News from Redev Properties

REDEV News

Issue: August 27, 2008

It always upsets me when my buddies come to me with a new hair brained idea that someone has approached her with, such as an idea to invest in land and to use her RRSP (registered retirement savings plan).

They are in their early 60's and have worked hard all their lives. Good honest prairie people!

I ask, "Why do you want to risk your money that you worked so hard for all your life with a promise of big returns? These aren't the funds you want to play with."

They have forgotten the "Golden Rule", he who holds the cash rules!.......

Some of the land companies that target them promise big returns, big profits, timely and quick returns and a promise of a safe and sound investment.

So many have forgotten about the many different land development companies over the years who have raised millions of dollars of money to invest in these "safe and sound land deals", only to have them evaporate, mostly into nothing.

Land investment can be rewarding, if you have RISK money, but not for people who are in their 50's on. And especially using your savings plan!!! Does that seem logical at all?

Why would you risk it? It is for your RETIREMENT.......ask yourself, "Who is going to give you the money back when you lose it?"

Here are the risk potentials:

Land can take longer to develop than the 5-7 years a developer has promised. (10-15 years, so what if you are 65 and you look like you may get some money back at 80 years, what are you going to do with it? And if you lose? Who is going to take care of you then?)
The Promoter that is selling the land has marked up the land 2 to 3 times or more than what he paid before he sells it to you, then hopes to have you make a profit. (At this point why should the Promoter care? He has been rewarded handsomely already.)
Do you buy at the highest or the lowest? If at the highest, that is what you are paying the land developer for.
Has the Promoter been doing this for twenty years or longer? Or is he a newbie?
What is his track record? Does he make the money with investor or does he make his money and a lot of it upfront?

Grr.......it makes me so mad to think my friends would consider this.......

Here is a website that details what you have to do with land when you are developing it. Check it out!

http://www.udicalgary.com/DevelopingACommunity.htm

"Just imagine you suddenly became owner of an undeveloped parcel of land on the outskirts of Calgary. What would you do with it? Obvious options might be to hold it as an investment or try to sell it right away. It might be appropriate to use the land for agricultural purposes. However, let's imagine the parcel is in an area being heavily developed for residential uses. One might consider the apparent strength of the current housing market and elect to develop the land for residential purposes. Images of wealth enter one's mind and provoke a smile. However, caution should be noted. Although developing land may indeed be profitable, one must fully understand all that is involved in the development of a community. This is an extremely complex and expensive venture!

A variety of issues should be carefully considered and understood, should the site be developed. the first thing you will need to do is conduct a thorough market analysis to determine if there exists a market for residential development in the area. If so, what should the housing mix be (single family versus multi family, etc.). In addition, things such as site topography and geology, the presence of environmentally significant areas, the current zoning on the site, the proximity of the site to existing services (water, sanitary and sewer), the 10% MR (Open Space) requirement, and various other factors must be carefully studied. These factors will all have impact on the costs associated with developing your site.

A common misconception associated with the cost of land development in Calgary involves the issue of 'who pays?'. Many people are unaware that initially it will be the developer who pays for everything including: the stripping and grading of a site, the placement of services, the construction of roads, sidewalks, curbs and gutters, a range of municipal fees and assessment rates, consultant fees, and landscaping, just to name a few things. Not surprisingly, these fees can often add up to great sums of money, typically millions of dollars!

Although much of the great expense will eventually be passed along to the new home purchaser who will pay for it in the cost of the home and lot, it will be up to the developer to pay for these great costs up-front. Few developers have the financial resources available to cover these 'up-front' costs and, as such, most developers work out arrangements with financial institutions or have investors.

Finally you will be interested to know that despite the great deal of money developers will pay in developing the site, it can take a significant period of time (often many years!) before developers se any return on their investment!"

Quick Stats

Alberta's exports rose to $9.2 billion in April. That is 42.2 per cent higher than the same month last year.
Alberta exported $34.6 billion in the first four months of 2008. that is a 28 per cent increase over the same period last year.
A key factor in Alberta's export growth is the expanding receipts for energy products such as crude oil, natural gas and coal.
At the national level, the export of energy products from Canada rose 2.5% let by gains in crude and natural gas, the bulk of which is provided by Alberta.
Alberta's first quarter fiscal update shows that the province is on target for a budget surplus of at least $8.5 billion this year.

REDEV Properties

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Calgary, AB, Canada, T2G 4B7 Toronto, ON, Canada, M5G 1V6

Ph: (403)212-1953 Ph:(416)460-7779

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www.redevgroup.com

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In This Issue

Land Investment

Quick Stats

Featured Property

Ranchlands Village Shopping Centre

REIG Highlights

Strong demand for commercial Real Estate in Calgary market
Excellent location in the dominant commercial area of NW Calgary
Retail vacancy in NW Calgary only 0.4%
Office vacancy rate in NW Calgary only 1.4%
According to Conference Board of Canada, Calgary and Edmonton are "in a league of their own" as they lead growth in Canada for 2008
Minimum investment $25,000.
Projected average annual return after tax 14.25%
Receive a tax deduction for 8
Receive capital appreciation on the sale of the property