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World Outlook Conference2015
The world is a MAD place…ALWAYS!
Credit crunch Currency crash Central Banks devaluations Greece Depression Run away inflation Falling Canadian Dollar Rising/falling interest rates
No help from developers
Tear down all the trees...and then
...call them...Pine Avenue Elm road and Fir Street
Economists
•Economists know a hundred ways to seduce a woman…
Real Estate Action Plan: Goal?
Well…We are the Boomer Generation
Boomers ARE different...
•We want to and can live longer
•We are "down-aging"
•We LIKE being older!
•We think QUALITY of life
•We work in smaller companies
•We become Social Media Hounds
•And more and more plan to retire in BC
Baby Boomer Trend
Trends
Long term Baby Boom trendNext 20 years...they'll keep coming to BC
A full 61% of Canadians over 65 intend to come to BC to retire!
Boomers
Yuppies
Dinks
Dins
Veeps(cialis)
Dildo
• Mamis: Middle Aged Men In Spandex
• The Chinese want cars, we want bicycles
Forecasting is never easy….
…particularly when it is about the future!
To forecast we have to set the baseline
Macro Principles
Local principles
Basic Principles to study
Macro: Inflation or deflation aheadTiming (Burnaby home)
Trend Cycles
Local: Inward migration/job creation Affordability Demand and Supply Interest rates
Let’s look at
Basic Principles to study
Most important…
Inflation or Deflation?
We at JREI believe in Inflation as a certainty
JREI has held the
multi-year position...
…that Hard assets are inflating worldwide!!!
Milton Friedman:"Inflation is primarily a monetary phenomena"
This slide is 14 years old
Are we telling the truth on inflation? It is not 2%! Shadowstats.com
More inflation… the outcome….always!
Exactly what we have seen for 50 years
(My book ‘Forget about location, location, location’ (1998) )
In 1998 – the average price in Vancouver
was $278,000
But Ozzie – it is clear it is deflation!The world has always been full of
naysayers• America’s Great Depression, Murray Rothbard, 1963; How
You Can Profit from the Coming Devaluation, Harry Browne, 1970; The Coming Credit Collapse, Alexander Paris, 1974; How To Profit From A Monetary Crisis, Harry Browne; The Invisible Crash, James Dines, 1975; The Coming Deflation, C. V. Myers, 1976; How to Prosper During the Coming Bad Years, Howard Ruff, 1978; At the Crash of a Tidal Wave, 1995 and Conquer the Crash, 2002, Robert Prechter; The Crash of ‘79, Paul Erdman, The Crash of ‘80, Paul Erdman, Panic of ‘89, Paul Erdman; The Great Depression of 1990, RAVI BATRA; How the World Will Change in the Great Depression of the 1990s, James Dale Davidson and Lord William Rees-Moog; The Death of Inflation, Roger Bootle, 1996, Money for Nothing, Roger Bootle; Bailouts or Bail-ins, Nouriel Roubini and Brad Setser, 2004, The Great Depression of 2010, Harry Dent
But Ozzie – it is clear it is deflation!
• 1982 – Crash in Vancouver
• 1987 – Stock market crash
• 1989 – Savings and loan crisis – 787 banks closed in US
• 1990 – Tough market – 5 year rate 13.5%
• 1993 – Currency crisis
• 1998 – Currency wars – Russian crisis – Mexican crisis
• 9/11 – Deflation, deflation
• 2014 – in this room - ! Every time … Deflation is imminent!
• ALL PREACHED DEFLATION- BUT WE WENT THROUGH THE VALLEYS…. And had more inflation.
Massive changes are taking place (in 2001 here)
Shift will continue to be from paper assets to hard
assets
Inflation - deflation ? The likely outcome? INFLATION!
I have been in the Real Estate Business for 45 years
Inflation is good for Real Estate
LAST YEAR we said: It is a mad world…
• Outcome in uncertain times? The rich will continue to look to park their money
• The rich will continue to flee emerging markets and collapsing currencies and are stampeding into
• London Real Estate (high end residential and commercial!) and other world-class cities – yes including Vancouver, Toronto and Montreal.
• The rich will buy anything and pay any price for things of value….INFLATION ROLLS ROYCE
I SPENT THE SUMMER IN EUROPE
• Real Estate values are rising in Switzerland, Sweden, Norway, Finland, France, Germany
• London up 14% - over 1 million 18%
• Dublin up 18% - residential
• Spain – George Soros Fund
• I WILL SPEND 2 MONTHS IN EUROPE THIS YEAR TOO
Current hard asset inflation worldwide is already a fact
India, China and a slew of
other Asian markets are experiencing huge real estate inflation Source: Roubini Global Economics
Why Real Estate?
REAL ESTATE
Physical asset
Local in nature
YOU can control
WHY IT IS BETTER than MOST other investments?
REAL ESTATE HAS:
LEVERAGE, your cash investment maybe 25% or 5% (as an owner)
IT PRODUCES AN INCOME
MORTGAGE REDUCTION (over time) –
Over half the payment going to principal – paid by tenant
CAPITAL APPRECIATION GAINS –(spectacular gains!)
You have control over your investment
Real Estate investment you can affect the outcome personally!
Flexibility:
Timing
Trend
Study cycles
You can add value
Inflation will help real estateReal Estate offers many ways
to make money.
You can:
• Assign it
• Mortgage it
• Rent it out
• Lend on it
• Grow stuff on it
• Leverage it
Unique advantages and flexibility
REAL ESTATE?
In US:
Defer capital gain – forever
You can write off interest against income
In Canada:
You can defer your capital gain for up to 5 years (by carrying a mortgage)
REAL ESTATE HAS HISTORY!
Home price increase
2014 Investor with 25 % down payment
(Mortgage redux)
Homeowner returns with 5 % down payment
Real EstateLast year I asked you
to:
Buy Phoenix and Las Vegas, Austin, Houston, San Diego
Our RETURNS on full price are up 14% - 29%
On DOWNPAYMENT? Spectacular gains!
Find out what we recommend this year!!!
Real Estate Action Plan: Goal?
So? Actually based on history
Everyone should buya condo every 5 years!
(imagine that you had!)
BUT WHAT IF THERE IS NO INFLATION?
Take a 300,000 mortgage at 2.9%:Nearly 50% of the payment is going towards principal!
• (Monthly payments are $1,402.86 per month)
• Mortgage balance after 5 years is $255,880 or $44,120 (52% of all payments!) has been paid off!
Inward migration
Net international immigration to B.C. jumped 16% in 2014 to 35,640, There will be 50,000 by 2017 – most settle in LM
Korean or China bank set up in British Columbia, rather than say New York State or even Washington. 100% corporate tax break
The Immigrant Investor Venture Capital Pilot Program says each investor will be required to have a net worth of $10 million and make a non-guaranteed investment of $2 million over 15 years. These funds will be invested in “innovative Canadian-based start-ups with high growth potential”.
Overseas buying of businesses – hotels – golf courses
Interest rates5 year money – still available at below 2.7 %
Variable as low as 2.05%
LIFE TIME LOWS…!
Short term versus long term..
Investors don’t worry about interest rates…WORRY whether you get the money at all at re-finance!
What is Poloz doing? Poloz warned we are ‘the most indebted ever’
Poloz warned house prices are 30% over valued
Then he brings DOWN INTEREST RATES to easier to buy?! What gives?
What does he know that he is not telling?
Outcome?
Will he shorten Amortization period? DP increases? GO long on your mortgage now!
He must do something or we will continue to have higher prices
What about affordability?
We have never been affordable in Vancouver
You want to live here or in London, New York, Hong Kong …you have to pay the price
Affordability matters only in small towns
Supply and Demand
23 year history in our 2015 OUTLOOK ISSUE
49-page Outlook 2015 Forecasting issue
All this and more is covered in this BRAND NEW issue:
5 best places to invest in Canada5 best places to invest in the US
5 best suburbs in Vancouver, Toronto, Calgary, Edmonton, Phoenix and Las Vegas for cash flow
5 best ski resorts with potential5 best small towns in BC
5 best towns in Alberta
What to buy and what not to buy.Forecasts for 2015 for Toronto, Edmonton, Calgary, Vancouver, Okanagan Plus Phoenix, Las Vegas,
and other US markets. Only $49
Outlook
THE WORLD?Top 5 places to retire in the world … Europe?
SpainPortugal
Cheap and you get a residence passport?
And.,,George Soros buys here
What about the US...
Will it survive????
Will the US survive?...17 trillion economy!A 13.2 Trillion economy!!!
a
NO QUESTION ABOUT IT ...
..IT WILL SURVIVE!
(This slide is 6 years old)
Yes, but the enormous debt???
It is not the debt…it is the ability to
service the debt that matters
The world is lending the USA billions for 10 years at 1.8% !!!
JREI has argued for years that the policy of devaluation does not work
We researched Greece, Germany, Russia, China, Europe, Britain
THE USA IS PROOF !!!Fastest rising economy and a soaring dollar
at the same time!
The USA is the locomotive for the world
Best employment picture since 1999!
Export growthHousing growth
Margaret Thatcher
Ozzie recommended year 2010-2014
Mesa + 17%
• Avondale: 2010 - 109,000
2013 - 150,000
• Laveen: 2010 - 129,000
2013 - 164,000
• Goodyear: 2010 - 167,000
2013 - 215,000
• Glendale: 2010 - 132,000
2013 - 180,000
• Mesa: 2010 - 160,000
2013 - 202,000
Last year Ozzie recommended
In 2014
• San Diego +17%
• Phoenix +30%
• Las Vegas +21%
• Seattle + 4%
• Austin +15%
• Houston +29%
• PLUS MASSIVE CURRENCY APPRECIATION…OUR INVESTORS ARE IN LVOE WITH US!!!
What about buying with a depreciating Canadian dollar?
REMEMBER, THE MOST IMPORTANT THING IS TO HAVE A GOOD DEAL!
Let’s look at investing in the US whether the dollar goes down, up or stays the same in say 5 years.
To simplify let’s assume that we want to invest $100,000 US and we expect as well a $100,000 profit at the end of 5 years (comprised of annual cash flow and capital gain). We then sell in 5 years and repatriate our investment of down payment, cash flow and profit back to Canada.
CANADIAN $ INVESTED IN US REAL ESTATE
Step 1 Canadian $
same
Step 2 Canadian $ up
Step 3 Canadian $
down
DOLLAR STAYS THE SAME AT $.80CTS:
• Invest $120,000 Canadian (Approx. $100,000 US) and make $100,000 US profit in 5 years.
• 5 years later you get back $120,000 Canadian plus $120,000 Canadian (US dollar profit) = total: $240,000 or a profit of $120,000
DOLLAR GOES UP TO PAR $1.00
• Invest $120,000 Canadian (Approx. $100,000 US) and you make $100,000 US profit in 5 years.
• 5 years later you lose on the exchange and get back $100,000 and you get $100,000 profit = total: $200,000
• or a profit of $100,000.
CANADIAN INVESTED IN US REAL ESTATE
DOLLAR GOES DOWN TO $70CTS
• Invest $120,000 Canadian (Approx. $100,000 US) make $100,000 US profit in 5 years.
• 5 years later you get back (approx.) $128,000 Canadian plus $128,000 Canadian (US dollar profit) = Total: $258,000 or a total profit of $136,000
YOUR WORST CASE STILL GETS YOU A SUBSTANTIAL PROFIT
IN YOUR BEST CASE YOU BENEFIT FURTHER
• You lose on the exchange going in, but you win on the profit in US dollars when you repatriate.
• BUT ONLY if you have invested in a good deal!
•
CANADIAN INVESTED IN US REAL ESTATE
We still like...
Las Vegas Phoenix Scottsdale Portland (We dropped all oil states)
Buy where prices have fallen 20 - 30%... volume is increasing sharply
We still like to buy in the US...
Mesa (We own over 400 units here) Scottsdale (We bought 70 units in Scottsdale in December Glendale (We have 120 units under contract)
For all suburbs we like in Vegas and Phoenix look at Outlook Issue
Come to booth and register
Blue card – 1. Win an I pad – Mini Plus 2. win a $300 consultation with Ozzie Jurock
• Want info on?• “How to Structure a US Joint Venture” Seminar
• Monthly Real Estate Investor Meeting
at the REAL ESTATE ACTION GROUP – www.REAG.CA
• Buying Real Estate by using your RRSP
•Sign up at our booth…
Canada
• Residentially, there are 2 kind of markets….
• The very rich and everyone else. Very rich doing fine…
• Most others markets will remain flat.
Canada Top 5: Last 2 years Ozzie recommended(Canada Recommendations for last year alone are up 5% - 30%)
• 2013 2014
• Terrace +14% 18%
• Kitimat +15% 24%
• Ft. St. John +18% 12%
• Edmonton +5% +8%
• Calgary +6% +10%
Canada top 5:
This year we dropped all oil producing provinces.
Still buy a house in Calgary and Edmonton – but investors stay on sideline
Great time to make real stink bids on new condos here• This Year :
• Etobicoke
• Hamilton
• Surrey
• Richmond
For 2015 in BC we like
Prince George Kelowna
In Lower Mainland we like Richmond Surrey Langley East Village – Vancouver East Burnaby-Coquitlam-Tsawassen
BC Ski resorts We like
Whistler – bottom in place – US dollar
Sun Peaks
Fernie
Kimberley
WE’LL BE OK
…long term – all positive
•Vancouver increased by 1 million people between 1981 – 2011
•IT WILL INCREASE ANOTHER MILLION BY 2041!
•IN ONLY 2,900 SQ KMS.
•HUGE CAPITAL INVESTMENT
•CAPTIVE AREA ON THREE SIDES
Still buy:
Trailer parksMini Storage
Strata warehousesIndustrial landCash flow ALL
Don’t buy:
Hotel CondosTime Share
Quarter ShareCommercial
Office Farmland in Prairies
Be very careful…outsideBuy cash flow - anywhere in
USA and CANADA
Do NOT buy anywhere else
For capital gain:
Go --- Where new jobs are
Go ---Where the rich play
For cash flow – go to US
8 astounding predictions
1. Massive money printing means continues – QE 4 will be necessary
2. The bottom is FIRMLY in place in the US real estate market.
3. Vancouver will become a Financial centre powerbase in Canada by 2016.
Korean or China banks and other multinational companies will set up in British Columbia -qualifying international business - and their employees. 100% corporate tax break
BC will do more business with China – Harper’s new Remnbi deal
Foreign buying of commercial / hotels/businesses will accelerate
8 astounding predictions
• 5. Site C Dam will be built. All LNG plants will be built by 2018
• 6. Poloz will reduce interest rates again in March and will announce new rules for mortgage lending…Higher DP and/or shortening of Amortization periods
• Federal Government brings in foreign investment restrictions on private investors – or tax penalties like Hong Kong, Australia, Austria and elsewhere – BUT embraces the rich
• 7. More people move back into the city everywhere– lifestyle
• 8. People will use more real estate apps: Realtor.ca, Realtor.com, Loopnet.com, Zillow.net !!!
• JUROCK REAL ESTATE INSIDER will become the largest real estate newsletter in North America --- JREI NEW APP!!!
• You will type less and talk more…Siri --- BUY: Dragon soft ware
• There will be valleys – but we’ll walk through them –ALWAYS!
Must do now!Remember dear Real Estate Investor these are crazy times
…uncertainty will persist … expect the unexpected
…the occurrence of Black Swan events are growing in frequency
1. Protect what you have---it is paramount
2. Sell your losers now – keep cash flow – buy more cash flow
3. Get long term financing in place now on all real estate
(not because of interest rates – but further restrictions to slow down RE markets)
4. Have some cash ready - up to 50%…There will be smashing opportunities
BUY! Ozzie Jurock's Facts by Email
Go to GOOGLE for information,Go to REAL ESTATE BOARDS for
stats
Get the JUROCK’S REAL ESTATE
INSIDER and find out WHAT IT MEANS!
The Facts by Email is a weekly real estate email newsletter containing: Feature stories on
International, National, USA, Western Canadian real estate;
Independent Analysis – Unbiased- No Advertising.
TODAY ONLY 1. Jurock Real Estate Insider Facts by E-mail with APP - How, When & Where? - Hot properties you can actually buy weekly - One-year Subscription - $177 value 2. Jurock’s 49-page Outlook 2015Forecasting Issue - 5 best cities US/Canada 5 best suburbs – 5 ski resorts. Economic Analysis, 23 year history of numbers. Accurate predictions - $49 value
3. Jurock’s Hotline - Late Breaking News - Hot deals explained - $97 value
4. Invitation to the JREI Landrush 2015 Conference - Always a sellout – Feb, 2028 - Two Tickets $194 value Over $517 Value!
TODAY ONLY $188! Plus
Gst
The best market...
...is between your ears!
We live in paradise
THE WHOLE WORLD IS LINING UP…
…at our immigration offices…
YOU are already here!
…don’t allow the negative
rust to settle in your mind
The nay-sayers will always be there….
ENERGY....ENTHUSIASM ...AND EMPATHY!!!
Live your life....with
Emanuel Kant:"To be is to do"
Nietzsche:"To be is to be"
Sinatra"Do be do be do"
You are here to have fun - like it or not!
...DO SOMETHING!!!
...and have fun doing it!
Get up happy!
Whatever you do...
Have a bubble bath
Live a self-actualized life!
In the end...
It is all about
becoming....
A human being...not just a human doing...
It is
all
about
allBECOMING
Go for the bird on the roof...
...a bird in the hand makes it hard to blow your nose!
Canada’s commercial markets under pressure
Commercial and office markets in Calgary and Edmonton under great pressure (Third quarter 525,000 sq. feet negative absorption)
Lower Mainland commercial markets dropped by 30% in sales volume - lowest since the start of 2013
Industrial down 15 %
Office and retail down 23%
Retail space under pressure – big box stores do not hold customers
Note! Building activity foretells future!
Nobel price winning economist ---Vernon Smith studied for 60 years---he found
Builders stop building – they act first!
NOTE: Calgary has is experiencing a third monthly drop of building starts
2 Toronto builders stopped building – give back deposits to pre-sale buyers
2 builders convert buildings to rentals!
Main Forecast Long term all prices will be higher because
of inflation
Long term all prices will be higher because of a power shift East to West - Vancouver will become the financial centre.
Short term all prices will decline in oil provinces