We're back from a little road trip.
We went down to El Salvador last week for Bitcoin Historico, the first Bitcoin conference held by the official government Bitcoin Office.
And wow, what a country.
The conference was held outdoors, in the gardens of the National Palace. It was a stunning location.
Not only is the country safe and the people friendly...there's a sense of hope everywhere.
They are clearly proud of the direction that El Salvador is headed.
Young people were excited that there were tourists now showing up.
Families enjoyed the new 7-story library in the heart of San Salvador.
Taxi and Uber drivers were literally "bragging" about how much progress has been made.
There were discussions of all the new classrooms being built, of the new hospital renovation, of a new diploma program being launched, of the new Nvidia chips arriving in the country, etc.
It was refreshing. It's like the government there was focused on things that actually mattered. Shocking, LOL!
Tourism was 2% of their GDP five years ago. It's now 18%.
It's funny what safety and a big presidential vision can do for a country.
And to be fair, they have a long way to go. There's still a lot of poverty and there's some controversy over President Bukele's approach...but overall I'd say every local we spoke to was excited about their home country. It was great to see.
OK, let's jump into some updates...
Our good friend Ben Rabidoux released some new data this week showing where we are in the condo market cycle.
Here's the latest on condo sales and condo starts...
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I'm not sure how aware the provincial or federal government are of this.
I'm sure they have some sense. The bank lobbyists and the builders are certainly causing some noise in Ottawa.
But here's what I bet they don't understand.
The federal government just announced a huge deficit.
In fact, it's the largest Canadian deficit in a "non crisis" period. The largest since the 1990s.
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What I don't think they fully appreciate is the sheer destruction of activity in construction and real estate markets, the resulting impact on revenues from land transfers, HST, capital gains, etc.
And, in our opinion, the government tax revenues are going to be a lot lower than they're even projecting.
Which means the next municipal and provincial budgets should also be disasters.
If we all think that the cost of groceries is high now, prepare accordingly.
The new M2 Money Supply (new Canadian dollars) that's needed to cover these deficits is going to debase your purchasing power even further.
But there is hope out there...
Check out the latest single family home building permits.
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It's in the gutter. The lowest reading since the 1980s.
If you are an investor with a single family home on a decent lot right now, you have a hard asset that's in demand!
We're looking at possibly converting one of ours from a 7-bedroom student rental property to a legal student triplex that would more than double the revenues and leave $5K in monthly cash flow...even after accounting for the financing to do the big reno.
We're seeing this happen on single family home lots right across Toronto and Hamilton.
Or if you just want to simply rent out a nice single family home, then you're in luck, positive cash flow is now back!
We're seeing resale single family homes sell in Hamilton for under $700K for the first time in ages and rent for around $3K a month. Wild!
To see positive cash flow on a straight rental like that is rare. We haven't seen that in over 10 years.
So the demand for nice single family homes continues to be strong.
You can run them as straight rentals, student rentals, you can rent-to-own them, add in a Garden Suite or Laneway house, or totally renovate and change it to a triplex (after you've checked zoning in the area, of course).
In a world where governments are printing new dollars like mad to cover for deficits that seem never ending...good homes in good areas will continue to be in demand.
There's opportunity out there right now if you know where to look.
And with the U.S. government opening back up and the refinancing of their debt staring them in the face right now, we believe the next six months are going to rather interesting.
We could be entering a period of multiple rate cuts in both Canada and the U.S., and money flowing around with bit more ease than it has been.
Let's see.
Tom & Nick
