Deal Of the Week:

3573 Peter Street, Windsor, ON

We’ve had a flurry of inquiries for our smaller investment opportunities, so here’s one of our favorite duplex listings right now. Fully renovated, fully rented, professional property management already in place, priced extremely well.

Promotional Package with Virtual tour:

http://www.ontariorci.com/3573Peter.php

Economic News for Windsor, ON

The link below has one of the best summaries of the cold, hard data on this pesky potential Housing Bubble.

Just… be careful. This obviously doesn’t affect Canada’s smaller cities such as Windsor, as we simply haven’t had the massive property value spikes like the GTA (Greater Toronto Area), Calgary, Vancouver etc.

Interestingly enough the smaller cities have continued plodding along at the Canadian historical appreciation average of 5%. (Windsor’s last 3 years? Just over 4%, just over 5%, and now so far 10.51% this year).

http://www2.macleans.ca/2012/04/23/the-under-the-radar-changes-that-may-soon-deflate-or-pop-the-housing-bubble/

Again reiterating the shortage of skilled trade workers in the area. Windsor has a ton of engineers and skilled tradespeople; even as we have shifted away from “nothing but cars”, we have still seen the demand for the trades. How does this affect us? Because this increases property value long term. These tradespeople must be imported from elsewhere in Canada or overseas, and they don’t buy, they lease. These kids (look at the ages, 16, 17) get really good paying trade jobs by 20, and are moving out of mom and dad’s basement. This both reduces vacancy rates heavily (which we’re already experiencing first hand), and increases property values.

http://www.windsorstar.com/news/With Clair College steps efforts fill skilled trades/6358285/story.html

I’m not really sending this out for the job announcements; sure they’re important — really important to the local economy — but take note why Ford wanted to add the third shift earlier but couldn’t; the suppliers — in other words, all the small skilled tool and die, tool and mould trade shops in Windsor that are the real heart of the local economy — couldn’t ramp up production fast enough. Why? NOT ENOUGH SKILL TRADE WORKERS.
This comes back to everything I’ve been stressing. We are incurring rapid immigration of professionals and tradesmen to keep up with these glossy jobs. This in turn plummets the vacancy rate and then in turn rockets up our property values 12-18 months later. We’re 6 months into the rapid vacancy drops, so we figure you have 6-12 months left before indecision starts burning a hole in your wallets.

http://blogs.windsorstar.com/2012/03/28/ford-to-add-third-shift-at-essex-engine-plant/

Mortgage rates for a five-year term have dipped below 3% for the first time in Canadian history at a major bank.

“That’s the lowest anybody has ever seen from one of the major lenders ever,” said Rob McLister, editor of Canadian Mortgage Trends.

Bank of Montreal has lowered the rate on a five-year-fixed rate mortgage by 50 basis points to 2.99%.

“That’s the lowest anybody has ever seen from one of the major lenders ever,” said Rob McLister, editor of Canadian Mortgage Trends.

He said the BMO product called the “low rate mortgage” comes with some reduced flexibility. Instead of being able to pay 20% of the mortgage down in one year in a lump sum payment, you can only reduce by 10%. You can also only increase your monthly payment by 10% instead of the traditional 20%.

The product is being offered on a limited basis from Jan. 12 to Jan. 25, but Mr. McLister doesn’t expect that to mean much because already the Royal Bank of Canada has pledged to mortgage brokers to match the BMO decrease.

TD Canada Trust also moved ahead with its own discount Wednesday, lowering the rate on a six-year fixed rate mortgage by 132 basis points to 3.79% and on a seven-year fixed closed mortgage by 91 basis points to 3.99%.

© Copyright (c) National Post

Deal Of the Week

1398 ROONEY, WINDSOR, ON

Great location – Located within walking distance to the University of Windsor and major transportation routes
Fully Renovated top to bottom.
Fully rented, each tenant has a signed year lease
Asking price just $99,900
Legal Duplex – Retrofit certificate available
Turnkey investment opportunity

Complete Promotional Package:
www.ontariorci.com/1398Rooney.php

1398 ROONEY, WINDSOR, ON

Economic News for Windsor, ON

Well, I have TRIED to be the herald on this; the economy continues to rumble on down here. And again, our wealthiest, most accomplished investors don’t think this is the start of a blip, or a mini-recession is going to happen (remember, media sells more advertising by speculating on FEAR possibilities). These clients firmly believe Windsor is about to boom for a decade. We are not just cars anymore, and all that hard diversification-of-economy work over the past 15 years is about to pay off big dividends. The article below is describing the rapid change in the real estate industry. And yes, our team agrees with the reports of multiple offers on the best places, and teammate Brad Mitchell (brad@ontariorci.com) can tell you all about the power of sale market getting heated. You want to fix and flip with Brad? Be ready to make a decision for an offer within a few short hours. You sleep on it and it’s gone.

I had the pleasure Wednesday night of listening to a global report from one of RBC’s (Royal Bank) top analysts, and it was interesting to hear the reasons why the world economy is almost certainly to thrive over the next 5 years, and why the USA is still in good shape if they get their act together soon (e.g. their debt to annual GDP ratio is just approaching 100% – still entirely manageable, apparently the trouble starts when you go over that 1:1 ratio). The “possibility” of another recession was crazy talk, yet contrast that with how much focus the media gives this remote possibility. Why remote? Because the globe cannot afford for Greece to fail. The EU is one of 3 global “trading blocs” that is intertwined heavily with the other 2 trading blocs (essentially North America, and the Chinese bloc).

I also found it interesting that an economy WANTS some level of unemployment. If unemployment drops below 6.5%, then wage demand jumps quickly, and unwanted inflation growth kicks in as a result. (finally, a REAL use for the crude unemployment statistic – if you read these on a regular basis you know I’m NO fan of its use to determine the health of a community and/or nation).

http://www.windsorstar.com/news/Bidding+wars+heat+housing+market/5798432/story.html

Dear Clients,

The University of Windsor has committed their final (and largest) group of students to the down town core long term.

This is huge, HUGE news for the downtown core. You now have firm commitments from both the University of Windsor and St. Clair College to shift over 2,200 students at the minimum into the downtown core. Man I can’t explain how huge this is for Windsor’s core. It ties into a master plan which has been carefully crafted by the uber skilled mayor and his ultra-capable city council (when can we EVER say that about municipal government). I’ll try to summarize for the interested clients:

• 1000+ St. Clair College students with a brand new MediaPlex building for journalism and broadcasting (first of its kind in Canada), and full possession of our old convention centre for hotelier, culinary arts and hospitality programs.
• 1200+ University of Windsor students predominantly in communications, social work and the arts, filling up four larger buildings in the core.
• From the University moving downtown, the Windsor Star newspaper now takes on modern digs in the heart of downtown with an amazing renovation plan.
• 4 incubation hubs (also known as business accelerators) creating hundreds of new jobs (JUST TO START – the whole idea is these companies grow and move out within 2-3 years).
• Incidentally Ontariorci.com member Rhys Trenhaile is one of the co-owners of the film and television accelerator downtown, 47 jobs projected within the first 3 years of operation.
• 4 new bank buildings in the last 4 years (a wise old investor once told me start buying when banks are building – he was spot on here).
• A $400 million casino expansion including a massive concert hall and the 2nd largest convention centre in Ontario (Jay Leno did New Years Eve there last year for example. Yes Torontonians, in Windsor.).
• You have gone from a single festival and a single fireworks night in the downtown core to literally multiple festivals each weekend during the warm season, including massive draws such as the International Red Bull Air Racing in recent years.
• A $6 million auditorium on the waterfront able to house 15,000 people for a concert (I was there for Benny Bennassi if that means anything to you, 2nd largest DJ in the world spinning tunes, was UNREAL).
• A $54 million community centre complete with Olympic sized pool, wave pool and water slides – a real draw not just for Windsor but for South Western Ontarian and American families as well.
• The Main Library branch moves into the Art Gallery which urban planning studies the world over have shown this is sheer brilliance in enhancing cultural services to the community.
• A massive call centre with 1,000+ jobs moves from two spots in town into the downtown core into the old library building. There was a good chance they were leaving Windsor, and the city government saved the day in spectacular fashion, where they’re now talking about expansion of the centre rather than leaving the city altogether.

This list above – and I’m sure I’m missing some things of significance – is all just in the last 4 years. That’s it. 1400 days.

Up next for the downtown core:

• The largest investor south of Toronto has bought up huge swaths of the western side of the downtown core in order to build condo towers. Now that this University news is a done deal, he’ll be building soon I’m certain.
• The Mayor is focusing on setting up a real museum as a serious draw. The reality is – and any historian will tell you this – no spot in Ontario has a richer history than Windsor. This isn’t me shaking the pom-poms, it’s a fact. It’s the oldest settlement west of Quebec City, War of 1812, end of the Underground Railroad, PROHIBITION (my favourite – man what an amazing story), the birth of mass production, the birth of the automobile, the birth of Electronic Music, the last of the “Company Towns” (Olde Walkerville), etc. etc. – many cities 10 times our size don’t have our stories to tell.
• Who knows. I put this in half jokingly. This city is changing so quickly in a positive, diversified direction that I can only imagine what’s up next. Take no prisoners. Next.

http://www.windsorstar.com/news/Windsor+Star+building/5755628/story.html

DEAL OF THE WEEK:

So in the spirit of celebration at the core’s steroid injection, I would be remiss not to make the deal of the week and exclusively listed (i.e. not on the MLS) opportunity:

www.ontariorci.com/545Ouellette.php

545 OUELLETTE, WINDSOR, N9A 4J3

And let’s add this profitable gem for good measure:

www.ontariorci.com/650Ouellette.php

650-690 Ouellette Ave, Windsor, ON N9A 1B9

If you want more details on either property, please email commercial/industrial team specialist Shibu George at shibu@ontariorci.com.

Dear Clients,

I’m selling off my 6-plex gem in order to focus my other investments. For example, you may have seen our Windsor Star front page article earlier this month creating a film and television hub in Windsor’s Downtown core:

http://www.windsorstar.com/business/Film+production+planned+downtown+Windsor/5647496/story.html

My 6-plex is fully rented, a newer structure at approximately 16 years old, a full and separately leased underground garage, and really low utility bills. As the property is less than 7 units, taxes are at a 1.73% mill rate as opposed to a 4.43% mill rate if just one more unit was added.

I can’t stress how good this property has been to me. Even in those occasional months where all your cash flow seems to go to repairs and renovations (you know what I’m talking about!), my mortgage is still getting paid down by over $2000 a month. This to me is huge peace of mind as an investor.

I’m not too worried about pulling a ton of my equity out of the building, I’m much more focused on freeing up my time. As such I’m willing to consider a creative, potentially fully financed deal on this property.

Take a look at the promotional package, and call me back at your earliest convenience to discuss the finer details.

http://www.ontariorci.com/1033Wigle.php

Dear Clients,

Property values are on the way up in Windsor, nothing I haven’t been telling you was coming for months.

What I find really, really interesting about this article: the tone and focus of it. It is all short term, short term, short term. I’m an investor, and as one I don’t care much about this year, maybe a bit more next year I suppose — I think (and YOU should think!) in terms of 5 years, 10 years, 20 years. And that’s where Windsor be, and continue to be, on your investment radar; this is a city about to hit a 10-year golden age economically. real estate prices will follow.

Housing market has started to turn corner, analyst says

Region’s sales, prices inching up

Homeowners Les Leck and Julie Burns still have some frames to hang and other fine tuning after moving into their home on Northway Street in South Windsor Tuesday, Nov. 1, 2011. Leck is holding a painting his grandmother painted. The couple plan to marry next July.

Les Leck is still looking for a full-time teaching job, but he and his fiancée Julie Burns don’t feel they took a gamble buying their first home in Windsor.

The couple, who are getting married in July 2012, are among a steadily growing number of home buyers who are putting their ultimate vote of confidence in the Windsor region’s gradual economic recovery.

“For me, looking at property here was far more affordable then in my hometown (of Paris, Ont.),” said Leck, 29, a supply teacher with the Greater Essex County District School Board.

He and Burns, a qualified teacher currently working as an educational assistant at the John McGivney Children’s Centre, feel the $200,000 South Windsor home they took possession of in July will gradually increase in value, he said.

If the recent trend in home sales continues, their timing may turn out to be ideal. Sales are inching up over last year and the number of homes that sold in October was up 12.8 per cent over the same month last year, according to the Windsor-Essex County Real Estate Board. The average price for 2011 is up about five per cent over last year.

“The real estate market does look like it’s starting to turn the corner in the city after a long period of, frankly, being the weakest in the country or one of the weakest in recent years,” said Douglas Porter, deputy chief economist for BMO Capital Markets, who was in Windsor on Tuesday. “It does look like it’s turned the corner, which is an important milestone for confidence in the city.”

He doesn’t expect more than a three- to six-per cent-increase in prices as the market picks up, which will leave the Windsor area as still one of the most affordable in the country.

“We definitely have seen some consumer confidence in the area,” said Julie Green, president of the local real estate board.

The most popular homes are those in the $100,000-$200,000 price range, which made up about half of the 397 sales in October. The bulk of those buyers have been first-timers, like Leck and Burns, and empty nesters who are downsizing or moving to the area to retire, Green said.

Low mortgage rates are helping maintain the momentum, as are efforts to promote the region as a retirement community, she said.

“Houses are selling. They’re selling quite well if they’re priced properly,” said Peter Valente, broker with Remo Valente Real Estate.

“The real thing that’s changed is the attitude of the people. There’s not the negativity surrounding Windsor that was abundant two years ago or a year and a half ago .…. Now people are investing back in the community. They feel that we’ve turned the corner and we’re looking for better days ahead,” he said.

New home sales have picked up this year after a lull in the last half of 2010 following the imposition of the HST, Valente said. “It’s getting better.”

It’s no longer a market in which buyers can expect to succeed with a lowball offer, but there’s still plenty of choice Leck and Burns found. They looked at about 30 houses and managed to snag the one they liked best by upping their offer after the seller came down from the listing price of $209,000, Leck said.

Valente Real Estate sales representative Brian Wright, who helped the couple find their house on Northway Avenue, said clients of all ages are looking to buy homes.

“I’m having my best year,” said Wright, who has been selling real estate for almost six years. “It’s a banner year for me so I’m happy with what’s going on.”

© Copyright (c) The Windsor Star

Dear Clients,

I think it appropriate that we now have the largest garage in Ontario since we are Canada’s automotive capital! But this garage is for planes; big planes that need a lot of people to fix them back up. Windsor is geographically blessed for business being surrounded by 77 million Americans in a very close proximity (including 6.2 million in the immediate Detroit area directly across “the creek”), and it’s a very short hop for repairs for Toronto/Chicago/Detroit/Cleveland/Indianapolis/Cincinnatti/Columbus/Buffalo etc. etc. etc. As a result 550 skilled aerospace trades people are expected full time. This is yet another example of the economic diversity push this region has been going through for the past decade, adding stability and economic growth (which in turns increases your property values hint-hint).

Biggest Garage in Ontario!

It’s bigger than a football field, all under a towering and massive, single-span roof.

It’s so huge you can park a Boeing 747 jumbo jet on one side and a pretty impressively sized Boeing 737 on the other side.

And that’s exactly what the folks at Windsor International Airport want to see. The $20.9-million MRO (stands for maintenance, repair, overhaul) service hangar nearing completion off County Road 42 to the east of the airport terminal will be the biggest indoor overhaul facility of its kind in Ontario.

The potential is huge, YQG (Windsor airport’s nickname in flying circles) president and CEO Federica Nazzani said during a media tour Thursday.

A typical overhaul of a 747 is a labour-intensive effort that can involve up to 160 people buzzing around the giant aircraft over a 60-day period. Everyone from welders and machinists to painters and even seamstresses are involved to get the big birds back in the skies, which is where they must be to earn money for their airline owners.

After some construction delays due to this year’s record rainfalls, YQG is hoping to have the facility ready for its private operator by sometime in January.

Dear Clients,

Bear in mind this article is talking about the “speculative” real estate market; I have been calling this the hot potato market (i.e. the one who gets caught holding the hot potato last gets burned).

I still feel the healthy cap rate, cash flowing properties are the best investments, speculative real estate gets me nervous, but I may be biased on this based on my own investment portfolio, and the fact that Windsor remains that only major city in Ontario where a 10% cap or better can be obtained consistently.

Into the arms of housing

Stressed investors keep eyeing the profits in real estate while equity markets continue their wild ride

It’s going to crash, it’s going to crash. How many times have we heard this about the Canadian housing market? Sometimes commentators use more tempered language to describe a predicted “pullback” or a market that is going to “moderate.” The problem is that outside of the 2008 recession, when prices corrected 10% followed by a boomerang recovery, it has not been true.

How do you are argue with almost 13 years of uninterrupted growth when the average sale price of a home in Canada has climbed from $152,365 in 1998 to $366,105 year to date in 2011.

That’s a 140% increase, but who’s counting? Apparently, a few investors.

Canada Mortgage and Housing Corp. says September new-home construction on an annualized basis was above 200,000, a level consistently hit on a yearly basis from 2002 to 2008. But this time out, a majority of the new construction was condominium apartments.

Existing-home sales, though not as buoyant, have stayed above 2010 levels and even added another 8.2% price appreciation. Why would consumers turn away from housing when all it does is go up? Not to mention the low interest loans that are there for the asking.

At one point, there was some tough talk about tightening lending, but the only substantial change has been shorter amortization periods. You can still get into the market with as a little as 5% down and borrow at rates below 3%.

And yet people like Benjamin Tal, deputy chief economist at CIBC World Markets, insist real estate’s prominence will fade over the next decade.

“This real estate boom is over. It’s not crazy to invest now, but it’s not the best way to utilize cash,” says Mr. Tal, adding the condo market has been influenced by foreign investors wanting to get their money out of their country of origin and diversify their wealth.

Don’t tell that to investors eyeing the profits in real estate while the equity markets continue their roller-coaster ride.

But what this boom has done for real estate is level the playing field with stocks. The S&P/TSX composite index total return over the past 13 years is actually about 135%, just below real estate’s 140% gain. Go back to 1980, when the Canadian Real Estate Association first started tracking average price, and real estate’s 446% return, based on average sales price, also compares with the market.

Much of today’s activity is in condominiums even though the costs of carrying such an investment have risen dramatically. Investors are still banking on a rising market.

Urbanation Inc. executive vice-president Ben Myers says the average condominium in Toronto - the biggest market of its kind in North America - sold for about $490 per square foot in the second quarter. Based on about 750 square feet, that’s $367,500.

Your carrying costs would include a mortgage and with 25% down and about a 2.4% interest rate, your monthly mortgage payments would be $1,222.67. The average condo fee is 47¢ per square foot, so add another $350 per month, plus, say, another $300 per month for taxes.

The problem is those approximate $1,900 in costs, which don’t include heat and hydro, are more than rental revenue. The average Toronto condominium rents for $2.18 per square foot, putting your condo income at just over $1,600 per month.

That gaps seems worth the risk because condominiums in Toronto have appreciated at an average rate of 7% to 8% over the past 15 years. Condominiums also have the added attraction of requiring minimum cash up front until they are registered. It can take three years to build a condominium, so you can get away with putting as little as 20% down before you have to come up with the full amount.

The math is simple. You put $73,500 down on that condo and hope the value of the $367,500 condo jumps to $450,000 in three years, based on a 7% increase. That’s an $82,500 return and, even if you take out $20,000 for transaction costs, you are left with $62,500 profit, or an 85% return on your money in three years.

It’s attractive to many. Financial planner Ted Rechtshaffen has a client with a net worth of $2-million who owns seven condominiums.

“It is a strategy that has worked,” he says, adding the model could come tumbling down if interest rates rise. “If you strip it all down, it’s a highly leveraged strategy. If you are of the view that real estate only goes up, highly leveraged is a smart thing.”

© Copyright (c) National Post