Tuesday, May 15, 2018

£1 for a house in the UK

Over in the UK there is sad little neighbourhood which is down on its luck and previous residents have been unable to sell their homes and just abandoned them. To rectify the bad situation the local city council has made an interesting offer to possible new residents by agreeing to sell the new residents a house for just 1 British pound.

The offer of £1 house does sound pretty tempting, but it does come with some string attached.

  1. The new owner must live in the house for 10 years.
  2. The new owner is expected to somehow help the community to blossom again.
  3. The 2nd part won't be easy as the area is known to be a high crime region and there is a lot of youth drug addiction, so it is not ideal for people with teenage children.

This is not the first time some neighbourhoods around the world have done such actions.

In Detroit after the financial collapse it was possible to buy a house for $1 USD, but you also had to pay the back taxes on the land that the previous owner had refused to pay. Since then the city of Detroit has been forgiving some or most of the back taxes because even then people are unwilling to buy the property.

In Cape Breton, Nova Scotia, Canada a company in the village of Whycocomagh offered to give people free land (2 acres) and a job on the island, but there was some strings attached to the deal of course. The Farmer's Daughter grocery store needed people to work there, but most young people in the area were leaving Cape Breton and nobody was willing to come work there. Needing the people to labour there, the owners of Farmer's Daughter sweetened the deal by offering free land to anyone who came and worked for them for 5 years or more.

If they stayed on at the store for five years, the two acres is theirs for free — as long as they cover legal costs to transfer the deed.

The truth is there is lots of places around the world where someone can buy a house (or build a house) very cheaply, and live there. The true challenge is the local cost of living and whether a person can find work locally (or work online).

One such place is Spain, which has seen many villages become abandoned during the past few decades.

It is now possible for someone to easily buy an abandoned home in Spain, cheaply, and then all they have to do is repair it. No string attached.

Well maybe one string. You still need to be able to find work locally. Proof that the cost of land is so often tied to economics.

Sunday, May 06, 2018

Why is Project Gridless more popular?

Okay so here is the thing, I have multiple blogs. Quite a few in fact and I really should get rid of a few that I don't update that often.

My Search for a Home has a sibling blog called "Project Gridless" which is about off the grid living, covering everything from off grid real estate to gardening to fishing to hunting to survivalism to various outdoor activities associated with off grid living.

My dream home frankly would be to have an off grid horse farm where I could raise horses, go riding regularly and do lots of archery outdoors (and open a horse riding / equestrian archery school). So that is my dream home right there, and it would be amazing.

Years ago I did my whole "Quest for a Condo" and it never really panned out. Now I am married, I have a son, and I have different priorities. Raising my son on a horse farm would be a dream come true.

So it should probably come as no surprise to you the reader that Project Gridless, being nearer and dearer to my dreams, has also seen a lot more blog posts.

A hundred more in fact.

As of today, My Search for a Home has 185 posts (186 if you count this one I am writing right now).

Project Gridless meanwhile has 285 posts. A testament to me spending a lot more time writing on the various topics that have made Project Gridless popular.

How about popularity is Project Gridless?

Sadly I am not quite sure. There is a glitch in the My Search for a Home blog statistics that says there was way more hits than there really was. So I need to use a different measuring stick.

Instead the reason why I know Project Gridless is more popular is because of the Google advertising revenue, which has thus far been 5 times more profitable than its sibling website.

So does this mean I will be getting rid of My Search for a Home ?

Doubtful. Too many of the topics in it pertain to specific aspects of the real estate industry that I cannot simply export it and import it and make it part of Project Gridless. Many of the posts would end up being off topic.

If I made a different blog that includes real estate as a topic, maybe then it would be better. But then it wouldn't be a niche topic any more and could end up being a website that is too broad a topic.

There are other blogs I should probably get rid of. The rarely updated, seldom used blogs that could be exported and imported to a more popular blog that is on the same or similar topic. But I don't think this one is one of those.

So for now I am keeping this one.

And maybe someday "My Quest for a Condo" will transform into "My Quest for a Horse Farm". Whatever. It is fine by me.

Want to have some fun? Go Google the following:

horse farm for sale ontario

There is even a real estate website just for horse farms at horsefarmsontario.com. Pretty nice.

Thursday, May 03, 2018

Demand for real estate lawyers goes up as Toronto home prices plummet

Imagine you are selling your Toronto home for $1.1 million and suddenly the buyer who already agreed to buy your home changes their mind, despite various bits of paperwork already being signed.

The reason? The home prices in Toronto have been dropping dramatically and some buyers have become wishy-washy on the whole buying idea when they see falling prices.

This happened to one seller. They were in the process of selling their home for $1.1 million, and the buyer changed their mind.

Months later when the seller finally did sell their home it was for little more than $800,000. So they lost $300,000 in that failed transaction. Or 37.5% of the value of the house. That is a huge drop.

So they tried to recoup their losses by suing the buyer who had pulled out by hiring a real estate lawyer, but that failed too. Was their real estate lawyer just not good enough? Or did they just have a weak case?

Whatever the situation, and it truly does vary from case to case, real estate lawyers in Toronto are suddenly in more demand as home sales continue to drop.

Sales data from the Toronto Real Estate Board (TREB) shows the average home sold for $804,584 in the Greater Toronto Area in April 2018, a 12-per-cent drop from $918,184 in April last year, when the market hit a record peak before beginning a steep slide in May 2017.

So that is the average. Not everyone experiences a 37.5% drop in value.

Still a 12% drop is significant.

Prices can also change dramatically from month to month, as can volume. Total number of sales in January, for example, were down 24% compared to December on a seasonally adjusted basis. Total sales fell 9% in February compared to January, and sales were down 1.4% in March compared to February, based on seasonally adjusted numbers.

So taken together, volume of sales is down 34.4% just in the December to March period, despite seasonal adjustments.

Volume is drying up as many homeowners have apparently decided low prices means this is a bad time to sell, so the only people selling are those people who really want to sell in a hurry.

Which is probably why that one seller took only $800,000 when it was $1.1 million months earlier. Is that really the buyer's fault for getting cold feet? Or was the seller just in a hurry to sell? Clearly it was the latter. They could have simply refused to sell.

Thus the seller might have had a better case if they had waited longer to sell and not accepted such a huge dip in the offer. A good real estate lawyer probably would have warned them against selling too soon.

Below is a video by Toronto real estate lawyer Stephen Shub - this is not an endorsement of his legal practice, I am just posting his video as an example of what real estate lawyers do. In the video Shub describes some of the services that real estate lawyers provide.

So who is the best real estate lawyer in Toronto?

Honestly. Hard to say.

It is probably not Stephen Shub. There are probably hundreds of other real estate lawyers who are better than him. I have no idea. Just guessing. I just like his video, despite his somewhat awkward manner of talking to the camera and the bad editing.

Googling "toronto real estate lawyer" won't tell you who is the best either. The people at the top of the search rankings are probably just the people who hired the best SEO experts to do their online advertising.

Yelp? Filled with fake yelp reviews.

Google Maps/Business? Also filled with fake reviews.

I do think I have a solution however...

Don't use the regular Google search. Use the Google News Search, find the name of a lawyer who has been in the news and recently won a case. Then search only that lawyer's name in Google News and see if there are other news articles talking about legal cases that lawyer has won.

It may not be the way to find the "best lawyer in Toronto", but it should find you a lawyer who wins cases - including high profile cases.

So for example I did a Google News search for Stephen Shub and only 1 article came up from April 23rd 2018:


In the article Stephen Shub is not winning a case, he is just commenting on a condo development that disappointed buyers when the builder killed the development.

Does that make him a good lawyer? Just commenting on a prospective case? Not really.

I found the names of other real estate lawyers...

  • Tim Duggan
  • Bob Aaron
  • Lawrence McLawyerson

Okay, so that last one I made up. But the first two were real.

Tim Duggan appears in multiple news articles. I didn't bother to read them all.

Bob Aaron appears in a whole bunch of news articles. A ridiculous amount. The news media loves mentioning him.

So from that perspective Bob Aaron looks pretty good. He is at least getting a lot of media attention. Is he winning cases though?

I don't know. I didn't bother to read anything more than the headlines. There was a LOT of news articles mentioning him though... hopefully they are mostly positive about his reputation.

Do you know a Toronto real estate lawyer that you would recommend? Post their name in the comments. Please do NOT post links to their websites. I do not allow spammy links.

Sunday, January 21, 2018

Real Estate Investing, Energy Trading and Red Paper Clips

Today I want to talk about several different things.

#1. Kyle MacDonald, aka the guy who traded a Red Paper Clip until he eventually got a house. See the video below:

Kyle MacDonald became noteworthy years ago for starting with a red paper clip and trading it for a pen, which he traded for bigger and better things until he eventually ended up owning a house in Canada.

In a way this idea of trading things for something bigger and better is a bit like how the stock market works. You trade cash for stocks when they have a lower value, you sell it for a higher value, then you buy different stocks for a lower value which you then sell for a higher value... then maybe you buy gold at a time when gold prices are soaring, then you sell the gold and buy other stocks which are showing growth... and you repeat this process again and again until you have a multiplied the amount of money you started off with many times over.

That is the theory at least. The problem is how do you guarantee the things you invest in go up in value?

#2. Energy Trading, which involves trading electricity with other regions in order to provide electricity to customers at a cheaper rate.

Energy trading can also relate to oil and natural gas, selling it or buying it. So for natural gas, commonly used in residential home heating, it again comes back to the idea of trying to save money and pass those savings unto the customers who are buying the natural gas. With oil it is going to refineries and later made in gasoline, diesel, petrochemicals, and even plastics. So that translates into different prices at the gas pumps and also effecting the petrochemical / plastics industries.

In Ontario, Canada our electricity grid has to produce a surplus of 10% more power constantly in order to prevent brown outs / shortages of electricity. (I learned this during a brief stint of working for an electricity / natural gas distributor in Toronto.)

Ontario then sell that surplus of electricity to New York State, Michigan, Quebec and other neighbouring regions. In the USA they use a similar system of trading electricity between various states, allowing each region to produce surplus electricity, but also to be able to sell their surplus electricity at a discount to neighbouring regions. This way no region suffers brownouts and ultimately the various regions can save money on the cost of electricity.

See the video below in which Gustavo Luna from Bismarck, North Dakota explains how energy trading works.

Energy Trading should not be confused with Commodities Trading - which focuses on buying oil for example at a lower price and selling it for a profit. With Energy Trading, the goal is to buy surplus electricity at a cheaper rate and then pass off those savings to consumers. So you are not making a profit, you are simply saving money for consumers.

Or at least that is my understanding of it. Gustavo Luna would probably be disappointed by my simplistic explanation.

#3. Real Estate Investment / Flipping Properties - which is really my primary topic today. (You are probably wondering what the above two ideas have to do with the third, but don't worry I am getting. I just have to make sure the readers are aware of everything before I get to my idea.)

There are a number of ways people can invest in real estate.
  • Buy a property for the investment, rent it out for years, sell it later for a profit when the real estate prices in the region skyrocket.
  • Buy a property, renovate the property in ways that will boost its resale value, then sell it ASAP for a profit. At which point you buy another property, renovate it, and sell it again.
  • Invest your money with a company that invests in real estate (office buildings, etc) and churns a profit from the rentals and later sales of properties. That company collects their percentage and you get a percentage while they do all the work, but you are the one taking the risk.
  • Buy mortgage securities on the stock market from banks and sell them later for a profit. The trick to this is that if you are aware of what happened during the Financial Crisis of 2007-08, you could be buying AAA rated mortgage securities that are actually full of junk mortgages (eg. sub prime mortgages). The problem with the mortgage security industry is that they tend to bundle together junk mortgages and give them together an AAA rating, even though it is junk. It is truly a care of buyer beware.
  • Finance the mortgage of a family member - this is quite good because a family member is pretty much guaranteed to pay you back. You can be lenient with the payment schedule, the interest rate, etc if needed, but otherwise it works out quite well. Even if the family member does somehow default on the home, you foreclose on them, keep the money they already paid you and then sell the home for a profit. That is a Win-Win financially for you if they fail to live up to their side of the mortgage agreement. It creates an incentive for the family member to not burn bridges because they know that if they do, you foreclose on the home and make a tonne of money anyway. (The only way you could potentially lose money in this scenario is if the real estate market collapses.)
So what do these things have to do with each other?

Well, that is where we get into the fun part.

I think there is a future in "real estate trading and investing", wherein people could invest in say "Renovating and Flipping Properties" for example.

Idea #1.

Lets say you have 10 investors who invest $100,000 each in buying and renovating a house. They do none of the work as part of their investment pays for a contractor who renovated the house. Upon completion they then sell the house for 20% more than what they paid for the property, the taxes, the cost of renovations, etc.

Those 10 investors then have $120,000 each, which they could then use to buy and renovate two smaller houses for $600,000 each, which they later sell after the renovations for $720,000 or more each... So each investor then has $144,000 or more.

Now if they managed to do all of this is the space of 1 year, that is a 44% increase from their investment.

A person could do this individually... and even do the renovation work themselves, and hope they follow the building code. But it actually makes more legal sense to have a contractor do it, have it all in writing in a contract, with liability insurance and everything in case anything goes wrong. But that would require the person who is funding this whole thing to come up with all the money by themselves.

In contrast, if people only had to invest one tenth the needed amount, there is more security in numbers as a shared enterprise... and it allows the group to buy larger properties or multiple properties, thus diversifying their investment.

Kyle MacDonald for example when he got the house eventually could have renovated himself - or hired a contractor - and later sold the larger house for a profit. Then he takes the money he made, buys a different house, renovates it, sells for a bigger profit... and keeps repeating. He in theory could have gone down that road, but is probably pretty amazed at what he managed to accomplish with just a red paper clip as is.

Idea #2.

Another way to do this "Read Estate Trading and Investing" idea is to buy up properties that make good rentals (properties that don't need a lot of maintenance costs are ideal), and then rent them out for a profit. Industrial properties are pretty good for this.

So for example 10 people buy a warehouse which they then lease out to a company for storage, which allows them to make a tidy income every month on their investment.

Individual investors could sell their one tenth share to other people if they later wish to do so, take whatever profit from that sale and then invest in a different property the same way.

Idea #3.

10 family members finance the mortgage of an eleventh family member. This way each of the 10 family members only have to pay one tenth of the total cost of the home, which they then gain money back + interest each month until the mortgage is paid off. The benefit of this is that there is even more familial pressure on the 11th family member to pay off the mortgage... and failure to do so means the family forecloses, sells the property and collects their profits.

Oddly enough something similar to this is already done by Mennonites when buying up farmland for their children. The whole community of Mennonites will pitch in, buy a property for a newlywed husband and wife, have a barn raising, renovate the house, and the property is later paid off.

And because Mennonites don't pay taxes they are laughing all the way to the bank. (What you might not know about Mennonites is that because they don't pay taxes, are very industrious and don't spend their money on cars/food/rent/university tuition/etc they end up saving lots of money and ultimately tend to be quite well off financially. They have so little expenses compared to the rest of us and money that goes into the Mennonite community rarely comes back out.)

Idea #4.

Crowdfunding Property Investment

Imagine if 50,000 people each invested $200 each. That is $10,000,000 and they use it to buy up multiple properties which they then:
  • Renovate.
  • Rent out.
  • Sell.
Following the same principle as #1, they could make perhaps a 44% increase in value in a single year by buying, renovating and selling properties in this manner.

Those people could also sell or trade their share(s) to someone else and invest in other properties instead. They could decide whether they want to invest in small properties, large properties, residential, industrial, rental properties, and more.

And they could do all of this via a website which manages it.

Idea #5.

Website? Why not also an app? A real estate investment and trading app.

Move over Bitcoin, you are basically worthless and eventually people are going to realize that Bitcoin is worthless.

Real estate however. There is a reason why it is called "Real Estate". It is tangible property.

So just imagine this revolutionary way of investing in real estate. One part Kyle MacDonald's Red Paper Clip, one part a bit like energy trading or commodity trading as explained by Gustavo Luna - except this is the buying, selling and trading of real estate.

That to me is an interesting and exciting app someone should make.

So yeah.

There is my idea for an app someone should make. I should start a crowdfunding enterprise just to create the app, with the first people who invest getting both a share of the app and a share of the first property that we invest it.

Now you might think, how does one make money off an app like that?

Well, easy. You charge 0.1% fee off every sale transaction. So if someone invests $200 and later sells their share for $300, the app takes 30 cents. So 10 cents off each $100. It isn't a lot really, but if you get 50,000 people to invest in the first year, and they later sell off their shares for $250 or more then you are still looking at 25 cents x 50,000.


If the app grows in popularity and millions of people start investing in real estate this way, that 10 cents per $100 isn't pocket change any more. It is millions.

So what is wrong with this idea?

Well, I am pretty sure there are some laws from the USA that would say that this kind of investing is illegal - because the government also wants their share. The USA would want to tax any transactions and profits happening within the USA.

And it would target any real estate assets being bought, renovated and sold in the USA.

So any kind of investment in the USA through the app would mean American citizens would be taxed on each transaction, and investing in the USA would be problematic. The app would make more sense in countries which allow this sort of investing and aren't so worried about taxing people who want to invest their money this way.

The USA has similar problems with offshore gambling websites. People can buy virtual chips/etc overseas, gamble, possibly win (although most likely they lose it all), and then cash out their chips and never have to pay anything in taxes.

Similarly, the USA has other problems with Bitcoin and other crypto-currencies. They are hard to track and it becomes unclear if people made a profit by buying and selling things using Bitcoin.

So the app and company that runs it would need to be based in the Bahamas, Panama, Ireland or some similar tax haven.

And this is where I hit a brick wall in terms of motivation to make this happen myself. It seems like too much work and I have other issues to deal with, rent, bills to pay and a baby to feed.

So I am not saying "go ahead and steal this idea". Honestly, I feel like this is definitely my idea and I would be upset if someone stole it and made a profit off it. But I would be willing to sell my idea or become an intellectual property rights partner with someone else if they want to do the leg work on this idea.

I currently cannot be bothered to do it all myself.

One more idea...

I would love to buy a farm, buy horses and open an archery range / horse riding school. I think that is a business worth investing in. I have already done the math on what it would require in terms of investment, how much to charge students, how much to pay the riding instructors, and how much money could be made within the first year. It would be one of the very few places in North America where people could do equestrian archery. (Seriously, go try to find such places and you will find they are few and far between.)

One last idea, I swear this is the last one.

Start a charity that deals with buying properties for mustang horse sanctuaries. People donate to buy the property, the property is renovated with fences to keep in the horses, and the mustangs are then transported to the property where they can roam freely. This would solve a problem in the American West where mustangs are a problem due to overpopulation and the government culling them because they get on to the properties of ranchers, ruining crops, etc. The people who donate get a voucher they can use on their income taxes, but really it is mostly about giving the mustangs a safe place where they roam without being killed by ranchers or by the government.

Popular Posts