Will Your Canadian Property Weather The Economic Storm?

Can Your Canadian Real Estate Weather The Global Financial Storm?

Here’s how to analyze how your property will fare

By Don R. Campbell

Merrill Lynch, and now Macleans, have recently come out with predictions of a national real estate calamity. Canadian Real Estate Association and Royal Lepage paint a much sunnier picture. The truth is Canadian investors and homeowners know that the truth lies somewhere between the chick-littles saying that the sky is falling and the pollyannas telling us that this correction is just a blip.

To uncover the truth in this storm of mis-information, it is important to go back to the basics, the facts and figures that actually drive a real estate market either up or down. These basics have held true through decades of up & down markets and those who focus on them when making their decisions will reduce their risk and increase their returns. Here’s how to analyze your property’s exposure to the financial storm buffeting real estate worldwide.

First, it’s vital to remember that property markets are not national; they are regional and local, and even vary widely from neighbourhood to neighbourhood in the same city. Looking at national numbers and coming up with an average is like putting your head in an oven and your feet in a freezer, and saying on average that the temperature is fine. There will always be some hot real estate markets and others that will be cold, but national and provincial figures are much too generalized to be used by Canadian homeowners and investors to make fundamentally sound decisions on their most important asset. So, focus on your target neighbourhood numbers, rather than national or provincial headline figures.

The road to good decisions is via research, followed up with careful analysis. The twelve questions listed below will help you decide if your local area and personal property is poised to go up, stay flat or collapse. Each of these factors can affect real estate prices in any direction, and each is an important component in determining which way real estate values will be going. Overall, to dramatically reduce your risk, ask and analyze these key questions for your target town or neighbouhood. The more “yes” answers you get, the better the market will perform.

1. Is the area’s average income increasing faster than the provincial average?
2. Is the area’s population growing faster than the provincial average?
3. Is the area creating jobs faster than the provincial average?
4. Does the area have more than one major employer?
5. Is real estate booming in the surrounding region more than where you’re looking?
6. Will the property values benefit from a major new development nearby?
7. Has the local and provincial political leadership created a “growth atmosphere”?
8. Is the region’s economic development office helpful and pro-active?
9. Is the neighbourhood located in an area of renewal or gentrification?
10. Is there a major transportation improvement occurring nearby?
11. Is the area attractive to “baby boomers”?
12. Is there a short-term perceived problem (negative stories, short-term layoffs) that will disappear?


Each of these questions, and where to get the answers for your region, is discussed in great detail in the book Real Estate Investing in Canada (version 2).

It is important to remember that current real estate market conditions don’t tell us what the market will look like in the future, it is a direct reflection of what has occurred in the past. Only by addressing the above economic fundamentals can help in making projections of long-term values.

And, in fact, there are thirteen major influences on the long-term value of property. Underlying the local analysis above of your property market is the thirteenth factor: the positive outlook for Canada generally. Our banking system has been rated the most stable of any in the world by the I.M.F., our debt load is one of the smallest of any population in the major world economies, our governments paid down debt during the good times so we are prepared for these next 18 months of economic turmoil and the majority of the major economist around the world are point to Canada as the country that will play a leading role in the recovery.

While the world is undergoing significant economic and financial turbulence, Canada is well positioned to provide other countries with what they need over the coming decade, even during an economic slowdown. These factors are called the three “Fs” of existence: food, fuel and fertilizer.

No matter what the economy is doing, the world needs these commodities. Even with a slowing or recessionary economy, the world will continue to consume these staples, then as the recovery begins to hit and the economic stimulous packages have an impact the demand for these staples will increase. As a stable democracy, Canada will become the ‘safe and secure’ provider of choice. Therefore, generally speaking, the Canadian economy and real estate is among the best positioned to withstand the economic storms that are buffeting property values in many other countries.

However, we must remember that only by analyzing the above 12 fundamental factors for your specific city or neighbourhood can you can properly evaluate your property’s prospects for withstanding today’s financial and economic storms. It’s also the way to sleep better at night, while the winds of economic turmoil howl outside our homes.

Don R. Campbell is the best-selling author of Real Estate Investing in Canada (now in version2) and President of Canada’s Real Estate Investment Network™. Discover additional detailed real estate research and analysis on the BC market as well as those across the country. Visit www.myREINspace.com and tap into an ever growing community of investors focused on economic fundamentals.

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.

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.