Some people dream. Others do. This house, it’s American owner, and its Dutch designer are doers. You’re looking at a 300 square foot cabin in the Vermont woods, which can also transform itself into 500 square feet home with the middle part becoming either a glassed-in solarium, or an open-air furnished deck. The roof and wall modules are made from prefabricated parts and can be shipped from the Netherlands to any location in the world for assembly.
There’s also room for a second bed up top in an 80 square feet loft. The cabin’s design is simple, elegant, and sparse. The surrounding landscape is meant to be the star of the show, not the building.
The Cabin ANNA’s base cost is 437,000 Euros ($661,000 CAD / $476,000 USD), so not cheap. The one you see below cost an additional $300,000 USD once you factor in the shipping costs, building a slab, installation, and running utilities to the site. It came to the United States courtesy of lawyer Yvette Lanneaux because of COVID. From Lawyer to FarmerYvette Lanneaux was a lawyer before the pandemic, but then she decided to buy a Babydoll Southdown sheep as a pet while stuck at home in Princeton, New Jersey, despite never having worked with farm animals before. Ms. Lanneaux took some online courses from the Cornell Small farms Program, the University of Vermont and Michigan State University. The content was so engaging, Ms. Lanneaux stopped practicing law, bought 60 wooded acres in Vermont, sight unseen, and launched a hobby farm. She cleared five acres, drilled a well, and slept on the flatbed of her truck. Sleeping in the truck got old, so she reached out to Caspar Schols after reading about his nature-embedded cabin, and what you see here is the end-result. Now she’s a full-time shepherd with six sheep, chickens and a guard-llama to protect them all. Plus, she has a modular cabin that sits on rails.
Pretty cool, dont you think?
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If you’re a realtor or mortgage broker in British Columbia, you will have passed through my office building at the University of British Columbia (UBC) in Vancouver. The Real Estate Division has its office on the 2nd floor, directly below mine, at the Sauder School of Business. I often see students attending classes in the evening, although I think much of the curriculum is now taught via Zoom. We also offer realtor accreditation and licencing courses for Alberta and Saskatchewan. Sauder received some good news this month when it was ranked the top university business program in Canada by Macleans’ Magazine. We share top spot for program reputation and research with the University of Toronto. Of the 10 years Macleans has been publishing its rankings, UBC Sauder has held top position for the last eight years straight. https://macleans.ca/education/best-programs-by-reputation/
I am also a social impact entrepreneur. I enter communities that need development, meet with city officials to learn what their town wants, and, if the right fit can be found, build rental housing. For instance, my Summerland-Magic Apartment Homes project (in BC’s South Okanagan region) began in 2023 as a land assembly on which 100+ purpose-built rental apartments would be built. I began sourcing the land 10 months ago and the project already met my social impact standard just be creating new rental homes. Tombstone Towns – Where the Elderly Stay Forever Summerland is one of many Canadian municipalities in danger of becoming a Tombstone Town, a place where lack of population renewal sees young people move away and not come back. This demographic time bomb is a man-made disaster in slow motion. The town has little rental accommodation - the rental vacancy rate is just 1.5%. Consequently, downsizers and empty nesters have nowhere to move to, so they stay in their large homes. This prevents new families from moving in because there are few rentable houses large enough for them. As this cycle continues over decades, Tombstone towns get hollowed out, lose their dynamism, and eventually begin to implode.
Heavy backing will be placed in walls, which will allow the installation of bed and bath lifts, if tenants need them.
Four six storey buildings will fit onto the one-acre site, which is on the edge of downtown Summerland. All services are within walking distance, which is great for seniors and families. The much larger city of Kelowna (30 minutes away) attracts most of the Okanagan’s regional development dollars. Which is why I’m motivated to build in Summerland, because who else will? Profits made in a small town are the same as those in a large one. Money is green, no matter where you earned it. A New Idea is Born For months, I thought building new rental homes was the end of the social impact mandate for this project. But then I learned in a recent pre-application conversation with Summerland’s planning department that the city is trying to open a hospital, but is $3M short of government funding. The old hospital was built in 1967, expanded in 1981, but then closed its doors in 2002. Summerland residents often have to leave town for basic medical care. The town’s GP’s are ageing too and would to close their practices. But there are no new doctors to hand over their patients to. Problem Meets Solution: Building a Medical Care Facility Entrepreneurs solve problems. This medical problem sparked my entrepreneurial curiosity and, as the conversation continued, a whole new aspect of the Summerland-Magic development was born. Plans are now being made to add a primary care facility on the ground floor of one of the four buildings. My developer partners and I will recruit general practitioners and other medical professionals to set up practices in this new centre. These professionals, who will come from across Western Canada, will also have the option of renting accommodation in one of the project’s other three buildings, creating a home-work separation, which also allows them to walk to work. That is a quality of life few urban areas can offer. Designing Unique Housing for Dementia Sufferers Additionally, the project will include rental apartments that are specially designed for dementia-sufferers. Dementia usually affects one partner in a relationship, while the other takes on a carer role. The Summerland-Magic project will allow the dementia-affected partner to live semi-autonomously in their own living space. The spouse will have the option to spend as much time as they wish with their partner, knowing they can always rent a separate unit in the building – or in one of the Project’s other buildings – for rest and self-care, because caring for an ill loved one can burn people out. Summerland Magic Apartment Homes is scheduled to begin construction in the spring of 2025. The land is under contract and the purchase will close in December. If you would like to make an impact with your real estate investing while also making a difference, please reach out. Investors are accepted on a first come, first served basis. The projected return for this deal is 18% for a three-year duration. Both registered funds and cash can be accommodated. This project has been structured so that both Canadian and U.S. investors can take part. Cameron The Educated Investor® Redgum Real Estate Founder | Owner Lead Instructor Law & Business Communications Group Sauder School of Business University of British Columbia Helping busy people achieve market-beating returns by investing in large, lucrative real estate projects they would otherwise not have access to Do Well by Doing Good
Build a Primary Care Medical Centre & Rental Housing |
We could have added lower-value apartments without lake views back here, but they would have been facing a car park and the rear of a nondescript, low-rise commercial building (right) we added next to the road. Economically, it made sense to have fewer apartments and to make them as exclusive in their design and proximity to neighbours as possible. Less is more. Buyers who are willing to pay $1M-$2M for a waterfront apartment expect this kind of exclusivity. |
Navigating COVID & the Economic Shutdown
The Oasis project began more than four years. Navigating the economic lockdown caused by the pandemic was challenging. We had four vendors go bankrupt during this time period, which saw their unpaid sub-contractors place liens on the property. It was no one’s fault, but everyone needed to be paid, so we were as much a victim as the subs who were left high and dry and the vendor companies that went bust. |
Summerland is a small community and finding skilled labour is not easy. My Cormode and Dickson business partners and I have such scale though, that we bring in teams of tradespeople from across Canada. It actually works out to be more economical. We even have a crew of Turkish drywallers throwing up board right now. They will work like crazy making coin until the cold weather comes, and then go home for winter to be with their families.
Thanks to all the stakeholders involved in Oasis. It’s the largest construction project the community of Summerland has ever seen. It’s also a great calling card for what Redgum stands for: real estate development with quality, innovation, and cost certainty.
Thanks to all the stakeholders involved in Oasis. It’s the largest construction project the community of Summerland has ever seen. It’s also a great calling card for what Redgum stands for: real estate development with quality, innovation, and cost certainty.
Oasis Site Visit with Caleb West, Cormode & Dickson VP
& Cameron Morrell, Redgum Real Estate CEO
July 3 2024
& Cameron Morrell, Redgum Real Estate CEO
July 3 2024
Composite rendering of the finished project
We’ve all had nightmare tenants. We’ve seen the horror stories on TV. I just got rid of one in Edmonton that tops my list of bad tenants.
It was a young woman whom I was helping out. She was clinically depressed, leaving home for the first time, and had never had her own place before. My property manager warned me that she might be a challenge, but we both agreed she deserved a chance. We agreed to accept her as a tenant.
All for nought. It turned out this person was a human dumpster fire waiting to ignite. Within a very short amount of time – weeks- this young woman revealed her true character. She had loud parties, upset the neighbours, did drugs, broke doors, refused to answer the door, left piles and piles of garbage when she vanished without paying rent, left discarded needles from illicit drug use lying around, not to mention blood stains and animal poop. The carpet is so damaged it will likely need to be replaced.
The damage deposit will not come close to repairing the unit. The cleaning bill alone so far is $600 and counting. And the unit is only 700 square feet. Here is what the cleaner’s invoice says:
COMMENTS OR SPECIAL INSTRUCTIONS:
Cleaning was completed on June 10, 2024. Upon entry into unit, there was an abundance of garbage, animal feces, and drug paraphernalia (bong and used needles). All appliances were cleaned and disinfected inside and outside, appliances moved and cleaned behind and around. Baseboards and walls were all washed.
This was more than a deep clean, it was a decontamination clean. There were animal feces throughout the unit, cigarette and joints in the bedroom, a used needle and a bong.
4 garbage bags were removed, food from fridge and cupboards. Light bulbs in the bathroom were replaced. Additional cleaning supplies needed to be purchased. Floors were vacuumed and washed as well as steam cleaned. Will need to return once more once carpets and repairs on walls are completed to ensure no dust is left behind.
I love the final line – the cleaner’s concern about dust. Such rich understatement.
Incidentally, this is a brand new building. The tenant was the very first person to live in this unit, which was pristine when she moved in.
My property manager contacted the mother – no response. She refuses to engage or help the young woman take responsibility for her actions. The father was tracked down too. He wanted nothing to do with his daughter or her damages bill.
Such is the life of a landlord. You take the good with the bad. Abusing trust in this fashion however, means I’ll think twice the next time an under-qualified, would-be tenant asks me to take chance on them.
It was a young woman whom I was helping out. She was clinically depressed, leaving home for the first time, and had never had her own place before. My property manager warned me that she might be a challenge, but we both agreed she deserved a chance. We agreed to accept her as a tenant.
All for nought. It turned out this person was a human dumpster fire waiting to ignite. Within a very short amount of time – weeks- this young woman revealed her true character. She had loud parties, upset the neighbours, did drugs, broke doors, refused to answer the door, left piles and piles of garbage when she vanished without paying rent, left discarded needles from illicit drug use lying around, not to mention blood stains and animal poop. The carpet is so damaged it will likely need to be replaced.
The damage deposit will not come close to repairing the unit. The cleaning bill alone so far is $600 and counting. And the unit is only 700 square feet. Here is what the cleaner’s invoice says:
COMMENTS OR SPECIAL INSTRUCTIONS:
Cleaning was completed on June 10, 2024. Upon entry into unit, there was an abundance of garbage, animal feces, and drug paraphernalia (bong and used needles). All appliances were cleaned and disinfected inside and outside, appliances moved and cleaned behind and around. Baseboards and walls were all washed.
This was more than a deep clean, it was a decontamination clean. There were animal feces throughout the unit, cigarette and joints in the bedroom, a used needle and a bong.
4 garbage bags were removed, food from fridge and cupboards. Light bulbs in the bathroom were replaced. Additional cleaning supplies needed to be purchased. Floors were vacuumed and washed as well as steam cleaned. Will need to return once more once carpets and repairs on walls are completed to ensure no dust is left behind.
I love the final line – the cleaner’s concern about dust. Such rich understatement.
Incidentally, this is a brand new building. The tenant was the very first person to live in this unit, which was pristine when she moved in.
My property manager contacted the mother – no response. She refuses to engage or help the young woman take responsibility for her actions. The father was tracked down too. He wanted nothing to do with his daughter or her damages bill.
Such is the life of a landlord. You take the good with the bad. Abusing trust in this fashion however, means I’ll think twice the next time an under-qualified, would-be tenant asks me to take chance on them.
canadian Tenants may be Liable to Pay their Landlord’s Income Tax Bills if the landlord lives abroad
25/4/2024
4175 Sainte Catherine West in Westmount, Quebec. David lived on the 5th floor.
David rents a fifth floor apartment in Westmount, Montreal. He likes it so much he stays there for 20 years. Two years after he leaves, David receives a disconcerting letter from the CRA. It claims he must pay tens of thousands of taxes owed by his landlord. David is incredulous. Clearly a mistake has been made. It shouldn’t take long to fix. But the CRA stands firm.
David sues. He loses.
David lodges an appeal. That appeal works its way through the legal serpentine and lands in Canada’s Tax Court. The outcome? David loses again, once and for all, and is ordered to pay his landlord’s tax bill of $43,650 + interest + a penalty + court costs.
This is a true story. It played out for years and concluded in 2023 in Canada's Tax Court as:
David sues. He loses.
David lodges an appeal. That appeal works its way through the legal serpentine and lands in Canada’s Tax Court. The outcome? David loses again, once and for all, and is ordered to pay his landlord’s tax bill of $43,650 + interest + a penalty + court costs.
This is a true story. It played out for years and concluded in 2023 in Canada's Tax Court as:
David’s landlord Sebastiana lives in Italy. She owns the Montreal apartment as an investment, but is not a Canadian resident. Canada’s Income Tax Act has a provision that imposes a 25% tax on certain income a non-resident receives from a Canadian resident, including rental income.
Under this rule, Sebastiana should have paid 25% of her gross rental income to the CRA. But she didn’t.
The government knows it’s hard to track down people abroad. To ensure compliance, the Income Tax Act also contains a provision that says this 25% tax can be claimed from the Canadian resident who made the payment, which the CRA did.
In plain text, any tenant whose landlord lives abroad could be liable to pay 25% of their gross rent costs to the CRA, even if they have no clue where their landlord actually lives.
The burden of knowing the residency background of the landlord is placed on the tenant. The tenant must then ascertain that the landlord will not be paying the 25% withholding tax, and respond by withholding 25% of their monthly rent and remitting this to the CRA.
Crazy stuff, but all legally defensible because it’s written in Canada’s tax statutes.
Under this rule, Sebastiana should have paid 25% of her gross rental income to the CRA. But she didn’t.
The government knows it’s hard to track down people abroad. To ensure compliance, the Income Tax Act also contains a provision that says this 25% tax can be claimed from the Canadian resident who made the payment, which the CRA did.
In plain text, any tenant whose landlord lives abroad could be liable to pay 25% of their gross rent costs to the CRA, even if they have no clue where their landlord actually lives.
The burden of knowing the residency background of the landlord is placed on the tenant. The tenant must then ascertain that the landlord will not be paying the 25% withholding tax, and respond by withholding 25% of their monthly rent and remitting this to the CRA.
Crazy stuff, but all legally defensible because it’s written in Canada’s tax statutes.
The Details of David vs. Sebastiana
The apartment was originally owned by Anjar Investments Ltd. Sebastiana was one of three Anjar shareholders, all of whom shared the same last name. It appears this was a family-run holding company. Anjar sold the apartment to Sebastiana in 2006.
It appears that Anjar was paying the 25% withholding tax until the 2006 sale, and Sebastiana continued paying it for four years after the transaction (until 2010). Because David began living in the apartment in May 1996, but the CRA only claimed unpaid tax for the years 2011 to 2016.
David signed a new three-year lease in May 2010 with Sebastiana as the lessor. Sebastiana countersigned from Italy, but listed a Quebec mailing address on the document. The lease also contained two phone numbers, one in Montreal and the other an international number. Her email address ended in .it (for Italy).
David met Sebastiana on three occasions: in 2010 when she delivered the lease, in 2014 or 2015, and once in 2017.
David is a small business owner and began paying his rent through his numbered company in 2011, so it’s his company that is officially on the hook for the tax bill. He says he was never told that his landlord lived in Italy.
It appears that Anjar was paying the 25% withholding tax until the 2006 sale, and Sebastiana continued paying it for four years after the transaction (until 2010). Because David began living in the apartment in May 1996, but the CRA only claimed unpaid tax for the years 2011 to 2016.
David signed a new three-year lease in May 2010 with Sebastiana as the lessor. Sebastiana countersigned from Italy, but listed a Quebec mailing address on the document. The lease also contained two phone numbers, one in Montreal and the other an international number. Her email address ended in .it (for Italy).
David met Sebastiana on three occasions: in 2010 when she delivered the lease, in 2014 or 2015, and once in 2017.
David is a small business owner and began paying his rent through his numbered company in 2011, so it’s his company that is officially on the hook for the tax bill. He says he was never told that his landlord lived in Italy.
How to win the Case
As worrying as this case is, David could not win his appeal by claiming it was unfair of the CRA to make him pay his landlord’s debt. Part XIII, section 250 of the Income Tax Act is unequivocal on this. His only chance was proving that Sebastiana was not living in Italy, but actually a Canadian resident.
His evidence was weak, though. All he had was the old Anjar business registration that showed Sebastiana as a shareholder of the family company, a social insurance number, and a TD Bank Trust account where he deposited his rent. The SIN was proof that Sebastiana had at one time lived in Canada, but it did not prove she hadn't left.
And so, David lost his appeal. He must pay his landlord’s tax bill.
It’s a grossly unfair outcome. How can a tenant be expected to background check their landlord to learn if they are living abroad? And how could they ever know if their foreign-based landlord is paying their Canadian tax bill? You sign a lease, you pay your rent, end of story.
But not in Canada.
His evidence was weak, though. All he had was the old Anjar business registration that showed Sebastiana as a shareholder of the family company, a social insurance number, and a TD Bank Trust account where he deposited his rent. The SIN was proof that Sebastiana had at one time lived in Canada, but it did not prove she hadn't left.
And so, David lost his appeal. He must pay his landlord’s tax bill.
It’s a grossly unfair outcome. How can a tenant be expected to background check their landlord to learn if they are living abroad? And how could they ever know if their foreign-based landlord is paying their Canadian tax bill? You sign a lease, you pay your rent, end of story.
But not in Canada.
This video belongs to KenMcElroy - so please visit his YouTube channel - but it is such a good 101 primer on real estate investing, it deserves a repeat here. Ken markets this video as how to make money in real estate in 2024 and 2025 because of an expected liquidation of multifamily properties by owners who can't afford their interest payments.
But it's really a basic illustration of how to buy real estate successfully.
1. Buy low. In this case Ken says lots of distressed properties will hit the U.S. market in the next 24 months as high interest rates bite. Same goes for Canada. Owners will be forced to sell - or go bankrupt. People bought properties at large premiums during the COVID go-go years when governments were shovelling stimulus money out the door, artificially juicing every kind of market: cars, hard goods, housing, electronics, shipping, labour, construction supplies. Real estate looked like a great bet. Prices were flying, but loans from banks were available for next to nothing, so real estate still seemed 'cheap'.
Real estate is a great store of value. But overpaying - for anything - is how you lose money, not make it, because loans must ALWAYS be paid back.
2. Make sure your income exceeds your expenses: Sounds pretty basic, right? Create positive cash flow on your buy-and-hold real estate by getting more rent than you spend on the loan, insurance, utilities, and so on.
BUT...when planning an investment property purchase, net cash flow calculations also require a set of what-if scenarios in the form of a sensitivity analysis. A sensitivity analysis creates new financial models in the event X happens. In this case, X is higher interest rates. For example, when modelling out the purchase of a new property in Excel, create five columns with a range of interest rates from best to worst in them, and model out future returns.
If you don't build in margins of safety in the event of interest rate increases, you are exposing yourself to errors through ignorance. We all knew interest rates could not stay near zero. We all knew inflation would rise - at least anyone with business sense and a basic understanding of economics did. The law of supply and demand may get suspended during bouts of irrational market exuberance, but foundational market principles never go away. Effectively managed markets always self-correct. Prices rebalance themselves, cheap cash goes away as banks tighten their loan books, and for those still able to refinance, the cost of money rises.
Those who bought property wisely will get bruised, but they will survive. Those who didn't include X in their planning will get burned. Then, those with cash who were waiting patiently on the sidelines for naive/inept investors to self-immolate, will scoop up all the discarded housing that the burned investors are forced to sell at bargain basement prices.
Such is capitalism.
But it's really a basic illustration of how to buy real estate successfully.
1. Buy low. In this case Ken says lots of distressed properties will hit the U.S. market in the next 24 months as high interest rates bite. Same goes for Canada. Owners will be forced to sell - or go bankrupt. People bought properties at large premiums during the COVID go-go years when governments were shovelling stimulus money out the door, artificially juicing every kind of market: cars, hard goods, housing, electronics, shipping, labour, construction supplies. Real estate looked like a great bet. Prices were flying, but loans from banks were available for next to nothing, so real estate still seemed 'cheap'.
Real estate is a great store of value. But overpaying - for anything - is how you lose money, not make it, because loans must ALWAYS be paid back.
2. Make sure your income exceeds your expenses: Sounds pretty basic, right? Create positive cash flow on your buy-and-hold real estate by getting more rent than you spend on the loan, insurance, utilities, and so on.
BUT...when planning an investment property purchase, net cash flow calculations also require a set of what-if scenarios in the form of a sensitivity analysis. A sensitivity analysis creates new financial models in the event X happens. In this case, X is higher interest rates. For example, when modelling out the purchase of a new property in Excel, create five columns with a range of interest rates from best to worst in them, and model out future returns.
If you don't build in margins of safety in the event of interest rate increases, you are exposing yourself to errors through ignorance. We all knew interest rates could not stay near zero. We all knew inflation would rise - at least anyone with business sense and a basic understanding of economics did. The law of supply and demand may get suspended during bouts of irrational market exuberance, but foundational market principles never go away. Effectively managed markets always self-correct. Prices rebalance themselves, cheap cash goes away as banks tighten their loan books, and for those still able to refinance, the cost of money rises.
Those who bought property wisely will get bruised, but they will survive. Those who didn't include X in their planning will get burned. Then, those with cash who were waiting patiently on the sidelines for naive/inept investors to self-immolate, will scoop up all the discarded housing that the burned investors are forced to sell at bargain basement prices.
Such is capitalism.
Cameron Morrell
Business Educator
Real Estate Developer
Social Impact-Entrepreneur
Venture Capitalist
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