The Latest Research Has Changed My Position On Real Estate
The Latest Research Has Changed My Position On Real Estate

The Latest Research Has Changed My Position on Real Estate

It is time for me to be a little bit blunt and I apologize in advance. The research that me and my team have been executing has been very profound – and very timely with all the changes we are seeing across our country and the world. Political shifts, turmoil in the Middle East, and soaring oil prices are just a few of the issues we are being faced with.

As I have emphasized time and time again, there is NO Canadian real estate market, and the numbers come down to location, location, location. Markets are very specific (regional), and the fundamentals must be heeded exclusively to each individual area. This is where me and my team dig deep to find the truth behind the headlines.

So let me get to the point… The Canadian economic fundamentals are headed toward a period  of long-term momentum, and this factors into the turmoil that is occurring around the world – the huge debt being created in the US, and the potential for the world economy to stay in the doldrums for a longer term.

Here's a very quick  snap shot of what's happening right in your backyard, and why April 16, 2011, is such an important date for investors across the Ontario

Real Estate Market Numbers are Exactly
The Wrong Factors To Look At When You Want
To Predict What's Going To Happen

Here's what you use to predict the real estate market future: The Momentum Graph,  which shows exactly the progression of an economy and how it will eventually impact the real estate market.

The Economic Formula to Predict The Future

 
Real Estate Formula

In a nutshell this graph states the following:

GDP growth >> Job growth >> Population GDP GDP growth >> Job Growth >> Population Growth >> Increased rental demand (12 months later) >> Increased rents >> Property purchase demand (18 months later) >>  eventually leading to property price increases.

The first step on the chart is GDP growth and contributing to the strong Canadian GDP growth is the following:

F3 + 1… Why This Is Important To You
and The Future of Real Estate
 

F3 + 1, stands for Food, Fuel, Fertilizer and Forestry.  These four things are what the world will need as it comes out of its economic recession and looks forward to future growth.  Canada is positioned well with a supply of these key ingredients.

Food:
Higher food prices are coming, with some saying it's already here.  World Food Prices Hit Another Record… article here.  This even hits very close to home as the beloved Canadian company, Tim Horton's, has just recently announced a price increase on its coffee … article here

Canada, as a food producer, will benefit from this trend: on one hand you will have to pay more for food, but the Canadian economy will also benefit from higher prices.

Fuel:
Yikes! The last time I filled up my car, it was almost impossible to have the pump finish on an 'even .00 number'. The monthly fuel bill is up substantially.  The political turmoil in many countries is causing a 'fear premium' in the cost of oil and its associated by-products… article here.  Plus, the unrest in the Middle East is making Canadian oil a safe and secure supply… article here.

The good news is, Canada is an exporter of energy and Canadians benefit from the higher cost of fuel.  Many dollars from the Canadian energy sector flow to Ottawa and help fund many of Canada's initiatives.

Fertilizer:
The three primary macronutrients of fertilizer are: nitrogen (N), phosphorus (P), and potassium (K), and large reserves of potassium are found in Canada.  More than 150 countries use potash, but only 12 countries produce significant amounts. As a result, about 80 percent of the potash produced moves across borders.

Canada is one of the world's largest exporters, accounting for about 40 percent of the total world potash trade. (source: www.potashcorp.com).

The largest markets that Canada exports to include: US, China, India, Latin America (primarily Brazil), and other Asian countries (Malaysia, Indonesia, Vietnam, Thailand, Philippines, Taiwan, Korea and Japan).

With food shortages throughout the world, countries will try to get a higher yield out of their food production, while trying to improve the quality of the food.  Fertilizer will be required to support the global food demand and Canada is poised to grow, based upon this trend… article here

Forestry:
The images coming from the recent Japanese earthquake and resulting Tsunami were horrific but, as soon as things start to settle down, the task of rebuilding will start and life can begin to return to normal for many of the victims. Japan is a large importer of high-quality lumber, and will be importing this from Canada… article here

Coupled with the forecasted recovery of the U.S. residential construction industry in 2014, the Canadian forest industry is entering an upcycle. You are going to see lumber markets spike in the next few years, translating into more Canadian jobs.

Along with the F3 + 1, the Manufacturing and Automotive sectors are also gaining traction:

Manufacturing Sales at Post-Recession High … article here
Auto Sector to Shoulder Big Chunk of GDP gains … (Globe and Mail; 25 Feb. 2011)
Automotive Employment Stabilizes … article here

All this translates into more overall economic growth.  Our prediction is that Canada's gross domestic product during 2011 will reach 3.3%.  Hot off the press today, International Monetary Fund (IMF) is predicting Canada will lead the G7 Nations in economic growth … article here

So how do you take advantage of this?

The momentum is beginning and sophisticated investors know how to get out in front of the cycle. This is not speculating – this is true investing. Doors like this open every so often – your job is to step through them.

If you would like to see my latest research exhibited live along with the presentation of the brand new Top Ontario Investment Towns Research Report >> click here.

Signature

Don R. Campbell
Real Estate Investment Network™

The Latest Research Has Changed My Position On Real Estate was last modified: April 12th, 2011 by maddy
 

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5 Responses to “The Latest Research Has Changed My Position On Real Estate”

Glen says:

April 13, 2011 at 5:54 am

Don Campbell!!!

Thanks for taking the time to share this, and please keep this kind of stuff coming! I just got back from a real estate investor’s meeting, and I’m frustrated at the common attitudes out there. At this group, almost every single person is looking to make 100% of their money on the purchase of the property . . . that is, they want the property x% under fair market value. I find this attitude not just frustrating, but counter-productive. I could show these people a list of cashflow-positive properties, and they’d probably say “If I can’t get the property 10% below market value, I don’t want it.” I have been hearing this so much lately that I’m almost ready to scream.

What’s wrong with paying in and around market value for a cashflow positive property in a fundamentally strong area? Even without appreciation, a good property should give you a fantastic ROI when you consider cashflow and amortization.

To get to my point, the research you share is more than fantastic, and I love it and quote it all the time. Moreover, the group of people you have brought together with REIN is amazingly valuable. I used to think it was the information that was gold, but it’s the environment. The positive, optimistic, smart, sophisticated investors that don’t nitpick over counterproductive points (even though they’d buy a deal when they found one) is really the biggest asset REIN has going for it. I’m sad I let my membership expire, and I’m really getting excited to get back in there.

But, thanks for all the great work and research! The more I know, and the more people there are who wait for the 1 in 1,000 deal, the better it is for me!

Thanks!
Glen Murray

 

Auburn Bay Real Estate says:

April 17, 2011 at 7:03 pm

Always love your articles, and enjoying the benefits of your research!

 

Robert Lee Barber says:

August 27, 2011 at 8:17 pm

Thank you for sharing this wonderful research and insight.

 
 
 

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