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How Iran is using ‘ghost ships’ to flout Donald Trump’s oil sanctions

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It sounds like something out of a pirate story, but the normally staid world of international trade has been beset by a flotilla of ghost ships in recent weeks, and they’re weighed down by several million barrels of trouble for U.S. foreign policy.

Iran is one of the world’s biggest oil suppliers, and according to official records, the country shipped about 1.8 million barrels of oil per day last month, a slight decline from August’s level and 40 per cent below a peak of almost 3 million barrels in April.

All things being equal, that figure is likely to plunge even more in the coming weeks, as U.S. sanctions aimed at forcing Tehran to negotiate a new nuclear agreement are set to come into force next month. If fully implemented and adhered to, the sanctions will cut Iran’s oil exports to zero as long as the rest of the world plays along.

But the Iranian government seems to already have found innovative ways around those efforts by moving millions of barrels of crude on the sly.

People who monitor global tanker traffic noticed a curious new development last month, as about a dozen tankers known to be carrying Iranian oil mysteriously turned off transponders designed to track their movements via GPS.

Under an international law known as the International Convention for the Safety of Life at Sea, ship captains must keep their  transponders — known as Automatic Identification System or AIS — on at all times. But sometimes vessels wishing to move about without as much scrutiny will turn them off, and so far the international community doesn’t seem too interested in stopping them

Iran has lately become a hub for the tactic. And the journey of one ship, the Dino I, is a good example of how it works.

On Sept. 4, AIS data shows that the supertanker picked up 2 million barrels of Iranian oil at Kharg Island, a massive fill-up station in the middle of the Persian Gulf. From there, the ship made its way through the Strait of Hormuz and into the Indian Ocean, where the ship went dark from Sept. 15 onward.

It reappeared on the grid more than ten days later while passing through the busy shipping lanes near Kuala Lumpur, Malaysia, and its transponder stayed on while it paid a visit to the shipping hub of Singapore a day later, on Sept. 27.

Then it vanished again for more than a week, before reappearing off the coast of Taiwan on Oct. 5. It then went dark for another few days before checking in off the South Korean coast and delivering its cargo at the Chinese port of Dalian on Oct. 13.

Dino I is not the only such “ghost ship,” as experts have called them, and the eyebrow-raising voyage seems part of a targeted attempt to evade the coming sanctions.

“They think they’ll throw people off the scent [and] they want to confuse what they’re picking up,” says David Adesnik, research director at Washington, D.C.-based national security think-tank the Foundation for Defence of Democracies, of what the ships are up to.

“We’re still puzzling through their precise motives,” he says, “but broadly speaking, it’s about the money.”

The threat of Iran being locked out of the oil market has pushed up oil prices in recent weeks. So deploying an armada of cloaked tankers allows Tehran’s leaders to have their cake and eat it too by selling just as much oil as ever.

Oil prices have risen steadily in recent weeks ahead of sanctions that will theoretically lock Iranian crude out of the market. (Larry MacDougal/Canadian Press)

“They’re doing it more because they embraced the media narrative that exports are down hard,” says Samir Madani, co-founder of ship monitoring firm TankerTrackers.com. “It helps boost the price of oil. They don’t want OPEC to go into higher production,” he says. OPEC refers to the Organization of Petroleum Exporting Countries, a producers’ cartel that includes Iran as a member. 

In the first 13 days of October, TankerTrackers calculated that Iran shipped an average 2.2 million barrels per day. That’s an increase of 10 per cent from what the company was seeing in September, and several hundred thousand barrels more than what’s being reported in the official numbers from OPEC.

Madani’s firm supplements rudimentary AIS data with other technology to fill in the gaps, and he estimates that official numbers sometimes only capture about 20 per cent of the tanker traffic at any given time. “The other 80 per cent is a cat and mouse chase involving satellite imagery,” he says.

This isn’t the first time that Iran has tried such chicanery. Iranian ghost ships last criss-crossed the seas to this extent between 2011 and 2015, when the previous U.S. administration had sanctions on Iranian oil before signing the nuclear deal that the current inhabitant of the White House pulled out of. 

It’s not just oil destined to feed China’s voracious appetite for fuel, either. Madani says Syria and Israel “both instruct tanker operators to switch off their transponders prior to arrival.” Officially, there are U.S. sanctions on selling oil to Syria, but Iran shipped up to 60,000 barrels per day to Syria in August, worth some $150 million, TankerTrackers says.

In Israel’s case, tanker operators bringing oil from Arab states who don’t have relations with Israel will turnoff the tracking devices to keep up appearances that they aren’t “dealing with the Jewish state,” Adesnik says.   

Ghost ships aren’t the only type of subterfuge currently at play in the oil market. Madani has noticed a marked uptick in the amount of barrels that Iran is storing in idle tankers. That’s a great way for the regime to get oil off of its official ledgers, until it can find a buyer on the sly in future, he says.

On the last day of September, for example, Madani’s satellites witnessed 10 million barrels sitting in six supertankers floating just offshore of Kharg Island. They hadn’t moved in days, nor did they move for several days following.

The red dots represent oil tankers spotted by TankerTrackers.com holding as many as 2 million barrels of oil on Sept. 30. The yellow dots represent smaller tankers that were holding a million barrels. (TankerTrackers.com)

That’s more than 10 per cent of all the oil the world consumes every day, just floating around, looking for a buyer — possibly one who’s willing to do business even after U.S. sanctions are in place next month.

“It would seem to be practice,” Adesnik says. “They’ll really need the cloaking after November 4, but they’re practicing with it now.” 

The risk isn’t only financial. In January, Iranian tanker the Sanchi burned and sank in waters 300 kilometres east of Shanghai after colliding with a freight ship. The Sanchi was carrying about a million barrels of condensate at the time, and all 32 members of the crew are missing and presumed dead. Rescue efforts were hampered by the fact that the Sanchi hadn’t broadcast an AIS signal for at least nine hours prior to the collision, Adesnik says.

More than 30 people who were on board the Sanchi when it exploded and sank in Chinese waters earlier this year are presumed dead. (10th Regional Coast Guard Headquarters/Reuters)

Tragedies like the Sanchi are likely to repeat for as long as the international community is willing to turn a blind eye to the shipping subterfuge. Tehran has an incentive to keep doing it and “authoritarian regimes are not known for their ability to confront the truth in an expeditious manner” Adesnik says.

“I’d imagine we’re interested in taking some pretty serious measures to prevent them from getting oil out illicitly,” he says. “But we have to prioritize who we’re going to be pressuring into compliance.”

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11-Step Guide to Buying A House

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Purchasing a home is likely going to be one of the largest purchases you will make in your lifetime, which is why it is so important to follow the right steps when starting on your home-buying journey to ensure that the entire process goes smoothly from start to finish!

We’ve put together a step-by-step guide to buying a home, to help you get off on the right foot when it comes to buying a home. Click the download button below to download these steps in PDF form.

1. Decide to buy a home

Make sure you are ready both financially and emotionally!

2. Get Pre-Approved

Work with a mortgage broker or your bank. They will work with you on what you require to submit an application. Once approved, this will determine how much you can afford to spend on a home.

3. REALTOR® Consultation

Work with a RE/MAX agent to help guide you through the process. The right agent will discuss your price range, ideal locations, current market conditions and much more!

4. Start Your Search

Your REALTOR® will get you information on new homes that meet your criteria as soon as they’re listed. They’ll work with you and for you to ensure you find your dream home.

5. Current Market Conditions

Your experienced RE/MAX agent is a valuable resource as you consider different properties. They will be there when you have questions regarding the homes you’re interested in – they can tell you what is a good deal, and when to walk away.

6. Make an Offer

Your REALTOR® will help create your offer tailored to your needs including the right subject clauses down to the closing date that works best for you.

7. Negotiate

You may receive a counter offer but don’t be worried! RE/MAX agents will negotiate for you to ensure you get the best possible price for the house you love!

8. Accepted Offer

It’s crunch time! The next few weeks are busy as you need to schedule and remove every one of your subject clauses by the specified date. You’ll likely need to schedule an inspection, appraisal, financing approval, and several others. You will also need to provide a deposit to put down on the home. The deposit will be a pre-determined amount given in-trust to your REALTOR® to show the sellers you are committed to this home. Don’t worry, that money goes towards the purchase of said home if all goes well! This is a busy time but be sure to reach out to your RE/MAX agent if you have any questions or are unsure about next steps.

9. Subject Removal

Once you have completed all your subject clauses, and everything went smooth, it is time for you to sign on the dotted line and consider your new home to be yours (almost!).

10. Official Documents

You will need to provide your RE/MAX agent with your preferred lawyer or notary to have the official title transferred into your name. You will meet with the lawyer or notary in person to sign all the legal documents before you move in. This typically happens a few days before you take possession of your new home.

11. Move In!

Congratulations, you are officially a homeowner! The date pre-determined by you is your move-in day! You can now move into your new home. Your RE/MAX agent will be there ready and waiting to hand you the keys. Enjoy!

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Know When to Rent ‘Em, Know When to Buy ‘Em

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We’re told it’s always better to buy than rent. Everyone—from our parents to the banks to the government—encourages us to buy, buy, buy our homes.

But times have changed, and I dare say that these authority figures might be slightly out of touch. The jaw-droppingly high cost of real estate in big cities is encouraging millennials to rent instead of own, causing homeownership rates to drop. At 30 years old, 50.2% of millennials own homes versus 55% of baby boomers at the same age. As a millennial homeowner, I can’t help but wonder if I’m generationally displaced.

There’s an old misconception out there about renting that needs to be addressed. You’re not “throwing away your money” if you’re renting. While that familiar axiom might be true sometimes, there are plenty of circumstances in which it does actually make more sense to rent than buy.

You Might Choose to Rent If…

…You Invest What You Save

Renting tends to come with lower carrying costs than owning. Typically, all you’ll have to worry about paying as a renter is, well, the rent (clearly) and perhaps a share of utilities. This leaves you with extra monthly cash to invest, which can ultimately put you on even financial footing or better with a homeowner.

As always, there’s a familiar caveat here: You need to be financially disciplined for this strategy to pay off. One mistake I see a lot is that those who rent tend to fall prey to something called ‘lifestyle inflation.’ Rather than investing what they save as renters, they just rent nicer apartments, eat at fancier restaurants, and put more money into their wardrobe than their RRSP. But this money vacuum can be easily avoided by:

1. Budgeting to find out how much you have left over to invest each month after factoring out all your expenses, then;

2. Funneling that leftover money directly into your investments. Some robo-advisors, like Wealthsimple, allow you to do this automatically via pre-authorized contributions, which set recurring transfers from your chequing account into your investment portfolio, at whatever amount and interval you choose.

…You Have Rent Control, aka the Urban Holy Grail

Depending on where you live, you might be lucky enough to benefit from the urban miracle known as rent control. That means your landlord can only increase your rent by the rate of inflation, which in turn keeps your cost of living way down and leaves you with more money to invest. In Canada, rent control is now implemented in most big cities like Toronto and Vancouver (although not in Montreal).

…You Have a Mobile Lifestyle

Renting makes it easier to move; if you’d like to relocate it’s usually as simple as giving your landlord 60 days written notice. But when you own a home you’re more tied down, and the obligation to be near your property may prevent you from chasing new adventures in faraway lands. I once turned down a fantastic job opportunity in Dallas, Texas for this very reason.

…You’re on a Tight Budget

Renting tends to be more affordable than buying in big cities like Toronto and Vancouver. I know, I know, renting is still unreasonably pricey in certain neighborhoods. But buying in those same areas can be arm-and-a-leg expensive.

When you rent, all you have to come up with is the first and last month’s rent; no need to scrimp and save to pull together a massive down payment on a house, which, incidentally, will take you two to four times longer to save than it did your parents.

And homeownership leads to a lot of other costs aside from mortgage payments. When you buy real estate, you’ll need to pay closing costs, which typically add up to between 1.5%–4% of the property’s purchase price and can include a home inspection fee, real estate lawyer fee, land transfer taxes, and homeowners insurance (sometimes you’ll have to fork over an entire year’s worth of home insurance as one lump sum).

There’s also the elephant in the room that nobody likes to speak about: repairs and maintenance. Homeowners are responsible for paying the big bucks for costly home repairs, such as a new roof and furnace, and are advised to set aside 3–5% of a home’s value toward home repairs and maintenance each year. Renters, on the other hand, can just call their landlord whenever they need repairs (provided the landlord actually picks up). Still, it’s important that tenants know their rights when renting to be aware of which fees do and don’t fall under their responsibility.

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A Montreal Real Estate Broker Answered 5 Qs About Buying A Property To Rent Out

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You’ve probably heard that Montreal’s real estate market is on fire. But how can you get in on the action? According to Alex Marshall, a local real estate broker, buying a property as an investment for the purpose of renting it out is a great way to go about it.

Marshall, who’s part of the Keller Williams Prestige team, sat down with us to explain why and how to purchase an investment property. These types of properties are also known as revenue properties.

Why do you recommend buying a revenue property?

Marshall used personal experience to highlight the advantages of owning a revenue property. He’s currently renting out the Saint-Henri loft he bought in 2010.

“Not only is my tenant paying off my mortgage, but I’m making a couple 100 bucks a month as well,” Marshall said.

Marshall was also able to take out a line of credit on the property, he said, and use the equity to buy an additional property.

“You actually don’t need to live in the property that you buy. I’m seeing clients who are in apartments with low rent [who] don’t want to move but have got the money right now … and are looking for smart ways to invest,” he said.

What are some tips to help people save up for a revenue property?

When Marshall was saving up to buy his first property, he said he worked a second job. 

“There’s a lot of value to having that side hustle … even if it’s at Subway or it’s at a landscaping company on Saturdays. It will add up significantly in the long run,” he said.

He gave the example of adding $5,000 to your annual income.

Marshall said you can qualify to borrow roughly four times your annual salary for a mortgage so $5,000 could actually provide you with an extra $20,000 of buying power.

“That might get you a second bedroom, that might get you a parking spot, that might get you a larger space,” he said.

The pandemic, Marshall said, has also helped some of his clients save extra funds.

“You can’t travel, you can’t go to the restaurant, you can’t go to the theatre, you can’t go to the bar. So a lot of people right now are finding themselves with almost a disposable income,” he said.

Marshall also recommends looking into Canada’s Home Buyers’ Plan program, which allows you to withdraw up to $35,000 — — tax-free — from your registered retirement savings plan (RRSP) to put toward buying or building a qualifying home. 

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