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Victoria Real Estate Investors Club Newsletter
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Meeting Tuesday March 29, 7pm | March 2011 |
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 Cheri Crause
Royal LePage Coast Capital Realty 1933 OAK BAY, Victoria 250-592-4422
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Next Breakfast Meeting
| Sat, April 16,
9:30am
Princess Mary Cafe,
right on West Bay in the inner harbour,
at 453 Head St in Esquimalt
reserved under Real Estate Club |
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AINEY
CONSTRUCTION
250-818-9725
250-588-4684
Renovations, Additions, Roofing, Siding, Fully Licensed and Insured.
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 Hi Folks!
2012 rapidly approaches and the earth is getting twitchy about having us live on her back. I noticed the large subduction zone off of Vancouver Island in Google Earth looks a lot like the one off Japan. People, get yourself prepared. Water, food, bushwacking skills (see youtube) and a helpful attitude. The Japanese demonstrate what's really important in a crisis IMO - no panic, help your neighbours, hunker down, listen to the authorities.
I couldn't find many news articles this month, too many cataclysmic world events I suspect. The Feb home sales article to the left is almost unreadable although I suspect stats and data junkies will like it. I'm not sure what it actually means. Using Structural Steel article as the skeleton of a home, rather than wood, now that's interesting (to me). It's likely where we are going, long term, as we continue to cut down our forests and decrease the diversity of species on the planet. I predict a new substance will soon come out of the labs which will be even better than steel. Getting an inspector to approve it's use is another issue.
For your reading pleasure, a couple of articles below on Cap Rates and evaluating land/farms as potential investments.
We're cleaning up some wood floors in a suite in Nanaimo. Mr. Sandless has just opened up there and uses a urethane-like coating that dries quick and doesn't off-gas. If you've only got one day to turn around a suite, this may be a good solution to tidy up wood floors. I'll let you know how it turns out.
The next regular meeting is Tuesday March 29. Speakers are Lisa and Andy from Dominion Lending Harbour View. Yes, it's time for a Mortgage Market Update. See article below.
I've been assimilated (again). I dropped the little Blackberry Flip phone onto concrete yesterday. Now the 4, 5 and 6 buttons don't work. Even more important, the Call button is now useless. I like that little phone and the way Blackberry syncs with Outlook. Now I have the Samsung S Captiva smartphone. It's like trading in a Volkswagen Beetle on a BMW 855i. Rogers granted me a hardware upgrade option (2 years into the 3 year contract). So now I join the hordes who walk/drive/lay in bed gazing down at their phone looking at who-knows-what. Best thing so far - voice driving directions. That'll come in handy when I'm lost in Mill Bay. Synching with Outlook - not so good. I can do it thru Google's various apps but it's complicated. My secret reason for getting an Android phone - so I can buck the iPhone trend. What a bunch of sheep !! ;-)
See you Tuesday night!
Gord Knox
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TUESDAY MARCH 29 MEETING
Mortgage Market Update
This month we have Lisa Fibiger and Andy Vickers speaking. Lisa and Andy work with Dominion Lending Harbour View Mortgages.
They will give us an update on what Canadian lenders are up to, their newest terms and a bonus checklist of how to get ready for borrowing money for RE purchases.
Andy Vickers is a Mortgage Broker with Dominion Lending Harbour View Mortgages. He went to college in southern California and continued a short career as a golf professional in Florida. He started his financial career in 2006 for a large US bank as a mortgage banker in Sarasota, Florida. After moving home to Victoria in 2007 he continued his career as a mortgage specialist for Scotiabank. After growing his business and contacts in the Victoria area he joined Dominion Lending as a mortgage broker in 2010. Andy has a passion for real estate and is currently an investor with 2 rental properties of his own. He still plays golf but just for fun.
Lisa Fibiger is a Mortgage Broker with Dominion Lending Harbour View Mortgages. Lisa went to University of Victoria. She spent most of this time competing in Triathlons. She graduated from UVIC with a Bachelors Degree in Science with a major in Chemistry. After university Lisa enjoyed living in different parts of the world, including Germany for three years. Lisa was introduced into the mortgage world in 2008 where she mentored under one of CMP's (Canadian Mortgage Professionals) top 50 brokers for 2 years gaining a lot of experience. She now works as her own independent broker and is working on becoming one of the top in her field. 7 - 9 pm
Tuesday March 29, 2011
Comfort Hotel
3020 Blanshard St
$15 at the door (no charge for annual or REAG members)
There's always an after-meeting meeting at Redd's down the hall for networking, socializing, eating, etc.
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What Is A Good Cap Rate To Shoot For?
By Jeremy Cyrier
Many of you may be asking yourselves, "What's a good cap rate to shoot for?"
Let's start with defining the capitalization rate, or cap rate for short. The capitalization rate is an investment measure that's defined as the ratio relationship (reflected as a percentage) between the first year's net operating income and the purchase price of your investment.
In plain English, this means that if you pay $1million cash for a property and you receive $100,000 in cash flow over the next 12 months, your capitalization rate would be 10%.
Or, if you were seeking to purchase property at a 10% cap rate and were considering a $1million investment, you would you receive $100,000 back in the first 12 months.
Simple, but here's where it becomes complicated.
Cap rates are not the same for any investment property you want to buy or sell. They change across markets and property types. For example, a mobile home park in Alabama will have a different rate than a free standing net leased bank branch in Chicago. Investors value these properties based on their level of risk, stability, access to debt financing, durability of income, quality of tenant, and condition.
So how do you really know the right one to shoot for?
Unfortunately, there's no one black and white answer, book, guide, or capitalization rate bible that exists. Yes, there are resources that give you ideas where rates have been, but they don't tell you the right one for you.
There are formulas, however, that you can use to build up a rate that's unique and individual to you. One formula is called the Band of Investment Theory. Appraisers use it to value commercial real estate and it allows you to determine the right cap rate for you.
It works by taking the debt and the cash on cash return you're looking for. You calculate your mortgage constants and equity dividend rates, add the weighted averages of the two together, and presto, you have your target cap rate for the investment you're considering.
For example, your $1million property is available again. Except, now you're going to borrow $800,000 at 5.5% interest over 25 years. You'd like to earn a 13.23% cash on cash return on your $200,000 investment, so you're wondering, what's your target cap rate?
Your target cap rate for this investment would be 8.54%. This means that if you used an 8.54% rate for this investment, you'd likely be able to pay your lender and yourself the required debt service and cash on cash return.
It's a great tool, but remember, for that cap rate to work for you, make sure that you have a plan to produce a net operating income of $85,412.40 over the next 12 months!
Jeremy Cyrier, CCIM trains people who invest their own money in commercial real estate at CreInvestEd.com. For a free report on residential vs. commercial real estate investing, visit: http://commercialrealestateinvestingeducation.com/residential-vs-commercial-property-investment-report.
Article Source: What Is A Good Cap Rate To Shoot For?
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 Mike Patterson When you need a trustable, reliable, and reasonable Plumber who can do the job right the first time. 250-880-0104 |
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Considering Farm or Ranch Properties For Sale? Two Components To Evaluate
By Leo Kingston
Buying a farm or ranch properties for sale includes several things to consider. Just like purchasing other real estate properties, a ranch or farm land needs a thorough assessment in order to ensure the success of your investment in the future. When you plan to utilize the property for income generating purposes such as cattle raising and crop farming. These components in certain ranch and farm properties must be taken into consideration and thought through thoroughly. Let us divide these topics and discuss how it should be handled.
Land:
It would be foolish to buy a huge piece of land and do nothing with it, most people buy these properties because they can get a great deal on it, some plan to rent the land out to farmers and sit back and receive rental income. Leaving it open, undeveloped is truly a waste. In many countries including the US, the Government pays property owners thousands of dollars annually NOT to plant or make the ground yield crops. This is perhaps the biggest issue to consideration when purchasing acres of property. Are we going to buy the farm or ranch to let it sit or be fruitful with it.
Consider how you will be utilizing the land and how you could reap benefits from it with respect to your financial capabilities and the jobs that it would produce for others.
Many people purchase property without really assessing their financial status for the next 10 years. Forecasting the future based on trends and economics with respect to your financial capabilities, means that you should only consider those options that are attainable by your current financial standing. Purchasing real-estate that is too expensive can complicate or jeopardize your financial future.
Since there are many options in utilizing a farm or ranch property, each option has different things to consider as well. Since farming and ranching use different methods and equipment, these are other factors you'll need to consider regarding the property. One of the most complicated factors to consider perhaps is the quality and attributes of the soil. From soil composition to the slope of the land, these things need to be considered and evaluated in order to identify how these factors will affect the result of your production. This is a vital undertaking in order to minimize the costs and maximize the benefits in the long-run. Be sure to find an expert real-estate agent or broker in that area that understands the industry and can provide you with sound advice.
Building:
A ranch or farm property for sale normally doesn't have a building or structure on the property, especially when it is far from town. Farms and ranches would still require houses built on the property for the tenants and farmers. Unless the land wasn't utilized by someone before, don't expect any form of housing on the property. Usually, building houses throughout these kind of properties are just humble homesteads where they are simple unlike modern houses in cities. Old buildings on these kind of properties for sale need to have a thorough evaluation in terms of cost for repairing to achieve something more desirable. If your desire is to make the farm or ranch your retirement haven of some sort or a vacation house or hunting lodge where it is nearer to the forests and wildlife, expect more wear-and-tear to occur in areas like these since their will be more species, involving bugs really does extra damages to structures compared to buildings in the city.
Presently there are only two major things to consider when it comes to farm or ranch properties for sale, however, evaluating both aren't simple and prove to be challenging. Hiring experts to help you do the assessment is a good choice. Evaluate the estimated cost of renovating both these components plus your working capital versus your estimated benefits for long-term financial stability in order to know if the farm or ranch property you desire is worthy of your investments.
Visit Leo Kingston at his 18002SellHomes web site for more information about buying and [http://www.18002SellHomes.com]selling homes. Leo is based in Oklahoma City and has over 3 decades of real estate experience.
Article Source: Considering Farm or Ranch Properties For Sale? Two Components To Evaluate |
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