Wednesday, December 21, 2011

Holiday Season

Merry Christmas to all my readers

I wish you a safe and happy holiday season to your and yours!

Best wishes in the New Year

Please note - I am not available between Dec 22nd and Jan 9th 2012.  During this time, please feel free to email me and I endevour to return emails daily.

USA visas to be easier to procure in the future?

What is Happening with the Retiree Visa and Homeownership Visa Proposal (S. 1746 and H.R. 3341)?

With much fanfare on October 20, US Senators Schumer and Lee introduced the long awaited Canadian retiree visa proposal and a companion homeownership visa proposal. Many of us have lobbied for years for the retiree legislation. Now, with public endorsements from Washington-savvy organizations such as the US Chamber of Commerce, the US Travel Association, and the American Hotel & Lodging Association, this bill seems to have a lot going for it-but nothing is happening.

As is customary, the bill was read twice in the Senate. The bill was then, appropriately, sent to the Senate Judiciary Committee for further consideration. To date, no Committee hearings have been scheduled. Calls to Senator Schumer's office have been met with "most bills introduced never make it out of committee..." No organization has made any identifiable public effort to get the bill moving. There is no movement of the House companion bill H.R. 3341 either.

The lack of movement is a good lesson in US politics. From our perspective, four kinds of bills are introduced in Congress:

a) A momentum bill. A bill that has a natural momentum all its own. It is pushed to approval by circumstance with no meaningful opposition. These come in two flavors: the meaningful (the December 8, 1941 Declaration of War on Japan and Germany) and the meaningless (National Ice Cream Day on the third Sunday in July).

b) A self-interest bill. A bill that moves forward because it is in the self-interest of a member or members of Congress. It makes a member look very good. It saves a member's political or financial bacon. Or, refreshingly, a member decides that it is simply the right thing to do.

c) An opportunity bill. A bill that makes sense and has some public support, but no member of Congress is going to put limited time, money, and energy behind it unless there is a compelling reason to do so. In other words, opportunity bills become self-interest bills and then become law through public support/pressure.

d) A dead-on-arrival bill. A bill introduced at the request of and to please a constituent. Though the bill does no political harm to the member introducing it, the bill has no chance of ever becoming law. Members from conservative districts might propose sealing the borders, eliminating the Department of Education, or making English the only language used in government publications. Members from liberal districts might propose free university education, a ban on hunting, or a cabinet level department of alternative energy. Under current circumstances, none of these proposals will go anywhere, but in every congressional session you will see these bills or bills like them.

Though we thought S. 1746 (VISIT-USA) was a momentum bill, it is an opportunity bill. It is, emphatically, not dead-on-arrival.

Monday, December 19, 2011

Updates to the Condominium Act

Changes have been proposed to the Ontario Condominium Act.  After being enacted in 2001, the legislation is ten years old, like anything ten years old, it should be evaluated and updates discussed.

To be a director of a condominium board in Ontario, you have to be 18-years of age, mentally competent and not be an undischarged bankrupt.

But as condominiums become an increasingly important lifestyle choice in the province, two of the largest condominium associations want to raise the bar on the quality of directors by making sure that education becomes a requirement under the now decade old Ontario Condominium Act.

“Given the large responsibility borne by directors often dealing with assets worth many millions of dollars, and that most often they are volunteers without a specific skill set for governance of a condominium corporation…all new directors regardless of their educational and professional background attend an introductory directors’ condominium course to ensure basic knowledge,” says a proposal to be released on June 1 and obtained by The Star.

The educational bylaw requirement is just one of many long-awaited recommendations in a 102-page report by the joint committee of the Canadian Condominium Institute and the Association of Condominium Managers of Ontario.

“There are a lot more people living in condos today than when the act was implemented, and we’ve seen where things could certainly be improved,” said Armand Conant, a lawyer and past president of the Canadian Condominium Institute.

Other changes the groups want include:
• Reserve fund requirements in condos to be increased so that buildings don’t fall into disrepair. Currently the minimum contribution in the first year budget is 10 per cent. The group recommends 20 per cent.
• New property tax classifications for condominiums. The government assess units for taxes as if they were receiving individual services which is “not fair or equitable” says the group. “For example there would be only one garbage pick up for a condo of 200 homes, yet if these 200 homes were houses on a street they would have to make 200 stops.”
• The Ontario New Home Warranty Plan should apply to condominium conversions so the new owners will have protection.
• More disclosure by developers on key financial matters. Some developers may mislead consumers by artificially depressing first year expenses which results in large increases in common expenses in the second year.

Conant says his group has met with as many stakeholders as possible, from owners, to developers and trades people to draft the recommendations.

“We started with the basis that this is essentially a consumer protection act, and we wanted to have as wide an input as possible,” said Conant.

With an election coming up in October, the groups hopes this will raise the profile of condominium ownership with politicians and that the provincial government will eventually move to re-open the Act. Copies will be delivered to Minister of Consumer Services John Gerretsen’s office, as well as all the opposition parties.

The Act received Royal Assent in 1998, but didn’t come into force until May 5, 2001, or ten years ago.

There are now 9,000 condominium corporations in the province, and record breaking sales of condos in cities such as Toronto as condominiums are outselling single detached homes.

“The current Act is a huge improvement over the old one, but since then times have certainly changed,” said Conant.

Click here to read the full article

CMHC Overview for Ottawa 2012

The Ottawa housing market appears to be looking positive again for Ottawa in 2012 according to CMHC.  This is fueled by Ottawa having the highest employment rate in Ontario and highest paid labor market in Ontario.

2012 Predictions by CMHC
- Interest rates are expected to remain low in 2012 due to the European and USA economic issues.
- Housing Prices are expected to rise by 2%
- Vacancy rates for rental properties to remain low, close to 1% (meaning 99 out of a 100 apartments are rented monthly in Ottawa).

Some 2011 Highlights
- Largest Price Increase: West End at 10.6%
- Highest Volume: Barrhaven at 15.6%
- Most Increase In Value: Condo's

Monday, December 12, 2011

New goal - Job Optional

I was at a seminar this week put on by a group promoting real estate investment.  It was mostly an information session, trying to sell spaces at a weekend retreat.  There message wasn't really anything new, it was planting a seed of additional information available in the future if you pay a hefty fee to attend another session (and then another session).  

The one item that came to me at this seminar was a very cool new term, "job optional".  Basically, job optional is exactly as it sounds, getting to a point that you no longer need to work a day to day, that your mail box money (passive income) exceeds your monthly expenses.  A seemingly simple concept, but difficult to achieve.  I like this term, as you could exist without a job, but it does not imply retirement.  It allows for options and flexibility in life and in your future.

I have two clients who are job optional in their 30s through real estate investment.  I have been working on analysing their portfolios.  I figured since I helped build these portfolios, I should be able to replicate it myself with work and effort.  They had clearly defined goals and a singular focus and direction towards an end result and achieved it by never losing focus on their ultimate vision for the future.

The first step is to accurately ascertain how much money you need to live the lifestyle you desire.  My wife (and by extension myself) does not believe in completely sacrificing your life to live only for tomorrow, you have to enjoy today and be smart looking forward to tomorrow.  For example, if you like to travel, you have to budget that into the figures.  If you do not add items like travel to your budget, you will never be able to financial afford to take a trip or whatever luxury items you enjoy.

For most of us, this number will be a negative.  This is why jobs exist.  This negative number is how much money you have to make each month at a job to live your lifestyle.  The larger the number, the more money you need to make each month.  This is a number that has to be replaced by your mail box money. 

I have back tracked my expenses for the past year and averaged out my expenses to reach a fairly accurate monthly expense estimate.  I have added ten percent to this number as a buffer for life's unexpected bumps.  I figure this gives me a pretty reliable estimate.  Inflationary concerns are limited as rents increase annually and should cover these.

Now, the fun begins.  My efforts going forward are to find properties that produce "mail box money".  After you deduct all the expenses, mortgage payments, etc, that there is a monthly left over balance, which is predictable.  To be safe, I will be deducting 10% off each month's rental income for vacancy, repairs, maintenance, etc. 

It is pretty interesting to do the math on your monthly budget and how much you are deficient each month, based upon your expenses.  This is a great tool to predict how much money you will need in the future for your own retirement.  I suggest, heading into the new year, that everyone work these numbers.

My number is rather large (or so I think), so this goal will take some time.  I think with focus and direction, it is attainable.  There is no sense in setting goals that cannot be achieved.  I will update you as my progress begins.

Saturday, December 10, 2011

Team approach to USA investing

My wife and I were new to real estate investing when we met with Greg. The team of people that he put us in contact with made us feel comfortable and confident that we made the right decision. Starting with the amazing service from Annelies and Julie to the renovation company we hired, everyone was very responsive to us and understood our investment goals. Tim's team in Phoenix is outstanding. They have answered countless questions from us and worked very closely with us on our first property which had 8 offers in the first 24 hours on the market. Their website is very simple to use. The feature we use the most is the hotlist of properties that they hand pick as some of the best deals for their clients. We have purchased 3 properties in the past 4 months. We are looking forward to our 4th purchase in early 2012.

Keith and Vicki

Tuesday, December 6, 2011

November Results - Ottawa Real Estate Board

Members of the Ottawa Real Estate Board sold 1,020 residential properties in November through the Board's Multiple Listing Service® system compared with 940 in November 2010, an increase of 8.5 per cent. The five-year average for November sales is 881.
Of those 1,020 sales, 244 were in the condominium property class, while 776 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.
"Last month was the best November on record for resale home sales in Ottawa. The last time we saw sales numbers anywhere close to that number was in 2001. It speaks well for the stability of our market that even in the quieter months of the year, our market is still thriving," said Board Past President Joanne Tibbles. "The number of properties available for sale is higher than at this time last year, indicating that homeowners are confident that it's a good time to put their home on the market, and based on these great sales numbers, buyers are also confident, especially as interest rates remain stable," she added.