Kerry Gold, The Globe and Mail, February 28, 2014
His desk has a large gleaming knife sticking into it at the corner, dramatically, as if someone got angry and left it there as a threat. On the floor is cowhide and on the wood-panelled walls, there are mementos such as snowshoes, antlers, and pictures of John Wayne.
Rudy Nielsen’s large New Westminster offices feel more like the set of a western than B.C.’s largest provider of real estate data.
Anyone who keeps up on real estate will know his company’s name. Landcor Data Corp. regularly makes the business and real estate pages for its comprehensive reports on all things to do with B.C. property. And we are a province that is obsessed with property – what it’s worth, what it will be worth, and who’s buying it.
In B.C., the impact of property development, in terms of gross domestic product, is around $8.2-billion, followed by the natural gas industry at $7.8-billion, and tourism at $7.4-billion. The film and television industry is way down the list at around $1.4-billion, according to figures supplied by the Urban Development Institute last year.
Property is big business in B.C., but anyone who lives here already knows that.
The man behind Landcor has been playing the B.C. property game his entire life, as a logger, a renovator, a flipper, an appraiser, an agent, an agency owner, a cattle rancher, a landowner, and now as a real estate analyst. This year, he celebrates the 50th year since he became an agent, although he gave up his licence in the eighties, when he decided to become B.C.’s biggest private property owner instead.
Lately, he’s been shifting gears, selling off acres of properties owned by his Niho Land & Cattle Co., as demand grows for real estate analysis. He once owned 450 properties, and he’s now down to around 200, all of it cattle, fishing or farmland, or “anything without a house on it.” And he still owns LandQuest, a real estate company that has 24 agents around the province, specializing in rural properties.
With access to B.C. Assessment records, and in partnership with mapping and demographic companies, Mr. Nielsen provides automatic valuations, monthly assessments and detailed breakdowns on 1.7 million properties in B.C. His database holds B.C. sales going back to 1972. His long list of clients includes mortgage lenders, banks, municipalities, developers, utilities, insurance companies, and private homeowners.
In his boardroom, Mr. Nielsen shows me a fascinating, although anonymous graph of the loan-to-value ratios for all mortgage lenders – in other words, the amount of the loan compared with the actual value of the property. A bank commissioned the report.
One lender soars above all others. “If the market went down 10 per cent, they would be underwater,” says Mr. Nielsen.
Landcor also supplies a steady stream of media-friendly data. It determined that 74 per cent of luxury homes in Vancouver had been purchased by Chinese buyers in 2010, at a time when there had only been speculation.
But that’s only half the picture.
Mr. Nielsen’s life experience offers perhaps the best real estate lesson of all, particularly the story of how he went from a poor kid with nothing, to a man worth $7-million who got cocky and ended up on the hook to creditors for $1.8-million.
He recalls going to court in 1981 and trying to convince the judge he only had $45 to his name because nobody would believe he had nothing left.
“At first, I used to tell everybody that the recession got me, but to tell you the truth, it wasn’t the recession,” Mr. Nielsen says. “I could have survived it, I had so much land. The reason was that I was a smart ass. I made so much money I thought I was indestructible.
“The desk I have right now cost $180. In those days, I had a $10,000 desk. I couldn’t spend money fast enough.”
Incredibly, over an eight-year span, Mr. Nielsen dug himself out of that hole. In the first four years, he paid off his creditors, and went on to build a real estate empire even bigger the second time around. But the pain of his humiliating fall taught him an economic lesson. “Today, I don’t have any debt,” he says. “I own everything clear title.”
Debt, especially in a volatile market, is a ticket to disaster, he says. The less debt you carry, the safer you are in any market. When the economy starts to look dire, he sells off properties.
But to get to that realization, he needed to climb a mountain first, and he means literally. As his world collapsed, he took a break and got into his beat up car with his dog, a fishing rod and a rifle, and drove far north. He and his dog hiked into the forest, built a lean-to, and lived off trout and grouse for 10 days, until he figured out a solution. The solution turned out to be a new mindset.
“I sat down and thought, ‘If I go bankrupt, a lot of little guys are going to go broke because of me, because I was a smart ass.’ Then I thought, ‘what have I got going for me? I know how to log and I have an appraising ticket. You can’t take that away from me. I have my motivation. I have my sons.’ I realized that if I had all those things going for me, what the hell was I worried about? I walked out of those mountains, made a deal with my creditors, and I started doing appraisals.”
He did appraisals for the bank for $20 apiece, five a day. He did $4,500 worth of appraisals for construction mogul Ben Ginter, whom he’d met in Prince George. Like Mr. Ginter, Mr. Nielsen had grown his early fortune in Prince George. He worked in his 20s as a real estate agent, selling off vacant lots. The emergence of pulp mills in the area made for a booming market, which helped him get his start. Mr. Ginter, well known to British Columbians for his famous Uncle Ben’s beer, had made a fortune and lost it by 1976. Mr. Nielsen sent him a few notices for payment, but knowing Uncle Ben was in financial trouble, he decided to forgive the debt.
When Mr. Ginter recovered from his financial setback, he called Mr. Nielsen and offered to help him put together a deal with a Canadian insurance company that wanted to purchase great swaths of timber properties in B.C. Mr. Nielsen appraised 220 properties, put in an offer and closed the deal on behalf of the company. He netted a commission of $480,000, which was a lot back in 1982. For his part, Mr. Ginter declined a cut of the profits. Mr. Nielsen used the money to help pay down his $1.8-million debt, but he still had a way to go.
In his life before he went broke, he bought residential and commercial real estate, but the second time around, he gave that up. He understood horses, bears, fishing, and living off the land, so he stuck to what he knew. Because he had nothing, he went back to his first job, as a logger. He found a chunk of land near the town of Vanderhoof that was for sale for $45,000. He drove up and checked out the property and immediately saw the amount of valuable timber that was there.
He paid $500 as a down payment, which was all the money he had. He then approached the local sawmill and said: “I’ll lay my cards on the table. I only have $50 left in my pocket, and I need that to get back to Vancouver. I need $45,000 for this property. How about I log the property and give you the timber?” The log broker thought about it overnight, and the next day he gave Mr. Nielsen a cheque for $50,000, for the property and extra for expenses. He didn’t even ask for an agreement.
“He said, ‘you didn’t declare bankruptcy. You’ve almost paid back $1.8-million. That’s good enough for me.’”
Mr. Nielsen made a net profit of $225,000 selectively logging the land.
Between 1989 and 1999, he did 700 property deals throughout B.C., travelling from Yukon, Alaska and Alberta’s borders, to Vancouver Island and the Lower Mainland. He officially launched Landcor in 2000, devising an automated valuation model, or AVM, with a team of programmers.
In B.C., he says, our best year for residential sales was 2007, with $64-billion worth of sales. For the last three years, we’ve been doing about $45-billion in sales.
A key player in the future of Lower Mainland real estate will be rapid transit, and where it’s located, he says. Landcor recently figured out a calculation to determine the “sweet spot” around a rapid transit station where property values start to rise. It’s part of larger report on transit, and it’s only one of many the company churns out.
“I don’t have to work, but I don’t know what else I would do,” he says. “I have a gorgeous wife, the perfect marriage. When I get up in the morning, I plan my whole day in the shower. If I have problems, I think them through in the shower, and I don’t get out until they’re solved. I have a daily goal, a weekly goal, a monthly goal and an annual goal. If I reach my goal, I reward myself.
“If I don’t reach my goal and I get depressed, I reward myself, too.”