The Investors Housez – Your Calgary Real Estate Information Site

As many of you know I write a weekly Real estate article for the Chestermere Anchor which goes out to the Chestermere, Langdon, Strathmore region. Every now and then I write an article there that I also put on the blog, and next week’s article I thought I needed to post here as well. This article is in regards to the recent fire in the rental property in NW Calgary and includes some information to help homeowners and landlords..

I’m still working on a second article regarding MIC’s, but that will probably be next week. Hopefully you can pick up some hints here for any rental properties you may have or have been considering, and possibly even make you aware of concerns in your own home. Enjoy.

With all the news about the house fire in NW Calgary that caused the death of three tenants earlier this year it may be time for not just landlords, but homeowners to do a quick inspection of their properties.

If you have a basement bedroom in your property it is essential to ensure it has a working window that a tenant or a family member can escape out of without any special tools or knowledge to open. In the case of the property in Parkdale that the tenants were trapped in, the windows were barred preventing any exit.

If you have security bars of any type on basement windows, either as a homeowner or as a landlord, you need to ensure everyone in the home knows how to open them. If they are padlocked, the keys need to be very close to the actual locks and possibly secured so they cannot accidentally wander away. If the bars require a specific tool to open, make sure this tool is located nearby and everyone is instructed how to use it.

If they are older bars, make sure they still actually open and haven’t rusted close, or the property hasn’t shifted making them impossible to open. These bars should be inspected every six months if not more often, especially in older properties.

Also for older properties, you need to ensure the windows can actually be opened and they are of a large enough size someone can escape through them. The specific bylaws for the actual window size vary by region, but for both Chestermere and Calgary, the window is required to be a minimum of 380mm in height and .35m2 in total area. Please be sure to confirm these sizes with the local bylaw officials for the area you live in as bylaws do change.

Current bylaws require smoke detectors in new homes to be hard wired and interconnected into the electrical system of a home, including basements. Interconnected refers to the smoke detectors one each level being connected so if an upper detector sounds it’s alarm, the lower detector also sounds.

By having all the alarms connected it can provide valuable time that may be required for someone to exit the property. If you are currently living, or renting out, an older house you can have an electrician come in and typically convert any battery operated smoke detectors into an interconnected and hardwired system for less than a couple hundred dollars. This is an expense well worth the money spent to protect your family or your tenants.

For further safety, having a fire extinguisher located both upstairs and downstairs in a property can be a great precaution. Great locations are near the kitchen and near the furnace or laundry room in the basements. Also, if the home has a garage, an additional extinguisher can be installed there to further ensure a safe home.

These are just a few of the steps property owners should be checking and considering for their own homes and any rental properties they own. As a homeowner, you have responsibilities to your own family. As a landlord, you have responsibilities to your family and any others that you provide shelter to.

Wow, 129,000 jobs, the obvious implications are that Canada may have some serious troubles ahead. With this kind of information as a headline in many of the papers people all over Canada must be awakening to the problems we are having.

With many projects here in Alberta being put on hold I personally know several people who have lost their jobs, quite a few individuals from our shared accommodation properties have returned home to Ontario and other Eastern parts of the country and our shared accommodation properties at a whole are having vacancies like we have never experienced.

Then again, it’s a bit strange that there has been so many people lining up to see any regular vacancies we have had in the last few months. Maybe we were missing part of the story? As I started to question the numbers, one of the first questions I came up with was, where were all the jobs lost? Could they possibly have been mostly manufacturing jobs out East?

As luck would have it shortly after I was pondering this I received a Twitter message from an acquaintance Chris Davies who had looked into this quite in depth.  His full story with all the graphs and info is available here, Canada Loses 129,000 Jobs you might want to take a minute and read through it. For those of you who are busy, your recap of the key points are below.

Of the 129,000 jobs, Ontario lost around 70,000, BC lost around 35,000 and Quebec lost around 23,000. Between those three provinces that amounts to around 128,000 jobs lost. That leaves 1,000 jobs lost in all the other provinces combined. The majority of all the jobs lost revolve around manufacturing and forestry.

The real story if you live in Alberta or invest in Alberta Real Estate should have read, Canada Loses 129,000 Jobs, Alberta Gains 200. Credit to Chris Davies for getting the facts and coming up with that headline. The parties not over here in Alberta and as long as you have a long term view and don’t get mislead by the headlines everything will be fine.

Well, the more I dig into this topic the more incredible information I seem to run into. Obviously, I have just touched the surface so far, so just to keep the topic flowing I will start with some information about what a MIC is and how they work.

MIC stands for Mortgage Investment Corporation and under Section 130.1 of the Canadian Income Tax Act, this is a special company created to enable investors to invest in a pool of mortgages. The MIC issues shares to its investors and then using the share capital and loan proceeds from banks is able to purchase various types of mortgages. The MIC then generates a profit from the interest it charges on each individual mortgage and the fees it charges on mortgages, much like a regular bank.

This profit is then split up with a small percentage going towards a management fee to pay the managers, some towards professional fees incurred by the business and to any other loan charges it may incur. The remainder of the income left after all these expenses are paid out is the MIC’s annual net income. As part of the Income Tax Act, the annual net income has to be 100% distributed to its shareholders as a dividend.

So broken down, if the management fee and admin costs are 2%, there are 100 shares and they make $100 profit, the managers get $2 and the other $98 are paid out to each share, so everyone would get $.98 per share. Of course, the numbers are all multiplied significantly as MIC’s tend to deal with millions of dollars worth of mortgages, but this should give you an idea.

So there are the basics of a MIC, hope this is a good start, would love to hear any questions this brings up! Later I will talk about how a MIC can be utilized in your Tax Free Savings Account to really take advantage of your investments.

Hey, anyone ready for another election? Does it annoy you as much as it does me that Jack Layton has already decided to vote against the Conservative economic plan, before it is completely announced? He says he cannot trust the Conservatives and that is why he has made this decision. Ironic that he lost the election, but still wants to form part of the government, talk about not being able to trust someone.

What are your thoughts? The more I follow politics, the more I see little freaking kids that cannot get along. I just finished a very interesting book Why Mexicans Don’t Drink Molson
and it spends quite a bit of time talking about how our government policy is basically non-existent regarding establishing international trade with anyone other than the US. It talks about how little business sense our leaders have and how busy they are protecting their own playgrounds either through all the provincial regulations, patronage appointments or just plain protectionism which makes many of our industries less competitive on a world stage.

This coalition boondoggle is another example of a lack of leadership and totally misguided intention. The repercussions Canada will go through if our government fails, will not only be felt for the next couple of months, but potentially for years as our global image becomes further tarnished by political power struggles.During a time where international investors have been flocking to Canada as a safe secure haven for their investments rather than the uncertain UK, US or EU markets, we need to show unity and strength more than ever. Toppling our government is not illustrating this.

Ironically just the other day Iceland’s coalition government collapsed as they couldn’t get along. Anyway there is my rant, tell me what you think.

So many things floating through my head today. Rate cut by the Bank of Canada, Inauguration day South of the border, interviewing potential tenants for a vacant property today, youngest daughter’s birthday tomorrow, learning more about the Tax Free Savings Accounts for an article coming very shortly and half a dozen other things.

So first the Bank of Canada reduced their prime lending rate another 50 basis points or half of a percent. I cannot wait to see the rate decrease letters coming in over the next few weeks. This may reduce a couple mortgages to less than 3% which is crazy. That is effectively like having free money.

Inauguration day should provide a nice temporary boost for the US stock markets and show a very short term surge as people are caught up in the optimism of an incredible historic time in the US.  Unfortunately Obama is being handed a country with some severe challenges in front of it and while there is no doubt he will do the best he can, it will be an uphill battle. The excitement and hype from today will flow into the markets and just as quickly flow out which is a great example of how emotional the stock market can be and how it is so out of the average person’s control.

It might create a short term profit for the myriad of day traders out there, but any potential strengthening of the market will quickly disappear as reality of the economic crisis continues on down there. 2009 will continue to be a long year for the markets with some people predicting we haven’t seen the bottom yet.

I have received quite a bit of interest regarding my post about Tax Free Savings Accounts, so watch for information on that very shortly.

Happy Inauguration Day

There seems to be lot’s of buzz around the Tax Free Savings Accounts which is the norm when it can involve saving someone taxes. I am meeting with Rick Unrau of Global Real Estate Investments to learn a bit more later this week.

One of the key points I am already aware of are that these savings accounts can be used to invest in almost anything that a standard RRSP can invest in, so people are not limited to just standard Tax Free Savings accounts offered by the banks. There are many more opportunities available that will offer not just the tax free aspect, but consistent yearly returns in the 8% plus range.

If this is the type of information you want to learn about leave me a comment. If there is enough interest I will definitely pass on what I learn to help everyone move forward with their tax savings!

****Lot’s of great feedback, the link the the information is here, Tax Free Savings Accounts  **** I hope this helps explain it well enough.

I just finished reading an article about the possibilities of 2009 and it really does come down to how you look at your surroundings. In December’s Newsletter, I talked about how much of the current financial crisis and economic downturn is being perpetuated by the news headlines blasting everyone with negativity.
Until people start getting their heads around the fact it is not the end of the world these headlines will continue to keep everyone down. You can live just about anywhere right now and there are some outstanding opportunities.

Think about this;

    •    Right now there are more available employees to hire than we have seen in the last five years
o    Maybe you can finally find the right employees
o    Maybe you can hire them for a reasonable wage
o    Maybe your business can become even better with better people

    •    One of the first areas companies cut back in during hard times is advertising
o    Your competitors are becoming less visible, decreasing your competition
o    You can become more visible, increasing business
o    Your business could grow

     •    The cost of many goods are actually decreasing as other companies struggle to grow, making it easier for you to upgrade, expand and grow
o    Computers and electronics continue to get cheaper, now is an excellent time to speed up your systems
o    Construction materials have dropped drastically, upgrade your showrooms or offices to outdo the competition
o    Take advantage and buy when everyone else is trying to sell

It’s all a matter of taking a totally different perspective and realizing there are opportunities out here. These opportunities apply to almost all businesses, or if these don’t fit your business model, there are definitely other positive things about the slowdown. You just have to think out of the box, rather than follow the doom and gloom herd.

The New Year is coming soon, so don’t sit down and make a list of haphazard resolutions.  Take a bit of time to do some planning.  If you have a significant other, this is a great time for you to both sit down and do a bit of long term planning.  Every year my husband and I do this.  We sit down on New Year’s Eve with a bottle of wine, and discuss what we want to accomplish in the next year.  Of course we also go over the plans we had made the previous year and see where we hit and where we miss.  So having paper and pen in hand is a great plan.

But where do you start?  It’s easy to get lost in a discussion and a downward spiral as you look at all the things that you didn’t accomplish.  Although it is important to review these things, they can also become very depressing, so don’t focus on them and make sure you spend most of your time looking at what great things happened.

Preparing for the New Year is a huge tradition in my family.  It is a great time to take a fresh breath to a new start.  Of course any day you can start new, but the New Year has significance that other days just don’t.  I’ve put together a list of things that I like to get done in preparation for the night.

1.       Undeck the halls.  Christmas is over, and I don’t like having the tree up past New Years, so everything gets boxed up and put away ready for next year.  I tell many people that it’s bad luck to have a Christmas tree up twice a year, I’m not sure how true it is, but I would stubbornly argue that it’s a fact.

2.       Clean up.  Clean up the house, get the floors cleaned, and things put away.  It’s nice to start the New Year with a clear, clean place to live.  Having a tidy place gives your mind a chance to concentrate on other things like your goals, instead of focusing on the dirty dishes in the kitchen.

3.       Deep cleaning.  This is for those who really want to start off with a bang.  Now I know that it’s still a busy season with family and friends to meet with, but even if you can’t do the entire house, start with a couple of rooms.  Deep cleaning is when you get into those insignificant corners where the dust bunnies collect and give them a good wiping out.  Deep cleaning might even be a drawer (that insistently messy kitchen junk drawer), or your purse.  Just dealing with getting a couple of things cleaned and organized well will put you on a good track.

4.       Unfinished jobs.  Those are those little projects that you just haven’t gotten time to do that just keep nagging at you.  There is no time like just before the New Year to get some of those things out of the way.  I had a closet that I needed to paint, and needed to paint, and needed to paint.  Well, just getting out that brush and doing it was such a relief.  Do you have any unfinished projects?

5.       Thinking.  Don’t just sit down on New Year’s Eve and expect to come up with all the solutions for your goal planning.  Think about some of the things you would like to do.  What things might be holding you back.  If you put together more of a list, then you will have a better time of it on New Year’s eve.

6.       Prepare.  Some people go out and bring in the New Year with friends, and that is great, because friends are so important.  If that is the case, perhaps you do this on the evening of the first day of the year.  If so, make sure you have some treats to make you happy.  Maybe it’s a great cup of coffee, or wine like me, or a snack that you like to treat yourself with.  Sit down and make the place cozy and comfortable so you can dream and plan.

Okay, so you’ve set the stage, gotten all ready for the night, ready to face the New Year with new goals and lofty dreams…  Alright, step back a bit.  What do you focus on when you are goal planning?  There are different areas in your life that may have different goals.  So I make up a list of those areas.  They will change for everyone, but here is a good start.

1.       Relationships and Family

2.       Faith

3.       Health & Fitness

4.       Financial

5.       Personally Me

6.       Fun Time

7.       Home Projects

8.       Learning

9.       Charity

10.   Thank yous

11.   Business/Job

So first, take a look at the past year and think about what you didn’t get quite done, or what didn’t work well for you.  Don’t leave it at that.  Think about each of those things.  Those things you didn’t get done, were they really that important to you (obviously not).  Are they even worth doing, or will they simply go away?  Perhaps they aren’t worth beating yourself up about not doing…maybe it just wasn’t that important, so let it go and move on.  You can’t change the past, and it’s not worth getting upset at yourself for not finishing something.  There is probably a reason.  To help, you can list the consequences of not getting those things done or what the consequences of for the things that didn’t work well for you.  Now is the time to determine if it is important enough to concentrate on for the New Year, and how the best way to do that is.  Maybe your approach last year just wasn’t the right one.

Second, take a look at things that worked out well for you.  Show some gratitude for the things that worked out.  Why did they work out so well, and how can you make that happen again.  Use the strength of what worked well to help you do it again and again.

Third, take a bit of time to dream.  Think about where you want to be in five years.  What do you want to be doing.  Are the things you do today supporting what you want in five years?  This is an important thing.  Many people live day to day and are just running around in circles.  What do you really want?  Think about if money was not an issue, and what would you do with your life?  Is there any aspect of that life in your current position?  How can bring it into your life, even if it’s only a portion of it?

Forth, now look at that list I gave you.  For each of those categories write some things down that you would like to accomplish, or at least work towards.  Are those things getting you closer to your goals?  If you are working with a partner, you may each have your own goal list, but some of the things may be duplicated on your list.  That’s a great thing because it’s always easier to work at a goal when you have someone supporting you with the same outlook.  Here are some examples for the categories.

1.       Relationships and family – Take a trip out to see my sister, make time to have friends over once a month (dinner, game night)

2.       Faith – become more involved in my church

3.       Health & fitness – take time to exercise, research yoga classes, eat vegetables at every meal

4.       Financial – save $500 per month into the vacation fund,

5.       Personally Me –go to the spa 4 times, Make time to do some things just for me

6.       Fun Time – go to 6 movies this year, Learn how to ski, plan a picnic party in the summer.

7.       Home Projects – build cupboards in laundry room, replace humidifier, fix broken window, weed old garden….man, there are lots of these things, so don’t get carried away, keep only the most important ones.

8.       Learning – Learn speed reading, read 15 books this year, take underwater basket weaving course.

9.       Charity – Decide on two charities to work with, volunteer time with Salvation Army,

10.   Thank you’s – I know this one seems odd, but think of people who you are thankful for, people who help you that you don’t normally think about.  Like someone who was really helpful in a store (how cool for their manager to get a letter telling them what a great help they were).  Or your mailman, garbage man, a friend who was there when you needed them, or someone who simply did what they were supposed to do.  Send a card of thanks.

11.   Business/Job – This can also be a big one.  But it could be impacted by your decision for your five year goals.  Think about things you can do to improve your job, or your ability in your job.  Think about if you improved how you do things in your job, where you could move up to in your job (maybe a thank you letter will come to your Boss about you).

So now you have a whole bunch of stuff here to work on, so what do you do with it?  Don’t try to do it all at the same time….you will be destined for failure if you try to do that.  Go through your list and pull out three or four of the most important ones.  It doesn’t mean the other ones go away, but they will be there in the back of your mind, and may influence some of the things you do.  Also, if you accomplish one of your four focus projects, you can add one of the others later.

That should be the end of your New Years Eve goal planning

The first week of the New Year is when I sit down and take a closer look at those goals.  Some of them may be very simple and you can accomplish them without much planning.  Others will need more work.  Planning in your first week is the key to getting on the right track.  Take a look at your goals, and some you may be able to break down into smaller steps.  Maybe you need to do a bit of research, or shopping, or designing, or reading.  This will help you take a larger goal and make it workable for the year.  Remember it doesn’t mean that just because it’s a new year you wave a wand and that goal is to be completed…this is a work in progress, and you may fall down during the year, but you can always have the chance to pick yourself up and climb back on that goal.

Making goals for the New Year doesn’t have to be this onerous thing.  You can make it fun, after all if it takes you closer to where you want to be, then it should be fun…right?  Many people make resolutions and then after two weeks they fail, and they think “well I didn’t do it so I may as well give up now and try again next year”.  Don’t do that.  If you can change one thing a year to improve yourself or your situation, that is a great accomplishment, imagine if you can do three or four a year.  Most people don’t do any.  It’s up to you to make the changes you want, so empower yourself and take charge of your new year, and enjoy.

Karen Biko

www.karenbiko.com

Wow, what an “interesting” last seven days we have gone through. I’ve talked to quite a few people about the coalition, the effect on Canada’s future it would have and how Stephen Harper has been handling this situation and as more and more information comes out it gets even more interesting.

So just to recap, Prime Minister Harper threatened to pass some new laws that reduced funding to all the parties. The Liberals were already in financial meltdown (makes you excited at the prospect of them controlling the federal pocketbook doesn’t it!) due to how they managed money, and this could have really sunk them. The NDP weren’t as desperate as the Liberals were, but still needed the extra money they would normally receive. Possibly this big issue helped start the formation of the current coalition.

We have also found out that Jack Layton may have been working on forming a coalition from the day he didn’t win the election. He had been busy talking in the background to people to see what he could create to topple Harper. So through outright bribes, concessions and by representing themselves as looking out for the Canadian people, the Liberals, the NDP and the Bloc Quebecois have formed a new government coalition in an attempt to wrestle power from the minority government Conservatives.

Just to explain the bribes and concessions, as part of the agreement the Liberals and the NDP’s were going to provide Quebec with an additional $1 billion dollars of equalization payments (how is that equalization?) along with special veto powers (so the Bloc could prevent anything harmful to their status) along with giving them several seats in the government. The former Bloc leader Jacques Parizeau actually congratulated Duceppe for prying enough concessions out of the Liberals and NDP to agree to back them. To make this even better some Bloc members are stating this shows the Canadian federation is no longer functioning and provides more reason or them to separate. It would be perfect timing especially if they have the extra $1 billion!

I could rant on this for pages, which is why it’s taken me so long to post anything, so I need to get some points in before I lose people. One of Jack Layton’s key points if the coalition gains power is to shut down any future oil sands developments. Just to remind people Alberta sends to Ottawa $8 billion more than it gets, mostly driven by the oil sands, see a problem? With the extra $1 billion Quebec gets, we need to send even more! Canada’s economic growth over the last few years has been off of Western Canada’s resource based economies, why would you shut that down if you are trying to avert an economic crisis?
Although technically the Bloc Quebecois is not going to be a member of the coalition, they are only going to vote with them; doesn’t that make them a member? If the coalition’s intent is to save Canada from this economic crisis that Harper is apparently not addressing, why would you have a member dedicated to separating from Canada as a key member? The Bloc doesn’t give a damn about Canada, they are only worried about their concerns, this is also sounding a lot like the coalition, so maybe they should be in bed together?

What exactly should Harper do to stimulate the economy? Prior to the coalition Canada was the country rated to be the least affected out of any of the G7 countries by the world wide economic crisis. Now that the coalition has started up, we have seen the stock market freefall, our dollar sink lower and countries who originally intended on investing in Canada (the safe haven) looking elsewhere due to the turmoil. Harper is limited to what he can do at this point by what will happen in the US. If the US gives bailout money to the auto industry, does the Canadian industry deserve money? US auto sales from the Big 3 are down over 30%, but in Canada auto sales are off by only 10%. My sales are off by over 10%, where’s my bail out money?

One theory that has come up is Harper has pushed the buttons of the Liberals and the NDP intentionally, to force another election to come up in the spring. Now that the government is out of session until early 2009, perhaps it is only a matter of time before the NDP and the Liberals lambaste themselves so thoroughly with infighting, they would be both woefully unprepared for an election and their flaws become even more visible as they clamor for their individual party goals. All leading to the Conservatives coming out of this with the majority they need to move forward?

My apologies for the extended rant, but I had to get some of my thoughts off my chest. What do you think of all this? What are your thoughts about it? Is it good, bad, or are you one of the $10 million non-voters in the last election who aren’t allowed an opinion? I also understand this isn’t directly Real estate related, but it will have a real effect on Canada’s future which will affect Real Estate, so it should be of interest to anyone who reads this Newsletter. I don’t care if you disagree with my take, or agree, I just want to find out what you are thinking, so leave me a comment!

It appears ever since our host had to reload an backup my outbound email program to update people on new posts has been not working. From my end it shows everything is fine, but I just checked my visitor traffic Wednesday and it appears either my information has lost its value, or the posts aren’t actually getting to you.

I’m really hoping it’s just the mail program!! You may want to randomly stop by every few days just to check in and see if there are new updates. I will work on this malfunction along with possibly updating the version of WordPress over the next few days. Uncharted territory for me, so hang in there!!

Also to help improve updates I will be looking at adding an RSS feed, more on that later. Here is a link to the last post I put up that didn’t get sent out that follows me through evicting a tenant using the RTDRS (Residential Tenancy Dispute Resolution Service)

Thanks to Stephen for sending me this clip the other day, it is an interview with Don Cox, Global Portfolio Strategist for BMO Financial Group, from Business News Network. He provides some insights into how long the turbulent stock markets will continue and the effects of the governments putting money into the banking industry. He also compares it to the last recession we went through in the 80’s.

This is great information for investors involved in anything from stocks to Real Estate, so be sure to pass it on.

Also, one reference he makes is to the TED spread. This is the difference between interest rates for three US Treasury bill futures and the 3 month Euro contracts. Rising TED’s indicate a downturn in the US markets.

BNN Interview with Don Coxe of BMO

Here is a follow up article about how long the financial crisis will continue that I wrote regarding the obstacles ahead of us for 2009,

How Long Will the Financial Crisis Continue?

We have some significant hurdles ahead and there will be everything from layoffs, to increased foreclosures and bankruptcy’s for individuals. Follow the above link to see what else may be in store.

Here is a link to a video from 60 Minutes covering some aspects of the financial crisis in the US and the debt instruments that Wall Street. brokered.

=====>>>> 60 Minutes, Wall Street’s Shadow Market

All of this being based on the sub-prime mortgage mess of course.