Jan 26

Understanding Current Interest Rates

Written by: Richard Crenian

ReDev Properties - Understanding current interest ratesWhile the world has been buckled up, anticipating a swift rally in rising interest rates, the Bank of Canada delivered a very welcome surprise in January. Cutting the key benchmark rate down to a mere 0.75 per cent on January 21, 2015 sparked a lot of media attention.

Bloomberg News describes the interest rate deduction as an effort to protect the Canadian real estate market, but it’s doing more than that. It has a lot to do with the current oil prices.

Oil prices have been free falling and together with a rise in interest rates, leverage-dependent energy companies would have seen severe compression in profit margins. There are forces across the globe that might like to see smaller firms pinched, but the Bank of Canada’s Governor has made it clear this nation’s firms won’t be a victim.

The Globe and Mail argues this new 2015 rate cut may not equate to an instant reduction in home mortgage interest rates or monthly housing payments for Canadians. It’s important to understand there is a difference between the benchmark rate and consumer mortgage rates. It’s really a question of whether individual banks and mortgage companies pass on those savings to their customers or not.

However, given recent mortgage trends, it’s hard not to anticipate these financial firms won’t be able to resist competing. Additionally, low home loan and commercial mortgage rates will result in less borrowers defaulting.

For Canadian property investors, it also means more cash flow and higher yields on income properties. Analysts commenting in the global news media expect this cut to keep more Canadians working and protect their individual paychecks too, all while fueling more consumer spending.

The bottom line here is that more free cash and confidence in Canadian property is likely to create an additional surge in investment, demand, and prices.

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Jan 26

Commercial Real Estate: Tips for Taking on Tenant Challenges

Written by: Richard Crenian

ReDev Properties Commercial Real Estate Tips for taking on tenant challengesEven in today’s strong marketplace there can be an array of issues creating tension between commercial property landlords and their tenants.

Recently, we saw retail giants with large commercial property footprints such as Target Canada fall, leaving their landlords in difficult positions.

Here are a few steps that can effectively smooth potential landlord-tenant issues.

 

Tenant Screening

In a recent episode of Shark Tank, Daymond John surprisingly pulled back on making an investment offer that seemed like a guaranteed success-business. It had nothing to do with match, credibility or performance. Instead, it was because the entrepreneur and founder were argumentative. When you are in business with someone, including being their landlord, you don’t want to be in a constant battle and financially draining relationship. Consider the tenants you’ll be working with as a part of the screening process too.

Leases

Target Canada’s move will leave at least 133 premises vacant. On average the leases still have about 12 years left, which can mean a catastrophic loss for the landlord. However, the retailer’s US-based headquarters had guaranteed these leases, saving retail property owners more headaches.

Relationship Building

Being proactive about building stronger relationships and loyalty with tenants can go a very long way to avoiding issues and having complying tenants. If landlords or property management firms have built strong relationships with business tenants and store employees, they’ll be less likely to create problems, and be far more forgiving. Simply sending birthday cards, offering new signage, sending a gift basket on their lease anniversary or stopping by to shop from them can do wonders.

Due Diligence

If issues between tenants arise or if tenants begin defaulting on their leases, consider your first steps to be due diligence. Invest time to find out the source of the issue and work with your tenant to create mutually benefitting solutions.

Professional Management

In addition to having real estate and business attorneys on retainer, having professional third party property management in place is another security for landlords. They can help minimize liability and maximize property performance.

 

 

 

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Jan 14

Best Way For Canadian Investors To Weather Current Low Energy Prices

Written by: Richard Crenian

ReDev Properties Best way for Canadian Investors

The energy sector has taken a downturn recently, resulting in losses for many Canadian investors and n overall economy shakeup.

The problem isn’t simply an issue with oil. Hundreds of employees have been laid-off by an Alberta coal mine as alternative sources of energy are driving down energy prices. As well, it also doesn’t help that the media continues to point to millennials as an anti-consumer generation.

The debates over why oil prices have fallen so far in such a short amount of time have varied, making it difficult for analysts to predict where the bottom will be and when a bounce-back is expected. As a result, many Canadian investors are scrambling to figure out what they should be doing to mitigate the losses and subpar performance of the energy sector.

With the uncertainty, this can be the perfect opportunity to restructure your portfolio. Diversifying your portfolio with investments that offer contrasting characteristics to the energy sector can balance and diminish overall losses.

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Jan 14

Gifting Commercial Real Estate

Written by: Richard Crenian

ReDev Properties Gifting Commercial Real Estate

Real estate has been rapidly rising as one of the top gifts for all holidays and special occasions. This is in part thanks to the increased awareness of the power of property as a gift, as well as how inexpensive real estate has become to acquire and finance.

Single unit residential real estate may be the most obvious choice of gift. However, these are personal and the thought can turn negative quickly.

In contrast, commercial real estate offers similar advantages as single unit residents, but without the mess. Ranging from offices, retail, multi-family and industrial properties, these investment gifts can continue to grow and generate income through the years.

Furthermore, another advantage of commercial real estate investments today is that new partnership and investment structures can allow a portion of a property be given, complete with turnkey management and often at a reasonable cost.

Posted in Canadian Economy, Investing Alberta, real estate investment, Richard Crenian
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Jan 14

What to Expect in 2015

Written by: Richard Crenian

ReDev Properties  What to expect in 2015It’s been an interesting few years in Canada. We’ve seen old real estate strongholds toppled and replaced by new ones. Canada was recently elevated on the world map for financial strength, stability, and of course globe topping commercial property investment returns. So what can Canadians expect in 2015?

Stabilization

Many have found exciting returns in fast moving pockets of the Canadian commercial real estate market and some areas have seen luxury home sales continuously break records.

Some analysts are pointing to 2015 as a relatively stable year. A year where the market will continue to heal and balance out, laying the foundation for more growth in years ahead. While others aren’t as convinced and are seeing a downfall in the upcoming year.

From either perspective, 2015 is turning out to be a launch-pad year that springs well positioned investors towards their short-term financial goals.

As part of this stabilization, stock markets will bounce back, interest rates will being to rise, oil prices will find stability and lenders will become more bullish again.

It’s All About Location

When it comes to real estate, it’s all about “location, location, location”. Toronto still appears to be walking the high wire. Calgary is seeing a slight drop, while Vancouver remains high on the radar. Edmonton is turning out to be the start for 2015, gaining momentum quickly.

Local commercial real estate in Edmonton is gearing up for city revitalization. Far beyond the new arena, the skyline will also be altered with new LRT lines, University of Alberta campuses, luxury hotels, museums and libraries.

Posted in Commercial Real Estate, real estate investment, Richard Crenian
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Jan 8

Paying Off Debt vs. Investing

Written by: Richard Crenian

ReDev Properties Paying off Debts vs Investing

Is it better to solely focus on paying off existing debt or contribute to both your debts and investments at the same time?

A feature by The Globe and Mail recently posed that those with student debt shouldn’t even think about investing. So how much wisdom is there in paying off all your debt before investing?

 

Five Debt Myths Canadians Need to Kick to the Curb

  1. Paying Off Debt Delivers the Best Returns

It used to be that paying off all your debt first was the best move specifically because the interest rates being charged were higher than being achieved on certificates of deposit and other investments. Some certainly may be lumbered with high interest rate credit card debt, but the real rate of returns many Canadian investors are realizing can often far exceed the rates being paid on student loans, auto loans, and home mortgages.

  1. Debt is a Problem

While there is such a thing as bad debt, individuals and accredited Canadian investors also recognize that leverage can be one of their best allies in generating above average investment returns. Some politicians and regulators have been bearish about the amount of consumer debt in recent years, half of Canadians report they expect to be debt free by 2017. That suggests that consumer and household debt in Canada may not need to be feared as in other markets.

  1. Student Debt Needs to Be Paid Off Right Away

Student debt is arranged to facilitate rising income. So don’t stretch too thin trying to race to pay it off too early.

  1. Free and Clear Homeownership

Some race to try and pay off home mortgages, chasing the myth of what they believe will be ‘free and clear’ homeownership. The truth is that there will always be insurance, taxes, maintenance and other costs. So why not preserve that capital and invest it profitably instead?

  1. Being Debt Free Will Last

Most individuals will find that they continuously re-borrow and max out credit lines. In essence, paying down debt first can be futile, counterproductive and lead to forking out even more in borrowing costs. Slow and steady often wins the race.

The Wisdom in Investing First

Investing is the way to get ahead. Of course credit card companies and other lenders would rather you pay your obligations to them first before borrowing more, but what’s best for you?

 

 

 

 

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Retirement Investing, Richard Crenian
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Jan 8

Impacts of Small Business on Canadian Commercial Property

Written by: Richard Crenian

ReDev Properties Impacts of Small BusinessIn 2014, both large Canadian pension funds and the energy industry were rocked by several economic factors, while small Canadian businesses had steady upward growth.

Small business has long been credited for being responsible for providing the bulk of employment in any market. It’s also a lot easier for small businesses to scale and grow than larger ones. Furthermore, disputes between large retailers in Alberta have grabbed most of the spotlight recently, with stories such as Edmonton’s Remedy café and their plans to add many new locations of over the next 12 months. Small businesses in general are adding far more new net jobs and are bolstering local economies, while the largest retailers are still downsizing and consolidating.

Toronto has had its entrepreneurial hub, but now Edmonton has taken over as Canada’s new equivalent of Silicon Valley.

This brings a new air of optimism and life to the city. Edmonton’s currently vibrant and buzzing startup scene is complimented by a multi-billion dollar barrage of new commercial real estate developments. Together this energized startup and revitalization is driving population growth, resulting in more consumers spending and more money within the local economy. In turn, this offers great promises for retailers and commercial property landlords that own local shopping plazas.

When combined with the existing activity in the Alberta market, the impact of small businesses should continue to fuel strong rents, low vacancy rates and high investment returns, especially in the local retail space.

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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Jan 8

Factors Driving Real Estate Investors to Canada

Written by: Richard Crenian

reDev Properties Factors Driving More Real EstateHere are three factors that will be driving more investment capital into Canadian income-producing properties in 2015.

1. Rising Rents

Rents have been steadily rising year after year, while this is a positive aspect for income property investors, the recent growth could also be pushing the market to limits where future investment returns can become stagnant.

In contrast to Canada where wages are strong, data shows rents have risen at twice the pace of income growth for almost a decade and a half. In hot markets, this means the minimum wage needed to afford the median rent is pushing as much as $80 an hour.

2. Unemployment

Canada and Alberta in particular, have quickly become the epitome of a strong employment market with relatively low jobless rates. December figures showed unemployment rising in other investment hotspots, investors are flocking to Alberta to capitalize on investment returns being generated due to the stable job market.

3. Competition

Between global investors and giant Canadian pension funds plowing into other markets, many have become frustrated with the heated bidding wars and overpriced commercial assets that deliver substandard yields. In contrast, Alberta continues to boast some of the top commercial real estate returns in the world, which has attracted the attention of many prominent real estate investors.

Posted in Commercial Real Estate, Edmonton, real estate investment, Richard Crenian
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Dec 30

Winning Industry to Invest

Written by: Richard Crenian

 Investing Local Richard CrenianCommercial real estate has been demanding the lion’s share of the attention among experienced investors recently. Canada’s leading cities Calgary and Edmonton have been competing for globe topping commercial property investment returns for several years and while Edmonton is expected to continue to edge ahead, the outlook remains bright for all Alberta investors for the foreseeable future.

Alberta’s commercial property market is quite sizable and everyone wants to know which property type is the absolute best. To help us assess that, we can look at factors currently taking place.

The current energy predicament isn’t likely to last, which will minimize losses in industrial properties. Concerns about overbuilding in the office sector will likely be negated as more head offices and start-ups move in. Lastly, retail will remain a strong front-runner as more luxury stores continue to expand into Canada.

Despite the media’s coverage of the current issues concerning retailers, such as e-commerce, the sector isn’t slowing down. There are large bidding wars over Edmonton’s retail space, which is driving up rent, property values and investment returns.

Posted in Canadian Economy, real estate investment, Richard Crenian
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Dec 30

New Edmonton Attracting Investors from All Generations

Written by: Richard Crenian

Millennials are loving commercial real estate investment in Canada. Although, their reasons may be very  Why Millennials Richard Creniandifferent from their parents and grandparents, Alberta’s new vision for Edmonton is drawing many young investors to this asset class.

Not Just Millennials

Generation X and boomers are also both returning to the commercial real estate market in big ways. While they have different motivations, for Gen X and those approaching retirement, commercial real estate remains a stronghold for wealth protection and reducing tax liabilities. It’s a top pick for those that can’t afford to gamble with their financial future, while at the same time providing ongoing income.

CRE is in for Gen Y

Edmonton’s rapidly transforming skyline has a lot to offer Millennials. Many young entrepreneurs are pioneering a new revolution back towards bricks and mortar opportunities, such as local shopping centers. While freedom of lifestyle may still be among their top priorities, surveys show they care about their communities and are more emotionally invested in them than their previous generation.

Although Gen-Y may not be big on owning their own homes, they appreciate real estate. In fact, many are as bullish on real estate as Generation X was at the beginning of the 2000s. This makes commercial investment property the perfect investment pick, as the passive income it produces also fuels more freedom to pursue other passions and provides investors the ability to travel, explore and live.

This surge in interest in Canadian commercial property is only going to help drive values and yields higher, making it an increasingly profitable sector for years to come. So whether you are on the threshold of retirement or just months out of school, it’s worth looking at what commercial real estate can do for you.

 

Posted in Canadian Economy, Commercial Real Estate, real estate investment, Richard Crenian
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