8 Canada Realestate Directory

Is the North American consumer on his way to extinction? You can all imagine the scene some 50,000 years into the future, when a group of renown paleo-anthropologists begins excavation in a geographical area of the Eastern Seaboard known as … The Great Wall Street Depression. They are looking for the fossilized remains of a sub-species of Homo Sapiens thought to have existed at any time between the mid-Twentieth Century and the beginning of the Twenty-First. After several days of unsuccessful research, luck strikes: they uncover the fossilized skeleton of a hominid with telltale characteristics. The large skull implies that this Homo was intelligent, the long femur is proof that he was well-fed and the gold teeth testify that he took care of himself. But what really captures the attention of the paleo-anthropologists is the fact that this specimen is still clutching a VISA with the right hand and a Mastercard with the left hand. They have unearthed the first fossilized remains of the North American Consumer !

Now that the Federal Reserve is openly on the path of war with increased interest rates and that the Bank of Canada is poised to follow suit, an important economic matter is the evaluation of the existing huge consumer debt. How much weight does consumer debt have on the economy as a whole and is the economy of the North American continent threatened by it? There is a fear these days that if Central Banks continue to increase interest rates, indebted consumers will be thrown into a tizzy and the overall result will be a sharp slowdown in the economies of both the United States and Canada. Those who believe this expect interest rates to remain at historic low levels for a very long time. At the heart of this issue is the high and ever-rising consumer indebtedness. In Canada the ratio of debt to personal income now exceeds 100 percent and in the United States it is more than 90 percent. By any standard of comparison, this is a lot of money. For instance, on the other side of the spectrum in the European Union the average ratio of debt to income is 65 percent, while New Zealand, Australia and Japan are anywhere in between on a growing scale (figures for Hong Kong, now under Chinese jurisdiction, are unavailable). It used to be that Americans were the big spenders, but they have now been outclassed by Canadians. And, furthermore, with debt growing at a rate of nine to ten percent in Canada and seven to eight percent in the United States and income growing at the rate of only two and three percent respectively, these debt to income ratios are bound to rise even further. The question, then, of course becomes: how much is too much ?

Economists have been always leery of consumer indebtedness over the past fifty years, yet disaster has eluded us so far. Canada’s ratio of debt to personal income was 98 percent in 2000, which is not very much different from today. And even though interest rates were on the rise in 2000, the economy remained strong. In fact the main reason as to why consumer debt has been constantly on the rise the past fifty years is simply because credit has become more and more available. Not only did lenders in Canada - and to a certain extent in the United States - lower their qualification standards - they have also been offering a variety of loan products, thus making even easier for consumers to meet minimum monthly payments without ever substantially decreasing their debts. Lenders have even made refinancing a snap and in Canada there are reported cases of minors going around (and shopping) with credit cards boasting limits in the tens of thousands. Consumers have more financial flexibility today than ever before, and for good or bad they take full advantage of it. And this flexibility allows them to choose to carry debt when in the past they may not have had this option. Additionally, it is certainly true that low interest rates have encouraged more borrowing which, in turn, has spurred more spending. Real estate is proof of this. All the BMW’s, Mercedes, SUV’s we see on the streets are another proof.

But has all this extra borrowing really increased the vulnerability of consumers to higher interest rates, as it is being suggested ? Consider the extraordinary automobile deals offered by the Big Three: GM, Ford and Chrysler are offering promotions on certain models with zero percent financing for up to 60 months. As interest rates creep up, those buyers will be left unscathed for the next four to five years. The same is true for mortgaging, where many homebuyers have locked in already for the next several years. This ultimately means that the return of interest rates to more normal levels will have no serious - if any at all - impact on these consumers with existing debts. And save an except for tragic occurrences the likes of another 9/11 or another war, it doesn’t seem that consumer spending will be abated vis-a-vis a gradual increase in interest rates. Much to the good fortune of all of us North American consumers, which do not seem to be on the way to extinction at any time soon afterall.

Luigi Frascati

Luigi Frascati is a Real Estate Agent based in Vancouver, British Columbia. He holds a Bachelor Degree in Economics and maintains a weblog entitled the Real Estate Chronicle at http://wwwrealestatechronicle.blogspot.com where you can find the full collection of his articles. Luigi is associated with the Sutton Group, the largest real estate organization in Canada, and is based with Sutton-Centre Realty in Burnaby, BC.

Luigi is very proud to be an EzineArticles Platinum Expert Author. Your rating at the footer of this Article is very much appreciated. Thank you.

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For most of us, the issue is getting started. How do I start?
Where do I start? And so forth.

I know from my own personal experience years ago, just how intimidating it is to embark on a career change. I first became interested in real estate way back in the mid 1980’s. I knew I wanted to increase my earning potential, and have a business where I did not have to worry about punching a clock. I wanted my hours to be my own.

I love being out doors on pretty days, and sitting in a little gray cubicle day after day is for me, like being in prison, no matter how much “security” the job offers. I am wired to be an entrepreneur. Anything less and I am miserable. I love knowing that my time off is not confined to weekends or 4 official company holidays a year. You only get one chance to live your life and I was bound and determined not to spend most of my years sitting in rush hour traffic, fighting the Saturday morning crowds at Wal-mart, frantically trying to squeeze all my “fun” into short weekends that seem to end all to quickly.

But, even with all that desire, I still found it very hard to get started in the early days.

In fact, it took me almost 10 years to get started. My readers are mostly aware that I have been involved in real estate in one way or another since 1994. But most do not realize that I spent about 7 years before that thinking about it, wondering what to do and how to get started.

It can be so intimidating when you are new, and the fear of the unknown can really hold you back. But by the mid 1990’s, I had decided that I had do something NOW, or things would never change. That little gray cubicle was really beginning to get to me.

So I started the process. I made mistakes, lost money and even managed to damage my credit, but at least I started. None of the problems I encountered killed me. But they all taught me valuable lessons that serve me well today. More than anything else, I have realized the value of getting started and taking some action, no matter how small or seemingly insignificant.

I have learned that there is no perfect time to get involved. There is no easy way to make big changes in your life. But once they are done, it doesn’t seem so bad.

I still have problems to deal with, I still have tenants that don’t always pay the rent on time, I still work hard. But, I don’t know anyone who really loves the freedom of being in their own business who does not work hard. At least I am working hard for ME, not for someone else.

I may sometimes work 14 hours in one day. I may sometimes work until midnight. And on some pretty days, I go to the lake and don’t work at all. But the point is, it is my choice. I no longer spend 10 hours a week sitting in traffic. My office commute takes about 1 minute. If I decide to take a day to go to the mountains I do it on a weekday when the crowds are all at work.

If this is what you are longing for, you can have it too. All it takes is the strong, unflinching desire to make a change. Entrepreneurs are not driven by safety and security, we are driven by a desire to control our lives. We have a vision for how we want our lives to be and we are willing to take the risks necessary to make it happen.

My point is this: If you want your life to change, you have to take action. And, like me, your life probably won’t change overnight. You only have to be willing to hang in there for the long haul.

Persistence is the key. You may feel like you have been putting this off for so long that it will never happen for you. But, if you are learning and growing in your knowledge of real estate investing and persisting little by little, the day will come when you will wake up and realize that you did make the changes you wanted to make.

Failure only comes when you decide to stop growing. Successful investors are people who choose not to give up on pursuing their dreams, no matter how long it takes and in spite of their mistakes. Don’t be afraid to take chances. It’s the way dreams become reality.

Donna Robinson is a real estate investor, author, and consultant located in Atlanta Georgia. You may read more of her articles on her website at http://www.RealEstateInvestorHelp.com or you may contact her by email at drobinson@reihelp.com or call 404 542-9903.

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You’ve bought a house, a fixer-upper you can make some money on. What improvements and repairs should you make? First of all, you need to know this before you buy, as I explained in another article. Before and after you buy, though, you need to have some simple rules with which to start analyzing possible fixes.

Return On Investment

A young couple was very disappointed when I told them there house was worth $110,000. “We just put $40,000 into remodeling the kitchen!” they told me. I looked at the kitchen. It was nice. They had added $10,000 in value to the house by spending $40,000. This is a classic example of a bad return on investment.

With fixer-uppers, you have do things which give the most “bang for the buck.” Aim for a three-to-one return on improvements. If you’re going to resurface the driveway for $1000, it better raise the value of the home by $3,000. Even when you’re just guessing, keep this three-to-one formula in your head, if you want to invest safely.

How To Fix A Fixer-Upper

With things like new curtains, you can’t really estimate the increase in value. What you can do, though, is group together the many small repairs and improvements you are considering, and imagine how the house will look when you are done. Then you can estimate whether you will have increased the value enough to justify the cost.

It often is in the small details that you’ll get the best return on investment, so look at these first. A new mailbox, flowers on the porch, a raked yard and trimmed trees - $30 total if you do the work yourself - can make a big difference in the first impression potential buyers have. First impressions are important.

Other small investments that pay big include shiny new switch covers (less than $1 each), shelves, a birdhouse, new doorknobs, new light fixtures, curtains, new rocks or wood chips on outdoor paths, new faucets, new woodstain on decks, and general cleaning. Stand in front of the house and imagine what it might look like with various small improvements (flowers, wood-rail fence, birdbath, etc.).

The Big Fixes

Obviously, there are things that just have to be repaired. The basic systems must function. Improvements, though, should be subject to the three-to-one rule. You may have to get creative here. An investor friend of mine once had a wall put up, and for less than $1000 created a new bedroom, probably raising the value of the house by $8,000. Now that’s a good return on investment.

Bathrooms and kitchens are important. A $1000 updating of a bathroom can add $4000 in value to a home. Spend $2000 wisely in the kitchen (New fridge, re-finish the cupboards, add a garbage disposal, etc.), and you can add $8000 to the sales price of the house. Look for changes which are most universally valued (don’t paint the kitchen pink because YOU like that color), and be sure you get a decent return on investment.

Depending on the fixer-upper, there are many potential improvements that can be worth doing. These include adding a carport, new doors, fences, gazebos, sheds, painting, carpet, benches, a new closet, a new toilet, a new stove, a shower/tub surround, and trees or bushes. The bottom line is the bottom line: be sure anything you do returns more than you spend, preferably three times as much.

Steve Gillman has invested real estate for years. To learn more, and to see a photo of a beautiful house he and his wife bought for $17,500, visit http://www.HousesUnderFiftyThousand.com

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