Clocks Spring Ahead this weekend - Reminder to test Smoke Alarms

Hello!

 

This weekend we change our clocks and move them ahead one hour this Saturday after midnight.

 

This is also a reminder for everyone to replace the battery in any battery operated CO or smoke/CO2 detector where you live and to check the proper operation of all detectors and operate as they should.

 

You are supposed to be doing this on a monthly basis, but this is a good time to test if you have not been doing this monthly testing.

                                                                                                                                                                                      

Please test each CO and smoke/CO2 detectors and make sure it works properly when you press the test button.

 

Also, please check the date on the CO detectors and the smoke/CO2 detectors manufacture date.  Most are good for 7 years, some for 10.  If any of the detectors are expired you should replace them with a new detector, this is very important for your safety.

 

Also, please don't forget to change your air filter for the furnace.  This will not only improve your air quality in the house, but also reduce your gas and electricity bills by allowing the air to circulate more freely.

 

Thank you,

Mark

 

Investment property purchase in the GTA and Mississauga

An investor that I know has contacted me with some very good questions about buying an investment property. I have shown his questions and my comments below in blue.

All the best,

Mark

Hello LS,

Yes, I remember you from some time ago, a very inquisitive man indeed!

I've put my answers below in blue for you to see.

Mark's comment: .

It may not have been the right time for you to buy last December when you first contacted me, but that was most definitely the right time to buy one or more properties. Values have increased about 10% since last December. I've blogged about this in the past, December 10th is the best time of year to buy a property. http://www.mississauga4sale.com/TREBprice.htm

Let me know your thoughts form my comments below and if you are ready to proceed. If so, my partner will also work with you and we will find you a suitable investment property

http://www.mississauga4sale.com/Investment-Property-Purchase.htm

Thank you,
Mark

This was his original email below with my answers in blue

---

From: LS
Sent: Sunday, November 15, 2009 11:34 PM
To: mark@mississauga4sale.com
Subject: Investment advice

Hello Mark Argentino,

• For quite some time I have reviewed the power of sale properties that your system sends. I am wanting to find a way to better understand the relation of expenses (for example on a 2 bdrm, 2 bath condo) and comparisons at varied down payment levels, with realistic rental rates likely achievable in certain areas. Mark's comment:This is a very good method of analyzing which properties are the best to invest .
  
• Are there spread sheets designed to assist? .Can a potential investor, get access to Days on the Market of these foreclosed properties, accurate comparison of recent similar sales, do banks have reasonable response time if an offer is presented? Mark's comment: Only if you have a real estate agent that is willing to do all this research and work for you .Do the banks have a growing number of such properties, preferred investor groups they reveal such information to? Mark's comment: Not a chance! If this were to ever leak out the banks would be sued for giving inside information .
  
• Can you help with strategy for getting an individual from a “one home investment level” to multiple positive cash flow properties? Mark's comment: yes, but to have a positive cash flow property is dependant upon your downpayment, the more downpayment you put on the investment, the closer to a positive cash flow you will have. Multi-unit properties are similar to single except you have more tenant headaches but at least they are all physically under one roof. As well, tenants talk to each other in multi-units so expect to get similar requests for improvements all at once! .
  
• I know that is a lot to ask, and a lot of questions, however without asking, I would be sure to get no answers. Mark's comment: Ask and ye shall receive and my credo is "If you don't ask you don't get" .
  
• I have selected several 2 bdrm condo units for discussion. I would be pleased to compare your best guesses as to likely sale price, mortgage rates, expected carrying costs, etc. Mark's comment:What property? .
  
• I have a carpenters knowledge of properties, and am trying to determine if I could make money by investing in properties. I am not intending to do renovations and flip them as I am a few years shy of retirement from the "blanked out" department, and too busy with back problems for that unless I were to sub-contract such work. Mark's comment:You fit the profile of a 'typical' investor .
  
• What I consider is condo properties that could rent with only minor repair, where common elements fees took care of the external unit, and the renter might be encouraged to rent to own, perhaps given an owner held second mortgage if they did not fully qualify with CMHC. Mark's comment: I agree, all of our investment properties are condominium townhomes, this way, as you say, the tenant does minor repairs on the inside and I don't have to worry about the outside maintenance .
  
• If I were able to find a bargain property I would consider forming a corporation and having it purchase my own home, then renting my home from the corporation, in order to free up some of my assets to purchase a second or third property if rental incomes or flip prospects made it viable to do so. Mark's comment: Why a corporation, you will have different tax levels, but it may be more difficult to obtain financing. I may be wrong on this, but the banks will usually want personal covenants on the mortgage unless the corporation has large assets and capital and has been in business a long time. .
  
• Is such a bargain property a needle in a haystack type search? Mark's comment: Absolutely! .

Closing,

Thanks, LS

What is best? The stock market versus real estate investing

Hello,

The bull market has been running up the high Dow Jones and TSX and other markets for some time now and many people feel they need some pessimism in order to cool it down a little since the rise in the markets was too high and over a short period of time too fast for most of the market to absorb the huge influx of money.

Maybe it's time to sell your stocks or mutual funds and sit on the sidelines for a while.

Only time will tell.

I continue to feel that real estate is a very good long term leveraged investment, tenant pays off the property, you get a tax write off.

Here is a good "real life" example of how you can be financially secure when you are 60 years old.

Imagine you bought just one townhouse investment property when you were 40 years old for $250,000

You put $25,000 downpayment and your mortgage and tax payments were $1500 per month for 20 years and the rent payments were $1400 per month for 20 years

It may cost you $100 per month out of your pocket plus another $100 per month for regular maintenance and incidentals, thus $200 per month or $2400 per year but you got $1000 of that back on your taxes so it really cost you $1400 per year or $28,000 over the 20 years and ...

Imagine you are now 60 years old and you say, honey, we need some money to travel and buy things for our children and ourselves and enjoy life since we are now 60 and you sell that investment property for at the least $300,000

Your adjusted cost base, (your total cost of your investment property) is initial cost plus additions which is about $284,000 (250000+28000+4000 land transfer tax and legal fees to buy and sell it) less costs when you sell equals a capital gain of $16000 which you would pay about $2000 income tax so now you have $288,000 EXTRA cash to spend on you and your family for 20 years of owning that investment property, piece of cake!

This is assuming that the property value increases only 20% over 20 years. If history repeats itself, then the property should at least double if not triple in value in 20 years, but let's be super-conservative with our estimates and say it doubles, even with capital gains tax on half the profit you would still end up with about $455,000 (250000+250000 less about $45000 capital gains tax)

Now, and here is the kicker, if you bought two properties at 40 and did the same thing you would end up with $910,000 in your bank account at age 60

Almost $1MILLION

It does not matter how much inflation we have over the period from now until 20 years from now, $910,000 in your bank account is still almost a million dollars no matter how you look at it

If I had $910,000 today versus $910,000 back in 1989 I would still have a heck of a pile of money and freedom to do the things I want to do, inflation or not.

1989 was not that long ago, so 2029 is not as far in the future as it seems, it will be here for you sooner than you think and if you don't start doing something about it now, you won't have the $910,000 in your bank account or anything for that matter in 20 years from now

You must take some action, get off your butt and do something about it today. Beg or borrow that $25,000 today, buy that townhouse today for $250,000 and sit on it for a measly 20 years, only 240 months and you are done. If you can do it and surely if you can purchase two investment properties now, you'll be set for the balance of your life

I'll even make it easier for you, buy one or two properties as I have outlined above and then let me manage them for you for a small fee and you can literally sit back and enjoy the benefits of your long term investment without lifting a finger for the next 20 years. Want to know more about property management?

Sound like a plan for you? Then let's just do it!

http://www.mississauga4sale.com/property_management.htm

I wish you All the Best to you and your family!
Mark