“Start where you are. Use what you have. Do what you can.” -Arthur Ashe

CALGARY EMERGING AS TOP RENTAL MARKET

LAND, RENTAL APARTMENTS SOLE BRIGHT SPOTS IN VANCOUVER COMMERCIAL REAL ESTATE SECTOR

RICHMOND CONDO MARKET SOFTENING

HAMILTON IS ONTARIO’S HOTTEST RENTAL MARKET – AND YOU CAN BUY IN FOR UNDER $90,000

BOND RATE RISE COULD AFFECT LONG-TERM MORTGAGES

SUBJECT FREE OFFERS AND ‘REL’ HELL

Calgary Emerging As Top Rental Market

The Calgary housing resale market was down in May for the sixth straight month. Last month, MLS sales were down 25.5% from May 2014, at 2,190 units, and
prices declined 1.5% to $478,7790. New listings also fell, down 26.7% to 3,161, but there are still more than 5,300 homes on the market.

Yet, we believe it is a very good time to be getting into the Calgary market as a pure rental investor.

Nuts? We don’t think so. A confluence of issues is creating one of the strongest tenant markets in the country and, as the oil-shocked city waits to see
what the new NDP government will do, renting, not buying will dominant housing demand.

Here is what makes Calgary a landlord’s dream play.

– Calgary still has an overall tight rental vacancy rate, at 3.2% and the one-bedroom vacancy is 2.7%.

– Average rents are high and increasing. Rent for a one bedroom unit average $1,137 and two bedrooms average $1,319, both higher than Vancouver and up from
a year ago, according to the spring rental survey from Canada Mortgage and Housing Corp.

– There is less than 35,000 apartment rentals in Calgary- compared to 61,000 in Edmonton and more than 105,000 in Vancouver – and few new rentals have been
built in the past few years.

– Detached housing starts will drop 4.5% to 6,400 homes in 2015 and condo starts will slide 24% to 8,000 units, analysts say. The supply constraint means
people are more apt to rent as they get priced out of the low-rise market or aren’t able to find the right home.

– Larger landlords qualify for low-cost CMHC-insured financing as low as 1.7% for five years.

– Smaller landlords can buy existing condos or houses at lower prices today.

We also believe that it will only take a small change in the global oil production rate to drive oil prices higher. A rental real estate investment in
Calgary today will not only return steady investment income but the potential for strong price appreciation down the road.

You can buy Calgary condos even close to downtown for under $150,000 which, with 20% down, will throw positive cash flow. Examples this week:

MLS: C4017236: a low-rise concrete one bedroom near downtown. Price $139,000; or MLS C4013575, a one-bedroom condo close to transit, rental ready, for
$149,700.

Major Point: Buying Calgary rentals now will prove the Warren Buffet idiom of being greedy when others are fearful.

Land, Rental Apartments Sole Bright Spots In Vancouver Commercial Real Estate Sector

Selling older homes in Metro Vancouver is now worth more in straight revenue for the B.C, economy than the province’s forestry, fishing mining and natural
gas industries combined. Just MLS sales through the Real Estate of Greater Vancouver (REBGV) so far this year – at $15.8 billion – equal
the revenue of the entire forestry industry in 2014.

And the emphasis on residential extends to the commercial real estate sector.

In the first quarter of 2015, sales of land – primarily for multifamily speculation – dominated commercial real estate. The total dollar value of
commercial sales in the region reached $1.5 billion in the first quarter, a 7.6% increase from Q1 2014, but the increase was all in sales of land and
rental apartments

While sales of industrial property fell 12.7% and retail and office building sales dropped nearly 1% from a year earlier, land sales soared 13.4% to $753
million and the dollar volume of apartment building sales rocketed 95.2% to $231 million, according to transactions
through the BC Land Titles Office compiled by the REBGV.

The message in B.C. today is simple: Metro Vancouver is in the midst of the mother of all housing booms, unprecedented in Canada. And the
market for investors still has momentum. Housing starts are slowing, which will lead to higher prices, while immigration and in-migration is rising, which
is fueling rental demand in region that already has one of the lowest vacancy rates in the country.

Major Point:
With the recent announcement of the start of the first big liquefied natural gas (LNG) export facility – and two more multibillion-dollar bids close to
approval – the B.C. economy is expected to lead the nation in GDP growth over the next two years. Investors should be scouting for real estate
opportunities across the province, but concentrating today on Metro Vancouver for the most dramatic gains over the year.

Richmond Condo Market Softening

With all the talk of soaring home prices and Asian immigration and investing in Metro Vancouver, one would think that Asia-rich Richmond would have runaway
condo prices. But recent sale statistics show Richmond’s condo market is softening and some low prices are available.

We dug down into the MLS stats from the Real Estate Board of Greater Vancouver for some surprises. First of all, May condo sales were up
just 4.8% from a year earlier, the slowest increase this year.

Also, most of the new listings coming onto the market are priced below $250,000. Of the 309 new listings last month, only 9 were priced above $700,000,
while 59 were priced below $250,000 and 19 were listed at $200,000 or less.

The lowest priced Richmond condos are found in the Granville area, at $112,000 (down 10% from a year ago); Stevenson North, at $218,900 (price up 4.5% from
a year ago); and Boyd Park, at an average price of $220,800 (unchanged from May 2014).

Hamilton Ontario’s Hottest Rental Market


– AND YOU CAN GET IN FOR UNDER $90,000

The former steel city of Hamilton has become the hottest rental market in Ontario, with a tight vacancy rate back dropped by rising home prices, in some
cases doubling from two years ago.

The rental vacancy rate is now at 12-year low of 1.6%, according to the spring rental report from Canada Mortgage and Housing Corp.

In May, total MLS sales in Hamilton hit the second straight month of record sales, with a 9.4% increase from a year earlier, to 1,699 units. Sales of
detached houses were up 11.4%, while the average sale price rose 10% to $447,000 according to the Realtors Association of Hamilton. The average condo price
is up 11% to just over $315,000.

Why has Hamilton’s market caught fire? It is combination of things, including proximity to Toronto (people actually commute from Hamilton, where housing
prices are lower); and strong job growth. The city is expected to add roughly 13,000 jobs over the next two years, with employment increasing by 1.6 % in
2015 and 1.8% in 2016. The region’s unemployment rate is expected to remain below the provincial average, hitting 5.8% by 2016.

Hamilton is worth a look for investors considering the Golden Horseshoe area of southern Ontario. A good way to test the market could be to purchase an
older rental tri-plex. There are number of them available, with prices from as low as $400,000.

Average rents in Hamilton increased 3.5% from a year ago, the highest increase in Ontario. A typical two bedroom rents for $1,213 and the average one
bedroom for $942.

This week we found 20 Hamilton condos priced at $100,000 or less, including two bedroom units in concrete buildings for less than $80,000. An example: MLSD
H3155971 “two bedroom penthouse unit offers newer broadloom, skyline views and spacious balcony. Complex includes unlimited parking, outdoor heated pool
and workout room. Close to all amenities.” Price $83,500.

At average two bedroom rents and 20% down, this has the potential for positive cash flow.

Bond Rate Rise Could Affect Long-term Mortgages

Since April, the five-year Government of Canada Bond yield has risen from 0.75% to 1.07%, but we have not seen a subsequent rise in fixed mortgage rates,
which would traditionally be the case with a 0.32% bond yield increase.

If the bond yields continue to increase, we will see fixed mortgage rates rise. Very likely. The real question is how long will the bond yields continue
their climb? If you have a mortgage up for renewal, or if you are buying and closing in the next 120 days, call your mortgage broker and get a rate hold.
It costs you nothing, and you will protect your interest rate. Generally, you can get 2.69% held for 120 days. There are some special offers at 2.64% and
even 2.59% but certain conditions and restrictions apply.

Subject Free Offers And ‘Rel’ Hell

By Dustan Woodhouse,
Dominion Lending Centres

Are you considering making a subject-free offer to secure a home in a hot market?

With multiple offers and over-asking-price bids now common in Metro Vancouver, it’s not unusual for buyers, in the heat of the home-buying experience, to
contemplate a subject-free offer – that is, an offer without conditions. But those can come with risks.

A myriad of complications can occur, and one such example relates to the home’s remaining economic life (REL).

REL is distinct from a property’s physical life. It refers to how long a house is likely to remain standing given its current state and the care it is
receiving.

Few lenders will lend on a home with an REL of less than 15 years. Moreover, the maximum amortization typically cannot exceed REL minus five years, which
can sometimes drive payments sky high, and often leaves clients unable to debt service.

Another problem can occur with properties located in a neighbourhood where older structures are being purchased for demolition and replaced with
multimillion dollar homes. In some cases, your purchase might look to the lender like a speculative land play or potential knock-down. In such cases, the
appraiser could peg the remaining economic life at just 15 years … or less.

Or maybe the property is a ramshackle house in disrepair. It might look like the bargain of the decade on paper, and perhaps the purchaser is even a
contractor planning to restore its glory. However, appraisals view the current remaining economic life of the home ‘as it sits’ not ‘as is planned’. Homes
like this could have an REL as short as five years.

At times, buyers also run the risk of their own good qualifications hindering mortgage approval. Those with significant liquid assets and strong incomes
buying a smaller, older home on a street of newly built monoliths will sometimes be seen as planning to knock the home down and build a new one.

But the land value alone should overcompensate for this, you say?

Maybe, but lenders are not in the business of writing conventional AAA mortgages on properties that will be torn down. This is considered speculative or
investment/business lending, which presents greater risks. There is a reason land/construction financing carries higher rates and additional fees. A
property with a habitable home is easier to liquidate upon default.

The bottom line is that lenders prefer security over risk, and you should too. The wise approach is to minimize purchase risk by either writing offers that
contain both ‘subject to inspection’ and ‘subject to financing’ clauses. At a minimum, have a detailed conversation with a skilled mortgage professional
well in advance of writing that unconditional offer.