Category Archives: Alberta (Commentary)

The ultimate deciding factor whether you should purchase a property

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Suppose you have looked at a property and are wondering if it would be a good addition to your portfolio.  You have taken out your checklist and verified that it is in a good area close to amenities, schools and transportation. The curb appeal is there as well as a potential resale in 3-5 years depending on your exit strategy.

Time and again you have checked your numbers and seen that it is positive cash flow with a Starbucks nearby. You may not have all of these above factors in your property but there is one factor no one will ever tell you about.

The deciding factor you must check is not what the numbers tell you but rather what your internal instincts say. This is unquantifiable and that which cannot be explained by mere logic and reasoning. If there is something holding you back, then walk away! Usually when something says do not buy, there is a good reason for it even if you cannot explain it! Otherwise, go for it!

Should one buy new or used appliances for a rental property?

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One of the many factors when renting out a property is the condition of the appliances.  Washers, dryers and stoves are certainly a cost to take into account as a landlord as well it can be a selling feature to a tenant. The question then becomes should one go for new or used?

If you choose to buy used appliances, the cost savings are immediate as they are cheaper than brand new. Keeping costs down is a business move that cannot be ignored. The downside to used appliances is that they can break sooner than new and then your costs could go up as you will be forced into a buying situation you had not planned for.

New appliances have an extra cost compared to used ones but I believe they are well worth it because they will break down less and they can be a great selling feature to a prospective tenant.  The tenant will have to deal with less hassle with (broken washers and dryers for example) and make their lives easier. Keeping an equity building tenant is key to making money in real estate and going cheap on appliances could cost you someone very valuable to your business.

Also, a real estate purchase is usually hundreds of thousands of dollars and the last thing you want as an owner is to go cheap on several hundred dollars of appliances.

The new type of literacy which affects your investments

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Regardless of the asset class one invests in there are a number of common factors which affect your success. The ability to understand economic fundamentals and reading a balance sheet are two that quickly come to mind.  Many people have lost money because of their inability to understand these concepts and have left money on the table in times past. However, a new one has emerged and many people think it does not affect them but it is increasingly prevalent all over the world. That literacy is the ability to use computers and technology with ease.

Children today are exposed to iphones, Facebook and other tech devices that most people over 30 did not have growing up. I was very fortunate to have had my first computer in 1984 and used email with livechat in 1988. (Karl predates me on all of this by over a decade and that is one of the many reasons why he is a world class IT support!) Computers to me were second nature because I was constantly exposed to them despite being teased as a teenager for advocating their future impact. I have spoken to numerous IT support personnel and the discussions repeatedly state that most people do not know how to use a computer beyond the bare essentials of turning it on and off.

Most financial advisors use technology to support their clients and send documents when required.  Also realtors, property managers and many others use the internet as a device to increase their efficiency. You are either tech literate or will quickly be left behind. If you are intimidated by a computer, then there is lots of help available for you. Most colleges and other educational institutions offer evening courses on how to use a computer. This will help build your confidence in utilizing this necessary tool for investing as well as life in general!

Do you stop and pick up spare change?

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Years ago, I was watching a documentary which explained that the cost of creating a penny is more than a penny and that according to the author “A penny saved is worthless!”. This last February, the penny ceased being produced in Canada but other forms of change continue on. Often times, I am walking and see loose change on the ground and see others just walk by and intentionally not pick them up. The question then becomes, do I pick up the spare change?

I absolutely pick up it all up even if it is on the ground. It is not just for the monetary consideration, but rather the power of intention. If you want to achieve any financial goal, it is virtually impossible to climb straight to the top of the mountain. You are much more likely to achieve your goal if you break it down to manageable and achievable monthly weekly or even daily goals. Picking up spare change is leveraging the law of attraction that you are open to receiving more. If you would stop and pick up a quarter, is that not 5 nickels rolled into one?

Start increasing your personal wealth attraction by using this simple but often overlooked strategy.

Flooding update for July 2013

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I have never been in the middle of a natural disaster until last month.  For those who were affected, it is very much a difficult time. What has greatly surprised me is the extent to which Southern Alberta has been able to address numerous issues regarding the recovery.  Already, Calgary has its electrical grid up and running and the Stampede will go “hell or highwater’. The resiliency of Alberta at this time is truly impressive. Short term, this is a very serious situation but in 6-8 months, I fully expect us to be in a fully operational mode.  Although the news articles I post in the short term can be challenging for readers, always keep the faith that this economy is one of the strongest in the world. Our actions and abilities in rising up speak for us and not even a flood can stop the momentum we have.

Success is not a straight line and no matter what happens, we will get through this. For those of you in Calgary, please visit www.nenshi.ca as something to keep in mind this coming October. A vote is a way of saying thank you for the tremendous leadership Mayor Nenshi has shown to us at this time.

Reflections on last week’s floods

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Late last week, Alberta was on the receiving end of a substantial amount of rain which caused flooding in many areas in southern Alberta.  The amount of rain that fell was unprecedented and resulted in billions of dollars of damage.  At present, we have the goal of getting critical infrastructure up and running. This includes Calgary’s downtown core which is essential for much of the country’s energy sector.

Although the floods were devastating, our response has been equally strong.  We have had to actually turn back our own local volunteers because we have too many of them!  The response from everyone has been both quick and very decisive in getting things back to normal from the political leaders in Alberta to someone’s neighbor.

Short term, this has been very trying and the numerous pictures showing the destruction many are going through says it all. Longer term, this will only intensify the coming real estate boom in Alberta since more people will hear about our reputation around the world.  As we recover, it will be with better infrastructure which is both safer and utilizes modern technology. The massive Alberta rebuild has begun!

Thank you to everyone who has inquired about my safety. I was completely unaffected by the flood in Calgary along with 90% of the city.

Exit Strategy

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When purchasing a home to live in or any investment property, it is very important to have your exit strategy before you buy. If you intend to renovate and flip the property, establish your metrics before you even begin down this path. Establish at least a 10 year time horizon (and preferably longer) on which to hold a property and then move onto your next property if you approach it from a buy and hold philosophy.

Do not ever attempt to exactly time the markets because doing so will inevitably lead you to miss the exact bottom or top. If you invest in a market which has solid economic fundamentals to support equity appreciation over the long term, you can do very well if you one buys and sells at market prices. It is not necessary or even advisable to obtain every last dollar possible as this will only lead to failure.

Increasing financial literacy through educational TV shows

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When I was studying to become an investment advisor (aka stockbroker), I was always trying to learn as much as possible from others who had gone through the road of business and see what tips I could learn from them.  In the mid 1990’s, the amount of information available to investors was quite small compared to today.  In fact, I would argue there is too much information available today!

One option which is available now is through the use of watching expert investors and business owners assist their analysis through the media. Three of my favorite TV shows which I try to watch are Shark Tank, Dragon’s Den and Bar Rescue on Spike TV. My particular favorite is Bar Rescue because this takes me completely out of my business comfort zone into an area I know that I could never succeed in a big way. These shows teach me that it is OK not to be perfect and skilled at everything I do. Just find your own niche and stick with it. By watching others improve their businesses, this is how I use these shows as inspiration in my business of promoting Alberta real estate worldwide!

How to make money in real estate

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For the classic buy and hold investor, there are in general three ways to make money in real estate. Please note that these are general principles and in apply many countries around the world.

1) Mortgage paydown.  Every month that a mortgage payment is made, part of the amount goes to paying down the debt and is like a forced payment plan which goes to your bottom line.  This way of making money is comparable to contributing to a government sponsored retirement plan called an RRSP in Canada, 401k  in America or Superannuation plan in Australia. This is the first thing one must look at when calculating your return on investment.

2)  Positive cash flow. It does not make any sense to buy a property that loses money every month and that is exactly why positive cash flow ( i.e. the overall income of the property pays all of the expenses and has funds left over) is absolutely essential.

3)  Equity appreciation. This is another way of saying buy low and sell high and is what most people call “investing”  Although there is nothing wrong with making money in this matter, it must not be your first consideration but more like your third or even fourth. Just ask anyone who purchased property in the United States in the mid 2000’s and was losing money every month because they cannot cover all their property expenses in a down market.

Ultimately, it is up to you!

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As you proceed down the path of achieving your financial goals, there are many people and situations which you will encounter.  Some will provide you networking opportunities and others will teach you investment systems that empower you to proceed. You will attend business seminars and have meetings with other like minded people who inspire you to do better than you are today.

I have been very fortunate to have met many people who have helped me think in ways that force me out of my comfort zone. These incremental and sometimes enormous steps helped me achieve many goals including the development of this website and its associated slogan of “Empowering Investors Worldwide”.

Ultimately, no one will ever be able to break through the barriers that you face except yourself. Systems and relationships can only take you so far. No matter what you aim to achieve whether it is to lose weight, buy an investment property or any of your personal goals.  You are the captain of your ship and must steer it in the direction that you want it to go. No one can do that for you. Take as much as time as is necessary steering your own ship because once you do, you will never go back to having others tell you what to think and do.