bizaro86

But on the other hand, the diapers come right to my house with free 2 day shipping. It's like a magical box that means I never have to go to Walmart late at night ever again.

From reading it, it seems to me the child has the money on deposit earning 4% per month. Sounds like they're getting the better end of the deal... Similar to the Lego story above, I intend to do kijiji/Craigslist buy-low-sell-high of whatever my kids are interested in with them when they are old enough. My wife and I have always done that casually with our interests at the time throughout life (including rare books, musical instruments, jewelry, electronics, vending machines, and baby strollers). While we might not start the kids with shipping a 4 valve euphonium to Spain or buy 30,000 used books (both of which we've done) I think the buy a dollar for fifty cents is a useful skill whether you end up an investor or not, and the scale is appropriate for kids.

All of the Canadian banks do stuff like this. A couple of recent personal experiences. I was at a CIBC, where a little old lady was at the teller next to me. She was taking out approximately a weeks worth of grocery money. The teller said "sign here for your pre-approved unsecured line of credit and I'll get your cash" I had a mortgage at Scotia that the banker flat out said they wouldn't approve unless I signed up for their credit card. I'm sure if I had complained it would have been my misunderstanding. These are just the examples I've witnessed so far this month... Also, to whoever said Scotia has the most conservative domestic underwriting, that is not true for rental properties. Scotia has by far the most generous terms for individual rental property investors. TD is probably the strictest in that market.

I live further NW in Calgary, the condo I am thinking of selling (in Sunnyside) is a rental.

Actually 200x to 250x is the norm now if it's in reputable school zones. Sorry, I was misinterpreting the graph. I think price to rent varies by local market, Calgary is a bit under 200 I'd day. That being said, I really do have a pretty nice 2 bedroom apartment condo in a good inner city Calgary neighbourhood (across the street from a good elementry, 1 block from the Peace bridge). I would sell it at the price (say 155x my 1300/mth rent) so I think my valuation is relevant for at least part of the market. Toronto and Vancouver are different, but that's not news.

I'd like to know which Canadian markets are at ~55 price to rent ratio (the bottom end of that bar). The propertis I own now are probably 150x price to rent ratio.

I have done this in a regular condo complex, and am in the process of doing it in a timeshare complex. I've only just started, and I estimate it will take me 12-15 years to control the HOA. I've known a number of folks who have tried this at various resorts and failed. The usual issues are that to pull a condo out of the timeshare plan, you need all 52 owners to sell to you, and there are usually a few you can't find or who won't sell. The other issue is the vast majority of places you'll have a significant negative carry, and it just gets bigger the closer you get to control. I think I've licked both issues, but am proceeding cautiously. If it turns out like I expect (10 bagger+) I'll be back here raising a fund in 2032... (And of course, anyone who wants discount rooms for weekdays in San Francisco or Anaheim can PM me)

Bromance

Anybody advertising to help you get rid of your timeshare will do the following. 1) charge you a bunch of money up front. This is the important part from their perspective. 2) step 2 varies depending on how scummy they are. The usual choices are: -advertise it on a low traffic website for awhile -call the resort home owners association and developer to try and get them to take it back -list it on eBay for a low price or free -deed it over to an LLC with an unknown or imaginary membership, and stop paying the fees. -nothing These are all things you could do yourself, although the LLC one is probably illegal, and various attorney generals have shut down a few folks doing it.

I should probably add that some of the timeshares that can be purchased in Vegas do have some resale value, maybe 10-20% of retail. That would include most units at the Marriott, high season RCI points units at Grandview, some Holton units (generally higher season/point values, and there are specialized brokers for this). Also, worldmark point are worth about 10% of retail, and Wyndham points at their Vegas locations have some value as well. Polo towers/jockey club/Diamond you'd be lucky to give away (unless fixed week 52). Anyway, a retail timeshare is a terrible investment, but some have a bit of value if marketed correctly.

What you should do us PM me the details of which timeshare it is. Name of the resort, size of unit (studio, 1 bed, 2 bed etc) and what week or season it is in. Then I can advise you as to what to do with it. There are various brokers that specialize in the ones that have value, and different resale sites are best for giving away others. I'm almost certainly not interested in a Vegas timeshare (with a few exceptions) but I will be able to tell you what your best options are, and the price is right.

I'm a debenture holder, and would absolutely have voted against anything less generous. At 90, the YTM is 20% plus, and if they don't pay out the debentures get control of a debt free company at a great price. The new YTM is way lower, so without a better stick I don't see why anyone would take it. Repricing the option is the very minimum. I still might vote no if I can do that and tender.

Disagree on CAD. Oil and gas exports were down over 40B in 2015, and total lumber exports were 25B in 2015. The recovery in oil and gas prices should outweigh weakness in lumber pricing to the CAD.

Greg Abel is from Canada, him and I are alumni of the same university.

It hasn't been profiled on microcap club. (I'm a member)

I'm not sure a mostly male, highly logical driven group of value investors is a good place to go for advice on which brands are hot. I don't think clothing brands will die, but I do accept I have no way of predicting which will succeed. That's practically the definition of outside my circle of competence. I buy dozens of pairs of black socks all the same every few years, so I don't have to think about them, and they all match, which makes laundry faster.

As an Albertan, I actually wouldn't be opposed to us having a separate currency from the rest of Canada. Since the oil shock our terms of trade have declined precipitously, and that has affected the value of the CAD, as Albertan exports are material to the whole country. If we were in a currency union with the US, the safe haven USD strength would have removed the currency related safety valve that has reduced the pain in Alberta, to the point that we would be in big trouble here. It would lead to political unrest in the first oil bust after the currency union, for sure.

Post from another forum I thought was interesting. Data not sourced, so YMMV. Here is a Chronology of CMHC rules & mortgage data: 1954-1990- Somewhere along this time, 10% became minimum down payment. 1990- 5% was introduced as a trial run, officially accepted in 1999. 2001 – Genworth (GE Capital) enters the Canadian mortgage insurance market 2001 – CIBC offered below-prime mortgages. Pre-2003 – CMHC: 5% down with price limit depending on area, 25 yr amortizations, no price limit if 10% or more down Sep 2003 – CMHC: 5% down, 25 yr amortizations, removed all price ceiling limitations. Now any mortgage would be insured regardless of the cost. Mar 2004 – CMHC: Flex-Down product allows 5% down to be borrowed and 1.5% closing costs to be borrowed (essentially zero down, but 95% insured) Mar 2006 – AIG enters the Canadian mortgage insurance market Mar 2006 – CMHC: 0% down, 30 yr amortizations (Genworth announces 35 yr amortizations) Jun 2006 – CMHC: 0% down, 35 yr amortizations, interest only payments allowed for 10 years Nov 2006 – CMHC: 0% down, 40 yr amortizations, interest only payments allowed for 10 years Oct 2008 – CMHC: 5% down, 35 yr amortizations, investors need 5% down. April 2010- CMHC did some minor tightening of their guidelines, investors need 20% down. March 2011- CMHC only allows 30 yr amortizations, restrictions on pulling equity out 2012 - CMHC only allows 25 yr amortizations, insured mortgages limited to $1 million, home equity refinance drops from 85% to 80%. The amount of credit expansion and loosening that occurred from 2003 to 2006 was crazy. Any wonder home prices almost doubled in 30 months? Calgary SF Median (January 2005) +/-$240,000 Calgary SF Median (July 2007) +/-$440,000

If net worth to income is up, and debt to assets is constant, its necessary that debt to income is up as well. Debt servicing to income might not be since interest rates are down, but that makes any shock from rising rates worse.

I love Calgary, live here, and own investment RE here. (Sold >50% of it in 2014, so that worked out) Anyone who tells you 1MM people on the prairies is a global city is either 1) an idiot or 2) trying to sell you overpriced real estate there. (Or possibly both). Calgary is wonderful. Great access to mountains, rivers, outdoorsy stuff. Good parks, restaurants (best Vietnamese food outside Vietnam, IMO), healthcare and schools. But it's not going to attract the super-rich looking for a place to personally live. The arts and culture and selection of high end dining are insufficient for that, and the climate hurts us. (Although this winter has been great). Rents here are declining (I took a call from a tenant today who wanted a reduction, which I granted), and I expect them to continue to do so. Interestingly, my highest priced rental unit is rented to two students from China who took high school here and are now taking post secondary.

That is interesting to me. I knew about non-recourse in Alberta (I looked into it extensively when I was buying foreclosures in 2009-2010, as I took on a lot of debt at that time, and wanted to know my downside). I was under the impression the only exception to the non-recourse law was insured mortgages, but if you can put a personal guarantee in that would make me more interested in doing 2nd mortgage lending, especially in this real estate environment. One more question, (sorry!) do you have a third party appraiser you trust or do you form your own opinion of collateral value for real estate? Hey, no problem. It's an interesting business, and I'm happy to talk about it. I just checked the most recent mortgage we did and there's only a passing mention of a personal guarantee. Basically it says this loan is guaranteed by 'x' property and by a personal guarantee from the borrower. Not sure if that's put in there as a scare tactic to make the borrower think they're responsible or what. If it never goes to court and the borrower isn't educated on their rights, I can see how they could be convinced to come up with a shortfall even if they're not legally obligated to. I've always worked under the assumption that if there wasn't plenty of equity in the property, I wasn't interested. The personal guarantee was just more of a margin of safety. Maybe the lawyer was blowing smoke up my ass or I misunderstood. Who knows. Every now and again we'll ask our Realtor to value a property, but for the most part we just go over and eyeball it. Usually we insist on signing the forms at the borrower's kitchen table just to make sure the house is worth about what we think it is. Thanks! I agree about there not being much downside to putting in the personal guarantee line. I paid for independent legal advice on the subject, but I seriously doubt the average person consolidating debt would even consider it.

Making a tender offer for a controlled company is almost certainly a waste of time (and professional fees!), but it would shake things up a bit I bet. You'd probably get slightly better capital allocation...

That is interesting to me. I knew about non-recourse in Alberta (I looked into it extensively when I was buying foreclosures in 2009-2010, as I took on a lot of debt at that time, and wanted to know my downside). I was under the impression the only exception to the non-recourse law was insured mortgages, but if you can put a personal guarantee in that would make me more interested in doing 2nd mortgage lending, especially in this real estate environment. One more question, (sorry!) do you have a third party appraiser you trust or do you form your own opinion of collateral value for real estate?

I have a number of HELOCs from large banks (both personal residence and rentals) that are floating rate, currently 3.2%, which seems like a reasonable rate to me. But I have a good job/credit rating, and the LTVs are at 80%. They're mostly undrawn, but I like to have access to cash if bargains come up (especially RE, where sometimes a cash quick close gets you a deal). I'm not sure how that compares to the US, but a prime credit can access tons of money in Canada, imo. Hard money would be for people who don't qualify at a bank, bad credit, etc. I'm considering it as a spread business (borrow on my Heloc at 3.2%, lend at 8-10%). I'd be curious, Nelson, how bad is the credit of your typical client? Presumably they have jobs, but do you pull credit? If so, what do you look for?

We are not a bank. We don't attract deposits or anything like that. We're just guys who lend money. There's no licence needed. We're the only lenders in town, which helps a ton. If you were competing with other private lenders my advice would be give great service to brokers. Do stuff like make quick decisions. Brokers want the path of least resistance. Like I mentioned above, a loan fee gets added onto the principal. Total fee of $3k is what we usually do, with $1k to us for lawyer's fees and $2k to the broker for doing the loan. If the loan is smaller (between $10k and $20k), the broker will usually take less. We've evolved to the point where we don't do many broker deals anymore. The one mortgage broker in town quit, lol. Tempted to get into the game, but I'm not especially bullish on real estate in general. Thanks a lot! Have you ever thought of becoming a bank, attract deposits and grow into a bigger lender? I shouldn't speak for Nelson, but the hurdles of starting a bank are pretty high in Canada, my impression is higher than the US. There are very few small banks here. Nelson, I'm curious, how do you compete against places like the cash store/money mart? It seems like that would be what people would think of first and it would be more convenient. Or is your town small enough not to have that? I've often considered going into this business (in Calgary, where I live) but have never pulled the trigger. Do you find yourself getting smaller, loans from brokers as well? I'd be interested, but for diversification/portfolio size reasons probably wouldn't want to lend more than 20k to one borrower, which wouldn't cover a mortgage refinance, obviously. Do you write second mortgages as well?