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Driscoll Enterprises Inc.

Investing in You and Your Future!

 

Issue 2 - July 2011
In this issue
A Key Reason We Like to Invest in Multi-family Properties
Industry Related News - A Time Sensitive Tax Tip for Rental Property Owners
Humor
Ongoing Projects
Opportunities

Dear Friends,

 

This July has been an eventful time for the Driscoll family. Ten of us enjoyed the fourth of July at a place called Great Meadows, a polo grounds, just north of home. There were fireworks of course but there were also model rocket demonstrations, a helicopter parade, a sky diver, and a huge water sprinkler that the kids got to play in and get soaked. All in all we had a great time.

 

We also lost Sam one of our dogs. She had been a member of the family for a long time. Sam was a black lab and I really loved that dog and I believe she loved me. Every day when I came home she would come in the garage, wait for me to open my car door and stick her big head in there, holding me hostage until I gave her a proper hello. We will all miss her.

 

These two events drove home how important family is.  Providing for them and spending time with them now, while we can, is so very important.

 

 
A Key Reason We Like to Invest in Multi-Family Properties 

Multi-family properties offer many advantages over single family homes.  The one that is most important to understand for our business model is determining property value. 

  

The value of a Single Family Homes (SFH) is driven largely by the value of the homes closest to the home.  Closest means both proximity as well as style.  As you might imagine with so many foreclosures even great homes in great neighborhoods are experiencing significant drops in value.

 

The value of multi-family properties is driven largely from what is called Net Operating Income (NOI).  NOI is simply revenue less ordinary operating expense.  Other factors influence the value but NOI is the driving factor.  Therefore it is possible to drive the value of a multi-family property up by either increasing revenue or controlling cost. 

 

Cost reduction/control methods include but are not limited to the following:

  • Analyze expense ratios to national averages and investigate any large variances.  An example of this would be an abnormally high water bill may indicate water pipes that leak.  Fix the leaks, reduce the costs, and raise the property value.
  • Too many personnel on the property payroll.  Banks tend to do this when they take over a property.
  • Managing the management company.  Understand the methods commonly used to cheat owners.  Trust but verify what they are reporting.
  • Decrease tenant turnover by offering incentives for the tenant to renew their lease.

Revenue can be increased by several methods such as:

  • Understand what market rents are for similar units/property types.  If warrented raise the rents to local market rates.  We recently did this for on of our properties.  The current rents were $40 per month less than the next closest comparable property.  We had 80 rented units so when we implemented this increase it generated and additional $3,200 per month or $38,400 per year.  At a 10 cap rate, the value of this property increased $384,000 ($38,400/.10) that day! 
  • Adding services that tenants will pay extra for i.e. laudry rooms, vending, storage, pet policies, etc.
  • Increasing the percentage of the property that is occupied.  Taking a property from 80% occupied to 90% occupied can dramitically increase the property value.
  • If the property comes with extra land, put it to work with additional rental units, self storage facililities, or some other type of commercial property. 

These are some of the strategies we use to drive multi-family property values higher thus allowing us to provide our investor partners returns that are generally higher than they can earn with most other investments. 

 
Industry Related News
  

Rental Property Owners - Fully Deduct 100% Of The Cost Of Capital Assets With Bonus Depreciation!

 

Instead of depreciating certain qualifying assets over a number of years, with "100% Bonus Depreciation" you can write them off all in one year.  Such qualifying assets are new equipment, new 5-year personal property in real estate, new 15-year land improvements in real estate.  So if you buy new appliances, kitchen cabinets, carpets, lighting fixtures, storage units for your rental properties, , instead of over 5 years (which is good but not as good as no years).   The same for 15-year land improvements such as a new parking lot, new pavements, new driveways,  new lawns & landscaping...all deducted in one year, instead of over 15 years, regardless of their cost.  If you purchased an entire new property, all of the allocated 5-year personal property and 15-year land improvements can be fully deducted in the first year.

 

Unlike Section 179 first year expensing, there are no deduction limits with 100% bonus depreciation, except that the assets must be  (never used before).  Plus there is no IRS controversy if the new asset is capital or a repair.  It's totally legally 100% deductible!  But do it now, as this bonanza is due to expire December 31, 2011.

_______________________________________
 
 

From Al Aiello, CPA, MS Taxation, RE Investor

For more information go to 

  www.GoldmineSavesTaxes.com

 
Humor
 

RED SKELTON'S RECIPE FOR THE PERFECT MARRIAGE

  1. Two times a week we go to a nice restaurant, have a little beverage, good food and companionship. She goes on Tuesdays; I go on Fridays.
  2. We also sleep in separate beds. Hers is in California, and mine is in Texas.
  3. I take my wife everywhere.... But she keeps finding her way back.
  4. I asked my wife where she wanted to go for our anniversary. "Somewhere I haven't been in a long time!" she said. So I suggested the kitchen.
  5. We always hold hands. If I let go, she shops.
  6. She has an electric blender, electric toaster and electric bread maker. She said "There are too many gadgets, and no place to sit down!" So I bought her an electric chair.
  7. My wife told me the car wasn't running well because there was water in the carburetor. I asked where the car was. She told me, "In the lake."
  8. She got a mud pack, and looked great for two days. Then the mud fell off.
  9. She ran after the garbage truck, yelling, "Am I too late for the garbage?" The driver said, "No, jump in!"
  10. Remember: Marriage is the number one cause of divorce.
  11. I married Miss Right. I just didn't know her first name was Always.
  12. I haven't spoken to my wife in 18 months. I don't like to interrupt her.
  13. The last fight was my fault though. My wife asked, "What's on the TV?" I said, "Dust!"

Can't you just hear him say all of these? I love it........these were the good old days when humor didn't have to start with a four letter word.  It was just clean and simple fun. And he always ended his programs with the words, God Bless.

Ongoing Projects

 

There are so many ways to make above average earnings with real estate.  Especially right now because everthing is on sale!  We are currently engaged with 2-manufactured housing communities, 3-short sales, 1-single family home (SFH) flip, and in the process of purchasing one SFH with 100% owner financing.  In addition, we are currently analyzing another manufactured housing community, a self- storage facility, and a small apartment complex.
 
Opportunities
 

How is your bank treating you?  Are you happy with the returns on your savings account, CDs, IRA or other retirement account?  We have opportunities available for both equity and debt partners who would like to earn above average returns on your investments.  If you are interested please contact us for more information.

 

Did you know that you can invest in real estate from your IRA or other retirement account?  This investment secret isn't well known but it is perfectly legal. Contact us and/or click on this Investment Secret link learn more. 

We are always willing to share information with you so please feel free to contact us

 

Driscoll Enterprises Inc. 332 West Lee Hwy., Suite 200, Warrenton, VA 20186

703-398-1188 or 800-887-0001

[email protected]

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