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The Lynes’ Roar – December 2009

Author: admin / Category: Newsletter, The Lynes' Roar
Volume #2 Issue #12 2009

Julia and DanielMerry Christmas and Happy 2010 New Year, everyone.  We sincerely wish you a new year filled with great things to celebrate in the world, in your life and in you.  As the snow is falling clear and white, we are sending this issue out a bit early before some of you go on Christmas holidays.

We are so incredibly grateful that you have been staying connected with us by reading our newsletters.  The compliments we received from your e-mails have given us so much encouragement and strength to stay on track.  Thank you a million!  This year has been a bit of roller coaster for us: a brand new environment to live in and to invest, lots of learning curves, and many road blocks to overcome.  We are confident to say that we are now more equipped with strategies and an understanding of the marketplace than we had a year ago.  We are finally settling down in Southern Ontario after moving from Vancouver a year ago, replacing the rain with the snow!  We feel happy to discover a niche market for us to tap into besides commercial properties.  We have also discovered the emerging markets for us to focus on.  We regret that we haven’t bought a commercial property yet, but we would rather be poor than buy the wrong property.  We also missed a couple of deals because our private money base is currently too small to support larger investment properties.  Well, we now know that our new priority is to grow our pool of private investors.  We love the quote from a highly successful marketer, ‘it is not about how much you are receiving, it is about how strong you are becoming.’  Let’s all look forward to year 2010.  We are moving on!

Discovery Tour of Hamilton

Hamilton, Ontario (Canada) has long been called “Steeltown” with the associated stigma and perception of it being a hardcore blue-collar city due to the prevalence of the steel plants located on The Hammer's Skyline at Nightthe shores of Lake Ontario.  The ongoing development, advancement of transportation systems, growing student population and affordable real estate market in Hamilton make for great investment opportunities yielding strong rental returns.  It has been suggested that Hamilton is becoming a bio-tech town.  Average Price: $260,000; vacancy rate: 3.2%.  We feel fortunate to be able to invite Mary Flynn, a REIN member to give us a tour of Hamilton.  Mary was very gracious to show us her investment properties; identified a few hot spots for us to consider, and shared her priceless words of wisdom with us.  An incredible woman with a big heart.  Mary was born in Hamilton, lived in Hamilton, is investing in Hamilton and she knows her market.  To book a tour of Hamilton with Mary and pick her brain, call her at 416-259-8116.

Does Any Of This Interest You?

Here’s a for sale by owner deal, a residential property we have found:

Asking Price:  $319,500.

- Total Income:  $41,800 minus 29% expense = $29,820 NOI

- Down Payment 25%:  $79,875

- Financing: $239,625 Variable Interest Rate 2.25% 25 Year Amortization

- $1,045/month X 12 = $12,540/year

- Cash flow: $29,820 – $12,540 = $17,280/year

- COCR (Cash on Cash Return): 22%

- DCR (Debt Coverage Ratio): 2.38

- Cap Rate: 9.33%

In addition to cash flow, we gain multiple profits such as the following:

  • principal reduction as your tenants pay down your mortgage (the total principal paydown is $7,234 after Year 1)
  • appreciation of the property (the properties in the area have appreciated by 30% over the last 3 year period, let’s be conservative to use 3%, the value of the property then goes up by $9,585 after Year 1)
  • tax benefits from equity depreciation (building, mechanical systems, roofs, driveway, parking lot, …  your accountant can explain how this works).
  • the power of leverage by using the bank’s money (we put 25% down to gain access to 100% of the profits from 100% of the property when property value goes up)
  • equity investment (if we buy the property below market value, we obtained equity from day 1)

Based on the numbers shown, if we add up the cash flow, the principal paydown, the projected property appreciation: $17,280 + $7,234 + $9,585 = $34,099.  Then $34,099 / $79,875 = 43% ROI (return on investment in Year 1).  Does any of this interest you?

This deal has been posted to the Lynes’ Inner Circle, but we haven’t received a committed response yet.  Anyone interested to know more about this deal, please e-mail our acquisitions department.  Anyone interested to receive immediate e-mail notification of our potential deals, please sign up to the Lynes’ Inner Circle by e-mailing us.  Any referrals you can give us to help us grow our real estate community is forever appreciated.

Variable Rate Mortgages Can Save You Thousands!

We started paying attention to variable rates when we first heard Don Campbell talk about it at the A.C.R.E. workshop back in April of this year.  Don seems to prefer variable rate as he said 85% of the time you win by using variable rate.  His statement is based on the last 80 years track record.  To win 100% of the time, we presume you would have to lock in to fixed rate with perfect timing.  However, that would imply that you knew when the perfect timing was, and your bank doesn’t impose a penalty for locking in.  Mary Flynn also strategically uses variable rate mortgages for generating incredible COCR on her investments.  From 1990 to 2004, interest rates decreased to a low of 3.5% from a high of 12%.  Since 2004, rates moved higher to 6.25%, only to fall again the following year!  The fact is that the prime rate in Canada has maintained a 3% band for the past 9 years.  When inflation is low, we can maintain low interest rates; government encourage consumers to spend which, in turn, should stimulate the overall economy.  Julia is excited to see that she can save $30,000 interest even though she has to pay a few thousand dollar penalty.  Well, do your own homework and seek advise from qualified mortgage specialists.  Does a 4.25% five-year fixed rate look tantalizing?  How about the prevailing 2.25% variable rate?  Now is your opportunity to start contributing to your bottom line and not your bank’s.

Links for your research: mortgage rate history; Canadian mortgage trends:  fixed or variable?

“Our blessing to you all for abundant health and abundant wealth.  See you in 2010!”

- Daniel & Julia

Daniel Lynes and Julia Lee

Raising Ceilings Without Raising the Roof

Author: admin / Category: Building Industry

An 8-foot flat ceiling can make a home feel cramped and uniform these days, as higher ceilings, both flat and vaulted, take over the housing market. Forty-two percent of builders responding to a 2002 NAHB survey said their homes had 9-foot first-floor ceilings, and 15 percent claimed ceilings of more than 9 feet. In a June 2005 AIA survey, 51 percent of residential architects said they use increased ceiling heights, two-story entries and vaulted ceilings to add volume to their homes.

Creating a cathedral ceiling in a ranch or split level home is one of the easiest ways to break out of the box, architecturally speaking. Cathedral ceilings can open up a house, adding a more spacious feeling to just about any room.

On the other hand, rooms with cathedral ceilings can be difficult to heat and cool. Homeowners may love the appearance of their newly remodeled room, but find that it is uncomfortable to live in.

via Raising Ceilings Without Raising the Roof – 8/1/2005 – Professional Remodeler.

Student Housing Deemed Illegal in Oshawa – No More Appeals

Author: admin / Category: Ontario Real Estate

His decision was upheld by the Ontario Court of Appeal when the landlords challenged it eight months later. Undeterred, the landlords made an application to the Supreme Court for leave to appeal, at which point the Ontario Human Rights Commission became involved in the case, along with an affidavit from Ms. Hall outlining the arguments the Commission would make if allowed to intervene.

In its submission to the Court, the Commission said that the effect of the zoning bylaw was to restrict students' access to rental housing because of the nature of the students' relationships to one another. It argued such a restriction is inconsistent with the Ontario Planning Act, which states that a municipality does not have the authority to pass a bylaw that distinguishes between people who are related or unrelated with respect to the occupancy or use of a building, including the occupancy or use as a single housekeeping unit.

via Court slams door on student housing case.

Solar Powered Sundial Building in Dezhou, Shandong, PRC

Author: admin / Category: Building Industry, Chinese Real Estate

The new congress center for the 4th World Solar Cities Conference, which takes place in September 2010, is now complete. Located in Dezhou of the Shandong Province, the 75,000 square meter (807,293 square feet) center includes exhibition centers, scientific research facilities, meeting and training facilities, and a hotel. It'll be a showcase of solar design, solar desalination, and, of course, about 50,000 square-feet of solar panels on the exterior.

With advanced roof and wall insulation, the conference center is supposed to be about 30% more efficient than China's national standard. And, notwithstanding its size, renewable energy will power 95% of the center's energy needs.

via Massive Solar Powered Sundial Building Now Complete in Dezhou, China.

Petition McSquinty’s New Tax Grab! No More Taxes!

Author: admin / Category: Community Service

Next summer (2010) the Ontario Government is set to  put into force its new harmonized GST/PST sales tax which will apply a 13%  sales tax to everything we purchase.

Things That Were Not Subject To The Current 8% PST will be now taxed.
As a result, things that were not previously taxed under the current Ontario Provincial Sales Tax (PST) will be taxed at 8%..

The new 13% tax will therefore apply to things like your electric bill, your gas bill, your water bill, condominium fees, insurance premiums, and every other good and service you purchase. There are almost no exemptions.

The current Ontario PST tax does not apply to services, nor does it apply to the purchase of certain goods. The new 13% tax will therefore extend the old 8% PST tax rate to the purchase of all goods and all services.

The New 13% Tax Will Apply To The Purchase of All New Homes. The new harmonized GST/PST will also apply to all purchases of all new homes. If a person were to purchase a new $1 million dollar home in Toronto , they would have to pay roughly $200,000 in taxes as a result of the Ontario land transfer tax, the new city of Toronto land transfer tax, and the new harmonized 13% GST/PST.

Think about that and what that would do to real estate values in the province .

It will cause property values to fall and kill the new home construction industry and the jobs it creates.

And it won’t be long before you’ll hear our elected representatives telling us that, because of the harm that has been inflicted to the new home construction industry by the new 13% tax, it would be “fair” to extend the new 13% tax to sales of existing homes.

The New 13% Tax Is An Assault On Your Primary Residence. Canadians have had two things that they have always been able to count on as being tax free – things that they could use to save money and accumulate wealth. They are your: (a) primary home; and (b)RRSP. That’s it.

The extension of the new 13% GST/PST to homes is simply a tax assault by the government on your primary home.. They want to tax your primary home and you will suffer because of it.
Why? Because if a purchaser has to pay almost $200,000 in taxes to buy your $1 million dollar home, the purchaser is going to pay less to you for your home. The purchaser will reduce the amount he or she is willing to pay to you in order to pay all the taxes.

The New 13% Tax Will Effectively Raise Your Income Taxes. Currently, the combined Federal/Ontario income tax rates are roughly 25% on the first $20,000 of taxable income, 42% on the next $40,000 of taxable income, and 46.5% on each dollar of taxable income over $60,000.
On top of that you have to add the “Fair Share Health Tax” of up to $1,000 each of us has to pay.

If the Ontario Government gets away with implementing their new harmonized GST/PST sales tax of 13%, the top effective income tax rates in Ontario will be as follows (since you can’t spend any of your tax paid dollars without paying the new harmonized 13% GST/PST tax):

38% on the first $20,000
53% on the next $40,000
59.5% on every dollar over $60,000

On top of that, you have to pay your Ontario Fair Share Health Tax, your city realty taxes, your city garbage fees, your city water fees, your city street parking permit fees, your annual Ontario vehicle license plate fees, your Ontario land transfer tax, your gasoline taxes, your liquor taxes, your air departure taxes, your entertainment taxes, and so on..

OF ALL THE MONEY YOU WORKED HARD TO EARN, WHAT PERCENTAGE
ARE YOU REALLY KEEPING FOR YOUR OWN USE?  25%? 20%? 10%? ENOUGH IS ENOUGH – FIGHT BACK THIS HAS GOT TO STOP HERE OR WE WILL ALL SOON BE WORKING FULL TIME FOR THE VARIOUS LEVELS OF GOVERNMENT IN ONTARIO .
YOU CAN ALREADY SEE HOW ARE LIFESTYLES ARE DECLINING BECAUSE OF THE ENORMOUS TAX LOAD WE BEAR.. AS A RESULT, I URGE YOU TO TAKE THIS ISSUE SERIOUSLY AND TO FILL IN AND SIGN THE PETITION AT  www.unfairtaxgrab.com AGAINST THE NEW HARMONIZED GST/PST TAX.

I WOULD ALSO ASK YOU TO SEND THIS E-MAIL ON TO OTHERS THAT YOU KNOW AND ASK THEM TO DO THE SAME. IF WE DON’T WORK TOGETHER ON THIS ISSUE THE NEW HARMONIZED 13% SALES TAX WILL BECOME A REALITY NEXT SUMMER.

THANK YOU.

to sign a petition go to  www.unfairtaxgrab.com

Thousands say “no” to the HST

Dalton McGuinty claims “no one is complaining” about his unfair tax grab. You proved him wrong this week. On Wednesday we sent out a request asking you to send a message to the McGuinty Government about the HST. Almost instantly our email box began to fill. By the end of the day we’d received nearly 2,000 messages.New Democrat Members of Provincial Parliament did their best to read them into the record in the Legislature, but they simply ran out of time. The good news is: there are more debates to come and we’ll be sending you details about how to keep up the fight against this unfair tax grab. In the meantime, you can read a transcript of the debate here .

Together we can stop the HST.

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