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Real estate is a numbers game first, last and always!  Whether one wishes to discuss purchase price, yield on investment or any other metric, you must know your numbers. Years ago, I ran across a book which to this very day serves as an excellent reference when doing numerical due diligence on an investment property. Although it can be said that it is overly complex and only for ‘math junkies’, its value cannot be understated.

The book is called “What every real estate investor needs to know about cash flow… and 36 other key financial measures” by Frank Galinelli. This time honored classic will ensure you know your numbers inside out. You do not need to go through this much detail to purchase a property but it certainly does not hurt to at least be aware of these calculations.

The book is available on Amazon and some useful pdf and Excel spreadsheets can be downloaded here.

http://www.realdata.com/book/download.html

In any team sport, no one individual can or is expected to be responsible for everything. Goalies have their jobs, goal scorers have theirs and so on. That is why you have a team you can delegate your responsibilities to. The same is true for real estate investing.

Now let me be very clear about one point here. Most real estate seminar attendees will never have more than three or four rental properties in their portfolio so the concept of delegation will not apply. Seminar companies know that but will never disclose it to the audience. If you are to truly grow a portfolio of properties, then delegation is extremely important.

Given the choice between money and time, time is more important because it can never be replaced. With that in mind, some aspects you may wish to start delegating are as follows:

1) Delegate the day to day property management of your investments. There are only so many properties one can handle (usually 7-9) that someone can handle before they need to start delegating duties. Donald Trump does not manage his own properties and neither should you.

2) Hand over all of your accounting to your bookkeeper and accountant. They are specialists in this area and keep up to the latest changes in the tax code.

3) Give all of your legal duties over to an attorney who is part of your power team.  This (like accounting) is also an area where being an amateur is simply not good enough to be successful

4) Daily errands such as housekeeping, grocery shopping and paying bills can be outsourced. In this digital age, there is no reason to go to the bank to pay your utilities like some people still do.

5) Having a team of competent professional tradespeople will only propel you to success. Make sure they are responsible for looking after your electrical, plumbing and other requirements that come up from owning rental properties. They can get the job done faster and more efficiently than someone who is not a registered professional.

With all this extra time, you can now proceed to expand your portfolio and purchase your next piece of real estate.

WordPress 4.0 has been installed and is fully operational. Thank you to the worldwide WordPress community for your continued efforts!

We have eagerly awaited the latest release of WordPress 4.0.  Although it is not as large a release as WordPress 3.0, it is moving us to our goal of greater functionality on our backend operations. As the release occurs on Wednesday Aug 27, we will be busy updating the site but it should in no way affect your access to our ongoing updates. Normally, one should wait a few days before upgrading but we chose to make an exception in this case.

There is a classic investment question which asks if it is better to own a stock or mutual fund. There is no right or wrong answer but I believe the article shown below addresses both sides of the debate.

Read more: http://tinyurl.com/q2pqhrf

There is also no right or wrong answer as to the debate of whether a house is a better investment than a condo but I prefer to say that the home is superior and illustrate my reasons why:

1) There is more prestige in owning a home versus a condominium.

2) There are no fees along with mandatory special assessments in condos unlike owning a home. This means you are responsible for your property and not your neighbors.

3) The accounting for a single family home is easier to understand than a condo board’s annual financial statements which may or may not have strict reporting controls.

4) There is greater privacy in owning your own home versus a condo.

5) You have more control of your investment in a home than a condo as one must abide by the condo board rules in the latter.

6) It is better to have a larger mortgage with corresponding payment (and hence built up equity over time) rather than have that money go to condo fees which will only be an increasing expense with nothing but a tax deduction to show for it.

7) Generally speaking, houses tend to have both a higher cash flow and equity appreciation rate than condos.

Of all the expenses in real estate, advertising for a tenant is the only one which has a positive rate of return. Everything else from repairing a faucet to property taxes are considered a cost of doing business and will not give a positive yield on your investment.

With that in mind, there are certain times of the month which will give you a greater chance of success than others. Here are some tips which should assist you in timing your next rental advertisement.

The 1st-5th are a good time to advertise because tenants will need a place and it is early enough in the month that they are still motivated to move in.

The 7th-12th usually have the lowest responses because it is too late after the first week and far too early for most to seriously consider moving for the next month

The 15th-20th have a good response like the first five days of the month because serious renters are being proactive in their search for a new place to live.

The 21st-end of the month usually give the best responses because month end is coming and people will want to get everything in order to move into a new place.

Have you ever heard of insider trading? If not, a definition would be appropriate. Generally speaking, it refers to using non public information to financially benefit from a transaction before the general public becomes aware of such knowledge.

If you ask anyone in the securities industry (i.e. someone involved with stocks, bonds, debentures, etc) whether it is legal, you will get a resounding no because it could lead to fines and/or imprisonment if caught. Many people have gone to jail for acting on a hot stock tip and ended up paying heavy fines.

In real estate, it is a completely different issue. If you hear of a property which has a million dollar valuation that a seller wants $800,000 for and you purchase it before it is ever on the market, it is not only legal but rather savvy! Acting on non public information will put you in the lead for finding the best deals.

Ultimately, the answer as to whether insider trading is legal depends on which asset class you are talking about, securities or real estate?

Businesses come in many types of specialties. Some examples are banking, telecommunications, restaurants and vehicles. The best real estate investors realize that real estate is also a specific type of business. This is because one requires knowledge of the management, product, market, business plan, corporate structure and financials to progress.

One of these elements, namely the business plan is what many novice investors overlook when purchasing their properties. Real estate is a numbers game and one must have them in a written down fashion with realistic tangible objectives.

In your business plan, one must include the monthly, quarterly and yearly income and expenses for the property. These would necessarily include a cash flow statement to be reviewed monthly at the very least. One should also factor in any capital and current expenses into your plan to account for unforeseen and planned upgrades to the property.  Do not forget to include a vacancy allowance because even the best properties in the best markets are occasionally vacant.

A key point which should be obvious after completing your first plan is that equity is not a priority but cash flow is because it is the heart of any successful business.

If you have never written a business plan, sit down with your real estate specific accountant and they can help you write one down which you can use as a template for your overall portfolio.

Before the internet was widely utilized in mainstream society, finding amenities for any property required the individual to visit an area and find out where they were located. One would usually have to ask neighborhood residents or drive around  to find the nearest grocery store, laundromat, bank, etc were located and essentially guess how far each of these were from your place of residence.

Fortunately, those days are rapidly coming to an end due to a website called Walkscore. This unique and free service is dedicated to removing all the unknowns as to which amenities are available for addresses in Canada, the U.S., Australia and New Zealand.

One can download this useful tool on your mobile device from either the App store or Google Play.

If you are a real estate professional, you should definitely have a look at their site as it is rapidly being adopted into mainstream real estate sales. Have your IT team member install the appropriate widget on your website to promote your properties and answer buyer’s questions before they ask them. The widgets are easy and quick to install for any WordPress site.

For more information, please visit www.walkscore.com