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Calgary Herald Sunday`s Paper April 27, 2008

Thanks for the Post. This is just what we spoke about at the April REIN Workshop... the value of the reasoned and non-emotional look at underlying economics. Having been in this game for 16+ years, we have seen the ups and downs of the markets and provided the leadership both on the buy side and the sell side for investors throughout the cycles of the market.

An educator (such as REIN) should not have a biased towards buying or selling, it should have a bias towards reasoned analysis of market realities. If you are investing in real estate with a short term, or day trade, mentality it is VERY easy to get the emotion of FEAR rising into your life (and at the other end of the scale - greed).

Real estate, as the big players understand` is about cash flow and getting a strong yield on the invested capital. Yield does not come from the increase or decrease in values (that`s really what homeowners focus on) the Yield comes from finding buyers markets where you can purchase properties that provide you with a future long term cash flow return on your investment of 6 - 8% or more, using this cash flow to buy freedom / time in your life.

Over the years I have chuckled many a time at the `Chicken Littles` who don`t truly understand the game called Cash Flow.
 
My first question would be to Mr. Turner, and it would be asking him what percentage of his income comes from a passive source such as rental properties. What credentials does this guy have that would enable him to write a book which forecasts a market`s real estate performance? Seems like diddly squat when compared to Don Campbell`s.
The bottom line is that controversy creates cash, which is very likely the reason for Garth`s timely book release. Must be pure coincidence that this book wasn`t published in 2006...

Credit to the Calgary Herald for allowing Don`s opposing take on Garth`s book, nice to see an article with two separate points of view.
 
QUOTE (JRL @ Apr 28 2008, 12:01 PM) My first question would be to Mr. Turner, and it would be asking him what percentage of his income comes from a passive source such as rental properties. What credentials does this guy have that would enable him to write a book which forecasts a market`s real estate performance? Seems like diddly squat when compared to Don Campbell`s.Contact him and ask, then let us know your results:
Call: 905-693-0166
Fax: 905-693-0704
E-Mail: [email protected]
 
Thank you for posting this. I listen to 660AM by day and all I hear is all the drag about how the market is over!!!!
I really needed to hear this today as I am working on my next purchase. I am a long term investor ... I am a long term investor ...
Sincerely,

Just an Investor Mom.
 
QUOTE Thanks for the Post. This is just what we spoke about at the April REIN Workshop... the value of the reasoned and non-emotional look at underlying economics. Having been in this game for 16+ years, we have seen the ups and downs of the markets and provided the leadership both on the buy side and the sell side for investors throughout the cycles of the market.


An educator (such as REIN) should not have a biased towards buying or selling, it should have a bias towards reasoned analysis of market realities. If you are investing in real estate with a short term, or day trade, mentality it is VERY easy to get the emotion of FEAR rising into your life (and at the other end of the scale - greed).

222 I think the recent big $100K + jump in property values over the last few years has thrown a lot of people into thinking that it certainly has a lot of room to retreat (crash) in price. I remember watching the prices in Canmore jump $100K when Marriott announced that they were coming to Canmore and the prices never retreated since. Commodities have gone up a lot so why not house prices to match the inflation rate? Fear and greed move the stock market prices. (Both are negative qualities too!)

QUOTE Real estate, as the big players understand` is about cash flow and getting a strong yield on the invested capital. Yield does not come from the increase or decrease in values (that`s really what homeowners focus on) the Yield comes from finding buyers markets where you can purchase properties that provide you with a future long term cash flow return on your investment of 6 - 8% or more, using this cash flow to buy freedom / time in your life.

Over the years I have chuckled many a time at the `Chicken Littles` who don`t truly understand the game called Cash Flow.

222 I remember many years ago thinking that all one had to do was to move to a part of the country where prices were depressed, wait for the area to turnaround and then move to another depressed area, live there til it turns around and move on, etc. Saskatchewan and some other areas have been depressed for decades it seems so if you moved to an area that didn`t cycle, you would be trapped.
 
QUOTE (JRL @ Apr 28 2008, 12:01 PM) My first question would be to Mr. Turner, and it would be asking him what percentage of his income comes from a passive source such as rental properties. What credentials does this guy have that would enable him to write a book which forecasts a market`s real estate performance? Seems like diddly squat when compared to Don Campbell`s.

My gut feeling says that Mr. Turner`s passive income comes from publishing books. Should his books outsell Don`s it`s because many people would rather read about doom and gloom than solid facts.

It is Don`s unbiased fact-based approached that drew me to join REIN in the first place.
 
Doomer Glomers and Chicken Littles can be our friends. I think they can create opportunities.
 
QUOTE (nepoez @ May 1 2008, 03:10 PM) Doomer Glomers and Chicken Littles can be our friends. I think they can create opportunities.

correct .. but let`s not be too caulky in AB or BC .. as prices here are high .. and will make cash-flow difficult (not impossible) and will deter in-migrants to some degree .. either before they come or when they are here .. and many folks are already stretched to the limit here with a 5.25% mortgage .. and adding rising gas bills, cell phone bills and heating costs will make owning even more expensive!

In addition, our interest rates are very low. So, if interests do go to 6, or god forbid, 7% .. this will impact real estate values !

Let`s not price perfection such as a 4.8% mortgage with 1.2% vacancy and no repair bill for 14 years into our cash-flow assumptions !!

Let`s be realistic !
 
QUOTE (thomasbeyer2000 @ May 1 2008, 04:26 PM) correct .. but let`s not be too caulky in AB or BC .. as prices here are high .. and will make cash-flow difficult (not impossible) and will deter in-migrants to some degree .. either before they come or when they are here .. and many folks are already stretched to the limit here with a 5.25% mortgage .. and adding rising gas bills, cell phone bills and heating costs will make owning even more expensive! In addition, our interest rates are very low. So, if interests do go to 6, or god forbid, 7% .. this will impact real estate values !

Let`s not price perfection such as a 4.8% mortgage with 1.2% vacancy and no repair bill for 14 years into our cash-flow assumptions !!

Let`s be realistic !

Here is some interesting information regarding interprovincial migration from Lai Sing Louie, senior market analyst in Calgary for Canada Mortgage and Housing Corporation:
In the second half of 2006 Alberta experienced a net gain of 36,348 people in interprovincial migration while in the second half of 2007 the province experienced a net loss of 4,196 people.

"That swing is over 40,000 people," said Louie, adding Calgary usually gets about 40 per cent of the overall interprovincial migration number.

There is no current data for 2008, "but that trend is likely to have continued and that`s probably likely leading to this sharp reduction in demand in MLS sales," said Louie.
 
QUOTE (MONEY @ May 1 2008, 08:16 PM) Here is some interesting information regarding interprovincial migration from Lai Sing Louie, senior market analyst in Calgary for Canada Mortgage and Housing Corporation:In the second half of 2006 Alberta experienced a net gain of 36,348 people in interprovincial migration while in the second half of 2007 the province experienced a net loss of 4,196 people.

I don`t argue the accuracy of CMHC`s research but that quote in this context is a little misleading. It could lead some people to believe that Alberta`s population actually diminished in 2007 which is patently untrue.

According to StatsCan, Alberta did lose more people to other provinces than it received. Their numbers are considerably different than CMHC`s (-880 vs. -4,196) however they both claim Alberta saw a net loss in interprovincial migration. However, in the fourth quarter of 2007, Alberta`s population experienced a net increase of 11,114 thanks to international migrants and net natural increases (new babies).

http://www.alberta-canada.com/statpub/file.../weh_280308.pdf

From that same document...
"On an annual basis, despite losses in interprovincial migration in the second half of 2007, Alberta`s population growth of 2.0% between January 1, 2007 and January 1, 2008 was the highest growth rate in the country."

No matter how you cut it, there were more people in Alberta as of January 1st, 2008 than what we started with on January 1st, 2007. The same can be said for the last quarter of 2007 which showed a net population increase of 0.32%.
 
yes, in-migration was around 2% growth in 2007 .. but FLAT to negative in late 2007 and 1Q 2008 !

will likely pick up again later in 2008 as US, ON, PQ is getting tougher economically .. and prices here have ebbed down somewhat ..

time to buy is now .. as prices will not come down a lot more .. and will rise again .. albeit more moderately in 2009 and beyond .. in a more cautious lending environment with add`l political risk about the "tar sands" .. and more delays as more and more costs get heaped onto the oil industry to protect ducks and reduce "global warming" .. which ultimately will lead to even more jobs here in AB .. but will stretch out certain projects form 5 years to 10 years .. thus a longer but not as fast rising economic boom !
 
QUOTE (thomasbeyer2000 @ May 2 2008, 11:17 AM) yes, in-migration was around 2% growth in 2007 .. but FLAT to negative in late 2007 and 1Q 2008 !

will likely pick up again later in 2008 as US, ON, PQ is getting tougher economically .. and prices here have ebbed down somewhat ..


time to buy is now .. as prices will not come down a lot more .. and will rise again .. albeit more moderately in 2009 and beyond .. in a more cautios lending environment with add`l political risk about the "tar sands" .. and more delays as more and more costs get heaped onto the oil industry to protect ducks and reduce "global warming" .. whcih ultimatly will lead to even more jobs here in AB .. but will stretch out certain projects form 5 years to 10 years .. thus a longer but not as fast rising economic boom !


222 One of the realtors i know is strategically trying to solicit buyers from Windsor where the market has slumped. The headlines of the Calgary Herald not that long ago spoke of an in-migration of 40,000 foreign workers coming here. There are things in the works to draw the buyers to clean up the inventory. My understanding is that currently, there are 6 homes per buyer in Calgary.
 
QUOTE (UTCVenturesLtd @ May 2 2008, 02:00 PM) ... My understanding is that currently, there are 6 homes per buyer in Calgary.

so buying is good .. but at the right price please .. as some price expectations are still somewhat elevated .. and prices do NOT rise in a straight line .. and might even be down for a year or, no, 2 even ..
 
QUOTE (thomasbeyer2000 @ May 2 2008, 02:28 PM) so buying is good .. but at the right price please .. as some price expectations are still somewhat elevated .. and prices do NOT rise in a straight line .. and might even be down for a year or, no, 2 even ..


And this is in the active season now with the interest rate cuts, so what will the market be like in the fall to Dec, when things typically go quiet? Is it better to hold off purchasing til then for a better deal? Interest rates seem to climb a bit in that time as well if i remember correctly. One can look at the past listings and what the property actually sold for to get an idea of the spread between the two and if the market is still sliding or has stabilized over the last quarter or in the current month. Just continue to monitor the sold prices as time goes on while looking for a property that will cash flow. If a property cash flows, the actual cost seems not to be as important then as you are now in the game. The key words always seems to be "cash flow". The number of listings have been increasing and will they continue to do so as time goes on or will the inventory start to dwindle either through sellers deciding to hold or just rent out any vacant homes til the market starts to move up again or the in-migration eating them up?
 
QUOTE (UTCVenturesLtd @ May 2 2008, 03:45 PM) And this is in the active season now with the interest rate cuts, so what will the market be like in the fall to Dec, when things typically go quiet? Is it better to hold off purchasing til then for a better deal? Interest rates seem to climb a bit in that time as well if i remember correctly. One can look at the past listings and what the property actually sold for to get an idea of the spread between the two and if the market is still sliding or has stabilized over the last quarter or in the current month. Just continue to monitor the sold prices as time goes on while looking for a property that will cash flow. If a property cash flows, the actual cost seems not to be as important then as you are now in the game. The key words always seems to be "cash flow". The number of listings have been increasing and will they continue to do so as time goes on or will the inventory start to dwindle either through sellers deciding to hold or just rent out any vacant homes til the market starts to move up again or the in-migration eating them up?

as oil prices rise and gas prices too .. AB will boom again .. so we are somewhat immune from worldwide recissionary discussions / events ..

cash-flow is NOT where the money is made .. but it is required for a long term hold ..

if you buy an asset with 20% down .. and 0 cash-low for 10 years .. and
a ) 0 equity upside .. you have doubled your money as the mortgage has been paid down 20% !
b ) 20% price increase (less than 4% annually compounded, below Canada`s long term average !!) .. you would have TRIPLED your money
c ) 30% price increase (less than 6% annually compounded, about Canada`s long term average as house prices in Canada have doubled every 15 years in a normal economy !!) .. you would have made 250% on your money

cash-flow is gravy / icing on the cake in a single family home / TH / condo ..
 
QUOTE (thomasbeyer2000 @ May 2 2008, 06:06 PM) as oil prices rise and gas prices too .. AB will boom again .. so we are somewhat immune from worldwide recissionary discussions / events ..

cash-flow is NOT where the money is made .. but it is required for a long term hold ..

if you buy an asset with 20% down .. and 0 cash-low for 10 years .. and
a ) 0 equity upside .. you have doubled your money as the mortgage has been paid down 20% !
b ) 20% price increase (less than 4% annually compounded, below Canada`s long term average !!) .. you would have TRIPLED your money
c ) 30% price increase (less than 6% annually compounded, about Canada`s long term average as house prices in Canada have doubled every 15 years in a normal economy !!) .. you would have made 250% on your money

cash-flow is gravy / icing on the cake in a single family home / TH / condo ..


Great explanation!
I was "lucky" to have bought a 2nd Alberta property and 3 Sask properties since 2005. All, including my principle residence have doubled to tripled in the now market price over the last 2 yrs!!!
Being brought up to carry no debt, i had thought the best and safest way was to have the properties paid off. Rather than to have all the money tied up in properties, it seems that just putting the min down and using OPM for the balance is a much faster way to build wealth. Then all one needs to do is to keep an emergency stash of Kash and use a min. amount for a down payment again and again to keep picking up one property after another. Almost like a snowball rolling down the hill, once you get it going it just keeps on going! An investor needs to take ACTION, but be educated first so they don`t rely on "luck". That is the simplified version...with a LOT of missing in between information. I am currently doing the Quickstart Home Study Program (recorded "live") to pick up a more solid education base to work from. Now on cd #2 and enjoying it very much! Don Campbell and Russell Westcott are great speakers with energy! If any of the transient forum members happen to stumble on this posting, i recommend that you invest in the Quickstart program. You`ll get your money`s worth out of the information waiting for you!
Dean
[email protected]
 
QUOTE (UTCVenturesLtd @ May 3 2008, 01:53 AM) Great explanation!
I was "lucky" to have bought a 2nd Alberta property and 3 Sask properties since 2005. All, including my principle residence have doubled to tripled in the now market price over the last 2 yrs!!!
Being brought up to carry no debt, i had thought the best and safest way was to have the properties paid off. Rather than to have all the money tied up in properties, it seems that just putting the min down and using OPM for the balance is a much faster way to build wealth. Then all one needs to do is to keep an emergency stash of Kash and use a min. amount for a down payment again and again to keep picking up one property after another. Almost like a snowball rolling down the hill, once you get it going it just keeps on going! An investor needs to take ACTION, but be educated first so they don`t rely on "luck". That is the simplified version...with a LOT of missing in between information. I am currently doing the Quickstart Home Study Program (recorded "live") to pick up a more solid education base to work from. Now on cd #2 and enjoying it very much! Don Campbell and Russell Westcott are great speakers with energy! If any of the transient forum members happen to stumble on this posting, i recommend that you invest in the Quickstart program. You`ll get your money`s worth out of the information waiting for you!
Dean
[email protected]

I agree equity growth is where you make your money. That is why I would be hesitant to buy now. Call me a "chicken little" or whatever else you want to discredit my opinion but there is no harm in waiting a little longer to see how this plays out. A person is not going to miss out in huge gains over the next 6 months. In a lot of areas in Alberta its likely that you will get in cheaper and closer to "bottom" in six months. As for Garth Turner, I bought the book, and I own Don`s as well. Garth book was so-so but he had some good points that you cant just throw out the window. He does have experience in Real Estate investing.

There are jobs here in Alberta and they will be here for quite some time so big big picture real estate is still a good investment but the people who are patient will be making money. Unfortunately the "easy money" days are over.
 
QUOTE (brendan82 @ May 4 2008, 11:19 PM) I agree equity growth is where you make your money. That is why I would be hesitant to buy now. Call me a "chicken little" or whatever else you want to discredit my opinion but there is no harm in waiting a little longer to see how this plays out. A person is not going to miss out in huge gains over the next 6 months. In a lot of areas in Alberta its likely that you will get in cheaper and closer to "bottom" in six months. As for Garth Turner, I bought the book, and I own Don`s as well. Garth book was so-so but he had some good points that you cant just throw out the window. He does have experience in Real Estate investing.

There are jobs here in Alberta and they will be here for quite some time so big big picture real estate is still a good investment but the people who are patient will be making money. Unfortunately the "easy money" days are over.


About equity... I took the leap in 2005 and bought a mtn 2nd property as a weekend getaway, then a BIG house in Sask to rent to my inlaws, plus 1 and 1/2 (joint title) lake lots. One to build and flip to pay for the second lot development. All have done very well. I like to look for places that are undervalued, before they run up in price or right now, my eyes are looking south of the border. Places like Las Vegas with a good in migration that should eat up the foreclosures and they have BIG projects coming that you read in the newspaper about every month. I am more interested in vacation destination properties that can rent for $1K a week as opposed to $1K a month to a local renter. Suppose you buy a property in the U.S. for $100K and it goes to $0. If you can rent it out for $1K a week for a whole year, you recover in just 3yrs taking in operating costs! The power of cashflow!

From the Alberta market, it is in a cooling off period or plateau until we get more in-migration happening again. From what i understand, that could be about 2yrs and then slower paced price increases. As for one financial advisor that i know, he says that with oil companies paying royalty fees or higher fees, they will move their rigs to Sask to do business and the house prices will go down a LOT here in Alberta which he figures would be about 2 1/2 yrs from now. Maybe just keep your eye on the number of listings until they start to dwindle and watch the numbers of those coming to Alberta start to rise. It seems that a lot of the more patient buyers are waiting to see if the prices come down further. I have been looking at advertising for new homes and prices have been slashed $30K in some instances. At some point the gap between the what buyers can afford and price reductions of the sellers, the market will be moving again. Well, although not easy, the numbers do line up for investment rental properties out there right now. Canada is said not to have an overvalued market either.
 
QUOTE (brendan82 @ May 4 2008, 11:19 PM) ... Unfortunately the "easy money" days are over.

AMEN to that .. as leverage is less and thus, more cash-to-close is required, and thus, less cash-on-cash ROI .. but still VERY decent (yes 5% or 10% down is hard, but 20% or 25% down still works quiet well in many places WITH cash-flow)

There are ALWAYS markets though somewhere that have attributes for growth, usually in-migration (i.e. JOBS i.e. strong economy) or scenic beauty (i.e. mountains or beach or lake or ocean or views) .. coupled with motivated sellers .. and then reative marketing ideas / impeccably management when owning !
 
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