About Simcoe County, ON

Well it's been year in the making but it's finally here. The official www.crieg.ca web site is up and running ( still in test mode till Jan 2009 - with lots of content still to be added)

My company ( www.manainvestments.com) has grown to the point where we need to expand our network. That is why I joined Activerain and began the Canadaina Real Estate Investment Group. I started as a one man private investor, grew into a full time real estate company, now I am officially licensed ( last month !!) and my company requires the need to grow Nationally. That is where your help can come in.

I can't do it all, nor do I want to. My partner is going to Japan and we will begin an advertising campaign there, promoting the new creig site. The creig site requires relevant real estate information ( news and opportunities) from across Canada. I initially was going to hire someone to upload the information, but I thought of trying something new. Why not open it up to any real estate professional and get their input? Why not let them create the local information? In other words, show the site visitors why Lethbridge AB ( for example) is such a great place to invest in. And as well, on top of promoting your region, you can also promote your local listings to the broader national and international market.

The purpose of the site is threefold:

•1- Create a Canada wide network of real estate professionals (agents, investors, other investment groups etc....) that are experienced with real estate investments. Each one contributing to their regional areas; real estate news and investment opportunity listings etc...on the site.

•2- Form a referral network amongst all CREIG members. For example I have an investor interested in Ft McMurray....we work together with this client.

•3- Build an extensive content managed site ( blogs, news and listings) with a direct focus for real estate investors.....with a special emphasis on the international investor.

•4- Drive potential clients to the site through a focused, international marketing campaign.

I got my real estate license recently because I could not find agents that catered to the type of clients that I work with, and with the stock market declining, the new clients are only increasing. And I hate to say it but I am expecting the typical real estate agent response of "what's in it for me first attitude". I sent out an email 2 months ago and only received 2 responses of "sure how can I help?" and I am expecting the same. I have funded all the site developments and advertising so far and will continue to do so because I see great potential. It is up to you to respond.

I can only promise you this...you will get everything you want in life if you just help enough other people get what they want.

For further information visit www.creig.ca , www.manainvestments.com and www.educatenotspeculate.com

Or call: (705)-812-1033

Email: mark(at) manainvestments com

The Six Steps to Success - www.sixstepstosuccess.com - Goal Setting for real estate Agents. Get to your financial goal quicker...Helping you achieve success in goal planning

I overheard bits of a conversation between a couple at the next table while out to dinner Saturday night, more of a debate really, on whether they should get a real or an artificial tree for Christmas. Points were exchanged back and forth on convenience, cost and personal preference. I waited for the conversation to come around to environmental preference but it never did.

I had my own discussion today on the real vs. artificial tree purly on environmental aspect with a friend who like me knows everything and we concluded that the artificial tree was likely better because you can use it over and over again and you don't have to kill a tree before it becomes a teenager.

We were both wrong (can't wait to tell him) based on the information I have found here on the Internet, so it has to be true. Here is what I learned from a Canadian environmentalist on the topic.

First off artificial trees are plastic composite made from petroleum products. Most are made in factories in China where pollution laws are next to non existent. They are then shipped around the world to us in fossil fuel burning ships and trucks.

A real tree grows for 10 to 12 years before it is big enough for a traditional home Christmas tree. All this time they absorb carbon and produce oxygen. Most are grown on farms where they are constantly replaced. Most of these trees are grown within a couple hundred miles or less of where most in Canada and the US will end up buying them. In my area many choose to cut their own tree right at the farm.

Even better for the real Eco friendly at heart. Plant a live tree in a box and for the other 11 months of the year it's home can be the yard or porch.

Me I like the real tree. The ritual of picking one out, stuffing it half into the trunk and tying it down with sticky sappy frozen fingers. Trying to get it just right in the stand. And then there is the smell it gives off, better than anything from a fabreeze bottle and worth all the needles in the carpet.

Taxes and Canadian Real Estate

We are told many times when we discuss real estate at our seminars to "dumb things down". We naturally assume that everyone knows all about how real estate can be used to reduce taxes, capital gains issues, and all that other fun stuff. This article will attempt to explain the basic tax implications one encounters when realizing a profit (or capital gain) from real estate. For those that are not sure what a "capital gain" is....it is simply the profit you made on something you bought (or invested in). For example you buy a house for 100k. In 10 years you sell it for 185k. You made a capital gain (profit) of 85k.

At Educate not Speculate.com we teach both aspects of investing in real estate, personal and investment. So for discussion purposes, we need to separate your personal home from your real estate investment property. We do this because from the tax mans perspective, he views them differently as well.

In Canada your personal home is your residence. It is where you live be it Barrie Ontario or Lethbridge Alberta. It is the address you put on your drivers license. It's where you get your mail and collect all your bills. We stress these points because the Canadian tax man does. You see your personal home can make you a lot of money. A lot of TAX FREE MONEY. In fact Educate not Speculate is in business because so many people have made money on their personal residence, that they have followed our guidelines on utilizing "Lazy assets" in their home for even more profits (see ENSIS -Course 5). From a retirement perspective your personal home is where a lot of tax free "capital gain" exists. Simply put, YOU ARE NOT TAXED ON THE CAPITAL GAIN IN YOUR PERSONAL HOME. In lay mans terms, all the profit you make from your personal residence is TAX FREE.

Your Investment Real Estate is another story. How you set up your real estate business and how you pay tax on it is an important point ( see ENSIS Course 6). For purposes of this article we are discussing the Capital Gains tax ( profit) you pay on your investment real estate. For any property that is NOT your personal residence, you will pay tax on 50% of the profit you make. For example you buy a rental property for 100k. In 5 years you sell it for 125k. You made a 25k capital gain on your investment ( minus your renovations/upgrades ... see ENSIS Course 11 on how to save money doing this). Now the government says we have to pay tax on 50% of the 25k, which is 12.5k. That is, you pay tax on 12.5k. And the amount of tax you pay is based on your personal tax rate. So for this example lets say your personal tax rate is 30%, you're going to pay 30% of 12.5k, which equals $3750.00. Therefore your total profit after tax is 25,000-3750= $21,250

Your accountant is the best person to review all this with as well. But keep in mind this is a simplified version of paying tax on investment property in Canada. There are many other options available to reduce taxes further by following the strategies laid out in the course materials at www.educatenotspeculate.com

As well Mana Investments ( www.manainvestments.com) can walk you through all the complexities of investing in Canadian real estate for the first time. We have developed tried and true options to help you find, buy, and manage your investments. We focus on Central Ontario, Barrie, Orillia, Collingwood, Innisfil and Midland because from our economic research we believe that these towns have good growth potential over the next 10-15 years. We firmly believe and TEACH that real estate is about education....not speculation. For information on upcoming seminars please visit www.educatenotspeculate.com

For more info: (705)-812-1033

Email: mark(at) manainvestments com

The Six Steps to Success - www.sixstepstosuccess.com - Goal Setting for real estate Agents. Get to your financial goal quicker...Helping you achieve success in goal planning.

I know upon writing this many stock market gurus will bash real estate as they always have. And in light of the current market conditions, I thought it would be a good time to explain why real estate is a better investment then the Stock Market.

Real Estate vs. the Stock Market- A Primer on the Differences

Difference #1 - Capital Gains

For most of us paying tax is simply a part of life. That old saying "there are only 2 sure things in life ...death and taxes" is true. Paying LESS TAX is what all educated investors need to study. Investment real estate offers one of the best tax shelters there is when compared to the stock market.

As noted earlier, we all have to pay tax, but why not pay less. If you properly set up your real estate investment holdings as a business, then you will only pay 50% capital gains tax on your profit. For example if you made $1000.00 in the stock market, you will pay 100% of the tax on that money. So if your tax bracket is lets say 35%, then you have to pay $350.00 in tax. Your net profit now becomes $650.00 AFTER TAX.

In investment real estate, if you earned a $1000.00 profit, you will only be taxed on 50% of the profit which works out to $500.00. The tax you pay ( using the same 35% tax rate) will only be $175.00. Making your net profit $825.00 AFTER TAX.

In time owning investment real estate can lead to a vast amount of money saved in tax And of course, you do not have to realize your profit till you dispose of the property. Which means that if possible, you do not have to sell until your personal tax rate is at its lowest, saving even more money.

Difference #2- Value

The stock market is valued on company balance sheets, assets, P/E ratios and other wonderful terms that could spin your head around. All these terms at one point or another help in understanding how valuable a stock is. (*Quick Note...for those that do not know what a stock is... it's a piece of paper that says you own a "share" or a piece of the company in one form or another. For the purpose of this article we will not get into the types of share ownership here)

However digging deeper into the foundation of basic economics and the meaning of value, a value placed on something is only what someone is willing to pay for it. In other words EVERYTHING is worthless UNTIL someone pays you for it. Let me clarify. You buy an antique dresser because you are an antique dealer and you "know" its value or what someone ELSE is willing to pay you for it. In other words you could say to yourself, "wow this dresser is worth at least $500.00.The guy only wants $250.00 for it...I'm buying it" You say $500.00 because you understand the craftsmanship, the name of the manufacturer and so on. But digging deeper into the true meaning of value, you say $500.00 because YOU BELIEVE THAT SOMEONE ELSE WILL PAY YOU $500.00 for it. I say this because in reality the dresser is nothing more then wood pieced together with nails and glue.

Let me give you a more pertinent answer. You own a small factory that makes widget42. Last week you and your accountant completed your year end financial statements and it showed that you had a net asset of 100k in your company. Your company was worth 100k. Your company owns machinery, inventory, Accounts receivable etc... . However today it was announced that widget42 causes cancer. When you get into the office you discover that all your orders have been cancelled and there is a lawsuit pending. You immediately call up your one of your suppliers and say "hey I'm going bankrupt, the machine you sold me last year I will sell back to you. Last week my accountant said it was worth 25k" (based on fancy depreciation modeling that only accountants and Tax people understand). He says sorry I'll give you .10 cents on the dollar for it. He makes other calls. They all say the same thing. What happened? Just last week you had a company worth 100k now you are lucky if it's worth 10k. What happened to the value?

Well we can certainly analyze the effects of news and market forces which stock market gurus can discuss in endless drivel and commentaries. But let's get to the point. He lost money because the value that his sophisticated accountant gave him just last week was in reality just a piece of paper. The real value in his whole company is what someone is willing to pay you for it. You can throw all the calculated numbers you want at something and base value on all kinds of things, but until you sell it and the money is in your hands, then everything you own is in reality ....worthless. Now I know that sounds all doom and gloom, but we are all in the same boat. All of us own things and all of us have value based on what we can SELL them for (yes it's simplistic but it works!!)

So big deal, I own a piece of real estate that is worthless. And I own a stock certificate that is worthless. What's the point? Value in stock is worthless until you sell it. Therefore the same can be said about real estate. Value in your home is worthless until you can sell it. But there is a difference. A stock certificate is a piece of paper. A value was placed on that paper because of what you paid for it based on market conditions of value. Real estate, well it's physical. Yes value can be placed on it by the same market conditions that value stock, and here is the difference. It's real. You can touch land. You can physically still use it. Even if it is worthless, you can still walk on it. (well I guess you could walk on a piece of paper too, but it's just not the same....). You can grow something on it, even if it's worthless. You can sleep on it even if it's worthless. Get my point? A stock certificate is a piece of paper that is worthless until someone pays you for it. Real Estate is worthless until someone pays you for it, BUT it still has use!! Even if land has no value, it still has use. A stock certificate has NO use if it's worthless.

Difference #3- Leverage & Margin Accounts

Margin Accounts - Going Long

Everyone talks about leverage in real estate. Which in simple terms means that you can take 25k and leverage it into owning a 100k home? That is, you put down 25k and you can own a home worth 100k.

You can sort of do the same in the stock market. Margin accounts are accounts that allow you to "borrow" money against the value of a stock, much like borrowing money to buy a home. Going "long" on a stock means you want to own it and in most cases you can borrow between 50-90% of the value of the stock to purchase it. That is, you can pay for 50 shares and in a margin account you can really "own" 100 shares. Similar to real estate. But there is a difference. If a share you just bought drops in value while in the margin account, you have to "cover" the difference. You have to come up with more money to balance out your margin account. But in real estate, if the value on a home drops after you bought it, the bank does not ask you to cover the losses. You will only absorb the loss if are forced to sell it. So margin accounts do allow for leverage, and if there is a loss, you have to come up with more money. In real estate, if there is a loss you only realize it if you are forced to sell it. If you keep it and keep paying the mortgage payments you can still use it. Real Estate losses are only realized upon the sale of it. Not during its ownership.

But let's use this same example and presuppose the share values go up. In this case you will have "extra" money in your margin account. You will now have excess funds that you can either spend, leave alone or re-invest it. In real estate we have the same opportunities. If the value goes up after you purchase a home, you can re-finance it ( get a new mortgage on a property you already own) and take the money "out" that way to spend, reinvest, or save it, But note there are costs involved to refinancing. Be sure to work out all refinance costs before proceeding.

Margin Accounts -Shorting

Now let's use the same example of a margin account but this time we don't want to really "own" a stock like we do when we go in a "long" position. We want to short sell it. Short selling means that we don't really want to own it because we calculate that the value will drop. After all why would we want to own something if we think the value will drop... right?. So in the stock market we can short sell a stock in "hopes" that it goes down. If it does, we make money. If it doesn't ( i.e. it goes up), we lose all our money PLUS the difference in your margin account. Very much like gambling. In fact this kind of investing I would call speculation or educated gambling, but that is another story.

We can do the same in real estate....sort of. We never really want a property to go down in value but the same speculative techniques where we "hope" the value will change like in the stock market can still apply in real estate. We all know that we can buy a property with no money down (This article is not going to explain how, that's for another time). With a no money down purchase you would buy in hope that the value goes up. If it does then we made money, but if it goes down, then we never really lost money for two reasons. One, we never money down in the first place to buy it and secondly we do not have to come up with the money right away to cover our losses like in a margin account. We only absorb losses in real estate when we have to sell it. And if it is a rental property, it doesn't matter what the value, as long as it produces cash flow, you will only realize a profit (or loss) when you sell it.

Difference #4- Market Fluctuations and Change

In many ways the stock market and real estate are both consider asset classes. That is, they both have value. However real estate is considered to be de-coupled from the stock market. The stock market can affect real estate values and vice versa, but in very different ways.

First off, by the speed of the affect. In the stock market a news item can immediately send the markets up or down. It happens within minutes. In real estate a news items can take weeks, months or sometimes years to have an affect on real estate value.

Secondly the type of changes have different affects. A rail link that comes into a new community will have a ripple affect on real estate values in the surrounding neighborhood. But that same rail link has little or no real affect on the stock market as a whole. Yes the value of the specific Rail Company may go up, but that may depend on other factors as well.

Which brings us to our third point; the stock market affects real estate and real estate affects the stock market....BUT...in very different ways. What that means is that if the stock market as a whole drops in value, our home values may drop...or they may not. It depends on many other outside economic factors (too many to explain here). If however the values of real estate drop as whole, then yes it will affect the stock market in a dramatic way (case in point-sub prime meltdown).

In Summary

I, like you have lost money in the stock market at one time or another. I, like you (maybe) have lost money in real estate. And that is the first point of discussion. I lost money in both. But I have found the real estate market to be a safe haven compared to the stock market. I have identified similarities in both markets and have come up with the following conclusions:

1-Tax - The capital gains paid on investment real estate is 50% vs 100% of a stocks capital gain ( taxed at whatever your personal marginal tax rate is)

2-Value- Stock value is worthless and useless / Real Estate value is worthless but still has use.

3-Leverage -You can leverage both real estate and the stock market, but in stocks you have to cover your losses immediately in your margin account. In real estate you can "hang on" and wait to sell at a later date.

4-Margin - You can short sell in stocks and you can buy no money down in real estate, but again any losses that occur in stocks must be compensated for immediately. In real estate, time is on your side.

5-Speed of change - Change occurs in the stock market quickly. Real estate is a week to months; again time is on your side to make decisions.

We have to put our money somewhere, and real estate is out on top in the long run. The practical use of real estate and the application of time is always on real estates side.

I agree that you can lose money in both. But real estate change, in many aspects is foreseeable. If you are educated on the local and national economy you can, to a degree, estimate real estate values more so then the stock market. Change in the stock market can be immediate and unforeseen.

To educate yourself on real estate visit www.educatenotspeculate.com

Mana Investments ( www.manainvestments.com) can walk you through all the complexities of investing in real estate for the first time. We have developed tried and true options to help you find, buy, and manage your investments. We focus on Barrie, Orillia, Collingwood, Innisfil and Midland because from our economic research we believe that these towns have good growth potential over the next 10-15 years. We firmly believe and TEACH that real estate is about education....not speculation. For information on upcoming seminars please visit www.educatenotspeculate.com

For more info: (705)-812-1033

Email: mark(at) manainvestments com

The Six Steps to Success - www.sixstepstosuccess.com - Goal Setting for real estate Agents. Get to your financial goal quicker...Helping you achieve success in goal planning.

Joyce Paron, President of EXIT Realty's Canadian Organization, was the keynote speaker to a packed house at a 60 Minutes with EXIT presentation in Barrie, Ontario last week.

Paron spoke about the challenges facing the real estate industry and offered practical solutions incorporating the new paradigm that is EXIT Realty.

"Congratulations to EXIT Realty First North franchisees Bruce Shipley and Larry Marples," exclaimed Paron. "This was Bruce and Larry's first 60 Minutes and they couldn't have had a better turn out at the posh Barrie Country Club. Great effort guys - it was first class all the way!"

About EXIT Realty: As a reward for assisting in the growth of the company, EXIT associates earn residual income equivalent to 10% of the gross commission of agents referred into the EXIT system anywhere in North America. When an associate retires, this 10% residual continues at the rate of 7%. These retirement residuals are further enhanced by continuing to sponsor agents into the EXIT system. The residuals continue after death to the associate's beneficiary at 5%. In addition, EXIT's top-producing trainers offer the industry's best hands-on, interactive real estate sales training at all levels, including regional, franchise, sales and administration.

For more information on real estate franchise ownership with EXIT Realty in Canada, please contact:
Quebec - Chantal Desharnais
Canada excluding Quebec - Ed Martens

This article is also posted on www.realestateindustryleaders.com