Ingénues

Kimmy and Tom think they’ve got this investing thing all figured out. The 28-year-olds (“We just got married!”) own a condo in the wilds of Scarborough. He bought it six years ago for $170,000, Kim muscled in last month, and now they figure the one-bedroom unit’s worth $240,000. On a good day. With a tail wind. But it’s paid for.

Marriage does stuff to you. Now the condo’s not good enough. They want a townhouse. “Hard to get a half-decent one around here for much less than $600,000,” she says. “Like, you know, a new one.”

So here’s the plan. They have $200,000 (part savings, part wedding gift) and plan to put it down on the townhouse, taking a $400,000 BeeMo 2.99 Saturday Night Special, and renting out the condo. Why, I asked, would you want to do that? You’d have every cent of your net worth in just one asset (real estate) augmenting your risk, and could do far better selling the box and investing the cash.

Because, he said, then we could get income for thirty years.

Ah, to be young. Unformed thoughts. Nubile bodies. Ingénues in limb, spirit and consequences.

So let’s figure it out, I said. The condo can be rented in that location for $1,200 a month. Condo fees, taxes and insurance total $655. That leaves $545 in monthly cash flow, or $6,540 a year – which is a paltry 2.75% return on the $240,000 in equity. Not only that, but this must be added to income, which makes it taxable at their 39% marginal rate. So, now the annual return is a fat $3,900, or $325 a month.

In contrast, $240,000 invested in a balanced portfolio making 7% in dividends and capital gains would produce $16,800, taxed at less than 15%, for a net gain of $14,300. Last time I looked, that was more than $3,900. Hell, kids, even a mess of sure-thing bank preferred shares at 5% would yield $12,000, with the dividend tax credit thrown in as sugar.

In a decade they could have close to $500,000 in liquid assets, instead of an old condo where they can’t control taxes, fees, possible assessments, or tenants planning a high-rise grow-op.

But if they’re still horny for real estate, how about shoving a bunch of money into REITs?

Real estate investment trusts handed their smart investors an average return of 22% last year, when the TSX was off 11%. They also gave cash distributions averaging 5%. In short, they were sweet. In fact, REIT investing has been proven several times to beat the skivvies off owning a rental condo outright.

The guys at Macquarie Research were the latest to crunch the numbers. They compared buying and owning 900-square-foot condos in Calgary and Toronto with investing in a couple of decent REITs. It wasn’t even close.

“Calgary: If an investor purchased a standard condo as an investment with a four-year holding period from January 2006 to December 2011, the investor would have realized a 34% decline in equity value. In contrast, had the same investor purchased units in Boardwalk REIT, the investor would be ahead 30.5% – an absolute difference of 65.5%.”

Gee, I thought real estate always went up. Oh well, let’s see how this contest went in Toronto, where life is good because there are fewer Silverados.

“Toronto: While the Toronto condo market has performed well in recent years, returns have been primarily from capital appreciation. That being said, the CAP REIT outperformed a condo investment across every holding period while generating stable monthly taxed-advantaged income.” In fact, over the same four years the condo returned its owner (in rent and appreciation) about 2%, while the REIT kicked out 27%.

Even better, nobody pays land transfer costs to buy a REIT, or 5% commission to sell one. You don’t have to fix the REIT’s toilet, or worry about finding a drug-free tenant. No maintenance costs, no insurance, and no waiting when you want to bail.

So, why would anyone buy a rental condo when there are trusts instead?

Well, some suspicious, negative and socially maladroit people who should get out more have posted on this pathetic blog that REITs will crumble when house prices correct. This is bunk. The inevitable real estate melt will probably boost these trust units, or at least keep them flying.

I mean, figure it out. If house and condo values start to fall, then investors will flee. Fewer tenants turn into owners, keeping occupancy levels (and rents) stable, and actually boosting the demand for rental accommodation. This is precisely the experience in the US –  when real estate crashed and residential REITs soared.

In places like Toronto, even with a delusional housing market, vacancy rates are falling and rents are inching up. The province has greenlit a 3.1% jack in rents next year, bound to feed these REITs in a market with virtually no new apartment construction. So, more cash flow. Higher unit prices.

Meanwhile the cheaper mortgage rates I wailed about yesterday are great news for REITs. They can refinance with stable, decade-long commercial loans at 4%, and use cheap borrowing to scoop up more inventory. All this, says a CIBC report, should encourage some REITs (like RioCan and Chartwell) to increase the cash they throw off to investors. In fact, the expectation is REITs will get far more attention from institutional pension plans, hungry for yield – further plumping prices.

But it’s hard to get horny over an income trust. At least when you’re 28.

I have no trouble.

192 comments ↓

#1 Jsan on 01.18.12 at 9:45 pm

It’s funny how people think that condos magically rent themselves? one or two months of it being empty and there go your profits for the year. Than there is the headache of having tenants and dealing with all of those associated issues.

When I sold my house and moved to Deadmonton, the people that I sold it to told me their sob story about how they used to have a rental property until they finally got fed up and sold it. Their last tenant apparently did 20,000 worth of damage and only thanks to friends and family were they able to afford to fix the damage and sell it. Never again they said.

Many people underestimate just how destructive and how slobbish some tenants can be.

#2 Devore on 01.18.12 at 9:48 pm

So, now the annual return is a fat $3,900, or $325 a month.

These are terrible numbers. And it’s for a paid off condo, so no interest charges.

If they don’t want to get their hands dirty fixing toilets or finding tenants who will pay rent on time, they will need to give up 1 months rent for a professional property manager. Set aside another months rent a year for vacancy allowance (highly recommended to ride out the periods between tenants) and 1 month for maintenance (fixing toilets ain’t free, as well as to cover the inevitable special assessments coming in the future), and their “income” property is cashflowing just enough to splurge on Timmy’s once a week.

Wow.

Where do I sign up? Are those REIN guys still in business?

#3 TurnerNation on 01.18.12 at 9:49 pm

Soo…you like hardwood eh?

HWD on the TSX: Hardwoods Distribution company (formerly a trust fallen on hard times). 2% yield, rocky chart and earning history.

Chart:

http://tinyurl.com/7z3y7gx

Disclosure: no position

#4 DUI on Money Road on 01.18.12 at 9:51 pm

Spoke with my agent on the weekend; all is well in the Ottawa market. They even closed two deals the week before New Years.

All is well in the land of the fed………

#5 Finally on 01.18.12 at 9:53 pm

First

#6 Peter Goesinya on 01.18.12 at 9:53 pm

OMG!!!!!!
FIRRRRRRRRRRRRRRRRRRRRRRST

#7 Finally on 01.18.12 at 9:54 pm

First or second?

#8 DUI on Money Road on 01.18.12 at 9:58 pm

Whatever happened to ‘crack shack or mansion?’

Crack shack?:

http://www.realtor.ca/propertyDetails.aspx?propertyId=11317891&PidKey=1452504914

#9 Bill Gable on 01.18.12 at 10:04 pm

If you don’t the message, with the advice in today’s post – I give up. It is incredible to me that so many of my friends think that renters like us, are mentally deficient.
Liquidity and yield, not debt, will win everytime.

#10 Jon on 01.18.12 at 10:05 pm

$200,000 at 28??? Come on let’s put up some realistic stories here that most of your readers can relate to. I’m a long time reader but getting a little tired of this…

I enjoy your blog (hence the long time reader bit,) but can’t you put up some advice for the average Joe? I doubt too many people who read this blog had $200,000 at the age of 28.

#11 Victor on 01.18.12 at 10:05 pm

For those that missed Garth’s tips a few weeks ago, which included several REITs, here they are again:

As a consequence of my boycott of this blog, I will therefore not be discussing the massive advantages of yield-producing assets, such as preferreds, REITs and trusts. Nor will I refer to a new report by Macquarie Research listing 50 of these suckers and their yields (Bell Aliant 6.7%, Artis REIT 7.8%, Crombie REIT 6.6%, Inter Pipeline Fund 5.8%, Retrocom REIT 8.7%, BMO or CIBC 5.0%). I won’t detail the benefits of collecting dividends, claiming the dividend tax credit, and paying 80% less tax than on a GIC.

==========

Disclosure: I bought a bunch of these after reading Garth’s blog in December, including Retrocomm at $5.19 (closed today at $5.67) and Artis at $14.10 (closed today at $15.04).

Plenty of upside left on both capital gains and those juicy dividends that are close to hitting! :)

#12 not 1st on 01.18.12 at 10:09 pm

So Garth, where can we get our filthy little hands on that McQuarie report???

#13 Van guy on 01.18.12 at 10:13 pm

Can take my tfsa and invest it into reit’s? And pay no tax on my gains?

#14 Ronaldo on 01.18.12 at 10:14 pm

#8 DUI on Money Road

A house like this one would have sold for around 30,000 in 1976. A 50 bagger in 35 yrs. My wages back then would have been around 15000 yr. and today that same job would be around 60,000 or 4 x increase. The house however increased 50 x. What’s wrong with this picture?

#15 Honas Wagner on 01.18.12 at 10:17 pm

Garth, was the run-up in REIT prices last year a leading indicator of an impending surge in demand for rental property, or just a yield play in a land of scarce yield?

#16 DonDWest on 01.18.12 at 10:21 pm

#8 DUI on Money Road

I’m sure a pile of wealthy Chinese carrying “smart money” will jump on it.

#17 Joseph [Original] on 01.18.12 at 10:32 pm

I called my bank manager and asked for a blunt assessment as to how the average diversified portfolio performed in 2010. Not 7% he said, but closer to 3.5%. But, he also said, knock another 1% off that number for financial consultant fees, so 2.5% is what it was. Until the world economy greatly recovers, he said 7% returns will be something of the past.

Why ask a bank manager for investment advice? — Garth

#18 Peter Goesinya on 01.18.12 at 10:33 pm

OMG!!!!!

I wasn’t FIRRRRRRRRRRRRRRRRRRRRRST

#19 Maxamillion on 01.18.12 at 10:35 pm

If high school had provided as much valuable information as this blog I would have shown up more often. Instead I had to deal with Shakespeare and the Apprenticeship of Duddy Kravitz. What a waste of time.

#20 Mike Rotch on 01.18.12 at 10:37 pm

Garth’s case study says:

“Hard to get a half-decent one around here for much less than $600,000,” she says. “Like, you know, a new one.”

“Around here” as in Scarberia?

Are they ijits, or just plain dumb?

2000 foot detached home (maybe a link, but close enough), on a modest suburban lot. Mid $4s

http://www.realtor.ca/propertyDetails.aspx?propertyId=11472302&PidKey=-930309345

In a neighbourhood with no crack-den highrises nearby. Close to GO and highway, some TTC coverage.

It ain’t paradise, but it’s a damned sight better value than a $600K Scarberian townhome. not even sure what one of those looks like…..

#21 Foggy on 01.18.12 at 10:43 pm

The mortgage wars have now generated an artificial Spring mini-boom for housing, thanks to the wisdom of BoM and others. I can hear the realtor song and dance now:

Realtor – “this condo is a great buy because your mortgage rate will be so cheap, sir. It’s a great time to buy!”

Buyer – “the cheap interest rate is of no value to me sir because this condo is so over-priced. Reduce the price from $400K to $250K and then that rate will mean something to me.”

Realtor- “the price is in line with other comparables (ie they’re ALL over-priced). At these rates, it’s a great time to buy!”

Buyer- “you mean if this same condo was priced at $800K, it would be a great buy because the rate is so low?”

Realtor- blank face but still smiling…

#22 Mr. Lee on 01.18.12 at 10:47 pm

Unfortunately, most people think like that… speaking to some guy at work… who lives in Vancouver, he had the same idea of purchasing a couple of units in his condo building and renting them out… his idea of retirement.

I purchased several REITs back in November… all but one are doing well but the real kicker is that I get monthly income…

Thanks Garth!

#23 zman on 01.18.12 at 10:47 pm

hi

you did not factor in price appreciation for the condo
we cant assume right now yet that price will stay flat
i think govts will intervene to prevent a major correction

#24 Trailer Park Boys on 01.18.12 at 10:49 pm

No more advice 4 that under 30 Generation.

If not Italian and don’t have 2 houses by Grade5..let Darwinism kick in.

PS Look how we turded out.

#25 DonDWest on 01.18.12 at 11:00 pm

Garth, as entertaining as these stories are of 28 year old stock brokers blowing away their opportunities of a life time on real estate – they’re not a testament to most people and/or even the generation.

The fact of the matter; people that young who make that much money working a job got to where they are by playing the rules. By that I mean they reached their position by mostly excelling in academia and doing as they’re told. That “doing as you’re told” means buying up real estate.

Trust me a 28 year old lawyer, accountant or broker will be one of the least creative people you’ll meet. They’re mostly incapable of critical thinking because in order to get in that position so young they’ve had to kiss some serious ass. Mostly a series of jumping hoops and throwing away independent thought.

A 28 year old who is independently wealthy and got their money without having to climb the corporate ladder might be worth reading, but young overpaid professionals who can’t manage their own money are a dime a dozen. When I worked in insurance I met such a guy. He was 29 at the time and made around $10,000 a month commission. He had absolutely no savings, but could make tons of money selling crap because he was a master at saying what the sheep wanted to hear. He literally felt it was his duty to dump his entire pay check within a week. You see, no matter what Adam Smith may have told you in your capitalist prayers, the smartest people don’t always make the most money. Smart people have a habit of pissing average people off – it’s hard to make money pissing people off. Although smart people usually make up for this by being smarter with what little money they do have. . .

None of these stories of young overpaid professionals floundering their money away help most people; young and old alike. . .

#26 Mr. Lee on 01.18.12 at 11:02 pm

Mr. Lee #22

Get another alias.

Now for the goodies, How many times do you have to show the wisdom of a balance portfolio only to be questioned at best or ridiculed at worst.

Never the less, I appreciate the advice and insight that you give.

Cheer

#27 Frank on 01.18.12 at 11:12 pm

If apartment vacancy rates are falling and rental rates are inching up in Toronto, does not sound to me that the housing market is going to suffer.

#28 Frank on 01.18.12 at 11:17 pm

I agree with #17

I just got my 2011 statement of my diversified investments and it shows a loss not a gain.

Maybe it’s time you took some advice. — Garth

#29 Uh Oh Canada on 01.18.12 at 11:23 pm

Garth-

You deserve a pat on the back for your public service.

And now, an update on what Beemo has done. I viewed a house in the summer of last year listed for 289k. Not bad, just wasn’t a fan of the crooked floors. Price dropped to 269k, then to 249k in the winter. It is now listed for 330k! We are now into the new bubble of the old bubble.

#30 Alex G. on 01.18.12 at 11:25 pm

#13 Van guy:

Yes you can purchase REITS, preferred shares, any type of shares or options for that matter within a TFSA account. Depends on each individual, but personally I prefer using discount online brokers that provide those otpions for a fraction of the price of large brokerages. For instance, Questrade charges $4.95 (plus $0.0036 per share if you purchase at market price instead of using limits) up to a maximum of $9.95 per trade. I’m not suggesting you should use Questrade nor that you should use an online discount broker, different people have different preferences, just wanted to let you know that you are not forced to stick with one of the large bank brokerages that charge you between $12.99 and $40.00 per transaction.

Happy investing, and make sure to do your due diligence before making any purchases. even though Garth stock tips may be good ones, always double-check the information. He provides information, not direct investment advice; don’t forget it.

#31 Min in Mission on 01.18.12 at 11:28 pm

Excellent info.

Do you have an office in the Fraser Valley? I need someone a little smarter than [email protected]

[email protected] — Garth

#32 Paully on 01.18.12 at 11:29 pm

#25 DonDWest

“You see, no matter what Adam Smith may have told you in your capitalist prayers, the smartest people don’t always make the most money. ”

I totally agree with that. The people that make the most money have the biggest balls, not the smartest brain!

#33 Van guy on 01.18.12 at 11:29 pm

Maybe it’s time you took some advice. — Garth
————————————————————-

We all need advice sometimes. But you don’t always answer us Garth!!!

Buy me a drink. — Garth

#34 Stinky the Fish on 01.18.12 at 11:32 pm

“Real estate investment trusts handed their smart investors an average return of 22% last year”
Doesn’t sound sustainable to me.

Still love your work, Garth

#35 Canadian Watchdog on 01.18.12 at 11:36 pm

RioCan, seriously Garth? Let’s look at their holdings..

1) Their US portfolio occupancy rate is falling..

2) Canadian Tire – Problems http://www.dbrs.com/research/241685

3) Walmart – Rising RMB is starting to kill earnings.

4) Famous Players – Movie revenues are in free fall.

5) Target Corporation – http://www.reuters.com/article/2012/01/18/us-target-idUSTRE80H1A620120118

6) Best Buy/Future Shop – Best Buy’s December Sales Disappoint. This was Christmas sales… yikes.

Mega-retail sector is getting hit hard from higher RMB and oil prices (import costs). Companies like these NEED consumer debt to fuel sales.

The bigger they are, the harder they fall.

As long as they pay the rent. — Garth

#36 Axehead on 01.18.12 at 11:38 pm

I like yesterday’s picture better…

#37 ken on 01.18.12 at 11:44 pm

I do not seem to be able to e-,mail your blogs to a friend,is it still possible to do so?

#38 John Ratadlin on 01.18.12 at 11:48 pm

Do you know where I can buy reits from turner securities?

#39 Canadian Watchdog on 01.18.12 at 11:51 pm

As long as they pay the rent. — Garth

Right, and what happens when they start downsizing and close up 250,000 sq buildings, or in Sears case, go bankrupt anytime now.

Who’s left holding the bag?

Wal-Mart downsizing? You are a fear-monger. — Garth

#40 Don Draper on 01.18.12 at 11:55 pm

Sigh…

http://ottawa.en.craigslist.ca/apa/2794392408.html

#41 a prairie dawg on 01.18.12 at 11:56 pm

Neither one of them will listen, “like, you know…”

#42 Tony on 01.18.12 at 11:57 pm

Calgary looks to down around 6 percent month over month so far this year.

http://www.bobtruman.com/SFH_DailyMonthly_Summaries/page_1869385.html

http://www.bobtruman.com/Condo_DailyMonthly_Summaries/page_1869405.html

#43 Mr. Lee on 01.19.12 at 12:10 am

Mr. Lee #26

how about “no”.

Thanks

#44 Mr. Lee on 01.19.12 at 12:13 am

#20

there’s no such thing as a 600K scarborough town home… and if there was and someone purchased it, shame on them… I was born in Toronto and Scarborough homes have never gone up in value… and if they do.. they’ve gone up in value very very slowly.

#45 sven on 01.19.12 at 12:18 am

#20 mike rotch

i saw that house. its filthy and out of date.

kitchen needs to be gutted, all windows replaced, carpet replaced, bathrooms replaced.

you’d be looking at 100K just to make it liveable. and dont get me started on the ghetto basement apartment they tried to put together. more like a dungeon.

i agree with the area though, ravine lot and close to go station.

#46 ian on 01.19.12 at 12:23 am

How about putting the 200k plus the sale of the condo of 240k (they can sell it themselves) = 440k down take a 160k mortgage 5 year term at 2.99 5 year amortisation and monthly pmts of 2,873 and voila! a 600k t/home paid for in 5 years would make way more sense, si!

#47 Van guy on 01.19.12 at 12:25 am

#30 Alex G. on 01.18.12 at 11:25 pm

Thanks for the tip. You didn’t demand a drink either hahaha. I’m a newbie to investing. Don’t know much yet, but what I know about Van RE is that we are headed for a serious correction 

#48 AprilNewwest on 01.19.12 at 12:26 am

Someone in the last week posted a link for Chris Hedges. I can’t find it just wondering if that person might repost it. Thanks

#49 City Slicker on 01.19.12 at 12:28 am

Garth when these new rates work their way through the market what will be the sign of Johnah.
I mean how do know when their effect will wear off and it’s time for a bigger crash then expected?

#50 45north on 01.19.12 at 12:34 am

So here’s the plan.

Kim and Tom: Before either of you were born, I bought a house in Scarborough, on Kalmar off Kingston Road. I sold it a year later for a small profit. Anyways your plan is stupid. Kim do not pressure your husband into buying a bigger place. You will regret it. Tom you personally don’t have a clue about being a landlord. Find somebody who is a landlord and talk to him.

#51 Devore on 01.19.12 at 12:36 am

#34 Stinky the Fish

Doesn’t sound sustainable to me.

Doesn’t have to be. Only a concern if you’re all in.

#52 martin9999 on 01.19.12 at 12:52 am

:( i am starting to feel a little bit left behind with all these rich kids that by 28 years of age have almost half a mil in assets and cash.

#53 martin9999 on 01.19.12 at 12:54 am

”Not only that, but this must be added to income, which makes it taxable at their 39% marginal rate. So, now the annual return is a fat $3,900, or $325 a month”’

mr turner i am quiet surprized that you you never mention nor calculate inflation on your profits. thats weird.

#54 Mark on 01.19.12 at 1:01 am

“Wal-Mart downsizing? You are a fear-monger”

Why be the provider of Wal-Mart’s off-balance sheet financing? If Wal-Mart thought there was better money in owning RE than running Wal-Marts, then that’s where they’d put their money. Instead of leasing buildings from REITs.

Wal-Mart and the other retaillers, with the dissappearance of tenants like Sears, will have incredible leverage over the REITs. Same deal in Toronto with the residential REITs, where the glut of condos competes with REIT appartment blocks.

Pushing REITs heavily strikes me as irresponsible.

Cynical conjecture. In 2011 the Canadian REIT index outperformed equities, even gold. Those who took my advice months ago did quite well. REITs make sense as one asset class in a balanced portolio of various bonds, preferreds, sector and index ETFs plus other secutities. I don’t push any investment vehicle. But I do lament this kind of blinkered opinion. — Garth

#55 westcoaster on 01.19.12 at 1:04 am

Garth,
Mortgages have changed alot over the last ten years. People dive into fixed rate low mortgages not fully understanding the commitment.
I can’t believe they’re are idiots out there thinking this 2.99 % is actually a good thing…. they must have never had a mortgage or really understand how much you pay in interest and penalties.
Better yet the 10 year is blinding to me.. think really hard people…. do your homework. The bank will stick it to you so hard, if you ever have to sell for any logical reason before its maturity I’d bet based on special rate discount an average mortgage you’d be paying a minimum $40,000.00 plus. Ask a “good” bank manager about IRD’s and how long they have actually existed. (didn’t exist before 2008) IRD’s are huge traps people do not consider before signing. They are a harsh reality to alot of sellers … people can’t afford to sell they’re home for market value.. the more the rate is discounted, higher the calculation.
I’ve always been in fixed rate mortgages, always been able to haggle my way out of a penalty. Not this time in a 5 year fixed. I actually had to decide to buy again to port the existing mortgage or the penalty would have been roughly $25,000.
This is small in comparison with alot of the penalties out there. Mortgage calculators are a great way to see how much you’ll be paying the bank…. every month for how ever many years. As far as the calculating your IRD it’s always a mystery and depends on so many calculations on the date of request. If the spread between your rate and the posted rate is different….. your screwed if you want to sell and get out of your mortgage.
I think the younger generation is blind to how banks operate and reel you in. There are big consequences for rates like these….
IRD’s

#56 Nostradamus Le Mad Vlad on 01.19.12 at 1:24 am


Your advice is sound. Sell the condo, invest the total net amount in bank preferreds, REITs, dividend-paying shares and / or bonds, rent a TH or duplex and let the monthly income pay the rent.

Be flexible on the sale amount — it’s worth taking a little less just to move it. Renting gives space and the opportunity to actually enjoy retirement at Freedom 55, by having a fair amount invested and not being slaves to an inanimate object.
*
#280 bridgepigeon on 01.18.12 at 10:04 pm — “Okanagon living?” — We’ve been here two decades now, and thoroughly enjoy it (not winters).

Suggest checking back in spring to see what the housing starts and re-sale markets are like. Gives a better understanding on how the economy is doing.
*
Chinese fiscal clout in SArabia; Stiglitz says austerity in EU will collapse economies, and Iran Oil Ban Suicide for Europe and Control by the banxters is the ultimate goal, so destabilization first; Local govts. The best laid plans . . .; Budget Kim and Tom can rad this, about debt slaves; Nixon, Rockefeller and Watergate;1300 people a day lost their jobs in UK; Brit. tab A thousand pounds per person to bail out the EU; Falling Peacock 9,600 jobs may be gone; GS paying nice bonuses.

Gold In a few months; Conspiracy Theory Is the Costa Concordia representative of the EU? Jim Willie on silver and gold (summat’s happening); The IMF and Funny Money; Oz Bond run; China’s Property boondoggle; Finland; Greece — Mohawk haircut; Bad earnings The withdrawal of money plays a role; James Bondshell; 6:30 clip The universe as we jnow it. What of the unknown? Producer Inflation with a nice chart.
*
Here’s one for y’all — Here, here, here and here — Kissinger tells China Jeb Bush will be next prez., conveniently replacing Ron Paul who could beat Romney hands down. Obomba was only put in power to bring in draconian laws and a police state (martial law was an option); These two make interesting bedfellows; China in space; Avoid Sleep It’s catching and it’s bad for one; Iran A conundrum for the west. It wants their resources and regime change, but that will start WW3.

#57 NotAGreaterFool on 01.19.12 at 1:35 am

Had opportunity to hear Benjamin Tal speak today. Here are some highlights:

1) R/E is at risk because incomes don’t support prices. Slow down expected. He estimates 10% correction. No crash due to rates staying low and no sub-prime in CAN.
2) Europe is in recession. Greece will default but danger is Italy. If it fails EU will collapse so this will not be allowed to happen by the Germans. European mess is resulting in successful mortgage business here (low rates, people renew and new buyers)
3) China is slowing down (based on exports from Canada sources vs. jaded data offered from government of China).
4) US moving the right way (manufacturing up) with consumer saving up (to be invested later?) but only person spending is Obama.
5) Banks have focussed on market share but focus will shift to profit by recognizing money holders are 55 yrs of age and up and are looking for safe yield. REITs and dividend stocks in demand will soar. Banks are prepared as risk are known (unlike in 2008).

For the most part nothingnew to the regulars here.

He is actually quite animated and a good speaker.

#58 chubster on 01.19.12 at 1:38 am

what are men in orange suits? i must have missed it. financial criminals? canuck mozilos?

#59 Van guy on 01.19.12 at 1:39 am

Garth,

Remember this?

http://www.tuscanyvillas.ca/

DA,

Any word on the prices on these?

#60 Lag on 01.19.12 at 1:41 am

Hey reading this kinda makes me second guess selling my place and upgrading to a nicer/safer area. Bought my sfh 5 bed 2 bath in downtown Hamilton for 100,000 seems I can get 179000 now a few years and a couple upgrades later. Is it a good or bad time to purchase a 275000 home in a better area? Even with a correction or rate increase should Hamilton be safe-ish (which from what I’ve heard is under valued compared to Toronto given its proximity) any advice would be appreciated. Side note my mortgage is cheap already and I can afford more just don’t want to pull the trigger at the wrong time. Thanks, great Blog.

#61 nonplused on 01.19.12 at 1:45 am

Hey nice post again tonight Garth, but you set the standard for pictures yesterday.

I don’t understand why people want to own condos for profit when REITs are available. Maybe the feeling of being your own tycoon and all the “Get rich in real estate” conferences they used to pump.

#62 Soylent Green is People on 01.19.12 at 2:06 am

My other blog god, i mean dog

http://www.truthdig.com/chris_hedges

.
.
.

#63 TZM on 01.19.12 at 2:16 am

are REIT’s really as good as they sound?? i just checked riocan and chartwell. i didnt even know they existed. i may go all in. good idea? i cant find a good investor. i dont trust a bank brat to give me financial advice. dont know where to find a good one either. suggestions on that front aswell?

#64 Onthesidelines on 01.19.12 at 2:26 am

@eaglebay-parksville from yesterday’s post. “You’ve probably been on the sidelines all your life.
Now, instead of bitching, tell us who actually creates real productive jobs.
I must have missed something along the way.
O great smart one.”

I generally would not bother to respond to a post such as yours. But, for the sake of argument, let’s assume that you and Garth are correct in your assertion that encouraging the general public to gamble on stocks with a decreased rate of taxation on capital gains and dividends is socially beneficial from a job creation perspective. Then, pray tell how does buying corporate shares in that 0-sum game casino called the stock market, produce more jobs than buying a bond issued by the very same corporate entity?

And, thus, I ask again who benefits when the interest earned on a more conservative investment in a corporate bond is taxed at a higher rate than the capital gains or dividends from having held the very same corporation’s stock?

And, as far as job creation is concerned, of all the ways jobs are created, stock trading is the least of them even when you do count the bloodsuckers in the casino whose livelihood depends on it.

#65 Cristian on 01.19.12 at 2:48 am

“Well, some suspicious, negative and socially maladroit people who should get out more have posted on this pathetic blog that REITs will crumble when house prices correct. This is bunk. The inevitable real estate melt will probably boost these trust units, or at least keep them flying.
… This is precisely the experience in the US – when real estate crashed and residential REITs soared.”
Garth

Really?…
So let’s check out some American REITs:
– AIV: Feb 9, 2007 – $64.35; Current price: $23.57
– AVB: Jan 26, 2007 – $146.79; Currently $127.98
– BXP: Feb 9, 2007 – $127.04; Now selling for $99.18
… and the list could go on and on and on.
None of the US REITs have recovered since the real estate peaked in the US.
What makes you think that this is going to be different here?…

A hollow comment. Equity markets in general have not regained 2007 highs. More importantly to investors, these assets pay you to own them and have had decent returns. Your cherry-picking is unrepresentative and probably agenda-driven. Last year, US real estate investment trusts, as measured by the FTSE Nareit All REIT Index, gained 7.3%, more than three times the 2.11% return of the S&P 500. — Garth

#66 Aussie Roy on 01.19.12 at 3:03 am

Aussie Update

PROPERTY owners in WA’s southern regions are suffering with market analyst RP Data suggesting many homes “down south” were currently worth less than their purchase price.

The latest RP Data National Equity Report indicated that almost the entire area located to the east and south of Perth, effectively from Perth down to Albany and across to Esperance, was experiencing some of the nation’s highest levels of negative equity.

http://www.perthnow.com.au/business/local-owners-looking-at-negative-equity/story-e6frg2ru-1226247640456

Vacancy rates climb to 8% in Melbourne

http://www.sqmresearch.com.au/graphs/graph_vacancy.php?region=vic%3A%3AMelbourne&type=c&t=1

How much property is on the market in your capital city? A state-by-state analysis

http://www.propertyobserver.com.au/residential/how-much-property-is-on-the-market-in-your-capital-city-a-state-by-state-analysis/2012011853069

WORLD BANK: Brace Yourself For Economic Slowdown

http://www.businessinsider.com/world-bank-brace-yourself-for-economic-slowdown-in-a-new-world-2012-1

AUSSIES ON NOTICE: Global crisis will ‘spare no-one’

http://www.news.com.au/money/cost-of-living/world-bank-warns-of-deeper-crisis-than-the-global-financial-crisis/story-fnagkbpv-1226247882564#ixzz1jswDUVGI

Victoria’s economy slips

http://www.theage.com.au/victoria/states-economy-slips-20120118-1q6pd.html

Interest rates get a nip and tuck but consumers remain glum

http://www.heraldsun.com.au/business/rates-get-a-nip-and-tuck-but-consumers-remain-glum/story-fn7j19iv-1226247786614

The economy shed almost 30,000 jobs in December, capping the worst year for employment in two decades and increasing the likelihood that the Reserve Bank will cut interest rates for a third meeting in a row next month.

http://www.theage.com.au/business/economy-shed-jobs-at-years-end-20120119-1q7fc.html#ixzz1jswq1l6H

#67 Last on 01.19.12 at 3:13 am

Again I echo what I said yesterday, have several family members with rental property and trust me it’s not easy money, the first time you spend 3 months of evenings and weekends gutting a place after a bad tenant has moved out, you’ll understand.

Again Garth please edit the comments so you can go back to giving investment advice again!!!

#68 Onemorething on 01.19.12 at 3:57 am

Debt is constant, returns a variable!

Remember that when investing in RE!

Off to the slaughter house both of you!

#69 VanLarry on 01.19.12 at 4:18 am

You don’t deal with toilets, you deal with paper work. Or pay someone to deal it for you. The returns you’re getting are not taxed as dividends.

That said, I’m enjoying my Whiterock REITs in my TFSA. I’m gonna miss the nice 7% yield.

#70 TheRealTruth on 01.19.12 at 4:23 am

Welcome to Globalization!

I am a Canadian whose Grandparents immigrated here several generations ago. Been to India many times and was appalled by the values…remember that girl that was left in the street after being hit??… that was nothing. check this out! May be deleted but at least garth gets to see it.

http://www.liveleak.com/view?i=ab8_1326822336

#71 Where's The Money Guido??? on 01.19.12 at 6:52 am

Re: #277 Where’s The Money Guido??? on 01.18.12 at 9:35 pm

Re: There is no relation between you choosing a bad mutual fund company and the CIPF or Barret Capital. BTW, did you seriously cash in your assets when the market crashed in 2008? Guess you like to buy high and sell low. — Garth

Well I tried to get out before the crash, as I said I initially tried to get out in September 2007 right after the July-August ABCP collapse and Vancity-Credential kept up the delay game until late February 2008 resulting in a 25% loss.
And here’s an item for you to peruse…..It’s crooked and slanted for people in the know, and you know it……And you belittle yourself by trying to suggest otherwise.

http://www.investorvoice.ca/PI/3475.htm

Regulators share blame for ABCP collapse, Flaherty says

KEVIN CARMICHAEL
April 12, 2008 at 1:02 PM EDT
Federal Finance Minister Jim Flaherty signalled that provincial securities regulators deserve blame for the collapse of Canada’s asset-backed commercial paper market, and said they and the firms they oversee will be will be subject to scrutiny as he pushes Canada’s financial services industry to upgrade its standards.

And it has been proven since then that Flaherty has done diddly squat.

Hard to believe you. A clear order to sell your fund units would have been executed the same day unless the fund had closed redemptions. — Garth

That’s what I would have thought also, but these people obfuscated and downright lied to me for months on end, saying they had executed the sale when I found out later, they clearly hadn’t, hence my actions of contacting all those offices (IIROC, OBSI. CIFP, BCSC, OSC, etc.).
They knew I was a newbie to investing and used it to their advantage. My fault for not knowing to get a clear trade order the day of my wanting to redeem. But these people were so hard to get in touch with, they made it their plan to not be available. Best part to keep the ponzi going, keep people from redeeming.

#72 R2D2 on 01.19.12 at 7:18 am

There appears to be a major funding crisis in Ottawa.

Anyone care to make a bet Parliament will be recalled today?

http://www.winnipegfreepress.com/canada/breakingnews/pension-plan-for-mps-faces-1-billion-shortfall-report–137654508.html#comments

#73 R2D2 on 01.19.12 at 8:37 am

“The weaker German outlook comes as the World Bank sharply cut its forecast for the global economy, making particular mention of the danger of recession in Europe. The World Bank estimates that the global economy will grow 2.5% this year, down sharply from its previous forecast of 3.6%. The World Bank also slashed its forecast for the combined economy of the 17-nation euro zone, forecasting a decline of 0.3%, compared with a previous forecast of 1.8% growth.”

http://online.wsj.com/article/SB10001424052970204555904577168343057367960.html?mod=googlenews_wsj

#74 Stevenson on 01.19.12 at 8:58 am

7 percent? Thats great. Where you going to live? You make it sound like their is no risk. RE smoked that number last year. With the interest rates so low do you know how many horny buyer there will be flooding the market jumping in like if it was 2008?

Call it delusional pricing, but as long as their is demand in the market the RE prices will continue to rise. What happen to the correction this year again? Oh yeah we were all trying to forecast whats out of our control again.

Garth sounds like you should start renting too since its OBVIOUS that the money could be put to better use. Even if it’s less then 30% of your net worth. That 30% could be earning 7%+. Remember to buy the worst house on the street too.

Don’t you have an Open House today? — Garth

#75 bigrider on 01.19.12 at 9:04 am

Let me fill you in a bit on the archaic, immigrant and uneducated viewpoint of the masses here in T.O.

REITS, preferred’s ,bonds, stocks etc. are but mere numbers on a piece of paper a person gets in the mail in the form of a statement once a month. Numbers that fluctuate in what is seemingly an uncontrolled manner.

Until you can point to these items in what is a tangible manner, like a pile of bricks on a patch of grass, RE will always be viewed with religious reverence while paper assets in revulsion. The illusion of control of your money with RE as opposed to the lack of control in the financial markets will persist.

Good luck in your pursuits Garth. You have a tough , long road ahead of you.

#76 bigrider on 01.19.12 at 9:16 am

Case and point with my previous point.

Had a conversation with an aqauintance. He asked me if making an allocation to silver bullion was a good idea. He was looking at an amount that would equal less than 2% of his net worth. I answered by telling him that if he did so and silver went to zero how hurt would he be by that outcome? He said not much but the conversation ended with him still being scared to do so. Fine I said ,perfectly acceptable to avoid the asset.

Yes there is a kicker. Here it comes…ready?

The f-in guy owns 7 rental properties, three of which are CMHC insured ,leveraged to the hilt on all of them and he says he sleeps soundly every night. Rent paying down the mortgages. Sees no risk at all in his RE investments.

This is the level on insanity T.O has reached in the investment class only “God created”.

If the correction is truly coming Garth, and you can make it come faster by calling your kerosene squirting friends in parliament (F) ,I say douse the raging fire that is RE now.

#77 Mike Rotch on 01.19.12 at 9:22 am

45 sven Re: Scarberian home

Not surprised, vintage looks 30 years old or so, maybe mostly original.

No matter, there will be other similarly priced casas in Port Union and other nice pockets. Some will be in better shape. All will arguably be better value than a $600K town (wherever the hell that is!).

If these folks are stuck on a town, I thought the newish freeholds at the foot of Port Union went 3s to 4s about 5 years ago…… Dunno, been a while since I’ve browsed seriously….home prices are irrelevant until I have to move. I’m here for the investment advice

55 Westcoaster: RE IRDs

You said they did not exist before 2008…..I have a 2007 mortage paper that says you’re wrong, and I thought they had been a standard clause for a fair bit longer than that.

No matter, you are perfectly correct that these are going to be a timebomb for a lot of people if they ever have to sell.

This is one thing that Garth usually doesn’t present as an argument against buying, but jeez, if you start a 25 year term by taking 10 year money at 3.99, and then have to sell in like year 5 when prevailing rates are, oh, I dunno, 5.5%……..OUCH! Better hope the value has gone up hugely against long odds.

#78 CalgaryRocks on 01.19.12 at 9:23 am

#10 Jon on 01.18.12 at 10:05 pm
$200,000 at 28??? Come on let’s put up some realistic stories here that most of your readers can relate to. I’m a long time reader but getting a little tired of this…

I enjoy your blog (hence the long time reader bit,) but can’t you put up some advice for the average Joe? I doubt too many people who read this blog had $200,000 at the age of 28.

Ah, you forgot the 250K paid for condo. A net worth of 450K at 28. 5 years out of school, after tax money.

If the trend continues, these guys will be millionaires by the time they’re in their mid 30s and it certainly won’t be because of their freaking REITS.

It seems that investing for 6% returns is not where the real money making action is nowadays.

Greed and risk are good, no? — Garth

#79 TurnerNation on 01.19.12 at 9:24 am

All around the world this is occuring. Bloomberg today:

Philippines Cuts Key Rate for First Time Since 2009 as Growth Outlook Dims

The Philippines cut interest rates for the first time since July 2009, joining emerging markets from Thailand to Indonesia in easing monetary policy as a deteriorating global economy threatens growth.

#80 kimi on 01.19.12 at 9:39 am

Jon 11#
Some people can save 200,000. We always compare people or think people are like ourselves.
Anything is possible and when it comes to money how could one ‘who is not in the investment advising’ industry even have a clue about the funds of others. You might not know it but its possible you may have a ‘millionaire living next door’.

#81 Memememe on 01.19.12 at 9:40 am

Between savings and wedding gift these kids have $200,000 saved!?

AND a reported $240,000 in equity!?

At 28!?

He bought his house at 22 years of age… G-d knows most of his income has gone to mortgage, not to savings.

I surmise his parents are loaded and he’s got hands that have never seen a day of hard work in his life, or that his wife is the most hideous creature on the face of the planet and the only way to have her married was the promise of a huge dowry.

No wonder house prices are outrageous, these fools have money to burn!

When I got married the only gifts I received were congratulations, a kick in the pants and a wish for the door to not hit my backside on the way out.

This blog is dripping with jealousy and cynicism. What a waste of emotion. — Garth

#82 Daniel on 01.19.12 at 9:42 am

What city, #29?

#83 Adam on 01.19.12 at 9:56 am

Oh no! you not taking the doggie treats away from us!

#84 Bando on 01.19.12 at 9:59 am

Hard to believe the whiners and loosers on this blog today. I listened to G a year ago and bought the REIT ETF – called XRE. The thing gave me 24% last year, wiping the floor with you gold nuts. Is there risk? Probably, but theres risk in everything. I can get out of this thing in 5 minutes if I need to, and meanwhile geta return that trumps anything the idiots posting here come up with. Unbelievable.

#85 Stevenson on 01.19.12 at 10:01 am

240K at 28 is not surprising for me at all. Some people are successful and some are just born rich. Just check this out.

http://www.cbc.ca/news/canada/british-columbia/story/2011/09/01/bc-cars-impounded.html

If your a typical Canadian looking to buy a home it may not make sense for you, but for international buyers it may be a different question. Toronto and Vancouver has cheap RE for its quality of life. As for somewhere for wealthy people to hedge, Canada has a pretty stable economy. There are RE offices set up in Hong Kong, Beijing, Shanghai, Mumbai, and Delhi that sell Canadian RE.

#86 Macrath on 01.19.12 at 10:05 am

#35 Canadian Watchdog

Do you have any research on any of these REITs ?
I`m considering adding to my position.

Allied Properties REIT
Artis REIT
Crombie REIT
Chartwell Seniors Housing REIT
Cominar REIT
Calloway REIT
Extendicare REIT
Primaris Retail REIT

Garth is this analyst affiliated with Macquire Research ?
Michael Smith, real estate analyst at Macquarie Securities.

#87 debtified on 01.19.12 at 10:05 am

This blog is dripping with jealousy and cynicism. What a waste of emotion. — Garth

Just like when the discussion involves salaries. The message is missed because people focus on the wrong detail. It’s a pity.

Great post on the Landlord vs. REIT, Garth.

#88 kimi on 01.19.12 at 10:06 am

My dad had houses he rented. When I asked him about buying a place to rent in Phx. He said if I know a person and I dont like …. I wish him 10 rental units.

#89 bigrider on 01.19.12 at 10:19 am

Can’t go into a coffee shop anymore without over hearing a conversation about how much a house sold on a given street or how much someone made on their condo investment or how someone is going to finance there next investment property and have a renter pay it off.

Bring on the ellusive correction please !!

#90 The Dividend Yield Investor on 01.19.12 at 10:45 am

Garth,

It is time for the real “teaching moment!!”

Your blog is NOT primarily about about real estate; the true cause, no the real mission that is directed by God himself is a huge and vital definition of accounting.

What is the difference between an asset and a liability?

From an investors “point of view” it is this:

THE DIRECTION OF CASH FLOW!!!!
****Assets put money into your pocket and liabilities take money out of your pocket!****

During the days before electronic money transfers(late 1960’s) my Dad taught me a simple lesson. He said “Son, the difference between rich people and poor people is which side of the check they sign!”

For you young people, here are some basic steps to financial success(for those going the employee route).

1. Work hard on your career.
2. Be careful who the hell you marry. I’ll let the blog dogs of this site go into this with their stories!!

3. Make a second career of buying assets that put money into your pocket first.
4. Increase your financial education!
5. Be impatiently patient in the long term goal of converting all of your earned income into dividends, interest, rental or royalty income.

There are other items in the check list but I wanted to keep it short by covering the big ones first.

The Dividend Yield Investor
Atlanta G.A.

#91 Emperialz on 01.19.12 at 10:45 am

Sorry, I have to agree with a lot of the other posters who have been commenting about the number of your stories that involve high net worth youngsters. It isn’t necessarily that I am jealous, but it is a bit disheartening when the majority of the Generation Y examples you give are sitting on a quarter to half a million dollars. Yes they are out there, but are they really as common as this blog seems to suggest? The overall message is not lost on us, but more realistic examples (i.e. median net worth) would probably be more helpful.

This blog is not about median net worth. Most people are failing. I’d hope those who come here are looking for more than average. — Garth

#92 fancy_pants on 01.19.12 at 11:06 am

missed me? I doubt it. back in the saddle. Got sick over Christmas then bronchitis. sucked. sucks the wind right out of you ~ literally.

Wow! Another maintain at 1% rate announced the other day… those damn persistent low rates really are a strong propelling force against RE price drops.

Back in spring ’08 prices would have kept falling if rates didn’t drop so much. Too much IMO. Now we are hooked on cheap debt like heroin.

#93 Ronaldo on 01.19.12 at 11:09 am

#86 Bando – “Hard to believe the whiners and loosers on this blog today. I listened to G a year ago and bought the REIT ETF – called XRE. The thing gave me 24% last year, wiping the floor with you gold nuts.”

Had you bought silver in November of 08 at $9.89 and sold it at $49.44 before the markets opened on May 2/11 you would have had a 400% gain. Or, you could have bought First Majestic Silver at $1.57 at around the same time and sold it in April last year for a 1450% gain. Many more like that. How’s your TFSA doing? Mine is up 117%.

It’s obvious you have no idea what you are talking about when it comes to investing in precious metals. Garth advises everyone that they should have a certain percentage of pm’s in a well balanced portfolio. Have you? Just keep in mind that yesterday’s Stars could be tomorrows Dogs.

#94 DonDWest on 01.19.12 at 11:24 am

“This blog is not about median net worth. Most people are failing. I’d hope those who come here are looking for more than average. — Garth”

So, care to give me advice how I can go from 35K a year to 100K a year in a year or two? Thanks.

No. — Garth

#95 Blacksheep on 01.19.12 at 11:25 am

Last #69,

“Again Garth please edit the comments so you can
go back to giving investment advice again!!!
—————————————————
Dude, If you don’t like the way the blog is run, feel
free to go elsewhere!!!

Blacksheep

#96 Wage Slave on 01.19.12 at 11:35 am

This blog is not about median net worth. Most people are failing. I’d hope those who come here are looking for more than average. — Garth

So you give us stories of “above average” young people who are going to make stupid decisions? Is this your way of encouraging average folks to do better with what they have? In any case, it worked. I just opened a trading account and bought etfs, so thanks.

32 Paully on 01.18.12 at 11:29 pm #25 DonDWest
I totally agree with that. The people that make the most money have the biggest balls, not the smartest brain!

If we’re going by the couple profiled today, it’s just luck. They have neither balls nor brains.

#97 Valyrian_Steel on 01.19.12 at 11:36 am

Hate to stir up the envy and hate on this blog again but… wifey and I save 5k a month – like clockwork. Living in Vancouver. With a mortgage (albeit a small one). Our salaries are not huge by any means, we merely made a CHOICE to live in a financially responsible manner, not maxing out our lifestyle. I won’t even share our net worth… that would merely inflame the ugly passions around here. Let me add that it is highly unlikely that we will have to work past our 50’s. I’m thinking we might be able to pull the plug sometime in our 40s…

I didn’t post this to “rub it in”… I just felt the need to tell our story – a couple of 30-somethings who have consciously done the right thing. We exist. It can be done.

#98 City Slicker on 01.19.12 at 11:41 am

Brother Carney continues to warn of fall out from Europe. Good time to buy a house indeed:

http://www.metronews.ca/calgary/business/article/1074420–europe-costing-canada-0-6-in-growth-boc

#99 vreaa on 01.19.12 at 11:47 am

House ‘A’ and House ‘B’

Each of these houses is not like the other:

http://wp.me/pcq1o-3za

(Passing the time, as the Vancouver RE Speculative Mania gets ready to do its imploding thing…)

#100 sam.i.am on 01.19.12 at 11:58 am

Dividend Yield Investor, good points all, esp #2.

Here’s some more timeless advice, from PT Barnum:

http://www.gutenberg.org/files/8581/8581-h/8581-h.htm#2H_4_0003

#101 Alistair McLaughlin on 01.19.12 at 12:09 pm

@ #100 Valyrian_Steel, $5000 saved every month? That’s great. I’m just not sure that a couple operating a grow-op is an analogy that has relevance for the rest of us. Or is that just envy on my part?

#102 DonDWest on 01.19.12 at 12:09 pm

‘I didn’t post this to “rub it in”… I just felt the need to tell our story – a couple of 30-somethings who have consciously done the right thing. We exist. It can be done.’

Not when employers are only willing to pay you 35k a year. Look, I’m the most frugal person you’ll ever meet. I have 100K in savings despite the low income, but there’s a limit to how much I can churn the crappy wine.

Basically, the problem with these blogs (and a lot of finance books) is they take the position of someone who already has a decent job right from out of college. This discourages people not in that position from even reading the book.

Now ten years ago I actually braved reading the books despite the discouragement, and yes they can help, but I still haven’t found a way to address the low income. Yes, you can manage the money that you have well and it’s your decisions, but as time wears on I’ve discovered your income is at the complete mercy of your employer/company.

The only way to “break the poverty cycle” when you’re in this pickle is to completely reinvent the wheel and start a business. You can’t even really start a traditional business because often those are saturated with competitors who the bank sees as more qualified than you (i.e it’s hard to beat the competition when they get million dollar low interest loans). Tried starting a few unconventional businesses twice, when it doesn’t pan out, you’re back at square one.

Another problem low income people have is they’re too ashamed to mention publically their income, in fear of being ridiculed, therefore they don’t ask for help. I’m different in this regard, but I often find the “help” I’m getting is often damaging rather than helpful.

#103 Herb on 01.19.12 at 12:10 pm

#4 DUI on Money Road,

“All is well in the land of the fed………” Whistling past a graveyard always works.

#104 Canadian Watchdog on 01.19.12 at 12:17 pm

#88 Macrath http://i39.tinypic.com/fxgz2b.png

Allied Properties AP.UN
Artis AX.UN
Crombie CRR.UN
Chartwell Seniors Housing CSH.UN
Cominar CUF.UN
Calloway CWT.UN
Extendicare EXE.UN
Primaris Retail PMZ.UN
RioCan REI.UN

Senior related REITs performed the worst of that list. CSH.UN EXE.UN

Best performance was AP.UN which has a heavy weighted portfolio in telecommunication and data companies.

#105 Alberta Ed on 01.19.12 at 12:17 pm

Speaking of delusional, a “huge” (according to local poo-bahs) new $300 million condo/retail development in Calgary’s East Village has been announced. Sales offices are opening soon, so there’s time to get your money down: http://www.cbc.ca/news/canada/calgary/story/2011/02/24/calgary-east-village-development-fram-slokker-cmlc.html

#106 DonDWest on 01.19.12 at 12:18 pm

#104 Alistair McLaughlin

Basically, in order to save 5000 a month, his household income (when considering taxes) would have to be $120,000 per year. And that’s if he spilled all his income into savings. This doesn’t include any costs for food, rent, etc. No envy here; just mathematics. I don’t know many people who make 120,000 a year and they’re allowed to live with their parents. . .

#107 a prairie dawg on 01.19.12 at 12:21 pm

Survey out of BeeMo says 40% of those surveyed don’t know the difference between a TFSA and an RRSP.

Now that’s scary.

#108 Sky on 01.19.12 at 12:25 pm

DonDWest – “So, care to give me advice how I can go from 35K a year to 100K a year in a year or two? Thanks.”

No. — Garth
********************************************
Since Garth copped out, I’ll supply the answer. Use the age old, tried and true formula – marry wealth. That’s what the elite have always done. Why mess with success?

I’d hold off on marrying your cousins though ( a preferred method of keeping-it-all-in-the-family throughout elite history) unless you want your future kids to look like gremlims and with an IQ just north of a potted plant. Consanguineous relationships have a way of doing that.

#109 Van guy on 01.19.12 at 12:26 pm

#83 Memememe on 01.19.12 at 9:40 am

“When I got married the only gifts I received were congratulations, a kick in the pants and a wish for the door to not hit my backside on the way out.”
——————————————————————-

You have cheap family and friends. Everyone I know that got married (incl myself) received enough $ to pay for wedding costs. Heck we all pocketed a nice chunk of change.

#110 DonDWest on 01.19.12 at 12:43 pm

“Since Garth copped out, I’ll supply the answer. Use the age old, tried and true formula – marry wealth.”

That only works if you’re a woman.

#111 -=jwk=- on 01.19.12 at 12:46 pm

Scotiabank selling it’s Headquarters:
http://www.thestar.com/business/article/1117948–scotiabank-looks-to-sell-skyscraper-headquarters-for-1-billion?bn=1

Choice quotes:

“In the current low-interest rate environment, it’s potentially a good time to sell and we have chosen to explore the sale of Scotia Plaza,” bank spokeswoman Ann DeRabbie said in an email.

and

“We are the only large bank that currently owns our head office in downtown Toronto and given market conditions, this could be an opportune time to maximize the value from our holdings,” DeRabbie said.

So scotia is calling a market top. esxcept for home buyers they give mortgaes too. For them now is a great time to to BUY BUY BUY!!!

#112 sam.i.am on 01.19.12 at 12:58 pm

DonD In NS it’s who you know. Get out there and make some friends.

#113 Sky on 01.19.12 at 12:59 pm

DonDWest- You need to get out more often. Take a look around and you’ll find plenty of bimbobs amongst the bimbos. Wealth predation is an equal opportunity employer.

#114 BPOE on 01.19.12 at 1:07 pm

10% is NOTHING. Long term trend is intact. This ain’t America folks. We WON! As I’ve said many times nothing goes up in a straight line. Everyday it’s just getting better
*****************************************
NotAGreaterFool on 01.19.12 at 1:35 am
Had opportunity to hear Benjamin Tal speak today. Here are some highlights:

1) R/E is at risk because incomes don’t support prices. Slow down expected. He estimates 10% correction. No crash due to rates staying low and no sub-prime in CAN.

#115 eaglebay - Parksville on 01.19.12 at 1:09 pm

#113 DonDWest on 01.19.12 at 12:43 pm
“Since Garth copped out, I’ll supply the answer. Use the age old, tried and true formula – marry wealth.”

“That only works if you’re a woman.”
———-
With your attitude and background, in your case, you’re probably right.
How about acquiring new skills and getting out of the Maritimes.

#116 BPOE on 01.19.12 at 1:11 pm

You will be hearing stories in coffee shops for decades to come. Owners in BPOE are SUPERSTARS and rightfully so. We’re SMUG, RIGHT and all the renters envy us. All renters stories are the same. “why didn’t I buy” There has to be a correction” NO THERE DOESNT NEED TO BE A CORRECTION. DONT LIVE IN THE PAST. Live in the present! This is where the WINNERS reside and why they bought. Winners live in the present and renters live in the past and future
**********************************
bigrider on 01.19.12 at 10:19 am
Can’t go into a coffee shop anymore without over hearing a conversation about how much a house sold on a given street or how much someone made on their condo investment or how someone is going to finance there next investment property and have a renter pay it off.

Bring on the ellusive correction please !!
.********************************************

#117 Joe on 01.19.12 at 1:14 pm

I refrain from posts that have zero value, no relevance or are factually misleading. With you it’s hard to know where to start. — Garth

What’s the value of the “first” posts, which you allow to appear?

Then we know who to ignore. — Garth

#118 Wage Slave on 01.19.12 at 1:16 pm

113 DonDWest on 01.19.12

I’m different in this regard, but I often find the “help” I’m getting is often damaging rather than helpful.

That only works if you’re a woman.

I generally like your posts, so don’t take this the wrong way, but did you ever think your inability to have a sense of humour about all of this is hindering your progress?

What, exactly, is being damaged by all of this help you’re getting? Your self esteem? Are you really comparing yourself to internet strangers? You can only really believe half of what any anonymous a-hole says on here anyway.

Some noble professions pay low. If you work for a non-profit or are interested in social justice, you aren’t exactly going to rake it in. If you’re an office monkey and unhappy and not well paid, then that’s a different story.

If you actually do have $100k saved and are 30ish, then that’s about enough to invest now and have grow to $1m by the time you’re 65. A lot of people are a lot worse off. Sure there are some who are better off, but so what? Your life isn’t your bank account balance.

Speaking as someone who is about your age and doesn’t have the savings you do (the horror!) take a pill. Or go on a date or something.

#119 Hicksville Alberta on 01.19.12 at 1:21 pm

I have read Galbraith’s epic book on the Great Crash of 1929 along with a few others on the same topic.

I have always wondered how “Stupid” got so stupid as there were so many unbelievable stories of things that happened leading up to and through the crash as well as so much lieing, cheating, incompetence, ignorance and blatant corruption at all levels of society.

Just sitting and watching all this play out day after day after day makes my spine tingle.

I believe we are in the last days before an impending collapse of a magnitude much worse than that of 1929 as the complicity of global governments at all levels everywhere in spawning and driving this Ponzi scam as far as it has to date is truly astounding.

There is no way this will end well and there is no way that this can last a whole lot longer before blowing up.

A very sobering website that i have bookmarked and follow daily is at http://www.dailyjobcuts.com and the amount of cutting and slashing going on is at pukelevel 5 and just keeps getting worse and worse.

If the U.S. is our number one trading partner, good luck on H & F & C on keeping their pump going.

#120 Macrath on 01.19.12 at 1:32 pm

#107 Canadian Watchdog

Thanks, they are all included in SIN.UN which has been paying very well since inception. Strange that the old geezer business is not as profitable as one might expect.

#121 Joe on 01.19.12 at 1:35 pm

I refrain from posts that have zero value, no relevance or are factually misleading. With you it’s hard to know where to start. — Garth

What’s the value of the “first” posts, which you allow to appear?

Then we know who to ignore. — Garth

I though you take care of this by censoring. — Joe

Deleted, rejected or edited postings average less than 1% daily. — Garth

#122 DM in C on 01.19.12 at 1:40 pm

DonDWest:

Get out of the Maritimes. We packed up and left in ’06. With no jobs lined up, just knew we couldn’t stay any longer and achieve what we wanted.

Since landing in Calgary our income has more than doubled. Plus there’s less tax.

#123 Brew on 01.19.12 at 2:05 pm

#32 Paully

“I totally agree with that. The people that make the most money have the biggest balls, not the smartest brain!”

Trouble is you only hear about the ones who claim to have the biggest set, not the ones who got their set kicked repeatedly!

#124 jess on 01.19.12 at 2:26 pm

The “Experts” on the FOMC didn’t see a housing bubble or a collapse.

Federal Reserve Board transcripts from its 2006 Open Market Committee (FOMC) meetings.

…which is “the year that the $8tn housing bubble hit its peak and began to deflate.”

Thursday 19 January 2012

by: Dean Baker, The Center for Economic and Policy Research | News Analysis
http://www.truth-out.org/alan-greenspans-ship-
fools/1326911547

http://www.cepr.net/index.php/publications/reports/will-a-bursting-bubble-trouble-bernanke-the-evidence-for-a-housing-bubble (Dean Baker)

#125 disciple on 01.19.12 at 2:28 pm

Last, you hurt my feelings. This is for you: Stephen Colbert 2006 Emmy’s.

http://www.youtube.com/watch?v=AGi8jSGpr5U&feature=youtu.be

#126 eddy on 01.19.12 at 2:30 pm

international currency heads up-

http://www.youtube.com/watch?feature=player_embedded&v=FRrv1pSzGyc

#127 blobby on 01.19.12 at 2:34 pm

The comments on this story are just beyond depressing:

http://www.cbc.ca/news/business/taxseason/story/2012/01/13/f-rrsp-market-volatility.html

Those are CBC viewers for you. Pray for them. — Garth

#128 spaceman on 01.19.12 at 2:35 pm

So if a REIT will appreciate in value, or give a better dividend during a housing crash, seems to me its a great way to short the housing market? Well at least its a better and more liquid investment than actually leveraging to the hilt, and buying something, that is destined to drop in value by 10-20%.

And whats with Flaherty? Is he crashing the market, or propping it up, wish he would make up his mind. What does he mean by “I will intervene” up ammorts, or lower them, which way does he want to go?

#129 Debtfree on 01.19.12 at 2:36 pm

garth you might find this interesting . re sex and real estate .
http://bigthink.com/ideas/42015

#130 bigrider on 01.19.12 at 2:38 pm

On your reply to me yesterday Garth, with regard to people with liquid funds lending out money for first and second mortgages, to quote you “..are you serious”. Yes I am. Ask around.

Lending money for mortgages are widely considered a better bet than financial assets. You ignore the immigrant, uneducated mentality.

I don’t ignore it. I worry about it. Second mortgages have zero security. — Garth

#131 spaceman on 01.19.12 at 2:45 pm

#119 BPOE

Sorry, your full of shit. Can’t have a conversation these days without someone complaining their underwater on their mortagage, can’t sell, paid too much in 2008, listed for 100 days and still no takers, it goes on and on. And all I hear at the water cooler, is how SOFT the market is right now, and that I should buy. The writing is on the wall, but they still only see 3 inches in front of their faces. RE will contine to be considered a great investment, until 2-3 years from now when all you will hear is, its crappy. Just ask an American. how do I know all this? I’m 50, I’ve lived through it 3 times now.

Respect and listen to your elders.

#132 Canadian Watchdog on 01.19.12 at 2:48 pm

#128 spaceman

“I’ve lived through it 3 times now.”

You lived through 3 recessions, not a depression.

#133 bigrider on 01.19.12 at 2:56 pm

#132- Garth to Bigrider- I don`t ignore it. I worry about it. Second mortgages have zero security.

Fair enough. What about first mortgages. 7% all day everyday with lots of security, at least presumably, and no volatility of the underlying asset, at least not what the eye can see in the form of a monthly statement from a money manager or advisor.

I have not invested in any first or seconds nor plan too but just letting you know Garth about an area of the RE holy land and the behaviour of it`s devout followers you might be missing.

#134 Rick on 01.19.12 at 3:01 pm

What about capital gain and leverage? With someone else paying your mortgage who will be buying your Reits. Where do you live when you hit 65, pay rent forever!

I would rather make 6% on 600,000 than 22% on 12,000

A dumb comment. REITs form part of a balanced, liquid portfolio. It you are 100% in real estate, God help you. — Garth

#135 Mixed Bag on 01.19.12 at 3:23 pm

Why are people so upset about these two 28-year-olds having had the good fortune of a really nice wedding gift and property that has gone up in value? What, if you don’t get to get ahead, then no one should? This is realistic, for some people, I’ve seen it, and if it’s not your reality, then oh well, good for them, move on, nothing to see here, and you go about getting yourself ahead.

First rule that will set you free: life is not fair. The world does not owe you a damned thing. When that finally sunk in for me, any envy and jealousy I had for other people went out the window. So-and-so got the breaks in their career? Good for them, what does that have to do with me? Nothing. So-and-so got money from their parents to buy a car/house/whatever? Good for them. Does that affect me? No.

It takes people time to break free from that mentality. Maybe it’s a learned behaviour, or just inner suckiness. Stop being a suck, pay more attention to what you can do to change your situation, and you’ll find that just maybe, you’ll be able to improve your lot in life.

#136 The Professor on 01.19.12 at 3:23 pm

Even the US based Dr. Bubble’s figured out our dirty little secret.
http://www.doctorhousingbubble.com/canada-housing-bubble-ripe-for-popping-vancouver-housing-bubble-2012-pop-real-estate-canada/

#137 Smoking Man on 01.19.12 at 3:24 pm

For all the brain power on this pathetic blog, still no one, other than me has really figured out the main reason why we have not have had a USA style real estate correction.

The fundamentals are outrageously in favour of a meltdown.

The answer is so obvious, yet 85% of the opinions on here are futile attempts at self-serving propaganda, no one wants the truth, they just want their bets to pay off, hence the push and sell of self-interest bias.
For the last year I perched fixed rate mortgages were going to the basement. People though I was nuts.
About a month ago I stated the when RE got hot, the machine would talk it down, and they are doing their best. Oh what’s this 2.99 for 5 years 3.99 for 10 years.

The machine knew those rates were coming so it was a pre-emptive strike to try and find balance and make sure they did all they can to prevent a rocket launch, that being real estate.

You ready for the real reason no USA crash, or do I punish you with another wacky story of a day in my life.
I have worked on many projects in the USA, NY city, New Jersey, Florida, Charlotte , Los Angels
With every gig the common denominator has been no one I worked with is from the city hosting the project, Americans are highly mobile and rarely stay put in one state, they go to the work. Hence If you have to be mobile, crazy to buy a property that restricts your movement.

Canada being a new country with ethnic folks that like to stay close to each other, and with only a handful of cities, people tend to lay down root’s they don’t move.
When Real estate gets soft, the herd de-lists, they don’t drop paints.

This small difference in the two cultures is why it’s different here.

But hey rebuttals and bias opinion welcome
No drinks last night, Sober I can scribe not badly.

#138 Kris on 01.19.12 at 3:40 pm

Garth, in MONEY ROAD you talk of Govt having to finance debt on the bond market, driving yields up and hence, fixed rates up.

The opposite just happened this week, presumably due to the favourable perception of the C$. Is this just a blip in the inevitable upward march of yields? (Appreciate if you could elaborate)

Not too much is normal at the moment. Have patience. We will get there. — Garth

#139 Ogopogo (né Okanagan Renter) on 01.19.12 at 3:41 pm

#19 Maxamillion
If high school had provided as much valuable information as this blog I would have shown up more often. Instead I had to deal with Shakespeare and the Apprenticeship of Duddy Kravitz. What a waste of time.

Shakespeare is a “waste of time”? How about these lines from King Lear:
“Have more than thou showest,
Speak less than thou knowest,
Lend less than thou owest.”

Doesn’t that speak to you in the least? The first line in particular seems to me to capture the essence of our esteemed blog.

Maxamillion, if you still think art is a waste of time you might do the world a favour and not have kids. The last thing we need is more dolts spreading this meme.

#140 Alex B on 01.19.12 at 3:44 pm

Who gets a wedding present of like 50k? and is 28? bought the condo at 22, sounds like house horny people to me, but hmmm it seems to have not killed them off. Another scenario non applicable to 90% of people under the age of 35, invest instead of buy another house. What about people with little savings or equity, what is our preferred option? I bitch but I always appreciate the writing, keep it up Garth ) That damn beemo 2.99 and 10yr fixed is trying to lure us in….its almost working

#141 Ogopogo (né Okanagan Renter) on 01.19.12 at 3:48 pm

Folks, it looks like the housing bubble is already causing an online war. Check out what I found when I tried to post on Rob Carrick’s Reader: “Is Canada’s housing bubble set to pop?”:

Comments have been disabled
Editor’s Note: Comments have been closed on this story because an overwhelming number of readers were making offensive statements about other commenters and/or the individual or individuals mentioned in the story. That kind of behaviour is a breach of our commenting policy, and so the comment function has been turned off. We appreciate your understanding.

http://www.theglobeandmail.com/globe-investor/personal-finance/personal-finance-reader/rob-carricks-reader-is-canadas-housing-bubble-set-to-pop/article2307830/comments/

Too funny.

#142 debtified on 01.19.12 at 3:55 pm

#124 Joe on 01.19.12 at 1:35 pm

I refrain from posts that have zero value, no relevance or are factually misleading. With you it’s hard to know where to start. — Garth

What’s the value of the “first” posts, which you allow to appear?

Comic relief.

#143 DonDWest on 01.19.12 at 3:57 pm

#121 Wage Slave

“What, exactly, is being damaged by all of this help you’re getting?”

Mostly outdated and ignorant information by otherwise well meaning people. Let’s just say, there are a lot of “Dorothy’s” with money here in the Maritimes. . .

#144 jess on 01.19.12 at 4:01 pm

staggering Outflows

http://www.gfintegrity.org/storage/gfip/documents/reports/IFF2011/tipsheet-illicit_financial_flows_from_developing_countries_over_the_decade_ending_2009.pdf

Illicit Outflow Drivers, Trends:
• Trade mispricing was found to account for an average of 50.6% of cumulative illicit flows from developing countries over the period 2000-2009, down from its high in 2004 when it accounted for 57.2%. It remains the major channel for the transfer of illicit capital from China.
• Illicit transfers of the proceeds of corruption, bribery, theft, kickbacks, and tax evasion, accounting on average for 49.4% of illicit outflows over the decade, are on the rise as a percentage of total illicit financial outflows.
• Corruption, kickbacks, theft and bribery are the primary conduit for the unrecorded transfer of capital from oil exporters such as Kuwait, Nigeria, Qatar, Russia, Saudi Arabia, the United Arab Emirates, and Venezuela.
• Mexico is the only oil exporter where trade mispricing is the preferred method of transferring illicit capital abroad.
Implications for Economic Development Policy: The illicit outflows measured in this report are approximately 7-10 times the amount of official development assistance (ODA) going into developing countries. This means that for every $1 in economic development assistance which goes into a developing country, several dollars are lost via these illicit outflows.
Solutions: Increasing transparency in the global financial system is critical to reducing the outflow of illicit money from developing countries.

#145 DRIP BOY on 01.19.12 at 4:06 pm

Dear Jon, #10 I’m early 30’s with over 220k, self made. Want the secret. Get a great degree, pay off student loan asap, don’t buy a car, don’t finance, take transit, rent, invest in DRIPS with SPP’s, travel to Europe last minute on deals. Their story is believable, and in T.O. Vancouver, not uncommon for parents to borrow 100k from their home to give to their kids for wedding gifts etc. If you’ve squandered your wealth atleast aim for health ! Hey Garth looks like TSE:BNS is getting out of the RE biz too, lol
http://www.thestar.com/business/article/1117948–scotiabank-looks-to-sell-skyscraper-headquarters-for-1-billion

#146 Guan-Di on 01.19.12 at 4:13 pm

Those are CBC viewers for you. Pray for them. — Garth

With headlines like : “Household debt still at safe levels, bank economists say” I think we are past the need for prayer…

http://www.cbc.ca/news/business/story/2012/01/19/pol-cp-household-debt-concerns.html

#147 DodgedBullet on 01.19.12 at 4:34 pm

Update on my Chia Pet (I took Garth’s advice back in September).

S&P index ETF up 9.6%
Nasdaq index ETF up 10.76%
US Reit ETF up 5.38%
US Bond ETF doing not a lot, down 0.5%

I also have a bank Pref. ETF and a US small cap index ETF both are down 1.2%.

I just exposed myself to the Canadian banking sector which has just paid off the fee (sitting at 0%).

Overall I’m up 3.5% since September 2011.

Thanks Garth.

Ben.

#148 debtified on 01.19.12 at 4:40 pm

DonDWest – “So, care to give me advice how I can go from 35K a year to 100K a year in a year or two? Thanks.”

No. — Garth

I don’t blame Gath for the emphatic “No” to answer your question. What’s wrong with you? I’ve read your comments and they reek of bitterness. You have the tendency to blame others for your misfortunes.

Allow me, if I may, to share with you my own experience because I used to make less than $35K and now I gross over $200K.

First step is to stop comparing yourself to others. If they have plenty and you don’t have much, don’t be jealous and bitter. Work harder. When I first arrived in Canada I saw a lot of things I wanted that I couldn’t afford. The best job I could get was a 3-hr shift at McD paying less than $5 per hour. I made sure I was the best damn burger flipper in that joint.

Second step is to upgrade your skills. I went to school. I got a better job at another fast food with more hours that made it easier on the pocket but harder to make it to classes; but I kept going to classes. To this day I still attend all sorts of classes to continuously upgrade my skills. Reading this blog is part of that continuing education.

Third is to persevere. I kept it up. The more I realized I had less, the more motivated I was and the harder I worked my ass off. I used to ride my bike home after work at 3AM in the middle of Ontario winter because I couldn’t afford a car at that time. Never did I blame others for my lack of anything.

Lastly, be smart. Have a plan. I always have a list of everything – from my wish-list in life to my grocery list. Forget about vanity (I still drive the same car I bought 12 years ago). Save your money. Ever wonder why the rich gets richer and the poor gets poorer? Money attracts more money. I have siblings who arrived in Canada with me and they are struggling. They spend every penny they earn as fast as they could. They allow their emotions influence important decisions they make without thinking things through.
Fast forward ten years later I broke through the $100K mark before I turned 30. Not bad for a skinny brown Asian guy who have experienced all sorts of discrimination.

One last thing… I noticed, the more I had, the easier it was to get even more. It only took six years more to break through the $200K mark. The savings also grew at a much faster pace.

Good luck to you and the likes of you. I have a feeling you’ll find it tough to get through the first step. It’s never too late, though.

#149 John saccy on 01.19.12 at 4:46 pm

Scientifically Proven Today… Stupidity has no limits.

http://www.cbc.ca/news/business/story/2012/01/19/pol-cp-household-debt-concerns.html

#150 Jack on 01.19.12 at 4:59 pm

Garth, REIT is a trust so it’s taxed at your marginal rate, am I wrong? It used to be different but CRA has changed the rule if I remember correctly.

#151 Realtors in a Panic on 01.19.12 at 5:17 pm

Just look at the many worried out of work realtors posting all day . With the freeeeeeze in housing the crash will get worse and worse.

#152 jess on 01.19.12 at 5:18 pm

lack of trust

http://en.wikipedia.org/wiki/List_of_pipeline_accidents

Hundreds of thousands of gallons of oil were speeding down the Kalamazoo River towards the Great Lakes from southwest Michigan after a pipeline burst

http://www.battlecreekenquirer.com/article/20110724/OILSPILL/107240319/Oil-water-Answers-few-cause-investigated

http://switchboard.nrdc.org/blogs/sclefkowitz/Letter%20to%20LaHood%208.2.10%20-%20FINAL.pdf

#153 titosantana on 01.19.12 at 5:28 pm

Reading these posts about young people with $$$ and skeptics alike, I just had to share my 1 cent: I thought about it and in 10 seconds thought of a buddy 31 who saves 5k easily every month with wife combined. He is not educated (high school ) has a decent job with benefits and overtime opportunity. His wife came here a few years ago and working in decent job. They rent a basement suite with all utilities, cable …. so they save huge monthly costs. They do have a life and still manage to save and amass huge accounts, investments etc.. point being that it can be done at young age. Especially throught the past 10 years or so.
My brother made 170K in a few months in 2007 just like that …presto , but that was flippping building lots. I think that ship has sailed and things such as discussed above are valuable tools going forward.

#154 cj on 01.19.12 at 5:44 pm

#151 debtified
It is encouraging to see how someone else handles adversity in your clearly laid out personal way.
Today’s blog is Garth’s way of bridging us from ignorance to ways to invest more wisely. Even though I don’t agree with everything he says, for the most part I learn something new whenever I go to the blog.
It is one thing for people to realize how dangerous it is to buy real estate at the height of the market and then another to know WHERE to put their hard earned money at the end of the day

#155 Mixed Bag on 01.19.12 at 5:48 pm

#151 debtified on 01.19.12 at 4:40 pm

You have a good attitude. Congratulations on the success you have earned.

#156 Freedom first on 01.19.12 at 5:52 pm

I just don’t understand? I must be missing something? I can talk to very few people about finances……the majority look at me as if I am insane. I learned that years ago.

I have always liked being diversified. I like assets, income streams, emergency funds, cash flow, no debt, paying as few fees and commissions as possible, and living within my means. I have never been a miser, and have traveled, ski holidayed, golf holidayed….etc…..more than anyone I know. A woman can be dubious of this way of thinking…….but is convinced fairly quickly…….when experiencing the results of this way of thinking……even though the pressure from her friends and family can be intense. Eventually, she ignores the sound, as one does with “white noise”.

I worked in a field with a decent income, but certainly not considered high income. No matter what my income level has been at, this way of thinking has worked well for me, in all situations. I really don’t care about what people think, who, “Go All In”….on one asset class, and with debt too. To me, this looks like putting ones’ gonads in a vise, and giving someone else the handle:)
Follow Garth’s advice. He truly is an expert. That’s “expert”……..not spelled the other way…….”exspurt”……..of which the majority belong:)……..just look at Canadian debt levels:)…..

#157 sam.i.am on 01.19.12 at 6:01 pm

debtified…pt barnum would be proud!

#158 Beach Girl on 01.19.12 at 6:02 pm

Busy today, haven’t read all the comments. But, someone mentioned beautiful Port Union Village.

Laughter in Paradise. Has anyone been there?

Whole site is built on the old Johns Mansville Asbestos Plant. So many people lost their lives to that cancer causing hell hole.

The cold air flowing of the lake should make the particle board frozen till June. At least you are close to the train tracks. Like 20 feet. That is not just a GO line. Not one half decent store in site.

Might as well well buy a house in Port Hope. Were there is no hope. As they are planning to pull every once of soil from the earth.

Same thing happened in Malvern. But no no one cared about that region. For a decidedly racist standpoint. People should investigate the history of the region before plonking down crazy sums of money.

Actually am happy today. Doesn’t sound it. But JEESE.

Have a nice day.

#159 Fred Munster on 01.19.12 at 6:15 pm

Household debt still at safe levels, bank economists say

http://www.cbc.ca/news/business/story/2012/01/19/pol-cp-household-debt-concerns.html

“TD Bank’s chief economist Craig Alexander agrees, noting that comparing a fixed statistic, which is debt, to a flow of income that is repeated annually is a bit like comparing apples and orange groves. He also says that while Canadians may have high levels of debt, they have something to show for it — namely valuable assets like homes.”

Did not the Americans also have “valuable assets like homes also” in 2006. What a dumb argument.

and so much for diversification!

#160 Devore on 01.19.12 at 6:20 pm

#114 -=jwk=-
#148 DRIP BOY

Yup, do banks know something “we” don’t? You betcha!

That’s a good article, and even better comments. Previously, when banks sold their real estate, marked the top of bubbles.

I’m not saying anything, just saying.

#161 Devore on 01.19.12 at 6:27 pm

#53 martin9999

mr turner i am quiet surprized that you you never mention nor calculate inflation on your profits. thats weird.

If you compare like to like, you don’t have to, just have to use the same methodology. The reader can adjust all figures for inflation. Certainly, government doesn’t give you a tax break based on inflation, quite the opposite, they tax it as gains.

#162 mac on 01.19.12 at 6:33 pm

Don’t forget MICs (Mortgage Investment Corporations), they’re pretty interesting too.

#163 eaglebay - Parksville on 01.19.12 at 6:37 pm

#140 Smoking Man on 01.19.12 at 3:24 pm

There’s one more important reason why the RE in the USA has gone the way it did and why it’s not quite over yet.
I just cannot mentioned it on this blog.

#164 Realtors in a Panic on 01.19.12 at 6:44 pm

Why would realtors post non-stop all day if the RE market was doing well? The fact is realtors and bankers are in a panic that Canadian RE has started a US style crash. When the stock market starts crashing in a few weeks followed by continued layoffs , strikes and the possibility of the euro break up will make it 2008 all over again. The higher they can manipulate the markets higher the more you can profit on the way down. Realtors have much to worry about.

#165 Devore on 01.19.12 at 6:49 pm

#76 Stevenson

Maybe when you’re an actual millionaire, you too can spend a tiny portion of your wealth and buy yourself a Lamborghini, because you can easily afford it and the price doesn’t make your head hurt just thinking about.

#166 Patrick on 01.19.12 at 7:00 pm

Top 10 REIT here:

http://www.thedividendguyblog.com/2011-top-10-canadian-reits-list/

Below is link to Boardwalk REIT which has longest historical chart to view:

http://ca.finance.yahoo.com/echarts?s=BEI-UN.TO#symbol=bei-un.to;range=my;compare=;indicator=volume;charttype=area;crosshair=on;ohlcvalues=0;logscale=off;source=;

REITS have great dividend % but the cost per unit does drop when actual real estate values drop. See 2008/2009

#167 harden on 01.19.12 at 7:03 pm

Phoenix real estate rises with Canadian Buying

http://www.vancouversun.com/business/Phoenix+real+estate+rises+with+Canadian+buyers/6019342/story.html

#168 JIM on 01.19.12 at 7:04 pm

Garth:
Housing prices will continue to rise, until they fall. No one can predict when. I have been saying since 1984 that housing prices are obscene, but over the last 1/4 century they went up more or less.

#169 harden on 01.19.12 at 7:19 pm

no savings? no problem, in vancouver

http://www.vancouversun.com/news/pensions/savings+Home+equity+good+Plan/6018590/story.html

#170 Nostradamus Le Mad Vlad on 01.19.12 at 7:36 pm


“Not too much is normal at the moment. Pray for them. God help you. — Garth”

I represent that statement! Fascinating to live on the far side, to be an abject social failure – reject! A fine way to kickstart the missives.
*
#151 debtified — “. . . the more I had, the easier it was to get even more.”

Correct, and good post. It places the saying “Like attracts like” above “Opposites attract”, ‘tho there may be some truth to that last one as well.

I can also attest to your saying Persevere. There were plenty of times during the five year apprenticeship I did that I wanted to quit and live a less disciplined life.

That’s why elders, or seniors were invented — they’ve been there and done that, so they know what the end rewards are!
*
Cement Penises Jon Stewart on SOPA; Wages Fifty per cent haircut = austerity; 10:02 clip Keynesian nutbars; Nigeria “Oil is oil and if I can’t steal it from Iran I’ll steal it somewhere else!” — Official White Horse Souse; Expect the best, but prepare for the worst.
*
Russia Warning the west to stay out of the MEast; 22:47 clip Ron Paul getting more on his side, but will probably be taken out of the equation when necessary; US Navy “Short version: It cost a ton of your money, and it’s useless.” wrh.com; Fukushima Still there,but TEPCO is all over the place, and Hading Radiation; Mitt Rommney Good question, and Cayman Islands.

Hanford Oh joy. No doubt this would contribute to the Cascades and SAF shaking; Florida Jeb Bush is Gov. of Florida; Anonymous “I have had my doubts about “Anonymous” ever since they showed up supporting Julian Assange and his extortion racket pretending to be a whistle blower site. In aligning with the pirates and attacking the DOJ, anonymous has handed the US government more justification for draconian controls on the internet. I see your true colors shining through.” wrh.com. Note the link. CNN is known for being a paid-for shill; Toxic BPA Another can of worms; ‘Net Protection From Big Brother, etc.; 9:59 clip Civil liberties going in SCarolina.

#171 Bill Gable on 01.19.12 at 7:41 pm

A genius friend of mine has no pension. Five condos, all tricked upwith money from helocs.
This guy bought in 3 years in Vancouver and Victoria. He asked me what I thought.
I hesitated and said. “got a pen? Write this down the url is greaterfool.ca” – I will stand aside and let Mr. Turner explain the hand you are holding.
This guy is 64 and has no savings, two cars, and he admitted that his credit card habit had best be controlled. I have no idea what that number is.

This is not uncommon! Over Chinese New Year my 23 year old friend was happy because he just bought three condos…finishing in 14 or maybe early 15. Tied up 175 k.

No wonder I need to go for long walks and breathe slowly. This is getting weird. Scary,even.

#172 jess on 01.19.12 at 7:46 pm

improperly marketing its Risperdal

The deal settles claims brought by Texas in 2004 and involves alleged Medicaid overpayments during the years 1994 to 2008 “and will circumvent potentially lengthy and costly appellate activities,” according to a statement from J&J’s Janssen Pharmaceuticals unit.
=====================

“They trashed the Johnson & Johnson credo and they misused Texas and, I believe, well-meaning officials, to further their marketing aims,” Jones said. “They subverted science and they induced others to betray the people they were supposed to be taking care of. To me that is reprehensible.”

#173 TurnerNation on 01.19.12 at 8:14 pm

What an ugly box!

http://www.torontolife.com/daily/informer/gimme-shelter/2012/01/18/cottage-of-the-week-201-brophys-lane/

#174 Smoking Man on 01.19.12 at 8:18 pm

DonDWest – “So, care to give me advice how I can go from 35K a year to 100K a year in a year or two? Thanks.”

You can make that in a month, sell weed. I hear Oxy is fetching in good coin.

It’s risk vs Reward. Harpo just slapped and min 2 year jail term at pushers. If you have the cahonas. Do it. The higher risk will make the profits higher and the compition meaner.

If that don’t work for you. Foget everything they taught you in school. become a prick, me first and get other people working for you, have an attitude holeyer than god, to get respect.

There has never been such an abandance of highly schooled obediant tax farm slaves that will wag their tails and lick your face for a few cents.

#175 live within your means on 01.19.12 at 8:19 pm

#112 Van guy on 01.19.12 at 12:26 pm
#83 Memememe on 01.19.12 at 9:40 am

“When I got married the only gifts I received were congratulations, a kick in the pants and a wish for the door to not hit my backside on the way out.”
——————————————————————-

You have cheap family and friends. Everyone I know that got married (incl myself) received enough $ to pay for wedding costs. Heck we all pocketed a nice chunk of change.

……………..

We’ll be celebrating our 25th this year. Neither DH nor I wanted a big affair. Even in my 20’s I didn’t want a big church wedding, a white wedding dress or a diamond ring. My older sis & I married on the same day. We were married by a JP & then took family & v. close friends to dinner. No regrets. Can’t believe how many couples will go into great debt for a 1 day affair. JMO

#176 Mister Obvious on 01.19.12 at 8:45 pm

#168 Devore

I don’t want to nitpick here but I think anyone buying a Lamborghini had better be a multi-millionaire. A single million technically qualifies you as a “millionaire” but if that is the sum total of your net worth then super expensive Italian sports cars would probably still constitute an excessive indulgence. Just sayin…

#177 Joe on 01.19.12 at 8:46 pm

I refrain from posts that have zero value, no relevance or are factually misleading. With you it’s hard to know where to start. — Garth

What’s the value of the “first” posts, which you allow to appear?

Then we know who to ignore. — Garth

I though you take care of this by censoring. — Joe

Deleted, rejected or edited postings average less than 1% daily. — Garth

I see – you censor only selected comments with no value. What is this selection criterion then? — Joe

Make my day. — Garth

#178 TurnerNation on 01.19.12 at 8:54 pm

Today in godless overpriced Toronto :

Council also approved a 2.5 per cent property tax increase for residents, a 0.83 per cent tax increase for businesses and a 10-cent fare increase for the TTC.

#179 Ogopogo (né Okanagan Renter) on 01.19.12 at 9:04 pm

#173 Bill Gable
I hesitated and said. “got a pen? Write this down the url is greaterfool.ca” – I will stand aside and let Mr. Turner explain the hand you are holding.

On that note, not long after I began coming here a friend and I were talking about how she’s been snorting up her HELOC faster than a Paris Hilton binge. I started giving her the url but when I got to the “fool” part she bristled and clearly took offense. She’s never touched on the issue again and I doubt she’s ever dared to click on the link.

Verily I say unto you:

“The fool hath said in his heart, there is no Garth”

#180 jess on 01.19.12 at 9:16 pm

163 Devore

Clearing houses: the next casualty of the crisis?
LONDON Jan 16 (Reuters)
…regulators insist that banks run their riskiest and private trades through them.
At the moment banks conduct over-the-counter trades between themselves: one to one dealings often involving multimillion-euro bets on differences in interest or other rates, the scale and complexity of which can be difficult to track.

But with the financial crisis still raging and banks, hedge funds and governments alike faced with unforeseen levels of debt, regulators are now forcing this shadowy, $600-trillion industry into the light.

The Dodd-Frank Bill in the United States and Europe’s Mifid II and EMIR acts will force firms trading standardised products, such as the most common swaps, to use clearing houses when they take effect, perhaps as early as this year.

=
They protect companies from default because they hold collateral on behalf of their numerous members that can be used to reimburse individual firms if one member becomes insolvent — a standard model used in various exchange-traded markets around the world.

But in taking on over-the-counter (OTC) products the concern is that the clearing houses will not have enough collateral to cover possible future positions.

In the view of International Monetary Fund economist Manhmohan Singh, the central counterparties dealing with over-the-counter derivatives need to hold $2 trillion in collateral to successfully manage this kind of trading.

Canadian-dollar OTC derivative contracts have a notional outstanding value of just under $9 trillion. Moreover, OTC derivatives, especially interest rate swaps, are closely connected via arbitrage and financing relationships with other financial markets in
Canada, including other derivative, bond and money markets. That’s big enough and connected enough that any disruptions would likely result in significant reverberations throughout our markets. …
http://www.bankofcanada.ca/wp-content/uploads/2011/09/sp190911.pdf

#181 Trailer Park Boys on 01.19.12 at 9:24 pm

Peoplz that post ” FIRSSSSTTT ” have read all the comments , researched all the links, checked their grow-opp and REITS..and ready to roll baby

#182 maxx on 01.19.12 at 9:55 pm

#181 TurnerNation on 01.19.12 at 8:54 pm

Yup. We’re viable taxpaying units- VTU’s for short.

#183 Snowboid on 01.19.12 at 11:11 pm

#169 harden on 01.19.12 at 7:03 pm…

Have to agree with most of that article, also more business moves from other high-tax states (such as California) are helping.

Totally unscientific, but the Barrett-Jackson auction appeared to me to be the busiest in years. Counted plates on the way out of the lot this afternoon, and out of about 200 we counted 22 were Canadian (including ours) – 10 from Alberta, 5 from BC, 4 Ontario and 3 from Quebec.

There is definitely lots of Canadian money down here now. Will be interesting to see how many show up for the annual Canadian picnic in a couple of weeks!

http://www.canadianpicnic.com/Home.html

#184 Snowbird on 01.19.12 at 11:49 pm

I like this. I always hated the idea of buying something I do not have money for. But people always assured me that is the way to save!? How can I save if I do not have money to begin with. Yesterday I read article about situation in Hungary titled This Is Why I Don’t Give You a Job
http://www.financialbell.com/this-is-why-i-dont-give-you-a-job/

Do not buy if you do not have money, do not invest if government will take it all from you.

#185 NorthOf49 on 01.20.12 at 12:29 am

#62 Lag

If you’re already comfortable with the area of Hamilton you’re in (ie. no crackheads going through your mail, no shots being fired through your door by mistake – happened to my buddy, car not being broken into nightly, etc.) then I suggest you stay put and ride out the wave of high prices in Hamilton. Sure, your 5 bdrm SFH has gained some value, but show me anywhere in Hamilton that you’re going to find the same size home of same or better quality, in a better neighbourhood for $275,000? I’ve been looking for the better part of 2 years for a deal like this in Hamilton and there are none to be found. Way too much overpriced crap in Hamilton. Sure, its cheaper than what you’d pay in Oakville or Toronto, but if you’re from the Hammer, you’ll know what I’m talking about. The good news is, there is a LOT of inventory now out there, some of it empty, some of it now for rent. Prices are sticky, but not for long.

#186 Mr Buyer on 01.20.12 at 12:43 am

investors not investers…crap (again)

#187 Where's The Money Guido??? on 01.20.12 at 4:13 am

Re: #96 bob’s my uncle on 01.19.12 at 11:16 am

Garth, I love how you deleted my post in regards to the OSC, if that doesn’t show vested interest on your part I don’t know what does. If enough lemmings are blind sided than it’s business as usual.

I refrain from posts that have zero value, no relevance or are factually misleading. With you it’s hard to know where to start. — Garth

I find it very relevant Mr. Turner.
The OSC is nothing but a clearing house for grifters whose overseers are paid handsomely to look the other way.
It took the the US SEC to bring to justice many fraudsters that Canada would not touch, even though they were doing the frauds in Canada. We are definitely a banana republic when it comes to investing. There is no scrutiny by the regulators whatsoever. You can get away with murder, as long as the murder involves stripping your cash from you. EG: Ian Thow, Conrad Black etc….

#188 disciple on 01.20.12 at 9:37 am

What’s the value of the “first” posts, which you allow to appear?

Then we know who to ignore. — Garth

Yes, we ignore those who feel the need to complain about them – disciple.

#189 Abitibi Doug on 01.20.12 at 4:08 pm

well, I’m not a sexy person, and don’t get horny about much these days. However, I DO get horny about investments like REITs that pay good dividends. If you still don’t think I could get horny, you should have seen me in late summer and fall when these dividend paying investments were on sale!

#190 Junius on 01.20.12 at 4:28 pm

#119 BPOE,

You said, “Bring on the ellusive correction please !!”

Can I have fries with that? Thanks

#191 Bing on 01.20.12 at 7:55 pm

With 2.99% mortgage and affordable prices, owning has to be cheaper than renting. 2 bedroom condo for $150,000? http://calgaryrealestate.ca/mls-listings/302-335-garry-cr-ne-C3498631

#192 jess on 01.20.12 at 8:55 pm

Romney Parks Millions in Offshore Tax Haven – ABC Newsabcnews.go.com/m/story?id=15378566&sid=3029941Cached
You +1’d this publicly. Undo
2 days ago – Official documents reviewed by ABC News show that Bain Capital, the private equity partnership Romney once ran, has set up some 138 …