Ozzie Jurock's Profile
Guru
1318
Points

Questions
1

Answers
176

  • Guru Asked on November 22, 2021 in Real Estate.

    REITS trade on the stock exchange. REITs do not pay corporate taxes; it is flow through capital. NOTE: REITs rise when interest rates go down, and fall when they go up, contrary to what you might think. If you want fast access to your money, it is the way to go. BUT – and you knew it – there are a lot of different REITS. Study their 5 years performance. Stay away from hotels, etc. REITS.

    Buy banks. They are flush with cash and must pay dividends in November…as much as 15 – 20%.

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  • Guru Asked on November 21, 2021 in Real Estate.

    I did, and I was wrong. It was $1,60 then and it is now $1,15 to $1 US dollar.

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  • Guru Asked on November 19, 2021 in Real Estate.

    Ha-ha, yes. Michael Campbell and I discussed that on air. Hard to see Vancouver to be the low in worries. But then … wasn’t it CMHC that forecast a 18% property crash last year?

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  • Guru Asked on November 19, 2021 in Real Estate.

    Thanks for the reminder. Actually, yes, we advised it was coming. Yes, it is now in force – it is a law! Effective November 30, 2021, new BC legislation mandates that all “reporting bodies”, including corporations, partnerships, and trusts that have held an “interest in land” since November 30, 2020, to file a report with the Landowner Transparency Registry. Significant control: An individual with significant control, or ISC, is someone who owns or controls a corporation. This individual: owns, controls, or directs a considerable number of shares. has considerable influence over the corporation without owning any shares. Also, you must disclose all “interest holders” (the people who benefit from the assets).

    If you own land that has been held by a corporation, trust, or partnership since prior to November 30, 2020, these requirements will apply to you.

    NOTE FINES: A person … is liable to a fine of not more than $100,000.00; and an individual who commits one of these offences is liable to a fine of not more than $50,000.00. Imprisonment is not a penalty under the British Columbia legislation.

    Talk to your lawyer, google it…do it…Deadline is coming.

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  • Guru Asked on November 19, 2021 in Real Estate.

    Modern Monetary Theory (MMT) is a policy model for funding government spending. MMT pioneer and American economist Warren Mosler in his book The 7 Deadly Innocent Frauds of Economic Policy pointed out that there is no financial constraint on government spending as long as a country is a sovereign issuer of currency and does not tie the value of its currency to another currency. Countries like the U.S., U.K., Japan, and Canada, which spend, tax, and borrow in a currency that they fully control. Googled it and you will find a lot of proponents on the far left who like the idea of unlimited creation of money.
    Now take a look at how much money the Trudeau government has created out of thin air (Chart on the bottom), and you can well argue that we are already in the midst of applied MMT. But to me it is nonsense. If you end uncontrolled money keep  rates at zero percent, you will have an infinite upward spiral in inflation.
    Money is destroyed since governments no longer sell bonds…and hard assets soar.

    RE: I heard you and Mike talk about MMT. What exactly is this?

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  • Guru Asked on November 19, 2021 in Real Estate.

    Bonkers, eh? I feel your pain. Here is an easy-to-use Canadian Government one

    https://itools-ioutils.fcac-acfc.gc.ca/MC-CH/MCCalc-CHCalc-eng.aspx

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  • Guru Asked on November 19, 2021 in Real Estate.

    Right, we already see short term rates heading higher and that 5-year term ? Up .7%. Michael Geller advised a relative of his to lock in for 5 years, using this chart as a guide. Locking in – with this history – at under 2% looks like a good bet indeed!

    RE: Looks like Benjamin Tal maybe right. Likely however, his forecast of interest raising next summer is going to be beat.

    Generally, I stay with my Oz buzz 60/61 blogs: Everyone argues that governments cannot keep rates low without inflation. Agreed, seems reasonable. But that is why surprise will be on the upside. Also, I repeat my Oz buzz 43. Watch the 10-year treasury. If it hits 2%, hang on to your hats. BUT, BUT in any case, rising mortgage rates are not a big deal in the scope of things.

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  • Guru Asked on November 19, 2021 in Real Estate.

    The short answer is, we are already stopping it from our side: Election promise: No more foreign investment allowed for 2 years. (Actually, think about how you would feel with your US investment in Palm Springs if the US retaliated?)

    But you raise several interesting points. It looks like the Chinese government is attacking (literally) its mega corporations (Ali Baba, etc.) and has in the process thrown all international bond debt holders under the bus.

    Big international problems:

    1. Chinese developer woes are crushing Chinese and emerging market high yield debt. Typical China problem. Companies do not report losses … that is why it waits until a big crash forces the report. Surprise!
    2. Evergrande, which has more than $300 billion in liabilities and 1,300 real estate projects in over 280 cities – means that cities like London will see their  real estate markets (likely) get under pressure as it cannot finish projects.
    3. It’s not just Evergrande. Greenland Holdings – which has built some of the world’s tallest residential towers – and E-house have had their ratings cut. Fantasia missed bond payments. Bonds issued by developers including Shanghai Shimao Co. Ltd. China Aoyuan Group and Country Garden Properties Group up to 7.4%, (exchange data), while Kaisa Group – the first Chinese real estate firm to default back in 2015 – saw some of its dollar-denominated bonds drop to as low as thirty-five cents on the dollar, pushing their yields to nearly 60%. Note: Kaisa has $3.2 billion of international bonds to repay next year, second only to Evergrande which has $3.5 billion.
    4. The $5 trillion Chinese property sector accounts for around a quarter of the Chinese economy. Imagine this: The spread on the equivalent high-yield or ‘junk’-rated index that these companies would have to pay (all time high 2,337 basis points)! That drove the yield – to 24%.

    Major Point: Massive defaults of mostly foreign and US denominate borrowers. (China govt has indicated it wants local buyers and investors hold whole – but does not care about outsiders.) That means sharp price declines and huge losses by investors in wealth management products, contractors, builders, and services. And of course, massive numbers of pre-sale buyers. And yes, by implication, less money coming to Canada. Watch Evergrande issues explained here: https://www.youtube.com/watch?v=ih8hDsqKcTU

    Another China note: On October 7 China told state owned companies to shore up and store supply for winter! Procure as many energy resources as possible. Will not tolerate lack of action. Right now, coal, oil gas all brought up at record prices and record amounts. We do not know what China is expecting … but clearly oil and other commodities are not going down anytime soon.

    Also, China wants to know who has the money. That is why they hate crypto and that is why they make dealing in crypto a criminal offence. You think that’s only China, look below at what the US democrats want banks to do.

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  • Guru Asked on November 19, 2021 in Real Estate.

    Ha-ha…where in my blog do you come to that conclusion? NO one (yes including me, has the definitive answer). Housing markets around the world are in uncharted territory. In many cities, it has never been harder to find a home, with properties in short supply and rents at record levels. In this video (below) – an edition of Business Beyond – housing crisis hotspots are visited: Berlin (rent strike), Hong Kong, Shenzhen, Vancouver, New York, Dublin, and Tokyo. Are we too late to prevent a global housing disaster?

    Subscriber Ace Victoria Realtor Rick Hoogendoorn directed our attention here:
    Watch it and weep… https://www.youtube.com/watch?v=3UAdGuscwqk

    Your thoughts – AS ALWAYS –  are most welcome. WRITE QUESTIONS HERE:  INFO@JUROCK.COM and put OzBuzz in the subject line. I try to answer ALL questions, but not all will be featured here.

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  • Guru Asked on November 19, 2021 in Real Estate.

    Just because rates go up, payments do NOT double: Example: 
    Borrow $100,000 at 1.5 percent, 25-year amortization – payment: $400. Now rates rise by 1% to 2.5%. Your payment also rises to $448.

    At 3.5 % your payment rises to $500. So even if interest rates rise by 2 full percent, your payment goes from $400 to 500. (Not double to $800!) And if rates hit 3% higher your payment clocks in at $554. 
    So, keep your shirt on!

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