The Accredited Canadian's Toolkit

January 25, 2024

Immigration- A.C.T.02024.01.25

Canadians have a low birth rate. This should mean population decline over time. You can see it in many families. My mother had eight brothers and sisters. I have three. Between we four siblings who are all in our 30s, we have four children, so the seven of us including our spouses are not replacing ourselves either. The population pyramid is upside down in my family, and in many families. This means unusual family dynamics compared to what has traditionally been true, where grandparents need to alternate Christmas and birthdays with the grandkids because there are more grandparents alive than there are grandkids. An upside down population pyramid creates a lot of pressure for the younger generation. The attention of my wife and I has been pulled toward our ageing parents as well as childless uncle’s and aunts growing needs as they age. Fewer younger people to support a larger, ageing population is a recipe for burnout and economic stagnation. The only reason we do not have a population decline and the extreme hardship associated with it is because of our immigration policies, and on a recent podcast episode I shared how economist Benjamin Tal said the only reason we are not in recession is because of immigration. Newcomers to Canada have been making the news as scapegoats for the housing crisis. I am familiar with immigrants to Canada because half of my staff are applying for permanent residency, and most of the new tenants that I have placed in the last couple years have been new arrivals to Canada, mostly university students and their families. The education pathway is very common for people trying to immigrate. They come for an education and integrate themselves into the community through work. I have found them to be extraordinarily hard-working, motivated and diligent. The brightest and most industrious people from other nations come here for a better life because life at their country of birth is very hard for them. I have heard stories of standing in lines and large crowds, attempting to get some cooking fuel and other basic needs. There is a housing crisis in Canada. We have a shortage because not enough new supply is being built. Most of our rental housing stock is from the 80s earlier. Foreign students have been blamed for the high cost of housing, which is not fair to them. There is new and hasty policies put in place designed to curtail the number of foreign students who come to the country and changing financial requirements on those who can stay. I’ve linked an article in the show notes where the publicly funded colleges of Ontario are complaining about the new requirements and how unfair they are. https://apple.news/AvwEelGqcRvq6ITIA_L9VUQ I have seen this firsthand hand with some of my tenants being forced to leave because they cannot afford the cost of living. They have high expenses, and frequently minimum wage jobs. To remain in Canada and have your visa renewed the rule used to be that they must show a balance of $10,000 in their bank account at all times. That dollar amount has now been doubled to $20,000. One of my good employees was told he would not be able to renew his work visa and his wife was not able to renew her study visa because they did not have the cash in their Canadian bank account. they have money in their foreign bank account, but they come from a country where the infrastructure is so poor it is impossible to withdraw funds without going there in person. This is the same place that has fuel shortages and food shortages at times so it is essentially a banana republic. If my employee was unable to show he had enough money in his bank account then he would not be able to renew his family’s visa. His wife is taking a masters, as well as working as a teacher at an elementary school part time. I believe that he and his wife and his son would be valuable members of our society if allowed to stay, so I loaned him the money he needed. For another staff member, I have hired an immigration lawyer to assist him with the application process for his permanent residency, because he has special skills I have not been able to find in Canada. I get the benefits of loyal, hard-working staff, and they get the benefit of a pathway to citizenship in a country that will give them and their children the opportunity to obtain prosperity that many Canadians take for granted. I hope this episode of the act show has given you a different take on the immigration story, and perhaps will make you think about how you can benefit from the trends. as a housing provider, my industry stands to benefit because population growth leads to GDP growth which leads to jobs which leads to migration which leads to higher prices of real estate and rent. The shortfall of housing we have is indeed a big problem that we are facing, but remember that the larger the problems you solve, the larger your paycheques will be.

January 25, 2024

Interest Rates- A.C.T.02024.01.24

Today’s headline news in my feed was that the bank of Canada has decided to leave the overnight rate at 5%. There’s speculation that the overnight rates will drop in the spring or summer. What does this mean for you as a business owner or investor? The availability of credit pumps up asset prices. If the cost of servicing debt is very low, there is more willingness to pay more for the fixed amount of goods and services in an economy. If the cost of goods and services increases, this is inflation. The central bank can set the overnight interest rate in an attempt to influence the cost of credit and thus the prevalence of inflation. What do interest rates do in my industry of rental real estate? Higher Interest rates makes it more difficult for people to qualify to purchase a house, this keeps people renting for longer and increases the Tenant pool. Where I have property, it is difficult and expensive to build new property so a larger tenant pool increases the market rent,. Lower interest rates allows for increases of real estate prices values. The interest rate is more of a neutral factor. Overnight interest rates affects Short-term debt servicing like credit card debt and variable rate mortgages. Most of my mortgage debt is in fixed rate mortgages which are priced based on the Canada mortgage bond of various maturities, so changes to the overnight rate does not affect my business much. The overnight rate is a neutral factor.

January 25, 2024

Inefficient markets (vehicles fleet management example)- A.C.T.02024.01.23