This small-town barber isn’t any smarter than you are. But he’s a part-time land speculator, and soon he’ll be worth $400,000. You could do it too

JON RUDDY January 1 1968

This small-town barber isn’t any smarter than you are. But he’s a part-time land speculator, and soon he’ll be worth $400,000. You could do it too

JON RUDDY January 1 1968

This small-town barber isn’t any smarter than you are. But he’s a part-time land speculator, and soon he’ll be worth $400,000. You could do it too


CARMAN’S BARBER SHOP is a one-chair establishment in Aurora, a town of 10,500 with no apparent beginning or end on Yonge Street 25 miles north of Toronto. The proprietor, Carman Minichiello, is 34 years old, stocky and amiable. His English is a-pretty good and his eyes are like ripe Salerno olives. Carman has a plump, hard-working wife and a 10year-old boy, Angelo, who watches as much TV as he possibly can. A passerby who dropped into his shop for a haircut might remark that Carman had done all right for himself, if the barber, in his garrulous way, described how he came over to Canada in 1955 from his father’s 15-acre farm near Avellino in southern Italy, an apprentice barber with a grade-three education and a $10 bill sewn into the lining of his coat. But the customer wouldn’t know the half of it.

The barber shop, it turns out, is the capital of an unsuspected empire of Minichiello realestate holdings. The proudest colony is a wellsituated 136-acre farm which Carman acquired in October 1966 for $75,000 — and for which, in October 1967, he turned down a sizable offer of $204,000. According to Robert Armstrong, a Newmarket, Ontario, realtor who made the offer, Carman told his brother-in-law he was holding out for $400,000.

He’ll probably get it. Carman Minichiello is a spectacularly successful example of a new kind of Canadian mini-tycoon, men of limited incomes who are living quite literally off the fat of the land. With gumption and big mortgages it's possible to parlay minimal assets into small fortunes in an incredibly short space of time, simply by buying real estate in fastdeveloping areas. Carman, who has never had a bank loan in his life, got started by acquiring a building in town on easy terms from one of his customers. He moved in upstairs and opened a coin laundry and, later, a dry-cleaning business (run by Mrs. Minichiello) in a store vacated by a tenant.

The barber kept moving up in the world — trailing his mortgages behind him. “I don’t deal in monthly payments,” he says. “People have given me open mortgages and I put in a few dollars on the principal whenever I can. My wife and I — we work very hard. We never go to bed before midnight. And how you lose on property north of Toronto?”

The Toronto area is Canada’s primary realestate hot spot, followed by the constricted lower coastal region of British Columbia, of which Vancouver is the hub. Next come Calgary and its redoubtable rival, Edmonton. Then it’s anybody’s guess. Apart from thç Yukon and the Northwest Territories, where the Department of Indian Affairs and Northern Development will still sell settlers “open” land for five dollars an acre and “other” land for one dollar, the whole vast country seems to be caught up in a land boom.

□ Near Charlottetown, PEI, a highschool English teacher sold two acres of pasture and woodlot with a nice view of Northumberland Strait to an aesthetic business executive for $6,500, having bought the land from a farmer for $1,500 two years before.

□ In the rolling Bragg Creek country 20 miles southwest of Calgary, a merchant paid $1,000 a decade ago for 20 acres of scrubby hillside and spent another $5,000 or so on a rustic cabin. Last year he sold the parcel to a lawyer for $50,000.

□ On Vancouver Island’s Saanich Peninsula, 18 miles from Victoria and about a million miles from Ulcerville, a middle-aged Calgary couple bought a 3.8-acre neck of wooded land in 1960. They paid $17,500 for the property, which had 1,100 feet of shoreline and a clam-shell beach, and they looked forward to building a little house there when they retired. Recently their plans changed and

they sold the land to a New York executive for $70,000.

1 bought my first piece of property in the spring of 1966 after concluding that life insurance, for all its hallowed image, is a pretty poor investment, and after taking a therapeutic beating in penny mining stocks. Last October when I was offered three times what I’d paid for my land I was not at all surprised. I felt that my 200 percent paper profit after 18 months was no more than I deserved, and I decided to hold out for more.

This sort of confident cupidity is typical of us nouveau dabblers in real estate. It is so simple. While stockbrokers keep saying things like, “Upside potential may supplant variegated downside drift,” Harvey Keith, the Toronto realtor, makes sense with, “God is still making people, but He stopped making land a long time ago.” On the face of it, there’s a law that says you have to make money on well-

located land, the good old economic law of supply and demand, bolstered by monetary inflation.

Nearly 150 years ago, John Jacob Astor said that the sure way to wealth was to buy property on the outskirts of a growing city. What Astor couldn’t foresee was the current ancillary boom in rural and recreational land brought about by mass prosperity and by the spaghetti-like spread of roads and highways. Nor could he foresee the extent to which small investors have moved into the traditional preserve of moneyed professionals, men who bought property as if they were playing a game of Monopoly with themselves as pieces.

Real estate is as multi-faceted as the stock market and small investment takes many forms, often related to changing Canadian life styles. A trend among city types is a visceral urge for rural land. When

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You too can be a land speculator

Several Canadian realty experts contributed to the following prospectus. When it was suggested to one of them that a lot of the advice was fairly obvious, he replied. "Yes, and so were the Ten Commandments.”

1. Bring money. It's still possible to acquire small lots of rural or recreational land for less than $1,000, but you should start with several thousand dollars that you can afford to forget about for an indefinite period. For $5,000 you can buy 10 acres of land within 50 miles of any growing city, or 20 to 30 acres if you use the $5,000 as a down payment, depending on finance arrangements. Bargains in land go first to him with cash. But the saving on a cash deal is sometimes offset by leverage — the ability to sell property at a profit before it’s fully paid for. The smaller the down payment the greater the leverage and profit potential.

2. Use the services of real-estate brokers, and never begrudge their commissions. Realtors who specialize in the desired kind of property are easily the best advisers. Make it clear to your realtor that your motive is profit. This gives him an extra incentive — the prospect of two commissions.

3. Join a syndicate — preferably one managed by a realtor — to invest in big or highpriced land tracts and urban real estate. Otherwise, leave the urban realty market to the experts. (Remember that, proportionately, bigger profits are made on raw rural land.)

A small investor should not gamble with his house in the city. If you sell for a profit it will almost certainly be absorbed when you buy another house, since you can't wait for a good deal or a buyers’ market.

4. In evaluating property, consider well the trite-sounding maxims and tips of realtors.

“The most important factors are ( 1 ) location,

(2) location and (3) location.” “People

move along highways." “An unusual quality — a view, a stream, etc. — increases the

value of any property and overcomes most faults.” “If you think a piece of land is a bargain, don’t quibble.” “Resist speculative fever. Find a quiet area where attention hasn't focused.” “Don't buy land just because it's cheap.” And here’s one tip that doesn’t come from realtors: Don't be stampeded into making a purchase by the real or imaginary “other prospect” who is always trotted out by realtors.

5. Don't sell too soon. Biggest profits reward the Biblical virtues of patience and fortitude. “The worst possible time to sell is when you have to.” “When the market’s right you can sell for any price. When it’s wrong you can’t sell for any price.” Accept that raw land is an expense until the day it’s sold, seldom bringing in any income toward taxes and carrying charges. A weekend farmer can sometimes make a go of it — if he happens to be the son of a farmer. The city slicker is best advised to use his rural holdings for family picnics.

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Rita Greer Allen, a free-lance broadcaster, received a substantial insurance settlement for a car accident in which she'd suffered a broken neck, she put all the money into 26 acres near Uxbridge, Ont. — “for investment, yes. but also because I wanted hills and a brook of my own.” McKenzie Porter, the journalist, divides his time between a 10-acre rural retreat and a small apartment in town, a civilized w'ay of life that will be adopted by tens of thousands of city-dwellers, Toronto realtors predict. Porter says he has already been offered three times his investment in the property. Other Canadians are finding new ways to acquire real estate in tow'n. An accountant and two journalists each raised $5,000 to meet the dowrn payment on a cavernous house, lived dowmstairs w'ith their families and rented out 1 5 rooms. The income paid interest on the mortgage, taxes, hydro and heating, and the partners slowly acquired equity in an appreciating property.

The city is the real-estate big time: volatile, perilous and enormously profitable. Causes and effects are multitudinous and sometimes obscure. A big European investment comes to Toronto instead of Montreal after De Gaulle's visit. ‘'A fair number of people without ties here have sold their property because of the uncertainty of the political climate,” says George Johnson, president of the Montreal Real Estate Board. Ottawa realtor Frank Sherwood explains why his city is the safest real-estate market in Canada: "Boom or bust, the civil service keeps on keeping on.” The planning director of Calgary predicts a jump in residential land to an average of $7.000 an acre in five to 10 years when a developers’ surplus is used up. In West Vancouver posh British Properties lots climb between 25 and 50 percent in two years. In northeastern Scarborough, a Toronto suburb, a provident German count is buying up land for cash, or so they say, although it would be difficult to prove. In Edmonton, Lamb Holdings Ltd. makes a 300 percent profit on 177 acres acquired in 1965. In Montreal two Jewish dry-goods peddlers, survivors of concentration camps in wartime Germany, take an option on some suburban land for $5.000 and sell it in less than a year for nearly $1,000,000.

The safest and often the only way for a small investor to acquire highpriced urban or suburban holdings is through a syndicate, which offers the protection of consensus and a shared r:sk. In a simplified example, 10 friends each put $5,000 down and acquire a block of land worth $400,000 in a prime location. One member is paid a small fee to keep the books and pay taxes. Presently the land is sold tor $500,000, which represents a profit, not of 25 percent, but of 100 percent — since the investment was $50.000. In a rising market, his leverage" gives the investors an edge over the lender, who is locked in for seven-percent interest (but whose principal is, of course, guaranteed).

A Toronto restaurateur and his four brothers-in-law formed a syndicate

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It’s riches for farmers who sell, then boredom in Cadillacs

eight years ago. Each member agreed to kick in a modest $150 every three months. Today there are 64 members and their portfolio, primarily in Toronto real estate, is worth $750,000. Realtor Harvey Keith advises a 10member syndicate that owns 40 properties, all appreciating. In Edmonton a syndicate of small investors has

built a two-million-dollar medical-arts building on 100th Avenue.

"Montreal has a lot of prestige and romance; Toronto is stable, rich and diversified.” Such is the estimate of Jerome Greene, a vice-president of Helmsley - Spear, Inc., the biggest holder of U.S. real estate (one billion dollars), who has been looking for

Canadian investments. At the moment Montreal is a buyers’ market, Toronto a sellers’. Mighty Metro trails New York and Los Angeles in total construction volume, but its per capita figure is said to be higher. If the apartments now under construction in the Toronto area were stacked like bamboo-curtained poker chips they’d

stand 60 miles high (and somebody, somewhere, would have enough money to rent the top floor). More significant to investors is the fact that four million Canadians live within a 50-mile ring around the city, a fifth of the country’s market with a quarter of its buying power. "We are the core of a forming megapolis from Oshawa to Kitchener and Niagara,” says Ernest Dempster, president of the Toronto Real Estate Board. The ebullient Harvey Keith sees the city oozing inexorably over the farm lands to Lake Simcoe. “The whole area is going to bust wide open,” he says.

Already booming are the townships near Toronto's creeping northern and western borders. (“People and money tend to move to the west of big cities,” says a developer. “You can’t explain it, unless they follow the sun.”) Northwest of Toronto, Brampton and the satellite city of Bramalea are the focus of a boomlet that has made more than 50 local farmers rich as cream, and listless as cows.

“They've been displaced from their land and they don't know what to do,” says Bill Doolc, publisher of the Brampton Times. "The younger ones buy big farms farther out but the old farmers just drive around in their Cadillacs. One farmer has taken trips around the world twice and he doesn’t know where else he can go. I was talking to an old guy recently who had sold his 200-acre farm in Toronto Township for $3,500 an acre. He was miserable.”

Mini-tycoons have been rushing in beyond Brampton to buy old farms and rural lots, for which there is an insatiable demand by latter-day homesteaders. Another hot spot is East Gwillimbury Township around the burgeoning town ofNewmarket. Prices of 10-acre and 25-acre sites have doubled, tripled, quadrupled. One man who paid $14,500 about 20 years ago for a 100-acre farm (and grumbled that he had been taken) has sold off 80 acres for $6,000 an acre. Ken Rogers, a Newmarket real-estate salesman, bought himself a farm two years ago and planned to live on it. “I just couldn’t hold onto it,” he says. “I asked an exorbitant price to discourage a man who was after it — $8,000 more than I'd paid a year before — and he told me to draw up the papers.” Speculative interest is moving north. Immediately below Lake Simcoe 10-acre lots are still available for as little as $5,600. But not, it seems clear, for long.

Farther north, in the Muskokas. the Kawarthas and Haliburton there’s a reverberating boom in waterfront cottage sites. (Back country, too, is increasingly salable. Toronto realtors are buzzing about Swiss money allegedly buying up Muskoka land for a satellite city.) Ted Bone, whose Shoreline Vacation Properties Ltd. controls land worth $1,000,000 in Muskoka, notes wryly that about 25 percent of the sales he and his partner make are to mini-tycoons who immediately plant their own For Sale signs, at quite a decent markup. That was more or less the way Bone himself got started 10 years ago, with a $600 investment on Skeleton Lake.

Bone, formerly a systems analyst at BA Oil, spends a lot of time hunting for likely shoreline in his Cadillac

convertible or 100-horsepower Mercury-powered outboard. He isn’t interested in buying anything less than half a mik, and he buys primarily from farmers. He has found that there is a market for any kind of shoreline, including treeless bluffs facing north across a weedy river. Even shoreline like that brings $20 a foot in Muskoka.

“Vacation property is the best way of getting started in real estate with a small investment,” he says. “You can start with $1,000 or less. Cottage land is going up faster proportionately than anything in the city. You could make a fortune just by buying up land 180 miles from Toronto that’s still selling for two to four dollars a foot of frontage. In a few years when the roads are better it’ll be $20 a foot.”

Although the summer cottage is largely an eastern phenomenon, in all 10 provinces scenic land on coasts and lakes, rivers, creeks, trout ponds and, in some cases flinty hills and clumpy prairies is changing hands like fivedollar bills. In the east the Ski-Doo, Stanfield winter underwear and other innovations and traditions have transformed the summer cottage into an all-year vacation home, making the cottage country a bigger opportunity for small investors.

At Mason’s Point and Schooner’s Cove near Halifax, cottagers typically put $20,000 into winterized second homes. Lots with 100-foot frontage on the nearby South Shore fetch from $1,500 (with no beach to speak of) to $3,000, and the demand barometer is rising. The Laurentians near Montreal are almost a suburb (the president of the Montreal Estate Board pays $1,100 taxes on his house in town and $750 on his vacation home) and Montrealers are pushing farther afield. Ottawa cottagers, too, are forsaking the expensive, established Laurentians, often ranging far enough west to bid for lots against Torontonians. From Winnipeg, cottagers move north, west, and east to the verdant, untapped Lake of the Woods area. In the western provinces there are few cottages hut many ocean-side or mountain - greenery homes whose owners

commute to the city all year long.

“This isn’t good farm land, it’s strictly dude land, and I wish I had some more of it.” So says Kurt Kuennecke, a Calgary realtor whose specialty is selling foothills to city commuters. A decade ago Bragg Creek land was going begging at $40 an acre. Today a scenic river lot brings up to $7,000 an acre and, says Kuennecke. “The cry is. Take my money! Take my money!’ ”

Land values around Vancouver

have jumped between 600 and 700 percent in the past 10 years, according to Leonard Bcultbee, a busy westcoast realtor. Some of the most spectacular climbs involve scenic waterfront properties, and some of the biggest winners, in true Vancouver style, weren't even playing the game. During World War II Leonard Moat languished in a Japanese POW camp in the Philippines and dreamed, not of dark revenge, but of an enchanted isle between Vancouver Island and the

lower mainland. He’d cruised past it in 1939. When the war was over. Moat hurried home and found the place, saved his money and, in 1956, paid $30,000 for a log house and 170 acres on a lagoon on Salt Spring Island — just about the hottest piece of real estate, currently, between BC and Japan. Moat says he has no intention of selling any of his paradise, and if he’s not tempted now he probably never w-ill be. Realtors say it would fetch one million dollars. ★