds within 120 days. There is an appeal from a decision of the municipality to not grant the rebate or if the landowner is not satisfied with the amount of the rebate. That appeal must be made within 120 days of the day the decision of the municipality is mailed to you. Once again failure to make that appeal within the appeal period is fatal.

There is also an appeal if the municipality simply fails to determine whether you are eligible for the rebate. The appeal can usually be made once 120 days have elapsed after the application was received.

Tuesday, February 16, 2010

Mortgage Lending changes - APRIL 19th

The Federal Government announced moments ago changes to the CMHC backed mortgage program. These changes will come into effect on April 19th, 2010. In a statement, Federal finance minister, Flaherty described the housing market as "healthy and stable" and said that the government's early action can help prevent negative trends from happening.

"Canada's housing market is healthy, stable and supported by our country's solid economic fundamentals," said Minister Flaherty. "However, a key lesson of the global financial crisis is that early policy action can help prevent negative trends from developing."

The three changes are:
1 - A requirement that borrowers will need the resources to qualify for a five-year fixed-rate mortgage even if they go with a lower variable rate.

2 - The government will also lower maximum amounts that can be withdrawn when borrowers refinance mortgages to 90 percent from 95 percent of the value of their homes.

3 - CMHC will require a minimum downpayment of 20 percent for insured mortgages tied to non-owner occupied properties bought for speculation.

Bank of Canada Governor Mark Carney has also recently said he did not see evidence of a housing bubble, downplaying fears of a Canadian version of the U.S. subprime mortgage meltdown. He cited a more conservative mortgage lending practice in Canada protecting our banks from failure and protecting our housing market from wide scale drops.

These changes to the system will not effect my clients greatly, because as a general rule, I suggest 80% LTV on purchases, which falls within the new suggested guidelines. This will protect certain investors from over leveraging themselves and getting into financial hot water.

"There's no clear evidence of a housing bubble, but we're taking proactive, prudent and cautious steps today to help prevent one. Our Government is acting to help prevent Canadian households from getting overextended, and acting to help prevent some lenders from facilitating it," said Minister Flaherty. "If some lenders aren't willing to act themselves, we will act. These measures demonstrate the Government is committed to taking action when necessary to support the long-term stability of a sector that is so vital to our economy and the financial well-being of Canadian families."

Friday, February 12, 2010

It's coming ... Soho Lisgar - April 2010

SoHo Lisgar's grand opening is planned for April 10, 2010.

This is the second Soho Project in Ottawa after the wildly successful Soho Parkway. The new building, Soho Lisgar, will be located at 300 Lisgar St. (on Lisgar St., east of Bank St.).

No specifics have been released, but you can expect the equivalent hotel-inspired specifications, features and amenties that are included in SoHo Parkway - professionally run gym, home theatre, hot tub, hotel-trained conceirge, etc.

While none of the details about SoHo Lisgar have been released, I can assure you this Soho will be a bigger building based upon the land footprint and the increased height. I have heard 18 or 19 stories high.

As SoHo Lisgar gets close to its April launch date, more details about the building will be revealed.  If you are registering online, please remember to indicate that you are working with a realtor (Greg Blok).

Tuesday, February 2, 2010

Abbey Lane - Westboro community within a community

A public consulation has produced the following information on the new project in Westboro on the convent site. Click here for details.

This site will encompass approximately 800 to 1,000 condo units, shopping areas, community center, etc. This area will be designed with a heritage flair and will be similar to the Byward Market in the atmosphere and feeling.

Now is the time to invest in the area, before this huge project is unveiled. Email me today and we can discuss the opportunities in the area.

Land based Investing

A great article in today's Ottawa Citizen about LAND BASED INVESTMENTS. I am flying down to Phoenix on Thursday to check out first hand some of the land investments.

At the end of February, we are hosting a land tour right here in Ottawa, where you can learn about land banking and actually see the lands that are owned by Walton International. It is quite interesting to see land banking in action, to understand the vast amount of research that goes into planning the acquisition. Email me if you wish to join the tour.