Author: Oliver Foote

Don’t Invest In Stocks or Real Estate

Update Dec 14, 2024: Added Newsletter Email Archive at End of Post.

Don’t invest in stocks or real estate. I know, probably controversial, allow me to explain. I recently read a business book that really brought home an important point that has been living rent free in my head for a while. Investing in stocks (less so in real estate) when you’re young is not going to make you wealthy. If wealth happens to be your goal. Now allow me to substantiate my claim. Surely investing in stocks and real estate is a good idea, surely I should save money from my job and invest it? People get rich all the time investing in stocks and real estate, right? Well, that depends. If I spend 40 years saving a bit of money from my job every week, and retire with a million dollars or two, sure, maybe I’ve done well. But, the elephant in the room is always inflation, which will eat away at my buying power. The $1 million dollars 40 years from now, won’t be worth $1 million dollars in todays money.

Real estate is a bit better because the power of inflation is working for you not against you, it tends to be a bit of an “inflation hedge”. If you increase your power to pay down a loan over the years (i.e. earn more), the loan value 20 years from now will not be worth as much and you’ll have an easier time paying it off. For example, if you can borrow money at 0% forever but inflation is 2%, the loans value drops 2% a year. Hence why lenders tend to lose money in a hyperinflationary economy, while borrowers tend to benefit. A very important concept that is overlooked when giving retirement and investment advice is the time value of money. Basically, inflation. Also, inflation during a high inflationary time is deceptive. Because when you go through a few years of close to 7-8% inflation, and then drop down to 3% a few years later. In 5 years time since the start of the pandemic the compounded TOTAL inflation has been close to 20%. So if your stocks aren’t keeping up, you’ve at best broken even.

Whenever there’s a story of some 25 year old who made it big did they work a regular job for 40 hours a week, then diligently save 15% of their paycheque and invest in stocks, and boom 5 years later they’re a millionaire! Unlikely, if not impossible. There are sound statistics and facts showing that the people who are young (and also how many older people made their money) did so by building a business. The capitalist system is built around rewarding those who create something the marketplace wants. There’s only one Apple (inc.), but MILLIONS of us buy their products. Simple math says if you sell a million of something you’ll be a millionaire. In the system we are in you have to be a “producer” in order to make it big. Sure, maybe once in a blue moon someone hits it big on crypto (assuming they don’t lose it all in the next crash), or managed to time an investment that went up 10x in value. But the large majority of people who speculate on stocks hoping to get rich inevitably get burned, just ask my friends and I.

For some people, they may not have any ambition to be wealthy and they may just want to have a decent job, and enough money to have a decent life. But for the people who want to be wealthy, they have to realize a few things. 1. No one cares that you want to be wealthy. What can you do for me? That’s what drives buying decisions. Generally speaking, I don’t care that a corporation is profit motivated, I care about the thing I’m buying or the service they are providing me. Maybe, I make my buying decision emotionally because they have built a brand that makes what they are selling desirable to me. 2. No matter what business you’re in, you have to sell. Whether “selling” means getting to the top of search rankings, creating a marketing campaign, or paying for ads. You can have the best product in the world, but if no one knows about it, it’s as good as having no product at all. (Luckily, nowadays social media is a strong method of selling and brand awareness that is largely free, Google My Business is valuable, and word of mouth is also very much still alive).

There are more intricate rules and considerations to think about if you are building a business. Do you want to build a business that can eventually work without your inputs, would be nice huh? But you have to remember that at the beginning the business needs you to be the one forcing it forward, building it up, and doing the stuff that no one else wants to do. A thriving business isn’t magically going to appear on your doorstep because you “visualized it”. You have to be actively out in the world providing input to the machine so it can start cranking its gears. Spend less time thinking and more time doing. Speaking of stuff no one wants to do. That’s a great way to choose an avenue that is ripe for disruption. There are a million different businesses you could start, but it’s important to consider if there is a need in the marketplace (the world probably doesn’t need another personal trainer, or blog for that matter, owch…).

It’s a much better idea to begin a business in a market that doesn’t have a ton of competition, that being said, you’ll almost always find someone who’s “already doing it” and if that business is smart they’ll do their best to deter you from even thinking of competing. But if the barrier to entry is relatively high, and building that business would be “hard” and you think you could do it better, then you’ve got an opportunity to innovate. The higher the barriers to entry, the better the potential idea, you want to be in a space that is “hard” to work in (or where all the current options suck), because that will act as a moat to your business.

You also have to consider the scale of the business. Would it be feasible for this to be a national or international business? Or am I just going to open one restaurant on the street corner. Not saying you can’t have a thriving restaurant, but notice that the chains who are global have found a way to replicate their formulas using the franchise model. Again, depends on your motivations. Do you want to be global, or are you stuck thinking local.

As a bit of personal experience allow me to divulge a bit of an internal battle between two businesses. When I was originally thinking about real estate sales as a business, I was noticing a lot of the warning signs that this book pointed out and that I’ve mentioned above. Does the world need another realtor? Quite frankly no. Unless, you have a super innovate or weird business model, it’s an oversaturated market. Can the business be global? Not really, unless I was to start my own brokerage like Re/Max or Sotheby’s. Can I detach from the business in the future? Not really, unless I build a team of agents who handle all my clients for me, but even then many clients would likely just prefer to work with me if we have built up a relationship. Do I have control over my own brand? Somewhat, but also not really. I work under a brokerage company, and I have to use their brand in all my marketing. They are probably the one making the big bucks. 1400 agents under their belt. Yeah, that’s a nice business. But I will say, the owner/operators are VERY involved in the day to day operations, and the business needs their constant inputs to grow and build relationships otherwise it would likely fall apart and agents would begin to leave. But, eventually, they could train and hire people to handle their roles if they so desired, it’s a pretty well oiled machine.

Then I started to muse about my YouTube channel where I posted engineering content for a period of time and now sits at 25,000 subscribers. I decided against posting about real estate content on that channel in the worry that I would upset my current audience 99% of whom subscribed from engineering videos. So I started to post some real estate content on a second YouTube channel and I had this realization of how brutally limited my market is. If I’m just talking about “Mississauga Real Estate” MAYBE at most 1,000,000 people are interested. But considering the demographics of Mississauga and that most of them aren’t on YouTube daily, it’s probably closer to 100,000 people who are relatively active on YouTube. Of those people, VERY few of them will be buying real estate because the average price of a home is $1 million dollars, and most young “Mississaugite” is probably not thinking about buying (or selling) anytime soon. That leaves the intersection of my online, “social media” market in “Mississauga Real Estate” to at most maybe 1,000 people. What a terrible business and waste of time. (If I sold houses to 1,000 people I’d be laughing, but social media and real life are very different). AND YET, I’ve been to so many “marketing training sessions” harping on how you should be posting to social media daily and how making YouTube videos about real estate is “essential”. But the market is inherently limited, unless you are building a separate online media “brand”. One way to overcome this limitation would be to focus on a larger market, all of Canada for example. But then your strategy won’t be relevant to the hyperlocal markets that all of “real life” real estate lives in. Two streets in the same neighborhood have very different dynamics, and that expertise is very boring to everyone except the clients you are working with at the time. The upside is that even if you get 1 sale from social media marketing you’ll probably see an ROI since commissions in real estate are so high. Real estate is a relationship building business, an “in-person” relationship building business, a local business. So if you can simultaneously build a unique online media business, while also working on your local real estate business, sure go crazy. But I don’t think from a strategic perspective a social media strategy is a good use of time for the average realtor. You’re better off just picking up the phone and calling people.

Now let me analyze my Engineering channel. What a great concept. My target market is high schoolers and university students. Who just so happen to be chronically online and advertisers love selling to the young crowd. Universities and colleges have never been more desirable, they are degree printing machines in the modern era, so channels with “studies” as their focus have the opportunity to grow. I also found a niche in Mechatronics engineering, since there wasn’t really anyone making videos on the topic online, yet the google search queries were quite high. Again, perfect unmet market  need/opportunity. I hardly realized all this at the time, and it took me about 4 years to really put this all together. As a business with growth potential, and something that actually meets the needs of a market, an engineering YouTube channel is not a terrible business plan at all.

Now, one of the challenges of building an “influencer” business is that you are often at the whims of an algorithm that can be challenging to predict. So you don’t REALLY control the means of production, and control is important in a business. Likewise, for real estate you could say I don’t REALLY control how many clients I can get, but in theory you have more options to gain some control over your real estate business than you do in an “influencing” business.

Additionally, you really need NUMBERS for it to be a viable business model. Over the past year I got around 750,000 views, which worked out to an average of $300/month from ad’s that played over my videos. Now an extra $300 a month is fricken sweet (pardon my French). Especially considering that I’ve all but stopped posting to that channel and 99% the views are coming from old videos. But unfortunately, no one can live on $300 a month. If I didn’t know better I’d say this YouTube thing is screaming into my face “HEY THERE’S OPPORTUNITY HERE!” And you know what, it might be right.

The creator business model almost always has multiple components for generating revenue, and like any sound business requires a component of sales. Whether that’s building  a product and selling something you think your audience may want, creating a course for people to take, or doing a “brand deal” and selling someone else’s product during one of your videos. Building an online brand requires a little more than just ad revenue to be sustainable. But the great thing is, that if there is demand for your content, those other things can often fall in place. Some other positives is that your reach is global, you have a lot of creative control, and once you make a video once it can continue to get views (hypothetically) forever. Creators often branch out to build traditional businesses around the “influence” they hold. Anything from merchandise, to experiences, to streaming platforms of their own, or “exclusive content”.

So, where do we go from here. Hopefully amongst all the rambling I was able to put across the idea that if you want to make money, you have to make something that other people (“the market”) wants. Once you’ve made a chunk of money, THEN I would highly recommend stocks as a passive income and wealth preservation tool (but if you don’t have any grandiose plans then, yes, please save and invest for your future). If you are doing something because “you love it” or “you want to work for yourself”, you’re doing it wrong. You work for the customer, you work for your audience. Once you meet their needs, then and only then will they help you meet yours. The world is a selfish place, work selfishly hard to build something other people want or need and become great at it. How do you know if other people want something? Throw it into the world and see what happens. Call up your friend and see if they’ll give you a $20 deposit for a service business, then provide the service and get feedback. Call 20 professional’s or small businesses in your market and ask them what they struggle with, then solve their problem. Look at your YouTube comments and find a common thread amongst requests and complaints that can help guide your future content. It’s not “what you can do” or “what skills do you have”, but “what can you do for me”. Give the people what they want.

Keep Investing,

Oliver Foote

Newsletter Email Archive Sent: June 9, 2024:

Newsletter #16: Don’t Invest in Stocks or Real Estate. Bank of Canada Rate Cut! May Market Stats.

This Weeks Blog Post:

  • Why capitalism is won by the people who produce things
  • When you should use stocks as an investing tool
  • How to choose a business to start and a market to start in

Don’t Invest in Stocks or Real Estate:

Read the full blog post here: https://oliverfoote.ca/dont-invest-in-stocks-or-real-estate/

Real Estate News:

  • Bank of Canada finally cut interest rates! By 0.25bps. This means that slowly borrowing money is going to become cheaper, which means that slowly you’ll see people coming back to the real estate market.
  • May market stats for the Toronto Real Estate Board came in, and prices were a bit lower than last year due to a somewhat short lived spike in pricing that happened 1 year ago. More homes were up for sale last year than the year prior, and less homes sold than last year. So supply is building up in the market, but with the interest rate cut this increased supply may not last.

Market Performance as of close Friday June 7, 2024:

S&P 500: 5,346.99 (+12.74% YTD)
NASDAQ: 17,133.12 (+16.03% YTD)
S&P/TSX Composite: 22,007.00 (+5.44% YTD)

Canada CPI Inflation Apr 2024: 2.7% (0.2% Decrease from Mar 2024)
Current BoC Benchmark Interest Rate: 4.75% (0.25% Decrease on June 5, 2024)
Unemployment Rate Apr 2024: 6.1% (0.0% Change from Mar 2023)

Have a Great Week!

Oliver Foote

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Investing in Real Estate With Only $5000

Update Dec 14, 2024: Added Newsletter Email Archive at End of Post.

Private investment funds. That is the topic of todays discussion. You may have heard of something called a REIT or Real Estate Investment Trust, often these can be public companies who might raise money using capital markets. The goal of a REIT, like a normal “company” is to provide it’s investors a return on their investment, specifically through Real Estate. Frequently, the reason that people invest in Real Estate is due to tax benefits, and REITs tend to benefit from tax benefits as well. However, you don’t necessary have to invest in a public REIT, if you know the right people (*cough cough, call/email me), you can find private companies, some of them quite sizeable with hundreds of millions or billions of dollars in assets under management who operate like a REIT.

The benefits of investing privately rather than on the open market is that it is less costly to operate privately than it is to operate on the open market. The open market has very stringent accounting and financial reporting regulations which becomes costly. But, just because a private company doesn’t have these regulations doesn’t mean they are a bad investment or that they aren’t regulated at all. Many private companies, especially those that are sourcing funds from large numbers of investors, will create internal reports similar to what you would get on the open market, maybe monthly, maybe quarterly, as well as your usual MD&A (Management Discussion and Analysis) discussing what their plans are and how they plan to invest going forward. There is also governmental oversight, and securities regulators that get involved when a company is sourcing funds from investors, so generally they are quite safe to invest in and can provide better returns than open market REITs.

Usually these privately run REITs will have a variety of offerings. The one that I’ve connected with in the past offers a minimum initial investment as low at $5,000, and this “segment” of their business exclusively invests in large multifamily rental apartments. They aim to purchase well, fix up, and create a consistent cash flow as a dividend to investors and have a track record to back it up. They also have another division which focuses on development projects, think new construction condos. But the minimum investment for this is closer to $25,000 and you do not get your money back until the project is fully completed. But the total returns on these projects can sometimes be a doubling of your initial investment. You are effectively a source of funding for a well managed construction company and once the properties all get sold you get a payout. The downside is your cash can be locked up for extended periods of time, but it’s almost as passive as real estate investing gets.

Now you might be wondering, well how do the people who run all this stuff get paid? The answer is that there is a management fee baked into the return that you get back. This management fee depends on the type of project, the sector of real estate in which you are investing and various other things. But this is really where smaller, (i.e. Less than a billion dollar) companies tend to shine. They tend to run leaner operations than public companies and can choose to undergo things like development projects that take multiple years without the investors being able to pull out at any time when they fell like it. There are multiple other ways in which private real estate investing is superior to public REIT investing and I would highly recommend this route for people who want some exposure to real estate, but don’t want to manage it themselves and want to get good value for their investment.

There is no such thing as a guaranteed investment, but real estate is a tangible asset so you know your money is backing something that actually exists. The goal of many REITs is to provide cash flow, as mentioned above. Which means that the market fluctuations shouldn’t have a significant impact on the amount of money that you see, because the price of the real estate only matters when they go to sell it, and as long as they manage the properties well and continue to improve them and attract better rental prices, your investment will pay you dividends for years to come regardless of what the market is doing. Every investment has risk, but well managed real estate can be one of the lowest risk investments out there if you know where to look.

Now if you do have a higher amount of capital, you could do something like this yourself, or even if you just have a few hundred thousand dollars you may after some analysis that you can get better returns if you do it yourself. That’s fine if you have the time invest the money yourself, often if you’re making a high income, you may not time outside of earning that income to put the money you’ve made to use, and in that case this is a perfect win-win situation of you’re that type of person. You may not get as high of a return as doing it yourself, but it’s not a bad way to invest your money while you build up more capital to make your own moves.

Additionally, considering the real estate industry in Canada is so robust with high immigration rates, constrained supply, and interest rates that will (eventually) come back down. It’s a pretty good bet that going forward you will continue to make money in real estate. The only caution I’m going to throw in here is that there is now a concerted effort from all levels of government to get more homes built, which in years to come could slow down the appreciation we’ve seen in prior decades (you may only get 5% growth rather than 10% growth like we saw from 2010-2020). This I think overall will be a good thing as it will get more people into the homeownership market, and I know that myself and lots of other young people still would like to own a home some day so any relief in pricing will be appreciated.

That being said I also do think that a bigger issue is going to be rental prices. As more investors enter the market (which is the trend we are seeing). These investors will want rents to cover expenses and make continued cash flow. But valuations are so high, that from the POV of many investors rents just aren’t keeping up (high interest rates aren’t helping either). So investors either will have to become more creative, or they will have to pool more of their money together to purchase with less debt, since debt is so expensive right now, and this is again, where crowd sourced capital is a very neat idea.

In a way these high valuations and low rents make sense because there is this principle of highest and best use in real estate. The principle asks if a certain lot is being maximized and put to the “most profitable” use within the current laws. If the answer is no then your investment will look like a bad idea and rents won’t cover expenses. Often in order to achieve this highest and best use, you have to take on risk, do some redevelopment of a property (which has city council approval risk) or have private investors that will lend you their money at below market rates and expect a good ROI. Highest and best use can make it more challenging for individual investors in places like the downtown core since competition will continue to heat up for rental properties. The only people with the money to take on conversion projects might just be larger companies like the ones I mentioned earlier in this post.

If this sounds interesting to you and you just want to test out private investing, I encourage doing so with a small amount of money (as little at $5000), into a private REIT project, and then increasing your investment if you like the results. If you send me an email mentioning this blog post I’ll introduce you to the CEO of a company that operates out of Toronto and throughout the greater golden horseshoe area doing basically exactly what I described in this post, he’ll give you a much clearer and concise rundown of how they operate and what their strategy is. They are top notch and very professional and I would highly recommend them to anyone.

Hope you found this interesting.

Keep investing,

Oliver Foote

Newsletter Email Archive Sent: May 26, 2024:

Newsletter #15: Investing in Real Estate With $5000. Summer is approaching.

This Weeks Blog Post:

Investing in Real Estate with Less Than $5000:

  • I talk about what a REIT (Real Estate Investment Trust) is
  • Why and when you should consider investing in one
  • What the difference is between a private smaller REIT and a publicly traded larger REIT

Read the full blog post here: https://oliverfoote.ca/investing-in-real-estate-with-only-5000/

Real Estate News:

  • CPI inflation fell as of the report this Wednesday from 2.9% in March to 2.7% in April (year over year changes). The largest driver of the slowdown in inflation was a slowdown in food prices increasing. Meanwhile gasoline (which impacts much of the other components of the index) increased 6.1% in April compared to 4.5% in March. Shelter costs remained high as well showing a year over year increase of 6.4%.
  • While interest rates remain high, prices for homes have not moved considerably in either direction up or down. Even with more inventory coming onto the market than last year prices remain steady. Notably, lower priced homes have more inventory and fewer buyers, while higher priced homes are trading hands more often. This is an interesting dynamic and is keeping the average price steady, while individual micro markets are behaving quite differently depending on location, even within a few blocks of each other.
  • The numbers tell one story, but in order to get a clear picture of what is really going on in the particular markets you are interested in a where the opportunities lie it requires some investigation. There are still many opportunities out there if you know where to look.
  • I am going to continue to stress this in upcoming newsletters, but now is a good time to be an investor (even with the coming capital gains increase). Because you will be buying in a relatively cool market, and inflation is finally approaching 2% and is already within the BoC’s “margin of error” range of 1-3%. Once they cut rates, people will come back, and if you can get into the market before that happens, you will ride the wave of people returning to the market.
  • Many people are predicting rate cuts towards the later half of this year, I’m inclined to believe the first rate cut will come after the summer and a second one in the winter for a total of 0.5%. We’ll see what ends up happening, since things tend to be taking longer than anyone expects.

Market Performance as of close Friday May 24, 2024:

S&P 500: 5,304.72 (+11.85% YTD)
NASDAQ: 16,920.80 (+14.59% YTD)
S&P/TSX Composite: 22,320.87 (+6.94% YTD)

Canada CPI Inflation Apr 2024: 2.7% (0.2% Decrease from Mar 2024)
Current BoC Benchmark Interest Rate: 5% NC (Next Meeting: June 5, 2024)
Unemployment Rate Apr 2024: 6.1% (0.0% Change from Mar 2023)

Have a great week,

Oliver

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When Should You Incorporate as a Real Estate Investor in Canada

Update Dec 14, 2024: Added Newsletter Email Archive at End of Post.

Real estate investing has many levels, when you are just getting started you probably aren’t thinking too much about incorporation, you are just thinking about picking up your first or second property. But, it’s never a bad time to plan and learn about how different real estate investors structure their deals and the age old question of whether or not you should incorporate to purchase an investment property. Why do people even care about incorporating in the first place. Today I’m going to discuss the different structures to conduct a real estate investment and the thought process behind each, when it makes sense and when it doesn’t make sense to incorporate.

Before I get into the meat and potatoes, just a disclaimer, speak to a tax professional, speak to a lawyer, speak to a CPA, in order to figure out what is right for you. Every situation is different. This blog is just for informational purposes and to get you thinking, I am not a lawyer or a CPA (yet). With that out of the way lets get into it.

Small Time Real Estate Investor:

If you are a small time real estate investor, say you own your primary residence and maybe 1 or 2 other residential properties that you rent out. Does it make sense to incorporate? Well you’ll hear this a lot today, it depends, but in this case most likely not. The reason being that passive income in a corporation like rental income is taxed close to 50% in a corporation. So if your marginal tax rate personally is lower once you include the rental income, it doesn’t really make sense. Obviously, there are nuances and considerations if you co-own property with someone else, or your tax rate is higher, then you’ll want to consult your investment team.

There is further nuance to consider, and this relates to refundable taxes on the corporate income. So while you pay 50% up front without getting into details, you can get a refund of about 30%. Making the actual tax paid closer to 20%.

Where incorporation does make a lot more sense is if you are operating your real estate as a business. So maybe you are flipping homes, maybe you are managing commercial property and the income can be realized as business income. If this is the case and the business is making less than $500,000 a year, your corporate tax rate is around 10%. Then you can choose to do what you want with the retained income and either leave it in the corporation for future investment, or pay it out to the shareholders as a dividend which generally speaking has a lower tax rate than earned income. So there are more tax advantages if you are earning active business income. But if you get into estate planning and paying dividends to various family members and shareholders the level of complication can increase even more.

If you want to know how to calculate income and expenses for a personal rental property the CRA has a useful page. Another interesting note, if you are thinking about transferring a property from personal to corporate ownership for legal reasons or tax reasons that make sense for your situation. You have to be careful because you may have to pay a land transfer tax since the property is technically changing ownership. This is why it becomes increasingly important to think about these things ahead of time if you are planning on building a large portfolio of real estate investments.

Larger Portfolios:

There are many more considerations once you begin to get beyond 4 properties. At 4 generally speaking traditional lenders may not give you a mortgage anymore, so you will have to find financing at B lenders for a slightly higher interest rate, or you’ll have to begin investing through a corporation which can sometimes enable you to find additional lending.

Also with larger portfolios, you may begin to bridge into investing in real estate as your businesses primary operations, in which case the rental income and the property management service you provide to your tenants could begin to be considered as business income rather than passive income. If you are considering building out an investment arm and hiring employees and building a true business to manage your company’s investments, then you would most likely be doing so in a corporation and earning business income.

Other corporate structures:

Partnerships (or Joint Venture) and Limited Partnerships:

This is going to be a very basic overview. But if you are looking at a larger project like a development project, or you want to partner up with someone and execute an investment idea, this could be classified as a partnership, which may or may not have an actual corporate structure or legal documentation to back it up. Legally speaking in Canada a Joint Venture is similar to a partnership, both generally share liability and both partners bear equal risk and can both be legally held liable for any debts incurred by the partnership. A Joint Venture is generally limited to a single undertaking, whereas a partnership generally has an intent for continuation of business. These are defined under common law and may or may not involve corporations as part of the Joint Venture or partnership.

A limited partnership, meanwhile, does have a corporate structure and is more well defined. You will often see when there are multiple investors in one or more projects and the project is managed by the general partners, while the limited partners are generally just the funding partners with an expected return. If you are looking into crowd funding a real estate investment, a limited partnership is generally a good structure to do so because it limits the investors liability to the capital they invest, and if a project is properly managed all partners can share in the returns of the investment.

If you are thinking about doing this type of investment as a Joint Venture or Limited Partnership and expanding the type of investing that you are doing, then might be a good time to talk to a tax professional and a lawyer about incorporation and the different structures that you are considering using.

Concluding thoughts:

The most important thing I want readers to get out of this is to plan ahead and have a broad understanding of what types of corporate structures work best for which types of investments. This rabbit hole is endlessly deep and you can get into umbrella corporations if you are doing multiple investments with different partners at one time, or you want to handle and manage trusts and estate planning. For those who are interested in this side of things I would highly recommend checking out the book: Tax, Legal, and Investing advice for the Canadian Real Estate Investor by Cohen and Dube. It covers a lot of the stuff I loosely touched on in the blog in much greater detail and gets into estate planning.

I also want to stress the importance of getting things done. Quite frankly, if all this stuff is confusing and you find yourself in a research rabbit hole and aren’t actually out there trying to find a good investment, or connecting with the right professionals, get your butt moving and start talking with other investors, go to meetups, talk to CPAs and Lawyers who specialize in this type of thing and do your best to get your hands dirty. All this corporation stuff is somewhat icing on the cake, and while it is good to know and could in theory save you money, you need to be making money in order to have money to save in the first place. So the more important thing to execute on your goals if you are seriously considering real estate investment and get out there.

That’s my two cents this week, as always thanks for reading and hope I got you thinking.

Chat soon,

Oliver

Newsletter Email Archive Sent: May 12, 2024:

Newsletter #14: My Upcoming Pre-Construction Webinar! Mother’s Day! Corporate Structure for Real Estate Investors and More.

Happy Mother’s Day! Hope you all find some time to thank your moms today for everything they do. The big news I want to bring to this newsletter this week is that I will be hosting an event on Saturday May 25th at 10AM! It’s going to be held on Zoom so you can join and sip a coffee from the comfort of your own home. The topic of discussion will be how to get started purchasing or investing in pre-construction. It will be hosted by myself and at least 1 other special guest to help out. We’ll cover everything you need to know about buying “new builds”, why it’s great for first-time buyers to consider, and why they make great investments as well. I’m also going to be talking about how the current market dynamics are proving it to be a very good time to consider making such a purchase. I’m also setting up a new mailing list that will include some of the best project launches of the year, you can opt-in at the link below. I will also be raffling off a $100 amazon gift card at the end of the event for those who attend it live. As another incentive, I’ve also created “an informed buyers guide to pre-construction” for those who register, it will be in your inbox right after you register (if you choose to do so), and of course anyone who can’t make it will get the recording of the whole event afterwards. I’m really trying to make sure you get a good value and no matter your situation you can get something out of it, if you think this might be something you’re interested in you can register at this link. Link removed.

Hope you can stop by!

This Weeks Blog Post:

When Should You Incorporate as a Real Estate Investor:

  • Talking about incorporation as an investor
  • Joint Ventures and Limited Partnerships
  • Mom and pop investors and when they should consider incorporation.

Read the full blog post here: https://oliverfoote.ca/incorporate-real-estate-investor-canada/

Real Estate News:

  • The Toronto Real Estate Board market stats for April have arrived, here are some of the highlights:
    • There were 7,114 sales through the Toronto Regional Real Estate Board – down by five per cent compared to April 2023. Inventory levels or the number of listings of available homes of all types have begun to creep up with over 18,000 available for sale at the end of April, which means there is an increased choice for home buyers.  Prices have remained constant, the average selling price was up by 0.3 per cent to $1,156,167 compared to March of last year.
    • Many would be buyers are continuing to wait for the Bank of Canada to make a move and decrease interest rates. Once rates do move down there is a expectation that many buyers will return to market and put upward pressure on pricing going into 2025.
    • Recently it has been stated that there is 2 years of Condo inventory available for sale when you account for resale, new construction, and developer standing inventory. This will likely lead to a shortage of homes down the line due to the delay that many pre-construction projects are experiencing thanks to slower sales. Opportunities will be available to condo buyers now and in the coming months for buyers willing to take advantage of downward pricing pressures on new construction units.
  • All provinces expect Ontario see rents increasing an average of 8.8% since last year. https://rentals.ca/blog/april-2024-rentals-ca-rent-report
  • Many reports are showing that Downtown Toronto’s office market continues to struggle with high vacancies. With fewer people living Downtown, this could be leading to the downward pressure on residential rental prices in the downtown core and surrounding as people have more selection and can move further away from work.
  • This overall trend of higher office vacancies could also be a contributing factor to slower condo sales and construction in downtown as fewer people have the need to live there and can find more space elsewhere.
  • Additionally, with international student visas being restricted for the upcoming school year, this could also result in downward pressure on rental prices in various cities as the demand for rentals from students gets cut in half.

Market Performance as of close Friday May 10, 2024:

S&P 500: 5,222.68 (+10.12% YTD)
NASDAQ: 16,340.87 (+10.67% YTD)
S&P/TSX Composite: 22,308.93 (+6.88% YTD)

Canada CPI Inflation Mar 2024: 2.9% (0.1% Increase from Feb 2024)
Current BoC Benchmark Interest Rate: 5% NC (Next Meeting: June 5, 2024)
Unemployment Rate Mar 2024: 6.1% (0.3% Increase from Feb 2023)

Thank you for reading and have a wonderful day,

Oliver Foote

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