June 15, 2011
In this week’s edition of BuzzTalk
, we buzz with
Don Campbell, one of Canada’s most sought after real estate experts. Don is the president of Canada’s Real Estate Investment Network, a membership program that educates its members about the how, where and when of real estate purchasing in Canada. He is a researcher, investor, author and educator. When the media seek real estate expertise, they come to Don Campbell.Enjoy!
BuzzBuzzHome:How did you get your start in the world of real estate investing?
DonCampbell: Back when I was working part time at Sears I started tonotice successful people in my life all played in the game of realestate. Whether they were higher-up employees or were farmers orbusiness owners they all seemed to be parking their money into cashflowing properties. To me that message became very clear, find outwhat those who are already successful are doing and then speak tothem and learn from them.
Thatis how I got my start. Myself and a friend did a Joint Venture on aproperty in Mission BC — interest rates were in the ‘teens’,we bought new, we really didn’t do enough homework on the area…we made mistakes. Yet it still made us money and still helped tospark me into doing more.BBH:
Real Estate Investment Network’s (REIN)slogan is a “unbiased, no-hype look at Canadian real estate.” Howdo you make sure that your information remains unbiased. How do youfilter out the hype from the news and information you receive?
DC:Great question. There are a few rules we foster when doing ourresearch.
Wedon’t sell real estate (despite the potential huge profits fromdoing so). Therefore it is impossible for us to put out researchhyping a market just so we can sell property in that region. We seethis unbiased research occur continually across the country under theguise of research and consumers are led down the path to believe.
Wecomplete our own research. We do not blindly buy into what is beingtold to us, we will read it and then go and investigate further. Wenow have 16 people on staff supporting what we do and supportingCanadians in their quest for good investment decisions.
Weteach others how we do research and implore them to do their owninvestigation before they purchase a property. We tell them justbecause it is in the paper, on-line or on TV doesn’t mean it is allyou need. Never be afraid to ask the tough and sometime uncomfortablequestions as it is your hard earned investment funds you are puttinginto a property. Hype is easy — research takes effort.BBH:
Foryou, what makes a property a good investment?
DC:In my world, it is only an investment if it creates positive cashflow (or yield). If it doesn’t it is then just a speculative buy(like a stock or mutual fund). All you are doing is hoping thatsomeone behind you will be willing to buy it when you flip it on —in my world that speculation strategy takes the power out of my handsand puts it into the market’s.
Iprefer to know (by studying the underlying economic fundamentals —not the housing market) that there will be demand for the property inthe future, especially rental demand. That way I know that no matterwhat direction the “average price” market is moving I don’treally care as the cash flow allows me to ride the waves both up anddown.BBH:
You’vehad a successful career as an author as well, what inspired you tostart writing books about real estate?
DC:It was never a goal of mine to write books. I was too busy building aportfolio, building businesses etc. However when Wiley (thepublisher) approached me to write the first book I agreed, as itlooked like a good challenge and a way for me to positively impactmore people. It also helped when we came to an agreement to give allof my royalties to Habitat for Humanity in Canada — creating agreat win for those needing a hand up.BBH:
Doyou have any plans to write another book in the near future?
DC:In addition to the many REIN Members who have now got their bookwriting start through REIN and Wiley (more of those coming outlater this year) I have two books in the pipeline right now. Thefirst one is a technical look at Real Estate Cycles in Canada and howto identify them for your local market and what to do when the cycleshifts to a different phase. The second onehas been a long time in the works and it is written to assistinvestors in raising funds (for instance Joint Ventures) to furtherthe growth of their portfolios.
BBH:You’vedonated 100% of your author royalties to Habitat for Humanity, whydid you choose this charity to donate to?
DC:I chose this charity because I believe that we should all have theopportunity to own our own home sometime in our lifetimes and Habitatdoesn’t give properties away… the new owners have to put in sweatequity in the building of the property and then they have to pay amortgage to live there.
SecondlyI investigate a lot of charities and I found that with Habitat forHumanity 100% of the money that is donated goes directly to thebuilding of houses, then once the property is occupied, that money isredeployed in building another. That means the dollars never go away — they become a financial legacy that has impact for decades intothe future.
BBH:Youronline bio says that you can speak in detail on any real estatemarket in the country — what’s your opinion on the housing marketin Vancouver?
DC:We do analyze all major markets as well as many minor markets acrossthe country as we believe that commentary on “Canadian” averageand “Canadian” market helps no one. It is the equivalent oftaking the temperature of everyone in a hospital and then commentingon the ‘health of each patient’ using the average.
Thatbeing said, it is important when reviewing the Vancouver market thatyou do not ‘take every neighbourhood’s temperature’ and judgethe market as a whole. With the foreign money pouring into keyregions (the west side and the new luxury condo market) you areseeing average prices in those regions get way above the underlyingeconomics. You can also see how dramatic the impact of the ‘detachehome value has on the so called ‘Average Price‘.
Witha definite lack of ‘land’ in the region, obviously those withland become much more valuable and thus drive the ‘average’ priceupwards. These land oriented properties also are highly sought afterby foreign investors and therefore demand is outpacing supply —it drives prices up even higher.
Propertiesare overpriced in many neighbourhoods when compared to the underlyingeconomic fundamentals, however it is important to note that regionslike Surrey and Maple Ridge BC (neighbouring regions) are underpricedto their fundamentals. Opportunities do remain in the lower mainland — but those who focus on ‘average price’ will never see them.
BBH:Whenyou’re not spreading real estate wisdom across the world, what doyou like to do for fun?
DC:I love music, I love my organic farms and I love traveling anddiscovering new and exciting regions as travel always gives meperspective on what we have here in Canada when it comes to lifestyleand economics.
Thanks to Don for taking the time to BuzzTalk!