Facts By Email #23 – Real Estate Entrepreneur Summit

IN THIS WEEK’S FACTS BY EMAIL:

• QUESTIONS, QUESTIONS – ANSWERED!
• IT’S TAX FEE DAY – FROM NOW ON THE MONEY YOU EARN IS YOURS
• THE NUMBERS, THE NUMBERS – LAST THREE MONTHS COMPARED
• VANCOUVER LANDLORDS: SELL SIGNALS FLASHING
• WEST END SPEC SALE PENCILS TO $180 MILLION AN ACRE
• HIGHER DOWNPAYMENT IS NOT THE CURE!
• APPRAISER WARNS CONDO OWNERS PLANNING LIQUIDATION
  AND IT IS NOT THAT EASY TO SELL TO A DEVELOPER
• MORE U-HAULS LEAVE VANCOUVER THAN ARRIVE
• BANK OF GRANDPA WORTH $197 BILLION IN VANCOUVER: RENNIE
• BTW, MOST CHINA REAL ESTATE MONEY IS ILLEGAL
• ATTEND THREE EVENTS AT A ROCK BOTTOM ‘SUBSCRIBER’ ONLY SPECIAL

TALK, TALK, TALK

• June 11 – Ozzie leads a group of action oriented entrepreneurs at the Real Estate Entrepreneur Power Summit at the downtown Marriott
• June 13 –  Ozzie speaks at the Real Estate Action Group meeting – Vancouver Alpen House
• June15 – Ozzie speaks at the Real Estate Spring Board (into action) at the downtown Marriot

Questions, Questions

Q: Ozzie, your piece on fixed term leases is wrong. You can never raise the rent at fixed rent completion!

A: Well, actually you can. We had confirmation from David Hutniak, CEO of Landlord BC confirming that fixed-term contacts trump rental rate increase legislation:

“Fixed Term Contracts are permitted under the Residential Tenancy Act and have been part of the rental housing market for some period of time. They are an effective contractual arrangement when both tenant and landlord wish to review the relationship at the end of the fixed Term with no obligation to continue the relationship. Both parties know the contract ends at a fixed date and the tenant ends their tenancy. At the option of both party’s negotiation of a new contract is available at a mutually agreeable. The new contract will typically be at market which is understandable. The 2% plus cpi restriction does not apply in this scenario. Again the fixed Term contract is governed/regulated under the Act.

Furthermore, fixed Term Contracts are not broadly used by owners and managers of rental housing and to-date we’ve not witnessed any issues with their existence.”

Q: Your hot property is usually sold by the time I call. Are they really available?

A: Ouch. You hurt my feelings! At the time I post them on the subscriber page (usually 3 days to 10 days before I put them on the radio with Mr. Mike Campbell) they are indeed available. They are sent to me by realtors or owners directly. But guess what: The market is hot! One recent property of a 20 building lot subdivision in Nanaimo had 19 inquiries. It was sold right away. Check your website from time to time. Also, we will in future delete the last few hot properties.

Questions and comments: The questions and comments on the market abound – when will it be over, what will trigger a downturn – what, what, what? We will do a special edition HOTLINE this Thursday at 6 PM – looking at several possible scenarios.

Yeah, Tax Feedom Day! June 7!

Happy Tax Freedom Day! So, says the fine Fraser Institute: “If you had to pay all your taxes up front, you’d give government every dollar you earned before Tax Freedom Day, which falls on June 7 this year. From that day onward, you’re finally working for yourself and your family.

“Since governments impose a litany of taxes—some of which are visible but many are hidden—it’s nearly impossible for the average Canadian to get a clear sense of all the taxes they. That’s why every year the Fraser Institute calculates Tax Freedom Day, a handy measure of the total tax burden imposed on Canadian families by all levels of government. To learn more about Tax Freedom Day, and to view and share our infographics click here.”

The Numbers, The Numbers

The fine Real Estate Board of Greater Vancouver reported that there were 4,769 sales for an increase of 18 per cent from the 4,056 sales recorded in May 2015 and a decrease of 0.3 per cent compared to April 2016 when 4,781 homes sold.

Last month’s sales were 35 per cent above the 10-year sales average for the month and rank as the highest sales total on record for May!

Interestingly, new listings for detached, attached and apartment properties in Metro Vancouver totaled 6,289 in May 2016. This represents an increase of 12 per cent compared to the 5,641 units listed in May 2015 and a 2.6 per cent increase compared to April 2016 when 6,127 properties were listed.

Active listings stand at 7,726, a 37 per cent decline compared to May 2015 (12,336) and a 2.3 per cent increase compared to April 2016 (7,550). (one of the reasons for the hot market).

The Boards’ composite benchmark price for all residential properties in Metro Vancouver is currently $889,100. This represents a 30 per cent increase compared to May 2015.

Sales of detached properties in May 2016 reached 1,865, an increase of 8.2 per cent.

The benchmark price for detached properties increased 37 per cent from May 2015 to $1,513,800.

Sales of apartment properties reached 2,150 in May 2016, an increase of 34 per cent compared to the 1,600 sales in May 2015.

The benchmark price of an apartment property increased 22 per cent from May 2015 to $485,000.

Major Point: We left the last three months’ performance for comparison purposes. We also left the last three years numbers in all product areas – condos new and used, detached new and used. These have been truly astounding 3 months. Note: Take out the prices for new construction and all prices are lower than they were in March. We publish both since the ‘used’ columns represent 84% of all sales – and they are thus more relevant. Usually – in normal times (and these are NOT normal times) prices increase most between February and June. We should take a breather this summer.

$792,800, B.C.’s Shocking New Number

Kelowna, Prince George the next markets to watch

The average combined residential price in British Columbia will rise 20.4% to $792,800 in 2017. That is the somewhat shocking forecast from the BC Real Estate Association as the provincial housing market roars through the first half of a record year.

If the forecast is accurate, it suggests that a typical B.C. residential investor could make about $158,000 over the next 12 months – or more than twice the average income – by simply buying and selling a home.

But the BCREA is playing it cautious on the Greater Vancouver region. As we noted last week there are signs of slower sales and BCREA is forecasting that home sales will dip 8.7% next year, led by a 10.4% drop in detached house sales. Overall Greater Vancouver home prices are forecast to increase a modest 4% in 2017, after posting a 24.6% rise this year (already up by that much).

So where will the biggest detached house price increases be seen in 2017 outside of the Lower Mainland?

Here are our picks:

Kelowna: (This year’s small town pick in January.) The Okanagan’s largest city is seeing an updraft in housing sales this year and is in full recovery mode, but average detached prices haven’t taken off. We expect to see at least a 6% rise in prices in 2017 to the $564,000 range.

Potential uplift per house: $30,000-$35,000.

Powell River: This northern Sunshine Coast community is capturing a wave of retirees and young entrepreneurs coming out of the Lower Mainland. Detached house prices will end the year up about 7% to $264,200 and we see bigger lift in 2017, likely in the 10%-12% range, particularly for view properties.

Potential uplift per house: $26,000

Prince George: (Last year’s small town pick.) Housing starts have been too low too long for city of around 90,000 people. Detached house prices now average $293,00 and sales average 180 per month, but there are only 115 detached housing starts expected for all of 2016. We see house prices rising in the 5%-6% range in 2017, more if any LNG export proposals get a green light.

Potential uplift per house: $20,000-$25,000.

Major Point: There are many communities that are still outright bargains – if you wish to retire, slow down, change your lifestyle or grab that 3 million price for your wartime bungalow … and live, live, live! I like Kimberley (totally biased) and there are dozen others. But a fabulous mountain home on the hill – all timber – 3,800 sq. Feet. can be bought for $700,000. Duplexes – real nice on the hill – under $450,000 and you know what? They come fully furnished and with hot tubs of course. Skiing AAAAAND golf! (You may review our Outlook Issue from January and read details on the top 5 retirement towns and top small towns for investment as well.)

Vancouver Landlords: Sell Signals Flashing

We have made no bones about recommending to long-term apartment rental building owners in Metro Vancouver that now is the time to sell. We believe a combination of cheap money, foreign buyers, aggressive land speculation and multiple offers have driven prices to the peak. But more B.C. government regulation, including tighter rent controls (which are coming), an increase in purpose-built rental housing, competition from AirBNB and other short-term rental group, more secondary suites being added to houses, and a potential cooling of offshore money all mean that landlords will face a more challenging environment over the next two years.

It is no coincidence that Boardwalk Equities, Beach Properties and other large landlords have already cashed out of Metro Vancouver.

Major Point: Listen to Sam Zell, the savvy chairman of Equity Group Investments, who has been liquidating its multi-family rental buildings in the U.S. this year: “With pricing currently available, it is very hard not to be a seller,” Zell said.

West End Spec Sale Pencils To $180 Million An Acre!

For an indication of how land speculation is driving up Vancouver multi-family prices, we present two sales this year, provided by request from RealNet.

The first is the January 28 sale of a 0.39-acre site at the corner of Barclay Street and Thurlow in the West End. Zoned for a 500-foot high residential tower, the site sold for $59 million. That pencils out to around $180 million per acre.

The second is the sale of a 1.3-acre site at the corner of West Eighth Avenue and Pine Street, which sold in February for $70 million to Delta Group.

Major Point: Note: In fact, sales of residential land for development dominated the record-setting commercial sales in the first quarter of this year, accounting for nearly $1.4 billion in sales and more than 50% of the total dollar volume across Metro Vancouver, RealNet reports.

As well, sales of older apartment buildings in the first three months this year sold for more – $247 million – than all the office buildings and retail property sold, combined. At the peak of previous markets, developers drive each other’s prices into the stratosphere! Just saying.

Higher Downpayment Is Not The Cure

Housing prices are soaring in Vancouver largely due to multiple-bids for a tight inventory and unprecedented speculation by offshore and local buyers. So what is the brainy idea from big banks and government watchdogs: raise the down-payment to a minimum of 10%, tighten credit conditions further and increase the cost of mortgage insurance for those with low equity.

As if the long-suffering first-time buyers and other working folks trying to get into the market are to blame for soaring prices.

There are smarter steps government could do to make Vancouver homes more affordable. Increase supply and:

• include incentives to developers to build more rental housing;
• expanding and improving transit to make less-expensive suburban and coastal locations more accessible to Vancouver and other employment hubs;
• increasing housing density across Metro Vancouver;
• releasing thousands of acres of unproductive and unfarmed Agricultural Land Reserve land for residential development;
• adding a 5^th or 6^th floor to every 4 or 5 storey apartment building (increasing housing stock by 16%)

All of these, of course, would take more political courage than jacking up the cost of homeownership for those Canadians just trying to get into the market.

Major Point: The only way to slow down the markets is higher interest rates! Which the government won’t (can’t) do. The head of BoNC, Porter actually does suggest that Ottawa may want to look at how the industry “adjudicates the five-year fixed mortgage, so maybe you raise the artificial rate on the five-year fixed mortgage.”

OK, BUT DON’T BLAME THE FIRST TIME BUYER FOR HIGHER PRICES!

PARIS AGREES: THE ORGANIZATION FOR ECONOMIC CO-OPERATION AND DEVELOPMENT is also worried. It calls on the Canadian government for more government action to slow surging home price gains in Canada. “Very low borrowing rates have encouraged household credit growth and underpinned rapidly rising housing prices, particularly in Vancouver and Toronto, which together are a third of the Canadian housing market,” the Paris-based OECD said in a 316-page economic outlook report published Wednesday. “In relation to household incomes, both house prices and household debt are high. Macro-prudential measures have been strengthened recently but should be tightened further and targeted regionally.”

Major Point: When all are worried … it usually means it’s too late.

Appraiser Warns Stratas Planning Liquidation

AND IT’S NOT AS EASY TO SELL TO DEVELOPERS

One of our researchers had a chance to talk with top appraiser Jason Upton of Aedis Appraisals (604-682-7585) about the trend towards liquidating existing Strata Corps so individual owners can sell the entire building for development. “We get a lot of calls now on this topic,” said Upton who has been in the business for 22 years in Vancouver.

B.C.’s Strata Property Act was amended last fall, lowering the voting requirement for liquidation from 100% to 80% of condo owners.

Upton said most of the calls are from condo owners asking for advice on how to price the buildings. He said it is wise for owners to get a firm handle on valuations, because some developers are being deceptive.

Upton said one developer insisted that the condos should be appraised individually, not on the land value, which Upton said would have lessened the sales offer to each owner.  In another case, a developer offered each owner twice the assessed value of their condo if they agreed to sell the entire building. “That is a fantasy,” Upton said, because the current market price of a Metro Vancouver condo is now so much higher than it was assessed at in July 2015, an assessment that did not include the land component.

And, while many owners of old condos may see liquidation as a smart exit strategy, it is not an easy process and can take more than a year to complete.

Obtaining the total number of votes needed is difficult and even then requires an application to the Supreme Court of BC to approve the decision as part of the legislative amendment.

There are two basic options to liquidation.

1. A buyer purchases all of the units directly from each owner. The strata corporation is not involved in the process and the deal is fairly simple.

2. A strata corporation votes. The principal advantage of this option is it gives the owners the collective ability to market the entire building for competitive bidding.

If the owners vote to sell and call for bids on the property, this process alone can take three to six months. Once the final offer is approved in principle, the real work begins. Around six to 12 months later, the final negotiation of the purchase conditions and price are completed and the strata corporation’s lawyer will prepare the 80% vote resolution that authorizes the liquidation, authorizes the court application to ratify the decision, and appoints a liquidator. The liquidator will be responsible for the receipt of the money from the buyer, the cancellation of each owner’s title into one parcel of land, and the payout to each owner.

The resolution the owners’ vote on and the sequencing of the events are the most critical parts of the transaction. A resolution can run 20 to 30 pages in length. One quirk of the liquidation process is owners who require their proceeds to make another purchase will have to wait until the job of the liquidator is complete before they can shop for a new home. A Strata corporation may want to negotiate 60 to 120 days of occupancy after the completion of the liquidation as part of the contract.

If everything goes well, plan on the process taking 12 to 18 months. If not, it may stretch into years.

If you are still interested, the Condominium Home Owners Association (CHOA) provides an onsite information service (www.choa.bc.ca) for B.C. strata corporations that are considering liquidation.

More U-hauls Leave Vancouver Than Arrive

Rich people don’t use U-Haul to move and neither do poor people, so a look at U-Haul Canada truck moving statistics is really a profile of the migration patterns of the middle-class.

So a look at the breakdown of 1.7 million U-Haul moves in 2015 gives an interesting and somewhat surprising profile.

For instance, in 2015 – after oil prices had already tanked – Calgary was still the No. 1 destination for U-Haul moving trucks for the second straight year and the third time in four years. The other top five destinations were Toronto, Edmonton, Montreal and Ottawa.

Vancouver dropped out of the top five rankings to 7^th place last year as a destination. And U-Haul found that Vancouver had slightly more U-Haul trucks leaving the city (51%) than arriving. Calgary also had more U-Haul moving trucks leaving than arriving, but by a very slight margin.

Major Point: Vancouver’s No. 7 destination ranking was behind London but ahead of Hamilton, Victoria and Kitchener in the top 10. But you knew already that people ae looking for cheaper places to live.

Bank Of Grandpa Worth $197 Billion In Vancouver

Top Vancouver realtor Bob Rennie told an Urban Development Institute lunch meeting this week that the generational wealth transfer is massively underestimated as fueling the Vancouver housing market.

“One in three homes in Greater Vancouver is owned clear title,” Rennie said. “That’s $197 billion of clear-title equity in 193,000 homes, out of 657,000 homes in Greater Vancouver. And what’s also scary is that $60 billion of this clear-title equity is owned by over-75-year-olds.

Even if $10 billion of this is transferred to their children, those children can buy $40 billion worth of housing.

And the unique thing about Greater Vancouver is that you can’t build more single-family houses, so these people are so highly liquid. And they’re downsizing, and releasing equity for retirement and giving it to their children. Some 80% of first-time buyers are getting help from family – and this is where the money is coming from,” Rennie said in the last of his annual speeches to the UDI.

BTW, Most China Real Estate Money Is Illegal

China is experiencing the largest capital flight in history, fueled by the slowdown in economic activity, the plunge in the stock market and the surprise devaluation of the currency – the Chinese yuan (also called the renminbi (RMB)) – last August.

In 2015, US$700 billion to US$1 trillion is estimated to have fled China.

The dream of many Chinese to have their children educated overseas is another cause of long-term capital outflows. Finally, the flows are driven by a belief that it will only get harder to move money offshore.

NOTE: However, China’s government is working hard to make foreign exchange transactions more difficult.

NOTE: Currently, the flow of most of the money into, for example, Vancouver real estate is already illegal.

The Chinese government already has very strict rules on how much can be taken out of the country. To quote official sources: “Individuals exiting China are required by law to declare amounts of RMB 20,000, or the equivalent of US$5,000 in foreign currency, to customs.”

This is the maximum amount of currency any citizen is allowed to leave China with. Chinese nationals are able to transfer up to US$2,000 a day to an overseas bank account, with a maximum of US$50,000 per person per year. In other words, it would take about 20 years to legally transfer enough cash to buy a typical Vancouver house.

Major Point: I know it is not popular to say so … but thusly, nearly all of the money being used by Chinese nationals to buy Vancouver real estate is arriving or being sent in illegally. While determined individuals can always find a way to move money, including untraceable bitcoin transactions, a slowdown in the fire hose volume of Chinese capital moving into Canadian housing is a risk factor for Vancouver.

Hot Property

1. Port Hardy, Full 1954 sqft duplex, side currently rented for $650/month. Rice $197,000;

2. Nanaimo, 4-year-old 5 bed 3 bath house that includes a 2-bedroom suite. RV parking, walking distance to downtown. Price: 489,000;

3. Nanaimo, brand new 3 bedrooms 2.5-bathroom town home in Central Nanaimo. Rentals are allowed. Price:  337,900.

Anyone that has a good deal, can be featured here. There is no fee. However, WE RESERVE THE RIGHT to accept or not to accept a specific deal. What makes it a deal? We look for: Low down payments, special discount, owner carries mortgage etc. Also note … we do not vet the deal, we just think it may be of interest. You MUST do your own due diligence. Please get contact info from your password protected website or e-mail Max at max@jurock.com … and read the disclaimer!

WONDERING ABOUT THE HOTLINE?

We can text you every time that the Hotline has been updated – with the password and no. E-mail (max@jurock.com) your cell phone number or call the office at 604-683-3222 and we will add you to the list.

These are Real Estate Action Group Events

Total Value: $409 | TODAY ONLY: $99
Real Estate Entrepreneur Summit
An all new experience to recharge and supercharge profits from Real Estate!
Ozzie Jurock and Ralph Case will share their strong real estate principles, their personal secrets to creating wealth, and a massive amount of wealth creation strategies. They will share their predictions for 2016 and beyond, including where, what, and when to buy!

Additionally, top real estate EXPERTS will teach YOU specific property strategies. You will learn state of the art property investment strategies, new ideas to finance property, to renovate property, to buy in the U.S.A., and to structure Joint Ventures, Multifamily properties, as well as how to deal with Realtors, mortgage brokers, joint venture partners, real estate lawyers, accountants and more.

ATTENDEES GET:

• 1 FULL day of instruction
• Top Real Estate Experts presenting
• Investor Panels with ideas and breakthroughs from New and Seasoned Investors
• PLUS – The Real Estate Power Summit Workbook
• PLUS – 2016 Real Estate Outlook Report – Ozzie Jurock’s predictions on where to buy in Canada and the USA
• PLUS – Your Personal Real Estate Business Plan – 16-page step by step business plan

Value: $197

PLUS
SPRINGBOARD TO REAL ESTATE ACTION
An Exclusive Workshop on Where and How to Buy in 2016 for Huge Profits!
On June 15th (Or pick a September date) Ozzie Jurock and Ralph Case will present to you:

• The 5 critical skills for Real Estate investing success in any market.
• Action Plan strategies to reach your goals.
• 7 Secrets for creating a mega portfolio.

Additional Gifts! Just for attending!
Gift #1: BONUS REPORT: “Joint-venture secrets” – How to successfully structure Joint-ventures.
Gift #2: BONUS REPORT: “Real Estate SELF EVALUATION” – So you know where you are today and where you need to be.
Gift #3: BONUS REPORT: “A New Paradigm in Real Estate: The Quantum Leap” – Ralph’s chapter in the bestselling book Trendsetters

Value: $35

PLUS
A Real Estate Action Monthly Night
Every week in North America, thousands of people take personal development courses. These courses concentrate on creating better lives, changing personalities, learning to invest in the stock market and learning to invest in real estate. People spend thousands of dollars, sit attentively, get excited and thoroughly understand the material presented. Ozzie Jurock, after managing thousands of sales people, management teams, franchise operators, and very productive people, found that understanding was simply not enough. No matter how much people told him they paid for this or that course, a few weeks later, they found the notes they took in the trunk of their car and they did not get into action.

This is why in 2002, Ozzie dedicated himself to create an environment where students could grow into their own future best selves through real estate investment action. The key word here is action. In fact, Ozzie dedicated his life to moving people from just understanding into actually achieving worthwhile personal goals.

In 2009, real estate ace Ralph Case joined Ozzie as a partner, and together they focused their strong belief in investment real estate action through leading by example.

It is open to all those who want to create a better life for themselves through Real Estate investing. The focus is “getting into Clarity and Action.”

Ozzie and Ralph don’t just talk; they lead by example. Members get a chance to learn from their vast experience. They also get a chance to network and gain inspiration from hundreds of other successful investors within the group.

Check out our group on June 13^th (or pick a later date)
Value $177

PS: 3 EVENTS FOR THE PRICE OF ONE. DO IT TODAY!

All three events valued at: $409
Today Only: $99 (+GST)

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To subscribe to Jurock’s Facts by Email call 1-800-691-1183 or 604-683-1111 or fax 604-683-1707. 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.