Real Estate Network Group

Integrity is an interesting word. It means to be whole, sound, unimpaired. In the context of morality, it means to be honest, truthful. And yet one person’s definition and application of integrity can be the polar opposite to another.  A classic example is when you tell someone a secret. A secret is a secret. It is personal and confidential information that is not to be disclosed to anyone else. And I’m sure you have heard stories of how people have been betrayed. That is a breach of integrity: doing something against the will of someone else’s direction.

White lies are a breach of integrity. I learned my lesson well early in my career because I got caught in a white lie. I started out as a receptionist. When the boss said to tell people he wasn’t in the office, I did as he instructed. Here’s a classic example of having a superior asking you to lie for them. And wouldn’t you know it. The first phone call that came in was from a gentleman who had been attempting to contact my boss for some time. My boss was avoiding him and using me as a shield. “I’m sorry, he’s not in the office.” The caller simply stated back to me, “No you’re not and I know he’s in the office. If you were really sorry, you wouldn’t lie for other people. Just tell your boss I know he’s there and he can choose to call me back or not.” He was polite and direct. His words woke me up. I ended up feeling bad to my core. I vowed that I would never allow myself to be compromised in such a way again. “He is not available to take your call right now” is a much more appropriate response.

White lies are such small things at first. They seem pretty harmless. But they grow over time. What happens when you breach your integrity day after day, year after year? It becomes a habit. It becomes a core value. It turns into Enron, Worldcom, Nortel. It turns into a Bernard L. Madoff Investment Securities LLC giant $50 billion ponzi scheme. It undermines the faith, respect and trust that people put into you and your company, and thousands of lives have been financially traumatized as a result.

Stand firm in your integrity. Keep your word. Even if you lose your job. Because living a life of integrity is a rich blessing towards your eternal retirement plan. I am mindful that my spiritual currency is not earned with silver and gold, but with the riches of character.

December 19, 2008

The past couple weeks has been astounding. I was reading with shock and awe the story of Wall Street icon Bernard Madoff and his $50 Billion ponzi scheme. It is inconceivable that one person could have perpetrated this for so long without being caught if not for his sons turning him in. And the demands made by the Detroit Three automakers (Ford, GM, Chrysler) for bailing them out of their inability to stay solvent. It’s amazing the see the power that the unions have on government to lobby for subsidization. I thought the USA was all about capitalism, not socialism. And 2 days ago the US Federal Reserves makes history by announcing interest rate cutes to zero percent.

Hey folks, this is the reason why I made the commitment to become financially literate. It starts with personal accountability and fiscal responsibility. It’s back to basics. It’s very black and white. Like piano. I am a classically trained pianist. The majority of my time was spent practicing the scales, not playing the piece. If you didn’t do the scales, the piece suffered.

I see the current financial mess as a really bad piece. Trying to play it faster and louder just makes it worse. This is when you stop, go back to basics, practice the scales, and slowly take the piece one note at a time, one bar at a time, and build from there. Until at last, the piece comes to life. You’re playing music to the beat of a different metronome.

The difference is that we were able to give our real estate investors a bonus payout last week instead of cutbacks and layoffs.

December 19, 2008

I just heard the price of oil went to a 4-year low to $43.47 per barrel, on the radio yesterday. What happened to the July 11th high of $147.27 per barrel just four months ago? Experts were predicting oil would go up to $200 per barrel. Now experts are predicting oil will go down to $25 per barrel. How can the price of oil change so dramatically in a few weeks? The more I see this kind of price fluctuation, the more I am convinced that these markets are completely manipulated. Putting my money in the market is literally putting my financial future at the mercy of a manipulated market. That’s why I so love real estate. It’s something I can control. I can manage the value of my asset. I can increase the NOI (net operating income) over time. I can manage expenses.

The best hedge in any volatile market is real estate. Don’t take my word for it. Do your independent research. Your financial future depends on it.

December 5, 2008

Let me tell you I am really miffed at the Liberals, NDP and Bloc Quebecois right now, and I for one will not tolerate political bullies discounting the election process. This note came in from my network, an individual who has been in the political scene for over 25 years:

I would like to briefly explain what is going on in Ottawa right now that may have a serious and lasting effect on the Canadian way of life.

Firstly, the Liberals are currently negotiating with the NDP and the Bloc Quebecois to form a coalition government to defeat the Conservative Party of Canada and form the government of Canada. There is nothing undemocratic about this except that the NDP is a socialist party and the Bloc is dedicated to the break-up of Canada. They all stated positively during the election period they were not interested in such a coalition.

Secondly, this “coalition” claims the reason for uniting is because the Conservative Party of Canada does not have a stimulus plan in place to counter the difficult fiscal period ahead. They are wrong.  The Government has ensured that our banking institutions are protected from financial disaster. It is also prepared to pour billions into the nation’s infrastructure if and when our economy recedes. To date, our economy is still growing even if slightly. The Government is watching the auto industry carefully which is also still growing but they have not committed to spending your tax dollars to bail out an industry in its present form.

Thirdly, and the main reason for the coalition, is that the Liberals, NDP and Bloc parties are incensed because the Conservative Party of Canada has proposed to eliminate the government funding of their parties. Did you know that if you voted in the last election (and every election since 2003) $ 1.95 was given on your behalf to a political party ? This bill was passed by Jean Chretien’s government without any discussion in Parliament. The Conservative Party of Canada was against this proposal in 2003 (at that time -  the Alliance Party) and still oppose the principal.

The CPC would lose about 16 million per year, the Liberals 6 million, the NDP 3 million and the Green 1 million. Each year yet!!

Companies and unions are no longer allowed to contribute to political parties and individuals are restricted to a contribution of $1,100.00 per year. This means that political parties must build a national team of members willing to contribute something to their chosen party. Does this not seem to be a fair plan to you ?? The economist, Stephen Harper and his Cabinet put this plan on the table as he felt political parties must tighten their belts the same as you and I, the Canadian citizen, when times are tough.

The three opposition parties have been lazy about growing their support and have counted on you and other citizens to contribute $1.95 whether you wanted to or not. They counted on taxpayer funds to finance their party. Is this the kind of coalition we want to carry us through the difficult times ahead ? Stephane Dion as Prime Minister and Jack Leyton as Minister of Finance and separatist Gilles Douceppe as the Minister of Foreign Affairs. It scares me half to death.

If you are so inclined, you may sign a petition prepared by Canadians for Democracy against this coalition by going to the website  www.canadians4democracy.ca. Let your voice be heard - 1^st time.

This note came in from my network on the east coast:

Regardless of your political leanings, the news that our great country could very soon be ruled by a coalition government not chosen by the people of Canada, but rather formed in the back rooms of Ottawa, should have you very concerned for our system of government and the political and economic stability of Canada. Even in the best of economic times this course of action would be cause for immense concern. The fact that it is being proposed in what is certainly the worst economic climate in modern times is outrageous and shows a complete disregard for the people of Canada.

The current proposal by the Liberal, NDP and Bloc Quebecois parties to supplant the ruling minority Conservative government is an affront to democracy. Canadians did not elect these parties as a coalition to govern the Country. The compromise policies developed in order to achieve the coalition were not put forward to the Canadian people to evaluate and voice their approval or disapproval of through a democratic election process. If the opposition parties have lost confidence in the Conservative government, then let the voters decide who should lead the country. If the Liberals, NDP and Bloc wish to present themselves as a single party with clearly articulated policies in an election, they are certainly welcome to do so, but the decision must be that of the people, not of a handful of politicians who have no mandate to pursue this course of action.

If you agree that an election is the only appropriate response to a vote of non-confidence, please sign the “no coalition” petition at www.ipetitions.com/petition/nocoalition/ . Results of this petition will be forwarded to Governor General Michaelle Jean. Let your voice be heard - 2^nd time.

This note came in from my immediate circle of influence, people I grew up with and have known for over 35 years. When I signed this petition, I was signature #178303.

http://www.PetitionOnline.com/CANADIAN/petition.html

December 3, 2008

In the November 25, 2008 issue of the Vancouver Sun newspaper, the BusinessBC section headlines “Consumer confidence slides” as if that was news and the secondary header halfway down the paper reads “Economic shock forcing the public to wake up to the pitfalls of easy credit”. My first response to that headline was the economic boom of access to easy credit … when you know what you’re doing. You see, most consumers spend their discretionary income on doodads. They also spend money they don’t have on doodads. Doodads depreciate in value the moment you buy them. Doodads do not put money in your pocket. Consumers spend a lot of money on assets that have no value. Ergo, the credit crisis because the majority of people do not know how to use credit to their advantage. My mentors taught me to spend my money on assets. So when I had access to easy credit the last few years, I made sure that I used it to purchase real estate investments. These investments all cash flow and will appreciate in value over time. Meanwhile the principal is being paid down by my tenant residents. This formula creates ongoing cash flow and builds my wealth. The interest payments for my investments are tax deductible so I get to write it off on my tax return. With this scenario, I can afford to buy doodads if I choose. Do you know that I still do not own a Blackberry, I do not have internet access on my cell phone, I do not own a flat screen TV, I do not subscribe to cable TV service or satellite TV, I drive a 2003 Jeep Cherokee Limited Edition (always buy a used car). I am perfectly happy without these doodads. My world is not falling apart. I can actually survive without a satellite TV and so can you. So what if I can afford it. I find life so much more fascinating. Get hooked on creating the life of your dreams. It doesn’t come with easy credit. It comes with diligence, persistence, commitment, purpose and vision. When you do what is hard, life becomes easy. When you do what is easy, life becomes hard. My mentor T. Harv Eker says this all the time, and he is so right. There are two sides to every story. Why not choose to be on the easy side of credit. Get educated. Get empowered.

November 26, 2008

It’s credit education week. According to the November 17^th issue of the Globe and Mail, a recent study by the Vanier Institute on the Current State of Canadian Family Finances, shows that household incomes have risen in the past 18 years. That’s good news. The bad news: Debt has risen seven times faster. We are becoming a debt driven culture with record high bad debt and record low savings. These are Canadian statistics.It’s time for a shift in ideology. Instant gratification and entitlement are promoted regularly in the media. Go ahead. Buy it. You deserve it. Thus, encouraging you to finance the spontaneous purchase on your credit card. And then you pay and pay and pay.

Managing your money well takes education and planning. Among the many tools available on the Credit Education Week website is a calculator that can be downloaded to mobile phones and used to track expenses on a daily basis. I used to do this manually in a ledger before computers were around. It’s a great way to increase your accountability. You can also play an online game to test and build your financial awareness. This is a great place to get started on your road to financial literacy.

For more information, please visit http://www.crediteducationweekcanada.com/.

For more information on building your credit rating, please visit http://www.roadtobettercredit.ca/

November 17, 2008

I often get asked where I look for good real estate investments. That’s a broad question since I look at most of North America. However, there are certain areas that I do not look and will not buy. They are my reasons, whether you agree or not. In Canada, I will not buy in the Northwest Territories, Quebec or the Maritimes. The NWT is just too far north for my taste with a small population spread out over a vast area. Yes, there are some great buys up there. I’m just not willing to fly up there every year. Quebec has the political separatist issue still hanging over it. Land values remain flat. And once a year on the same day (April 1st), all the tenants move out and move in. There is no staggered end of lease term. They all start and end on the same day. That’s just plain ridiculous. And as for the Maritimes, they do not have a torrens system so you can’t really be sure that you even own the land, and if the land you own is in dispute, it shall remain that way. I like knowing that I have clear title to the land and buildings that I buy. If you’re wondering what Torrens is, look it up in Wikipedia.

Torrens title is a system of land title where a register of land holdings maintained by the state guarantees an indefeasible title to those included in the register. The system was formulated to combat the problems of uncertainty, complexity and cost associated with old system title, which depended on proof of an unbroken chain of title back to a good root of title.

November 17, 2007

It’s interesting to note that with all the hype and media sensationalism, nothing has changed all that much in the mortgage scene. I was reading the November 2008 issue of Canadian Real Estate magazine (www.remag.ca) and looking at the number of residential mortgages in arrears in Canada. Since 2005 to 2008, the percent of arrears to total number of mortgages in the country has remained between 0.24% to 0.28%. That’s one-quarter percent; less than 1%. Mortgage arrears is three months or more. So as you can see, foreclosures account for less. 

November 17, 2008 

Health care spending is set to reach its highest level ever - $171.9 billion dollars this year. This is $5,170 per person. And it’s growing faster than the economy and outpacing inflation. This is the report from The Globe and Mail, Friday, November 14, 2008.

If you have read Robert Kiyosaki’s book, Prophecy, then you can already see the rumblings of our future. We are blessed to have a universal health care system in Canada. I certainly appreciate the benefits of this sytem for my dad. Private medical costs for prostate and spinal cancer, treatments, MRI scans, CAT scans, chemotherapy treatments, would be astronomical if he lived in the United States. It’s only a matter of time before the system collapses. Are you prepared if this were to occur in our lifetime? Is the next generation of youth prepared? That’s a yes and no answer.

I met a 24 year old last week who is already an accredited investor. That means he has over $1,000,000 (one million dollars) of net assets. He went into real estate right after high school. That’s just 5 years. That means you can get started, now, too. Get started on your real estate health care plan so when Medicare goes by the wayside, it’ll be a blip on your radar.

November 16, 2008

 That is the headline in the November 1, 2008 issue of the Financial Post’s Economy section written by John Greenwood. “Pension funds everywhere have been gored by the market turmoil.”  ”Due to the fact that most pension plans report only once a year, the extent of the problem is far from clear, but according to industry experts, the damage is unprecedented in recent decades.”  ”Under current rules, companies have five years to make up any funding shortfall, but the government might extend the period.”

What does this mean? You don’t want to be retiring right now. If you were planning to retire between now and five years from now, and you were relying on your pension fund, you are now faced with the possibility of working through your golden years to make up for your losses. In the last two weeks, I have seen investment accounts that were once hailed as stable income sources decimated.

The good news? The market will eventually return to normal. You just have to wait it out, five, seven, ten years, until the market recovers. That’s just too much nail-biting tension for me to bear. I absolutely love Robert Kiyosaki’s new book “Increase Your Financial IQ”. He clearly states that paper asset investments are out of your control. Less control equals higher risk. Therefore only invest the money you are prepared to lose. That way when this happens, your lifestyle is not affected.

More control equals less risk. That would be real estate. That’s why our portfolio contains less than 1% of our overall investments in the stock market. We have multiple sources of stable, reliable passive income from our apartment holdings.

We diversify our risk geographically; look for real estate that is under priced in the low cycle; make sure it has net positive cash flow; manage the rents up creating a more valuable asset; and ride the appreciation trend up. When the real estate market peaks, we start the cycle all over again in a down market.

My money is in real estate that I control and manage. That’s my pension fund. It’s not too late to start educating yourself on what other options you have available to you. The key is to get started now. Start with Robert Kiyosaki’s new book.

November 2, 2008