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The million dollar question

Paul Sullivan

I have tried a number of investment strategies over the years, and the most successful average around 6 or 7 per cent a year. Invariably, those that do really well over one or two years then have one or two really bad years to bring them back down to earth. The steady customers hum along at 6 or 7. Boring.

If you're looking for real action, come to my house. Not for a party, you understand, but to appreciate the irony. Because while I've been beavering away on the equity front, my house has increased in value from $318,000 in 1992 to well over $1-million today. That's about $700,000, or an increase of 200-plus per cent over 15 years. Anyway you calculate it, that's better than 6 or 7 per cent.

I have to admit, I thought it might appreciate a bit when I bought it. It's in North Vancouver, in an area I thought was undervalued, compared to some of Vancouver's notorious national success stories, for example, Point Grey, where you need to be the Sultan of Oman or David Suzuki to afford to live there. But it requires a commute over the Lion's Gate Bridge, and while it may appear a mild inconvenience to those steeled by the 401 or the Gardiner, in Vancouver, anything that raises a pout gets a stress discount.

So I was feeling pretty shrewd. But not this shrewd. Not in my wildest dreams this shrewd. Everything just fell into place. Somehow, Vancouver became the It Place to live for people who crave that sodden, grow-moss-on-your-north-side lifestyle. Go figure. So the prices went up everywhere and nowhere faster than in North Vancouver where 20-plus per cent increases have been the norm for the past seven years.

And they're still going up. My perpetual real estate agents, a very patient couple named Ray and Linda Proc, say they've never seen anything like it and Ray's been selling real estate in this neighborhood for 30 years. Just last week, a derelict tear-down on my block went up for $899,000, and it sold within seven days for $985,000! And it's a corner lot. Crazy.

Of course, the problem is, this is my house. If I sell it, I have to live somewhere else, and if I want to buy a nice two-bedroom condo in North Vancouver it will cost at least $750,000. Still, my house remains the most inadvertent good investment I have ever made.

The million dollar question is: Is it still possible to make an "advertent" real estate investment in the current market? Certainly, the legendary Ozzie Jurock thinks so, and when Ozzie talks real estate, people in BC listen.

Ozzie is a kind of one-man real estate resource centre in Vancouver. He runs courses for people who want to invest and either flip or benefit from steady income. He's featured on a variety of talk shows, and despite a thick Euro accent, his message comes through loud and clear: "For 37 years I have listened to the naysayers and they have always been wrong in the long run," he declares in a recent article on his web site www.jurock.com. "Despite all the wars, two stock market crashes, the Mexican peso crisis, 9/11 and all the other shocks," he points out "if someone had simply bought a house at any time in the past 40 years they would have increased the profit on their down payment by thousands of percentage points."

Who am I to argue with a man who is cited by Donald Trump in Trump, the Best Real Estate Advice I Ever Received, but what about the future? What about the U.S. real estate slump, which even former Fed chairman Alan Greenspan worries will spawn a recession? Ozzie's advice is to be bullish, not foolish. A fine distinction, perhaps, but faced with the U.S. and an almost imperceptible slowdown in the Vancouver market, he warns people away from buying a presale condo in Vancouver and trying to cover the payments with rent, but advises them to shift their focus to places like Prince George or Quesnel where prices are still low. And as the resource sector is relatively strong these days, northern renters can afford the monthly payments.

Ozzie's thinking is not sexy. It's astonishingly plain and even kinda homespun. But it's still pretty seductive, like his plan for making a million - with no money!

  1. Buy five condos in a growing urban area. His theory is that an urban area will always have a use and will always therefore have value.
  2. Buy a good building and pay no more than $100,000 for each unit. (That narrows it down!)
  3. Get $800 rental income from each unit.
  4. Finance the purchase 100 per cent
  5. Own them in 20 years.
  6. Even if they never go up in value, and the rents stay the same, you get $4,000 income in perpetuity.
  7. An income of $4,000 today will pay off a million dollar mortgage!
  8. "Presto" says Ozzie, you're a millionaire.

Of course, there are caveats. Ozzie recommends two months' research and due diligence, then sticking to the plan despite temptations to buy into hotels, downtown condos, flipping, etc. And on the up side, these properties could appreciate in value. Passive income for life. Not sexy, just money.

Despite my aversion to the real world of bricks and mortar and plumbing, I'm sorely tempted to become an Ozzie Jurock millionaire. After all, my way is not working. I invested $14,500 in Great West Life Canadian Real Estate 1 (G) NL, which is currently worth $15,429.87. Woo hoo! And it's one of the top performing real estate funds in the country. At this rate, I'm in no danger of supplanting Ozzie Jurock as B.C.'s number one real estate investment guru.

Paul Sullivan is a longtime Vancouver journalist and president of Sullivan Media. He also writes for The Globe and Mail.

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