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Kung Hei Fat Choy

  • Real Estate Outlook Issue 2014
  • Collapsing Currencies – Stock Markets – Where Do The Rich Put Their Money?
  • Inflation
  • Jim Dines – The End Of Jobs
  • U.S. Market Will Outperform Canada This Year
  • Vulture? Feed Your Greed Guilt Free In BC
  • Nelson Waterfront Resurfaces
  • Calgary Detached Houses A Rental Play
  • With Low Rates, Reits Will Beat The Street
  • Tie Up Real Estate With No Risk! It Is Possible!
  • Alberta Bound
  • Western Investor
  • Best Mortgage Rates This Week

The Year of the Horse

The horse is one of Chinese favorite animals. Horses provided transportation before automobiles, to quickly reach their destinations. Horses help people to
win the battle. Therefore Horse is a symbol of traveling, competition and victory. That’s why the Horse is connected to speedy success in China.

Horses like to compete with others. They pursuit for their freedom, passion and leadership. That implies that people will have busy
schedules for their goals in the year of Horse. The Wood Horse year is a time of fast victories, unexpected adventure, and surprising romance. It is an excellent year for travel, and the more far away
and off the beaten path the better. Energy is high and production is rewarded. Decisive action, not
procrastination, brings victory. But you have to act fast in a Horse year. If you are not 100% secure about a decision, then don’t do it. Events move so
quickly in a Horse year that you don’t want to gallop off in the wrong direction.

Famous Horses:
James Dean, Clint Eastwood, Ella Fitzgerald, Harrison Ford, Aretha Franklin, Janet Jackson, President Teddy Roosevelt, Adam Sandler, Chopin, Davy Crockett,
Denzel Washington, Halley Berry, Harrison Ford, Jerry Seinfeld, John Travolta, Kathleen Turner, Oprah Winfrey, Rembrandt, Rita Hayworth, Robert Wagner,
Sean Connery, Ted Williams

LAST CHANCE: MICHAEL CAMPBELL WORLD OUTLOOK CONFERENCE

THIS WEEKEND!!!

Michael Campbell
writes: LAST YEAR, the World Outlook Financial Small Cap portfolio was up 32% following an 86% increase in 2012. The audience was also privy to currency recommendations that returned 30% in 3 months, was warned of oil and gas
declines that saved them 20% and heard real estate recommendations that returned over 30%.

THIS YEAR
we’re adding even more. In addition to returning world-class analysts like Martin Armstrong, Mark Leibovit and Peter Grandich, Mike will
introduce new guests who will explore the huge growth and massive economic revolution of the technology sector. Ozzie will speak at 5:30 on FRIDAY night – his 21st appearance at this conference.

PLUS
as a special pre-conference bonus we are offering a series of workshops on the rewards, risks and rationales of private company investing on Friday
afternoon. We are also expanding our Personal Finance seminar series and scheduling more “Ask an Expert” time.

AND
we will have one more secret keynote speaker that we can’t even reveal until they arrive on Saturday!

an online video archive subscription as well. Watch when and where you want, as often as you want.


CLICK HERE to see the complete agenda

Real Estate Outlook Issue 2014

Sooo many great comments … BLUSH! Thank you! (Read it here.)

INTERNATIONAL: Collapsing Currencies – Stock Markets – Where Do The Rich Put Their Money?

What a week! As if Argentina’s 16% drop in the value of its currency wasn’t an eyebrow raiser by itself, Venezuela’s jaw
dropping 44% crash (PLUS A 50% inflation rate) got my attention. Once I hardly had focused … there went the S. African Rand, The Turkish Lira and on
Saturday Night China suspended remittances of it REMBI overseas amidst rumours of bank machines without cash and a liquidity crisis of
mammoth proportions. I mean the Chinese New Year coming up in 3 days DEMANDS that banks are flush with cash and if there isn’t any for those millions of
small and large red envelopes it denotes a HUGE problem. Add to this the completely sub-prime ‘shadow bank’ loans outstanding (reportedly 1.8 trillion) and
you have some very large problems in China (Much like the S & L crisis in the US?). There was no joy on Monday either as the US reported a 7% decline
in new homes starts and stalwart Apple crashed in after hour trading by 10%.

Each of these events by itself could be shrugged off … all of them together means … more trouble ahead.

The old adage “when risk comes … it always comes fast”. Or “Black Swan” events combining or … what? It could not be that all countries together
are crashing their currencies to help exports? I mean no one devalues itself into prosperity. But we try. Even if our Finance Minister
denied Monday that the BOC is letting the Canadian dollar slide by design for just that reason … we at JREI do not believe it. It is a concerted effort
by our bank to help exports and damn consumers.

What does it mean?

Major Point 1:
When the world is scared it flees into the US dollar – that will continue.

Major Point 2:
If you are worried about the Canadian dollar -we are still doing ok when compared to some of the world’s other currencies decline against the US dollar. It
is by design and thus unpredictable.

Major Point 3:
The rich will continue to flee emerging markets and arestampeding into London Real Estate (high end residential and commercial!) and other world-class cities – yes including Vancouver, Toronto and Montreal.

Major Point: 4.
This week the FED will tell us whether it will continue to taper. Our bet is that it will.

Inflation

Inflation in real estate prices worldwide is reported to be continuing. We reported December 12 that Roubini Global Economics reported:
“…signs of frothiness, if not outright bubbles, are reappearing in housing markets in Switzerland, Sweden, Norway, Finland, France, Germany, Canada, Australia, New Zealand, and, back for an encore, the U.K. (well, London).”
In addition there is of course India, China and a slew of other Asian markets. Inflation is primarily a monetary phenomena said Milton Friedman. Well we are having one heck of a monetary phenomena … as in printing it worldwide.

Major Point:
This world reminds me of the seventies when inflation – much denied – was rampant. The difference … interest rates were starting to go higher. This
Tuesday (29th) India – which experiences high inflation raised its rates unexpectedly. When rates rise they always do so unexpectedly … when
risk comes – it comes fast. Risk on rates is coming!

Jim Dines – The End Of Jobs

In a wide ranging interesting interview with Mike Campbell Mr. Dines said that we are in ‘
The coming end of the creation of jobs’ – citing European nations like
France, Italy, Spain with 16 year highs in unemployment rates. Further, with Sears, JCPenny laying off thousands the old jobs don’t need
people and new jobs are not being created.

Major Point:
We do think that there are new jobs, just not replacing the existing ones. They are totally new. In other words many new jobs need a college education
which some of the existing ones did not. Whatever the outcome it is more important than ever, that we as real estate investors understand our basic
principle “Values grow where people go and people go where jobs grow” and pick a town with more than one employer and good job prospects.
(We need the tenants to create our debt free properties).

U.S. Market Will Outperform Canada This Year

OK, we have beating this drum for four years now (yes, e were a tad too early), but it is now evident to everyone: the U.S. housing market will outperform
the Canadian market, even most of Western Canada, this year.

The U.S. national median existing-home price for all of 2013 was $197,100, which is 11.5% above the 2012 median of $176,800, and was the
strongest gain since 2005 when it rose 12.4%.

For all of 2013, there were 5.09 million sales in the U.S, which is 9.1% higher than 2012. It was the strongest performance since 2006 when sales reached
an unsustainably high 6.48 million to end the housing boom.

Perhaps the most telling statistic:

there were only 1.86 million existing homes for sale at the end of December 2013 across the U.S., a country with a population of 340 million.

In Canada, there were 860,000 homes on the market at the end of last year. The average price here was just under $400,000, more than twice the level as in
the U.S. Canada will continue to enjoy a stable market this year, but the real excitement for investors will be in U.S. cities.

Major Point:
Canadian investors who followed our advice and bought in such U.S. markets as Phoenix two years ago (prices have increased 40% since then
in the Arizona capital) have seen another perk recently: the downturn in the Loonie’s value has added another 8% or so their U.S. properties.

CANADA

“Open your eyes. Look around. Are you satisfied with the life you’re living? -Bob Marley

Vulture? Feed Your Greed Guilt Free In BC

A new breed of real estate investor emerged during the U.S. housing market: the vulture, which proudly declared itself through such websites as
Florida-based condovultures.com. As in nature, the vultures proved beneficial: snapping up distressed properties, often in bulk gulps, and helping to get the market moving.

Well,
B.C. vultures
also have an opportunity to do some good this month.

This is because once high-flying League Group has 6 months to unload 22 real estate properties under a court-imposed deadline of June 28; and a major condo and retail development in downtown Kelowna has gone into receivership. (League
has not listed its flagship Capital City Centre in Colwood, once said to be worth $1 billion if ever completed.)

Selling with a deadline is hardly ideal, said interim League CEO John Parkinson, who added they still hope to get maximum value from the
assets. The court-imposed deadline is part of a compromise deal between League and its secured creditors. There are 26 lenders owed $186 million.

While 11 of League’s 22 properties are now listed to be sold, three others have already been sold, two have been handed back to the lenders who held
security on them, three are being held off the market for the time being in the hope their value will increase. The properties are listed with Colliers International, Cushman Wakefield and Avison Young.

Six of the properties are in Alberta; 4 in Ontario, one in Quebec and 7 in B.C.
The BC properties include four in Duncan, 2 in Victoria (2835-5285 Quadra Street and 734-735 Broughton; and the Tyee Plaza in Campbell River. League is also selling
leasehold interests in the Duncan Mall, the Duncan Superstore; and Duncan Plaza, all in Duncan, BC.

Meanwhile in Kelowna the biggest mixed-use project in the city, Sopa Square, has gone into receivership.

Sopa Square was originally slated to include an 11-storey condo tower, a four-storey townhouse portion and a mixture of commercial, retail and residential
units. The original cost was estimated at $70 million.

Ernest & Young Inc.
was named the receiver Dec. 30 2013 after the latest investors pulled the plug. Kelowna-based Epic Real Estate Solutions has been selling
residences at Sopa Square since last September with prices then from $339,900 for the smallest units. (This may help explain why the project is in trouble:
the median price of a Kelowna MLS resale condo last month was $294,000)

Epic has released the following statement: “Epic Real Estate has been managing the marketing and sales at Sopa Square in Kelowna. The project is being managed by Ernst & Young Inc. until a
resolution to the financing is rectified. We are confident the project will proceed when these legacy issues are resolved. Purchaser deposits are being
held in trust with and are at no risk during this process. All project inquires should be directed to Ernst & Young Vancouver.”

See: (http://documentcentre.eycan.com/Pages/Main.aspx?SID=289)

Major Point:
We expect foreclosures to continue and that is why we urged you in our OUTLOOK 2014 ISSUE to keep some powder dry.

Nelson Waterfront Resurfaces

We like Nelson. The vibrant Kootenay community has a young population, an intelligent edge and great waterfront. Now the latest attempt at getting a waterfront condo
development off the ground is underway with the launch of Nelson Landing last week.

“It’s official – the development of Nelson Landing is now happening,” said Allard Ockeloen, president and CEO ofStorm Mountain Developments, “The new website went live this week and this community is ideal for those looking for waterfront living close to downtown.”

The first phase of homes will feature eight townhomes priced in the $400,000s and ranging from 1,324 to 1,389 square feet. This works out to around $300
per square foot, which may appear high for Nelson. But Ockeleon notes the townhomes have south facing private decks and high-end finishing. The plan is to
sell at least six units to get the project moving.

Nelson lacks high-quality new townhomes, so Nelson Landing may be the right product at the right time. The average price of the four waterfront houses that
sold in 2013 in Nelson was $694,000, while the average price of all condos was $288,055. Interested parties can visit nelsonlanding.com
to register for more information.

Major Point:
If you are drawn to Nelson, it may be wise to also check out the detached housing market. We found a number under $300,000. An example is MLS 2216255, an older 3 bedroom with a view and an unfinished basement. Price is $279,000.

Calgary Detached Houses A Rental Play

We recommended both Calgary and Edmonton as Top cities in Canada for 2014. Drinking my own medicine I am heading to Calgary and Edmonton this week to
evaluate 2 new multi unit deals. This month the last detached house in downtown Calgary was earmarked to be bulldozed away, but the mayor of perhaps the
best residential real estate market in Canada for 2014 confirms Calgary houses are a great play for rental investors. With the house on 5 Avenue SW gone,
Calgary’s civic assessment rolls published this month do not include a single-family residential home in the entire downtown business district.

According to Mayor Naheed Nanshi, Calgary’s real rental vacancy rate, officially at 1.7%, is actually near zero because of all the tenants
affected by the floods last summer. The mayor hinted that secondary suites in existing houses may be the answer. In a speech to realtors last week, Nanshi
said: “We have tens of thousands of our neighbours living in illegal suites, and they live without the legal rights that the rest of us enjoy, If the
landlord’s abusing you, if there’s mould, if there’s mice, if the smoke detectors don’t work, if there’s flood damage, well, you’ve got no recourse.
The city will send inspectors to rip out the cabinets, take out the stove and kick you out of your house. This cannot continue.”

Later, a spokesman for the mayor’s office said the city is looking at how to change regulations to make “income suites affordable and attainable for average people”, and help homeowners construct them in their homes. This could be
following the lead of Edmonton, which has been offering incentives to homeowners to add rental suites for a couple of years now. Calgary
ended a similar grant program in 2012.

In Calgary, new home builders have been allowed to include rental suites in detached houses since 2007, but they remain illegal in many existing
neighbourhoods.

Major Point:
Calgary, with no rent controls, a strong economy and plenty of young high-earning tenants, is already a great destination for condo investors. Now the much
wider detached housing market offers similar potential.

With Low Rates, Reits Will Beat The Street

Commentary by Frank O’Brien – Editor, Western Investor (wieditor@biv.com)

Real estate investment trusts (REITs) were posting healthy gains since 2010 as the governments kept interest rates – the biggest REIT cost – at historic
lows. But it just took a small blip up in rates in May of 2013 to spook investors and drive REIT values south, down an average of 13% down
by September of last year.

But guess what?
Mortgage rates are still low and signals are they could be going even lower. On January 18, the Royal Bank of Canada cut its five-year fixed-rate mortgages
by 10 basis points to 3.69%. The Bank of Montreal cut various fixed mortgage rates by 10 to 20 basis points, while the Bank of Nova Scotia cut its
five-year rate by 10 basis points. Other lenders, including Home Trust and First National Finance LP, have also already reduced their rates.

While there is good value in many REITS (with the possible exception of those tied tightly to the office market) the best value we see is in
residential-weighted REITs. These REIT values have not budged, at least not yet, but have a strong upside because, unlike other REITs, they can take
advantage of low-cost CMHC financing on apartment buildings.

When we talked to Calgary-based Boardwalk REIT in September, Bill Chidley, the company’s senior vice president, said Boardwalk, a large
residential landlord, was taking advantage of the downturn to buy back its shares, which were trading then at $58 (down from $66 a year earlier.) As of
this week, Boardwalk was trading at $58.75.

Boardwalk is among the REITS we recommend for 2014.

Boardwalk REIT
is well positioned in the strong Alberta economy and has the cash (estimated $144 million) to acquire properties if opportunities arise. It has also
invested in improving its existing portfolio of 35,277 rental units. For the third quarter of last year, total rental income was up 5% from the same period
a year earlier and Net Operating Income (NOI) was 6.4% higher.

Northern Property Real Estate Investment Trust (NP REIT)
concentrates on residential rental (and some commercial) property in northern Canada, northern B.C and Alberta, Saskatchewan and, recently in Quebec.

NPREIT has slowed its acquisition drive
and instead is starting to develop rental properties. So far, NP REIT has about 600 units under construction, including its first rental project in Regina,
and is currently trading at $29.00 up from $27 in September 2013, but, down from $33 a year ago. Despite some bad press – tenants in Dawson Creek and Fort
St. John complained about a lack of heat this winter – NP REIT is well positioned in the resource-rich areas of Canada.

Canadian Apartment Properties REIT (CAP REIT),
which holds 38,000 rental units, bought six apartment buildings in Calgary in 2013 year. In 2012, five Victoria apartment buildings were among record
acquisitions by the Toronto-based company, which also included a mobile home park portfolio (which we see as a smart play). CAP REIT is trading at $21.00,
down from a 52-week high of $26.00.

Vancouver-based Pure Multi-Family REIT LP
is the only Canadian REIT focused exclusively on the apartment rental market in the United States. An example of how this REIT rolls: In October Pure
bought 42 units in a resort-style Phoenix rental apartment complex for US $5.6 million. Earlier it bought 264 rental units in Dallas Texas for US $25.5
million. So far it holds 1,706 U.S rental units in Texas and Arizona for which it paid an average of less than US $90,000 per unit. Pure is now trading at
$4.30 per share, down from a 52-week high of $5.25.

U.S. rentals look like a good move, especially with prices that are about half that of Calgary or Vancouver. Since the U.S. housing crash in 2008 the
number of U.S households renting has jumped to 38 million and is expected to ramp up to 41 million in the next two years, according to the U.S. Census
Bureau.

Major Point:
The fly in this exciting ointment? If rates should rise sharply – against expectations and against the wishes of the BOC – REITS will drop again and more
sharply. Some US REITs lost as much as 21% in 6 months last year. This is why you get the big money – dear Reader – you place your bets … caveat
emptor.

 

Tie Up Real Estate With No Risk! It Is Possible!

“Landcor Data reports the single family detached price in Metro Vancouver was up 6.39% in 2013, at $869,772. And in its fourth quarter housing analysis
of 2013, the B.C. Real Estate Association predicts another 6.3% increase in sales for 2014, with prices to rise a further 2%”

Don’t wait any longer to make money in real estate!
This week, right now, you can learn how to Tie-up Real Estate Deals with Zero Risk! Attend the“Springboard To Real Estate Action” FREE workshop that Ozzie Jurock’s Real Estate Action Group partner Ralph Case is teaching.

One of the skills Ralph is covering is how to tie up a real estate deal with zero risk. Most people starting out in real estate investing think that you
have to have money before you can tie up a great deal. NOT! Many investors I talk to have missed out on fantastic deals because “someone else scooped it”
while they were getting their ducks in a row. I have a battle cry for good deals: “Tie It Up!” How???? With our “Tie Up The Deal”
system.

This knowledge is essential to your real estate success, whether you are a new investor or a seasoned pro. Attend this workshop FREE as my guest and you will discover new skills to help you lay the foundation for 2014. May it be your best year
ever in real estate!

Ralph will be holding 1 pm and 7:30 pm Workshops from Monday, January 27th to Thursday, January 30th in Vancouver, Burnaby and
Surrey. For more details and to register please go to www.realestate2014.ca

Best Mortgage Rates This Week

“The Department of Finance issued a release January 24th to the
Credit Union Central of Canada
to inform it of temporary transitional support for Credit Unions interested in moving from a provincial regulation to federal regulation,”
says
Kyle Green of Mortgage Alliance
(778-373-5441,
kgreen@mortgagealliance.com
).

“This move is intending to offer Credit Unions extended deposit insurance and short-term funding options that will allow them to transition to federal
requirements. So far,

Coast Capital from BC and Meridian Credit Union from Ontari
o has expressed some interest in transitioning to federal regulation.

If Credit Unions decide to switch, much of their lending flexibility like higher loan-to-values on HELOCS (Home Equity Line of Credit) of up to 80% versus federally regulated lenders
capping at 65%, lower qualification rates and others would disappear. However, larger and more capitalized Credit Unions with better brand recognition
may see better profits with better economies of scale.

It is too early to know how many Credit Unions will be interested in switching, but if many do we may see fewer “outside the box” lending options when
it comes to mortgage financing.”

 

Alberta Bound

OZZIE
Will be in Calgary and Edmonton this Wednesday/Thursday. If a subscriber wants to meet for a coffee – he’ll try and make it possible … just write
direct to
oz@jurock.com

 

Western Investor

Western Investor, published since 1986, is Western Canada’s commercial real estate authority, featuring more than $2 billion in commercial real estate, franchise and business listings broken down geographically for easy reference, and referred to by thousands of commercial real estate investors and professionals for news and opportunities.

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