Eagle Quest Properties

A little buzz of Obama’s trip to China.  According to the Financial Times, the American president should have told the Chinese that he wasn’t going to put the US into depression just to protect the value of China’s dollar holdings.  ‘We didn’t ask you to stock up all those dollars,’ as Obama might have put it. ‘It’s not our fault if the dollar goes down and you lose money.’  US economists think China should raise the value of the yuan. This would immediately lower the value, domestically, of the trillion(s?) worth of US-dollar assets China holds as reserves. It would also make Chinese products less competitive on the world market.  Americans built too many shopping malls; the Chinese built too many factories.  One consumes too much; one produces too much.  “You think you’ve got trouble,” Premier Hu Jintao might have replied to Mr. Obama. “Did you know that there are something like 200 million Chinese who still get by on as little as a dollar a day? Let’s face facts. You’re sitting there in Washington, comfortably talking about how much free health care and unemployment benefits to give the American people. We don’t have the time…or the money for those kinds of things. Too many Chinese people. They don’t earn enough to afford the kind of cradle-to-grave bribes you give your people. We have to keep them working; there’s no other way.  “Besides, we don’t quite see why we should pay for your mistakes. It wasn’t our economy that blew up. It wasn’t our financial industry that sold houses to people who couldn’t afford them. It wasn’t our consumers who spent more than they had and went too deeply into debt.   “It’s the debtor who’s supposed to pay, not the lender. We’re the lender!”  (who’s the all take?  Who’s the all give?  Who can decide?)

In the US, consumer spending is about 70% of the economy. In China, fixed capital formation is estimated to have made up 70% of China’s growth in 2008 and as much as 90% in the first half of this year.  Well, paying a little attention to the global economic factors that affect the flow of investment capital helps.

This Is It!

This month’s play day we chose to see “This Is It”.  It is a concert movie showing Michael Jackson’s final dress rehearsal scenes up to two days before his passing.  As this was our first time watching MJ on stage, we realized his performance was quite uniquely attractive with high impact and lots of energy.  We are truly amused by his moonwalk dancing, flexible movements,  vocal prodigy, electrifying charm and perfect choreography.   “Billie Jean” and his other favorite songs are previewed right in front of us on the big screen.  All the audiences including MJ fans are thrilled!  We are thrilled.  His 50 comeback concert shows had been planned for and sold out in a few hours, the King of Pop is now forever legendary!  Michael Jackson’s music, his love and grace lives on.  “This Is It” is for you to admire and cherish if you so desire.

Outrageous Advertising That’s Outrageously Successful

Buy

Most business owners overlook the importance of marketing as part of their business model.  As a real estate investor, you are in the marketing business as quoted by some gurus.  Simply, your phones won’t be ringing without a good marketing system, and you will eventually run out of leads.  Some methods are: Yellow Pages, Local Newspaper Classified Ads, Google Ad Words & Articles, Internet Lead Sites, Signs around town, direct mail to sellers, REIA meetings, Landlord meetings, Billboards, TV.  To achieve outrageous results, Julia is reading Bill Glazer’s Outrageous Advertising That’s Outrageously Successful. Bill has the unique ability to combine proven and effective direct response marketing strategies with OUTRAGEOUS Advertising that cuts-through-the-clutter, get’s noticed and gets results.  It is definitely a fun book to read.

Highest and Best Use

Here’s an old historical church, which has been converted to a thirteen unit apartment.  Doesn’t it sound outrageously creative?  It looks gorgeous!  We happened to drive by it while we were checking on some other buildings.  It is on a nice corner lot with plenty of parking.  It sold for $850,000 in 2005, yet, the buyer had to incur $1,100,000 financing to rehab and convert to residential units.  The after conversion cost ended to be $154,000/unit.  It is highly unlikely each unit would rent for $1,540/month, considering the 1% unit rule.  The verdict: the best use might not be at its highest economically.

The Numbers Behind The Curtains

A Hong Kong apartment set a record last month.  It was sold for $56.6 million, which works out to be $11,350/sqft – the highest price ever paid in China.  The buyer may well be bullish on China!  Besides the Cap rate, net operating income, cash on cash return and cash flow, we shouldn’t overlook the calculation on the cost per square foot.  Would you buy a 1500 sqft house instead of 2000 sqft house for the same price given both houses have 3 bedrooms and 2 bathrooms?  2ndly, renters would rather rent a 750 sqft unit vs 550 sqft unit given both have the same price in same area.  We come across a building for sale at 8.5% Cap, the cost/sqft is $180.  By comparison, another building at 7.7% Cap sells for $76/sqft in the same territory.  Be aware of replacement cost!  Not only that you can almost build a new building at $180/sqft (depending your marketplace), your insurance company can only pay you up to replacement cost if there’s a total loss on the building.

$1,350 Home Renovation Tax Credit for “Green” Do-It-Yourself

Is anyone doing home renovation for Christmas or New Year?  If yes, please NOTE the Federal Government of Canada is giving out 15% tax credit or up to $1,350 for work performed or goods acquired between Jan. 27, 2009 and Feb. 1, 2010.  Make your home more environmentally friendly, save money, save the environment, and save your health at the same time.

• Lighting: replace incandescent lights with compact fluorescent bulbs operate on a quarter of energy, yet last 10x longer
• Plumbing: using a low-flow toilet can save 15 litres of water per flush.  Inexpensive low-flow aerators are easy to install and cut water use by half or more
• Painting:  Many paints contain chemicals called Volatile Organic Compounds (VOCs) and other toxic components which evaporate and can hurt your indoor air quality and aggravate asthma and allergies. Many major paint manufacturers offer low or no-VOC paints to help you avoid those potential health hazards.
• Flooring: Bamboo is an environmentally friendly substitute for hardwood that provides much of the hardness and convenience of traditional wood flooring at about the same price. Look for a formaldehyde-free pre-finish and low formaldehyde-adhesive emissions. For carpets choose wool—it’s renewable, biodegradable, and often more durable than synthetics.
• Appliances: If your washing machine is more than 10 years old, you can save up to $100 a year by switching to a new, efficient model.

“Doing what you love is the cornerstone of having abundance in your life.“

- Wayne Dyer

Daniel Lynes and Julia Lee

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We are in a recession.  Maybe it will become a greater recession.  We don’t know.  But it is a time of credit contraction instead of credit expansion.  A $5 shirt?  A $10 pair of shorts?  That is a sign of deflation.  A few months ago, these same clothes may have had designer brands on them – Diesel or Polo Ralph Lauren, perhaps.  Excess capacity was created by excess credit.  That is what happens in an expansion.  Manufacturers borrow to increase capacity, so they can sell more products to credit-addled consumers.  Then the excess capacity dooms them.  They put out too many goods and too many services.  When demand falls along with incomes and housing, prices fall too.  A couple of our readers share that their line of credit (LOC) has been revoked by their bank, because they have not used it for many years.  If you are relying on your LOC as a contingency fund, be aware and be prepared.  Ideally, the purpose of a LOC is to buy income producing properties that create positive passive income every month.

Recap to Apartment Investing

Further to the last issue, we are so passionate about apartment investing that we can’t help to share a few more jewels with you.

PHYSICAL ANALYSIS: In-suite conditions must be livable, clean and functional with a good efficient layout. Common areas, roof, mechanicals; security is key as everyone wants to be safe while they are sleeping.

FINANCIAL ANALYSIS: Check lease provisions. Ensure terms are properly enforced with background checks. Historical data should have three years of operating history; a major upturn just before being placed on the market should be a concern. Almost everyone lies about their utility costs, so ask for the utility bills.

TIMING VS LOCATION: If you buy the property right in the wrong location, you can still get hurt.  The physical location will help us read the demographics.

TIMING VS VALUE: If you buy cheap enough, if the market tanks I will still be okay?  Not really true.  If the market takes a dive, you could have a serious challenge getting your project to fill.

The key is that if you are cashflowing in a property you don’t have to sell even if the market is down.  Therefore, you have to buy right, at the right time, in the right location with the RIGHT TERMS.

The Passing of a Legend

With the passing of Michael Jackson, the undisputed King of Pop Music, we are reminded of our extreme mortality. Tomorrow is only a hope; today is a gift, called the present. Why don’t we live life to the fullest with a purpose? Michael was truly living his purpose even when he was only 5 years old.  Sadly, he passed away at 50 from a heart attack on June 25, 2009 in Los Angeles.  Our prayers are with his family in this sad time, for them.

Let Us Help You Help Us

We have been actively looking for 20+ unit apartment buildings in Southern Ontario.  If you have come across apartment owners who want to sell and you are not in the market to buy, please call us at 1-877-978-9788 or e-mail Daniel.  We will reward you according to the size of the deal, that we close.

If you want to share any of your insights, market knowledge and your resources, we would always appreciate it.

Master Your Invisible Power

We feel fortunate to have attended the world-famous seminar “The Millionaire Mind Intensive” by T. Harv Eker’s team.  To master the inner game of wealth, you should read Harv’s book: Secrets of the Millionaire Mind.

Each of us has a personal money and success blueprint already engrained in our subconscious mind.  It is this blueprint that is running our financial life. Yet, we might not know how to reset it for success.  Our comfort zone is in direct proportion to our income zone.  We should have an active income as well as a passive stream of income: real estate, storage, Internet marketing, etc.  Millionaires are good money managers.  Yes, we are excited to start using an excellent and easy money management system.  You can too!

There was one exercise that made some people in the audience and Julia cry.  In the end, Julia was taught to let go of her pain from childhood experiences owing to her mother’s extreme dominating and abusive behaviors.  People who have to be right are usually the most miserable.  Research shows that 47% of all cancer is related to unresolved anger.  The seminar trainer, Doug Nelson, says it best:  “everyone does their best they can at times.  We don’t necessarily forget, but we do necessarily forgive”.

If you are ready to experience a life-changing journey yourself, please call or e-mail us as we have received some free tickets from the event.

Managing Your Credit Score

A credit score is a number that lenders use to help them decide “if I give this person a loan or credit card, how likely is it that I’ll be paid back on time?”  It essentially dictates your finances.  Most of us don’t know this number until we apply for a loan.  Julia has met a lady, who got declined for a mortgage because she had been paying everything in cash and had not established a credit history in her life.

FIND OUT WHERE YOU STAND: Request a copy of your report from the three major credit reporting agencies (CRAs):  Equifax, TransUnion, Experian.

FIGURE OUT THE FACTS: One late payment on your Visa can stay on your report for up to seven years.  If you find any discrepancies, you need to fill out a dispute form and send it back to the CRA by registered mail.  Fortunately, the law states any item not being verified as accurate must be removed from your report.

CLEAN UP: Set up a plan to eliminate existing debts.  Clearing up debt can take time. Remember that you have the right to add remarks to your file. Take the opportunity to defend yourself and point out the good areas of your report, such as highlighting a loan or a mortgage that was paid on schedule.

PROVE RELIABILITY: Taking out a loan that you don’t need and then paying it back in a short span of time can prove that you are a good credit risk.

TOO FEW OR TOO MANY: The ideal position is to have a few lines of credit, never more than you could afford to pay off on your income, and with none of them maxed out.  Cancel old cards that you never use.  Don’t ever max out one giant line of credit by putting your entire debt on it.  This is akin to killing the goose that laid the golden egg.

“Holding on to anger and resentment is like drinking poison and expecting someone else to die.”

- Unknown

Daniel Lynes and Julia Lee Lynes

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Volume #2 Issue #4

2009

The Deal That Wasn’t To Be
We have been looking at a property in earnest in Hamilton lately.  However, after spending some time analyzing it, running the numbers, and weighing all the possible options we have decided not to go ahead with it.  Everything looked great on paper, but we felt that there was just too much potential for the numbers to become very skewed, because of the age of the building, and the lack of existing services.  On another note, we are constantly pursuing other properties that fit our profile.  If anyone is open to joint venture possibilities, please feel free to email our Acquisitions Department.

Tweeting on Twitter
If you haven’t heard about Twitter yet, perhaps you should.  It’s a great tool for both propelling your online presence to the next level, and to hobknob with some of the best minds in your areas of interest.  Since joining Twitter, we’ve found a wealth of information on real estate and search engine optimization (SEO) that we wouldn’t otherwise have known about.  Before you jump onto Twitter, you might want to learn one simple rule of etiquette.  If you like something someone said, and you want other people to know about it, you should ‘retweet’ it.  In layman’s parlance, that means give credit to the original author.  You do this by preceding the quote with ‘RT @twittername’, where ‘twittername’ is the twitter username of the person you’re quoting.  ‘RT’ means ‘retweet’.  If you wish to reply to someone, merely type in ‘@twittername Whatever your response is’.  If you wish to send them a private message (a direct message in twitterspeak), type in ‘D @twittername Whatever your direct message is’.  If you would like to join Daniel on Twitter, you can follow him at @dlynes.  Happy tweeting!

“Be faithful in small things because it is in them that your strength lies.”

Daniel Lynes and Julia Lee Lynes

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Volume #1 Issue #1

2008

Hello, welcome to the Lynes Roar. We are pleased to extend our sincere appreciation of your desire to stay connected with us. This is our first newsletter and we are extremely grateful to July Ono to mentor us on our first newsletter. The purpose of our monthly newsletter is to share our experiences with you and allow us to keep connected with you on a monthly basis.

We were happily married on August 8th, 2008 and we trust that you like the picture.

Julia Lynes

She came to Canada from Guangzhou, China 20 years ago, without knowing a word of English. She loves Canada. Her biggest challenge was finishing secondary school with her limited knowledge of English, and achieving honor roll standing. Her dream was to complete a business degree in university. Due to financial hardship in her family and having to work multiple jobs to help pay the bills, she regrets not being able to go to university. She completed her CIP and worked in several commercial insurance companies in the underwriting department for 10 years. She started to think about creating a stream of passive income after her disability from an eye surgery and a few herniated discs on her neck. She is so excited to have discovered real estate investing. For that, she has to thank Selena Cheung, who first introduced her the power of real estate: a high leverage investment with small, calculated risks.

Daniel Lynes

He has been developing computer software as a hobby since 1980. He has been developing computer software, professionally since 1994. He has also been doing Linux and Windows system administration since 1997. He hitchhiked from Thunder Bay, ON to Vancouver, BC in 1994. After 3 days of driving, he arrived in the

most beautiful place in the world. The next day he called up his mother and told her he was never going back to Ontario!

Our Trip to Las Vegas

It was such a treat that we had the opportunity to learn about Commercial Real Estate investing from Scott Scheel in Vegas for 4 intense days. The four primary property types: office, retail, apartment and industrial/warehouse. Each type has its own criteria and considerations. i.e. A retail property is leased based on square footage and typically has a operating expense ratio of 15-35% (of GOI) as most of the expenses can be passed down to the tenants. An apartment is leased by the unit and it is not uncommon to have an expense ratio of 40-60%. The former typically has a lease term of 3 years or more, which can be quite attractive for the bank to finance. The latter typically has up to 1 year lease term and it is generally more management intensive.

Having a low interest rate and a soft market, this is the best time to buy commercial properties in the last decade. Scott Scheel is a commercial real estate Einstein. He started investing with a 24 unit apartment, no credit and $400,000 in debt. He achieved financial freedom in less than 2 years. We learned a lot from him and we are grateful to have him and his team to coach us on our investments.

Tip of the Month

If you find yourself needing to use MS Office documents, but you can’t justify the cost, take a look at a free alternative that’s available for Windows, Mac, and Linux: OpenOffice.org. For simple tasks, it’s usually easier to use. Unless you’re an international economist, you’ll probably find it just as capable as MS Office.

Until next month, we wish you an abundant and prosperous month! God bless!

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