IN THIS WEEK’S FACTS BY EMAIL:
- URGENT: LIBERALS BRING IN CAPITAL GAINS TAX ON YOUR HOME OFFICE
- LANDRUSH CD SETS DISCOUNTED FOR SUBSCRIBERS
- BUYING WITH NO MONEY DOWN – IT IS NOT A RARITY
- KAMLOOPS RIPE FOR RENTAL INVESTORS
- TAKING SELF STORAGE TO THE NEXT LEVEL
- PIPELINE TO PROFITS IN NORTHEAST BC
- YOU HAVE TO START CONSIDERING COMMERCIAL STRATA
- AVERAGE CALGARY CONDO OWNERS LOST $14K EQUITY IN PAST YEAR
The Extraordinary 2017 Land Rush Conference Was Packed
No threat of sleet, hail or bad weather kept attendees away last Saturday … and that was – for the whole day – there was standing room only. (Actually, the sun came out to help as well.) If you were not able to make it, please note that the full CD-set will be available shortly to the general public for $88.88. However, subscribers will be granted the ‘attendee bonus‘ for this week.
NOTE: For subscribers, the full conference (on CDs) is available for a short time at a steep discount price of only $48.88 (plus GST and shipping). Just go to www.jurock.com/products and click on Landrush CD sets and use coupon code LRCD2017 … or phone Max at 604-683-1111 or write him at email@example.com.
• Canada •
URGENT NOTE: Your Home Profit Is Now Taxable (In Part!)
The Trudeau Liberals announced that you now have to report the sale of your home on your income tax return. Up until now when you sold your ‘primary residence’, you didn’t have to pay any taxes on the money you may have made as profit. NOTE: We’ve always had a tax exemption on your residence – we never had to report the sale, because there were no taxes to be paid. Capital gains on your home were exempted from tax. THEN – the Liberals announced the home registry (you have to tell that you sold your house and for how much). That was “To ensure Canadians didn’t have to pay tax”.
A lie? The truth? Last week in Question Period the Liberal Minister of Finance explained the “exemptions to the exemptions”. NOTE: That means, that if you work from home, you are now an exemption to the exemption, and Trudeau’s latest Tax Target. The percentage of square feet you work from home in, or run your business from, is now taxable! According to the conservative MP CHERYL GALLANT: “This sneaky stealth tax deserves entry into the Liberal Hall of Infamy. While we have been fighting in Parliament, and you have been writing Trudeau asking him to not bring in any new taxes in the next budget, they just slipped this one into an announcement about mortgage rules.”
What is worse is that there is not a peep out the mainstream media. If we are going to have any chance of getting this stealth tax repealed, we need to spread the word ourselves. Share this post and just say no to a #StealthTax on your home.
Now, I do not wish to be an alarmist … but what about your basement suites? Or work and live spaces? Fun times ahead!
Major Point: I am NOT a tax advisor, BUT, if I sold my house last year and made a ‘multi big buck profit’ and if I may have to disclose … say 20% of my home as my office and I had a big profit … I may be better off NOT claiming office expenses … I may want to review whether to write off my office space! Maybe get a PO Box … just saying.
Land Rush 2017 Highlights – Part 1
It was another sell-out at the annual Jurock Land Rush real estate conference, held March 4 at the Pinnacle Waterfront hotel in Vancouver. With the current volatility in the world and the real estate market, investors wanted to find out where to place their money this year for the best returns. And they were not disappointed, as expert speakers pinpointed exactly where to find yield and equity returns.
The following is the first of a two-part report on Land Rush highlights:
Buying With No Money Down – It Is Not A Rarity
Buying real estate with no money down was once a come-on staple of late night TV real estate pitches and questionable seminars. But, as the true experts at Land Rush explained, it is entirely possible, even common, for investors to tie up real estate today with no money coming directly out of their own pockets.
In fact, with the matching down payment loan program for first-time buyers, it is virtually endorsed by the B.C. government. Add in first-time buyers counting on help from the bank of mom and dad, and thousands of Canadians get their first start in real estate with none of their own money.
Sophisticated investors can even purchase big-ticket real estate with no equity, ace mortgage broker Kyle Green told the Land Rush audience. Green, Mortgage Alliance’s top-producing agent in B.C. for the past six years, said the key is to enter joint-venture agreements. You find a great deal and then find someone else to put up the down payment.
“If you show a partner that he or she can make more money with you than in another deal, they will back you,” Green explained. “If you find a great real estate deal, you will find a partner. “Of course, it also requires integrity and trust.”
Here are Green’s tips – which he has used personally to close $1 million plus property purchases:
- Make sure the investor partner gets paid first and all of his cash back at exit, and split any profit 50-50.
- Get a lawyer to draw up the joint-venture agreement (including and especially if the partner is a relative or friend).
- Make sure the bank will agree to the deal. With today’s money-laundering regulations, the bank will want to know from where and who the down payment is coming from.
- Use a mortgage broker who is familiar with the regulations and rates at major banks, because all of them have slightly different lending criteria today.
- Join the Jurock Real Estate Action Group or other real estate investment groups to meet with potential investors.
Kamloops Ripe For Rental Investors
Dr. Rod McLean told the Land Rush conference that he has a found a cure for the tepid returns being seen in mutual funds and RRSPs: real estate in Kamloops. Dr. McLean, a GP in Kamloops, spoke as a partner in Perron Properties and SBS Investments, which is targeting the residential rental sector in Kamloops, a city of 90,249 that is the third-fastest growing municipality in B.C.
As Dr. McLean and partner Sam Perron explained, Kamloops has more than a great ski hill and 13 word-class golf courses. It also has a fairly tight 4.2% rental vacancy rate (1% for one bedrooms), is the No. 1 destination in Canada for U-Haul Movers and has seen annual rent increases above the provincial average for the past two years.
Kamloops also has the expanding 25,000-student Thompson River University, the Highland Valley copper mine, new jobs coming with pipeline expansions and a $417 million hospital upgrade that completes in 2019. (Perron is also confident that KGHM’s Ajax mine in Kamloops will win approval, adding 1,200 high-paying jobs.)
For the price of a Vancouver tiny tear down, you can buy a luxury new 5-bedroom house in Kamloops with a view of the lake or the mountains, he added.
Perron Properties latest venture is 34-unit Kamloops apartment complex that they are buying for $3.3 million with a cap rate of 6%. They are offering shares at from $50,000 to $250,000 and the offering is 70% subscribed.
The partners will spend $7,500 per suite on renovations and increase the rents by about $180 per month. They calculate that at a five-year exit the building would sell for around $4.56 million.
Major Point: We don’t know if Perron’s math is dead on, but the strategy is. You can make good money in smaller towns if you pay attention to the basics: people go where jobs go and profits grow where people go. In that aspect, Kamloops checks all the right boxes.
Taking Self-Storage To The Next Level
We have always liked self-storage real estate. It is simple to maintain and there appears to be an endless supply of tenants. But we had always thought of self-storage in a suburban or rural context, with a big parking lot and a rather remote location.
But Shane Doyle of NationWide Self-Storage Trust revealed to the Land Rush audience how investing in storage has been taken to the next level. For Doyle, the new paradigm involves big-city storage tied to the boom in condominium ownership.
This is not old-school self-storage. NationWide’s concept is multi-level storage buildings that look like condos, where units are rather small (starting at 4’x5’ and 5’x5’) and aimed squarely at all those who are living in small condos that need somewhere to store all their toys and other stuff.
Results of a NationWide survey were an eye-opener: 70% of storage decisions are made by women and they want security (which means no big dark parking lots); they want to it clean and they want it close to where they live.
The potential client pool is huge: there are 25,500 new condos under construction or ready to start in Vancouver right now, not counting the thousands already occupied.
In some cases, such as Olympic Village, nearby storage is part of the condo development package.
NationWide, with Maple Leaf Management, is building a large self-storage facility on East Pender in Vancouver’s East Village, where many condos are being developed, and selling to investors as a preferred income fund ($100,000 per share unit; 7.75% annual return and a five-year exit.)
And the kicker: Vancouver storage is renting for an average of $3.17 per square foot, which Doyle said is 44% higher than typical residential rents. But, he noted, a storage unit requires just four steel walls, a concrete floor and one light bulb. “Not a single storage facility has ever gone bankrupt in Canada,” Doyle said.
Pipeline To Profits In Northeast BC
The economy is stirring again in Northeast B.C. and Taylor Steele co-founder of Investment Revenue Realty Ltd. (IRR), told Land Rush that now is the time to be buying investment condos in Fort St. John, the largest city in the region.
He has a point. The $8.8 billion BC Hydro Site C dam, right outside of Fort St. John, will have 1,100 workers on site this year alone.
Malaysia-based Petronas is spending big on infrastructure and negotiating exactly where to place its $36 billion liquefied natural gas (LNG) export terminal on the north coast. The pipelines for it have already been approved. Petronas is expected to announce a “go” decision by this June.
Shell Canada is already prepping a Kitimat site for its proposed $40 billion LNG terminal.
And all of the natural gas exports has to come from the northeast, which expects to see 49,000 jobs generated this year by 367 drill wells and related processing plants.
Remember, Fort St. John has only 22,000 people, a shortage of land, and is close to the second-largest natural gas fields in the world.
Steele and his team appear to have nailed down a turnkey rental investment opportunity in Fort St. John. Here is an example of the deals presented to the Land Rush audience. Buy a brand new 600 square foot 1 bedroom condo for $209,900 with 20% down. IRR screen the tenants and handles all management and repairs for a flat $50 per month. Rents are $1,200 per month and the income is deposited directly into the investor’s bank account. To even out income, all the rentals are pooled so each owner receives consistent returns each month.
IRR has similar deal in more expensive projects, up to executive townhouses.
Steele said the exit strategies are timed for five-years (which he said would track the startup of LNG exports and ongoing Site-C construction); eight years (hitting the peak of LNG employment and investment) or his favourite: forever, banking on the northeast be a perennial economic powerhouse.
Next week, the Jurock Real Estate Insider will profile Land Rush’s report on the Phoenix market, opportunities in Victoria and the Fraser Valley, and Ozzie’s picks for the top cities to invest in in 2017 and beyond. (Please note, that at Landrush conferences we have this disclaimer – similar to the one on our subscriber only website: Landrush 2017 conference neither guarantees claims made for a product or service, nor an endorsement of a manufacturer, distributor or promoter of a product or service. Neither Landrush 2017 nor Jurock Publishing Ltd. or its subsidiary companies shall be liable for any damages, claims, liabilities, costs or obligations arising from the use or misuse of the information that appear, whether such obligations arise in contract, negligence, equity or statute law. No guarantee or warranty is made as to the quality, accuracy, completeness, timeliness, appropriateness or suitability of the advertising or sponsorship material or any information provided. No advertising material is intended to be a substitute for the advice of a real estate, accounting or legal professional, and attendees are advised always to consult their personal professionals for a review of products and services offered.)
You Have To Start Considering Commercial Strata
200,000 square feet at an average of $500 per square foot is worth $100 million. That is what a Vancouver commercial real estate developer will gross from a single city block in East Vancouver where it built a pair of three-floor buildings is selling it all as strata. The developer has already grossed $50 million and the project just broke ground last week.
The office space is selling at approximately $600 per square foot and industrial space for more than $325 per square foot. Demand is so high that the remaining 100,000 square feet could sell for even more.
No investors were allowed to purchase: all had to be owner-occupiers and preference is given to local companies, but even with these restrictions the space appears headed for a sellout.
It is the latest indication that investors who have long been tied exclusively to residential strata in Metro Vancouver should start seriously looking at the commercial market.
And, with the direction that commercial leases are going, the potential cash flow is challenging residential returns.
Commercial leases are annual rates, not monthly, but Metro Vancouver base office leases now average $23 per square foot, with an average of $14.50 psf for additional rent (which covers operating costs and property taxes). Residential rent, meanwhile, is around $2 to $3 per square foot monthly, or $24-$36 psf annually.
However, unlike residential, office space has no provincial tenancy regulations, no rent controls, needs no fancy kitchens, few costly fixtures and, often, has tenants who stay in place for at least five years, often longer. Also, the price-per-square-foot of even prime office space is about half that of a strata residential in the Metro market.
And the Metro office fundamentals are solid: Here is a summary provided by Colliers International:
Metro Vancouver vacancy rates were down from 9.3% in Q32016 to 7.9% in Q4. The lack of new supply entering the market at the end of 2016 also contributed to a downward trend of vacancy rates in most markets. There is almost 1.3 million square feet of office space expected to deliver in 2017, and 42% of that is pre-leased.
Major Point: There is still not a lot of strata commercial space on the Metro market for investors, so you have to act fast when a listing comes up.
Average Calgary Condo Owner Lost $14k Equity In Past Year
Calgary’s condominium market is slowly improving, but it still has a way to go. Sales were 17% higher this year than in January 2016, but only when compared with one of the lowest monthly levels on record.
Prices continue to fall. If you had bought an average Calgary condo last January and sold it this January, you would have lost $14,000 as the benchmark price fell 5% to $269,000. Northeast Calgary was the only end of the city with a year over year price increase. There, the apartment benchmark improved 0.9% to $273,200.
Best deal in Calgary appears to be the city centre, where the benchmark condo apartment price is $295,400. This compares with more than $600,000 in the centre of either Vancouver or Toronto. Calgary downtown townhouses are now selling for $460,500, or about half the price of downtown Toronto or Vancouver.
There are signals that Calgary condo prices could increase: first of all, listings for both apartments and townhomes are down 5% and 15%, respectively, from a year ago; second, sales are rising in both sectors.
Major Point: We still believe it is too early to get back into Calgary condos as investors, but it may be time to start scouting for opportunities as prices test the bottom.
BC Commercial Leading Indicator Ends Year On A High Note
The BCREA Commercial Leading Indicator (CLI) increased for the fourth consecutive quarter, rising 1.5 index points from the third to fourth quarter. The index now sits at 123.9, a 5 per cent increase from a year ago, and about a 1.2 per cent gain on a quarterly basis.
“The CLI was propelled higher by strong fourth quarter growth in the BC economy,” says BCREA Economist Brendon Ogmundson. “The strength of the underlying BC economy, particularly relative to the rest of Canada, makes BC a very attractive destination for commercial investment.”
Major Point: JREI agrees… Five straight quarters of rising BC manufacturing sales and a second consecutive year of more than 6 per cent growth in retail sales has driven the CLI to new heights this year. That uptrend signals further growth in investment, leasing and other commercial real estate activity over the next two to four quarters.
At our great Landrush conference, we handed out 100 MLS listings in BC and 10 in Phoenix, that were priced under $100,000. Just email a request to firstname.lastname@example.org and he will be pleased to send you the listings.
(As we have stated many times, you are welcome to send in your ‘best deal’. There are no fees from us, nor any guarantees that your deal will be featured here or even is a good deal. It is up to you to study, evaluate and negotiate. Look up our disclaimer under the Hot Property section on your website. Interested parties – go to your website and get in contact directly with the owners/realtors or write to email@example.com)
WONDERING ABOUT THE HOTLINE?
Hotline Text Alert System and Hotline Code Changed
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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.