Questions, Questions – Comments

Q: I came to Landrush the first time in 1999. I could not believe it. What inflation? What economy boom for BC? Doesn’t Ozzie read the paper? It took me till 2004 to buy an investment property. I now own 3 rental properties. I have become wealthy! Thank you! Yes, yes, I admit it, I eagerly await your old jokes too – every year!

A: Thanks, this made my day. Remember – as we will teach this weekend at Simon Fraser U – just knowing what to do is not enough. You must take action. YOU did! Take credit for that. Congrats!

US Job Report … This Week

Strongest creation of new jobs (200,000) since 1994. As we reported to you over and over … The US is recovering and leading the world. Our US recommendations stand!

Major Point: What could it mean? Interest rates could be higher (could – not will)? Cheap money ride could be over? Commodities lower, US dollar higher? Canadian lower? Yes, it could mean all of that …

Packed Conference Showed Rush Of Real Estate

• Viva Las Vegas

• Land magnate shared the Rush

• Edmonton: oil shock overstated?

The 23rd annual Jurock Land Rush Conference drew more than 500 people to the Marriott hotel last Saturday and the buzz in the space proved real estate remains a rush for many investors.

You could feel the energy bouncing through the hotel and follow the roar as speaker after speaker led investors through opportunities from western Canada’s northern regions to the U.S. Sunbelt.

The following are some of the highlight speakers and their comments, but you really had to be there to experience the raw excitement and unbridled confidence. (More features next week)

Viva Las Vegas

The party isn’t over in Las Vegas and two Nevada real estate experts were eager to tell Land Rush about everything that happens in Sin City.  Manny Cordoba, CEO of CanAm Property Management LLC, a 30-year real estate veteran who specializes in finding Nevada deals for Canadians, agreed the $50,000 crash-era condos are gone, except in crime-heavy North Vegas. Cordoba said thebest rental investment deals right now are detached house are in southern Vegas close to the Strip. His picks include  Silverado Ranch and Green Valley in Henderson, which is part of Las Vegas but a separate, safe community 10 min from downtown and the airport. (We have recommended these areas at JREI since 2012). Detached houses dominate here and $220,000 will buy a 3-bedroom, 2-bath, 1600-1800 square foot rancher with swimming pool. “It would rent for $1,500 to $1,600 per month.”Financing Canadian buyers is simple right now in Nevada, Cordoba said. “Banks love Canadians.” W.J Bradley bank is among the lenders offering Canadians seven-year term, 30-year loans at 4%, he said. Cordoba said Canadian investors have slowed with the falling loonie but “there are still great deals in Vegas.” A sleeper area of Nevada, especially for retirees, is Boulder City, an upscale town of 15,000 on Lake Meade about 15 minutes southeast from Las Vegas. Here an average rancher sells for around $325,000, and the house prices go straight up from there, but Cordoba said Boulder real estate is not where the action, the rentals and the jobs are: Las Vegas is it.

Mathew Sheldon, owner of Legacy International who helps Canadians buy in Las Vegas and Phoenix, detailed how hot the Vegas action is. He told of new multi-billion dollar casinos – including a $7 billion Asian themed complex that opens in 2017 – that are now breaking ground. ”  Las Vegas is hot,” he said.

Todd Smith is equally bullish on Phoenix. The ace realtor with AZ Performance Realty Team said this is the ”  best time ever to buy in Phoenix” because the market has stability and strength. Seven years, he noted, Phoenix had lower house prices but also uncertainty, Wild West real estate auctions, and high unemployment. Now  Phoenix unemployment is 5%; the American economy is expanding but “we are still 37% below the peak in housing prices in Phoenix.” Like other Sun Belt pros, Smith said detached houses are the best buy for Canadian investor because prices remain low and financing is easy. For $200,000, he said you can buy a 3-bedroom house in a golf community and finance it at 70% loan to value. As for the lower loonie, Smith noted that only the down payment is affected by the current exchange rate “and you will collect rents in U.S. dollars.”

Major Point: It was great to hear the confident America roaring again: and rather humbling to think we fret about the potential of new LNG plants that are priced about the same as the latest Vegas mega-casinos. It is all about scale. It is also about the strength of the American dollar: don’t let the lower Can. dollar stop you from investing in the U.S. I pointed to the 3 scenarios of Canada and US exchange rates. Loonie up down or sideways and the key remains: You collect the rent in US dollars, your profit is in US dollars … so the key is A GOOD DEAL!

Land magnate shared the Rush

It was with great pleasure that the packed room welcomed Rudy Nielson back as a Land Rush speaker.

Rudy, founder and president of Niho Land & Cattle Co. and LandQuest Realty, owns more recreational and farm land in British Columbia than others own milk. Ranches, lakefront and recreational land, from the mountains to the sea. He also founded and owns  Landcor Data and Landscore, the massive real estate data banks that have detailed information on every real estate title in the province. It provides accurate prices on any real estate property. [It is so accurate, it’s kinda scary].

So where does the colourful and irrepressible Nielson think is the best place to buy B.C. land? Near Prince George in northern BC and around Kamloops in the Thompson Okanagan, both of which he sees as the economic hubs for BC’s future. Where not to buy land: Victoria and around Nanaimo on Vancouver Island (costly ferries; slow economy, out of the mainstream resource action, he says.)

Major PointCheck out the new Landscore service: among other things it can speed deal hunting with colour coordination of individual properties, based on price. Any property type anywhere in B.C. (see www.landcor.com).

Edmonton: Oil shock overstated?

Robert McLoed, CEO of McLoed Project Marketing Ltd. handles sales for the largest residential developers in Alberta’s capital city. McLoed said that despite the plunge in the price of oil, Edmonton’s diversified economy is thriving. It is not like 10 years ago “when we were selling a floor a day” but the condo investment market is  strong and stable. And affordable. For $250,000, he said, an investor can buy a brand new one bedroom-and den condo right next to the Edmonton Arena District (the huge core redevelopment and stadium) downtown, or a 1,000-square-foot two to three bedroom just outside the core. “Edmonton has some of the highest incomes and the lowest housing prices in Canada,” he said. The rental vacancy rate is below 2% and the unemployment rate remains among the lowest in Canada. McLoed believes a new generation of urban consumers has arrived that is all about rentals. “They don’t want to save for a down payment; they are already leveraged to the hilt and they want to rent a brand new place downtown.” In other words, ideal tenants for condo investors who want to share Edmonton’s growth (and oil prices won’t stay low forever.)

We will carry information from other Land Rush speakers in next week’s Insider.

The Numbers, The Numbers

Sales in Greater Vancouver reached 3,061 in February 2015. This represents a 21 per cent increase compared to the 2,530 sales recorded in February 2014.

Last month’s sales were 20 per cent above the 10-year sales average for the month!

New listings totaled 5,425 in February up 15.4 per cent compared to the 4,700 new listings reported in February 2014.

NOTE: Last month’s new listing count was 11.8 per cent higher than the region’s 10-year new listing average for the month.

Active listings however stand at 11,898, an 11 per cent decline compared to February 2014.

The MLS Home Price Index composite benchmark price for all residential properties in Metro Vancouver is currently $649,700. This represents a 6.4 per cent increase compared to February 2014.

The sales-to-active-listings ratio in February was 25.7 per cent. This is the highest that this ratio has been in Metro Vancouver since March 2011.

Sales of detached properties in February 2015 reached 1,296, an increase of 25.6 per cent from the 1,032 detached sales recorded in February 2014,

Sales of apartment properties reached 1,244 in February 2015, an increase of 20 per cent compared to the 1,032 sales in February 2014.

The benchmark price for a detached property in Metro Vancouver increased 9.7 per cent from February 2014 to $1,026,300.

The benchmark price of an apartment property increased 3 per cent from February 2014 to $386,500.

(For an explanation of benchmark, average and median prices and what they mean … search your password protected website.)

Vancouver
Feb 2015
Feb 2014
%
YTD 2015
YTD 2014
%
Units Sold 
3,067
2,533
+21%
4,983
4,299
+16%
Average Price 
877,200
847,000
+03%
858,100
832,000
+03%
Active Listings 
11,898
13,412
-11%
12,544
10,438
+03%
Detached New
1,395,000
1,333,200
+04%
1,357,000
1,299,600
+04%
Detached Used
1,424,900
1,750,500
-18%
1,416,579
1,686,600
-16%
Condos New
478,900
442,300
+08%
471,700
456,700
+03%
Condos Used
442,000
457,100
-03%
452,900
449,700
+00%

Major Point: 3% higher prices in the overall average price, the used detached home price 4% higher and the average used condo price lower by 3%. However lower listings, lots of optimism will drive our market action higher this spring. However, watch the strong increase in new listings. Remember that the ‘new’ sale column represents only about 10% of the ‘used’ sales column. Also, new property comparisons may compare large new homes vs smaller ones year over year. The ‘used’ column gives you a better view of what is likely to happen.

Vendor Take-backs Seen As Solution To MF Prices

Last month, CHC Student Housing Corp. of Toronto wanted to buy a rental property in Quebec. The company, which was closing on three other acquisitions at the time, entered into a vendor take-back mortgage for $2.75 million for a 2-year term fixed at 4% on the Quebec apartment building.

And such tax-friendly take-backs could also help vendors broaden their potential buyers in Vancouver’s fully priced apartment rental market, argues Brandon Harding of NAI Commercial (604- 691-6630).

“The biggest concern we hear is “what do I do with the money?” For example, when you sell your property the gain will be susceptible to a tax of approximately 22%. Even after you receive market value for your property, and pay taxes, you no longer can afford an apartment building of equal size, defeating the purpose of re-investing your money. Without more profitable alternatives, apartment owners will continue to keep their money safely invested in their current properties.

As prices for property continues to climb, the average working individual is unable to afford buying investment property. This restricts the demand to a relatively limited market of buyers in Metro Vancouver; ones that already own property.

The solution could be a vendor take-back mortgage. Instead of putting the entire cash value received from selling your property in the bank, and paying tax on the full amount,  there is an opportunity to defer some of the tax and make a good return on a portion of your money, while banking the rest. (Capital gain can be spread over up to 5 years) With the banks requiring large down payments, and therefore not offering enough financing, you can provide the financing or even additional financing by way of a second mortgage.

The majority of apartment buildings are financed through CMHC, which  now allows the registration of second mortgages to facilitate a purchase transaction. (!!)

The amount of the second mortgage is subject to CMHC underwriting criteria – and these can be in the form of a vendor take back or private mortgage.

When you are selling, a vendor take-back mortgage allows for greater leverage when negotiating the price, as it permits a buyer to purchase a building that they could not finance otherwise. Since you previously owned the property, you can be comfortable knowing the level of financing the building can support. In some cases you may be able to defer the tax. There’s no way around paying the full capital gains, but, in these cases instead of paying the entire lump sum upfront, the portion that has been mortgaged back on the building can be taxed as it gets paid off for up to five years using a prorated formula.

Major Point: Your investment is secure. In the event of default, you as the mortgagor have legal options enabling you to collect payment. If there are any further complications the property can be refinanced by banks or resold at market value, with you getting the proceeds while retaining the original down payment. For more detailed tax advice, talk to your accountant or lawyer.”

New Langley Condos From $139,900; Surrey From $93,900

MAYBE EVEN LOWER WITH THE RIGHT OFFER!

Some shiny deals are coming up in the Fraser Valley’s new condo market. On March 14, for example. Manorlane Homes will be selling “cutting-edge” condos at Willowbrook from $139,900 for studios and $169,900 for one-bedrooms. Laminate wood floors, quartzite countertops, and contemporary fixtures are included. These are example of some tighter prices coming onto the market, especially in Surrey and Langley, where a competitive developer market is angling hard for investors. There are now  385 new and unsold condos in 15 low-rise projects and 195 unsold townhomes in 20 new projects in the Langley area. Per-square-foot prices are averaging $290 to $315 for new low-rise units and $235 range for townhomes, reports Fifth Avenue Marketing.

In central Surrey, the Evolve micro-condos (316 sq. ft.) start at $93,900 as the lowest investor price point.  There are at least 995 new and unsold high-rise condos and 200 new low-rise condos on the central Surrey market. 

Major Point: As Ozzie told the Landrush and Outlook audiences last year: 1. it may be time to be making low-ball offers because there are still a lot of Valley condos in the pipeline and mortgage rates are at super low levels. Developers WILL look at offers.2. As a judge for the Fraser Valley Real Estate Board Commercial division Ozzie toured a lot of developments and is really impressed with the quality, greening, and design of a lot of new development that would be great investments.

!!!Landrush CDs Available Now!!!

If you like the cd set for the whole conference, it is now available at $87.77 on our website. HOWEVER, FOR YOU OUR SUSBCRIBERS WE KEEP THE CONFERENCE SPECIAL PRICE OF $47.77. Call Max at 604-683-3222 or email him at max@jurock.com

Hot Property, Investors Note:

1. For Real Estate Landrush attendees and other interested parties. There is a casual information session on the  cash flowing NEW condos from $109,000 at The Nest in Spruce Grove, AB. Sunday, March 8 at 2:00pm. This is the property that was presented by Gerry Halstrom. Contact Marc at  marcjurock@remax.net or 778-288-6798 for the venue.

2. 99 properties under $100,000. If you were unable to attend the Landrush conference but still would like access to the 99 properties under $99,000 please write to max@jurock.com and he email them to you. Contact info on every property.

Anyone can submit a deal to be offered here. There are no guarantees, you must do your own due diligence. For contact info go to your password protected website.

Best Mortgage Rates

Bank of Canada keeps overnight lending rate at .75%

Kyle Green, Ace mortgage broker (Kyle@GreenMortgageTeam.casays: After much speculation of a potential decrease of the overnight lending rate Mar 4th, Bank of Canada governor Stephen Poloz decided to keep things the way they are … for now. “Financial conditions in Canada have eased materially since January, in response to the Bank’s recent monetary policy action and to global financial developments,” the bank stated. Many swap index traders (OIS) were pricing in close to a 50% chance of a decrease leading up to the BoC’s meeting. Now, a 25% chance of a decrease in the April meeting remains with many traders expecting the BoC may not be done yet, but it may take until the end of the year for them to reduce the rates. Oil prices settling slightly and markets calming down were exactly what Poloz was hoping to see, and when they reduced the overnight lending rate in January for the first time since 2010 he achieved just that. Subsequently, 5 year Canadian bond yields plummeted to well below 1% for the first time in recorded history which caused a downward surge in fixed rates, along with a .15% cut of the prime rate by the banks.
The Bank’s next meeting is April 15. It will be interesting to see if there is any further activity at that time as it seems like many are waiting to see what happens with commodity prices before making a bold prediction.

Mortgage
Alliance

Posted
Rates

1 yr 
2.79%
3.50%
2 yr
2.24%
3.55%
3 yr
2.39%
3.99%
4 yr
2.59%
4.19%
5 yr
2.59%
4.79%
7 yr
3.29%
6.35%
10 yr
3.79%
6.75%

 

March 4, 2015

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While the above information is compiled from sources believed to be reliable, its accuracy cannot be guaranteed. Any type of investing carries inherent risks; as such JREI cannot assume responsibility for any subscriber’s actions.