World Outlook Conference2015

The world is a MAD place…ALWAYS!

Credit crunch Currency crash Central Banks devaluations Greece Depression Run away inflation Falling Canadian Dollar Rising/falling interest rates

No help from developers

Tear down all the trees...and then

...call them...Pine Avenue Elm road and Fir Street

Economists

•Economists know a hundred ways to seduce a woman…

Real Estate Action Plan: Goal?

Well…We are the Boomer Generation

Boomers ARE different...

•We want to and can live longer

•We are "down-aging"

•We LIKE being older!

•We think QUALITY of life

•We work in smaller companies

•We become Social Media Hounds

•And more and more plan to retire in BC

Baby Boomer Trend

Trends

Long term Baby Boom trendNext 20 years...they'll keep coming to BC

A full 61% of Canadians over 65 intend to come to BC to retire!

Boomers

Yuppies

Dinks

Dins

Veeps(cialis)

Dildo

• Mamis: Middle Aged Men In Spandex

• The Chinese want cars, we want bicycles

Forecasting is never easy….

…particularly when it is about the future!

To forecast we have to set the baseline

Macro Principles

Local principles

Basic Principles to study

Macro: Inflation or deflation aheadTiming (Burnaby home)

Trend Cycles

Local: Inward migration/job creation Affordability Demand and Supply Interest rates

Let’s look at

Basic Principles to study

Most important…

Inflation or Deflation?

We at JREI believe in Inflation as a certainty

JREI has held the

multi-year position...

…that Hard assets are inflating worldwide!!!

Milton Friedman:"Inflation is primarily a monetary phenomena"

This slide is 14 years old

Are we telling the truth on inflation? It is not 2%! Shadowstats.com

More inflation… the outcome….always!

Exactly what we have seen for 50 years

(My book ‘Forget about location, location, location’ (1998) )

In 1998 – the average price in Vancouver

was $278,000

But Ozzie – it is clear it is deflation!The world has always been full of

naysayers• America’s Great Depression, Murray Rothbard, 1963; How

You Can Profit from the Coming Devaluation, Harry Browne, 1970; The Coming Credit Collapse, Alexander Paris, 1974; How To Profit From A Monetary Crisis, Harry Browne; The Invisible Crash, James Dines, 1975; The Coming Deflation, C. V. Myers, 1976; How to Prosper During the Coming Bad Years, Howard Ruff, 1978; At the Crash of a Tidal Wave, 1995 and Conquer the Crash, 2002, Robert Prechter; The Crash of ‘79, Paul Erdman, The Crash of ‘80, Paul Erdman, Panic of ‘89, Paul Erdman; The Great Depression of 1990, RAVI BATRA; How the World Will Change in the Great Depression of the 1990s, James Dale Davidson and Lord William Rees-Moog; The Death of Inflation, Roger Bootle, 1996, Money for Nothing, Roger Bootle; Bailouts or Bail-ins, Nouriel Roubini and Brad Setser, 2004, The Great Depression of 2010, Harry Dent

But Ozzie – it is clear it is deflation!

• 1982 – Crash in Vancouver

• 1987 – Stock market crash

• 1989 – Savings and loan crisis – 787 banks closed in US

• 1990 – Tough market – 5 year rate 13.5%

• 1993 – Currency crisis

• 1998 – Currency wars – Russian crisis – Mexican crisis

• 9/11 – Deflation, deflation

• 2014 – in this room - ! Every time … Deflation is imminent!

• ALL PREACHED DEFLATION- BUT WE WENT THROUGH THE VALLEYS…. And had more inflation.

Massive changes are taking place (in 2001 here)

Shift will continue to be from paper assets to hard

assets

Inflation - deflation ? The likely outcome? INFLATION!

I have been in the Real Estate Business for 45 years

Inflation is good for Real Estate

LAST YEAR we said: It is a mad world…

• Outcome in uncertain times? The rich will continue to look to park their money

• The rich will continue to flee emerging markets and collapsing currencies and are stampeding into

• London Real Estate (high end residential and commercial!) and other world-class cities – yes including Vancouver, Toronto and Montreal.

• The rich will buy anything and pay any price for things of value….INFLATION ROLLS ROYCE

I SPENT THE SUMMER IN EUROPE

• Real Estate values are rising in Switzerland, Sweden, Norway, Finland, France, Germany

• London up 14% - over 1 million 18%

• Dublin up 18% - residential

• Spain – George Soros Fund

• I WILL SPEND 2 MONTHS IN EUROPE THIS YEAR TOO

Current hard asset inflation worldwide is already a fact

India, China and a slew of

other Asian markets are experiencing huge real estate inflation Source: Roubini Global Economics

Why Real Estate?

REAL ESTATE

Physical asset

Local in nature

YOU can control

WHY IT IS BETTER than MOST other investments?

REAL ESTATE HAS:

LEVERAGE, your cash investment maybe 25% or 5% (as an owner)

IT PRODUCES AN INCOME

MORTGAGE REDUCTION (over time) –

Over half the payment going to principal – paid by tenant

CAPITAL APPRECIATION GAINS –(spectacular gains!)

You have control over your investment

Real Estate investment you can affect the outcome personally!

Flexibility:

Timing

Trend

Study cycles

You can add value

Inflation will help real estateReal Estate offers many ways

to make money.

You can:

• Assign it

• Mortgage it

• Rent it out

• Lend on it

• Grow stuff on it

• Leverage it

Unique advantages and flexibility

REAL ESTATE?

In US:

Defer capital gain – forever

You can write off interest against income

In Canada:

You can defer your capital gain for up to 5 years (by carrying a mortgage)

REAL ESTATE HAS HISTORY!

Home price increase

2014 Investor with 25 % down payment

(Mortgage redux)

Homeowner returns with 5 % down payment

Real EstateLast year I asked you

to:

Buy Phoenix and Las Vegas, Austin, Houston, San Diego

Our RETURNS on full price are up 14% - 29%

On DOWNPAYMENT? Spectacular gains!

Find out what we recommend this year!!!

Real Estate Action Plan: Goal?

So? Actually based on history

Everyone should buya condo every 5 years!

(imagine that you had!)

BUT WHAT IF THERE IS NO INFLATION?

Take a 300,000 mortgage at 2.9%:Nearly 50% of the payment is going towards principal!

• (Monthly payments are $1,402.86 per month)

• Mortgage balance after 5 years is $255,880 or $44,120 (52% of all payments!) has been paid off!

Inward migration

Net international immigration to B.C. jumped 16% in 2014 to 35,640, There will be 50,000 by 2017 – most settle in LM

Korean or China bank set up in British Columbia, rather than say New York State or even Washington. 100% corporate tax break

The Immigrant Investor Venture Capital Pilot Program says each investor will be required to have a net worth of $10 million and make a non-guaranteed investment of $2 million over 15 years. These funds will be invested in “innovative Canadian-based start-ups with high growth potential”.

Overseas buying of businesses – hotels – golf courses

Interest rates5 year money – still available at below 2.7 %

Variable as low as 2.05%

LIFE TIME LOWS…!

Short term versus long term..

Investors don’t worry about interest rates…WORRY whether you get the money at all at re-finance!

What is Poloz doing? Poloz warned we are ‘the most indebted ever’

Poloz warned house prices are 30% over valued

Then he brings DOWN INTEREST RATES to easier to buy?! What gives?

What does he know that he is not telling?

Outcome?

Will he shorten Amortization period? DP increases? GO long on your mortgage now!

He must do something or we will continue to have higher prices

What about affordability?

We have never been affordable in Vancouver

You want to live here or in London, New York, Hong Kong …you have to pay the price

Affordability matters only in small towns

Supply and Demand

23 year history in our 2015 OUTLOOK ISSUE

49-page Outlook 2015 Forecasting issue

All this and more is covered in this BRAND NEW issue:

5 best places to invest in Canada5 best places to invest in the US

5 best suburbs in Vancouver, Toronto, Calgary, Edmonton, Phoenix and Las Vegas for cash flow

5 best ski resorts with potential5 best small towns in BC

5 best towns in Alberta

What to buy and what not to buy.Forecasts for 2015 for Toronto, Edmonton, Calgary, Vancouver, Okanagan Plus Phoenix, Las Vegas,

and other US markets. Only $49

Outlook

THE WORLD?Top 5 places to retire in the world … Europe?

SpainPortugal

Cheap and you get a residence passport?

And.,,George Soros buys here

What about the US...

Will it survive????

Will the US survive?...17 trillion economy!A 13.2 Trillion economy!!!

a

NO QUESTION ABOUT IT ...

..IT WILL SURVIVE!

(This slide is 6 years old)

Yes, but the enormous debt???

It is not the debt…it is the ability to

service the debt that matters

The world is lending the USA billions for 10 years at 1.8% !!!

JREI has argued for years that the policy of devaluation does not work

We researched Greece, Germany, Russia, China, Europe, Britain

THE USA IS PROOF !!!Fastest rising economy and a soaring dollar

at the same time!

The USA is the locomotive for the world

Best employment picture since 1999!

Export growthHousing growth

Margaret Thatcher

Ozzie recommended year 2010-2014

Mesa + 17%

• Avondale: 2010 - 109,000

2013 - 150,000

• Laveen: 2010 - 129,000

2013 - 164,000

• Goodyear: 2010 - 167,000

2013 - 215,000

• Glendale: 2010 - 132,000

2013 - 180,000

• Mesa: 2010 - 160,000

2013 - 202,000

Last year Ozzie recommended

In 2014

• San Diego +17%

• Phoenix +30%

• Las Vegas +21%

• Seattle + 4%

• Austin +15%

• Houston +29%

• PLUS MASSIVE CURRENCY APPRECIATION…OUR INVESTORS ARE IN LVOE WITH US!!!

What about buying with a depreciating Canadian dollar?

REMEMBER, THE MOST IMPORTANT THING IS TO HAVE A GOOD DEAL!

Let’s look at investing in the US whether the dollar goes down, up or stays the same in say 5 years.

To simplify let’s assume that we want to invest $100,000 US and we expect as well a $100,000 profit at the end of 5 years (comprised of annual cash flow and capital gain). We then sell in 5 years and repatriate our investment of down payment, cash flow and profit back to Canada.

CANADIAN $ INVESTED IN US REAL ESTATE

Step 1 Canadian $

same

Step 2 Canadian $ up

Step 3 Canadian $

down

DOLLAR STAYS THE SAME AT $.80CTS:

• Invest $120,000 Canadian (Approx. $100,000 US) and make $100,000 US profit in 5 years.

• 5 years later you get back $120,000 Canadian plus $120,000 Canadian (US dollar profit) = total: $240,000 or a profit of $120,000

DOLLAR GOES UP TO PAR $1.00

• Invest $120,000 Canadian (Approx. $100,000 US) and you make $100,000 US profit in 5 years.

• 5 years later you lose on the exchange and get back $100,000 and you get $100,000 profit = total: $200,000

• or a profit of $100,000.

CANADIAN INVESTED IN US REAL ESTATE

DOLLAR GOES DOWN TO $70CTS

• Invest $120,000 Canadian (Approx. $100,000 US) make $100,000 US profit in 5 years.

• 5 years later you get back (approx.) $128,000 Canadian plus $128,000 Canadian (US dollar profit) = Total: $258,000 or a total profit of $136,000

YOUR WORST CASE STILL GETS YOU A SUBSTANTIAL PROFIT

IN YOUR BEST CASE YOU BENEFIT FURTHER

• You lose on the exchange going in, but you win on the profit in US dollars when you repatriate.

• BUT ONLY if you have invested in a good deal!

•  

CANADIAN INVESTED IN US REAL ESTATE

We still like...

Las Vegas Phoenix Scottsdale Portland (We dropped all oil states)

Buy where prices have fallen 20 - 30%... volume is increasing sharply

We still like to buy in the US...

Mesa (We own over 400 units here) Scottsdale (We bought 70 units in Scottsdale in December Glendale (We have 120 units under contract)

For all suburbs we like in Vegas and Phoenix look at Outlook Issue

Come to booth and register

Blue card – 1. Win an I pad – Mini Plus 2. win a $300 consultation with Ozzie Jurock

• Want info on?• “How to Structure a US Joint Venture” Seminar

• Monthly Real Estate Investor Meeting

at the REAL ESTATE ACTION GROUP – www.REAG.CA

• Buying Real Estate by using your RRSP

•Sign up at our booth…

Canada

• Residentially, there are 2 kind of markets….

• The very rich and everyone else. Very rich doing fine…

• Most others markets will remain flat.

Canada Top 5: Last 2 years Ozzie recommended(Canada Recommendations for last year alone are up 5% - 30%)

• 2013 2014

• Terrace +14% 18%

• Kitimat +15% 24%

• Ft. St. John +18% 12%

• Edmonton +5% +8%

• Calgary +6% +10%

Canada top 5:

This year we dropped all oil producing provinces.

Still buy a house in Calgary and Edmonton – but investors stay on sideline

Great time to make real stink bids on new condos here• This Year :

• Etobicoke

• Hamilton

• Surrey

• Richmond

For 2015 in BC we like

Prince George Kelowna

In Lower Mainland we like Richmond Surrey Langley East Village – Vancouver East Burnaby-Coquitlam-Tsawassen

BC Ski resorts We like

Whistler – bottom in place – US dollar

Sun Peaks

Fernie

Kimberley

WE’LL BE OK

…long term – all positive

•Vancouver increased by 1 million people between 1981 – 2011

•IT WILL INCREASE ANOTHER MILLION BY 2041!

•IN ONLY 2,900 SQ KMS.

•HUGE CAPITAL INVESTMENT

•CAPTIVE AREA ON THREE SIDES

Still buy:

Trailer parksMini Storage

Strata warehousesIndustrial landCash flow ALL

Don’t buy:

Hotel CondosTime Share

Quarter ShareCommercial

Office Farmland in Prairies

Be very careful…outsideBuy cash flow - anywhere in

USA and CANADA

Do NOT buy anywhere else

For capital gain:

Go --- Where new jobs are

Go ---Where the rich play

For cash flow – go to US

8 astounding predictions

1. Massive money printing means continues – QE 4 will be necessary

2. The bottom is FIRMLY in place in the US real estate market.

3. Vancouver will become a Financial centre powerbase in Canada by 2016.

Korean or China banks and other multinational companies will set up in British Columbia -qualifying international business - and their employees. 100% corporate tax break

BC will do more business with China – Harper’s new Remnbi deal

Foreign buying of commercial / hotels/businesses will accelerate

8 astounding predictions

• 5. Site C Dam will be built. All LNG plants will be built by 2018

• 6. Poloz will reduce interest rates again in March and will announce new rules for mortgage lending…Higher DP and/or shortening of Amortization periods

• Federal Government brings in foreign investment restrictions on private investors – or tax penalties like Hong Kong, Australia, Austria and elsewhere – BUT embraces the rich

• 7. More people move back into the city everywhere– lifestyle

• 8. People will use more real estate apps: Realtor.ca, Realtor.com, Loopnet.com, Zillow.net !!!

• JUROCK REAL ESTATE INSIDER will become the largest real estate newsletter in North America --- JREI NEW APP!!!

• You will type less and talk more…Siri --- BUY: Dragon soft ware

• There will be valleys – but we’ll walk through them –ALWAYS!

Must do now!Remember dear Real Estate Investor these are crazy times

…uncertainty will persist … expect the unexpected

…the occurrence of Black Swan events are growing in frequency

1. Protect what you have---it is paramount

2. Sell your losers now – keep cash flow – buy more cash flow

3. Get long term financing in place now on all real estate

(not because of interest rates – but further restrictions to slow down RE markets)

4. Have some cash ready - up to 50%…There will be smashing opportunities

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Gst

The best market...

...is between your ears!

We live in paradise

THE WHOLE WORLD IS LINING UP…

…at our immigration offices…

YOU are already here!

…don’t allow the negative

rust to settle in your mind

The nay-sayers will always be there….

ENERGY....ENTHUSIASM ...AND EMPATHY!!!

Live your life....with

Emanuel Kant:"To be is to do"

Nietzsche:"To be is to be"

Sinatra"Do be do be do"

You are here to have fun - like it or not!

...DO SOMETHING!!!

...and have fun doing it!

Get up happy!

Whatever you do...

Have a bubble bath

Live a self-actualized life!

In the end...

It is all about

becoming....

A human being...not just a human doing...

It is

all

about

allBECOMING

Go for the bird on the roof...

...a bird in the hand makes it hard to blow your nose!

Canada’s commercial markets under pressure

Commercial and office markets in Calgary and Edmonton under great pressure (Third quarter 525,000 sq. feet negative absorption)

Lower Mainland commercial markets dropped by 30% in sales volume - lowest since the start of 2013

Industrial down 15 %

Office and retail down 23%

Retail space under pressure – big box stores do not hold customers

Note! Building activity foretells future!

Nobel price winning economist ---Vernon Smith studied for 60 years---he found

Builders stop building – they act first!

NOTE: Calgary has is experiencing a third monthly drop of building starts

2 Toronto builders stopped building – give back deposits to pre-sale buyers

2 builders convert buildings to rentals!

Main Forecast Long term all prices will be higher because

of inflation

Long term all prices will be higher because of a power shift East to West - Vancouver will become the financial centre.

Short term all prices will decline in oil provinces