Month: January 2009

I read a very interesting article recently about Disruptive Innovation, and I thought I would share some of it with you. I had heard about the concept before, I actually covered it in my class called (deep breath) Managing and Growing Small to Medium Sized Technology Based Companies. Now I don’t know if I was too tired in class and didn’t catch on to the concept completely, but what I remembered was that it was simply a type of innovation that turned an industry on its head so to speak. Pretty vague, no? Maybe I should have had MORE coffee to get through those 7-10pm classes!

In a recent issue of the Harvard Business Review, an article was written entitled, “ Will Disruptive Innovations Cure the Health Care Industry?”. They describe an aspect about the Health Care industry (which is typical of all industries that get blindsided by disruptive innovation), and that is that the dominant players are all focused on improving their products and services to the point where the average consumer doesn’t even know what they are using. Furthermore, as these sustainable innovations make products and services more and more advanced, specialized professionals become the only ones able to produce what is needed. When it comes to health care, the more complex, expensive and inconvenient it becomes, many afflictions simply go untreated.

An example they give of a product that would disruptivley innovate the industry is a portable, low-intensity X-ray machine that can “be wheeled between offices on a small cart. It creates images of such clarity that pediatricians, internists, and nurses can detect cracks in bones or lumps in tissue in their offices, not a hospital. At 10% of the cost of a conventional X-ray machine, it could save patients, their employers, and insurance companies hundreds of thousands of dollars every year”. Sounds like a great invention, right? Well guess what happened when the entrepreneur tried to license the technology? The large scale X-ray equipment providers wanted no part of it because it threatened their business model! Unbelievable!

Now the idea here is that Disruptive Innovation should enable a larger population of less-skilled people to do in a more convenient, less expensive setting things that historically could be performed only by expensive specialists in centralized, inconvenient locations.

I work in Real Estate, and a great example of this would be Grapevine. You know, the “lets pretend to be educated and conditioned professionals that know how to properly analyze the market and subject properties, navigate through lengthy legal documents, protect our interests effectively, pull upon all the resources we don’t have, and structure and manage negotiations as if we do this a dozen times a month” company? (I’m not a fan).
As threatening and under-serving this company has been to its own client base, it has had some good success, and it is a great example of Disruptive Innovation. The fact is, there was (and still is) a HUGE barrier between Realtors and Buyers and Sellers. Regardless of who is responsible for the gap – Grapevine saw the opportunity and took it.

Another example would be very cheap cell-phones that are just PHONES. At todays rate, something like that would sell for ZERO dollars and likely run about $10 a month. There IS an opportunity out there for something like that.

There is often a constant pull to the underserved high end of industries, but what about the over-served low end of the industry? The 80/20 rule states that 80% of your business comes from 20% of your clientele. Why is that? Maybe YOUR BUSINESS is the problem, and if you don’t adapt with the times, someone is going to come along with a value based business model and target the 80% of your market that is not responding to your product or service. Sure 20% of the market of cell phones will give 80% of the business, but that’s because 80% don’t need 101 applications that can tell them the time in Tuktoyaktuk on the drop of a dime. Furthermore, ever think about Canada’s aging population? How are they all going to feel about this over-serving of products or services when all they want is something simple? Our younger generation is always trying to be the next best thing, and there may be a HUGE gap that arises in certain markets as a result.

See the opportunity?

Hi Everyone,

The 2009 Federal Budget has passed! Included are some parts of the stimulus package that has been CREATED FOR YOU to get out there and contribute to the economy. The incentives are incredible!

Here is a quick list:

The HRTC (home renovation tax credit)

A tax credit that will allow homeowners to claim 15% of their renovations started no later than February 10, 2009. You can claim these renovation costs from $1,000.00 to $10,000.00 on your 2009 tax return for a maximum tax credit of $1,350.00. The credit is available for both homes and cottages.

“Green” initiatives:

The Feds have committed $300 million over the next 2 years into energy retrofit programs.

The Homebuyers plan (HBP)

The eligible amount first-time homebuyers can borrow from RRSPs has been raised from $20,000.00 to $25,000

Closing cost credit

The Conservative government will give first-time home buyers a tax credit of up to $5000 on the closing costs of the purchase of a new home. That means a savings of up to $750 when you file your tax return.

Dont forget, Scotia bank and the “Free Down Payment” option still available!

Rates look something like this right now: 4.49% 5 year fixed, 3.5% 1 year fixed, 4% 5 year variable (prime +1)

Get out there and get a piece of the stimulus package!

If you want me to help you find some direction, dont hesitate 613/868-4383 or leave me a comment here!

“Free Down Payments”, historical low rates, downward trending house prices, and closing cost credits!

Are you KIDDING ME?

GO GO GO!

 Hello Again,

 

I spoke with a good friend of mine, John Walsh – Founder of the Ottawa Real Estate Investors Organization (http://www.oreio.org/ ) and a Mortgage Agent with Mortgage Alliance, and I asked him to provide me with some explanation as to why it is significant to us that the Bank of Canada (BoC) has lowered THEIR lending rate. Here is an excerpt:

 

 “Banks borrow from the Bank of Canada at the BoC’s prime rate (also significantly from the bond market, but that’s another story for another day). Banks need to make money, so they charge a “spread”. The spread used to be 150 Basis Points (Bps), then 175 Bps, then most recently 200 Bps.

When the banks didn’t follow the second most recent rate drop of 75 point (in December), the BoC President was not happy and let them know publicly. No mincing of words either. Follow the BoC lead or face consequences.

 

 John Walsh is not just a smart man, he is also one that I TRUST (Remember the New Social Contract – and what is important to me?). In fact, he is the one I introduced to my fiancé to arrange her mortgage – need I say more?

Hi Everyone,

 

Remember that New Years Resolutions blog that I wrote at the beginning of the new year? Well, I got some good feedback from a few good friends, and I decided to share their comments with you so that you could all see what others are planning in 2009.

 

Enjoy!

 

 

Meet Adam Elsaadi. Adam is a bilingual IT professional with 8+ years experience and a background that blends business, management and technical expertise focusing on management consulting, project management, business transformation, strategic planning, systems analysis, product engineering, development and integration to meet public and private sector client requirements. Clearly, Adam is a busy man. As managing partner at Navigatus Consulting, the bulk of his efforts in 2009 will be dedicated to the provision of IT and Management Professionals to his clients. Adam has set his Real Estate goal of 2009 to acquiring a piece of land in order to build a custom home in 2010.  He can be reached at adam.elsaadi@navigatus.com

 

 

Meet Jacquie Chammas. I have known her personally for about 5 years now, and she is VERY driven. Jacquie started University at 16 (yes, SIXTEEN!) with high hopes of becoming a surgeon. She quickly realized that the life of a surgeon was not for her, and she quickly shifted focus to Law, where she will see herself graduating this year with a keen eye on International Law. In the near future, she plans on pursuing her MBA and becoming the CEO of her very own business. I think it is safe to say this is within her potential, wouldn’t you? Jacquie is a proud sponsor parent of 12 year old Thiasara Hansamali Subasigha from Sri Lanka – a true testament to Jacquie’s desire to help those in need. Her Real Estate goals for 2009 include purchasing a condo or a small house to get her started. She clearly recognizes that Real Estate is a sound investment, and is looking forward to getting started! Jacquie can be reached at jacquiechammas@hotmail.com .

 

Finally, meet Remi Bedirian. He is a 4^th year University of Ottawa Finance student by day, and a passionate guitar teacher by night. Remi would like me make clear that he is a handsome young lad, who enjoys long walks on the beach, and is the proud owner of a brand new shiny cell-phone – his first! (You’re welcome Remi!). For 2009 he is focused on completing his degree (with no break in his scholarship, mind you), expanding on his guitar teaching practice, and fine-tuning his Spanish. His Real Estate ambitions for 2009 include educating himself on how to acquire and manage investment Real Estate (something I can help with!). Throught the years I’ve known him, and through all the times we have spent late at night on weekends at University working away, he has mentioned to me that his father is an active and successful landlord, and his brother is a Realtor as well (smart move!). Remi is a great guy with a lot of depth to him, and recognizing this, I asked him to include a little more contact info that the previous two so that he could get a little exposure – here it is:

 

Email: remibedirian@hotmail.com

My MySpace Page where I post some of my more recent guitar recordings: www.myspace.com/remibedirian

Website: I had an actual website going a few years ago, but never got beyond the one page where I post music. It has some older recordings: http://137.122.145.36/~b4209056/

Hi Everyone,

 

I will keep it quick.

 

The market is VERY STRONGLY in favour of those who want to buy right now. My parents just bought a new house, and my fiancé and mother in-law are getting pre-qualified this week to see what they can get their hands on.

 

More good news:

 

The Bank of Canada just announced their overnight lending rate will go down to 1%!!

 

Here is a table from the Bank of Canada that I pulled 10 minutes ago:

 

 

Source: http://www.bankofcanada.ca/en/monetary/target.html

 

This means that the BANKS get THEIR money for this amount, isn’t that incredible?

 

Naturally, this means that the lending institutions can provide you with lower rates on loans as well. I will show you just HOW LOW they are going as soon as I get the info.

 

You should all realize that THIS IS THE BEST TIME TO BUY REAL ESTATE in over 15 YEARS – maybe longer when I find out how low the lenders will go.

 

I was speaking to the Mortgage Development Manager from Scotiabank place and she was telling me about a FREE down payment option that they offer!

 

What this means is that in this incredible Buyers Market, with lending rates as low as they have ever been, there is now an opportunity to acquire some Real Estate with NOTHING DOWN.  I don’t know what else anyone could be waiting for….

 

I have many friends that are still renting right now and are paying anywhere from $800 to $1200 a month. Their main reason for not buying is that they can’t save for the down. If you can put together a few thousand dollars for closing costs, THAT’S ALL YOU NEED! Gather your savings, borrow from your family, put together some money from your job, get on Kijiji and sell that old stereo – whatever you need to do!

 

This is not a sales pitch.  If you don’t learn about this opportunity to buy Real Estate before its too late – you will regret it later on.

 

Don’t forget about the value of a Realtor in this market. If you are a Buyer – a Realtor is FREE – how? The Vendor pays the commissions. I will put together some information about just how valuable a GOOD Realtor can be.

 

Coming up:

 

The inside word on the FREE DOWN PAYMENT from the Mortgage Development Manage at Scotiabank, and a mortgage calculator so that you can figure out exactly HOW MUCH IT WOULD COST TO OWN.

 

What do you want to learn more about? Bankers, brokers, markets, houses, being pre-qualified, Realtors? ASK ME.

 

P.S. I’ve had a handful of people write me back about their New Years Resolutions. Excellent Work! I will put them all together and post them soon – you will never guess what the people around you are up to!

 

Cheers and Stay Tuned!

Many of my fellow students at the Telfer School of Management will be graduating this year, and will be moving on to their next stage in life. Similarly, many people in my age group are upgrading their lifestyles for a variety of reasons – these are indeed the transition years! One of these transitions includes buying their first piece of real estate – likely something small, like a condo for example (which was my first purchase many years ago).  I thought I would ask for some expert insight into what you should all know when considering to buy your first piece of Real Estate, and here is what I have for you:

 

Mr. John Walsh, a Mortgage Broker with Mortgage Alliance, and also the founder of the Ottawa Real Estate Investors Organization (http://www.oreio.org/ ), has the following to say about first time home buyers:

 

The biggest fear most of the first time home buyers have from my perspective is that they don’t quite know what’s going on. They are not “experts” in financial matters and when they approach what many perceive as the “big scary bank”, they tend to assume that they are being taken care of (or taken to the cleaners). Whether they are or not depends largely on their personal history with the bank.

The quote I like to give people is that banks are in the business of making money. They are very good at it. To the tune of almost $1B a quarter. Given that this is their focus, do you believe it is in their “best interest” (pardon the pun) to give you the lowest possible rate or do you think it might be a conflict of interest?
As a mortgage broker/agent/professional, I get paid by all the lenders. I also get their best rates and terms automatically as we are “viewed” by the lenders as volume customers. So my interest, is in doing what’s best for my client. My bottom line is also my clients bottom line.

Best advice for anyone buying or not is to pull your own credit bureau. Find out what is on there BEFORE you decide to get a loan. Depending on the score (Becon or FICO as it’s commonly referred to) you receive will determine much of the time the kind of rate you will get. The lower the score the higher the risk and the higher the rate and vice versa.

That $20 Zellers bill that you were never notified of that has been sent to collections could prevent you from getting a mortgage. It just happend to a client of mine.

I also like to compare investing in real estate long term with the stock market. In a given 15 year span, real estate has shown the ability to almost double in value. Worst case senario, the building value drops to near zero. It’s still a place to live and the land will always have some value. Stocks? They can double in shorter time frames, but how low can it go? Well, I guess you could always use it as wallpaper in your house. 🙂

The best time to plant a tree was 15 years ago. The next best time is now. -anchient Chinese proverb.

 

Mr. Walsh can be reached at jwalsh@mortgagealliance.com or 613-237-7044 x148, or check him out at http://ForAllYourMortgageNeeds.com .

 

This is great advice. I can personally vouch for the importance of verifying your Credit History. Fill out this form: http://www.equifax.com/ecm/canada/EFXCreditReportRequestForm.pdf

and fax it to Equifax for your Free Credit Report (something I recommend to all my clients).

 

Next Up: Margaret Burniston, Broker at Partners Advantage GMAC Real Estate. Margaret is a very kind and intelligent woman who is great at what she does. I have recommended her to family and friends before and she has always been a great help.

 

Margaret tells me that most first time home buying clients are surprised by the amount of additional closing costs that are require. Conveniently enough, she prepared a list of these costs for us today. Here they are:

 

Commom Home Buying Costs

 

Purchasing a home can be one of the most exciting and satisfying experiences.  Wise home buyers plan for an additional 1.5 – 1.75% of the price to cover these items involved with the purchase.

 

Deposit

As a general rule all offers are submitted with a monetary deposit. The amount will vary with the value of the property.  Unlike the other items listed, deposit monies are part of the purchase price and will be deducted from the balance due on closing.

 

Home Inspection

A knowledgeable home inspector will spend 2 – 4 hours with you examining the home with you. They will check mechanicals, general construction, visible structure, and overall fitness of the property, a good home inspector will also identify ongoing maintenance items.  

 

Condominium Status Certificate

Condominiums generally have a document called a Status Certificate outlining the condition, financials etc., of the condo corporation.  A careful review of the certificate is recommended by the buyer or the buyer’s lawyer during the conditional period.

 

Land Transfer Tax

This tax is required by the government to be paid by the buyer at time of closing of the real estate transaction. Land Transfer doesn’t apply on your first home purchase.

 

Legal fees

The transfer of ownership of the property generally involves the use of a real estate lawyer. It is important to secure a lawyer as soon as possible after the offer has been accepted by the vendor.

 

Adjustments

This is a category of items that require apportioning (or splitting) on the closing of the transaction. 

 

Title Insurance

Designed to cover unpredictable or unforeseen issues with the title of the property that become known after closing of the sale.

 

Home Insurance

All properties are required to carry valid home owners insurance. Covers fire and other hazards.

 

GST

Goods and Services Tax will be required on all service items including real estate commission and legal fees.

 

Margaret Burniston can be found at: www.buyandsellottawahomes.com  and contacted at Margaret@buyandsellottawahomes.com or 613-836-3378 x236.

This is the time of year that everyone starts to think about what they want to accomplish in the coming year. For many of us, this is a BIG year, and I mean HUGE. Some of my good friends are working on big promotions, buying another investment property, or my favourite: starting a family!

Take me for example – new job, graduating, getting married, and generally spending a GREAT deal of time doing what I want to do with my life (work in Real Estate, pursue entrepreneurial ambitions, and piece together my future family life).

What about you?

I’m not talking about those regular new years resolutions such as quitting smoking or joining a gym, I am talking about S.M.A.R.T. goals that will bring you closer to where you want to be in life (who wants to call me out on S.M.A.R.T. goals? :)). Examples include: Expanding your network, getting a new job, travelling, starting your own business, graduating, or maybe even buying your first piece of Real Estate.

What else would make a good resolution?

Curious about other’s New Years Resolutions? The next round of blogging will satisfy that curiosity!

Note: I’ve been noticing some great feedback on some of my blogs, and I wanted to let you all know you can click on the TITLE of the specific blog entry to see the comments, and even add your own.

Let’s talk about those resolutions!

Hi Everyone!

 

Many people have been running around talking about our current economic and Real Estate market situation. I would like to take this opportunity to provide you with some information that is as ‘cut and dry’ as I can make it.

 

I spent a little while on the Bank of Canada’s website to pull some monthly  rates over the past ten years, and then converting them to graphs (through Excel) to give you an idea of the economic landscape as it appears today.

 

Observe the Bank Rate (minimum lending rate TO lending institutions from BOC), and the Prime Rate (minimum lending rate BY financial institutions).

(Source: http://www.bankofcanada.ca/en/rates/digest.html converted to Excel)

 

 

Bank Rate 1.75%

 

 

 

 

Prime Business Rate 3.5%

 

 

 

What we are observing here are historical low lending rates.

 

Going rates from various mortgage brokers (best alternative to Banks IMO), show 5 year Fixed rates below 5% and Variables just above 4%!!

 

How about a peek at the value of the stock in the market right now?

 

In October, the average Canadian home price fell by 10% from a year earlier!

http://www.financialpost.com/news/story.html?id=1008418

 

That same month, the Financial Post noted that Canadian home sales fell 14%, and then the Globe and Mail noted a further 12.3% in November!

http://www.financialpost.com/news/story.html?id=959714

http://business.theglobeandmail.com/servlet/story/RTGAM.20081215.whomes1215/BNStory/Business/home

 

Coming to a conclusion:

 

Lending rates are down to historical lows, and housing prices are following suit.

 

Do you think that it is a good time to buy?

 

For more information, don’t hesitate to contact me at mevans@partnersadvantage.ca

 

Cheers