How Transportation Changes Affect Real Estate Values - Special Edmonton Download Report
Don R. Campbell, Canadian Best-Selling Author

Following the success of the Vancouver and Calgary transportation reports, the REIN™ research team has just now finished another substantial research report covering the Edmonton marketplace and it is ready for you to download. We're working our way across the country, completing in-depth research for investors and homeowners and these first three will provide investors with an opportunity to get a 15-20% premium on their property values.

Right now our focus is on the major transportation changes occurring in cities across the country and how they will impact on the prices of real estate in select markets. The BC, Calgary, Edmonton, and the Ontario reports (early Spring 2008) are covered by the national media, but more importantly provide an insight into the future hot areas in each city.

The neighborhoods that our research has identified will jump an additional 15 - 20% (over what the rest of the city's property does). In these reports we provide you not only the technical analysis, but we also boil it right down to tell you where and why in each region. In other words, we tell you exactly the neighborhoods to watch (and which ones to take action in!)

To read just one of the dozens of articles covering these latest findings, click here.

To download your copy of the full research report for no charge, click here.

Five Essential Tips for Canadian Real Estate Investors


As Don R. Campbell discussed with Helen Burnett in the Globe and Mail on November 21st:

"Real estate prices are still breaking records across Canada, although higher interest rates are expected to affect the affordability of the residential sector through the end of this year and in 2008.

The average property is expected to rise in value by more than 10 per cent this year and more than 5 per cent in 2008, says the Canadian Real Estate Association.

Real estate expert Don Campbell, president of the Real Estate Investment Network and author of Real Estate Investing in Canada and 97 Tips for Canadian Real Estate Investors has several do's and don'ts for existing and aspiring real estate investors looking to get involved in this popular asset class."

The 5 essential tips for Canadian Real Estate Investors include:

1. Study the market before you take action.
2. Never speculate, always invest.
3. Don't invest in a property just because it seems cheap.
4. Follow a long-term system.
5. Focus on cash flow, not equity appreciation.

Flipping Houses - Much More Difficult Than It Appears on TV
Don R. Campbell


In a recent interview, Don R. Campbell was asked the following questions:

1. Can you provide some top-line information on the topic of flipping houses?
2. What types of buyers are involved in flipping?
3. What should people be wary of when flipping?
4. What are some property qualities that people should be aware of when purchasing in order to flip? What should they avoid?
5. In your experience, what are the benefits of renovating a home and then flipping it?
6. Do you have any final thoughts on flipping houses?

1. Can you provide some top-line information on the topic of flipping houses?

Flipping houses is a business fraught with risks and is not actually investing in real estate. It is pure speculation. Although they make it look somewhat easy on the multitude of TV shows, it really isn't. That is why HGTV are changing the formats of a number of these shows because the risks have recently really started to take their toll on the people in the shows.

Here are some key points that are not discussed much (as a matter of fact, not discussed at all in many cases.)

- Renovation estimates are varying wildly right now. In fact, due to the labor shortages across the country, it is becoming increasingly difficult to get reliable suppliers and contractors who can actually finish on time and on budget.

a. Every time there is a delay (and there will be!) the person who bought the property loses another month of outbound cash (i.e. mortgage payments, taxes, heat, electricity, etc.)

b. Every time there is an increase in the budget (which there will be) it takes directly away from the speculator's profit.


- Often time speculators over-estimate their selling price and underestimate their reno and carrying costs. Here are some costs that are often forgotten:

a. Closing costs at purchase (legal, tax adjustments, appraisals, mortgage costs, title insurance, etc.)

b. Mortgage and tax payments during the holding period (could be substantial) with an extra 3 month buffer in case there are reno delays or it doesn't sell right away.

- Vagaries of the market. Every real estate market goes through short and long term plateaus. If you happen to time your property wrong, you could be trying to sell your finished project at the exact wrong time (i.e. a dramatic increase in listings on the local MLS or a major layoff notice given to a major employer in the town.) A buy, hold and rent person will have analyzed this and have a long term hold view. A flipping speculator has only a short-term outlook and can get caught in the micro cycles that the market always goes through. As Warren Buffet says: "It's easy to see who has been swimming naked when the tide goes out."

- A critical piece that is NEVER discussed is the tax implication of flipping property. When buying a property for a buy-hold-rent strategy - a long term strategy - the ultimate profits that you make are, in most cases, taxed as Capital Gains (i.e. only 50% of the profit is taxed at your tax rate). However, as a buy-renovate-flip speculator, the CRA is very clear that any profits will be taxed fully as business income, which is tax on 100% of the profit (not 50%) PLUS the flip-property can be deemed as 'inventory' by the CRA and therefore they can disallow the carrying costs of the property while you renovated it (i.e. you won't be able to write off the mortgage interest or any other carrying cost). OUCH! That sure cuts into the flipper's bottom line substantially. But most don't factor that in when running their budgets.

2. What types of buyers are involved in flipping?

Short-term speculators and those just interested in trying to make what they perceive to be easy money. However, the above four points need to be brought to their attention so they factor them into their plan (and thus may not be as much money or as easy money as they think)

4. What are some property qualities that people should be aware of when purchasing in order to flip? What should they avoid?

Although most properties can be repaired (at a cost), in order to avoid the big surprises they should make sure they avoid at least the following (source: REIN™ Renovation Secrets):


a. Foundation issues:


i. Vertical Cracks that are larger than ¼" wide and if there are more than 5 per basement. More than that spells potential huge trouble.

ii. Horizontal Cracks are a sign that the wall is under stress from inward or outward pressure and buckling. The bottom line is, unless you have very deep pockets and you don't mind solving huge potential problems, avoid these properties at all cost.

iii. Disintegrating Concrete: if you can rub your hand on the wall and it starts to crumble or fall apart, this house very likely will need MAJOR foundation work, which means major costs.


b. Bowing Roof Trusses: if the roof line is bowing or sagging, the house quite possibly will require new roof trusses or extensive structural repair.

c. Extreme Settling Problems: if windows or doors are not closing properly, door jams look crooked, floors are very uneven, this is a sign of major settling issues and repairs, which could be very expensive. In these cases a professional engineer inspection should be done before you buy the house.

d. Additions that are not done correctly: many older homes have additions that have not been built on proper footings or pilings. They slowly start to pull away from the house as the two parts of the building settle at different rates. Sometimes this is an easy fix, but in most cases it involves a major cost/reno to fix it.

5. In your experience, what are the benefits of renovating a home and then flipping it?

If done right, and the speculator has learned all of the strategies and is following a proven system (rather than hoping for the best) that covers everything from what properties to buy, to accurate renovations estimations, to what to renovate and what to leave, to selling the house fast, to profits tax considerations. Flipping can lead to some good profits, but at a relatively high risk. The key is, if you are going to attempt this, don't just jump in; use a Canadian-proven system, or learn directly from someone with extensive experience (who ISN'T trying to sell you a property or do a Joint Venture with you because then they may be just getting you to 'do the work' for them). Also, have a large buffer account for the inevitable hiccups. Click here to learn more about Renovation Secrets.

I speak to thousands of investors and speculators every year and one of the biggest regrets I hear is the money lost on what they believed was the perfect flip opportunity. The second one is "If only I had hung on to the property and rented it out, I could have made SO much more money over the years."

6. Do you have any final thoughts on flipping houses?

I think that there is some money to be made in the buying and flipping of properties; however, it is not as easy as it looks on TV. The key is for the potential investor to ask themselves:

1. Do I have the talent, experience and the time to get the property accurately estimated and renovated if my contractor doesn't show up or finish on-time?
2. Am I OK with the risk of trying to sell the property fast in whatever market condition exists when it is ready?
3. Could I make more money (after the different tax benefits and holding periods) buying an older property, fixing it and then renting it out over the long term?
4. Who exactly am I going to sell my property to? (That way you know what renovations will be important to do and which ones you can ignore.)
5. Do I wish to add more stress to my life?
6. Can I afford to hold on to the property if the market is soft at the time I wish to sell it?

I do know some people who have done very well with flipping, but in every case they were experienced in construction and they took the business seriously. It wasn't just an expensive hobby (which, often times is what these projects turn into). Even then, these successful flippers worked towards building their buy-hold-rent portfolio with their reno'd properties as they quickly identified the lower risk and higher return this gave them over the long term.

First-Time Buyers Need To Get Creative To Own A Home
Don R. Campbell

A recent article that appeared in the Edmonton Journal featured Don R. Campbell. Don was interviewed and discussed some strategies how first time home owners can use to buy their first home.

"The last two years of a run-up in housing prices across the country presents a dilemma for first-time buyers. Do you get in now or wait until you have more of a down payment to keep your mortgage payments lower?

Another conflicting factor is the effect of rising interest rates on your calculation. Buying a home is never an easy decision, but one thing is clear: waiting is not really an option. That's because real estate values continue to rise faster than the ability of people to save money; even when the recent increases in listings and decreases in average prices are factored in, we're still going to witness an annual 20-per-cent increase in some areas of the country.

Instead, first-time buyers need to get creative if they're going to achieve their dream of owning their own home. While some may wait and hope for the market to cool off, there are a number of strategies prospective home buyers can use to get in now. One need only look to Vancouver, where housing affordability is off the scales and buyers are employing a wide array of innovative ideas to get into the market."

To read this entire article, click here.