March 12th, 2012
This comment is in response to Norman De Bono’s London Free press article, Workforce Has Wrong Skills.
The Royal Bank and LEDC stated the London workforce has a ‘skills mismatch’ when compared to the future needs of businesses. This revelation occurred during plant shutdowns and an increase to 9% unemployment.
The article states the answer is to bring in foreign workers to fill the void. Perhaps it might be beneficial, but I think it makes more sense to retrain an existing workforce to perform the jobs that will be required in the future, than to bring additional people from outside into our existing labour pool. Redeploying our current workforce could result in a more vibrant local economy, which, in turn, would ease many other issues facing Londoners today; the housing market would stabilize, fewer people would potentially default on their mortgages, declare bankruptcy, etc.
We have jobs that need filling, and we have people to fill them. What’s missing is the training, because nobody wants to pay for it. So we turn to pre-trained foreign workers, who cost more to employ, and leave Londoners jobless. Why not take the budget that would be spent on the foreign workers and apply it to training Londoners?
Somebody tell me how this makes sense.
Original article can be found here.
Tags: #faultylogic, Bankruptcy, Economy, Foreign Workers, Labour, LEDC, London, mortgage, Norman De Bono, Ontario, Royal Bank, Skills Mismatch, Stability, training, Unemployment, Workforce, Workforce Has Wrong Skills
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February 10th, 2012
Thanks for returning for part III of our series. On Monday we discussed The Finance Package and Wednesday The VTB Discussion. Realtors need to appreciate that the buyers of commercial or likewise investment properties are doing so to make a profit; a business decision, and as such, it usually comes down to the numbers. Given this assumption there are several things realtors can do to maximize the value of the property they are listing and facilitate quality offers from qualified buyers. Our final suggestion to the realtor selling commercial real estate: know your role in the process.
Your primary role in selling a commercial property is not to maximize the selling price for the vendor. Let me repeat this. Your primary role in selling a commercial property is not to maximize the selling price for the vendor. Your role in the process is to facilitate a business transaction between vendor and buyer where both parties are satisfied with the transaction. This is not done by taking an adversarial position with the buyer or the buyer’s agent. You role as negotiator may be limited, because sophisticated vendors and buyers may be skilled in this area and it would not be unusual for a buyer to take his offer to the seller directly. The concept of leveraging a higher price through “multiple buyers” that may exist in a residential setting is less of a motivation in commercial deals, as buyers know that the cash flow and debt servicing is key. Overpaying for a property will make little sense to them and they will simply move on to the next property.
Your best strategy is to present all the information that is available, co-operate with the buyers in obtaining financing and work to insure that all the buyer conditions can be met. You will be pleasantly surprised with how easy commercial deals can be consummated. The time you save will ultimately free you up to work on the next deal and your reputation as a facilitator of commercial deals will grow.
At Casb Management Group Inc., we help prepare lender packages. We have written articles on how to position clients for commercial financing, and are always happy to assist.
Questions, suggestions? Join us on twitter: @BruceSmithLive #BrokerThoughts
We welcome your comments.
Tags: Buyer, Commercial Real Estate, finance, investment, Investment Property, mortgage, Real Estate, Seller, Selling Price, Vendor, VTB
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February 8th, 2012
Thanks again to those returning to our series on how realtors can be more successful selling commercial real estate. On Monday we addressed The Financing Package as a way to connect with qualified buyers. Once the connection is made, there are several things a realtor can do to maximize the value of the property and facilitate quality offers. One of these things, and the second topic of our series, is: The VTB Conversation.
With lenders asking for 25%-35% down payment on an investment property, it is very common for vendors to help finance the property for new owners by offering a VTB (vendor take back mortgage). I am surprised when some realtors tell me their client would never do that. Well, did you actually ask the question? Did you explain how it may work to their advantage? Properties that sell with VTB financing sell at a premium, as buyers who require this assistance are willing to pay more to gain the co-operation of the seller, since the ability to finance is more important than the eventual purchase price.
VTB financing becomes a double win for sellers when there is no immediate need for the funds they earn from the transaction, because the mortgage rate charged will likely be higher than the rate of an investment made elsewhere.
A VTB can be a win/win for both parties under the correct circumstances, so understand what is possible, and use that information to help you market the property.
Questions, suggestions? Join us on twitter: @BruceSmithLive #BrokerThoughts
On Friday we will end this series with The Role of the Realtor.
We welcome your comments.
Tags: Agents, Brokers, Commercial Real Estate, Down Payment, Financing, Financing Package, Investment Property, Investments, lenders, mortgage, Real Estate, Vendor Take Back Mortgage, VTB
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February 6th, 2012
Thank you for your interest in our series on how realtors can be successful selling commercial real estate. It’s a different animal when compared to selling residential homes, and realtors need to appreciate that the buyers of commercial or likewise investment properties are doing so to make a profit, pure and simple. It is a business decision, and as such, it usually comes down to the numbers. Given this assumption there are several things realtors can do to maximize the value of the property they are listing and facilitate quality offers from qualified buyers. One of these things, and the first topic of our series, is: The Financing Package.
It is unlikely that a buyer of an investment property will present an ‘all cash’ offer. Although you might get lucky in working with an investor who puts the money up front, a more prudent strategy is to assemble commonly requested lender information in advance of taking a listing, as financing will most likely be required. Lenders request essentially the same information in reviewing a financing application, such as rent rolls, leases, tenant acknowledgements, previous financial statements, previous appraisals, fire/electrical certificates, environmental reviews, etc., so the request for information from buyer to buyer should be fairly consistent. Time is wasted if a realtor must chase the client for information after an offer is presented, especially for information that should be available on day one.
The realtor with a professionally prepared info package can charge a premium for the property because all the guess work has been eliminated for the buyer, which equates to less risk on the deal for them. You will also attract qualified buyers because your property has, in effect, been pre-approved for financing.
Questions, suggestions? Join us on twitter: @BruceSmithLive #BrokerThoughts
Wednesday we discuss: the VTB discussion.
We welcome your comments.
Tags: Brokers, Commercial Real Estate, finance, Information, Investments, lenders, mortgage, Property, Real Estate
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February 3rd, 2012
Selling commercial real estate is a different animal when compared to selling residential homes. Realtors need to appreciate that the buyers of commercial or likewise investment properties are doing so to make a profit, pure and simple. It is a business decision and as such it usually comes down to the numbers. Given this assumption there are several things realtors can do to maximize the value of the property they are listing and facilitate quality offers from qualified buyers. On Monday, February 6th, 2012, I will begin a three part series on what realtors can do to sell more commercial real estate.
Any ideas you’d like to share or concepts you’d like addressed? Tweet us @BruceSmithLive or #BrokerThoughts
Tags: Commercial Real Estate, mortgage, Profit, Property Value, Real Estate, Residential Real Estate
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January 30th, 2012
“What’s in a name? That which we call a rose by any other name would smell as sweet.” - Shakespeare
The University of Western Ontario, or as it is now known, Western University of Canada, recently undertook a major re-branding of its name and logo. This struck me as strange as I was not aware of any branding issues at the university. It is not like accounting firm Arthur Anderson, which lost all credibility after the Enron scandal and quietly rebranded into Accenture. To my knowledge and in observing the changes made, I don’t see how this repositioning does anything new that could not be achieved under the old name.
Branding is important in terms of image, recognition and market positioning. I am constantly amazed that I can still view television, radio or print media advertising and have no idea what product is being offered. I thought Branding 101 taught us that you tell people what you do in your name. We brand under names like Advantage Business Financing and Centum Future Mortgage Group so hopefully people have some clue as to the services we offer. The University of Western Ontario worked for me. It even provides insight into the location of the school.
In a business such as mine where personal relationships and the competency in ones craft is important, I find that branding of the person is as important as branding of the company. An experienced real estate agent for example will market themselves and not their broker such as Re/Max. People will know them first and foremost and not necessarily remember who they work for, which is great if they ever need to change employers. Alternatively, newer agents may need to market the brokerage as it may be the only brand creditability they have as a newbie in the business.
Here is link to detailed info on Western’s transition. We welcome your comments.
Tags: Branding, Re-branding, Shakespeare, University of Western Ontario, UWO, Western University of Canada, What's in a name?
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January 22nd, 2012
I had the opportunity over the holidays to see the new Mission Impossible movie starring Tom Cruise. It took me back to my favourite Tom Cruise movie, Jerry Maguire where Cruise portrays the sports agent of the same name. This movie produced some famous lines including “you complete me” and “show me the money,” but I think my favourite line from that movie occurs with Maguire explaining to Rod Tidwell, played by Cuba Gooding Jr., why he has not secured the big sports contract: “help me help you; help me help you,” pleads Jerry.
This line resonates with me because I see many professionals in similar positions as Tidwell, not meeting their expectations year after year. Ironically, these professionals continue to conduct business the way they always have, while expecting different results. That is the definition of insanity, is it not? If this pattern is followed, how will 2012 be any different?
Help is in abundance. The internet is a wealth of information. Business mastermind groups can be formed. Mentors can be sought out. There are people willing to help you succeed, at no cost to you. Reach out to them; let them know that you need their help.
My personal expertise, of course, rests in the realm of mortgage financing, business financing, management and investment opportunities. So, to the Rod Tidwell’s of real estate and real estate related businesses, entrepreneurs, home owners, and financial planners, drop me a line and let’s chat. “Help me help you” and I will “show you the money.”
We welcome your comments.
Tags: 2012, Business, Business Financing, Entrepreneurs, Financial Planners, Help Me Help You, Home Owners, Insanity, Investment Opportunities, Jerry Maguire, Management Opportunities, Mortgage Financing, Real Estate, Rod Tidwell, Success, Tom Cruise
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December 16th, 2011
Several people have asked for my opinion on where interest rates and home prices are headed in 2012.
In 2011 we found that interest rates remained at historic lows and threats by the Bank of Canada to effectively raise the prime rate beyond 3% never materialized. Talk in the fall was that they might actually be lowered, but expect no changes for the remainder of this year, with the next review scheduled for January 17, 2012.
Moving forward we can expect much of the same for 2012. The Bank of Canada would like to raise rates as they remain at historic lows, but balancing that is the volatile economy, a worsening recession in Europe and continued housing foreclosures in the United States. There is simply no economic stimulus I can foresee for 2012 that would justify a significant increase.
So what does that mean for housing prices? I can speak best to the local London, Ontario market. Prices softened overall in 2011 simply as a function of supply and demand. At the end of November, 2011, 3414 properties were listed in the London/St. Thomas board with only 379 properties sold during the month. That works out to a 9 month inventory of homes on the market. If I was selling a home today that would make me nervous. Homes that are priced aggressively will continue to sell quickly, but those expecting top dollar may have a wait on their hands. Some niche markets will continue to do well. Quality residential investment properties remain in strong demand. I also expect newer homes to remain popular as they are equipped with the on-suite bathrooms, larger kitchens, full basements, and attached garages that seem to be the “must haves” homeowners expect today.
Overall it is always a good time to buy/sell real estate. Rates are low, and there are plenty of housing options.
We welcome your comments.
Tags: 2012, investment, London, mortgage, Ontario, Outlook, Property, Property Value, Rates, Real Estate, St. Thomas
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December 5th, 2011
I was against the tightening of mortgage rules and blogged about the topic back on January 17, 2011. Glad others are beginning to clue in as to the real financial problem facing Canadians. Moody’s has yet to offer me a job but I will keep you posted. Here is the latest article regarding Jim Flaherty’s movement from Vernon Clement Jones of mortgagebrokernews.ca:
A report from Moody’s is vindicating brokers by pointing out unsecured debt – and not secured mortgages – poses the real threat to RBC and other Canadian banks.
“It’s an uncertain world that we’re living in,” said author David Beattie, VP and senior analyst at Moody’s Investor Services in Toronto. “The macro environment is unclear as to what negative shocks may occur, and the banks that have positioned themselves a bit more aggressively against an increasingly leveraged Canadian consumer could run into problems in the event that we have some adverse economic developments.”
To be perfectly clear: that possible bump in the road is unsecured debt, says the report.
RBC, for one, had the highest exposure to all types of uninsured consumer debt among the Big Six at the end of its fiscal 2010 – some 24 per cent of its total managed assets. Scotiabank’s accounted for 21 per cent of its overall assets and CIBC’s exposure stood at 20 per cent.
Those levels are coming dangerously close to the 30 per cent of total managed assets Moody’s says would negatively impact their ratings.
The analysis jives with that of brokers who argue the government’s focus on tightening up mortgage rules has been misplaced, leaving the country exposed the more-urgent problems associated with easy access to credit card debt.
“What may have been more effective as for the government to place limits on credit card interest and force the credit card companies (and banks) to do better underwriting to minimize default,” said Curtis Cannon, a sub-mortgage broker with TMG The Mortgage Group in Prince George, B.C., this summer.
The worrying level of debt at the big banks includes uninsured mortgages as well as personal lines of credit.
Moody’s and, indeed, brokers, will get a close look at that exposure later this week when the first of the big guys share their fourth-quarter earnings.
We welcome your comments.
Tags: Big Six, Broker, Canada, CIBC, Credit, Curtis Cannon, David Beattie, Debt, Economy, Interest, Jim Flaherty, Moody's, mortgage, Ontario, RBC, Scotiabank, Toronto
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December 1st, 2011
I have been asked to comment on the article Londoners grapple with new ways to solve old problems written by Glen Pearson, co-director of the London Food Bank. Hat off to Glen and the excellent work done by this organization. It is one of my personal favourites and I believe I am still recovering from the Thanksgiving Day 6 kilometre Gobbler Gallop run.
In my line of work I am exposed to the struggles of every day Londoners as they attempt to make a better life for themselves through home ownership. My view on these ‘old problems’ is that efforts are treating the symptoms of the issue rather than the issue itself. I find that many who struggle have never been educated on basic ‘financial literacy’ such as establishing credit, maintaining credit, budgeting, paying off high interest debt first, living within ones means etc. A course within our education system would solve much of this problem; it will minimize the need to treat issues, caused by a lack of education, with social resources down the road.
The first step in addressing the problem at the source is taking personal responsibility for ones actions. It should be the expectation that family members help family members who struggle financially; use of the social safety net should be viewed as an exception, a short-term solution, and not as a preferred way of way of life.
I would be happy to volunteer my time to teach others about financial literacy. An open invitation to all Londoners. We welcome your comments.
Tags: Budgeting, Credit, Debt Management, Education, finance, Financial Literacy, Glen Pearson, Home Ownership, Interest, London, mortgage, Ontario, Responsibility, Social Safety Net
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