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“Good luck needs no explanation” -Shirley Temple Black

LAST CHANCE TO PARTICIPATE IN THIS EXCITING
ALL NEW
LANDRUSH 2014 CONFERENCE –
THIS SATURDAY

MOST OF YOU – DEAR SUBSCRIBERS, DEPENDING ON YOUR PACKAGE – ARE FREE TO ATTEND THIS EVENT … BUT PLEASE BOOK ONLINE ASAP OR CALL OFFICE AT
604-683-1111 TO GUARANTEE YOUR SPOT!

FOR DISPLAY BOOTHS AND SPEAKER DETAILS LOOK BELOW OR GO TO
LANDRUSHCANADA.COM

  • Flipping To U.S. Hipsters
  • Federal Budget Blocks 45,000 Rich Chinese Immigrants – 59,000 to 66,000 Worldwide
  • Hongkong Taxes The Heck Out Of Foreign Real Estate Investors
  • Victoria’s Shaky Apartment Market
  • Okanagan: Can You Spell O.K.?
  • Vancouver Condo King Sold On Calgary
  • When Strata Owners Want To Sell The Whole Building
  • Western Investor
  • Best Mortgage Rates This Week

INTERNATIONAL: FLIPPING TO U.S. HIPSTERS

At this weekend’s Land Rush conference some of the top minds helping Canadians make money in U.S. real estate (Focus on Las Vegas and
Phoenix) will share their secrets. In the meantime, with the help of Realtytrac, we are looking at the best U.S. cities to buy homes and
flip them to the “hipster” generation.

To qualify as a hipster hot spot, a zip code had to have at least 15% of its population between ages 25 and 34 (above the U.S. national average of 13.2%)
and have at least 15% of its population walk or take public transportation to work (above the national average of 20%).

To qualify as a good market for home flipping, a zip code had to have a minimum of 10 homes flipped in 2013, a median home that was five times or less the
median household income and an estimated monthly house payment – including mortgage, taxes and insurance – that was lower than the average fair market
rent for a three-bedroom home.

This narrowed the hipster zone search down to 10 top cities (we culled from a list of 20):

Fairfax, Alexandria and Falls Church, all in Virginia; Seattle; Rockville, Maryland; Atlanta, Georgia; Oakland, California, Denver, Colorado; Las
Vegas; and (gulp) Jersey City, New Jersey.

Realtytrac looked at homes that had been flipped: that is bought and then sold within six months. In the 10 markets we narrowed down for
the best flipping returns, the Virginia cities of Fairfax, Alexander and Falls Church saw returns that ranged from 46% to 68%. An example
is in Fairfax, where the average home was bought for $210,200 and flipped for $456,000.

In Seattle, the typical flipper bought a home for $147,145 and flipped it within six months for $241,041.

Denver
was also strong performer with an average return of 66%; while the typical Las Vegas speculator bought for $55,665 and sold for $109,554.

And Jersey City?
Wise guys were buying homes for an average of $140,333 and flipping them for an average of $295,183.

The other markets saw returns of from 9.9% to 59% for the average flipper, according to Realtytrac.

Major Point:
You can see the entire flippin’ report at www.realtytrac.com.

CANADA: FEDERAL BUDGET BLOCKS 45,000 RICH CHINESE IMMIGRANTS – 59,000 to 66,000 WORLDWIDE

For most it was a surprise to say the least: In Tuesday’s federal budget, Canada announced it is scrapping its controversial investor visa scheme, which has allowed waves of rich Chinese (and others) to immigrate to Canada – mostly
to Vancouver – since 1986.

For you dear Reader it was not. First, the federal government had frozen applications to the national program already in 2012. Second, JREI told you here and at Landrush last year that one of our astounding predictions was that the Federal Government was
contemplating a tax on foreign investment (Like HongKong – see below) or stopping it all together (Like Austria, Australia and others). We also had it as a Black Swan in each of our Outlook issues.

The announcement was made in Finance Minister Jim Flaherty‘s budget, which was delivered to parliament on Tuesday afternoon.

An estimated 66,000 Chinese millionaires in the queue will reportedly have their applications scrapped and their application fees returned.

On Monday, a South China Morning Post investigation revealed there was a backlog of more than 45,000 rich Chinese waiting for approval of their
applications to move to British Columbia (read Metro Vancouver) as of January last year. (THE VANCOUVER SUN REPORTS 66,000 worldwide). They were estimated
to have a minimum combined wealth of $12.9 billion.

Census data shows 96% of all recent Chinese immigrants to British Columbia live in Metro Vancouver and the proportion among the wealthy is even higher.

Under the former Canadian rules, principal applicants worth a minimum of $1.6 million had to loan the Canadian government $800,000, interest-free, for five
years. They and family members could then apply for citizenship.

According to Flaherty’s statement, “In recent years, significant progress has been made to better align the immigration system with Canada’s economic needs. The current immigrant investor program stands out as an exception to this success.

For decades, it has significantly undervalued Canadian permanent residence, providing a pathway to Canadian citizenship in exchange for a guaranteed
loan that is significantly less than our peer countries require.”

Major Points:

First:
The federal government had frozen applications to the national program already in 2012. Even with the investor program frozen (none approved for 19
months), housing prices continued to rise. However we feel it will affect the high end.

Second:
It looks like it will really benefit Quebec, whose investor program is NOT affected. Investors now go to Quebec but still come here use our services, but
still buy houses.

Third: It
are actually 59,000 to 66,000 applications that are scrapped… worldwide (45,000 in HongKong)

Fourth:
Most importantly – We believe it is the first shot. The second will be some sort of Tax on foreign real estate investment (Like HongKong) or outright
ban/restrictions on foreign investment like in Australia, Austria etc.

Federal Budget Blocks 45,000 Rich Chinese Immigrants – 59,000 to 66,000 Worldwide

We have touched on this before in connection with our ASTOUNDING FORECAST at Landrush last year (so far 4 came true!). We pointed out that HongKong
introduced a ‘sales tax’ on foreigners that were selling their properties on a sliding sales (to avoid flips). Then last year they introduced a ‘purchase
tax’. Never heard anything like it! Now our longtime subscriber from HongKong, Airline Pilot Bob Blanchard writes: “To buy a $4.5 million hkd apartment, in Hong Kong, the various Buyers Taxes on Non-Permanent Residents on the purchase will amount to $955,000
hkdollars. A million is about $130,000usd. Pretty onerous and outrageous! Whatever happened to ‘open for business’? … The market is flat. Nobody
selling, nobody buying. Certainly not the expats, for whom this tax is directed at!”

Major Point:
Canada may not do the same, but it will do something and it is the BIG BLACK SWAN overhanging all Canadian Real Estate market. The immigration cancellation
for the very rich is a drop in the bucket and may affect only the upper end of the market. Foreign investment controls would knock off Europeans buying
condos in Toronto and Montreal and waterfront in Nova Scotia … PLUS … Chinese investment.

EXCITEMENT BUILDS AS LAND RUSH 2014 READIES TO OPEN

NEW

RAPID FIRE REALTOR PANEL

SNAPSHOT on SURREY, TRI-CITIES, NANAIMO, RICHMOND, VICTORIA, OTHER AREAS

Best deals throughout BC and Alberta

NEW

‘THIS IS HOW I DID IT’ PANEL

Young real estate entrepreneurs tell their story – learn to do it too

NEW

3D printing
… see the future today!

NEW

Break out:
7 steps to making successful real estate offers

NEW

Viva Las Vegas –
Deals, Proeprty Management and legals

NEW

US real estate financing
now available for Canadian Investors … finally!

NEW

Laneway housing
– the future for density in Vancouver and how much are they anyway?

NEW

Break Out: 5 foundations for real estate investment success

NEW

US taxation myths
and other foibles dispelled

NEW

Brand new Fraser Valley condo …
Rent guaranteed for 2 years and all expenses paid!

NEW

Owner will carry 85% financing
on investment condos

NEW

Ozzie sharpens
presents a ‘frenzy of forecasts’ – all designed to make you money and/or help you not lose any

PLUS:
Focus on ‘The North’, best interest rates, 20 display booths – a great mini convention.

Join hundreds of like-minded real estate investors at Land Rush 2014.

For (YOUR-mostly FREE) tickets, call today to 683-1111 or order online at www.landrushcanada.com

ALL DAY FEB. 15 AT THE MARRIOTT HOTEL, VANCOUVER

Victoria’s Shaky Apartment Market

For years Victoria served up a tantalizing environment for landlord investors: super low vacancy rates, fairly
inexpensive apartment buildings and a lack of new construction kept the city popular with both small investors and cautious real estate investment trusts.

That scenario now appears to be in trouble: the evidence is seen in a flight of investment capital from the capital
.

Take 2013 for example.
Last year just six apartment buildings sold in Victoria for a total dollar volume of $22.1 million and there were just two sales in the entire last half of
the year. This compares to the heady days of 2010 when 22 buildings were sold or 2012 when the sales volume topped $89 million.

We can understand REITs bailing out of Victoria – the hike in mortgage rates last spring chilled trust acquisitions across the board – but a 75% plunge
in sales volumes shows that local investors are also passing on Victoria.

(The mortgage hike fear was misplaced: According to Ace Commercial mortgage broker Lisa Nairn … landlords can still get 2.43% five-year CMHC insured mortgages.)

One reason could be price. The average “per door” selling price in Victoria, according to Colliers International, is now $147,000 per door
and it spiked to more than $230,000 for an 18-unit downtown building last year.

Another could be rising vacancy rates, which are now close to 3%, up from 1.4% five years ago, and as high as 5% in Esquimalt.

Or it could be the flat rental rates, which budged up just 1% in the past year, or less than half the rate allowed under provincial rent controls. What
this reflects is that some landlords have actually lowered rents. One bedroom rents saw just a 0.6% increase to $833, while one bedroom rents rose 0.8% to
$1068. (Capitalization rates are averaging 4.9% in the capital, which is relatively high compared to Vancouver.)

And there are a lot of new rentals hitting the Victoria market for first time in years. There are at least 1,000 new purpose-built rental
units either under construction or set to start in the city.

Major Point: What the Victoria rental market is saying is that the overall Victoria economy is softening. Microsoftclosed down its only game development office in December (after just two years); the provincial government is cutting back on hiring; and (you can blame high ferry costs) tourism spending is down. Rental
investors find they can buy less expensive apartments and raise rents faster in growing areas – such as the Fraser Valley – than in Victoria.

Okanagan: Can You Spell O.K.?

It has been a long time coming, but like its best wine, the Okanagan real estate market appears to be finally recovering from the triple-whammy hit of the
recession, the HST and tougher mortgage rules that all affected sales of recreational and secondary homes.

The huge inventory of homes is being whittled down and, if January’s MLS performance is an indication, 2014 could see rising sales and somewhat better
prices right across the central Okanagan. Listings of homes for sale, for example, were down 9% from a year earlier while region-wide sales were up 30%
from January 2013.

The following is a market-by-market breakdown of sales through the fine Okanagan Mainline Real Estate Board for last month:

Peachland to Lake Country:
During January, overall sales were up 6.4% to 233 units from 219 in 2013. Total detached sales improved 4.1% to 205 units. The 762 new
listings were down 1.0% compared to 2013, while total inventory fell 11.5% to 3,422 units.

Predator Ridge (Vernon) to Enderby:
Overall sales for January rose 140.8% to 118 units compared to 49 units sold last year at this time. Total residential sales improved by
93.2% over last year with 85 units sold (up from 44). The 295 new listings for the month were up 38.5% from 2013, inventory for January saw a 10.2% drop to
1,763.

Salmon Arm to Revelstoke:
January overall sales rose 22.2% to 44 units compared to 36 in 2013. Total residential unit sales for the month stayed the same as last
year at 32 units. New listings were down 5.3% compared to last January (to 144 units from 152). However, overall inventory remained stable at 1,344
compared to the same month in 2013.

Vancouver Condo King Sold On Calgary

Lower prices, better potential returns and shift in urban trends all make downtown Calgary the next big play for condo developers, says Cameron McNeill, president of Mac Marketing Solutions, Vancouver’s number 1 condominium sales agent.

“It is a unique time in Calgary’s real estate history,” McNeill said. “There is a growth opportunity not only for real estate developers, but for industry service providers. There are just not enough skills and experience
to satisfy the market.”

McNeill expects Calgary to account for 40% of Mac’s project marketing within three years, up from 25% today. Mac has sold 14,000 condominiums since 2001.
The condo demand in downtown Calgary is being led by young urbanites tired of the sprawling suburbs that characterize Alberta’s biggest city, McNeill said.

“In Calgary, it is a very recent phenomenon that a young professional would not need a car. Only five years ago, this would have been a laughable
concept. But urbanization of Calgary’s central core [now] provides a very viable way of living,”
McNeill said.

A comparison of the Calgary and Vancouver condo markets reveals some stark difference, according to Mac research.

  • New condominiums in Calgary are priced from 15% to 25% less than in Vancouver. The average MLS condo price in Calgary is $299,000. In Vancouver it
    is $462,000.
  • Calgarians expect more space in their condos. The micro-condos being developed in Vancouver are not being seen in Calgary.
  • The City of Calgary is “generally found to provide a friendly approval process. In Vancouver, developers expect a big negotiation with the City and
    are never sure what zoning they will get.”

When Strata Owners Want To Sell The Whole Building

There are a lot of older condominium buildings around now: many 30 or 40 years old and sitting on land that could be sold for a handsome profit. So what
happens when some members of a strata want to sell the whole building and some don’t? It will likely become a big legal issue in the years to come.

Vancouver lawyer Peter J. Roberts of Lawson Lundell LLP (604-631-9158) looked at two recent court cases that show how
rulings can be very different. Understates Roberts, “It takes a lot to convince a court to order a sale that will result in people being forced from their
homes against their will.”

The first case is Cypress Gardens, a condo development in North Vancouver consisting of 177 units owned by 135 different owners. Some owners
applied to have the property sold to a developer. A majority of the other owners opposed. The court noted that the facts and circumstances of each case
must be examined to determine whether good reason existed to refuse a sale. Here, the Court found that a sale would “force particularly vulnerable people
out of their homes, including young children, single parents, the elderly, the infirm, and people of very limited financial means.” Many could not afford
comparable property nearby and would be forced to rent or move away. The court found there was a reasonable understanding among all owners that they were
buying individual homes and not simply fractional interests in a larger complex. All this amounted to “good reason” not to order a sale.

The second case is McRae v. Seymour Estates. Like Cypress Gardens, this case involved a common law condominium in North Vancouver.
Seymour Estates comprised 114 units in eight buildings on 6.5 acres of land. There were 114 different co-owners, each with an undivided fractional interest
in the whole. Seymour Estates was over 40 years old and the repair and maintenance costs were gradually escalating. As in Cypress Gardens, a group
of the unit owners wished to sell the property to a developer who was prepared to pay a premium for the whole property. A sale would relieve the owners
from having to invest increasing amounts of money in the coming years to repair and upgrade the buildings. However, unlike Cypress Gardens, these
owners did a lot more work organizing themselves before they went to court. They spent a long time lobbying support among their co-owners and presented a
compelling economic case for a sale. In the end, they managed to get the support of over 90% of the owners to support the sale. Once they had this support,
they commenced a petition seeking a court order authorizing the sale of Seymour Estates. The owners who opposed the sale raised many of the same arguments
that had prevailed in Cypress Gardens. However, in this case, the Court granted an order authorizing the sale of Seymour Estates as a whole. The
primary difference in the outcome was that the overwhelming majority of Seymour Estates owners were in favour of a sale.

BEST MORTGAGE RATES THIS WEEK:
Is it possible for Prime to decrease in 2014?

Those who predict and “bet” on prime rate fluctuations seem to think that there is an increasing chance that the prime rate may drop later
this year. The estimated probability of the prime rate decreasing rises to 35% for the July Bank of Canada meeting and hovers around 50% for the rest of
the year.

In fact, the chances of a decrease exceed the chances of an increase during 2014.

“Although the chances of a decrease may exceed the chances of an increase, I still feel that the Bank of Canada will stick to a slow, cautious approach
and is much more likely to raise rates slowly when the time is right,”
says Kyle Green of Mortgage Alliance (778-373-5441, kgreen@mortgagealliance.com).

“What this data does tell us, however, is that the incentives for the Bank of Canada to raise rates is not likely to be present during 2014 and very
possibly 2015 as well. A variable may be a safe bet for the next 2 years. Is it possible for Prime to decrease in 2014? Yes, but I still hesitate.”

Western Investor

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