Greatest Boom Ever

      How does one tell the current value of a property? If it is a residential, there is the comparison method in which an appraiser compares some recently sold properties and arrives at an answer. This may work well for residential but for multifamily  properties,  the calculation is based on a more  business like  approach. This is called the Capitalization rate or CAP rate for short. Normally, the more valuable a property is, the greater  it’s  income.   Here is a general method to calculate the CAP rate for a property:   ·  Get the recent sold price of an income property, such as an apartment complex.   Example:  Six unit  apartment project sold for $600,000   ·  For  that same apartment project,  determine  the net operating income, or the net rentals realized by the owners.   Example: The rental income after expenses (net) is $48,000   ·  Divide  the net operati...

    One of the many things I have discovered in my investing career is that the percentage of dishonest individuals  in the area of  wealth creation is very high .   This is not to say that there  aren’t  many  good   honest  hardworking people who do their best for their clients. Rather, the percentage of people who will steal or use deceit for their own purposes is much higher here than say the medical profession.   Since there are so many  scams  out there and it is impossible to keep track of them all, I prefer to  leverage  my time by  attempting  to learn from other people’s mistakes. One of my favorite ways to do this is to watch CNBC’s American Greed which does a fantastic job of describing the historical and  financial impact  of past  scams  against investors. Many times, I catch myself watching reruns of the show because it does such an excellent job of explaining past dec...

      We just passed the 24th anniversary of the terrorist attacks on New York city and in fact the entire western world. Like all of you, I recall exactly what I was doing on that  day  and it will be with me for the rest of my life. What has happened in terms of North American real estate in the past decade is a trend that has been clearly  identified . Over the past 500 years, the continent has seen rise to 5 major waves of migration. They can be summarized as follows:   1)  Arrival of Mayflower to North America   2 )  Mass  migration to North American mainland   3 )  Migration  to cities   4 )  Migration  to suburbs   5 )  Migration  to Exurbs (small cities outside of major  centres )   The technology trends which are so present in our everyday lives have enabled one to telecommute from home instead of physically going to the workplace as in times past. This trend...

    Whether you have ever bought a property or not, is  is  entirely possible that you may have heard about landlords who rent out a suite illegally. In any analysis, one must look at both sides and then weigh them accordingly. What I am presenting is only my own  opinion  and you are strongly encouraged to look at your own risk and rewards. The pros of renting out an illegal suite  is  quite simply the extra cashflow one can receive from this activity. Real estate is a numbers game and having your cashflow increase from 50-100% is a huge bonus which is unmistakable. The cons of doing so are much more  numerous.If  your insurance company  discovers that  any illegal activity from renting out a suite to a  grow  operation or anything else, they can cancel the policy without any recourse on your part. The mortgage can also be called by the lender because of illegal rentals occurring. They can call the loan  an...

    Many corporations have a “sinking fund” set aside to deal with investors who require their capital .   A sinking fund is a pool of money set aside by a corporation to help repay a bond issue. Bond agreements require a corporation to make interest payments to holders of the bonds and then at the end of the life of the bond, all the principal is to be repaid in full. A similar approach should be taken by a real estate investor who owns a rental property   Suppose you have  purchased  a positive cash flow residential property and all is going well until one  day,  an unexpected problem occurs. It could be that there is a $400 repairs bill for the furnace, a $700 bill for unanticipated plumbing repairs or other unforeseen circumstances. Many investors would be scrambling to get these  funds  but there is  a simple way  to avoid this type of emergency.   If your property has a monthly income of $1,000 then you should have b...

    In the overall scheme of real estate investing, many people have their likes and dislikes. Some of the things that I am good at and like are  the investment  analysis, economics (this should not be a shock based on the majority content on this site) and accounting.   When it comes to my biggest weakness, it is unquestionably property management. I consider myself to be the worst property manager in the world! If the rent  was  constantly late, I would  probably fall  for every story that was given to me. Having discovered this weakness of mine early on, I decided to address this issue by outsourcing  all of  my property management. This is critical to going forward because the best property in the world can fall apart if the management is lacking. I am completely hands off and have this as one of my strongest sides of real estate rather than my Achille’s heel.   What is the one (or more) aspect(s) of real estate you  d...