Canadian Realestate Magazine forum is the place for positive industry interaction and welcomes your professional and informed opinion.

Kevin O’Leary addresses ‘real estate correction’

Notify me of new replies via email
Canadian Realestate Magazine | 19 Aug 2015, 08:15 AM Agree 0
Canada’s most-celebrated and controversial investor is offering real estate buyers a word of caution – in addition to his take on market corrections
  • Keith | 19 Aug 2015, 11:10 AM Agree 0
    Like anyone else Kevin does not know what will happen and like so many others he views shoe box or micro condo's as being over built. This may very well be, however, one segment does not dictate the whole market nor does one or two cities. It is well known that the population of millennials is now greater than that of the baby boomers and the generational views on housing and life are very different.

    Investing in real estate the right way is not a bad investment now or in the future. If you buy a $300k home now with $60k down payment; in an area with solid economic fundamentals the investor will have positive net monthly cash flow. The tenants will pay down the mortgage in full for you and if it is a 25 year investment and the property value stays exactly the same your return on investment is 400% (300-60=240K/60 which is 4 times your initial investment or 400%). Even if the property value dropped 20% in 25 years to $240K the investor would still see a gain of 300% on their initial investment (240-60=180K/60 is 3 times your investment or 300%).

    Even if an investor had a 10 year time line the tenants would have paid enough of the mortgage principle for the investor to have about 100% return on their $60k investment.

    Actively investing in real estate is not for everyone and neither is the stock market, mutual funds or RRSP's. Since 2005 real estate has outperformed all other investments. Just compare the real estate indexes to the stock market indexes.

    Many people that building wealth through real estate is very lucrative, however, they do not have the time to do all the work it takes to educate themselves and invest in real estate. it is these types of people that become involved in our joint venture partnerships and are seeing their wealth grow and great returns on investment paid for by tenants.
  • Jeff D | 19 Aug 2015, 01:50 PM Agree 0
    Beware "Complacency Bias" - Canadian market is long overdue a correction
  • RossK | 19 Aug 2015, 06:14 PM Agree 0
    Anyone who buys real estate is investing in real estate whether they realize it or not.

    Mr. O'Leary in this one area lacks the expertise or knowledge because when the last housing correction took place Reader Rabbit was just an idea.

    Housing prices must correct and current home owners must take a hit if the housing market is to keep going. It is a structural impossibility of the housing market for things to keep going.
  • Michael | 20 Aug 2015, 12:52 PM Agree 0
    Here is some food for thought…..nobody knows anything and your guess is as good as the next
    Historical trends, speculative talk, theoretical models, analyst advice/reports, experience, rntal investment calculations/ideas, to a certain degree do not count for anything in today’s world to be honest.
    Just watch BNN for an hour and you will see some of the smartest guys in the world fighting it out (except for Ben Tal, he is the man)
    This is because there is a shift in phenomena that has not been determined. Applying any rule of thumb to any sector at this point in time may be dangerously inaccurate. We are not dealing with a traditional market place in any sense and the only prevailing theme to date is volatility.
    As a few examples off the top of my head consider the following:
    Canadian economy going from hot to not back to hot about 5 different times this this yr alone
    Local real estate demand, “ stock market oriented like behaviour” having short/aggressive spikes up and down. Also, extremely segregated
    Surprise rate drop
    China trading with the rest of the world
    China’s debt bubble
    Tiny Greece a problem
    Federal Reserve increasing rates, now possibly decreasing
    Canada trading with the rest of the world pretty aggressively (not just USA)
    Commodity super cycle done
    Essentially, a complete US turnaround in as little as a few months
    BOC Governor not knowing how to define a recession as per last announcement
    BOC Governor HOPING the low dollar will save the word
    The only conclusion:
    Everything is becoming interrelated and the world is truly becoming global across the board (all nations) It is naturally operating on principles we do not grasp and we do not know how to deal with it. We have a 2015 reality with a 2008 mentality. This is like trying to mix oil and water, it just doesn’t work
    I think best bet: we all have to face facts and understand the true nature of the beast we are dealing with so that we can recreate sharper and better operating principles.

    As per Mr. O'Leary he is a tech baby gone Hollywood not a real estate mogul, most likely looking to create hype or fulfilling his role. Still accomplished, so has some weight with his words.
Post a reply