Oz Buzz

“The difference between stupidity and genius is that genius has its limits.” 

–Albert Einstein

Today’s Issue:

  • GREAT HOT PROPERTIES – 465 acres – $599,000


Many emails. My response: Yes, I write the letter, yes, my English is not the King’s (but I won’t change after writing since 1993). Thanks for the lovely kudos and yes, the Ozzie personal Ozbuzz podcasts will start after BC Day. I am also bringing back the song of the week and the book of the week.

“Judge others by their QUESTIONS rather than by their answers.” –Voltaire


Q: You talk about real estate as an investment. What about buying with our long-term friends? We spend 2 weeks together renting a cottage on Okanagan Lake. Every year we debate buying a unit together. Should we now?
A: Run, don’t walk. If your purpose is to buy something together that someone else rents from you and pays the mortgage – that is an investment. If you buy something together with friends that you want to use yourself each for a month and then rent out … it’s full of unintended consequences. 1. The lovely friend family loves things neat, washes dishes every night, vacuums and cuts the lawn – your family is the opposite: trouble. 2. Children are different when they are supposed to listen to a neighbour. 3. All expenses become a problem. If you do, sign a clearly laid out JV agreement, even if it is your brother (particularly when it is within the family).

Q: We have been waiting for some time to get into the market. It seems that prices just never come down. But is this a good market now?
A: Most of the questions I get these days have to do with: “Is this a good market?”, “Should I wait?”, “Is the boom over?” or “Can I write a low offer in today’s market?” and so on. In 40 years, I have never seen the “great deal of a lifetime” advertised (or if I did, it turned out it wasn’t). I have never seen a Realtor who REALLY liked low ball offers, including myself. I have never read in the paper that “This is without a doubt the best market ever”, when it really was. I also have never subscribed to the theory that one should wait, let life, ideas, pundits, gurus, worries, stress storm in on us … and to defer our actions to a better day.

In Real Estate investment – the only time to do it is NOW. Always. There are no perfect markets, no perfect situations, no 167 secrets to make that great buy. There are only the actions that you take. Identify a neighbourhood, look at everything that is for sale there, look at everything that sold there, do it for a little while. Oh, yes, I forgot, the only real secret is: “It is work!” Get an idea of what really presents value and then take action. So, get your professionals, your Realtors, your mortgage brokers, your bankers, your home inspectors lined up. Talk to them, see them, work with them and make offers. All good deals are negotiated. So, storm the net, hit hard, and keep shooting on the net. Don’t ice that puck.

Q: I always see the words “cashflow” but when I try to do the numbers, I don’t see it. Can you explain the Abbotsford Hot Property and how you arrive at cash flow?
A: I have had the agent Richard Morrison ( mls@strawhomes.com ) do a ‘cash flow’ sheet based on a 20% down payment and a variable and fixed mortgage on that hot property. (Thanks Richard).

Richard Morrison: I have run 2 scenarios on the spreadsheet print outs below:

The mortgage calculation is on $420,000 (assuming a 20% down payment of $105,000) and not on the full amount of $525,000.  As such payments are as follow: 
1) $1,916 /month with a 5-year variable rate of 2.65%
2) $2,065 on a 5-year fixed rate of 3.33%. 

Here are the 2 scenarios in detail:

1) With a 5-year variable rate mortgage at 2.66%, the unit will cashflow at $1,762 per year (after mortgage, taxes and maintenance fees).


2) With a 5-year fixed rate mortgage at 3.33%, the unit will break even and pay itself (after mortgage, taxes and maintenance fees).


Major Point: So, there is cashflow, but in addition there is mortgage reduction and a dramatic increase in principal. Under the 5-year mortgage you reduce your mortgage by $13,820 EVERY year … increasing as you go along. The classic piggy bank (forced savings) … even if the market does not go up. If the value of property goes up by 5% a year you increase your asset by a further $26,500 per year (actually more as you increase in the annual increase as well. How much in total after 5 years … take a pen work it out … it is quintessential proof why you should use your $105,000 this way… 1. Actual cashflow, paid by tenant, 2. Mortgage reduction and 3. a possible increase in value … unbeatable.

Question: …you state that timing is more important than location in determining the value of a property. I don’t buy that. A property located on the Westside is more valuable than one on the Eastside, so location is more important.
Answer: Of course, a waterfront location at False Creek is more valuable than a lot on Stuart Lake. That’s not the point. Everyone trumpets the location, location, location answer as the panacea to real estate investment yet the average person would have been far better served by observing timing and trends. Downtown condos at False Creek from 1992 to 1997 dropped by up to 35% in value at the finest location, while a building lot in Surrey rose from $65,000 to $130,000. Buying a home ANYWHERE in Toronto, New York or San Diego in 1986 and selling it in 1989 would have made you 60% profit, buying the same home anywhere in these markets in 1989 and selling it in 1994 would have lost you 35%…buying it back in 1994 and selling in 2000…up again by 45%. More recently buying a home anywhere in the US in 2004 would have seen a 32% profit by 2006. Then the loss was over 60% by 2011. If you bought in the US in 2012 (when I urged people to buy Phoenix and organized bus tours there) you saw a 200 – 300% increase…Not to waste your time talking about Vancouver, up to 2008 – down to 2010- soaring to 2017 …down till now…etc.

Real estate markets – unlike stock markets – are always local in nature and thus fluctuate with the confidence level of the buyers in a given market. There are a half dozen times, where you could have bought on the Westside and seen values come off substantially. ‘Location’ did not help the loss in value. When I argued in 1995 to go into Toronto, in 1996 into Calgary and back into the Lower Mainland BC and the US since 2012, it did not really matter what location you bought – you made money in ANY location as you were at the right time in the cycle. (The most unreported inflation of all-time cycle.) Yes, and I did write the book “Forget About Location, Location, Location” in 1998.)

Q: I want to own my own home but am not sure whether I can afford it. I want to stay within my means. Is there a rule of thumb for a point beyond which I should not make payments? 
A: I am with Oscar Wilde who said: “Anyone who lives within their means suffers from a lack of imagination.” Kidding aside, your mortgage company has rules. Essentially, they will let you pay some 32% of your gross income on mortgage, tax and strata fee payments. Also, your total debts cannot exceed 42% (car and other payments). So, the bank will make the decision on ‘means’ for you.

Q: The stress test reduction is indeed nonsense and ineffective. Why do they do that?
A: They get so much flak on it that they want to be seen as ‘proactive”. But they will not react until the banks scream louder. Banks are losing tons of money on the safest bets and must get into tough deals to make any returns. The government will not move, if you and I scream. We are getting closer to the banks screaming. The grape vine is that the new stress test will be another half a percent lower before October.


1. Day Lake, Burns Lake – $599,000 – 465 acres One of kind! lake frontage on a private lake

2. Naikoon Estates, Haida Gwaii – Priced well below assessed value: $141,800 only 2 remaining riverfront acreages left for sale

3. Caledonia EstatesFort St. James – Priced below assessed value from $35,600 for 5 acres serviced with power and gas

4. Victoria: least Expensive Revenue Duplex in Greater Victoria
6 bedrooms, 2 bathrooms, 4 parking spots, 1,901 finished sq. ft, large 8,914 sq. ft lot
Current rent $3,167/month or just over $38,000/yr. gross
Assessed Value – $845,000 — Asking price: $799,900

5. Langley: $998,800, now $158,000 below assessment. Price dropped another $30,000. on Monday. Motivated Seller. Large 7700+ SF lot in Great Neighborhood – Beautifully renovated with A/C & Security cams, nice, quiet & a lot more.

6. South Surrey: Recent Price reduction. Reduced $30,000. List price $949,900. Rancher in cul-de-sac. 6658 sq. ft south east beautifully landscaped yard. Priced $150,000 below assessment.

7. .58 acre, 5 BDRM, 2 level highbank waterfront, Halfmoon Bay, zoned R2 so can build another house on the property even a B & B, currently rented approx $4k could be $5k. $1,050,000. No foreign buyer tax.



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In OzBuzz No. 2
Irecommended “Homo Deus: A Brief History of Tomorrow” by Yuval Noah Harari. His 2018 book “21 Lessons for the 21st Century”is also remarkable. In The New York Times, Bill Gates calls the book “fascinating” and his author “such a stimulating writer that even when I disagreed, I wanted to keep reading and thinking.” For Gates, Harari “has teed up a crucial global conversation about how to take on the problems of the 21st century.”

I liked it even better than the ‘History of Tomorrow’… It is a great summer thinking book.



NEW: You can buy both of Ozzie’s books and Ozzie’s 25 Money Making Principles on USB and the complete Land Rush audio on USB by ordering them here https://jurock.com/products/


Go to www.realestatetalks.com – Some 2,500 members (47,009 posts) talk real estate. Ozzie created this bulletin board in 1998!
If you are in a real estate related industry of any sort (realtor, appraiser, lawyer, home inspector, etc.) list yourself in Ozzie’s free British Columbia real estate directory at www.bcred.ca.


You can watch all videos and podcasts on my YouTube channel at https://www.youtube.com/jurockvideo. It is a great way to check on what I said 10 years ago.


On air with Michael Campbell on fabulous MONEYTALKS every Saturdaysometime between 8:30AM – 10 AM. The Hot Property that we discuss there, is available by subscribing to the Oz Buzz Dispatch at Jurock.com


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