1) Canadian Real Estate Market Commentary

Don Campbell, Canadian Best-Selling Author

When analyzing Real Estate markets, you need to remove yourself from the emotions of the market, and focus your attention on the facts (based upon a sophisticated model of analyzing many economic factors).

At REIN™, because we do not sell properties to our clients, we can be unbiased in our research, only giving you the facts based upon our eleven economic fundamental measures that drive Real Estate Markets up and down. Having studied Real Estate markets for more than 15 years we have seen both the ups and downs and they follow a predictable pattern, if you base your research upon long-term unbiased economic fundamentals.

The Real Estate Investment Network's™ model that we use to analyze markets includes:



-Mortgage Interest Rates
-Net Wealth Effect (Disposable Incomes, Median Incomes, Employment Rates, Housing Affordability Index)
-Increased Job Growth & In-Migration
-Real Estate Doppler Effect
-Local Regional & Provincial Political Climate
-Critical Infrastructure Expansion
-Increased Costs of Labor & Materials
-Area Gentrification & Renewal
-Maximizing Value and Zoning Opportunities
-Renovations And Sweat Equity
-Speculation & Rumors.

Right now, many of these economic fundamentals are pointing towards Western Canada, with Central Canada in retrenchment mode right now. In the next 3-5 years this trend may shift, but right now Western Canada is leading the nation in many economic categories (remember, no emotions, base your decisions upon the facts and long term fundamentals).

However, if one region in Canada is driving the growth, this does not mean that it is not beneficial for all Canadians, from Victoria to St. John's.

For example, in a recent article Derek Abama writes about the importance of the Canadian Oil sands fulfilling the increasing global demand, and how this will be good for all of Canada.


As Jeff Rubin of CIBC markets states about the Oil sands, "The economic benefits are most apparent in the West, where the oil is," but added that the people underestimate the impact the petroleum industry has on the whole country. "Don't forget that all of these companies and all of these individuals in Alberta are paying the same federal tax rates that everybody in Ontario and everybody in the rest of the country is. It's just that [the West] is going to become a much more important source of federal revenue, and federal revenue gets redistributed across the country through government spending, which certainly is not concentrated in Alberta."

As the demand for global oil increases and as Canada has about 52% of the investible oil in the world, most of the 'oil investment dollars' are coming our way. Canada's oil production (currently about 1.2 million barrels a day) is expected to triple in the next 10 years, and is forecasted to surpass four million barrels a day by 2020. These are some serious numbers.

In the oil sands, including mining projects and upgraders, the government lists 52 planned projects and each one of these has an average price tag of $3 Billion. Currently nine upgrader projects are listed on the Strathcona and Sturgeon counties' websites, and even if 50% of them never happen this still represents a massive inflow of people required to build these upgraders (estimates are between 5,000 - 6,000 for each project).

In addition, Ontario manufacturers are targeting the oil and gas industry as their latest customers, shifting from the U.S. markets to the Western Canadian markets, thus increasing Ontario employment.

Currently about $100 billion has been invested in the oil sands, and this has significantly impacted the Canadian economy. The forecast is for an additional $150 billion in capital expenditures in the next 10 years, and this bodes well for the future and economy of the whole country.

To view the full article, click here.

To download the full research report from CIBC World Markets, click here..

These articles talk about many of the fundamentals that REIN™ has known for many years.

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2) Brand New Research Report - How The Mountain Pine Beetle May Affect Real Estate Prices in Central B.C. and Across the Country

Don Campbell, Canadian Best-Selling Author

You may have seen this article in many newspapers across the country or on the front page of the Vancouver Sun business section (Sept. 12, 2007).

This is the press release for this announcement, and your opportunity to download the full report.

Vancouver, B.C. — The Real Estate Investment Network (REIN™), Canada’s largest real estate research, education and investment organization, has today released a detailed analysis of how the mountain pine beetle infestation is likely to affect real estate values in the B.C. interior over the next decade.

The report, titled "How Global Warming & the Pine Beetle Could Devastate the B.C. Interior’s Real Estate Markets", found that real estate values will be most negatively affected in Quesnel, Prince George and Williams Lake. Secondary impacts will be felt in Kamloops and Merritt, and in Alberta as the pine beetle begins its march eastward to invade pine forests right across the country. Global warming is one possible cause, as warming winter temperatures reduce the length of the periods of sub-zero freezing weather required to kill off the pine beetles each year.

"Our research found that the accelerated harvest of the pine beetle infested wood has caused an economic boom and is artificially raising real estate prices in cities that are forestry centers like Quesnel, Prince George and Williams Lake," said Don Campbell, president of REIN™ and the report’s lead author. "However, when the harvest and local boom runs its course in about five to seven years, the whole buildup of these past few years will likely unravel to deliver falling real estate demand unless new economic stimuli are put into action today."

The report concludes that the pine beetle is likely to have a negative impact on real estate values in the affected cities, and recommends that REIN™’s national membership review the fundamentals very thoroughly before deciding to invest in real estate in towns and areas throughout the affected pine beetle regions in B.C., Alberta and elsewhere.

Speculation is a factor in recent real estate price increases in these towns. REIN™’s research found that, despite shrinking populations (a key leading indicator for declining real estate prices), real estate values in Quesnel actually rose from $116,061 in 2005 to $145,471 at March 31, 2007, an increase of 14.1% in the last year alone. During the same time period rural houses in Quesnel went up 40.6%. According to Campbell, this contradictory trend indicates that speculation may be at work, creating competition for real estate and pushing up prices.

Quesnel has seen its population drop from 10,044 in 2001 to 9,326 in 2006 — a decline of 7.1% and was the third-fastest-shrinking community in Canada over that period of time. This is an important indicator because stable real estate markets are driven mainly by full-time residents.

"Rising house prices, despite a falling population, is a clear signal that speculation, and not fundamental economic factors, may be at work in places like Quesnel and Williams Lake," notes Campbell, author of the best-selling Real Estate Investing for Canadians.

The report notes that a similar situation is occurring in Prince George but to a lesser extent due to that city’s economy being more economically diverse.

To read more details and to download the full 25 page Beetle report, click here.

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3) Joint Venture Secrets Q&A's

Russell Westcott

Q: I am just wondering if there are certain limitations on how much information we should tell our Money JV partner in the beginning of the process? I have recently been talking with some of my potential JV partners regarding buying properties in Calgary; however, I have a feeling that I have given them too much information and they can invest by themselves without me. So, are there any rules of thumb regarding to this matter?


A: Thanks for the question. One of the first things you have to ask yourself is... what is your intention when creating your Joint Venture partnerships? The main intention most people have when creating JV partnerships is to create a win/win relationship, and to have your JV partner create wealth because of their association with you.

Early on, I too had the same situation as you did, educating a potential Joint Venture partner, and then they went out and purchased their own properties without partnering with myself. To date, that person has made at least $150,000, because of our earlier conversations. On the one hand I fulfilled an objective of helping someone create wealth. On the other hand, I didn't secure a JV partner at that time.

As a follow-up to this story, this person has now become extremely time constricted, because of their new business taking off. They have now contributed almost $100,000 to a current JV opportunity I have, and we have created a Joint Venture deal almost 5 years after the first conversation. You just never know when the opportunity may arise again to complete a deal with someone, creating a win/win deal (fulfilling the first objective of Joint Venturing).

Now for your question, it all comes back to the system you have learned and the 7 steps of successful Joint Ventures, particularly Step #3: "Where and How To Find Joint Venture Partners, the REIN™ Filter System".

Early on with your Joint Venture partner, you should have had them fill out a questionnaire, and from the list of questions you could have determined very quickly what direction your conversations should have gone. Your discussions with your Joint Venture partners should be focused around the answers to your questions (you should be asking more questions than they should).

Once you have a clear picture of what your Joint Venture partner is looking for, you can then tailor your presentation around meeting their expectations, and not 'teaching' them everything you know about the Real Estate transaction. Your meeting should be focused around helping them reach their goals and not you telling them everything you know about Real Estate.

As well, very early in the relationship with your JV partner you will want to ask them the question "You do realize you may be able to do ALL of this work yourself?" Then listen to their answer. They will very clearly indicate if they can buy real estate themselves or if they need your help to accomplish their goals. Typically, only target very time-starved people who would never want to buy real estate on their own. They just are so busy that they are almost 'begging' you to help them with their money. When you find this, you now know you have a GREAT JV partner.

Someone who feels they can complete all the tasks required themselves (and you complete a Joint Venture with them) will forever be focused on how much money you will be making and will never be happy with what they make (no matter how large the amount is). Be happy you found out this partner wants to buy Real Estate on their own, as it is better learning this now then later in the relationship.

Early on, with a couple of key questions, having your potential Joint Venture partner fill out your questionnaire (listen more than talking) and working together with people that have complementary skills (not similar) can save your time, energy and create more success in your Joint Venture relationships.

click here and receive a $200 subscriber's discount

4) Tales from the Legal Trenches

Bare Land Condominiums And Real Property Reports

Barry McGuire

Two interesting situations came up recently for a REIN™ member and another non-REIN™ member client. They had both purchased half-duplex bare land condominium units from developers. Now they are selling those units. The real estate purchase contract called for them to produce an RPR and Compliance. They didn’t have those documents because the developer did not provide it to them when they bought the property. Neither buyer wanted to accept title insurance in lieu of the Real Property Report and compliance. Both sales were delayed while new Real Property Reports and compliances were obtained.

I know, I know, I can hear you all say, “It’s a CONDO, why do you need an RPR?!”

We all talk about condominiums in terms of, ‘unit(s)’, as in, “I bought three units in that building”. Did you know that you can buy a condominium unit that has no building? It’s called a Bare Land Condominium. The Condominium Property Act defines ‘unit’ in Section 1(1)(y)(i)&(ii) as:

(y) “unit” means

(i) in the case of a building, a space that is situated within a building and described as a unit in a condominium plan by reference to floors, walls and ceilings within the building, and (this is a typical unit in a building)

(ii) in the case other than that of a building, land that is situated within a parcel and described as a unit in a condominium plan by reference to boundaries governed by monuments placed pursuant to the provisions of the Surveys Act respecting subdivision surveys; (this is the ‘bare land’ unit)

In other words, you can buy a condominium unit that is land only. There is no building on it. Bare land condominiums have their own set of issues, but the one I wanted to talk about today is Real Property Reports as they apply to bare land condominiums.

As we all know, when you buy a condo unit in a building you do not get a Real Property Report. The Standard Purchase Contract does not require a Real Property Report. However, bare land condos are different. As set out above, bare land condos are just that - bare land, no buildings. Bare land condominiums are most often created by developers. They subdivide a parcel of land into bare land condominiums units. Then, and most often, they build single family homes or side by side duplexes on the bare land units. Many developer contracts do not provide a Real Property Report or compliance.

It is important for any buyer to get a Real Property Report and compliance whenever a building is involved. All the issues that you are concerned about when you are buying a ‘lot, block and plan’ property come up when you are buying a bare land condo unit that has a building on it.

Summary: understand there is a type of condominium called a bare land condominium unit. When buying from a developer, make sure your contract calls for the developer to provide a real property report and compliance. If you are selling a bare land unit, check your files to see that you have a real property report and compliance. If you don’t, consider removing that clause from the contract.

Barry McGuire is a Real Estate lawyer who has been helping Canadians for the past 35+ years. Barry is one of the co-authors of the Canadian best-selling book 97 Tips for Canadian Real Estate Investors, and his expertise can be heard on the newly released REIN™ REIN™ Joint Venture Secrets program.

Final Thoughts

Don R. Campbell

These are the types of economic times where both fear and greed often take control of a marketplace. It is our job as Real Estate Investors to ensure that we do NOT get caught up in the media-created fear, and separate the facts from the misinformation. It is a good time to take a deep breath and review your investment strategies, based upon the long term fundamentals.

This time of media-created uncertainty and fear has proven to be the best buying time, a time that many veteran Real Estate investors have been waiting for a couple of years for. During this seasonal slowdown, they can finally write offers without much competition, analyze multiple properties, take their time, negotiate aggressively and complete the full due diligence required to purchase properties.

As we have shown many times before, when there are times of change and uncertainty, there are lots of opportunities for the brave. Recently, Jack Welsh (former head of GE) published a column in Business Week Magazine that summed up how serious investors look at markets such as these, and believe me they are not hiding under their sheets! A question was posed by one of his readers and he answers it directly. Here are the first two paragraphs of that important column (along with a direct link to the whole piece). I think you'll find it refreshing to see how sophisticated investors are looking at the next period of economic times: