Ed Rempel Org

What is The Cash Flow Dam?

What Is The Cash Dam and How Does It Work?

 The Cash Dam (sometimes referred to as a “cash flow dam”) is a simple but powerful concept, and it’s an especially attractive option for those who are familiar with the Smith Manoeuvre or other tax minimization strategies. Cash Dam can help you with tax optimization if you have a mortgage and own either a small business or a rental property.

What is cash damming?

 The Cash Dam allows the owner of a small business or rental property to more quickly pay down their non-deductible mortgage on their home. It’s a variation on the Smith Manoeuvre, but without additional investing. The Cash Dam is essentially an expedient way to change bad debt into good debt.

For someone who’s using the Cash Dam, what it involves is using a line of credit to pay for business expenses. Then, while using the increased business cash flow, you pay down a non-deductible mortgage or loan. This, in turn, produces an increasing tax-deductible business loan, while paying down a non-deductible mortgage or loan. Be advised that the Cash Dam as described above will only work for those who own a non-incorporated personal or partnership-based small business or a rental property.


 If you own a small non-incorporated business that has $2,000 in expenses each month and you also have a readvanceable mortgage, then the $2,000 per month expense would be paid by the home equity line of credit (HELOC). You then use the additional $2,000 you have in your business expense account to make a payment on your non-deductible mortgage. Interest paid on money that’s borrowed for business expenses is tax-deductible; by using the Cash Dam, you’ll be left with a tax-deductible business loan and a non-deductible mortgage that’s been quickly paid down.

One of the keys to the Cash Dam, however, is capitalizing the interest on the business line of credit. That way, you avoid using any of your own cash flow and you keep the business line of credit tax-deductible.

How does the Cash Dam differ from the Smith Manoeuvre?

The Cash Dam relies on using a tax-deductible business loan to allow you to pay down a non-deductible debt, while the Smith Manoeuvre allows you to buy investments. Investing from your credit line is why the Smith Manoeuvre has much higher risk and return than the Cash Dam.

Potential applications

 Say that you’re a rental investor, instead of using your own cash flow to pay for rental-related expenses, you can use the Cash Dam and a line of credit. In this instance, using the Cash Dam would help you pay for your personal mortgage and help you satisfy your tax obligations as well.

And if you are a small business owner, the Cash Dam can be extremely advantageous. The strategy gives you a way to quickly pay down your non-deductible mortgage and convert that debt into a tax-deductible business loan.

Are You Legally Allowed to Break Your Apartment Lease?

Picture this: You have been enjoying life at your apartment for months, but then you receive a devastating loss of your job or a family member passes, causing you to have to move home and take care of vital life matters. As everybody knows, there are many valid reasons for wanting or needing to break the lease on your apartment, making a difficult situation for everyone involved. In some cases, your landlord may choose not to penalize you for this decision, but in other cases you could have lasting consequences. Because of this, you want to know how to get out of your lease in the most positive way possible.

Are There Penalties Involved?

Sometimes. Leases are considered to be legally binding agreements, which means that if you back out on one, your landlord could potentially take legal action for back rent payments and more. Unfortunately, to the courts, things like job loss and illness do not legally excuse you from breaking your lease. On the other hand, you could also experience a difficult time being able to rent in the future, which is a huge consideration to make. It could leave an adverse mark on your credit report, which future landlords will see and this could lead to the denial of your rental application. 

Best Ways to Break a Lease, if Necessary

It’s always best to carefully review your lease prior to signing, but if you’ve already signed a lease, here are some tips. For your protection, it pays to know the ways in which you may be able to break your lease without too many negative consequences to yourself and your landlord. We can help.

Reading Your Agreement: You should always turn to the rental agreement you originally signed for options before you take other steps. One section could contain information on how to break the lease and may even list penalties for doing so. Look for words like “early release” and “sublet” to return to, as these will be options to consider down the line. You may also legally have to give notice of your intention to vacate in advance, just like you would when leaving a job.

Speaking One-on-One: Having open communication with your landlord is better than letting the issue fester out of control. It helps them look into options well into advance, so always be honest with them.

Subletting: You may be able to find a new renter and agree to it between you and your landlord, helping you move out early and helping them replace the costs. You may be able to choose subletting, which is where somebody will take over your current lease even though the lease would remain under your name. Though you would be responsible, the benefits may still outweigh the negative parts.

Termination Offers: Your landlord may give you termination offers, such as paying a few month’s rent in advance or forfeiting your security deposit. Those these can be disadvantages to you, it could be the better option depending on the circumstances. 

These situations can be difficult, which is why you should always be prepared. Keep your landlord in the loop and consider the options that work best for everybody involved.

Living Affordably – Life in a Repurposed Shipping Container

Many people will decide that their current lifestyle is too costly, and would rather save their money by living far more cheaply. Switching to a repurposed shipping container is easily one of the most cost effective ways to largely reduce your expenses in almost every sector.

Buy container today and bring your bank account to a new level of progression while still enjoying the comforts and durableness of the stability that a repurposed shipping container brings.

Let’s Talk Numbers

Obviously living in a repurposed shipping container is far cheaper than living in a traditional house, but how much does such an implementation actually cost? Some of these original homes can be created for under $30,000.

Seeing as you will indeed be using far less water and electricity in your new home, you can expect to pay far less for utilities. You can forget about paying for mortgages or any related loan-based payments.

Planning is Key

Moving into a repurposed shipping container may indeed be a life changing process, but it is also a massive revolution in your living standards which requires the proper planning and dedication to the foundational phase.

You certainly cannot just improvise as you go along the construction phase, and doing so will lead to much in the way of debilitation and upset. Just because you will be moving into something far simpler than a traditional home or apartment, does not mean that you should treat your living space with any less care and sensitivity.

There are two major components to the planning phase.

Establishing a Budget

Any home, no matter how small, cannot be accomplished without the adequate amount of funds set aside. Although the repurposed shipping container home may indeed be far cheaper and more humble than the standard home, that doesn’t mean that it has to be lackluster.

You need to decide just how much money you are willing to set aside, for both luxuries and practical means. In any case, whatever you decide upon will not take too much from your bank account to achieve.

Planning Space

This ties into your budget, and is obviously constrained by how much you are willing to spend, but you need to decide how much space you will actually need. This means how many bedrooms and bathrooms, living rooms, lounges, etc.

The addition of stories is a very simple matter with repurposed shipping container homes, all that it takes is to stack one container on top of the other which will be linked by stairs. You can also get very creative with such simple and straightforward shapes, and there are plenty of awesome designs that have been hatched due to how easy it is to craft with repurposed shipping containers.

Take your time to settle on exactly what you want to get out of your home, and make sure that your dream can be adequately funded. In any case, you should approach the right companies and professionals who have dedicated their lives to furthering the establishment of repurposed shipping container homes.  

Honest Property Valuation is of Huge Help

You get a property surveyor because you want your property to be properly assessed and checked. Sometimes, it is tempting to just pay the surveyor so you can get the price that you want. To begin with, this is a bribe and it is illegal. Secondly, most professional surveyors who have been around for a long time will not grant your request. Most of all, you will still end up with an inaccurate assessment of the property. The amount might be too high for some potential buyers and they will have a hard time believing the valuation report.

This is why it is important that the property be assessed accurately. The results must be honest. Those who are interested in buying the property will no longer second guess the accuracy of the report. Aside from the potential buyers, you will also be helped a lot personally.

Going through a divorce

When you are going through a divorce, you don’t necessarily intend to sell your property. Your goal is to simply know the value of the property so you can split it with your former partner. One of you could get the property and pay the other half of its value. In this rough time, you no longer have the energy to really think about all the legal aspects. You just need someone to help you out by giving you the accurate worth of the property.

Filing for bankruptcy

If you have done your best to keep your business afloat and it still ended up being bankrupt, it can be very heartbreaking. Hence, you have to sell whatever assets you have left in order to repay your loans. The property where your business used to operate could be the biggest asset. Make the most of it by asking for a property surveyor to check it. The estimated amount will then be known and you can decide what to do with the property. You can sell it to potential buyers so you can finally get out of your current financial problem.

Now that you have fully understood the need for a property surveyor, it is time to hire one. There are a lot of them for you to choose from so you need to screen them well and get the right partner to do the job. There are qualities that make a good surveyor, but always choose honesty before anything else. You want someone who will tell you exactly what your property is worth. The amount should be as close as possible to its actual worth so if you decide to sell the property, you will earn a lot.

Look for the best people to do the job at www.chekes.co.uk.

The Most Essential Facts on Bad Credit Mortgages if You Want to Buy Property

A bad credit score can be a devastating blow to someone with the dream of one day owning his or her own home, because mortgage lenders usually require the applicant to have a positive credit report. Anyone who has made some bad financial decisions in the past or was unable to keep certain commitments could find their credit rating is negative; anyone who has missed a payment or made it late, anyone with a debt management plan, or anyone with a discharged bankruptcy can also have a bad credit rating.

Luckily, there are still ways to get a mortgage even if you don’t have the best credit rating; some mortgage lenders are more flexible than the average. Here are the most essential facts on bad credit mortgages if you want to buy property.

Causes of bad credit reports

A ‘bad’ credit score is actually a vague concept – often the score depends largely on what exactly is considered and what weights are attached to those values or variables. However, here are some of the most common issues that can affect your score:

  • Electoral role information (if you’re not registered, it can be held against you)
  • Missed payments or late payments of debts or commitments in the past
  • Misinformation in previous credit reports (such as wrong addresses)
  • Previous court records
  • Having been declared bankrupt, and so on.

Poor credit mortgages

Getting a mortgage can often be difficult, and this is aggravated if you have a poor credit history. Luckily there are mortgage lenders who specialise in these cases, and consider the application of each on an individual basis.

Loan to value

The LTV (loan to value) is very important – this is the percentage of capital borrowed in as a percentage of the value of the property. Naturally, the lower your LTV, the higher your chances of getting your application approved.

How much can you borrow?

There are no hard rules to determine this without going into specifics, but a general rule is: between 4 and 5 times your yearly income. If your income (combined) is £40,000 then it should be possible to borrow between £160,000 and £200,000.

We have to be clear, however: having debts is not necessarily a bad thing – as a matter of fact, getting some debts may actually help improve your credit score; by paying them on time and in full, or even paying them in advance, you demonstrate you can handle the responsibility and commitment, which tends to increase your credit rating. If you feel you are completely willing and completely able to pay your debts and commit to a mortgage, don’t be dissuaded by previous experiences; contact a bad credit mortgage broker who is willing to look at your case and allows applicants with less favourable credit ratings.


How Can You Save Money With Realtor Commissions?

The average sales commission in the real estate market for the real estate agent is at around 5%. This is a pretty high price if you do the math and you do need to consider the services of the real estate agents because of the associated advantages. The good news is there are always ways in which the commissions can be reduced or you can simply save some money during the buying or selling process. Here are some things you do need to be aware of.

Reduce The Commission By Half

The real estate agent commission is normally split between the seller and the buyer. Even so, the home seller is the one that tends to pay it in full. When selling real estate property and buying something else in return you do want to work with the same agent so that you can negotiate cutting the commission in half. Many think that this is not possible but this is incorrect, especially with the pricier properties available on the market.

Shopping Around For Better Commissions

It is highly recommended that you will interview at least 3 real estate agents in order to see what commissions are going to be charged. You might be surprised to find out that there are some pretty great deals available on the market right now, like the One Percent Guys. Alternatively, you can contact the agencies in order to discuss the property with them and see what they would be willing to agree with when they find clients. Having the real estate agents compete with each other is going to drastically reduce commissions in many cases.

Discuss What The Commission Entitles You To

This is especially important when you talk to an agent that is asking for a commission that is higher than current local market average. Is there a reason why you need to pay more than what the others charge? When you deal with luxury real estate the costs that are needed to advertise are normally higher or the considered agent may actually have an increased number of contacts than what the cheap realtor has access to. If the reasons that are offered are not justified you will want to consider negotiations. When negotiations do not work you want to work with another real estate agent.

Higher Selling Price

In this case you are not actually negotiating lower agent commissions but you end up covering payment through receiving a larger amount of money as the property is sold. When the buyer offers an asking price that is close to what you want within a short time frame you are tempted to take the deal. However, a real estate agent is going to be interested in selling the property fast, without waiting for a higher offer that would be more than the asking price. Holding out for some time and receiving more money for the property is going to be mainly beneficial for the seller. Commissions are normally covered and more money lands in the seller’s pockets.

5 Tips for Buying Land as an Investment in Ontario

Fair Alberta isn’t the only province worthy of your real estate investing dollars, you know. Its flatter, wetter friends to the east harbour uncommon opportunities as well.

Head toward the rising sun along the Trans-Canada Highway and you’ll soon enough find yourself in northern Ontario, a thickly forested wilderness riven with lakes, streams, and wetlands. There’s abundant land for sale here, at a fraction of the per-hectare cost one expects on the outskirts of Edmonton and Calgary.

But, as any old real estate hand knows, every market is different. If you’re interested in buying land as an investment anywhere in Ontario, you’ll want to keep these five points in mind — and find a trusted estate agent who knows the region well.

  1. Head North

Northern Ontario comprises the bulk of Ontario’s land mass — and houses a tiny fraction of its population. Land for sale in northern Ontario is therefore far cheaper than land for sale in southern Ontario, especially in the densely settled Golden Horseshoe region ringing the western shore of Lake Ontario.

If you’re not a Canadian resident, a northern Ontario investment allows you to skirt Toronto’s 15% foreign buyer surcharge, a 2017 measure imposed to cool the city’s red-hot real estate market.

  1. Get Close to Town — But Not Too Close

Northern Ontario isn’t entirely depopulated. Northwestern Ontario is anchored by Thunder Bay, on the north shore of Lake Superior; northeastern Ontario by Sudbury, in the mineral-rich hills north of Lake Huron. Though still cheap by Alberta standards, land and homes are pricier in these regional hubs.

If you’re seeking a truly cost-effective investment that’s likely to appreciate faster than an in-town property, look for land near these or other settlements — but not too near. Sweet spots tend to lie in rings close enough for commuting, but far enough for peace, quiet, and plenty of breathing room.

  1. Assess Access and Improvement Potential

If you’re planning to improve your investment, look for lots with access to existing paved or well-maintained gravel roads. Failing that, look for properties upon which such improvements can easily be made. If you need to coordinate with more than one other landowner to punch a driveway out to the main road, the property might be more trouble than it’s worth.

  1. Have Cash on Hand

First-time land buyers are often surprised to learn that lenders are reluctant or unwilling to underwrite generous loan packages for their purchases. While every case is different, it’s unrealistic for Ontario land buyers to expect to be able to finance more than 50% of their investments. In other words: Set your land investment accordingly, or patiently accumulate the requisite cash reserves before you make your move.

  1. Consider a Joint Venture

This is one obvious way to stretch your land investment resources further. Surely you have friends, family members, or trusted colleagues who see the same potential as you in unspoilt Ontario land. Why not enter a joint venture and pool your collective funds? Housing your land in a formal business entity as other benefits as well — though you’ll want to discuss with a tax professional or business attorney to evaluate your specific situation.

Are you planning to invest in Ontario land anytime soon? Where are you setting your sights?

Refinancing may still be an option

To no one’s surprise The Bank of Canada has left its key interest rate unchanged at 0.5%. After reading the latest Monetary Report, it doesn’t sound like it will raise its policy rate any time soon. Inflation is flat, as is wage and export growth, and there is still uncertainty in the US and globally.

Despite record low interest rates, some new home buyers are finding it challenging to qualify for a mortgage due to a new round of rule changes announced late last year. These changes have also affected existing mortgage holders who may want to refinance to get a lower rate.

While low interest rates and robust regional housing, markets continue to be the norm, Canadians are still burdened with record-high debt loads. The ratio of debt to disposable income rose to 167.3% by the end of 2016. That means Canadians owe $1.67 for every dollar of disposable income, up from $1.66 the year prior.

If you’re sitting with equity in your home yet can’t seem to manage your debt payments, refinancing could still be an option. With credit card interest rates often pushing the 20% range and unsecured lines of credit in the 7% and higher range paying off high-interest debts can make sense.

Let’s review a refinance. Specifically, you are increasing the amount of your mortgage to pay off debt. Your actual mortgage payment may or may not increase, depending on a number of factors, and you may incur a penalty to break your existing mortgage if you are refinancing midterm, but your overall monthly payments should decrease. You could be paying off the refinanced debt at a much lower interest rate, which could save you thousands of dollars in interest in the long run.

Here are some reasons to consider a refinance:

Decrease your overall monthly debt payments by using your equity to pay off those high-interest credit cards or unsecured loans, which can help you better manage your budget.
You can refinance to purchase another property. Using the existing equity in your home can be a great way to buy a rental property which, if done right, can also make the interest you pay tax deductible.
You could also take out some of the equity for investment purposes.
Or you may want to refinance to renovate.

As you can see there are many factors to consider before deciding to refinance. Each individual’s financial situation is different. Call me and we can discuss the options available to you.

Guy Ward is a Mortgage Broker in Calgary, Alberta with TMG (The Mortgage Group Alberta) and can be contacted at www.guythemortgageguy.com

How Does the Office Space Market in Canada Compare to the One in the US?

Image Source: Hi-Level Mezzanines

At present, both the United States and Canada share a fairly healthy office market being shaped by broadly similar trends. As large trading partners of similar economies, this is unsurprising. Yet despite sharing many characteristics, there are differences in how they are being shaped by these trends and broader differences as well.

Similarities Between the US and Canadian Markets

Growing Demand for Class A Space

Class A commercial space is in high demand across North America as firms demand greater efficiency and technology while relocating or renting for the first time. JLL reports that Class A rents have increased by 21.5 percent since 2010, which is nearly 2.7 times faster than Class B rent growth. Much of this stock is being created or converted in urban centers.

Companies are flocking to central business districts and areas linked to them via transit hubs for the value offered there. With greater focus on efficiency, many companies are not as concerned with space as they once were and take opportunities for hot-desking and remote work seriously. While rents are surging for Class A properties, this has left Class B property owners with pressure to offer greater incentives in their lease such as lower premiums and larger packages.

Tech and Finance Drive Commercial Rents

The largest driver of rents for both the US and Canada continues to be tech companies. In the United States, 24.2% of leasing volume in Q1 of 2017 was attributed to the tech sector. The creative and finance sectors are also capturing sizeable shares of lease volume. The digital pressures of all are one of the factors pushing the market toward Class A office space.

Cautious but Optimistic

Both the US and Canada have been troubled by the surprise events of 2016. Britain’s unexpected vote to leave the European Union and America’s selection of Donald Trump in the 2016 Presidential Election have created uncertainty in Western economies, sparking fears of a slow down and lower demand for real estate. For the markets in the two countries, construction is expected to slow and softening of the market to occur as new spaces come online. Developers in both countries also complain of too much regulation.

Differences Between the US and Canadian Markets

Stage in the Real Estate Cycle

According to JLL and its Office Clock system, plotting cities on the market cycle into falling, bottoming, rising, and peaking phases, the United States cities are further along the property cycle than their Canadian counterparts. Leading US cities like New York and Los Angeles (with their hitherto hot market increases) are reaching their peak with the office market in San Francisco seemingly already done so. Many smaller, regional hubs across the US like Indianapolis and Phoenix are further behind and set to see market rises.

Canada, as a national market, seems to be one phase behind the US market in the property cycle. Vancouver and Toronto especially, unlike major US cities, seem set for a much longer rise in the office market and escalating rents as both continue to grow at fast pace toward becoming major metropolises on par with New York, London, or Paris.

Regional Irregularities

Other Canadian cities are not seeing such rapid growth however, as studied by pwc and the Urban Land Institute. Montreal is growing but at a lesser rate. Ottawa, after decreases in government spending, now has a vacancy rate of near 25%. And cities in Alberta like Calgary and Edmonton are having to weather the loss of profits from a collapsing oil industry as well as what some consider an over-supply of commercial property from the last decade.

In the United States 10 cities lead the growth of the market, mainly in the eastern seaboard states and the southwest. Gateway markets and some leading metro-areas have actually seen a cool down. Most dramatic is that in the seemingly unstoppable Bay Area where both San Francisco and Silicon Valley have seen negative net absorption and rent declines on a quarterly basis.


The Importance of Aligning Your Goals With Your Clients’

The really great companies have something in common that is often imitated, but very hard to duplicate: a relentless focus on the client.

What does that mean?

For starters, it means the ability to gain insights into their needs and wants. It means the ability to provide products or services that anticipate those needs – often providing these services before clients realize they want them. Perhaps most importantly, it means aligning your capabilities and goals as a business with the client’s for optimal success.

For all the businesses that have successfully used this formula – think Apple, Google, GE or Toyota – the wayside is littered with casualties.

Business failures have typically centered around losing track of what was important or depending too much on technology when clients want live, face-to-face contact; other businesses just didn’t try hard enough to retain their client relationships. An Accenture study found that 52 percent of consumers stopped doing business with companies because of issues like this, and once they’re lost, 68 percent of consumers won’t return.

This is as true in real estate as it is in any other field, and maybe more so. In fact, having the ability to align your goals with your clients’ may be one of the most important determinants of success or failure in a business like ours. That’s because if your goals aren’t matched with your clients’, you may well find yourself working at cross-purposes. There’s no happy ending when that happens.

The reality is that realtors are doing more than just selling properties. We are helping our clients realize a lifestyle, enhance an environment, and find a place to live. What is more important than that? This all involves a process that, when done right, is intensely personal and hands-on. In turn, we grow insights into their motivations and needs and then set out to anticipate them.

This is one of the differentiators around which AISA Real Estate Services has built its business. This focus has allowed us to establish a successful niche with affluent clientele who are particular, discerning, and who appreciate when firms truly take the time to understand their goals as clients and then evaluate how they can best achieve those goals.

This focus on the client and understanding what their real estate needs are enabled us to find the right buyers for 65 luxury residences at The Trump International Hotel & Tower® Vancouver and allowed us to set a record average for a project of this size in Canada, a record which has only recently been topped.

Such achievements are great, of course. But, there are other benefits too. When you support your clients’ goals, they are more likely to support yours. When you’ve created the kind of client experience that matters, they will continue to count on you as a valued resource for future transactions. Further, there is nothing like a referral from someone who is happy with how you held up your end of the bargain.

There’s more to success in real estate than steering clients to properties in the right price range and with the right mix of amenities. The customer experience is of paramount importance. When you establish a meeting of the minds on shared goals and expectations, you’re more than halfway there.