Wednesday, April 20, 2022

Why Ford is Going to Win the Ontario Election

Why Ford is going to win the Ontario election

Ontario's Premier Doug Ford is one of the best from all retail politicians in Canada. Remember how he used his own car and shovel to help dig out drivers caught during the snowstorm? It made the news, and got all the attention. It played to Ford's image - a man of the people. Liberals hate him, but he knows how to do politics. Here are four reasons why he should handily win the election:

1. Justin Trudeau is the Prime Minister of Canada

Ontario is a smart province. The people of this province want different parties in power in Ottawa and Queen's Park. With the Liberals winning federally, Ontario would want a Conservative in charge of their province. Besides, if Pierre Poilievre succeeds in winning the leadership of the federal Conservatives, and turns hard right, this just plays into Ford's image as a centrist (which he is). Ontario loves their moderates.

2. The NDP and the Liberals are fighting for second place

Ford's opponents are acting as if he has already won. Do you even know the leader of Ontario's Liberals? Or recognize his face? And the leader of NDP has lost more elections than she can count. Their ideas seem all over the place as well. Liberals blamed Ford for not shutting down the province early on during the pandemic, and then held a rally. NDP, despite being on the left, supported the people not getting vaccinated as a "Charter right". Their criticism was seen as criticism for criticism's sake, and not as valid opposition. When you are seeing "doing politics as usual" you are going to lose.

3. The pandemic handling

Ford has certainly done some mistakes (I have called him out on this many times). He famously told people in March 2020 to go for Spring break and "have a good time". He was late in getting the province ready for the vaccination drive. He was late in many of the restrictions that would come into play. Yet, despite those mistakes, which every government made, he generally handled the pandemic well. Almost 90% of the province is vaccinated. Ontario had strict lockdowns, and strict vaccine mandates. Ontario kept the mask mandates the longest. Ford generally listened to the science and to the experts, even if it went against his own instincts. 

The right was angry at him for the restrictions and lockdowns, and left angry at the lockdowns and restrictions not coming down fast enough. When both extremes are mad at you, you are probably doing something right. Ford also rightly called out Justin Trudeau and the federal government for their lax security and screening (or rather, NO SECURITY and SCREENING) at the border. The 2021 autumn wave of the virus was purely due to open borders - a federal fault - that Ford rightly called out. His government, despite being Conservative, handled the pandemic with smartness and caution.

4. Keeping his promises

Ford kept most of his promises. He got shovels in the ground on Ontario's notorious on again off again public transit projects. The Crosstown is going to open soon, the Ontario Line and the Scarborough extension is well on their way, along with LRTs in other cities. He has removed the tolls on highways 412 and 418. He kept his promises to reform the education curriculum, be it sex ed or Maths. He has kept public spending in check (too much, in fact). In his battle against the teachers, the people generally support him. 

All in all, everything looks rosy for Ford. Yet, he has challenges in his second term. Healthcare in this province is at a breaking point. It is almost non-functional, except the bare basics. Education is going to be a rocky battle, as he has to take care of bigger classes, lower tax base, and a teachers' union that is in the mood for a fight. Other public unions are coming up for negotiations. Ontario is facing a housing crisis - with buyers facing high house prices, rising interest rates and higher mortgages, not to mention higher property taxes and utility costs. All these add up in higher rents, which harm renters. And the LTB is a pure disaster.

So... much fun awaits. For now, all roads lead to Ford.

Saturday, April 16, 2022

How To Buy A House Without Interest

The simple answer is that you need to come up with the whole chunk of money. If your house costs $1.4m, you need $1.4m plus the other closing costs (such as taxes, lawyers, etc.) and then of course, you can buy the house without paying a single cent in interest. 

(image courtesy: Mattamy Homes)

However, for the average person, such a big amount is not possible (and hence mortgages). So here are some schemes that can allow you to have some big returns, without going into interest, so that you can start to save and / or utilize the real estate market, without getting into interest. Please do your own due diligence, and treat these ideas as entertainment only. If they work, and you are able to finally buy a house of your own without interest, please remember me and my family in your prayers.

1. Partnership

Find 20 people, each of whom can pay $25,000. That gives you half a million dollars. As of 2022, this can be enough to buy a property in many places. In Toronto, you may be able to find a small condo. The further away you go, the bigger this property becomes. In provinces such as Nova Scotia, you can buy a big house for that money. Even in places like Edmonton, or some areas of Calgary, you can find a decent property for this. Of course, you need to buy in a place where you can put it on rent, and someone can be there to manage the rental property.

Now put it on rent. Assuming it earns around $2000/month, and property tax is say $5000/ year, and budgeting another $5000 for miscellaneous expenses, that gives each of the 20 investing partners a monthly revenue of $58/month. If the rent is $3000/month, that gives a revenue of $108.33/month. So you can be making rental income of $700 - $1300 per year.

Now assume your saving is $100,000 instead of $25,000. So you can do 4 such partnerships. Now you have the potential to earn around $4000 per year. But that is not the main purpose of these partnerships. The goal is to eventually sell the property. So say, in 4 years, the price of the property has gone up by $200,000. That is $10,000 for each partner. 

If you have invested in 4 such properties, you are now reaping a pure profit of $40,000 - all interest free, along with the rental revenue stream of those years ($1300 * 4 * 4 = $20,800), giving you roughly $60,000.

Cons: Obviously, this comes with ALL THE drawbacks and risks of partnership. There can be personality conflicts, trust issues, management issues, conflicts about vision, and so on. Thus you need a good lawyer to handle these issues upfront, and someone strong enough (in personality and integrity) to manage the whole venture. There are risks of renting a property (especially in Ontario). It's a business, so obviously it can be a loss (although with property, the chance is less if you do your homework). 

Moreover, the MORE partners there are, the less is your initial investment, but this also lessens your profit, and increases the risk. Inversely, if the number of partners is less, this increases your initial investment, but also increases your profit, while reducing the risks.

Ultimately, this allows you to participate in the benefits of the real estate without interest.

2. Assignment Sale

In this venture, you don't need a partner, but you need a capital of around $100,000 to $200,000 - depending on the city and the builder. Your goal is to buy a new property from a builder, but one that won't be complete for another 2-3 years, and has the potential to rise significantly in value. In Ontario, the Durham region right now has that potential. There are tons of builders who are ready to sell plans on paper, and will start building soon.

Find a reputable builder, such as John Boddy Homes, Mattamy Homes etc., and buy a property. What you will need is an initial deposit, followed by subsequent payments every couple of months, so that in six months you will be paying them around $150,000. What you get is an assignment - a contract that will allow you to buy the property once it's finished at an agreed upon price (say $750,000). You have already paid $150,000 - so you will need to pay the remainder - $600,000 - on closing in 3 years.

Now you wait. Remember, so far you have not taken any interest, nor any mortgage. You are paying NOTHING per month. A year passes. Perhaps another 6 months. You still have another year and half to go.

This is where you (or your realtor) start looking for people to buy this assignment from you. The value of this property may have gone up by $100,000 (real example from 2020-2021 in Durham). It has the potential to go up another $50,000 by the time the property closes. So in effect, you will be paying $750,000 total for a property that as soon as you get it, will be worth $900,000. 

You now have two choices. You can close on the property, and then sell it - but that would mean interest and going into mortgage. What you want to do is sell the assignment before you get the property. So someone will buy the assignment from you for say $250,000. In other word, they will pay you $250,000, and then assumes the contract with the builder as is, and will pay the builder $600,000 on closing (as your original assignment). 

So from the new buyer's perspective, they are getting a $900,000 property at $850,000. From your perspective, you have now made a profit of $100,000 (your initial deposit was $150,000 and you have sold this assignment for $250,000). 

Cons: Obviously, you are depending on the property going up significantly in value so that an assignment sale becomes profitable for all. If no sale goes through, you will have to end up closing the sale. There are also realtor fees and lawyer fees to consider, as well as the fact that some builders do not allow sale of assignments, or charge a fee to transfer an assignment (this fee can vary, and I have seen figures of $7000 for this). 

3. Leveraging Income Differential 

In this venture, you will be earning in a place where property is expensive, and cost of living is high, and so your remuneration is high. However, you will be buying a property in a place where it is cheap, but has the potential to go up significantly. 

So for example, let us say you are earning $150,000 per year in Toronto, but you are looking to buy a house in Saskatchewan where in certain cities, a whole house is available for $100,000 - $200,000. A year's (or two's) worth of total income savings (such as your spouse's) is enough to buy a property in many places in Canada. I know people who are living in Toronto but have bought places in Halifax or Edmonton, where it's still cheap (as of 2022). 

And then, you collect the rental income in the interim, as you wait for the property to appreciate in value. And once the property significantly appreciates, you can sell it off, and repeat the whole cycle again.

For some people, they do this internationally. Earning income in Canada, but buying property in Bangladesh, where the Dhaka market has gone crazy in the last decade. Others live in Canada but buy properties in USA, such as Florida, where they can use it for AirBnB or as holiday rentals.

Cons: Obviously the biggest drawback is that you need someone to manage the property where you buy it, as you do not live there, which can have its costs. You also need to find an area where the property is cheap enough so you can buy it without paying interest (as that is our main qualification criteria).For some people, they can combine this with the first idea. An example is a condo in Calgary, which can be bought by 3 people (rather than 20) together. Again, this comes with the risks of partnership, and also chances of property depreciation.


All these ideas are obviously business ideas, which always has the potential for loss. They come with other risks of real estate, such as potential for market crash, bad tenants, etc. The revenue stream may not be as rosy as depicted (especially in these uncertain times). None of them will give you $1.5m in a year. At the end of it, in hot markets such as Toronto, you can never save enough from normal streams to buy a house outright, since the rate of real estate increase is far higher. 

However, these ventures allow you to buy property and participate in the benefits and profits of real estate, without potentially paying a single cent in interest.