The best investment according to the CEO of the local Builders Association. The opportunities and risks for builders and real estate developers. The membership group attended by the who’s who in local real estate. That and more on todays episode of the Truth About Real Estate Show For Canadians!
My name is Erwin Szeto, host of this 300+ episode show since 2016, ranked #81 in Business on iTunes. Happy holidays everyone and what a week!
The US Federal Reserve, the folks who control interest rates in the US just announced they are holding the rate and expect to cut rates three times next year. Assuming .25% each cut that’s ¾ of a percent sending stock markets soaring and i’m a bit surprised Jerome Powell is sharing their plans for cuts.
The implication to real estate investors is many expect the housing prices to go up once rate cuts begin in the US.
The implication for Canadians is our own Bank of Canada increased rates faster and higher than the Americans did so the natural expectations is they will cut steeper and faster than the Americans so we should expect more than three cuts in 2024.
The market expects rate cuts of 1.25% to 1.50% by the end of 2024 and cuts to come as early as the spring. Based on history, cause and effect, we should expect to see the market pick up in activity and increased demand pushing prices up which is good news to many current investors.
My clients are taking advantage financing their acquisition of US income properties using their HELOC. Since HELOC interest rates being variable, expecting to fall and it’s cheaper financing than what the American lenders are offer, as long as they can cover the interest and payments, this makes a lot of sense. The positive cash flow and no rent control will help a lot to reduce the risk of such investments.
I really can’t wait till I sell some properties here and buy houses down south. The timing seems appropriate too according to Shark Tank’s Barbara Corcoran who’s saying the US real estate market will go up once the interest rate cuts begin.
We Canadians with lots of HELOC have a strategic advantage over the Americans since American banks only offer 30 year fixed mortgages. Their buyers should stay on the sidelines longer because who wants to lock in near peak interest rates.
Best Developer Investment, CEO WEHBA, Planner Mike Collins-Williams
On to more serious matters.
I’d like to take a moment to reflect on the human beings negatively affected by investing on pre-construction or speculation. There have been many and will be many more people losing their 15% deposits on pre-construction condos and houses and they’re on the hook for any costs and losses incurred by the builder when they resell the property.
In combination with a slowing economy and job losses it’s just awful out there.
In a country with massive affordability issues someone was going to get burnt and let’s not forget renters who are praying to stay in their rent controlled units as a move could be a disaster in having to pay today’s outrageous market rents.
A friend of mine told me he rented out his downtown Toronto condo, two bedroom, two bath for $3,500 plus utilities and it’s still negative cash flow. Rent went up $500 over a two year period.
If the federal Liberals wonder why their polling numbers look so bad… well they didn’t have the courage to force municipalities to revise their zoning to allow for higher density and they’ve simply allowed immigration to exceed the supply of health care, education and housing.
While the Canadian economy is shrinking in real GDP terms. The numbers are even worse when you remove the economic growth from immigration. Housing affordability hasn’t improved much either and it’s about to get worse.
Royal LePage is forecasting Toronto housing prices to increase by 6% by end of 2024. Between rate cuts and rising prices, this is why I’ve recommended my clients to wait for a rising market to sell to maximise their sale prices. We investors need all the help we can get with investment properties so out of favour in the current market.
The housing crisis still exists, there are deals out there for short term gains for those with deep pockets and strong stomachs. I still believe those who create housing, as they always have will continue to be a profitable investment business hence we have a serious expert today in Michael Collins-Williams who is the CEO of the West End Home Builders’ Association.
MCW as he’s known to his friends, has spent his entire working career in Planning and Building with a degree in such from Ryerson University, followed by 18 years at Ontario Home Builders’ Association before taking the big job as CEO almost 3 years ago at the West End Homes Builders’ Association.
I know several members of the West End Homes Builders’ Association. They are an close knit, active community of members with the major players including folks with hundreds of millions worth of real estate. Cool party is the crazy rich builders are approachable and humble in my experience.
With all the development craze I’m seeing on social media, if you’re one of them, I can’t recommend enough you check out your local, non-profit, Builders’ Association for low price, high value networking.
There’s a saying in Chinese, the best things are cheap and quality which is why I’m so frugal :).
You can connect with MCW on Twitter: https://twitter.com/mikejcw?lang=en, website is https://www.westendhba.ca/ and Mike is happy to speak to anyone interested in joining, just reach out! Just tell him you heard him on this show.
Please enjoy the show!
This episode is brought to you by me! We don’t have sponsors for this show. I only share with you services owned by my wife Cherry and me. Real estate investing is a staple in my life and allowed me to build wealth and, more importantly, achieve financial peace about the future, knowing our retirement is taken care of and my kids will be able to afford a home when they grow up. If you, too, are interested in my systematic strategy to implement the #1 investment strategy, the same one pretty much all my guests are doing themselves, then go visit www.infinitywealth.ca/events and register for our next FREE Online Training Class. We will be back in person once legally allowed to do so, but for now, we are 100% virtual.
No need for you to reinvent the wheel; we have our system down pat. Again that’s www.infinitywealth.ca/events and register for the FREE Online Training Class.
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BEFORE YOU GO…
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Hopefully being the most decorated team of Realtors in Ontario will make you consider us for your first or next real estate investment. Even if you don’t invest in our areas, there’s a good chance I know who would be ideal for you.
I’ve been around for a while, some Realtors are talented at servicing investors there are many with great ethics. The intersection of the two, talent and ethics is limited to a handful in each city or town.
Only work with the best is what my father always taught me. If you’re interested, drop us an email at firstname.lastname@example.org.
I hope to meet you at one of our meetups soon.
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Don’t delay, the top markets we focus in are trending upward in price, so you can pay today’s price or tomorrow’s price.
Till next time, just do it because I believe in you.
Hamilton, St. Catharines and Toronto Land Development, Real Estate Investor, and soon to be builder.