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VMedia to go public in proposed reverse takeover of junior oil company Phoenix

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VMedia, the upstart internet and cable provider known for lower prices and a legal spat with rival Bell, is moving to become a public company, announcing a proposed reverse takeover of a resource company listed on the TSX Venture exchange.

The move signals a growth strategy by VMedia, and a way to raise money to expand and offer its services to more customers.

The telecommunications industry in Canada is heavily dominated by five big companies — Bell, Rogers, Telus, Shaw/Corus, and Quebecor — in what has been a notoriously closed market to new entrants. 

“This is just an opportunity for us to be able to pursue growth a little bit more aggressively. It opens up opportunities for us in terms of expansion of our business,” said VMedia’s George Burger.

Phoenix Oil  is a junior oil and gas company with royalty interests in Alberta and British Columbia as well as Ecuador. The company is currently valued at $7.3 million but has seen annual revenues fall sharply from $39 million in 2014 to just $1.6 million last year. 

“We’ve been seeking somebody with operating assets that is cash flow positive as an investment partner,” said Phoenix CFO Mike Kindy. 

“We’ve conducted a search, we’ve looked at VMedia, and we’re enthused to go forward with VMedia,” he said. 

But VMedia isn’t taking over Phoenix because of its oil business. The move would allow VMedia — a privately held company — to in effect become a publicly traded company without the hassle and expense of an initial public offering or IPO, which is traditionally how private companies sell themselves to the public by offering shares.

“It really dramatically broadens the base of potential investors in the company,” said Burger. “And that’s really what we’ve been looking for for quite a while.”

“The business has been essentially a self-financed, bootstrap operation from Day 1 and it will be very exciting to be able to have some resources to pursue things a little bit more strategically and aggressively,” he said.

Founded in 2013 by Burger and Alexei Tchernobrivets and headquartered in Vaughan, Ontario, VMedia is an independent telecom service provider offering internet, home phone, home security, and television and cable packages.

VMedia is licensed by the CRTC to offer TV services nationally, which it does through IPTV or television over internet protocol. The company recently launched in the Atlantic provinces and with the potential increased access to capital it should be able to accelerate its growth plans.

“It’s been fairly aggressive in trying to expand its footprint,” said Dwayne Winseck, professor at the School of Journalism and Communications at Carleton University. 

Winseck, who is also the Director of the Canadian Media Concentration Research Project, says smaller companies like VMedia, TekSavvy, Distributel and others have been fighting for access to a Canadian market dominated by Big Telcos for more than 20 years. 

“This access to more capital could help [VMedia] build out its footprint as both an [internet] access provider and as an alternative cable service.”

“One of the key things that has held back these entities (smaller, independent ISPs and telcos) is a lack of access to the capital markets. So if this is a way to get more access to capital … than I think it’s just one more arrow in its quiver to continue to scratch away at the edges [of the Canadian telecom market].”

Winseck says smaller companies may have a very small market share in relation to the big telcos but they have been able to introduce some competition and helped lower prices.

As one such newer, smaller entrant, VMedia has had a history of using creative and controversial tactics to grow its business. Perhaps the best example is its legal battle with Bell over VMedia’s “skinny basic” cable package offered through an app on a digital media player.

VMedia’s package was nearly $8 per month cheaper than those of the big telcos.

Shortly after it launched, Bell Media sent a cease and desist letter threatening legal action if VMedia did not remove Bell’s signals from the new service, contending VMedia was violating copyright laws.

As a licensed BDU (Broadcasting Distribution Undertaking), VMedia is generally allowed to retransmit over-the-air TV signals at no cost on its own network. But it was offering the service through the Roku player over the open internet and didn’t require a specific VMedia internet subscription. 

A judge sided with Bell and ordered VMedia to pay $150,000 in legal costs

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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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