Monday, February 28, 2011

My Phoenix Investment

I just got word that the renovations should be completed mid to late week.  The house will then be put on the market.  Working on the listing price now. 

Very, very excited to see what happens going forward!

Tuesday, February 22, 2011

Phoenix Update - house sold - Full asking, one week!!!


SELLING PRICE - $149k
TOTAL COST - $135k (re-hab, expenses and commissions)

$14k profit for them, house sold in ONE WEEK!!!

Wednesday, February 9, 2011

Published in Print

Recently, the Winter 2010 edition of ORLA News Magazine, volume 23 no 4, reproduced one of my blog posts as an article.  It is really cool to see my thoughts and articles start popping up in printed magazines.  Please check out the magazine.


  To read the full article please click here.



Tuesday, February 8, 2011

Interest Rate Direction

Just in, from our informal poll

21% think rates will go up
39% think rates will go up at the end of the year
32% think that rates will stay the same
8% think rates will go down

Interesting stuff.  A full 60% of people feel rates will increase this year.  Based upon a lot of the information coming from Banks and Government, it would seem that fixed rate mortgages could climb, but variable rate mortgages seem to be predicted to remain at their current levels for the foreseable future.

The Hidden Advantage of Real Estate

When investing in real estate, many people are "turned on" by what they can see.  They are excited by the monthly cash flow.  They really enjoy that at the end of the month, there is more money than at the beginning of the month, after buying their property.  This is only one of the ways that money is made in real estate and often is the only method people choose to evaluate.  I think it is a mistake to forget about the other three very important ways that real estate makes money.

Mortgage Reduction
Roughly, on every $1,000 per mortgage that you borrow, each year your networth increases by $21.11.  Doesn't seem like much?  Now extrapolate that over a typical mortgage in Ottawa of $250,000 and you have an annual networth increase of $5,275.00

Now go a step further and imagine you now own 5 investment properties, you have an ANNUAL mortgage reduction of $26,375.00

Equity Growth
Basing your whole investment strategy on equity growth can be risky, especially if you do not research the location you are buying in well.  Over time, it is a pretty consistent, in Ottawa, to see a bit over 6% annual increase in the value of your property.  For my numbers, I always estimate 1/2 typical growth.  Average household prices in Ottawa are now approximately $330,000 which means, with 1/2 growth, an annual increase of $9,900.00

Again, going a step farther, you have 5 investment properties, you would have a 1/2 growth, conservative estimate of $49,500 ANNUALLY.

Together, these two items have increased your networth annually by $15,175.00 on one house worth approx, $330,000.   Again, if we extrapolate over a portfolio of 5 average homes, your networth will increase by $75,875.00.  Now to really make this hit home, imagine ten years into the future, when those five houses have generated a networth increase of $758,750.00 - all generated off a relatively small deposit of $412,500.00. 

This translates to an 18.4% annual return without factoring in cash flow or tax deductions.

Tax deductions are harder to factor in.  Remember, negative cash flow is a tax deduction, if it does occur.  You can also write off realtor fees, lawyer fees, property management fees, renovations, property tax, insurance, utilities, etc - basically think of things this way, if you would not have spent the money, had you not had the property, it is probably a tax deduction.

Having the write offs will produce a lump sum of money each Spring and make you look forward to tax season, rather than dread it.  What do I try to do?  Combine my tax return with my mortgage reduction and equity growth to be able to buy another property each year. 

Saturday, February 5, 2011

Kanata North

Ciena Corp announced a planned $900M investment in their central labs at their Moodie Drive facility and creation of an additional 353 new jobs over the next 5 years.


Federal Government has also announced the movement of 7,500 jobs from Rideau Center location to Moodie Dr. over the next 5 years.
 

Tuesday, February 1, 2011

Got one!!!

Today, I won an auction in Phoenix, Arizona and bought a wonderful 4  bedroom, 3 bathroom, double car garage for ... get this ... $75,100.00

After a renovation budget of ceramic, new kitchen sink, paint and carpet cleaning (about $8,000), we will be listing it on MLS at $115,000.

This should render, in less than 120 days, an after tax profit of -- $12,216.76 or 14.6%

Take a look at some photos:




interested in investing in Phoenix, Arizona, check out the web site - http://www.smartazforeclosures.com/