Losing it

DOG NAP modified

Four months ago I bought a piece of real estate, and referenced it briefly here at the time. See? I’m normal. A cool property turns me on, too. Especially one which comes cheap with lots of unrealized potential.

This is a commercial building fifty clicks north of Toronto, and you may have noticed I’ve chronicled the escapade on another blog. The iconic heritage structure was in sad shape, like the owner, and apparently I’m a sucker for ancient piles of bricks as well as damsels in financial distress.

Anyway, it came to me at a big discount – which was a good thing, considering all the cash just expended on a total gut and restoration. This coming Saturday (I hope), after eight years of being shuttered and disintegrating, the Belfountain General Store in Caledon will open again. Of course, it’s not a nails-potatoes-bait-&-ammo kinda store. More your metrosexual-café-artisan-bakery-Harley-gelato-parlour place.

Plus there’s a 3-bedroom, 2,000-foot apartment above, also gutted and rebuilt, on an acre at one of the busiest tourist corners in the province. Come the weekend (I hope) about a dozen people will have new jobs, and I can stop spending my spare time painting, grouting and grimacing. Like any small business, start-up or gut job, it’s a gamble. One more in my long career of doing things most people consider reckless. Like getting elected twice. Launching ten businesses. Or touring the country for eight years giving speeches. Pissing off the prime minister, and losing my job. Or starting a pathetic blog.

I mention this simply to underscore the fact real estate isn’t a bad asset to own. For the past forty-five years there’s never been a time I haven’t owned some. Often it made me money, certainly not always. But there are rules to bear in mind that mitigate the risk inherent in a commodity that’s expensive to buy, costly to carry and can turn illiquid in a flash.

For example, never devote too much of your net worth to any one thing, even real estate – and especially residential housing. That’s where my Rule of 90 comes in, to ensure that as you age your exposure to a single asset diminishes.

Second, avoid the mistake so many moisters are making now – buying the flash instead of the location. You can put a designer kitchen in any house, but you can’t move the property. So always buy the worst house (if you have to) on the best street, in the right hood. Don’t have your head turned by a Wolf stove or polished cement floors or anything else trendoids have installed into a slanty semi on a dodgy street.

In fact, if you’re smart and have the means, you’ll never purchase a condo, a semi, a townhouse or row unit. Condos come with fees you can’t control and a myriad of things that can seriously affect your property value. Attached houses can be severely impacted by neighbours, have scrawny lots, common wall issues and are currently over-valued in hot markets, thanks to buyers who can’t quite afford a detached place.

In terms of financing, be careful. Eschew a one, two or even three-year mortgage term, no matter how cheap they appear. Rates are going up, not down. No, not this year. But certainly by the time your loan comes up for renewal. These days you can get a conventional, fixed-rate, five-year mortgage for about 2.5% if your credit’s good and [email protected] likes you. Given the fact the inflation rate is 2.1%, that’s pretty much free money.

Don’t leverage too much (5% down is insane), but then again, don’t be in too much of a rush to pay off a 2.5% home loan, either. Channelling money into a balanced portfolio instead of accelerating mortgage payments will make you more diversified, spread around the risk and let wealth grow efficiently and more predictably than putting it all into bricks. The current housing market is not sustainable, after all, and building up a nice liquid portfolio will give you more choices once the mortgage comes to term. After all, if the loan is at 2.5% and your investments average 6% or 7% over five years, why trash it?

Variable or fixed? The latter, of course. Never buy mortgage insurance at the bank, as this is about the world’s most expensive policy. Never make an offer without having arranged for a home inspection in advance. Never get into a bidding war. Always have an agent representing you when you start seriously shopping. Never buy from a FSBO, as they’re usually greedy, cheap people. Remember land transfer tax, especially if you live in 416 where it’s double. Get pre-approved for financing. Always. Start with the old listings first, not the new ones – there are never any bargains when a property first hits the market.

Never go to a real estate seminar. There are no secret tricks to making fortunes using other people’s money. But there’s sure a living to be made taking cash from people at seminars. Ignore foreclosures or powers-of-sale or tax arrears auctions. Nobody’s that dumb. Don’t buy in Toronto unless you have to. Don’t even think about it in YVR. Remember that despite what your parents tell you, no loan is ever free. You’ll pay in guilt and obligation.

Finally, be very worried if your spouse tells you he just purchased a dusty pile of disintegrating bricks with a heritage plaque nailed to the front. He’s lost it.

BRICKS FIX

105 comments ↓

#1 NoName on 04.24.16 at 7:00 pm

bbq season is finally here, nothing tastier than beer marinated meat. Study that explains that waht i was saying all along; “pour beer on a meat while bbqing , its good for you” is actualy true.

https://youtu.be/i19ObS6l-_4

#2 Randy Cross on 04.24.16 at 7:03 pm

Garth…we’re neighbours. Where can I park my plane ?

#3 TRUMP on 04.24.16 at 7:04 pm

Wise words for wise ears…. ..unfortunately some deaf ears will take another route.

#4 Jimmy on 04.24.16 at 7:06 pm

Get your taxes done!

#5 Marchy d on 04.24.16 at 7:07 pm

Nice job Garth. If you ever need a structural carpenter give me a call! .

#6 JO on 04.24.16 at 7:13 pm

Great advice Garth
Thanks for sharing the wisdom
JO

#7 Bucky on 04.24.16 at 7:13 pm

“Never buy from a FSBO, as they’re usually greedy, cheap people.”
I resemble that statement. My wife and I sold 2 condos as FSBOs, not too hard, just priced midway between the cost of the equivalent units with the real estate salesman’s fee added, and the take away price we would get if we were paying our own real estate salesman. Hired our own lawyer to do the paperwork – actually, his paralegal does all the real work. Buyer saved money, we saved money. But to each their own.

#8 JamesA on 04.24.16 at 7:14 pm

Caledon is a very beautiful part of Ontario. That crack in the brickwork looked pretty nasty though. Is the foundation done settling? Can you inject cement bellow to prevent a repeat? The next time I am in town I will buy some some ice cream from your troops.

#9 AB Boxster on 04.24.16 at 7:14 pm

All great advice Garth.
(Except for the FSBO comment of course)

I suspect the Uberization of real estate will take place in the not too distant future, and realtors, realty firms and the obscene fees charged to sell a house will disappear.

Good luck in Caledon.

#10 For those about to flop... on 04.24.16 at 7:19 pm

Boss, better stock up on sand to help out at that all way stop intersection…there is always someone who tries to blow through them as they see the other car sitting there and think that they have the right of way.

Seen any big accidents yet?

M41BC

#11 Fed-up on 04.24.16 at 7:20 pm

Congrats Garth, I hope it works out well.

Sometimes if it feels right, you just have to pile on ;)

#12 Irent on 04.24.16 at 7:21 pm

Don’t buy in Toronto unless you have to. Don’t even think about it in YVR.

Does that include the GTA areas like Rich , Vaughan. What if I decide to not buy yet and continue. How can it turn to be a bad decision?

#13 Piky Pappa on 04.24.16 at 7:24 pm

It’s also not in the best interests of banks to hand out variable mortgages, considering it could go negative, and they end up giving you money to borrow money from them.

http://www.huffingtonpost.ca/2016/04/18/negative-mortgage-rates_n_9722138.html

http://www.wsj.com/articles/the-upside-down-world-of-negative-interest-rates-1460643111

#14 Ronaldo on 04.24.16 at 7:26 pm

That’s a pretty fast reno considering all that had to be done. Good luck with this Garth.

#15 Randy on 04.24.16 at 7:39 pm

Bernanke loves Bubbles

https://www.facebook.com/photo.php?fbid=10150787138077629&set=a.123762032628.132884.527227628&type=3&theater

#16 Metaxa on 04.24.16 at 7:49 pm

Agree with almost everything Garth writes today with a couple of small reservations.

Never buy a duplex/side by side/semi?
Maybe in TO or Van but move out a bit and you can find duplex housing that doesn’t look like a duplex at all, where the builder has taken care to noise separate and you have a proper yard for each side.

My adult children, what you folks call millennials in your pejorative way, bought such a thing.

Here is the kickers: zoning allows a basement suite under owner occupied so they rented out the one side (4 bed, 2 bath) to a family of healthcare professionals, put a couple of healthcare professionals into the basement suite below the half they live in and took on two room mates on their side. Room mates are friends from high school and only there until they get the mortgage chopped down, the health care professionals are all nurses.

Nurses!

Cash flow positive from day one including the basement suite reno.

second nit pick is regarding the mortgage itself…why no mention of terms and conditions? They are far more important than even interest rate.

Did you know that you can have your CA write up your mortgage and present it to your bank of choice and if its acceptable to them, you both sign it and away you go?

Conversely you can take the mortgage document they offer you and go over it with your CA and make changes, strike outs, whatever and if they accept you both sign it and away you go?

Lenders sell the sizzle of home ownership but serve you the steak of onerous terms and conditions that restrict your ability to quickly pay them back. construct your mortgage document such that it removes principle faster and you win. They can’t charge interest on principle that isn’t there.

Time is your enemy, take a bank document unaltered and all you have is time…time for them to collect interest with multiple rate resets over the full term.

Oh…I forgot, most of you won’t pay a planner to help set up your balanced and diversified portfolio so I’ll have to assume you wouldn’t pay a CA to set up your mortgage either.

#17 Freedom First on 04.24.16 at 7:50 pm

Awesome Garth! I wish you the best!

Great advice today. I like your very fitting frequent use of the word never. Cue the words: IknowIknowIknow, and, butbutbutbut taking place in the minds of the financially insane.

Also, great pic. Nice dog. Raised and trained a few dogs from puppydom through old age. They taught me love. Never tried to train a human though. I’m a tough act to follow. Few can master the road less traveled.

#18 Spaccone on 04.24.16 at 7:51 pm

Mark #171 and #172 prior blog post:

There are a host of exemptions other than being an accredited investor…friends, family, employees, etc.

#19 salonist on 04.24.16 at 7:55 pm

Feds to consider public pension funds to help bankroll big infrastructure….?

http://www.torontosun.com/2016/04/24/feds-to-consider-public-pension-funds-to-help-bankroll-big-infrastructure

#20 nonplused on 04.24.16 at 8:09 pm

The thing I don’t like about your Belfountain web site, and I don’t like this about every website that does this, is the disappearing scroll bar. Leave it there so I can click down for crying out loud there is no reason for it to disappear! Other than that it looks great though and I can see why you were interested in the building. Good luck! PS do you sell beer there?

#21 Panhead on 04.24.16 at 8:18 pm

All the best with the new endeavor, sounds like it may be fun … don’t forget the dog watering bowl out on the sidewalk … and … just how much you charging for a cauliflower?

#22 Mocking Sam on 04.24.16 at 8:24 pm

Garth, after many hours of reading your blog I would have never suspected you had a thing for old bricks. Its always nice to hear about crazy people like you breathing life back into old architectural/historical gems! Wishing you and your crew all the best on your new business adventure!

#23 not 1st on 04.24.16 at 8:31 pm

Is it a flip Garth, or are you actually going to be serving ice cream in the summer?

16 flavours. — Garth

#24 Dominoes Lining Up on 04.24.16 at 8:40 pm

Here’s a classic sign of a market top:

Just days after saying how they were fans of Prince but were asking for their privacy, the owners of Prince’s former Bridle Path home have realized prices are likely to drop and have suddenly put it on the market to capitalize on all the attention.

Best chance they will ever have to unload at a higher price.

http://www.thestar.com/entertainment/2016/04/24/princes-former-toronto-mansion-up-for-sale-127-million.html

The smart money has been getting out for a while – this example is just a little more obvious.

#25 Bucky on 04.24.16 at 8:41 pm

BTW, great advice in today’s column, must-read for any young persons out there buying .

#26 lee on 04.24.16 at 9:18 pm

Are you saying never buy a semi even in Leaside? Where do get the bollocks? People there will surely say you can’t be the Garth Turner they know and dine with.

#27 Lookinin on 04.24.16 at 9:19 pm

#16 Metaxa: “Did you know that you can have your CA write up your mortgage…”
Now that is something that I never knew. Thanks for the info! I learn all kinds of things on this website.

#28 mathman on 04.24.16 at 9:22 pm

A few things that make me think we are at a tipping point, although we may have already inflated the largest bubble in real estate history in this country.

– Lines at Sbucks are very short in the Bay Street area at prime mooring coffee time, don’t hear anyone buying $8 coffee’s in the morning
– Went to best buy last Tuesday night, three customers in the whole store, me, my wife and daughter
– The guy I buy my suits from has called me three times in the last month, more than the last 3 years combined – great deals right now apparently
– People are starting to pay over $700k to live in the worst neighbourhoods in the west end of Toronto – along a street that rhymes with pain and north of the junction- Garth hit the nail on the head, a beautiful kitchen in a shitty neighbourhood is a beautiful kitchen in a shitty neighbourhood.
– the low end luxury car index is at an all time high – go to any parking lot in the GTA and count the C Class Merc’s – crazy – what low rates for a prolonged period of time do is make aspiration a reality and the car companies are taking advanatge
-check lease buster and look – crazy amount of people trying to unload.

Math

#29 The Great Gazoo on 04.24.16 at 9:26 pm

Another great post. I sold my home FSBO. It’s not everyone’s cup of tea, but if you enjoy negotiating or want to learn, great experience.

In addition to the above, I did it for two reasons. 1) Get a higher price than selling using an Agent 2) Save some commission. Only paid $1k to list on MLS through a discount brokerage. Given those commissions are in Atax $$$, it was worth every hour of time.

Really enjoyed dealing directly with potential buyers, no filtered messages. Had a lawyer do all the paper work. A few tricking moments along the way, but figured it out.

It is not for everyone, but recommend it to anyone who is comfortable negotiating.

#30 Cash is king on 04.24.16 at 9:26 pm

Completely agree on the maintenance free townhouse/condo. Have been accompanying my parents to showings of these types of units after failing to convince them that hiring a lawn/snow service is more practical than moving.

Condos fees starting at $45 and as high as $200 month which included the extra cost of underground parking and rental water heaters. All starting at $250,000 for 1200 sq ft.

BTW… Is that Tom Hanks and Shelly Long I see through the window?

#31 Courage and Poo on 04.24.16 at 9:30 pm

I only see occupational health and safety violations…

#32 Exilled on 04.24.16 at 9:31 pm

Sir Garth:

First thing, the windows, replace!

Second, sprinkler system!

See you , maybe this summer! Or early fall, when the leaves change!

Enjoy!

#33 WalMark of Sadkatoon on 04.24.16 at 9:32 pm

congrats and good luck on your new venture!

#34 Beston Whelps on 04.24.16 at 9:32 pm

Beautiful Site Garth! Glad to see you are employing youngsters that will be told to load up their TFSAs!! I love Green Tea Ice Cream in a waffle cone with dark chocolate chunks!

#35 Panhead on 04.24.16 at 9:51 pm

#29 The Great Gazoo on 04.24.16 at 9:26 pm

Another great post. I sold my home FSBO. It’s not everyone’s cup of tea, but if you enjoy negotiating or want to learn, great experience.
It is not for everyone, but recommend it to anyone who is comfortable negotiating.

I bought a house once that was FSBO … enjoyed sitting at the table and haggling out a price with the owners. Did the rest with a notary and all went well. No complaints …

#36 };-) aka Devil's Advocate on 04.24.16 at 9:53 pm

Another good piece of advice I’d like to add to yours Garth.

Rather that base your budget on the 2.5% mortgage currently offered use a rate of 5.0% and make the payments were they such. You’ll pay the debt off faster and if (when) rates rise you won’t be faced with that surprise that you have already accounted for.

#37 45north on 04.24.16 at 10:09 pm

Soil Survey of Peel County, 1953

Belfountain is a mile and a half, north east of the border with Wellington County

http://sis.agr.gc.ca/cansis/publications/surveys/on/on18/index.html

#38 Metaxa on 04.24.16 at 10:09 pm

#16 Metaxa: “Did you know that you can have your CA write up your mortgage…”
Now that is something that I never knew. Thanks for the info! I learn all kinds of things on this website.

remember…both parties have to agree on any contract.
I have had a long and fruitful relationship with my CU but I have helped folks by steering them to my CA who then sent them off to regular banks and with success.

But more say no way than allow it, eh?

Tiger ice cream is the only ice cream worth buying in a cone, out on a road trip.

#39 BadMagpie on 04.24.16 at 10:14 pm

Great, Scottrade doesn’t want to do business with me cause I’m Canadian:

http://www.zerohedge.com/news/2016-04-24/bad-news-canadians

This is true; I got two of these in my email, one for my Roth IRA and the other for my general investing account (you’d call it non-registered?)

Anyone know of a US broker who’ll take those of us with Canadian citizenship in? Yes, I live in the US.

#40 The Spectre on 04.24.16 at 10:17 pm

Epic post, Garth. Thanks!

Best of luck!

#41 Vern on 04.24.16 at 10:26 pm

Ah, the General Store. I moved out of Ontario almost 10 years ago, but i used to frequent that store almost every other weekend up to the cottage. It was the Webers of this route except it never sold crappy burgs and always had some old Canadian charm….usually no lineups………killer Ice Cream…..not in quality, but in timing. As a business venture, I hope it treats you well, Garth. Yes, there’s some intangible value in resurrecting a historic building, but I don’t think bleeding money is something you do for fun. Make a few, give a little back it it rolls your way…..but above anything else, have fun. Life’s to short.

#42 Shortymac on 04.24.16 at 10:29 pm

@Mathman

I notice a lot of things lately:

1) No one can sell their condo
2) Everyone is cutting back, a lot less jobs on the market, lots of cancellations, etc
3) Lots of car companies running very lucrative sales, not many certified pre-owned car on the market now
4) lots of homes sitting on the MLS, after the 500k rule
5) Restaurants are struggling and offering deals/gimics

#43 caleb gibbons on 04.24.16 at 10:32 pm

Great post, and agree, everything in moderation. As the saying goes, “You can buy more real estate in an afternoon than you can sell in a lifetime.” JCG

#44 Lola on 04.24.16 at 10:32 pm

I’ve read your explanation many times for your Rule of 90, but I’ve not seen you address how one would calculate the value of a DB pension into that formula.

If a person is 55 years old, has a paid for home valued at ~$400K, other financial assets valued at ~$100K and a DB pension, how is the value of that pension factored into the Rule of 90?

It isn’t part of anyone’s net worth. — Garth

#45 Nobody on 04.24.16 at 10:40 pm

Bought in 604, 5 years ago – a SFH on 1/2 acre for $500k.

The good news is that it hasn’t gone up 1% because nobody knows how good this neighborhood is, or where it is.

The bad news is that I paid off the mortgage in 5years, rather than invest the extra payments – because I’m an idiot who hates being in debt.

#46 IM in C on 04.24.16 at 10:43 pm

Ignore foreclosures or powers-of-sale or tax arrears auctions.

Why?

Most are marketing myths. The rest not worth buying. — Garth

#47 conan on 04.24.16 at 10:52 pm

Hopefully I will be around that part of the province and will definitely drop in to grab some ice cream.

So, 10 businesses….. did you ever start a stinker? A what was I thinking?

PS My favorite flavor of ice cream is Tiger Tail : )

#48 TurnerNation on 04.24.16 at 10:54 pm

I see brick licking!

If I need a summertime road trip will pick up a rental (hopefully not Kia) and motor over for a cone.

#49 Who is on first? on 04.24.16 at 10:56 pm

Is it a flip Garth, or are you actually going to be serving ice cream in the summer?

16 flavours. — Garth
=======

Diversified and Balanced?

#50 Love my Kia on 04.24.16 at 11:03 pm

You are like the rural version of Donald Trump, building greatness on the landscape and just as politically opinionated!

Looks fantastic, congrats!

#51 RainBird on 04.24.16 at 11:05 pm

Your advice is good “normally” – but in YVR these are abnormal times because of this – see link:

http://www.canada.com/mobile/iphone/story.html?id=11868132

By posting that link you drop the IQ of the entire blog. — Garth

#52 Investx on 04.24.16 at 11:05 pm

“Rates are going up, not down. Not this year. But certainly by the time your loan comes up for renewal.”

You said the same thing years ago. What makes you think you won’t be wrong again?

#53 Mark on 04.24.16 at 11:12 pm

I’ve never understood those people who run around claiming that coats of paint, or other trivial repairs, will surface a lot of value in a house that didn’t otherwise exist.

After all, wouldn’t the new owners of the house prefer to paint the house the colour they want? Wouldn’t the new owners want to put in their “kitchen” of choice, rather than pay top dollar for the (probably gawdy) choices of their predecessors?

Then someone kindly explained it to me and I had a “Eureka” moment. Banks are glad to finance the purchase of a more expensive house, but when it comes to extending a LOC for home improvements, they’re far stingier. So basically buyers feel more comfortable having the cost of improvements and “modernity” capitalized into the price of the house up-front, rather than trying to borrow, in their often precarious financial position, after the transaction closes, to do those renovations/repairs.

It all makes sense to me now. Taking the whole concept a bit further, it also explains why including BMW’s with condos, as is the case in Toronto/Vancouver, is an attractive proposition for the buyers. They actually get a loan to do it all with it being a ‘housing’ loan, but they probably wouldn’t qualify for a car loan to do the same.

Ignore foreclosures or powers-of-sale or tax arrears auctions.

Hit up the Canlii database of Canadian judgements in the mid 1990s, search for “Garth Turner”, and you’ll have the answer as to why chasing foreclosures/powers-of-sale/tax auctions can be a losing proposition. Especially when people on the other side of the table are either crooks, or are not devoted to carrying out the process properly.

#54 tundra pete on 04.24.16 at 11:13 pm

Nice Garth. Way to go. That will be most enjoyable for sure. I hope to make it there soon.

#55 Turtle on 04.24.16 at 11:14 pm

Too many people live beyond their means. Too many people are pretenders. They pretend to be someone else, to show off material things like cars, houses, exotic trips…

Think about it. How exciting is Long Term Portfolio? Who is gonna say: “That’s cool, man!” If nobody says that Portfolio is a cool thing, than it’s not cool.

It should be something else as a goal, not a Portfolio. It should be a trigger to change a mind set, something like “cash flow”, “early retirement”… Otherwise people don’t listen. Frustrating.

The young lady I know got a good job, went to Australia for 3 weeks vacation, bought herself a condo and … got laid off. Very sad story.

Status is everything, debt is nothing.
Sad.

#56 Lorne on 04.24.16 at 11:47 pm

#35 Panhead

#29 The Great Gazoo on 04.24.16 at 9:26 pm

Another great post. I sold my home FSBO. It’s not everyone’s cup of tea, but if you enjoy negotiating or want to learn, great experience.
It is not for everyone, but recommend it to anyone who is comfortable negotiating.
…..
I bought a house once that was FSBO … enjoyed sitting at the table and haggling out a price with the owners. Did the rest with a notary and all went well. No complaints ………………
It always amazes me that somehow a system has developed that allows many people feel that so called “professionals” who take a 6 week online course (how many other “professionals” are trained in this manner and for this period of time…..ZERO thank goodness!) are necessary to sell their home. Think about it for a moment, the second most valuable piece of property that most people own is their car….and how do we sell these when the time arrives?? We either trade it in, or, in many, many cases, put an ad on Kijiji, Craigslist or Autotrader and conduct the sale ourselves. We arrange the sale with our insurance agency and motor vehicle branch and it is done. We do not have to have somebody else guide us through this sale, pointing out the lovely layout of the interior etc to the prospective buyer and then have to take it to a notary or lawyer ourselves to conclude the sale!!!! What makes this so difficult to do with a house….except that the Real Estate industry has encouraged us to believe they are an integral component in the selling of any house…which is far from true as I, along with others on here, have also shown.

#57 For those about to flop... on 04.25.16 at 12:11 am

Boss I don’t have time to do all 16 ice cream flavours as the wife wants the iPad ,but I’ll try and help you out with a few.

Cookie Cutter Condo.

Nortel Nougat.

Bre-X Bubblegum.

Chunky Monkey Portfolio Plumpy.

Chocolate Chip Market Dip.

Sales Mix Strawberry

Ross Kay Triple Ripple.

Freedom First Fudge.

Bandit Butterscotch.

Smoking Man Rum and Raisin.

Metrosexual Messiah Macadamia.

Tiger Tail Real Estate Will Never Fail.

I probably could finish ,but in the interests of inclusion which this blog is great at ,I will let someone else finish it off if they choose.

Good luck Garth…

M41BC

#58 Adam on 04.25.16 at 12:23 am

Good luck with your venture. Very cool, and inspiring.

#59 James Rubberneck on 04.25.16 at 12:27 am

Warren Buffet said it best:

“…there were a vast number of things that contributed to it. The basic cause, you know, embedded in psychology – partly in psychology and partly in reality in a growing and finally pervasive belief that house prices couldn’t go down and everyone succumbed –- virtually everybody succumbed to that. But that’s –- the only way you get a bubble is when basically a very high percentage of the population buys into some originally sound premise and – it’s quite interesting how that develops – originally sound premise that becomes distorted as time passes and people forget the original sound premise and start focusing solely on the price action.

So every – the media investors, the mortgage bankers, the American public, me, my neighbor, rating agencies, Congress – you name it – people overwhelmingly came to believe that house prices could not fall significantly. And since it was biggest asset class in the country and it was the easiest class to borrow against, it created probably the biggest bubble in our history.” FCIC Interview of Warren Buffett, May 26, 2010

#60 For those about to flop... on 04.25.16 at 12:34 am

I stole the iPad back for one more.

Debt Load Rocky Road…

M41BC

#61 Rexx Rock on 04.25.16 at 12:51 am

Garth is right,always buy a detached house.Condo and townhouse fees will kill you in the end.Attached houses are nightmare,never ever.Own real estate that is a good deal and will cash flow like the USA.

#62 Chaddywack on 04.25.16 at 1:37 am

Garth, your rules are exactly the opposite of what the media is telling all of us to do in YVR. How refreshing!

Wife got a temp job in YYC, going to hang out there for a year and watch the carnage from a distance! It will be nice to be somewhere where every 2nd conversation isn’t involving real estate.

#63 Metaxa on 04.25.16 at 1:54 am

@ #55 Turtle

My daddy once told me, “Its better to be well off than to appear to be well off.”

He was commenting on the Eaton’s lay away card becoming a credit card and the advent of Chargex (Visa’s forerunner) back in the 60’s but still holds true today.

#64 Tony on 04.25.16 at 1:57 am

A sure sign commercial real estate in Canada is in the topping process. The guy should have read up on commercial real estate prices in small towns in southern Ontario before doing something this stupid. They’re ALL falling.

#65 April. on 04.25.16 at 3:18 am

That’s a beautiful pile of bricks. May she make everyone involved with her lots of money.

#66 When will they raise rates? on 04.25.16 at 4:01 am

Very nice acquisition Garth. Best of luck!

#67 Smoked Meat Sal on 04.25.16 at 6:23 am

Every time my wife talks about opening a flower shop, eatery or ice cream parlour I drive her past all the ones that have sucked a long list deluded ‘entrepreneurs ‘ dry as soon as the snow fell…. and show her how the cash she saved by investing has compounded into real money. Retail is for suckers….buying stocks in food co’s ain’t ….SAP tripled….TIMS I bought for 14 and sold for 92…..MFI tripled …..try making that kind of dough with ice cream…..while doing none of the grunt work and paying less tax.

#68 Ace Goodheart on 04.25.16 at 6:42 am

Re: Belfountain store: Where did you get those kiln fired red bricks? I have been scavenging mine from various demolition projects of venerable old houses in my neighbourhood (torn down and replaced with McMansions) as I continue to replace spalled bricks in my 1914 double brick house.

Would love to be able to buy new bricks. That would be amazing

#69 LowRent of Arabia on 04.25.16 at 7:13 am

two scoops of mint chocolate chip…and not the cheap crap…I want large chocolate chunks.

Congrats on the venture.

Who needs fancy IT startups?

#70 fancy_pants on 04.25.16 at 7:59 am

We saved a boatload of money from @ ’03-’11 on a variable rate mortgage (vs fixed terms) but bought bigger last year and we locked in a 5 yr fixed. The spread between fixed and variable was too close to chomp on a variable this time round, History indicates 9 times out of 10, you save $ going variable, but I think the spread used to be greater.

is that amanda seyfried on the couch and are you a shrink too? if so, hats off to diversification, no comment on being balanced

#71 fancy_pants on 04.25.16 at 8:05 am

ps. Speaking from experience, please don’t stock cotton candy or bubblegum flavours. every kid orders it, takes a lick and trades off with mom or dad. dagnamit.

#72 crowdedelevatorfartz on 04.25.16 at 8:29 am

@#67 Smoked Meat Sal
I think Garths purchase while, designed to make a profit, was also a bit of a reno project.
The building was in danger of falling down and a little bit more of Canadian history would have disappeared with it.
So pick up an empty, diamond in the rough for a bargain and spend some time, sweat equity and money to give it a new lease on life and voila!
Hopefully a self sustaining investment that will be around many many more years for all to admire and enjoy. All while creating a few jobs for the locals in a small town that could use them.
Whats wrong with that?
It aint always about counting the sheckles.
Sometimes its nice to give back to the community.
Try it sometime you might actually anjoy it.

#73 Grantmi on 04.25.16 at 9:14 am

DELETED

#74 NotSoNewToETFs on 04.25.16 at 9:23 am

Am I losing it to try a dividend capture strategy?

#75 Renter's Revenge! on 04.25.16 at 9:58 am

To add to For those about to flop’s list of ice cream flavours:

Vanilla Index Fund

Neapolitan Sales Mix

‘Attsa M’Boy Spumoni!

The Orange Guy’s Sherbet

#76 TurnerNation on 04.25.16 at 10:34 am

Hmm Home Capital and Genworth stock price down sharpishly today.

#77 Sam the Sham on 04.25.16 at 10:41 am

OK, here it is! It looks like HAM is real! Chinese buy one-third of Vancouver homes National Bank estimates.

http://www.bloomberg.com/news/articles/2016-03-23/chinese-buy-one-third-of-vancouver-homes-national-bank-estimate

That bogus report was debunked here two weeks ago. Try to keep up. — Garth

#78 Derek R on 04.25.16 at 11:30 am

#67 Smoked Meat Sal on 04.25.16 at 6:23 am wrote:
Every time my wife talks about opening a flower shop, eatery or ice cream parlour I drive her past all the ones that have sucked a long list deluded ‘entrepreneurs ‘ dry as soon as the snow fell

The big problem for most retailers is that they rent the premises from a commercial landlord who expects to be paid the average market rent come summer or winter, come hell or high water. And the average market rent is based on tenants who earn the average market profit. That’s what sinks so many of these small businesses.

Garth has sidestepped that by buying the building for a knockdown price. Hence no rent and probably no mortgage to pay.

So the Belfountain General Store has every chance of doing just fine. I wish it well.

#79 Capt. Obvious on 04.25.16 at 11:54 am

You said the same thing years ago. What makes you think you won’t be wrong again?

He’ll be right eventually, and eventually matters when you’re taking 15+ years to pay off the mortgage. Yes, yes, rainbows and unicorns if you bought 10 years ago, but it was hardly foreseeable that we were going to have a GFC gifting the lowest interest rates in a generation. Lucky and wise are different.

#80 Hot Albertan Money on 04.25.16 at 11:54 am

These days you can get a conventional, fixed-rate, five-year mortgage for about 2.5% if your credit’s good and [email protected] likes you

What can [email protected] do for 6 to 10 year mortgages? Is there ever a justification to go over 5 years?

This is what TD is showing…

6 year fixed
5.14%

7 year fixed
5.30%

10 year fixed
6.10%

https://www.tdcanadatrust.com/products-services/banking/mortgages/numbers-resl_c.jsp?mboxSession=1461599590168-154319&

#81 Hot Albertan Money on 04.25.16 at 11:55 am

P.S This is a great post Garth.

And good job/good luck with the store

#82 GHauck on 04.25.16 at 11:59 am

All hope is lost
http://www.huffingtonpost.ca/samantha-brookes/millennial-real-estate_b_9750526.html

This gem in the article caught my eye
“Tip one: If you want it and can afford it, just buy it — even if it’s not in a prime location.”

And don’t forget this tidbit – why only screw yourself when you can bring others down with you
“One trend that has been gaining popularity is investing in a home with family members or friends. This is a great way to earn equity without the stress of saving up on your own for a hefty down payment or carrying a mortgage on your lonesome.”

#83 LP on 04.25.16 at 12:39 pm

More your metrosexual-café-artisan-bakery-Harley-gelato-parlour place.
*********************************************
(Sigh) In 1972, when we moved to our first house in Erin, a town about 3 minutes from Belfountain as the crow flies, there was a lovely old-fashioned hardware store on Main Street. The proprietor was very elderly and blind to boot.

When a customer went in to shop for whatever, s/he would be told to take the desired number of whatnots needed (from a bin where whatnots were sold in bulk) and to reel off the required number of feet – pre-metric of cable or wire or rope. When you got to the cash register you simply told Mr. Bush what you had got and he would take your word and ring up the purchase.

Main Street in Erin now is choc-a-bloc with places for “metrosexual-café-artisan-bakery-Harley-gelato-parlour” types to feel right at home. Add the horsey set and you get the picture.

But whenever I visit, like that artist who paints pictures with ghosts in them, I can’t help looking back with nostalgia to those years before things got so darned complicated.

#84 Smoking Man on 04.25.16 at 12:52 pm

Nice buy.

#85 Stirling on 04.25.16 at 12:54 pm

Used to walk to the Belfountain General Store when in boarding school in Orangeville back a few decades ago. Not at all surprised it’s still around. Terrific location.
Best of luck with the venture Garth!

#86 not 1st on 04.25.16 at 1:07 pm

New slogan

“Belfountain Store – come for the ice cream, stay for the real estate brow beating”

#87 Doh! on 04.25.16 at 1:14 pm

You can get get mortgage insurance from others beside CMHC? Doh! I screwed that one up.

Otherwise I’m good. Thanks Garth! Let’s hope Whistler doesn’t fall into the YVR trap, but with the upcoming investment into the resort I should be OK. (Gamble gamble gamble)

#88 JSS on 04.25.16 at 1:23 pm

#80 Hot Albertan Money

Do the banks know something we don’t???

I remember as early as a year ago, a 10-year fixed mortgage was around 4%

#89 Star Stuff on 04.25.16 at 1:27 pm

So will the new store be stocking thirsty underwear for all the boomer accountants and dentists on their harley’s… casino gamblers need a good supply as well – got to protect that slot machine.

#90 Ponzius Pilatus on 04.25.16 at 1:35 pm

Garth. Thanks for doing this.
Preserving the past for future generations.
A noble undertaking.
Unfortunately, in Canada, this seems a losing battle.
Fortunately, Europe is just a few hours flight away.

#91 Ry on 04.25.16 at 1:43 pm

Good for you Garth! I wish you all the best on your store. I will stop by on a motorcycle ride and have a gelato!

#92 conan on 04.25.16 at 1:53 pm

I give it a year and you will be sheriff of this town. You might want to Netflix the show Deadwood for pointers.
You could be like Al Swearengen but with ice cream.

#93 apil on 04.25.16 at 1:53 pm

#42 Shortymac,
Where, in the world, is this going on? You don’t give any location?

#94 waiting on the westcoast on 04.25.16 at 2:00 pm

I read this guy’s post periodically but this one is more scary than I would like to believe. I don’t own any silver/gold (and don’t plan to) except through companies in the sector but if there ever is widespread disenchantment with the central bank system, all hell will break loose.

http://www.financialpost.com/m/wp/news/blog.html?b=business.financialpost.com/midas-letter/0425-midasdaily&pubdate=2016-04-25

#95 Granny on 04.25.16 at 2:56 pm

‘Great, Scottrade doesn’t want to do business with me cause I’m Canadian:’

WHY would they be turning down business??? When the bail-ins come they will have a hard time getting Canadians?? What else?

#96 TurnerNation on 04.25.16 at 4:34 pm

Perfect batman on gold daily chart. Kaput! Loser investment.

#97 jess on 04.25.16 at 4:38 pm

learn how to play

https://panamapapers.icij.org/stairway_tax_heaven_game/

#98 Okanagan on 04.25.16 at 6:09 pm

Congratulations Garth! Clearly a labour of love!!

#99 Smoking Man on 04.25.16 at 6:22 pm

I must be losing my mind, the guy who invented the English language is a tool.

Colonel Sanders, where is the R in Colonel? I pronounce it; Cur-nal Sanders.

Unreal. Writing is challenging.

#100 God Emperor of Mankind Trump on 04.25.16 at 6:31 pm

All of our high energy nimble navigators following the are in for a treat tomorrow when Trump sweeps the east coast in a land slide that threatens to dislodge the plaque that dwells in the GOP party bureaucracy.

#101 Star Stuff on 04.25.16 at 6:46 pm

And where’s the “f” in lieutenant for fracking sake.

#99 Smoking Man on 04.25.16 at 6:22 pm

I must be losing my mind, the guy who invented the English language is a tool.

Colonel Sanders, where is the R in Colonel? I pronounce it; Cur-nal Sanders.

Unreal. Writing is challenging.

#102 acdel on 04.25.16 at 6:52 pm

Only a person who takes calculated risks is free.

Good luck with your endeavor!

#103 Nimoucha on 04.25.16 at 6:53 pm

Congratulations Garth! What a great undertaking! I wish you the best with it! Please keep blogging about it from time to time on your other blog.
Now how do you find the time and energy to do so many different things is a mystery to me. Please take good care of yourself!

#104 Squish on 04.25.16 at 7:06 pm

#83 LP on 04.25.16 at 12:39 pm

_____

I grew up in Erin; our family ran the Shamrock Springs trout farm at the edge of town until around ’87 and my mom taught at the elementary school. I haven’t been back there in years, but it was a great place to be a kid.

Seeing the Belfountain General Store building get a second chance at life instead of being torn down does my heart good. Nice going, Garth.

#105 Cici on 04.25.16 at 7:52 pm

I love that beauty you bought Garth…she’s got a lot of soul and character. Hope that works out to be a good investment.