Alberta Commentary 2012

All the best in 2013!!

December 31, 2012

At this time of year, we all stop and reflect as to what has transpired over the past 365 days and prepare for yet another tour around our Sun. New Year’s resolutions will once again be made and for the most part will be forgotten in 6 weeks or less. My only resolution I have ever made was on Dec 10, 1985 and that was to exercise on a continuous basis. Although it has been difficult at times, I have kept going to this very day.

As for predictions for the coming year, I have only one. 2013 will be the year that the first internet powered real estate boom will begin to take effect in Alberta. It will be unlike anything the world has ever seen because the web will be a fundamental shaping not only the economic and political landscape of the province, but also Canada. The Facebook and Twitter resources on this site will be followed by many worldwide and it will serve to attract an enormous influx of people, resources and investment capital in a way that will only further accelerate the economic advantage of the province over the rest of North America.

Sometime later, I will be adding one more municipality which lies outside Canada to the group of cities receiving news coverage. Its purpose will serve to accelerate the generation of tens of thousands of real estate transactions in Alberta and I will have more to say on this topic at a later date.

So there you have it. My only prediction for 2013 and a year from now, you alone will decide if I am correct or not.

Happy New Year!!

Why this website was created

December 24, 2012

When I first began investing in real estate, I was amazed at the economic research that some investors would provide in order to justify their purchases. I had previously been trained in the securities field and the overlap between the economics of equities and real estate fascinated me. I then noticed that equities had substantial media coverage but real estate in my local region was not compiled in one central location. It was not easy for the average person to access in a time efficient manner.

Later, I discovered that I did not have to go off to another nation to find a world class real estate investment. It has always been right underneath my nose. The main reason why I compile these articles is because no one ever did it for me and it is my way of paying it forward. If you are going to invest in anything over the next few weeks, spend time with family and friends and you will be better off as a result!! There will be plenty of time in the new year to pursue your next investment.

Merry Christmas

How much to pay for real estate education

December 19, 2012

Investing in real estate is different from stocks or mutual funds in that there are many more aspects to purchasing, holding and selling compared to paper assets. It therefore comes as no surprise that educating one self in all matters of real estate investing is much more necessary. Many times you will see someone come from another city or even country and try to promote their system of purchasing property. The prices of these weekend or even four day courses can range from several hundred to tens of thousands of dollars. Some seminars are even as high as $35,000!

The question then becomes how much should one pay for this secret information or what they claim is secret. I have seen many successful investors start off by purchasing books, networking with other investors and spending up to $500 for two fulls days of training. This is adequate to start off on your first few properties. Anything beyond this is where you can expect to spend $5000 for courses but only after numerous transactions have occurred and you have a fair bit of experience and know what you want.

The most important telling sign of a scam at a seminar is if they have properties at the back for all of the attendees. They rarely work for the purchaser. That is not education but rather a way to make someone else wealthy.

Job Security

December 12, 2012

An interesting email crossed my desk this past week. In this day and age, there are people who believe that if they do a good job, have solid performance reviews and get along with their co-workers that they will be at a job for as long as they like. The old adage that an employer will take care of you if you take care of them is what they believe will take them forward.

I hate to bring this reality check but that is simply not true!  I believe job security is definitely something that existed 50 years ago during a different economic time but it is very rare today. I personally have been let go or fired many times in past positions because of the economy or that I did not fit into a particular group. The longest I have ever held a job for is 25 months at a company I actually liked! To me, moving on is not devastating because I am able to bounce back and my true nature is that of a business owner/investor and not an employee. I am the exception and not the rule and have seen many people become emotionally disheartened because they tie their identities to their positions. Jobs come and go but what one must always focus on is increasing your own personal net worth. Your boss cannot protect you if he is told by his/her boss to fire you. If you want security, look in the mirror and accept the fact that you must make your own wealth!

One bank account per property.  No exceptions!!

December 5, 2012

Let us for the moment assume you have decided to purchase your first (or next) piece of real estate. It is extremely important that you open up a separate chequing account from which all your income and expenses for the property are to be recorded. Many people are reluctant to do so stating they wish to reduce their banking fees and commingle everything into one bank account. Although you may save a few dollars doing this, it potentially exposes you to having to pay thousands in accounting fees should the tax authorities ever decide to audit your property.

The deposits into your account for your rental property may include rent, parking fees, laundry or even vending machine income. Some examples of related withdrawls are insurance, property taxes and a mortgage payment. Doing this will make the accounting for your property very simple and easy for your accountant and others to follow.

Having a master bank account from which any fund transfers into or out of your rental property (or properties) will also simplify matters and keep your business running smoothly.

The true sign of success in real estate accounting is to not hear inquiries from anyone whether it is your accountant or the tax authorities.

No snow on the rooftops

November 28, 2012

This past week in Calgary has been a little bit colder than normal. I often like to walk because sitting in front of a computer for extended periods of time is not something I have ever been able to do. As I walked through my neighborhood, the roofs had snow on them which had not all been blown or melted away. I always look to the roof to see if there is even a little bit on top. My motivation for doing so is not for aesthetic appeal or design but something much more ominous.

Houses used for to grow marijuana must be kept at high temperatures for growth to occur.  For this much excessive heat to be present in the house, it means any snow on the roof must be melted away. No snow on the roof means it has a potential to be a grow operation. Dark curtains are another indicator potential criminal activity is present.

Fortunately, I did not see any on my walks but I am always watching because these properties can adversely affect your community, lifestyle and values of any properties you own in the area. ALWAYS be vigilant if you see this and ask questions.

Who pays for the utilities in a rental property.

November 21, 2012

So you have purchased a rental property and have an excellent tenant who pays their rent on time and has excellent references. The question will inevitably come up as to who pays the utilities.

The answer is simple and clear. Since the tenant lives there and uses those services, they should pay for the heat, water,electricity, internet and cable. This is not to say that you cannot use a free DVD player or IPOD as an incentive for a tenant to move in. It means that your property will never produce positive cash flow if you include all of these essentials. Having said that, it is your responsibility to ensure the furnace is cleaned regularly (probably every two-three years), all the plumbing and electrical units are working and up to specified code. Also ensure that your tenant has all the energy efficient electrical bulbs they require.

For a multifamily property, the owner is responsible for all the heating costs and needs to pay for the common electrical usage such as hallways. Separate electrical metering is strongly recommended for tenants in their suites.

November 13, 2012

1934,                        1938,                        1982,                        2006,                       2014!

“Give me a lever long enough and a fulcrum on which to place it and I shall move the world.” Archimedes (400 B.C.)           

November 13, 2012

This will be my final written post before I send a worldwide press release regarding the greatest real estate boom of all time. It will be the classic case of Newton’s Second Law where an irrepressible force (the internet) meets an immovable object (planet earth). I do not know what lies ahead except that if you want something you have never had, you must do something you have never done. I wish to personally thank a number of individuals and my family for their support in making this project possible. There is also someone whom I have never met and wish to express my gratitude for showing me how to acknowledge, defy and challenge the impossible. To Roberto Baggio whose superstar performance at USA 94 inspired me to believe that one day, I would also give everything I have and take on the entire world. Forza Baggio, Forza Azzurri, Forza Italia!!

Why real estate is different than other investments

November 7, 2012

Mention the word “investing” to any person on the street and they will most likely think of stocks or mutual funds. Others might mention options, futures or other exotic entities such as art. However, they all have one thing in common which sets them apart from real estate.

You do not need to own Apple’s stock or a call option for Coke. You do however need a place to live and it does not matter if you own or rent. Housing is a basic human need and that is why real estate will continue to exist in the future as an investment vehicle. I also like to mention that paper assets that related to real estate such as utility companies and banks are some of my favorite stocks. People may complain about their water bill, but it will always be a high priority on the list of monthly expenses. I also believe that internet access which the United Nations has declared as a basic human right could very well enter into the same “need” category that real estate has established itself as. Time will tell!

The best “investment” of all

October 31, 2012

Many people worldwide have acquired great wealth through different methods and the question sometimes comes up as to what the best investment of all really is. The answers range from gold, real estate, colored diamonds to futures, stocks and intellectual property. There are pros and cons to every investment and there is no one size fits all which works for everyone at every time.

In my case, I used to believe that mutual funds were the answer. I then changed my mind to real estate, then business. I have met many investors who have weighed in their opinions on this matter and against all the odds, I believe I have found the ultimate investment which will stand the test of time worldwide.

The greatest investment of all is in educating yourself about money. The vehicle you choose is not as important as how you empower yourself. If stocks interest you, then attend a seminar and network with those who are like minded. Your network is your net worth and can greatly expand your horizons.

I did not know how to balance a checkbook until I was 30 and that basic bookkeeping knowledge (which I had procrastinated for 15 years in learning) has assisted me to this day. If it wasn’t for my initiative to learn that tried tested and true knowledge, I would still not be able to form a budget.

Educate yourself and keep expanding to truly have the greatest investment of all!

Constantly challenge that which you assume to be true

October 24, 2012

Recently, I started watching Brad Meltzer’s “Decoded” which has at times forced me to question things which I always believed to be true. This show follows a team of investigators who try to determine the meanings behind various symbolism, alleged secret codes and conspiracies that surround us everyday.

In one a recent episode, they investigated the gold in Fort Knox and alleged that there may not be as much if any of that which many believe is stored in the vault. As intriguing as that was, it paled in comparison to what was in my opinion the real eye opening experience!

I had always assumed that the 1933 movie “Wizard of OZ” was made for children. During the shooting, it was discovered that color motion pictures could be made and that is why the land of OZ is in color and the rest is in black and white. That is all I had known about the movie and did not delve any deeper into it.

Upon further inspection, the truth behind the story became readily apparent. The Wizard of OZ is the true story of gold. Dorothy follows it to find the Wizard (who is a manipulative politician) and in the end she finds that he is a fraud. This is comparable to our present day in which paper money (i.e. fiat currencies) have nothing to back them up except the ability of governments to tax their people. Gold and Silver are real currencies and everything else is a fraud.

As for the title of the movie, the abbreviation for ounces is OZ because it sounds a lot better than the “Wizard of Ounces”.

I had always assumed there was little else to the movie but by being forced to challenge a long held belief, I now have a greater understanding of the hidden meaning contained therein.

For more information, please visit this site:

Acres of Diamonds

October 17, 2012

Often times, I have heard about investors who wish to purchase stocks or real estate in the United States or other places in the world. Whenever I encounter these people, I always recall the story of “Acres of Diamonds” which has been handed down over the generations.

It is a true story about an African farmer who through an acquaintance became enamored about prospecting for diamonds.  Diamonds were already abundant in Africa and this individual was so excited about the idea of making his financial dreams come true, that he sold his farm and went directly to the diamond line. He searched all over Africa but as the years turned into decades, his dreams slowly faded until one day he committed suicide by jumping into a river.

The new owner of his farm took possessions and picked up a large and unusual looking rock about the size of a large egg and put it on his mantle as an ornament. A friend stopped by and in viewing the rock became hysterical. He told the new owner of the farm that the funny looking rock on his mantle was one of the largest diamonds that had ever been found. The new owner of the farm said “Heck, the whole farm is covered with them” and it most certainly was!

The farm turned out to be the Kimberly Diamond mine which is the riches the world has ever known. The original farmer did not have to go anywhere to find his wealth.

For these reasons, I am happy to keep on investing in my own back yard for a long time to come!

How to improve your performance without trying

October 10, 2012

I have met many successful people over the years in the field of business and real estate and there runs a common theme about some of their activities that sets them apart from ordinary. People often think there is a secret formula to success, but they have all shown me that simplicity is truly the answer in their success. They keep their business practices simple, their relationships and above all, they have free time!That’s right. They take at least one day a week completely off and do not talk about anything regarding money. The other 6 days are plenty enough to cover all aspects of their finances. Day 7 is exclusively for family, prayer, private time, or even Serie A soccer. Without some sort of non financial goals to achieve, there is no point investing. Having money is not about money itself, it is about lifestyle.The next time you meet someone who works seven days a week, walk away as they would probably not be a good business partner for you as their life is most likely not balanced.

After Europe, who will be next to require a bailout?

October 3, 2012

You do not have to pay attention to politics and economics to be aware that Europe has been requiring financial assistance for quite some time. First it was Greece which then has led to others requiring funds. Although I believe the worst is still to come in this saga, the next generation of Europeans will benefit from all of this fiscal responsibility which is finally being forced upon nations which have relied on credit far too long to fund their lifestyles.

I have always been one to try and find that which is silent as not making waves in order to determine future trends.  In the financial arena, there is one nation which has me greatly concerned and has not really caught the world’s attention. That nation is Japan.

Japan is the world’s third largest economy, has an aging population with a public debt at 200% of GDP. I do not see how this is sustainable long term because one cannot continue to spend more than one makes (even for a nation) indefinitely. The day of reckoning will come for Japan as it is coming for Europe.

Although it will not happen in 2012, I believe the United States will also go down this route and sometime later Canada will have to take responsibility for their financial books.Ontario’s situation is a sneak preview of what is coming for other provinces. Fortunately, in Alberta we have the strongest economy in the country and are much better prepared to weather the coming years.

Christine Lagaard was quite accurate when she saw the world economy as lost for the next 10 years. The only question Alberta must ask itself is how to cope and even prosper while the world struggles to find itself.

CAP rates and Property Valuation

September 26, 2012

How does one tell the current value of a property? If it is a residential, there is the comparison method in which an appraiser compares some recently sold properties and arrives at an answer. This may work well for residential but for multifamily properties, the calculation is based on a more business like approach. This is called the Capitalization rate or CAP rate for short. Normally, the more valuable a property is, the greater it’s income.

Here is a general method to calculate the CAP rate for a property:
·  Get the recent sold price of an income property, such as an apartment complex.

Example: Six unit apartment project sold for $600,000

·  For that same apartment project, determine the net operating income, or the net rentals realized by the owners.

Example: The rental income after expenses (net) is $48,000

·  Divide the net operating income by the sale price to get cap rate.

Example: $48,000 / $600,000 = .08 or 8% (The Capitalization Rate)

Typical market norms can be obtained from your mortgage broker or sometimes a realtor who specializes in investment properties.

CNBC’s “American Greed” and Crimes of Persuasion 

September 19, 2012

One of the many things I have discovered in my investing career is that the percentage of dishonest individuals in the area of wealth creation is very high.  This is not to say that there aren’t many good honest hardworking people who do their best for their clients. Rather, the percentage of people who will steal or use deceit for their own purposes is much higher here than say the medical profession.

Since there are so many scams out there and it is impossible to keep track of them all, I prefer to leverage my time by attempting to learn from other people’s mistakes. One of my favorite ways to do this is to watch CNBC’s American Greed which does a fantastic job of describing the historical and financial impact of past scams against investors. Many times, I catch myself watching reruns of the show because it does such an excellent job of explaining past deceits. I am not American business and I watch CNBC!

Another useful tool I have found is the website This too has been instrumental in helping me past the latest or reused scam which exists.

Sept 11 effects on North American Real Estate

September 12, 2012

Yesterday was the 11th anniversary of the terrorist attacks on New York city and in fact the entire western world. Like all of you, I recall exactly what I was doing on that day and it will be with me for the rest of my life. What has happened in terms of North American real estate in the past decade is a trend that has been clearly identified. Over the past 500 years, the continent has seen rise to 5 major waves of migration. They can be summarized as follows:

1)  Arrival of Mayflower to North America
2)  Mass migration to North American mainland
3)  Migration to cities
4)  Migration to suburbs
5)  Migration to Exurbs (small cities outside of major centres)

The technology trends which are so present in our everyday lives have enabled one to telecommute from home instead of physically going to the workplace as in times past. This trend is responsible for people living in smaller centres and the terrorist attacks of Sept 11 only accelerated this effect of people moving out of major cities. We must never forget the memories of those thousands who died on that day and the heroic civil servants of New York who gave so much of themselves to help others.

Welcome to the Internet Stone Age

September 5, 2012

Much has been written about how we are in a technological revolution that has not been seen in hundreds of years. Whether it is a new app to download, phones which can accept voice commands or high definition TV’s the examples abound. Convenience has certainly never been so prevalent and the question must be asked if this is a great technological revolution? My friend Karl and I are in  total agreement that we have not seen anything noteworthy. If you consider our lives today versus the 1970’s, it is very much the same except for a few gadgets and computers. We drive cars that use fossil fuels, our cities are not in the clouds but still on the earth and travelling to the moon is not commonplace. Furthermore, we rely on the same furnaces and air conditioners that our parents did and grocery stores still dictate where we get most of our food. The great tech revolution will eventually occur but it is still decades away from having any real impact on our lives. Until such times that we can see marked differences to the 1970’s age and science fiction becomes science fact, I believe we will still be in the Internet Stone Age.

The Pros and Cons of Illegal Suites

August 29, 2012

Whether you have ever bought a property or not, is is entirely possible that you may have heard about landlords who rent out a suite illegally. In any analysis, one must look at both sides and then weigh them accordingly. What I am presenting is only my own opinion and you are strongly encouraged to look at your own risk and rewards. The pros of renting out an illegal suite is quite simply the extra cashflow one can receive from this activity. Real estate is a numbers game and having your cashflow increase from 50-100% is a huge bonus which is unmistakable. The cons of doing so are much more numerous.If your insurance company discovers that any illegal activity from renting out a suite to a grow operation or anything else, they can cancel the policy without any recourse on your part. The mortgage can also be called by the lender because of illegal rentals occurring. They can call the loan anytime but this is much more likely if the law is broken as is the case with renting an illegal suite. You run the risk of having a jealous neighbor complain about your suite to your local municipality. You would then have to evict your tenant, remove any illegal cooking facilities and possibly face a lawsuit from your evicted tenant for renting out the suite.

The construction of illegal suites without building permits does not ensure health and safety standards are met. You would also be liable for this should anything happen.

Whether you decide to proceed or not with renting an illegal suites completely up to you. I am merely presenting the two sides of the argument as best as I can.

Reserve (or sinking fund) for a rental property

August 22, 2012

Many corporations have a “sinking fund” set aside to deal with investors who require their capital.  A sinking fund is a pool of money set aside by a corporation to help repay a bond issue. Bond agreements require a corporation to make interest payments to holders of the bonds and then at the end of the life of the bond, all the principal is to be repaid in full. A similar approach should be taken by a real estate investor who owns a rental property

Suppose you have purchased a positive cash flow residential property and all is going well until one day, an unexpected problem occurs. It could be that there is a $400 repairs bill for the furnace, a $700 bill for unanticipated plumbing repairs or other unforeseen circumstances. Many investors would be scrambling to get these funds but there is a simple way to avoid this type of emergency.

If your property has a monthly income of $1,000 then you should have between 3-4 months worth of rent (i.e.$3,000 and $4,000) sitting in the bank account for this property. If your property is outside a major centre, the amount to be held should be 4-6 months worth of rent or approximately $4,000-$6,000. because of the possibility of greater unknowns. This money will also assist in the event your property is vacant for a period of time.

Acknowledge your weaknesses and address them

August 15, 2012

In the overall scheme of real estate investing, many people have their likes and dislikes. Some of the things that I am good at and like are the investment analysis, economics (this should not be a shock based on the majority content on this site) and accounting.

When it comes to my biggest weakness, it is unquestionably property management. I consider myself to be the worst property manager in the world! If the rent was constantly late, I would probably fall for every story that was given to me. Having discovered this weakness of mine early on, I decided to address this issue by outsourcing all of my property management. This is critical to going forward because the best property in the world can fall apart if the management is lacking. I am completely hands off and have this as one of my strongest sides of real estate rather than my Achille’s heel.

What is the one (or more) aspect(s) of real estate you dislike. Identify them all and then hand it over to professionals. Many people I know hate accounting and that is why I encourage people to hire an accountant as soon as possible for no other reason than to stop losing money.

Take a real estate investor out to coffee or lunch

August 8, 2012

Everyone’s circumstances in real estate are different whether it is age, gender, education, lack of experience in investing or anything else. We all need mentoring especially when starting off on this road less traveled and the best way I have found is also one of the cheapest.

Call a friend, neighbor or anyone else you know (or even better you don’t know) who owns real estate and buy them a Starbucks coffee or lunch while asking them questions about their real estate investing experience. I have personally done this hundreds of times with people all over and have gained an incredible amount of knowledge and insight. It is extremely rare for someone not to accept your offer and most are only too glad to help.

Unlike school, you will not be penalized for duplicating someone else’s success and in fact, it could help you from making some on your own.  I know people who have saved tens of thousands of dollars in mistakes by using this one simple technique. The person you speak with may refer you to someone else that could make all the difference in your next real estate purchase.

Network marketing and real estate

August 1, 2012

At one time or another, most people have been approached to join Amway or some other type of Network or Viral marketing program.  This usually entails paying hundreds of dollars to receive a starter kit, making a list of people you know, calling them and introducing them to the business you have become part of.

Over the past 20 years, I have been exposed to dozens of such programs and am still a loyal customer of both Usana Health Sciences and Legacy For Life’s Immune 26.  My dedication to these companies is strictly as a consumer. I do not pursue these as businesses unto themselves as I have found them to have too many barriers to being successful and the fact that the pay programs are not in your control.

Even with all these obstacles, I still strongly support the notion of this model as it has taught me a great number of things which have helped over the years in real estate and in life.

First of all, it forces one to get out of their comfort zone and introduce themselves to others.  Not only will you expand your network (which is really your networth) but it gives you a chance to be exposed to opportunities that you would never have heard of otherwise.  I have also made a great many friends by using this technique.

Network marketing methods are exactly what successful real estate investors do to get their names out to the public and tell the world they are looking to buy property. Instead of selling or talking about vitamins and minerals, they speak the language of real estate.

The concept of making a list and calling everyone you know to tell them about your new venture (which is real estate) could very well lead you to that mortgage broker or lawyer you are looking for.  This could be all the difference you needs to succeed.

How to enter a suite at your discretion

July 25, 2012

Have you ever wondered if something just wasn’t right at your rental property and wish you could see what was going on rather than be told everything was OK?

Fortunately a simple and completely legal method exists for you to do so. Contact your tenant and give them at least 24 hours written notice that you wish to install or check the smoke detectors. (I believe all properties should be non smoking as this is a legitimate fire hazard to you as a property owner).

Upon arranging a time that works for you to enter the property, you may proceed in installing or checking that the smoke detectors throughout the property.

When you happen to be at there, you cannot help but notice everything else that is occurring inside your property and that is exactly how you have entered a property, added value to it and addressed any concerns about what may or may not be occurring there.

Paying for online news

July 18, 2012

Recently, the Globe and Mail announced they would be asking their customers to pay for their services after a limited number of news articles could be read for free.  This will be implemented in the fall of 2012.The internet has certainly changed the news industry with news never having been so accessible. The days of huge profits from paper based sales are long gone as that part of a business’ revenue continues to go down. I believe most newspapers will eventually adopt this model worldwide.  Eventually, the Calgary Herald and Edmonton Journal will erect paywalls and it could be as soon as next year. This follows the lead initially set out by the New York Times and Wall Street Journal. For the record, I have no intentions of ever charging for this service. If you choose to read articles from a paper and are asked to pay, we will not be involved in your decision. Our motivation is to provide research on Alberta real estate to empower investors worldwide on this once in a lifetime opportunity.

Greatest Boom Ever Website

July 11, 2012

Welcome to Greatest Boom Ever. Alberta has a world class economy which is reflected in its abundant real estate opportunities throughout the region. Leveraging the power of the internet, we intend to promote the underlying strength of the province through the worldwide web.