Eagle Quest Properties

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

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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

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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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