Quotations by Don R. Campbell

At the end of the slump phase, net migration, population and employment growth are at low levels. Rents become stable, as do incomes, real estate values, the number of real estate sales and the number of days it takes to sell. This is the optimum time to buy, but most people will avoid investing in real estate because it has proved to be such a bad investment in the past few years. Strategic investors will see the silver lining - and the pot of gold. They realize current market opportunities and future wealth. [2011] - Don R. Campbell

The recovery is often the shortest phase of the real estate cycle. It is often the most difficult to identify. The strategic real estate investor's job at this point is to determine if positive economic growth signs are green shoots or just plain old weeds destined to wither and die before a true sustained recovery begins. Investors who "get the recovery right" can invest during the most opportune time in the cycle with the least amount of risk. [2011] - Don R. Campbell

Employment is often a lagging indicator regardless of whether a market is headed into an economic downturn or upswing. Heading into the downturn, companies tend to hold on to their staff as long as possible and are reluctant to add staff on the upswing until confidence has been fully restored. [2011] - Don R. Campbell

If the number of first-time homebuyers is trending significantly downward, while at the same time the number of repeat buyers is on the rise, this is a clear sign of the speculation at play in the market. The level of first-time homebuyers tends to peak during the middle of the boom phase and then decline until the middle to end of the slump phase. [2011] - Don R. Campbell

While housing construction is a key driver, it tends to lag behind any increased demand for housing due to the significant lead time required to build, especially in larger centers where condominium buildings make up the majority of starts. This lag usually results in an eventual oversupply that persists long after the demand for housing dissipates. Therefore, construction levels tend to peak at the end of the boom phase and through at the middle to end of the slump phase. [2011] - Don R. Campbell

The number of listings of properties for sale tends to peak in comparison to sales volumes during the end of the slump phase as the supply of property exceeds demand. It reaches a statistical through during the boom when properties are selling rapidly. In the GTA's case, listings have not followed this typical pattern; in fact, they have moved the opposite way during the slump phase, due mainly to the strong demand brought on by the market influencers. It is important to note that, before a true sustained recovery begins, it is likely that listings will begin an upward trend. [2011] - Don R. Campbell

The strategic real estate investor may buy property in a slump because he has a business plan to hold that property until a sustained recovery arrives. The bottom line is that strategic investors will exercise caution in a slump. Strategic real estate investors diligently stress-test their portfolios to measure the potential impact of rising interest rates. [2011] - Don R. Campbell

The ABC Strategy: Adjust for the Slump - Build for the Recovery - Capitalize on the Boom [2011] - Don R. Campbell

The Golden Rule: Always Make Money on the Buy. Finding undervalued properties gives investors more tactical options to choose from to further their profits and achieve their goals. Motivated Vendors: If a vendor is getting transferred due to employment, they may be motivated to sell at a reduced rate. A vendor who is downsizing may take a reduced rate if he or she believes the buyer will take care of the property. Distress Sales: Couples who want to quickly divest themselves of shared property as a result of marital discord may sell for a lower-than-average price. Estate Sales: Sometimes family beneficiaries are inclined to make a quick sale, in lieu of holding out for fair market value, so they can realize their share of the cash faster. [2011] - Don R. Campbell

Assuming positive equity in the property, a vendor is likely to be more lenient on price to prevent further credit issues BEFORE the property goes into foreclosure. If the property is in Canada and is already in foreclosure, be cautious and understand the Canadian foreclosure process, as it is much different to the U.S. model of deep discounts. [2011] - Don R. Campbell

The end of the slump proves to be the best and generally the most profitable time in the cycle to execute the buy-and-hold tactic. Values are at their lowest and confidence in the market is at an all-time low. The end of the slump phase is considered a buyer's market and there is a lot of inventory to choose from. Vendors are highly motivated and investors who want to capitalize on the end of the slump bargains will continue to look for quality properties that are undervalued or underutilized. The beginning of the recovery phase will still be offering great buy-and-hold deals. There are still many motivated vendors, and strategic investors will likely enjoy a steady appreciation for the remainder of the recovery. [2011] - Don R. Campbell

Market influencers impact the immediate levels of supply and demand in the real estate market. Their effect is temporary but real. Market influencers have little to do with the fundamental key drivers of the real estate cycle, but that does not mean that market influencers are insignificant! In the Vancouver and Toronto markets from the middle of 2009 to the middle of 2011, a "false boom" occurred. Fuelled by market influencers rather than an actual shift in the real estate cycle. The low interest rates and impending HST worked as market influencers and stimulated real-world, but short-term, demand, thus creating a false perception of a real estate boom. [2011] - Don R. Campbell

A special commendation should go to the small cities and towns that are actively promoting themselves to the world. These include towns such as Barrie, Orillia, Hamilton and the Tri-Cities areas of Ontario; Fort Saskatchewan, Grand Prairie, Red Deer and Devon in Alberta; and Abbotsford, Cranbrook and Fort St. John in British Columbia. Although these may or may not be great places in which to invest, these towns have decided that their future is in their hands and they are promoting the influx of investment to their towns. [2009] - Don R. Campbell

Areas like Forest Lawn in Calgary, the Junction in Toronto and Queen Mary Park in Edmonton are all in different levels of transition, providing investors with some major opportunities. [2009] - Don R. Campbell

As an investor, you may begin to feel frustrated when you haven't written any offers in a while. However, that simply says you are following your system and waiting until you find a property that does fit your system. [2009] - Don R. Campbell

A positive cash-flow property is a property where, at the end of the month, the rent you take in exceeds the expenses of operating and owning the property. These expenses can include utilities, maintenance, management and insurance, in addition to the more obvious mortgage and tax payments. [2009] - Don R. Campbell

(Gross Annual Rent / Purchase Price) x 100 = Cash Flow Zone%. The key number is 10%. If the gross annual rent is 10% or more, you have a very good chance that the property will provide you with good positive cash flow. If the gross annual rent of the property is 8% or more of the purchase price, then the property is still worth further investigation as it sits within the Cash Flow Zone. The majority of properties for sale in any given marketplace will not fit the Cash Flow Zone rule. Your job as a sophisticated investor is to have the patience to uncover the ones that do. If none in your area fits the system, then you will want to change your target area. [2009] - Don R. Campbell

Once the property fits the Cash Flow Zone, the next step is to determine the motivation of the vendor. Unmotivated vendors will waste a ton of your time. The best way to determine the vendor's motivation is to provide your realtor with a list of questions. 1. Why are you selling? 2. How long have you owned the property? 3. When do you have to move? The answers you get will reveal the vendor's motivation level and, as an added bonus, you'll discover whether the most critical motivating factor is time or money. You should also note that a vendor's motivation level often increases when the property has been listed for sale for some time. [2009] - Don R. Campbell

Writing offers is the difference between successful investors and excuse-laden pretenders. If the offer is rejected outright, then you know you haven't found the motivated vendor you're looking for; remember, dealing only with motivated vendors is absolutely critical. By receiving an outright rejection, you have just saved yourself substantial time, energy and money because there is no use putting any further effort into this property until the vendor is motivated. You may return in a few months when the vendor's motivation level has increased, but today is not the day for a deal, so move on to the next one. [2009] - Don R. Campbell

The deposit should be made out to your lawyer's trust account whenever possible or, failing that, to your realtor's trust account. I like to provide the deposit in two steps. I provide an initial deposit with the offer, to show that I'm serious, and then the rest of the deposit upon the removal of any of my conditions in the contract (for instance, following an inspection and approval for financing). [2009] - Don R. Campbell