- QUESTIONS, QUESTIONS
- MOVING WAY OUT OF TOWN AND THE CADSTRAL PLAN
- EYEBROW RAISER – CLIMATE CHANGE – HAH
- YOU WANT A BETTER TREATMENT OF YOUR RENTAL INCOME – GO CREDIT UNION
- CHINESE BUYERS EVERYWHERE – WALL STREET JOURNAL
- HOT PROPERTIES – NO MORTGAGE PAYMENTS, NO TAXES FOR A YEAR
- BEST RATES
Hotline Crashed Last Week … After We Texted Your Password
So many of you called and said they could never remember their password, so by texting it out – some listened to the Hotline for the first time.
If you have not given us your CELL no, we cannot text you. Call office at 604-683-3222 and we put you on the JREI subscriber notification list.
1. Best time to call … evenings after 5PM – all weekend! We will be changing the access code every two weeks, so please read your text … or go to your password protected website and get the new codes there.
2. Most weeks it is updated on Saturday after 11 AM or Monday after 5:30 PM.
We were peppered with questions this week … most about the stock market. And a wild one it was. Dropping a 1000 points in 6 minutes. Huh? Then a recovery by weekend. But the stock market is driven by large corporations and by computer generated by and sell calls … thus the wild swings. 84% of the market is institutional only 16% private investors.
But I am only interested in what it may mean to real estate values. Next week more.
Q: You talked about excess creation of money resulting in inflation, but I do not see any?
A: Well you have massive inflation in real estate values here. You also have cost price inflation all around you from parking to food costs etc. But just the creation of money (thru QEs) is not working anymore the way it did before. The money is created but people/companies are not borrowing it. The reason that there are negative interest rates in Europe now is that the banks can’t lend it out (low demand) so they can’t earn anything much less pay a return to the depositor.
Wall Street Journal Reports Chinese May Pour More Money Overseas
Something we at JREI have been reporting to you for several years … WSJ: “Wealthy individuals and well-heeled (Chinese) companies seek to shelter their money in more stable havens abroad.
In Australia, where China earlier this year topped the U.S. as the biggest source of foreign real-estate investment, officials are worried that wealthy Chinese
investors will pour more money into an already overheated Australian property market.
In the U.S., where, as in Australia, Chinese buyers this year surpassed their nearest rivals to become the biggest foreign real-estate investors-in this caseabove Canada-at least one broker describes a sudden surge in Chinese interest in buying high-end residential properties in New York City
China’s currency devaluation earlier this month sparked a global sell off of stocks amid concerns over the nation’s economic health. Thus Chinese investors are ‘looking for safe, stable, secure investments,’ Treasurer Joe Hockey told The Wall Street Journal (last) Wednesday.”
In the summer we spent time in Europe and it is no different in the big cities there either. The difference? Not just Chinese investors are looking for safe havens … Iranians, Ukrainians, Germans … all the big money everywhere is looking for places to hide. This is driving prices (in the big cities, in the best areas) dramatically higher, but the rest of the ‘small towns’ in Australia, Italy, Germany and Canada don’t (or at least didn’t till perhaps now) follow suit.
WSJ says that there is a ‘tear in Chinese purchases abroad’.
During the first half of 2015, Chinese investment in overseas commercial properties, which is a proxy for outbound residential investment, totaled $6.5 billion, well on track to surpass 2014’s total of $10.5 billion, according to CBRE, a U.S.-based property services firm.
The rise for U.S. properties was most pronounced, with the first half already exceeding the whole of 2014 by 68%, owing to a few large deals.
In the U.S., (We reported that in our OUTLOOK issues) as in Australia, Chinese buyers last year surpassed their nearest rivals to become the biggest
foreign real-estate investors-in this case above Canada.
Chinese investors (and us Canadians) are drawn to the U.S. for its stability, with low interest rates and moderate economic growth during a time of global economic uncertainty, according to Cushman Wakefield.
The big problem? It is making it impossible for the average buyer to buy a property in town (Vancouver, Toronto). JREI believes that the surge of investment will have the Canadian government study to curb foreign investment by the introduction of a special tax or forbid it outright.
The crazy thing is that Australia HAS FOREIGN INVESTMENT CONTROLS … but they are not working. The Australian government believes that
real-estate prices in big cities, such as Sydney and Melbourne, have in the past two years risen to levels that are pushing many middle-class families out
of the market.
Foreign buyers, including from China, are among those driving the boom, officials say.
House prices in Sydney are 48% higher than they were at the start of the current growth cycle of May 2012, and 32% higher in Melbourne, according to data from CoreLogic RP Data.
WSJ: Officials believe many people, including from China and Southeast Asia, are abusing the system through loopholes to illegitimately buy existing homes
and have recently began cracking down on them.
Major Point: With investment controls being circumvented by foreign investors, the Canadian government is likely (after the election – or if it becomes an election issue) to bring in a ‘speculation tax’ of some sort. In the meantime if you were fortunate enough to own in the best areas, you have become a millionaire,
sometimes multi-millionaire without trying. Some forecasters believe and are reporting that there is a ground swell in the ‘younger’ middle class against
foreign investment that drives them out of the market … worldwide.
Eyebrow Opener Of The Week
GLOBAL WARMING – WE MAKE A LOT OF DIFFERENCE … EHM … REALLY?
Excerpted from an article by Ian Rutherford Plimer
Where Does the Carbon Dioxide Really Come From?
PLIMER: “Okay, here’s the bombshell. The volcanic eruption in Iceland. Since its first spewing of Volcanic ash has, in just FOUR DAYS, NEGATED EVERY SINGLE EFFORT you have made in the past five years to control CO2 emissions on our planet – all of you (!!)
Of course, you know about this evil carbon dioxide that we are trying to suppress – it’s that vital chemical compound that every plant requires to live and grow and to synthesize into oxygen for us humans and all animal life.
I know….it’s very disheartening to realize that all of the carbon emission savings you have accomplished while suffering the inconvenience and expense of driving Prius hybrids, buying fabric grocery bags, sitting up till midnight to finish your kids “The Green Revolution” science project, throwing out all of your non-green cleaning supplies, using only two squares of toilet paper, putting a brick in your toilet tank reservoir, selling your SUV and speedboat, vacationing
at home instead of abroad!!!
Nearly getting hit every day on your bicycle, replacing all of your 50 cent light bulbs with $10.00 light bulbs…..well, all of those things you have done have all gone down the tubes in just four days. The volcanic ash emitted into the Earth’s atmosphere in just four days – yes, FOUR DAYS – by that volcano in Iceland has totally erased every single effort you have made to reduce the evil beast, carbon. And there are around 200 active volcanoes on the planet
spewing out this crud at any one time – EVERY DAY.
I don’t really want to rain on your parade too much, but I should mention that when the volcano Mt Pinatubo erupted in the Philippines in 1991, it spewed out more greenhouse gases into the atmosphere than the entire human race had emitted in all its years on earth.
Yes, folks, Mt Pinatubo was active for over one year – think about it. Of course, I shouldn’t spoil this ‘touchy-feely tree-hugging’ moment and mention the effect of solar and cosmic activity and the well-recognized 800-year global heating and cooling cycle, which keeps happening despite our completely insignificant efforts to affect climate change.
And I do wish I had a silver lining to this volcanic ash cloud, but the fact of the matter is that the bush fire season across the western USA and Australia this year alone will negate your efforts to reduce carbon in our world for the next two to three years. And it happens every year.
Just remember that your government just tried to impose a whopping carbon tax on you, on the basis of the bogus ‘human-caused’ climate-change scenario. Hey, isn’t it interesting how they don’t mention ‘Global Warming’ anymore, but just ‘Climate Change’ – you know why?
It’s because the planet has COOLED by 0.7 degrees in the past century and these global warming ‘BS’ artists got caught with their pants down. And, just keep in mind that you might yet have an Emissions Trading Scheme – that whopping new tax – imposed on you, that will achieve absolutely nothing except make you poorer. It won’t stop any volcanoes from erupting, that’s for sure!!! But, hey, relax…… and have a nice day!”
Ian Rutherford Plimer, an Australian geologist, professor emeritus of earth sciences at the University of Melbourne, Professor of Mining Geology at the University of Adelaide, and the Director of Multiple Mineral Exploration and Mining Companies. He has published 130 scientific papers, six books and edited the Encyclopedia of Geology.
Real Estate Investors Note: Credit Unions, Borrower’s Best Friend!
When most people think of getting a mortgage, they think of their mortgage broker or their bank; very rarely will they think of a Credit Union when thinking of getting the best rate. However, times are changing. The internet has changed the way many do business, and the mortgage industry is no different.
Gone are the days where posted rates meant anything (expect for banks abusing them to incur outrageous penalties for fixed rates
… but that’s another story for another day).Yet, major banks still advertise rates that are often .25% – .5% higher than Credit Union
best advertised rates.
Of course, this doesn’t mean the banks will be higher after sitting down and negotiating, but it does mean there is less transparency. This isn’t the Credit Union’s biggest competitive advantage, though. Since 2012 there have been significant changes to mortgage guidelines to federally regulated lenders. This would be all of the big banks, and the majority of “non-bank” lenders (lenders that typically offer very aggressive rates that are only available through mortgage brokers). Credit Unions, however, are provincially regulated which gives them a lot of flexibility that banks cannot offer. Although they only have about 8% – 13% market share, they have seen major growth in the past few years of close to 50% per year.
“I have been buttering up my Credit Union connections for the past few years when it was clear that the Credit Unions would have a competitive advantage when it came to qualifying certain individuals,” says Kyle Green of Mortgage Alliance (778-373-5441,Kyle@GreenMortgageTeam.ca). “Here are some of the things that I can get done at a Credit Union that won’t get done at a bank:
- “90% offsets” on rental income. Most lenders use a “50% add to income” method of calculating rental income except for a few banks that have some portfolio methods. In a nutshell, $1,000/mo in rent is only $200/month in borrowing power with most banks but is $900/month with Credit Unions. That $700/mo difference is equivalent to borrowing about $170,000 on a mortgage! 35 year amortizations. Credit Unions still have to adhere to insured guidelines, so any borrower putting less than 20% down can only have a maximum 25 year amortization, but with 20% down or more Credit Unions can still offer 35 years where the banks only offer 30.
- Unique property types. Examples would be ex grow ops, student housing, properties with outbuildings like workshops or multiple dwellings, Co-Ops, Phase 2 condos like those found in Whistler, etc. Lines of Credit up to 80% financing. Banks can only offer up to 65% of the value of the property on an interest only line of credit, so 15% has to be amortized to get to 80%.
- Small commercial financing. Many banks don’t want to look at commercial mortgages under $500k – $1mil. Credit Unions have a nice little niche in this area.”
That said, Credit Unions aren’t always the lender of choice. Their small funding sources sometimes mean their rates can be uncompetitive for stretches of time. When they do have low rates they can often get inundated with business that they aren’t well equipped to handle. Also, Credit Unions cannot lend out of Province and are often restricted to their local lending area, as their mandate is to help their local communities.
BUT, if you want your rental income looked at properly … next time you need a mortgage, maybe it’s time to think about a Credit Union again.
BEST MORTGAGE RATES THIS WEEK
August 28, 2015
When You Really, Really, Really Want To Buy Waaaayyy Out Of Town…
Sometimes, we dream about really getting that remote property, where we can really let it all hang out. Or you want to have a special place to hunt and have NO cell phone access (yes!). Once you do … make sure that you understand these things:
People that do live waayyy out of town … have a very strong AMNE syndrome (after me no one else) and often will do anything to keep strangers (including you) away. Do read and understand the following:
1. THE CADASTRAL PLAN (Huh?)
Look up the Community “cadastral plan”, which designates location of roads and public access to waterfront. In many areas, such roads exist only on paper. Check. Many unfriendly landowners post “Keep Out” signs on such unknown public access. Check it. Your property might have access rights of which you’re unaware. Can enhance value of your land if you have legal access to nearby water.
Determining boundaries of subject property vital in pre-sale situation. Get surveyed plan “subdivision plan” or “strata plan” from Land Title Office otherwise, OR when far away consider hiring surveyor.
3. UNSURVEYED ROADS
In some areas, public roads haven’t been surveyed or even formally dedicated. Highways Act says whenever public funds spent on roads crossing private property, serviced area becomes property of the Ministry of Highways.
“Section 4” roads have no set width. If road to house or building site isn’t on legal plan as public road and yet is being used by public as such, check with Highways Ministry to determine its status.
Many people think that when they buy a property and they travel on a gravel road the access is automatically to the paved road … it ain’t necessarily so. Many highway allowances in B.C. are 66 feet wide – private property usually begins ten or twenty feet from the shoulder of the road. You actually may need permission from the department of highways to cross to your own road, as John Ince points out in his book B.C. Guide to Buying Rural and Recreational Property. Check it out and if necessary make the deal subject to getting an access permit.
5. DRINKING WATER
If not on property, usually supplied by community water system. While reliable, such systems can be poorly maintained, can lead to chronic water-quality problems. As we reported a few weeks ago, make sure that the well is actually running more than just enough to brush your teeth. Of course, municipal or regional systems usually problem-free. Good service and value.
6. SEWAGE DISPOSAL
Of extreme importance. If using septic tanks or field, can’t be within 100 feet of source of freshwater or well on your property or neighbour property. If your neighbour has a well near the property line and your property is less than 100 feet wide, you might be stuck. As we have also stated before regulations require minimum setback from ocean and requires a minimum depth of four feet of non-impervious ground above the water table. Check it out.
7. CROWN LAND
As the largest landowner in province, chances are good your property abuts Crown Land. Can be logged, mined etc. Check withForest District Manager or regional office of Ministry of Environment to see what the future will bring. Look at B.C. Lands in package, call their offices, they may have YOUR dream property for sale.
Major Point: Check things out. Always go and walk the walk yourself. Quite often, we place into our newsletter what we think is a deal. Sometimes a subscriber comes back and says, boy was that ever a fantastic deal … thanks a lot. Sometimes, hey it was a piece of swamp. Either way, nothing takes the place
of your own due diligence.
1. Powell River investment – 4 bedroom house in Westview Powell River rented to long term tenant for $980 per month plus utilities. Looking for investor as tenant is wanting to stay. Price: $219,000;
2. BURNABY, MAC Marketing offers“Live Free” for a year on all 1 bedroom homes at RedBrick. Own for 5% down and move in now – you’ll pay no mortgage payments, no strata fees, no property taxes for one year. From: $263,000. You have to check it out.
Remember, it has to pass the smell test! Is it a superior deal? (Low DP, Owner carries, well priced, well located, lease to own etc.) Can be submitted to be featured here – FREE. Contact info will only be displayed on your password-protected website (to stop you from getting bothered by non-members).