What's Next for the Globe & Canada?

Could it be that people are allowing themselves to be fooled?

YOU Can make more of a difference than the government

The sad part is that the parties know that FEAR makes people make poor decisions - so they are stirring up the fear, making the economic situation WORSE by doing so. No, why would anyone vote for someone who wants to DESTABILIZE a country in time of turmoil.

YES what they used to call global warming and they now call climate change (that way it can be argued either way) is an issue that will affect what is going on in the world. But a system of trading carbon credits, or taxing the big bad corporations (read: employers of the majority of Canadians) isn't going to do much more than provide OPTICS for those proposing such. Everyone was FOR the carbon tax in BC - until it came in and actually added expense to the average consumer (gas, autos, environmental levies) and now the same people who wanted it are saying that the government were crazy to implement it. Do you think the same thing would happen on the national stage - OF COURSE it will. Someone pays the tax at the end of the day - and at the end of ALL lines in an economy are the consumers of the goods (you and I).

Here's an idea, let's start looking at how we can all reduce our consumptions. Turn off those extra lights, turn down the thermostat (or program it it do it for you), turn off the TV (imagine how much energy that would save if we all just shut of the TV for a couple of days a month). Here's another thing to consider - how about if we all just started to PAY ATTENTION to what we eat and where it comes from. Why do we insist on buying specialty apples from some other country when we grow perfectly good ones right there (think how much carbon that would take out of the air). It is NOT just the big bad corporations who create carbon, they create carbon to provide you and I with what we demand... if we didn't demand it there wouldn't be any profit in it and they wouldn't make it. How many miles does YOUR food travel to come to your plate, can YOU make a difference by paying more attention to the distance your food travels ABSOLUTELY! A lot more than more government regulations.

The "GREEN SHIFT" has to come from you and I not some government theory. Consolidate your trips to the store, while there, look at where the product came from (and choose local or closest to you!), read books on "Food Miles" and if you really want to know what's behind the curtain read The Omnivore's Dilemma: (http://www.amazon.ca/Omnivores-Dilemma-Natural-History-Meals/dp/0143038583/ref=sr_1_1?ie=UTF8&s=books&qid=1223667415&sr=1-1) a book that will change your life and change how you think about 'what's behind the curtain' on all of these announcements and why it would be EASY for us to make a difference.

I just wish the public would look around a bit, not buy into horrible rhetoric and boil down to the facts - we need economic stability before we can afford the billions and billions of dollars of programs that these politicians are promising.

By the way, increasing taxes is NOT going to help stimulate the economy - it will slow it down. Does anyone really believe that adding more taxes is actually going to be 'returned to the people' as some of these leaders are spouting. Come on, who are they fooling (sadly more than ever).

Grab October 10th (Friday's) National Post and see the start of an important series on "Fundamentally Speaking" (page A8 in my edition paper) The series begins with don't fall prey to the 'prophets of doom.' They are just trying to manipulate us into making decision based on emotions not facts.

Are You REALLY Taking Responsibility - or Just Telling Yourself You Are...

What Do You Mean There Is NO Magic Pill?

How The Answer To Two Questions Makes Life’s Decision Easy.

As I sat and continued to stare blankly at my computer screen I pondered the ‘right’ decision. I had just received another promotional e-mail about a world class, “too good to be true”, first and last time ever offered, marketing workshop that was being held in San Francisco. (I think this might have been the 3rd time they’ve offered this ‘last time ever’ event).

The workshop was 3 days of intense education with some of the most successful and best marketing minds in North America. These marketing gurus have been recognized for their successes in spearheading the amazing turnarounds of faltering businesses, writing best selling books, hosting the best marketing boot camps, as well as their huge contributions to special charities.

OK there was no question that I’d learn something – but at what cost? Couldn’t I just find the information out myself? My business although relatively successful in its own right was nowhere near where I wanted it to be. I had hit my ceiling of limitations when it came to marketing and growing my business. I was frustrated, yet immediately went into my pattern of ‘self-sufficiency’ I thought “I’d gotten this far on my own knowledge, why do I need this event (even if they were being truthful on what I would learn).”

I knew it was up to me to be the leader for my business for my managers and staff, but frankly I had hit my own glass ceiling.

So, here I was reading the fifth promotional e-mail that I had received after signing up on their marketing website. Everything sounded great, however my brain immediately went to value and math – How could it be worth it? It sounded pretty darn expensive…

…all I had to do was come up with two airplane tickets to San Francisco for one of my key managers and me, pay at least 4 nights of food and accommodations and scratch a check for 7,500.00 for the course itself. (OUCH!) That’s $12,000 for a weekend, come on who are they kidding? That’s a ton of money to take out of the limited marketing budget.

I knew I was going to be absolutely certain that I was making the right decision so I called and asked all the ‘really hard’ questions. I was going to make sure that I was going to get my money’s worth. And… they better not try to sell me stuff that I had to run to the back of the room to buy and spend more money or ‘miss out’ on the opportunity.

The guy I talked to on the phone was great (later I found out that he would be the presenter of the topic ‘Fortune 500 Sales Strategies’ at the workshop) and he systematically answered every question I asked.

The more I talked to him the more comfortable I got in asking the tough questions and by the end of the conversation I gave him my credit card number and I was away to San Francisco with my right hand manager. Hoping that the value was there and was going to leave with knowledge, not a disappointing feeling.

The Lesson Of Two Perspectives

To make a long story short, the workshop for me was in fact as amazing as they had said it would be. I committed to taking meticulous notes, (which I still refer to). I fully engaged in the process of learning, I went there with the full focus of getting as much value out of it I could... I was ACTIVELY making it a win so that even if the event was mediocre I would come out ahead. Six years later I can look back and honestly say it changed how I think and the way I do business.

In fact, by being so engaged and taking responsibility for the value I received I met someone, not a speaker, who gave me an idea that helped add immediate 11% profit to my business’s bottom line. This wasn’t a valuable agenda item in the marketing e-mail it only came to me because I was there being pro-active and creating value for myself.

Interestingly enough it had much less of an impact on my manager, and, even now I will sometimes find myself feeling frustrated with his lack of understanding of what was presented during our time in the workshop. His commitment level was not pre-set before the event, he didn’t have the “I’m going to CREATE value” attitude I brought to the event.

So, when I sit back and analyze that weekend, even today, I see that value is given only to those who take life as an active pursuit, not a passive event. Same event, dramatically different results… the only difference was in attitude going in.

The Big Lesson

The reason for sharing my story is this; as I struggled with my decision prior to buying into the workshop all that I was able to see was the ‘what’, that they were selling. I was looking strictly at the value of the product and services that they told me they would be providing me during the workshop and the subsequent program.

I made it about them as if it was a magic pill they would give me so I would wake up as a richer and more successful business owner.

While questioning potential value is still an essential part of my due diligence, what I have since learned is that I was only really seeing one variable in a multi-sided equation.

What I have discovered since that time is that there are two other very important questions that need to be answered before doing the deal on (in this case) any further education workshops or membership type processes. Whether it’s registering for a marketing workshop or signing up for a gym membership, I believe there is a fundamental shift that must be made in our thought process. And the more ultra-successful people I speak with the more that they say these questions are now second-nature to them.

The first question that you must ask yourself is, ‘Am I worth the investment in myself?’

If I take the course, buy the book, register for the workshop, become a member, gain the knowledge, how will I leverage the investment I am making…’in myself’! What will the return on investment (ROI) in me be?

The business that you are spending your money with is gaining a return on your investment in their product or services. That is their mandate, clearly. They are in business to provide value by offering their product or service or membership at a price that makes sense. If they have been around a long time and have many repeat clients who are willing to provide proof and comment that the product or service gave them value, then the value will be there in one way or another. A little due diligence will tell you whether others are getting value or not. The variable in the equation is you. And that is why this first question is so important… but not as important as the 2nd one.

The second question is: “Can you TRUST yourself to follow through?”

Are you in the game to win, or are you in the game hoping that something good just shows up in your life, with no effort. You have done your due diligence on potential value, now what are you going to do with the tools you purchase (the tools of education, insight, resources etc.) How are you going to capitalize on your investment in you!?!

This second and much tougher thought process is the one that I believe that the majority of people never really ask themselves. And, even if they do ask it, there may be a tendency to fool oneself. Some people outright lie to themselves.

The question is simple; the answer however is usually not; to ensure that you capitalize on the investment you are making… in your self? It’s just not about the workshop, the membership to the club, or the expensive CD’s. It’s about you and what YOU honestly and truthfully want out of the game of life.

Seminar Junkie or Action Taker

Whole seminar industries are built around the knowledge that the majority of people lie to themselves when answering the key 2nd question. They know that most people will say “All Right, this is the time I am breaking my patterns. I‘m going to follow through.” This is how come after all of these years, that the same pattern of “I’ll teach you a little bit, but you have to spend thousands of dollars on follow-up course to know the real truths” seminars continue to work. There is no REAL follow-up required other than going and signing up to the next level.

It is designed this way because it artificially makes you feel as if you are moving forward and taking action. You told yourself that this time you were going to ‘follow-through’ and they gave you an easy, no work way to do that… sign-up to the next ‘thing.’

Sadly it is all based around people not TRUSTING themselves to take the knowledge that they’ve learned, the benefits that the membership offers, or the guidance that the books and cd’s offer , and capitalize on it.

Value is There When You Play Full On

As entrepreneurs, business owners, investors, we put tremendous pressure on ourselves to succeed. At the same time we often look outside ourselves and create excuses to blame someone or something for our own shortcomings, which stops us from having the success we say we are committed to achieving.

Next time you are faced with an opportunity to attend a workshop, become a member, buy the program; remember to ask the two other questions;

#1 Am I worth the investment in me?

#2 Do I trust myself to follow through and capitalize on my investment?

If the answer to either of these questions is no, then it becomes very clear that you’re not ready for the next level of growth and that’s OK... just know you’re not ready. And when you are, the choice will get very clear.

And when you are truly honest with yourself and you play full on creating value no matter what the situation, that’s when you know that real success, and all that entails is right in front of you.

I encourage you to take full responsibility, grab control.

Do's and Don'ts of Successful Real Estate Investors

Do's and Don't of Successful Real Estate Investors

Recently I was asked for some do's and don'ts to being a successful real estate investor for a radio interview and it was an interesting exercise to grab all of these thoughts together.

I thought I'd share these with you and ask that you add your own from your personal experience:

Do's

#1 Build a strong team that supports your long term vision. All of whom should have extensive experience with real estate investors. These include: accountant, corporate lawyer, real estate lawyer, mortgage broker, realtor(s), research source, fellow investors.

#2 Eliminate 'Day Trade' mentality with real estate. Stock markets can move substantially on a day to day basis and because of this many investors watch their stocks every day. With real estate, there is no get rich quick... it is a long term process that is driven by long term economics. Fluctuations will always occur in the market.

#3 Study the economics that support your region - rather than national 'averages.' Become a specialist in one or two geographic areas. The smaller your niche the more apt you will be to be successful. It will be easier for you to stay focused on what matters to YOUR bottom line.

#4 Focus on positive cash-flow - no matter what the market conditions positive cash flow is important and makes your life easier and allows you to get closer to your Personal Belize.

#5 Don't be afraid to ask anything of anyone. Learn from those more successful (or more experienced) than you. If they are too busy to help, ask someone else. There are no bad questions and definitely no reason to play the loan wolf trying to solve problems on your own.

Don'ts

#1 Don't allow yourself to get too high when you hit a home run or too low when you make a mistake. This also goes for market conditions, if the market is screaming hot, don't get caught up in it and when it comes back to normal don't talk yourself into being too low. It is what it is and as a business owner you can't afford the emotional roller-coaster.

#2 Don't line-up for a pre-build condo. That is speculation not investing.

#3 Don't buy a property just because it seems cheap - you may quickly find out that it wasn't so cheap after all.

#4 Don't let a property promoter sell you a property without you doing your own due diligence on the area. If you fell pressure to buy, step away! The quick decisions are always the ones that turn into the mistakes.

#5 Don't ignore tax planning in your overall scheme. Speak to a real estate accountant, give them your plan so they can help structure your whole program

#6 Never, Ever buy a piece of real estate based on a 'Tip' always follow your system -don't skip steps they are there to protect you during market fluctuations. Many skip steps in the Quickstart system during hot market times only to find that the steps they skipped are the ones that would have saved them during real market conditions. The steps are there for a reason not just for fun.

visit www.myREINspace.com discussion forums to post your do's and don'ts

Hot Real Estate Topics for Summer BBQ Talk

Hot Real Estate Topics of the Summer of 2008.
A quick overview of the hot topics around the BBQ this Summer.

Suddenly it seems live everyone you meet at a summer BBQ is a real estate expert and they want to share with you all of their extensive knowledge about how the world will end.

If you have seen the Lotto commercial with the two snobby 'rich' people talking about what to where at a BBQ and what to speak about you will understand that the ad is funny because it has a base of truth to it. Their one comment is while at the BBQ with those who haven't won a lotto, "talk about fuel costs because they like that." Well that commercial should now be changed to 'talk about interest rates and property values."

Here is part 1 of an overview of these hot topics and some analysis of each one, I trust you'll find it useful to have some perspective based in the reality of the market.

BBQ Topic #1 Elimination of zero down mortgages and 40 year amortizations.

You would think by some comments I've heard and read from people not really active in the real estate market that this was one of the signs of the apocalypse when in reality the elimination of these came as no surprise at all and not that much of a big deal.

Only a VERY, VERY few investors ever took advantage of these two options during the time they were available, and many banks didn’t even offer the program (despite CMHC's backing). These changes will not have much of an effect on the market. I find it quite entertaining to watch the gyrations and pontifications of people who have never used these products stating that it is the end of the financing world, when in fact it was a brand new product and the market has done very well over the last 100 years without it. It also ensures that the Canadian market won’t set itself up to be like the US and UK. A smart move by all concerned.

Most investors have been taking advantage of the 30 year amortization mortgage to increase cash flow as cash flow is the key in all markets.

BBQ Topic #2 First time in 6 years that average year-over-year Canadian Real Estate price was ‘down’

Anyone investing based on national average prices isn’t really investing, they are guessing and speculating. Sophisticated investors focus on the economics behind a specific market not generalization (like national averages). When prices were up in some areas, they were down in others – hence the reason the overall average is down.

That being said, as we discuss just about every month in REIN – Prices and markets never run on straight lines (although that would make life a lot less exciting ). There will always be fluctuations in the market… it is just that so many beginning investors believe the concept that the markets should skyrocket every year (like they had the last 3 years) and so as soon as the inevitable pause occurs, panic set in. Markets that have gone up at a too fast rate, will always adjust to find their new normal based on the real economics of the region, and then begin once again to build from their new base.

The only way to be a true investor (rather than a speculator) is to study the unbiased economics that we present every month and because we aren’t in the business of selling real estate, and don’t profit whether you buy, sell or hold we can cut through the positive and negative hype and get to the truth. Those who actually understand the importance of research have had an amazingly relaxing summer knowing that their decisions are based on long-term fundamentals – not month to month (or even year-to-year) gyrations of the market. And that is why we have so many members who have been coming out every month for 15+ years!

If you truly want to cut to the reality, take out the goldmine scorecard and re-do the work on your target area. It is designed to protect you in all market conditions. That way if you are feeling fear, following the goldmine scorecard system will make sure you have all the facts (either justifying your fear or eliminating it by just looking at unbiased, non-emotional facts). Another way is to tap into the conference call and interview archives we have in the downloads section of www.myREINspace.com as they will provide you with the facts you need as an investor.

And to get the latest facts, ensure you are on myREINspace.com regularly to read the economic fundamentals. This will help you keep a long term perspective while still keeping a close eye on what is going on today. Then you can make decisions based on reality not emotions.

BBQ Topic #3 What’s next for interest rates, there is talk of rising Bank of Canada interest rates

Financing properties, even for the average home owner is taking more effort than it did over the previous 3 years. So remember not to get mad at your banker or mortgage broker – the goalposts have moved and they are just the messengers of this change.

That being said, as predicted at REIN, the Bank of Canada is between a rock and hard place on interest rates. They need to keep an eye on inflation (and keep a cap on that) by raising interest rates, but at the same time they want to keep them low so the dollar weakens and the Eastern Canada market can revitalize. Raising interest rates may be inevitable (due to food and fuel inflation), but that would have a detrimental effect on the manufacturing based economies in the East.

The good news underlying this situation is that it can only be a gradual increase when they do it, and will provide investors lots of time to lock-in their variable mortgages in the future

Right now, variable rate mortgages are still one of the cheapest and most flexible options available to investors. The gap between variable and fixed can be as much as 1.5% - thus increasing potential cash flow. Recent variable deals that REIN Members have arranged have been prime minus .25% and a more rare prime minus .6%

If you are someone who can’t sleep at night worrying about interest rates increasing, then locking in at a great rate (not the posted rates) is a good option for you, but understand that safety will cost you money on a monthly basis.

BBQ Topic #4 There seems to be inflation on the horizon. What does inflation mean to Real Estate Investors?

During inflationary periods, hard assets perform the best as their values increase along with inflation. Property values ride the inflation wave, rents increase (as many of the rent controlled areas increases are based on the CPI) and as an informed investor you will have chosen your properties in areas where demand is to continue because of job increases and in-migration. The other thing that occurs during times of inflation is that wages increase more rapidly (and there is more labour unrest, strikes etc as more people demand more money to fight inflation).

Inflation also can drive interest rates up, so ensure that you keeping listening at the REIN Workshops as we discuss whether it is time to lock in or not.

The cycles of inflation / deflation / stagflation are somewhat predictable, what has lead to more attention on these items this time around is the 24 hour news and business news that is available to the average consumer (even if they don’t understand what the story means to them.) and #2 the ridiculous lending practices that were being followed in the US and which are coming home to roost right now.

In the next post I’ll be discussing other hot topics of the summer BBQ season:

• The US housing markets,
• The US economy,
• Energy & commodity prices and how they are going to affect certain markets in Canada,
• How a Saudi Arabia investment will affect Canadian real estate demand
• How REIN predicted the massive changes to the automotive industry in Ontario June 5th 2005 and how that past prediction can help you today.
• How market sentiment can affect your property values even when economics don’t change
• And other hot BBQ topics important to investors

Please remember that the Western Canada REIN conference is coming very soon where we will be releasing the BRAND NEW Top 10 Alberta Investment Towns as well as other research revealed for the first time. REIN Members attend FREE as part of their Membership. Here is a link to other details on this annual event.

Eliminate 'Tenants' From Your Life To Change Your Paradigm

Attracting Your Best Customers For Your Business

We are about to change the paradigm of landlord and tenant relationships. The time has come for us, as investors to start to understand the business that we are in is actually a business. No different from any other business out there.

Many people call the purchase and operation of rental real estate an investment and by doing so lump it in with all of the passive investments such as mutual funds. This, in turn, creates the belief that real estate investing is similar to other investments, when it is truly not. Yes CRA rates real estate income as passive income when treating it from a tax perspective, however the truth is that it is far from passive if you want to do it right.

Let’s face reality, by investing in real estate, you are starting up a business, a business that provides a product and service to the community. This business has every component that a successful business has (and most other investments do not): marketing strategies, income, expenses, accounting, financing, management of the day to day operations and balancing of assets and liabilities.

Investment real estate, whether commercial or residential, is also like other businesses in that it will only be successful if you find a way in which to attract quality loyal customers to purchase your product or service and to provide it to them at a price that makes sense to both you and your customer.

That means that the absolute first step in becoming a sophisticated real estate investor is to begin to think of your tenants as clients or customers. Without them you do not have a successful business no matter how hard you work or how many properties you own. Change your thought paradigm from tenant to customer and your marketing and business opportunities will begin to grow exponentially.

This subtle shift opens up a whole new thought process for your business, you can immediately start modeling other successful businesses (in any industry). At one time we have all been customers of businesses that we enjoy and became loyal to, that means we have first hand knowledge about the power of customer loyalty.

You can learn from your experiences by analyzing what they do to keep you as a loyal customer. Pay more attention to why you return to the same store or service provider over and over, then begin to find ways to transfer these strategies into your rental real estate business. For instance:

Is it like they know what you’re thinking?
Does it seem like they intuitively know what you need?
Do they listen to your concerns?
Do they make dealing with them an experience you enjoy?
Do they reward you with loyalty rewards?
Do they do little things to thank you for your loyalty or repeat business?
Do they appreciate your business?

As simple as this thought shift sounds, it truly is one that will change how you look at your business from now on and more importantly help you to stand out and become a landlord that renters WANT to stay with over the long term.

Over the coming weeks we will be going into detail on changing the paradigm of passive investment to active property owner and the strategies that will allow you to simply increase your bottom line and decrease the hassles.

In this thread, why not add your experiences from interactions with companies that you have become loyal to or really enjoyed. Take a shot at writing why your drawn back to them. Then we can start a conversation on how those experiences can be adopted into the rental real estate business

Multi Family Property Investing

The Multi-Family financing market is in continual flux due to the so-called sub-prime crisis. The rules seem to change on a month by month basis.

The following is an article written by Peter Cook, Assistant Vice President of Commercial Lending at First National Financial Corporation. First National is one of Canada’s largest apartment lenders.

It provides insights into the market, choices that need to be made when considering the financing of your Canadian multi-family properties.


THE LOWEST RATE MAY NOT ALWAYS BE THE BEST DEAL

The emergence of the World Wide Web has had an amazing impact on our day to day lives, especially in the way we shop. The convenience and speed of the Internet has turned many industries into a commodity. Searching for the lowest airline tickets and car rental rates, purchasing shares of your favourite stock or finding the lending institution with the lowest home mortgage rates has become a simple process without leaving the comfort of your home computer. The days of obtaining sound advice and great service from your travel agent, stock broker or banker is becoming a thing of the past. The lowest price seems to be the only factor when consumers make major purchases or financial decisions.

When arranging new mortgage financing apartment owners should be careful not to convert the commercial lending industry into a commodity. Selecting a lender based solely on the lowest interest rate quotation may not always be the best deal.

Securitization has increased the number of lending institutions and commercial mortgage products available to the apartment industry. Borrowers have their choice of financial institutions including chartered banks, life insurance companies or a number of mortgaged-backed security lenders. Financing products available include CMHC insured, conduit and conventional mortgages. The method of determining the interest rate, the timing of when your rate may be set, borrowing costs and closing requirements will vary depending on the lender and product you choose. Signing a financing offer and providing a deposit to the lender with the lowest rate may be a costly mistake.

Interest rate quotes provided sixty days prior to the funding date may have little value if you’re not permitted to establish the interest rate until five days before closing. In a rising interest rate market this type of limitation by your lender may cost you several thousand dollars in additional interest. Several lenders will allow the option to set the rate early with or without additional cost. Borrowers should have their lender disclose details of when the interest rate may be established and any additional costs associated with an early rate set.

A clear understanding of how the lender determines the interest rate is also an important factor that varies among institutions. Most commercial mortgages are established based on a spread over Government of Canada bond yields. Bonds yields are published daily in major newspapers or may be found at the Bank of Canada website (bankofcanada.ca.). A number of institutions have moved to setting their rates on a spread over their internal cost of funds. Borrowers may be at a disadvantage as the lender’s cost of funds are not published and do not always fluctuate at the same time as bond yields. Request that your lender provide a quote based on a spread over Government of Canada bond yields only and define which bond they will be using to set the rate. Another convenient option of determining interest rates for smaller commercial mortgages is a spread above or below residential posted mortgage rates.

Borrowers often do not consider the lender’s closing costs when choosing a financial institution. The difference in costs between lenders may be equivalent to adding several basis points to your interest rate quotation.

Third party report costs will vary depending on the appraisal, engineering/structural or environmental companies that are approved by your lender. I’ve had appraisal quotations on the same apartment building range between $2,500 and $5,000. Environmental reports and engineering/structural reports will also vary depending on the engineering firm completing the investigation. The difference between firms may add $2,000 to $3,000 to your borrowing costs.

The lender’s legal fees may vary by several thousand dollars depending on the law firms approved by your lender. We recently had three quotes for legal fees on a $2,000,000 mortgage that ranged between $2,500 and $5,000.

Insurance requirements also differ between lenders. Increased liability coverage or other additions to your policy required by your lender may add several hundred dollars to your annual insurance premium.

Lender’s processing fees may range from 0.10% to 0.50% of the loan amount depending on the institution.

Hiring a mortgage broker to arrange your mortgage financing is often a great idea to help navigate through the lending process and shop for the best rate. However, a half point brokerage fee adds 0.12% (12 basis points) to a five year term and 0.075% (7.5 basis points) to a ten year term mortgage.

Although most lenders will not provide details of future renewal fees and requirements, having a basic idea of their current structure and fees may provide an estimate of costs at maturity.

The following is an example of two quotations on a $2,000,000 mortgage with different interest rates and closing costs. The example proves the lowest rate is not always the best deal.

Lender A Lender B

Loan Amount $2,000,000 $2,000,000
Interest Rate 5.15% 5.0%
Term 5 years 5 years
Amortization 25 years 25 years

Interest Costs – 5 years $482,498 $468,069
Lender’s Processing Fee 2,000 10,000
Appraisal Report 3,000 5,000
Structural Report 1,200 2,500
Environmental Report 1,200 2,000
Legal Fees 2,500 5,000 Additional Insurance Requirements nil 3,750 ($750/yr)

Total Cost of Borrowing $492,398 $496,319

Although the quote from Lender B was 0.15% (15 basis points) lower, the total cost of borrowing over the first five years was $3,921 higher than Lender A. If the borrowing costs were converted into the interest rates over the five year term, the equivalent rates would be 5.27% for Lender A and 5.35% for Lender B.

Also, having a great relationship with a commercial lender is a key to the success of any real estate investor. Borrowers should take into consideration the level of service provided by the lending institution, including location of where their mortgage will be administered, staff response time, industry knowledge and product availability. Saving a few basis points in rate on your mortgage may easily be off set by obtaining the wrong advice or receiving poor customer service.

Borrowers should take their time when arranging new mortgage financing and receive written quotations from more than one lending institution. The financing proposal should not only include the current interest rate but how and when the interest rate is to be determined. Also, request a detailed list of all costs associated with the transaction including estimates for legal fees, third party reports and insurance requirements.

Fortunately, the Internet has yet to turn the commercial lending industry into a commodity. Experienced real estate investors know the importance of a lender in their long-term success and do not always base their financing decisions solely on interest rate. Obtaining a competitive rate along with low costs, sound advice and great customer service is still a necessity and available in our industry.

Peter Cook is the Assistant Vice President of Commercial Lending at First National Financial Corporation. First National is one of Canada’s largest apartment lenders and has over $16,000,000 of mortgages under administration. Peter may be reached at 416-593-2913 or 1-800-465-0039.

This article first appeared in the FRPO’s Fair Exchange magazine and is published with permission from the author Peter Cook.

The Must Have Books - Recommended Reading

In response to hundreds of request, I have begun to create a Recommended Reading list. These are books that have had a substantial impact on my life or business. Plus a few others that are just great reads. They cover many genres, and many types of business philosophy.

Enjoy these amazing reads (each book has a live link to make it easy to grab a copy from Amazon).

To add your own favorites, visit www.myREINspace.com where Members are sharing books that have impacted their lives. Here's a direct link, Recommended Reading from REIN Members

I look forward to reading your favorites, trust you'll enjoy mine

Must Haves:

Law of Success: The 21st Century Edition by Napoleon Hill (Author)

This classic book, all 1,072 pages of it, should be on the desk of anyone interested in enjoying a successful and balanced life. It is not a sit down and read type book, it is more of a very practical reference guide to life and business. Over the last 20 years, there hasn’t been a month go by that I haven’t used this reference. Bottom line: GET IT!

Law of Success

Winners Never Cheat by Jon M. Huntsman

It is true, nice guys DO finish first. Discover that you can live by high standards, morality and integrity and still be incredibly successful. What a revelation, Chapters include Check your Moral Compass, Pick Your Advisors Wisely, Get Mad - Not Even, the Bottom Line and many more. Written by a true winner and self-made billionaire, everyone should read this at least once per year. The most important $21 you’ll ever spend.

Winners Never Cheat

Real Estate & Business

Commercial Real Estate Investing in Canada: The Complete Reference for Real Estate Professionals by Pierre Boiron (Author), Claude Boiron (Author)

Commercial real estate, which include multi-family properties, is a complex world in which to invest and having a solid background in the business of analyzing, buying and operating a commercial piece of property is critical. This book, all 672 pages of it, are packed with insights, strategies and key metric that any serious commercial real estate investor must understand.

Commerical Real Estate Investing in Canada

101 Tax Secrets for Canadians 2008: Smart Strategies That Can Save You Thousands by Tim Cestnick

OK, tax time is over. Whew. Now it is time to plan for next year so you don’t miss some key tax planning strategies that need to be started today. Don’t wait for next years deadline to look back and see the opportunities you missed. Whether you own real estate, operate a business or have a job, you’ll find some simple steps to take.

101 Tax Secrets for Canadians 2008

The Power of Focus: How to Hit Your Business, Personal and Financial Targets with Absolute Certainty by Jack Canfield, ...

Focus is the Number one habit that the most successful investors and business owners continually work on. This practical guide will give you tools and action steps to help grab back more of your time.

The Power of Focus

The Speed of Trust: The One Thing That Changes Everything by Stephen M. R. Covey

Building relationships that you can trust in business is one of the cornerstones of long-term success. Stephen Covey provides insights into why some relationships are doomed to failure from the beginning, and why others last a life-time. If you are having a difficult time getting business deals done and closed, or just want to learn how to build you business more quickly, then this book is a must read.

The Speed of Trust

Getting Things Done by David Allen

I learned a long time ago, when you want to get something done, always give it to someone who is busy. Counterintuitive maybe, but it works. In today’s society, there seems to me increasingly more to get done. David Allen provided me with a system to get more done AND have more free time for myself, my family and my hobbies. A very simple book that even the busiest of us MUST take time to read so we can grab our lives back.

Getting Things Done

International Real Estate Handbook by Christian H. Kalin

Buying outside of Canada is fraught with hidden legal and tax issues that aren’t usually discovered until it is much to late. There is no question that before buying property in any other country, an investor must have this book on their shelves. Written by an international real estate and tax specialist, you can be confident in the accuracy of this information. You will find answers to questions that you didn’t even know you should know. The first major section of the book alone is worth the money, it includes detailed discussion on tax, legal, insurance and financing consideration no matter where you are buying. It even discusses International change of residence, if that is your ultimate goal.

International Real Estate Handbook

The Dip by Seth Godin

Really, any business owner should have the complete selection of Seth Godin’s books. His innovative and unique way of looking at business can shift you out of your patterns and habits to discover opportunities, you had never seen before, sitting right in front of you. In the dip, you will discover that sometimes the best thing to do is quit… the key is to know if it truly is time to dig in our jump out!

The Dip by Seth Godin

The Mystery of Capital by Hernando de Soto

Written by the President of the 2^nd most important think tank in the world (according to The Economist Magazine) this very important study of world economies and how property rights can be the one catalyst that can turn a poor country into a prosperous one. There are 5 mysteries of Capital and the author reveals them all and shows how they affect the world. A heavy read worth working your way through if you are serious about understanding the base of capitalism.

The Mystery of Capital

The Power of Tact by Peter Legge

The subtitle says it all for this book – “It’s not what you say or do, it is HOW you say and do it.” Today’s society is filled with people not even knowing that they are repelling those they want to attract and you can see it in business, real estate and social settings. I think that everyone should read this book at least once in their lives, and it wouldn’t be too bad if it was a mandatory course in school. (or at least parents teach it to their children so that life becomes more easy for them).

Other

The New Nutrition by Dr. Michael Colgan

A book that changed how I looked at food and nutrition. By opening my eyes to the reality of nutrition (not the marketing hype) I was able to grab control of my energy, have clearer thoughts and live life with much more enthusiasm. Did it happen over-night, of course not. But this book was the catalyst of this major change.

The New Nutrition

Happier by Tal Ben-Shahar (Author)

A simple title for a not so simple process – creating more happiness in your life and the world. This book is the basis of a very popular course at Harvard University. If you would like to amile more and have those around you smile more, this is a wonderful book.

Happier

Law of Attraction: The Science of Attracting More of What You Want and Less of What You Don't by Michael Losier

This book adds the missing component from the much talked about ‘The Secret.’ Real life strategies that anyone can use to help attract more of what they want in the life, business and real estate.

Law of Attraction by Michael Losier

Three Cups of Tea – by Greg Mortenson

An epic real story about how one person can make a massive difference in society, by bringing passion and vision and not allowing others, or road-blocks, to push them off their dream. Amazing true story of courage, vision and determination that will inspire anyone who reads it.

Three Cups of Tea

Searching for Bobby Orr by Stephen Brunt

An incredibly well written account of the NHL’s transition from a 6 team league to what we know today. Stephen Brunt’s writing makes the story leap off the pages and puts you back in front of the black & white TV on Saturday night for Hockey Night in Canada. A must for any hockey fan.

Searching for Bobby Orr

Round Ireland with a Fridge by Tony Hawks

One of the funniest books I have read in years, a PERFECT book for summer holidays. It is a well written journey around Ireland, YES with a fridge. The author took a bet that he couldn’t hitchhike around Ireland with a bar fridge and he turned it into a life changing journey and a turning point in his life. Be prepared to have people look at you when you’re reading it because you’ll be laughing out-loud throughout.

Round Ireland with A Fridge

Tropical Real Estate Not Always Paradise

The Six Rule of Investing in Tropical Real Estate

Become an informed investor instead of an excited and emotional speculator.

Due to the high Canadian dollar, the shrinking market in the US and the huge commissions that are paid to promoters, Canadians are currently being inundated with sales pitches for tropical real estate

And let’s be honest, in the midst of another long, cold Canadian winter, the idea of owning recreational property in a tropical paradise is quite easy to be drawn into.

This dream can quickly become a financial nightmare if an investor does not follow the critical 6 Rules to Investing in Tropical Real Estate. Buying out of the country requires substantially more due diligence than buying in Canada, and sadly most people do substantially less.

I have almost 20 years of experience with business and real estate in tropical countries and during that time I have seen just about everything, from outright fraudulent developers selling Canadians a dream (and NEVER intending to complete the project) to individuals flying down doing their OWN homework and finding the perfect retirement property. The difference in every case is in the homework that the buyer completed. From this experience I have developed the 6 Rules To Investing in Tropical Real Estate.

Let’s set the stage.
Tropical real estate is a true emotional sell and has proven to be the easiest real estate sale on earth. Combine this easy sale with the HUGE commissions that are paid to the promoters in Canada and you have a situation ripe for abuse. And unlike Canadian real estate, it is unregulated, there is no dispute resolution process, there is often limited land title guarantees and the contracts can’t be signed in Canada due to the developers/promoters trying to do the deals without scrutiny.

What is So Alluring About Throwing Money Away?

Tropical real estate has some obvious draws (warmth, holiday mind-set) however one of the top reasons people justify buying this type of real estate is because saying "I own Real Estate in Costa Rica " sounds cool when you tell your friends and family. It’s like name dropping – only it’s country dropping. Imagine that, we can allow our egos to justify a property purchase. That does NOT make it a good investment.

The second reason we see people buying this type of real estate is the “Grass is Greener” Syndrome. Anything 'far away' has an appeal – but it is absolutely critical that you do even MORE due diligence than if it was in your own country.

Tropical real estate purchasing and owning is completely different to what we all know in Canada. And because of that there are very specific rules that we all need to follow BEFORE we sign on the dotted line.


Rule One: Go there not just once, but twice. Don’t Sign Until You Fly

Never buy property at a distance, especially in another country, without seeing it for yourself. You work hard for your money in Canada, why would you throw your money at a potential property without knowing the reality behind the dream?

The important steps are to make sure you visit the region at least twice, once in the high season and once in the low season. In many counties there is a VAST difference in accessibility (flights, bus travel etc), demand (tropical storm season or too hot) and open amenities (often times half the businesses are shut down during low season).

Imagine if you were from outside of Canada and you were thinking of investing in a summer cottage area. You visited only in the summer time, you saw an area teeming with life, the economic activity would be obvious, the rentals would be hard to find and it would feel like an amazing place to park your money. However, you would only be getting half the picture. If you took the time to visit in November or February, you would start to see the other side of the reality: Huge snow-banks, most businesses shut for the season, very limited number of visitors, potentially difficult access. Your view would now start to change closer to reality, you wouldn’t be caught up in the “Holiday Feel” that drives people to buy and you would then start to analyze the facts.

Combine these realities with the property being located in a tropical second or third world country with different laws and customs and you will quickly see why visiting at least twice, at different times of the year is critical. The reason time-share and vacation property sales people locate themselves in the heart of tropical tourist country is they understand the whole “Holiday Mind-set” psychology that makes a holidayer enjoying the weather an easy target.

If the promoter tells you that you don’t have to visit to check out the property or the region, you have to ask yourself, what are they hiding? Why don’t they want you to do your due diligence?

What To Do During The Visits

When you visit, there are certain steps you should take to complete your due diligence.

A. Feel free to tell the promoter/developer that you are coming but only tell them this the first time (you might get a free hotel stay out of it) The next time you go do not pre-warn them, book somewhere else and just show up at the site to see what’s really going on behind the scenes. Bring your camera, you might be shocked at what you find when they’re not prepared for your visit.

B. Check out the location and closeness to local amenities, airport, restaurants, stores, water, etc. A three hour bus ride from the airport is NOT compelling to potential renters/tourists. Check out what the water is like, is it good for tourists (or something you would feel comfortable swimming in)? Are there a lot of attractions/restaurants, stores nearby? How about a medical clinic, what are the medical service options?

Be wary of promised local improvements such as a new airport unless you see actual construction underway. In Tropical countries, I have seen the same airport ‘rumour’ being announced 10 times in 10 years and still no real work has been completed.

C. Visit a local realtor to see if a property you are considering was quoted to you in local or “foreign” pricing. Sure it may look inexpensive, based on our North American perception but only by visiting will you know if it truly is a deal or not. The difference between local pricing and ‘foreigner’ pricing is often substantial. There is a reason that such massive commissions are paid to the promoters in Canada. It is because the mark-up on the property sale price is so high. Properties being sold in Canada at $50,000 per acre has been bought for less than $5,000. That is amazing mark-up… and you won’t know about it until you start speaking with a trusted local real estate person, visiting properties for sale and checking out the competition.

Rule Two: Always check out the competition on both fronts
Bring Realism and Skepticism - not blind enthusiasm

“Make sure you're buying not because it is cheap but because it has potential.” Part of any due diligence is investigating what else is out there. Discover what your competition may be and what other opportunities you can uncover that may be cheaper or provide better return.

There are two types of competition you will want to check out.

Competition #1
Other projects or properties in the region… or even in other better countries or regions

Before a sophisticated investor buys any piece of property they check out what else is for sale out there. The question I ask is, why do so many people NOT do this when looking at tropical real estate? The answer quite clearly is because of laziness and blind excitement, neither of which leads to good investment decisions.

In order to ensure you don’t get caught in this trap, or get seduced by an apparent bargain, you should always check out other available properties. If it is for investment, check out other geographic regions as well. Look for the best potential combination of cash flow (rental income) and capital appreciation.

Sophisticated Investor Insight

When looking at the proformas for comparable properties take a look for ‘Resort Fees’ that are often charged over and above other operating expenses. Watch for this as a hidden profit centre for promoters or developers not discussed in presentations. How will this affect your bottom line?

Once again, once you have finished your investigations on the internet (Google will become your friend), then get on a plane and visit, find out what is real (see Rule #1 above), have fun with it, make it an adventure as well as a due diligence trip. Make sure that the area is appealing to you, so that it is appealing to your potential visitors/renters/vacationers.

Competition #2
Other projects vying for your potential renters or vacationers

If you are expecting your property to eventually produce revenue, you MUST know what else is out there and who your competition is for your revenue generating renters. In order to do this properly, you must put yourself in the role of the potential tourist, they are now using google.com more often than not to start their vacation search, so that’s exactly where you must start. Get on the internet and start searching for properties for rent in your area. Find out what the prices are, what the availability is, what amenities they’re providing, then compare these to what your expectations are.

Often times you will see, when a tropical property is being sold to North American investors, a projected rental rate that is completely unrealistic based on market comparables. There is often no account for high and low season, they are often quoted at ‘rack rate’ a rate in the industry that no one ever pays. Only by playing the role of tourist would you know what’s real in the market.

Make sure your potential property would look compelling (financially, accessibility and amenities wise.) if you were a tourist planning a trip to the area. Remember, generally tourist often only have a week or two, so they want amenities, ease of access good pricing.

If the flights is long with lots of connections or the trip from the airport is brutal, what are the chances of getting a returning visitor. Not very good. You want to know that people would be willing to do these trips. You’ll also want to see (by going there twice before buying) whether you want to go there often or not yourself. Dream vs reality.

Sophisticated Investor Insight
Wild Rides of Currency Fluctuations

Remember, you are always at the whim of the currency markets, so make sure that you investigate that side of the equation. Find out how the currency performs. Ask these questions as a start:

Is it floating or is it pegged to the US dollar?

If it is pegged to the US dollar, do you believe that the dollar will strengthen? If the US dollar continues downwards, will the currency change to a floating currency or adjust to their internal conversion rate?

If it is floating – Is the local economy strong enough to support the current level of the currency? What do you expect the currency to do against the Canadian dollar during the time you own your property?

In both cases, how will the fluctuations affect your cash flow and the willingness to travel to that country?

Can your investment value or potential income drop dramatically when their currency fluctuates?

Remember, there is a reason that these countries are economically called second and third world economies.Look at the reality to cut through any ‘dream assumptions’ you may have.


Rule Three: Know the property laws of the country .
This is critical. If you don’t know the property laws you’re playing with fire.

The first step in this rule is to find out what restrictions are put on a foreign property holder. This should include investigations into:

· What is the Maximum Length you can stay in the country? Do you need a Visa to do business (i.e buying real estate) in the country? If Yes, what type, how easy is it to get and how long does it last?
· Ownership must be Held?
· What are the squatters’ Rights Laws?
· What appropriation rights do the many levels of government hold in the region?
· Do locals appreciate or disapprove of foreigners buying up their properties? What types of problems can that lead to?

Even after this investigation, it’s important that you investigate how stable the government system is. If the government changes is it likely that some of these foreigner rights will change along with it?

Make yourself aware of the property laws, the zoning requirements. Especially look at the ‘deforestation’ rules if you are buying a lot to build upon. Don’t assume that what occurs here in Canada will lookk anything like what occurs in another country.

Rule Four: Always have your own legal representation in the target country

The best way to deal with Rule 3 is by following Rule 4. Every contract you sign must be reviewed by an unattached, outside expert familiar with local laws. The best case scenario is that they are located in the country you are thinking of buying in. This legal expert must not have anything to do with the property or the development promoter and must be very proficient in property transactions with foreigners.

What you will find is that the property contracts are quite different than your typical MLS offer. Although they may look the same, so that you are made to feel comfortable with the process, many clauses we are familiar with in Canada are actually unenforceable in some other countries so you cannot just transfer your Canadian thinking to a foreign country.

Find out, from your independent legal advisor, what right you have if the developer or promoter does not perform. What is the dispute resolution process, what would the costs be and would you have to be present in the local court to bring an action?

Land Title Considerations

The land titles registry, in many of these countries, is not as sophisticated, or as accurate as we have come to expect here in North America. You want to ask key questions to ensure that you are well protected in the transaction such as:

· How is Title usually held in that country?
· What is the historic accuracy of their process?
· Do you get the equivalent of a site survey or Real Property Report? Is the info on this document confirmed by a government agency?
· What is the title dispute resolution process?
· What are the restrictions for use on the property’s title?
· What are the zoning rules?
· Are there Historic or Indigenous Rights Issues? (this is becoming an increasingly more common issue that you do NOT want to be the target of.)
· Can you hold the title as a Canadian or does a local have to ‘hold’ the title in trust?
· If in ‘trust’ who do you know that you TRULY trust with your money and investment in the country?
· Who holds the deposits and in which country are they held during the purchase process?
· How do you get your deposits back if you need to?

Knowledgeable and independent legal advise is going to be critical in all of your transactions whether in Canada or in a tropical country. Do NOT take this transaction lightly, make sure you have a strong team around you who has nothing to do with the promoter or vendor and has extensive knowledge of the local laws and how they can affect you.

For instance, many people do not know that in some countries there are squatter rights laws that allow a squatter to move into or onto your property and if they stay there for a set period of time (often only a few months) you lose the right to move them off. They can even erect make-shift buildings on your property.

In other countries, there are laws where the government has limited the size (diameter) of trees you can cut down on your property. Therefore, if you are not careful, and you buy a building lot with these certain sized trees scattered on it, you may have just bought your self a nice camping plot that you will never be able to build on due to the location of the trees.

Don’t fool yourself, get the expert on your side early in the transaction.


Sophisticated Investor Insight Financing Options

Real estate is such a great investment due to the leverage that banks provide you. When buying outside of Canada, you must find out what your financing options are and what types of interest rates you can expect to be paying.

Often times it is not as simple as it seems, and you will see many a promoter telling you to go get a Canadian line of credit to buy the property. What they forget is that you must service this debt (so there had better be cash flow) and you are now really putting your self at increased risk because you are borrowing Canadian dollars to buy a property based on another currency.

Find out what financing is available in the country the property is located and find out what their underlying interest rate is, and you will soon find out what their central bank thinks of their economy and currency.


Rule Five: Dig into the tax implications – How will the profits be treated?

That’s right, tax issues follow you wherever you go. An important component of any investment is in the tax planning. It is critical that you understand the tax implications of buying, owning and operating a property outside of Canada. How will this purchase affect you in Canada and in the country where the property is located.

Is there a tax treaty between Canada and the country? How will profits (income and capital gains) be taxed in both places and what effect does the time you spend in each country have? When money is being transferred many countries insist on a tax hold-back. In other words, when profits are being transferred to a foreigner, it is the obligation of the management company / developer to send a portion of that profit to the government who will hold it until all proper tax filings are done at the end of the year. This can take a big bite out of your profits.

Property taxes are also an issue that are often overlooked. Find out if you are going to be paying substantially more property taxes because you are from out of the country. In many cases, the local’s property taxes are substantially less than that paid by foreigners. (same thing with utility rates). Ensure that you are analyzing the cash flow based on the foreigner taxes, not the local.

In addition to the tax issues, it is important that you fully understand that if you will be renting out your property you must know how the property management company will conduct the finances and how money will be transferred to you. Will it be sent by wire, cheque, or do you have to open a foreign bank account? Can this cash flow be expected monthly?

Other key questions are: What rights do you have to get your money out if the property or the management company doesn’t perform? What occurs when there is a deficit in the cash flow? How will you be transferring the funds to the management company?

When buying any property at a distance you are in essence putting all of your cash in the hands of a second party. What is your trust level with them? What experience do they have with foreign investors? Do you believe that they will be treating your money as if it was their own?


Rule Six: Know exactly what you are buying

Do you TRULY know what you are buying? Is it a real estate investment, or a security with a real estate foundation? Many unsophisticated investors buy into projects believing that they are buying a real estate investment, when in fact they are simply pooling their money in a security (partnership, LP or share) that happens to use real estate as the base for the profits. There is a massive difference between this and a real estate investment where you are in control.

The key thing to consider with any property is can you own it, move in, rent it, or sell when you want? This is the true definition of a real estate investment. Whenever there are restrictions that limit your ability to make a profit if the developer/manager doesn’t do their job, you are adding more risk and it is less of a true real estate investment. If you do not have control you may get stuck with a dead investment. If you have control, in worst case scenarios you can sell it on the open market to try and get some of your money back.

That is why you see so many time-shares for sale by those who bought them at a dinner meeting… they bought into the dream but never did their homework on what they were buying. Then, when reality hit, they were stuck with something completely different than what they expected.

Another key issue when you are buying in a tropical country is whether you can hold the title as a Canadian or does a local have to hold the title in trust? In many cases, foreign ownership of property is limited to certain geographic zones unless title is held by someone in the country ‘in trust’ for you. Well, ask yourself; “How many people do I know in that country who I am willing to trust with my hard earned money?” Can the trustee, legally, take control of the property? Often times the answer is “yes.”

Find out the local title dispute resolution process. Ask the key question… are there any historic or indigenous peoples rights issues? Something you do not want to get caught up in.

A key to any real estate deal being profitable is your ability to get out quickly and easily when you need to, so consider your exit options. Could you sell it on the open market or are your sales restricted by price, title, financing or other encumbrances?

By following these 6 Rules To Investing In Tropical Real Estate you can do well with a purchase of tropical real estate. However, you MUST do the homework in order to protect yourself and make sure you are investing, not just blindly speculating. If you’re not willing to do the work, and you blindly believe the promoter’s pitch, you might as well play the slot machines.

A promise of quick riches is such an alluring sales pitch, people look for ways to justify to themselves why they should buy. Don’t get caught up in the dream, this is you and your family’s hard earned money. Make the dream a reality by asking the tough questions. And in ALL cases make sure you are visiting the area at least twice before you sign on the dotted line.

Don R. Campbell
Cutting Edge Research Inc.
http://www.myreinspace.com/

8 Steps to Successful Investing with Family and Friends

Investing with Family & Friends
The 8 Steps to Success

“It was the best of times, it was the worst of times.” This opening sentence to the classic book “A Tale of Two Cities” also can describe what can happen when family members with differing philosophies decide to work together in a business or in real estate investing together.

Successful real estate investors, and brothers, Mark and Eric Gonneau readily admit that they live their lives under different philosophies; they have acknowledged this difference and have forged a real estate business that allows them both to live to their strengths. They work together, but not exclusively, which helps to release the potential tensions of disagreements.

They have worked very hard at building a team together that supports where they want to go both together and independently. However, as with all family business relationships clear communications is the key to success as they have found out throughout the years of working together. Whenever there was a major dispute, it inevitably could be traced back to misinterpretation of poor communications. A great lesson for all of us in all of our business dealings, don’t be afraid of getting clarification if you’re not 100% sure of what was agreed to, and always get confirmation in writing, even if it is just a quick e-mail.

Family partnerships sound like a wonderful solution. Pooling resources and expertise with someone you know incredibly well (often your whole life) to create a strong investment team with a single minded goal. But along with the positives, there are often negatives that you wouldn’t have to deal with if your partners we not close family.

For instance, all the past family baggage and old ‘set-in-stone’ family behavioral patterns come along for the ride.

ACTION STEPS TO SUCCESSFUL INVESTING WITH FAMILY and FRIENDS:

Family units investing together can create amazing results, as you’ll hear in the many Family & Friends stories in this book. You’re all working for the common good of the family legacy and wealth. The key to making a family-business relationship like this work is to set some very clear guidelines, for instance:

1. Acknowledge that difference in opinions will occur and that they need to be dealt with from a business only perspective.

2. Discussions of business should be during scheduled times, not everytime you get together. For instance, birthdays, Thanksgiving dinners and other family gatherings are for family NOT for business. Schedule regular business meetings to deal with the business issues. Just like the separation of church and state: you need to separate family from business.

3. All parties agree to work very hard to be ‘adults’ and separate business disputes from family relationships. Remember, it is just a business deal, not life or death. Family MUST come first, before money.

4. Design a dispute resolution process for when the inevitable impasse occurs. Define who you will use as an outside source to help you get to a conclusion.

5. Acknowledge that one party will always think they are doing more work than the other one (even if, in reality they are not) Schedule a regular twice yearly meeting to solely discuss the division of labour and expertise.

6. Treat it like a business. All Joint Venture agreements, cash infusions, and division of responsibilities notes MUST be in writing and agreed to by all parties involved. No Exceptions. Remember to deal with the inevitable situation in which one partner wants to buy a property and the other doesn’t. Define whether the one who wants if can go and buy it on his own.

7. The older or more forceful stronger sibling MUST agree not lord-over the younger or less forceful sibling, and the younger one cannot play the role of the ‘poor-me’ victim

8. Define exactly how you will break-up the business Joint Venture if and when one of the parties wants to end it. Remember to address the key elements such as: property valuation, does the portfolio have to be liquidated, what is the partner buy-out process, how is the tax liability going to be shared of one partner buys out the other. It is MUCH easier to get these all dealt with before there are large dollars on the table. Do it early.

If you treat the family-business relationship as a true business partnership, and every party is clear on what your agreements are, working with a family member or two can be amazing.

However, if you take this relationship more casually than you would a regular business relationship that is a recipe for disaster, and if there is a disaster in the business relationship it can’t help but ripple into the family time. Don’t let that happen, plan and discuss well in advance of starting the business and you will enjoy an amazing business that will only enhance and strengthen the family bonds.

To discover more stories of successful investing with Family and Friends pick up a copy of the best-seller 51 Success Stories from Canadian Real Estate Investors at your local book store or on-line at http://www.amazon.ca/Success-Stories-Canadian-Estate-Investors/dp/0470839163?ie=UTF8&s=books&qid=1187132682&sr=1-3100% of the author royalties go directly to Habitat for Humanity.

Edmonton Real Estate Prices Driven by Transportation Improvements

Cutting Edge Research Inc. has just completed our detailed research into the effects of transportation improvements on the prices of real estate in markets all across North America.

Our methodology was to study current and past major transportation improvements (Light Rail, Major Highway improvements and commuter rail) in cities across North America to determine whether these improvements had any direct and measurable impact on real estate values.

We then took this data and used it to analyze select cities and towns. In this edition, we took a special focus on the Edmonton real estate market, located in Northern Alberta. Here is a quick summary of our findings:

• Edmonton transportation improvements will deliver a 10%–20% enhancement of real estate values in the regions most affected. In the future, these areas will outperform the rest. If the market goes up everywhere, these areas will increase by about 10%–20% more. If the Edmonton values drop, these will drop by 10%–20% less.
  
  
• With the completion of the Anthony Henday Ring Road and the extension of the LRT, real estate prices in key neighbourhoods (listed below) will increase more quickly than other regions of the city due to improved transportation linkages. Improved accessibility drives real estate demand.
  
  
• Values in older and more established neighbourhoods are impacted more significantly than in newer developments.
  
  
• In studies of the effect of transportation improvements on real estate in other jurisdictions around the world, it was found that real estate value increases occur for properties located within 800 metres of stations on the new transportation and 800 metres from exits on new major highway improvements.

The areas that will be most significantly impacted by transportation upgrades are divided in to the 'Four Tiers of Impact'

First Tier: areas which will witness the most positive impact of the transportation improvements, most of which are located on the 111th street corridor being. This region will enjoy the twin impact of the Ring Road access and LRT expansion: Blue Quill, Ermineskin, Sky Rattler, Twin Brooks, Park Allen, McKernan, Belgravia

Second Tier: areas which will also feel a strong positive impact with one of the major improvements significantly increasing long term demand: South Mill Woods, Pleasant View, Lendrum; West End including, Jamieson, Glastonbury, Aldergrove, Thorncliff & Belmead.

Third Tier: areas which will feel the impact in years to come once the Northern Section of the Ring Road is designed and completed: (NW) Castledowns neighbourhoods, Lago Lindo; (NE) Miller, Casselman, Kirkness, Fraser, Rundle Heights, Abbotsfield

Fourth Tier: Regions which will feel the ripple effect outward from the main impact areas. These include St. Albert, Ft. Saskatchewan, Devon, and Sherwood Park

There are negative effects (nuisance, property crime, noise, increased traffic, etc.) on properties located in the immediate vicinity (100 meters) of many stations but this does not have a negative effect on the price increases.

To download the complete research reports on Edmonton, Vancouver or Calgary visit this link

The Gateway Effect - Transportation's Impact on Real Estate Values

Un-biased research is at the heart of EVERY quality real estate investment.