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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