Archives for December 2015

I am sure that everyone has heard over the last few years that real estate crash in the US was caused mostly by sub-prime lenders, and to a large extent this was not the case according to a very interesting interview that I hard on satellite radio (this has not been sourced and verified) now when I hear an opinion of these world changing events I most certainly take them with a grain of salt- and I think you should to.  However being a natural skeptic I did think that this researcher had some interesting perspectives and I wanted to share that with the Canadian community.

The first item of significant note was that the break down of the lending landscape looked far different during the years leading up to the crash than most would think- the sub prime lenders only made up less than 20% of the total amount of mortgages in the US at that time with around 60% of the total loans being issued by traditional or large institutional lenders.  This is rather shocking to think that well over half of the “bad loans” that were issued were from the big banks and they were taking risks that were out of line with good lending practices.

It is always easy to look back and blame the lenders for complex issues, but as we know there are a multitude of factors that lead up to a correction of that magnitude.  What happened to the other 20% some might ask – the remainder was made up of regional and community banks and during the boom times they made bad decisions just like the big boys…the sub prime lending issue definitely played a role in the crash but the recession appeared to be on its way for a while based on the fundamentals of what was happening in the US at that time.

The take-away here is that the sub prime lenders were demonized in the media as being the sole culprit and the big banks that needed to be bailed out (and others that didn’t) seem to have played a larger role than many may have realized.

This phenomenon and others really drive home the point that what the media is reporting about and what unfortunately becomes the common consensus is not necessarily a reflection of what is really going on – so don’t believe everything that you hear especially when it comes from the media!

Respect the hustle

Tim Reid

The changing climate of real estate in Calgary sure has a lot of real estate investors shaking their heads about what to do next to continue to make money amid changing winds.  How can I keep my cash flow above water with rental prices dropping all over town? How can I flip this house without large risks when the prices are falling? What is the best way to find wholesale deals right now?

These are the questions that Investors have been asking me on a daily basis – and not surprisingly one of the requests I have been getting a lot more lately is whether or not I have any leads on tenant buyers or investors interested in doing a JVP for Rent to own in Calgary.  This strategy works very well to buoy you sinking rental rates and with a lot of current home owners losing jobs or having fear that they could be laid off – creates a large influx of potential tenant buyers into the marketplace.

The resurgence of rent to own is certainly taking place in Calgary and area, which was almost a barren wasteland for this particular strategy over the last few years with soaring house prices making it very difficult to find owners willing to even consider rent to own as a good strategy to solve their problem.  There have been increased foreclosures in Calgary by about 30% in the last 60 days and the trend will likely continue over the coming months with layoffs still happening with many going unreported in the main stream media – which is always a few laps behind what is really going on in the marketplace.

This is a great time to be able to help struggling families out of their problems and make an excellent profit for your real estate business at the same time, rent to owns may not have the hustle and bustle of flipping or wholesaleing but it still produces when executed properly an average of around 30% return on investment (ROI) – that is much better than any traditional investment that I can think of.  The weather has changed over the last few days in calgary and the real estate climate has some changes to match – but if you know what to look for and are willing to provide some creative solutions to your motivates sellers that that changing climate could mean a hurricane of dollars rushing into your bank account or saving that rental of yours from a negative cash flow position!

Respect the Hustle

Tim Reid