Eagle Quest Properties

GOOD NEWS to our real estate investing friends and associates:  8-10% Cap rate buildings are now coming into the marketplace (Ontario, Canada).  Besides lining up the fundamentals, try to find motivated sellers!  We came across an owner who had overpaid for his apartment building by $300K two years ago and is now bleeding $150/unit negative cash flow owing to mismanagement.  Another owner wants to sell a Mixed Use building with 75% seller financing.  Needless to say, there’s more and more power of sales on residential houses you can pick up for a bargain.  If you are real estate savvy, you might want to start analyzing some deals and get ready to buy.

Qualifying a good neighborhood is far more important than the numbers.  We have viewed a condo for sale at $68,000, but the neighborhood is mostly infested with drug dealers, ladies of the night and druggies.  Talk to the cops on the street, they might tell you the whole story behind the scene if you ask nicely (although, officially they’re not allowed to say negative things about their beat).  Talk to the tenants of the building you want to buy.  Talk to the residents on the streets.  Talk to the cab drivers by giving them a tip.  Drive around different neighborhoods at different times, you would be amazed to see one block can be completely different from the next block.  One property owner spent over $500K to retrofit, renovate, convert from office use to residential units with high quality material, yet he can’t convert his tenant profile and the quality of the neighborhood!

The Lynes’ Inner Circle

We would like to say thank you to all who inquired about our real estate opportunities.  The more deals we analyze, the more time we spend with appointments, and power team members, the less time we can attend to individual inquiries.  It has been suggested we form an inner circle to serve our real estate community.  Initially, we want to set up an exclusive mailing list for readers to be notified about all the potential deals: Commercial and Residential.  We believe residential properties with opportunity for some minor upgrades for a quick flip can produce quick chunks of cash in good pockets of neighborhoods.  Our criteria: any one within our database who are interested in real estate investing in our residential and/or commercial projects.  Any questions or concerns, please drop us a line.

If you have decided to join us, we welcome you to send us a e-mail with subject line: “The Lynes’ Inner Circle”.

Is It A Setback?

Life is not getting easy for most of us in today’s turbulent economy.  We see friends being let go from their long term jobs.  We have financial constraints from overspending on real estate courses, unexpected vacancy on a property, Daniel’s unstable contracting work and the list goes on.  Part of us (the impatient side) want to quit, but Scott Scheel’s story inspires us to move on.  Scott incurred a $400,000 debt from failing in a business venture.  He couldn’t even feed his dog and he had to move back to his mom’s tiny basement suite.  (Be grateful to supportive parents when they are).  With his creative strategies, Scott bought his first 24 unit apartment building with 80% VTB, which cash flows $2,500/month.  He now owns and manages hundreds of millions of commercial properties.  Should we believe a set back is a set up for a come back?  If denial is not a choice, we can only work harder to get through our challenges and learn from our mistakes.  Going through a setback requires mental strength and taking actions, yet, you will see you will become a much stronger person at the end.  Cheers!

Free Seminar:  Risks in Real Estate, Kitchener, ON

For those of you in Ontario, the Gowlings law firm will be hosting a free seminar at the Holiday Inn, 30 Fairway Rd S, Kitchener, ON.  Free breakfast is served during registration at 7:30am.  Seminar starts at 8am and lasts until 9:30am.  The title is ‘Risks in Real Estate‘.  It will touch on the topics of Aboriginal Issues (the duty to consult and what it means to you), Official Plan Policy Changes (impact on development), and Paying the Rent (landlord and tenant points of view).  If you are going to attend, please register at Gowlings’ website.  For more information about the event, please contact Chantal Chaves by phone at 519-569-4558, or by email.

4 Full Days of Complete Immersion!

Here we are in the Rock & Roll City, Cleveland, OH attending the Commercial Property Academy as alumni.  Scott Scheel never ceases to amaze us by his genius creativity in adaptive reuse, financing in volatile market, advanced market analysis, reading trends, repair & rehabbing, condo conversions, mini-storage and much more!  Aside from the seminar world, Scott took us to the real world.  He took us on a bus tour to show us some of his properties, how he analyzes the upsides in real numbers, structures the deal, acquires the property, organizes phases, budgets, adaptive reuse strategies and how he makes the profit at the end of his project.  What an eye-opening experience!  If you are going to learn, learn from the best!

One intriguing scenario:  A gung ho young man, Ted bought a property in 2006 for $2,000,000 at a 7% Cap rate with 10% ($200,000) down and 10% ($200,000) seller financed note for 3 years at 5% interest with no payments.  He took out a bank loan of $1,600,000 with interest rate of 4.5% for 25 years with a 3 year term and monthly payment of $8,856 ($106,272 in annual debt service).  He has a DCR (debt coverage ratio) of 1.27 with his NOI (net operating income) of $135,000.  Over the next 3 years, Ted successfully raises his NOI to $155,000, so that he can refinance the property.   He hopes that the refinance will allow him to pay off the seller’s $200,000 note and pay off his acquisitions loan of $1,600,000.  Sadly, when Ted sits down with the loan officer to discuss his new loan in 2009, he is shocked to realize the interest rate has climbed to 8%.  He can only support a loan payment of $10,700/month or $128,400/year based on $155,000 NOI.  Thus, his property can only support a loan of $1,279,230.  After paying on his loan for 3 years his balance is still $1,488,092 and the balance with interest on his balloon to seller is $231,525.  This leaves him $440,387 short of being able to pay off his notes and keep the property.  Ted has already invested $200,000 up front and he has no where to go to raise the $440,387, to avoid foreclosure by the bank and pay off the seller.

Don’t be caught in the bubble!  Knowing when to get in and when to get out is critically important.  NEVER EVER OVERLEVERAGE on your properties!

The New Top 10 Towns

Don Campbell, president of the Real Estate Investment Network (REIN), has released the list of Alberta, BC and Ontario’s top investment towns for 2009 – 2014.  The list for Ontario is as follows:

1. Technology Triangle: Kitchener, Waterloo, Cambridge
2. Hamilton
3. Simcoe Shores:Barrie- Orillia
4. Brampton
5. Durham Region – Whitby, Pickering, and Ajax
6. Ottawa
7. Brantford
8. Toronto
9. Vaughan
10. Whitchurch-Stouffville

For further information about REIN Canada (named North America’s best REIA by Robert Allen), or to purchase the reports, please contact REIN at 1-888-824-7346, or by email.

A Powerful Use of Google Maps

Do you know that you can now view Google Maps at the street level while sitting in the comfort of your own home?  This is new to Canada and Europe.  The US has had this feature for a couple of years now, but due to privacy issues in Canada and Europe it took a while before everyone was happy with it.  It is called Google Street View and It is a great little tool.  Type in an address and drag the little man to your designated spot to view.  You can check for blighted lots, trashy streets, schools, shops, and anchors from your own desk.  You can view a rental building you want to rent from.  Try it, it is great!

“A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty”

- Winston Churchill

Daniel Lynes and Julia Lee

Print/PDF Version | Read our Privacy Policy | Eagle Quest Properties, Caledonia, ON, Canada | 1-877-978-9788 |  If you did not give permission to receive emails from this sender, please notify us.

We are heading into the third quarter of 2009, and already this year’s looking considerably different from 2008.  We’ve had a large dip from the peak of the last decade’s housing bubble, and last month we had some up tempo buying in the low end of the housing market in Vancouver.  We’ve seen a lot of market insiders suggesting that we’ve ridden out the bumps in the market place and that we’re going to see a very gradual increase in prices until 2010, when the market is supposed to go back to normal.  Based on what we’ve seen for prices on the historical charts (from BC Real Estate Association’s own data), we believe we’re heading for another price correction in the market place that will be happening sometime between September, 2009 and the end of 2010.  After that, we believe there’ll be a bit of a flattening out before the market returns to normal again in Q4 2010 to Q3 2011.  We’re starting to see price corrections in the commercial real estate market now, too.  Apartment buildings that were selling for 6-7% cap rates in Kitchener, Cambridge, Hamilton are now starting to sell for 8-12% cap rates.  Yippee, it is now a better time to shop for apartment buildings!  As the market unfolds in Southern Ontario and Vancouver, we will be sure to keep you updated.

Hold is Gold

How can you sell your property in a declining market?  Our answer would be don’t.  Hold is gold.  How do we know that?  Been there, done that.  We have tested the market by hiring a top 1% Realtor to sell a condo for us.  After doing our homework by researching the sold comparables, we decided to discount our listing price by 15% from the average sold price and 10% from similar competition listings.  That creates a competitive edge.  Even if there might not be a feeding frenzy, there should be a couple of offers within the first month.  The verdict is no offers despite the high number of showings.  We kind of know the market to expect a worst case scenario and our exit strategy is only to try it for a month or two; our Realtor understands and agrees to that.

The 1st month of your listing is the most critical stage to attract buyers.  If you price it right, you would normally end up with multiple offers within the 1st month of the sale.  Otherwise, your property can be on the market for months as we have seen on a recently sold unit which takes 8 months.  In today’s hot buyers market, you need to plan DOUBLE EXIT strategies: use a competitive price as listing price yet sticking to your price point to sell; if it doesn’t sell, you either use it for yourself or rent it out until the market turns around.  On the other hand, if you are buying in today’s market, you don’t necessarily wait for the market to reach the lowest because you never know when the market hits the bottom.  Instead, you buy when the market hits your price point.  Some smart buyers are monitoring their dream property listings every week.  When their price point is met, they make their move.

May “Faith” Inspire Faith in Us All

We thank Aggie Chan, one of our readers, who shares an amazing inspiration with us, from Faith, the dog!  Faith was born with two legs on Christmas Eve in 2002.  His mother didn’t want him.  His first owner didn’t think that he could survive and thought of putting Faith to sleep.  But then, his present owner, Jude Stringfellow, met him and wanted to take care of him.  She determined to teach and train this little dog to walk by himself.  She named him Faith.  In the beginning, she put Faith on a surfboard to let him feel the movement.  Later she used peanut butter on a spoon as a lure for him for standing up and jumping around.  Miraculously, after 6 months, Faith learned to balance on his hind legs and to jump to move forward.  Not only that, Faith could now walk like a human being.  Read more about Faith, and see more pictures of him.

Let us be thankful for what we have.  When we wake up every morning, It is a blessing to all of us to be able to open up our eyes to see the blue sky, to walk to the garden to touch and smell some beautiful rose blossoms.  Faith has been trained to get out of his comfort zone and now he’s touring around the world to inspire the human race.  May each one of you be inspired by Faith to get out of your comfort zone to live your dream: your life – your freedom. 

A Big Celebration in a Small Town

Happy 142nd birthday to Canada!  We, Canadians, take this day to sit back and reflect on this wonderful country that offer us the ability to live a safe and harmonious life like nowhere else on planet earth.  Likewise, happy birthday to American’s Independence Day to some of our American readers!  We have a blastful of festivities from dawn to dusk in Caledonia.  You can enjoy a complimentary pancake & sausage breakfast at 8 am, watch the parade, participate in a craft show, attend a Citizenship Ceremony, take your kids to see the children’s group performers and the Steven Young memorial duck race.  The Tianna Woods Band is one of the performances we enjoy the most.  Tianna Woods is such a multi-talented high energy singer with a vibrant voice almost as good as Celine Dion.  Wouldn’t you believe you can also enjoy a 15-minute firework extravaganza in a small little town of  9000 people?  For that, we have to thank all the sponsoring vendors and volunteers for their generosity and time.

Application With the Highest and Best Use

After spending much time, money and energy learning about real estate investing, it is time to apply the knowledge and take massive action.  First, we set a short term goal to acquire our first 20+ unit apartment building with a deadline.  Our project can be in any towns in Southern Ontario, which has qualified for 9 out of the 12 economic fundamentals set up by Don Campbell.  We analyze any properties with the highest potential for growth and increased property value besides cash flow.  For generating leads, we run marketing campaigns.

What is the highest and best use of your time, talent, and skillset?   Your most valuable resource is going to be your time.  The beauty is that you can leverage other people’s expertise and time to maximize your effort to do a project for your business.  To operate a successful real estate investing business, you need to set up a power team.  A power team would have: commercial real estate attorney, accountant, inspector, tradespeople, realtors, appraiser, architect, title company, insurance broker, mortgage broker and most importantly, a good property management company or building manager.   Realize that no man or woman is an island, and that the success or failure of your efforts in real estate is going to largely depend on the quality of the relationships that  you create.

Search Engine Ranking of Your Website

The Internet plays a large part in our future.  How well are you marketing your website?  As a property owner, you’re probably always wondering just how good that property manager is that’s been around for 5 years.  If a property manager’s been around for 5 years, and they have a web site, chances are numerous landlords and/or renters have reviewed them and rated them on the Internet.  The more pages there are that link back to their website, the more favorable they rank on the Google, Bing (formerly MSN or Live), and Yahoo search results.  Just an aside, Yahoo just got purchased by Microsoft.  Did you know that there’s a barometer you can use to measure just how popular any given website is?

When Google was first starting out, they came up with a barometer index to give a relative measurement of how popular given websites were.  This barometer index is one of the methods they use to determine how close to the top of search results your website should come.  Nowadays, they use more than just this ‘page rank’ to determine it, but back when they were first starting out, it was the main yard stick.  The official name is the ‘Google PageRank‘ index.  If you’d like to see the Google PageRank of each website you visit, the easiest way to do it, is to install the Google Toolbar (the link should work for both Firefox and Internet Explorer users).

The idea of Google PageRank, is that when your website first hits the Internet, it starts out with a Google PageRank of ‘NA’, or Not Available.  From there it starts at ‘0′, and works its way all the way up to 10, with 10 being the most popular website on the Internet (it’s not Google).  So, there you have it…try it on your own website as well, to see how well your Internet marketing efforts are working!  You may also consider Realtors’ PageRank before you hire them to showcase your property for sale.

“To begin is the most important part of any quest, and by far, the most courageous.”

- Plato

Daniel Lynes and Julia Lee

Print/PDF Version | Read our Privacy Policy | Eagle Quest Properties, Caledonia, ON, Canada | 1-877-978-9788 |  If you did not give permission to receive emails from this sender, please notify us.

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

Print/PDF Version | Read our Privacy Policy | Eagle Quest Properties, Caledonia, ON, Canada | 1-877-978-9788 |  If you did not give permission to receive emails from this sender, please notify us.