News from Redev Properties

REDEV News

Issue: December 2008

I would like to take this opportunity to wish everyone and their families a very Merry Xmas and a prosperous new year. We are all caught in this financial turmoil with little end in sight, markets have dropped in some cases 50%, a big hit for a lot of people. I am happy to report that commercial real estate has held its own and will weather the storm, yes there are a few hiccups here and there but all in all we are in good shape. You all probably noticed we did not bring a new project out for the latter part of this year, we felt it prudent to see which way the winds were blowing. As the mortgage crisis eases we will be bringing out a new project in 2009 with great values to the shareholder. If you are interested in getting information, please register now as the demand will be great.

Howard Manley
Senior Vice President
REDEV Properties

Incredible!

Richard Crenian

December 3, 2008

I had a meeting for lunch yesterday with a friend of mine who is a realtor out west (Alberta).
We were talking about the state of real estate and I was telling him how lucky we were to be in a cash flow income business, and not having to worry about land holdings or in the midst of developmental projects under construction.
He told me of a story of a group that just bought a piece of land for speculation within the last year for $250,000 an acre in Edmonton, Alberta. They bought eighty acres. According to the locals they placed a 60 per cent mortgage with a major bank.
Here is the rub, when they bought, the land across from them sold for $300,000 and acre, so they thought they were getting a deal. According to my other friends, they thought that the land would be ready for development within one to three years, as the residential market was booming in Edmonton.
So what happened? The residential market fell off the railings through over supply, the land won't be ready for development now for between seven and ten years and they have zero cash flow coming from the property, and still have negative cash flow with taxes and mortgage payments to pay.
To add insult to injury, the land beside them is now for sale for $100,000 an acre, with good financing terms.(This has all happened within the year!!) So even if they sold their land they would not get enough money back to pay back the bank. Welcome to the world of speculating and land holding. "If you ain't farming it or renting it out, you run the risk!" I feel sorry for anyone that bought into land investments in the past five years that hasn't sold it. They probably have lost their net worth of their investment and equity.

Quick Thoughts

Beware of shady companies who try to sell you the donation schemes that are going around. In a February 23, 2007 tax court of Canada case, the taxpayer received a donation receipt for five times the amount of the cash donation. The CRA successfully disallowed the charitable donations, even in statute-barred years, and applied gross negligence penalties. You know the old saying, "If it sounds too good to be true, it probably is!"
You have until March 2, 2009 to make tax deductible Registered Retirement Savings Plan contributions for the 2008 year.
Yahoo Finance has an interesting page that offers a number of calculators from mortgage calculators to calculators to help you know how much you will need to save for retirement. You can check it out at www.finance.yahoo.com/calculator/index.