In Canada Government had increased prime rates to slow down the growth in economy and inflation. There was a big recession in the real estate and in general all over market had no money and because of lot of bankruptcies properties became empty and there was no buyers for land as demand had completely dried up and people were moving out of province because of political reasons.

I kept on borrowing new money at fluctuating heavy interest rates which went up to 17 % when Government started increasing prime rates. When you borrow money on land banks also charge higher interest rates and they also charge heavy lending fees and closings costs. I also end up giving them our personal guarantees and cross collaterals on our other properties. Most of the banks don’t lend money on land as it does not have any cash flow. When the development stops for many years and there is no demand for land then prices of lands don’t go up and you still have to pay interest on your borrowing and taxes. So don’t borrow money and invest in land for speculative purposes if you are not absolute positive that development will continue plus you are ready to develop it right away. If you have your own money in savings which you don’t need right away so that if values of land don’t go up then you don’t have to pay interest and capital to the bank you can speculate on bank. Land does not need any management it can be very good for investment if you have etc money lying in low interest bearing savings account which you don’t need right away and new jobs come in your area where you have land.

Province of Quebec which is a French speaking province wanted to separate from rest of Canada so lot of English Canadians and English speaking population started moving out of Quebec. All the big company head offices had started moving out of Montreal and most of them they moved to Toronto and to Calgary where lot of new jobs were created in the oil drilling and Vancouver. Toronto, Vancouver, Calgary started booming as most of Quebec Head Offices moved to Toronto and other cities. No one was investing in Montreal. Lot of people came from Hong Kong when England was giving Hong Kong back to China as it was easy to get emigration in Quebec then rest of Canada. But most of these people from Hong Kong once they got their emigration they moved out of Quebec and left for Toronto or Vancouver. Quebec in Canada became the worst place to invest in the real estate. French Canadians had such a hating and separatist attitude that English people had very hard time in living in Quebec. French Canadian Government policies were not favorable for any new investments and even existing businesses were moving out. Land values had dropped and did not go up for next ten years. Rents dropped down between 1987 and 1997 and Government was broke so they heavily taxed people and property taxes went up by more than double in some cases. As there was no demand we ended up losing properties as we could not pay property taxes and State taxes on Capital to the Quebec which was a tax on borrowing.

I had land for 600 homes in Quebec .I realized that Quebec will not have new industries and high unemployment rates and there was no way to make any money in French dominated Quebec areas. Then in 1990 I decided to move to USA. I had never thought that I will lose everything in Quebec in the next coming years. I kept on paying interest and taxes and was not able to sell any land in Quebec. We lost most of our assets in Montreal like lot of our other friends in the next many years in Quebec.

One of my biggest mistakes was that I sold most of my commercial good income producing properties which were in Montreal paid lot of capital gain taxes which in some cases took away more than 35% of profits and invested money in land in French dominated areas of Quebec where there was no growth and jobs were disappearing.

I came to retire in Florida, but I ended up working again. I had brought close to a million dollar to invest in Florida. I bought my own personal house from a bank. Contractor had borrowed money and had left this home unfinished. I bought the house close to $100000.less then the market value of homes in that area. I also bought few free standing commercial buildings as well as one run down shopping center. Free standing buildings were empty and bought them from people who were living out of town or in an auction. These were distressed properties and I opened my own floor covering stores in them. Within few years I was able to acquire few more commercial and industrial properties which were empty when I bought them and then I renovated them with a very small amount and leased them. Now most of commercial buildings we own either they are now leased out to other tenants or we have our own stores in them. But all these properties have a very good cash flow and have appreciated in value by more than three to six times in the period of fifteen years. We again have built back multi million dollars of equity in our real estate and businesses. In Quebec also prices of land has gone up and overall Canadian Economy is doing much better. Canadian Dollar has become very strong. I will soon starting subdividing those lands and at least get all my investment back with some profits. Remember basic principal is real estate always goes up in value it may take years but if you have holding capacity you will always make money.

By Ashok of http://becomerichinfiveyears.blogspot.com

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