Eagle Quest Properties

Wow, it is getting hotter and more humid than Orlando in Southern Ontario.  Are you enjoying your summer yet?  The summer days are getting longer and we are navigating to a new focus for our specific region.  We have driven around town to identify decent neighborhoods with good anchors.  We have found the 12+ unit apartment buildings we like.  We talk to the tenants, talk to a few owners, and pull titles on some buildings that we have identified as being buildings we were interested in.  We have talked to a senior planner in the city to get a more solid picture of their budgets and plans.  We have requested traffic counts from the engineering department for a couple of different mixed use buildings we were looking at.  There’s one area we encountered where the whole neighborhood was bad, with undesirable tenants and unkempt yards.  Many American real estate gurus advocate buying properties unseen.  We suggest reconsidering that proposition.

We are grateful for a few of our readers interested in taking assignment deals from us.  Once again, we are here to support each other in our mutual goal to achieve financial freedom.  We are analyzing more and more potential deals.  Anyone who is interested to know more about our projects, please email our acquisitions department.

The Lynes’ Lion Safari Adventure

Daniel intentionally surprises Julia by taking her to the African Lion Safari on their anniversary.  Daniel drags Julia out of bed bright and early and tells Julia not to wear red clothes???  Driving through a few little towns and some farm fields, they arrive to a gate which reads, “Do not leave your windows open, or you will be eaten alive.”  Julia screams out in fear and refuses to enter the two storey tall gate.  Daniel drives through the second gate, laughing like a hyena.  A big sign says, “close your windows and lock your doors.”  Following the small winding trails, their car comes to a sudden halt near a big tree.  Three big baboons jump right up to the windshield and one of them started urinating and defecating on the side mirror.  At a blink, you can see a few dozen of them jumping out from some tree tops.  These animals are quite vicious fighters against each other.

Here comes a shocked driver with his rooftop luggage container popped open by the curious baboons.  (Wouldn’t they make great customs inspectors?)  The best part is the thrill you get from watching ten elephants forming a bee line by clinging their trunks to tails one after the other; heading down to the lake for their leisure swim.  Well, we will let you explore the ferocious looking lions and other animals yourself.

Daniel’s New Blog

Hey, Daniel is stepping out of his comfort zone by starting a blog.  He takes an article that captivates him and share his opinion with you.  It is only an opinion; you don’t need to agree with a single word he says.

You can read his blog entries by clicking on the archives, ordered by month, on the righthand column of our Website.  If you’re looking for an article on a particular date, you can also click on the day on the calendar object in the righthand column.

If you find something interesting, there is an option on the Website to comment on the particular article.  We’ll stay current with economic developments and industry news in the region, Canada, and the U.S.A. to give you a heads up for any new changes.  We cover off topics such as new regulations affecting the industry, LEED happenings, building industry, economics, retail industry, service industry, toxic materials, and other related issues affecting real estate investment and/or property management.

Bill Bartmann has a Gift For You

We thank Jack Canfield, who emailed us about his friend, Bill Bartmann.  Bill Bartmann is most famously known for going from flat broke to becoming a billionaire!  Bill left home and joined a traveling carnival when he was 14 years old.  He became a teenage alcoholic and gang member.  His life changed when he learned to think better of himself and realized his true potential.  He learned how to take his dreams and turn them into reality.  Ultimately, Bill received his GED and eventually graduated from law school.  He went on to build seven successful businesses in seven different industries.

Let’s listen to a billionaire’s “9 Steps to Achieve any Goal.”

The One Little Golden Goose

Julia feels fortunate to have started using credit cards at very early stages of her working career.  At the time, a co-worker graciously introduced her to use dividend credit cards; Julia ended up getting paid dividends annually.  The best side effect was she had built up her credit score, unknowingly.  When you have a good credit score, the credit card companies will mail out extremely low interest rate offers to you.  Would you like to make use of credit cards like a small golden goose?  Some benefits are huge: build up credit line, increase credit score, get paid up to 1% cash back, accumulate air miles to fly free, and get free groceries if you use the President’s Choice credit card.  Needless to say, some investors use it to finance fix & flip single family homes.  Just one small way to build wealth.

A Business Plan is The Start

We are finally writing up our business plan.  Our procrastination!  The real value of creating a business plan lies in the process of researching and thinking about your business in a systematic way.  The act of planning helps you to think through your ideas thoroughly to avoid costly, perhaps disastrous mistakes later.  The most time consuming is in the research part.  The two great helpful sites we have found for drafting a business plan are: Industry Canada and the US Small Business Administration.

The Power of Leverage – Your House

Assets are something that put money into your pocket vs Liabilities which are something that take money out of your pocket.  Is your house an asset or liability?  The answer is No and Yes.  Most of us were brought up to believe that our house is an asset.  Actually, it’s the equity in the house that is the asset portion.  The equity belongs to you.  If you carry a mortgage on your house, the property is technically the bank’s asset.  Yes, your house doesn’t become a true asset until you sell your house and realize the capital gains (convert the equity into cash).  If you understand that, the next question is why not leverage the value of the equity in your house and put it into higher yielding investments?

Most banks currently loan up to 75% of the equity (HELOC) in your house at a rate of around 4%.  Some stock savvy investors then put this money into high yielding funds in the stock market.  Some novice real estate investors would prefer to buy an apartment building to create passive income.  eg. If you own a mortgage free house worth $650,000 in Vancouver, you can use a $400,000 HELOC to buy a decent 8 unit apartment building in Southern Ontario.  If you can rent each unit for $700, based on a 45% expense ratio, you realize a net rental income of $385 x 8=$3,080/month.  After paying a HELOC interest only payment of $1,333/month, you are putting a net passive income of $1,747 into your pocket every month.  Would you see how this would benefit you by turning your house into a money making machine?

“Life is not easy for any of us.  But what of that?  We must have perseverance and, above all, confidence in ourselves.  We must believe that we are gifted for something, and that this something, at whatever cost, must be attained.”

- Madame Marie Curie

Daniel Lynes and Julia Lee

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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Volume #2 Issue #1

2009

Hey, Gung Hei Fat Choy!
The phrase means "wishing you a happy, lucky and prosperous new year", but in fact, it also means "please give me a little red envelope full of money".  All the Chinese kids love this season as they count up their collected lucky money.  Chinese New Year arrives on Monday, January 26 this year.  This year, is the year of the Ox.  We met up with some relatives for dim sum in Toronto and finally found a T&T supermarket in Toronto.  This T&T is jam packed with five times more shoppers than the T&T in Vancouver.  You can imagine the massive Chinese population base in Toronto.

We have taken some time to learn about several cities’ master plans by attending city planning meetings and visiting economic development centres.  We find some cities are willing to give incentives and grants to real estate investors up to 25% of project including the acquisition price of land and building & renovation costs.  The areas the city plans to revitalize are called Economic Development Zones which will give you the greatest return on each dollar invested.

Our Duplex in Indianapolis

As the foreclosure market was so tempting, we recently bought a duplex with a garage for $23,169. U.S. from the bank.  The duplex is 4500 sqft with 3 bedroom and 2 baths on each side.  We received several bids from contractors to know our rehab project should be $35,000. and the market rent was $600. per side.  We thought it was a great deal, so did our real estate field trainer and fellow classmates. The property had been vacant for few years.  Due to the extended period of vacancy, there was many hidden repair costs: damage inside the walls, clogged drainage line, unopen windows.  The whole extent of the termite damage could not be determined by our inspector.  We ended up spending much more money on rehab than we originally budgeted.  We found a lot of anchors near the property, and we knew the city had a urban renewal plan.  We thought it was a decent neighborhood for blue collar tenants.  We didn’t make money from equity but the monthly rent supports the 1% unit rule ($100,000. house you should collect at least $1,000./month or more).  Most of all, we learned a number of valuable lessons to be shared in the next issue, please stay tuned.

Emerging Real Estate Markets

We love David Lindahl’s most recent book.  It hit #1 worldwide best-seller status on Amazon.  It shows you how to define and invest in each phase of the real estate market: Seller’s market I, II and Buyer’s market I, II.

Does the recession really matter to a real estate investor now?  Let’s stop for a minute and think about what a powerful concept an emerging market can be to real estate.  We live in a huge country, with 33 million people (with 300 million people if you are in the U.S.).   At any given time, there are factories, new highways and bridges being built, young industries taking off and people can make a fortune.

Windsor, ON is in a slump, but oil companies are having their best years ever.  The bottom line: The only real estate trends that count are local ones.  The best emerging market shows and maintains strong leadership from the city’s leaders.  These leaders are aggressive and thoughtful to develop a master plan and they show courage and strength to implement it over a span of several years.

Investing in Southern Ontario

As we search for apartment buildings in Southern Ontario, we avoid cities that are not at least moderately diversified.  For instance:  Windsor, Chatham and Oshawa are dependent on the automotive industry.  We focus on cities with a well-diversified group of jobs coming in.  We want to see a city with some type of barrier to entry and the best barrier to entry is lack of land on which to build – a key to significant increase in property values as land gets exhausted by new constructions.

What system do we use to analyze apartment buildings?  We look for buildings with fixable holes that we can patch through our efforts by means of forcing the appreciation.  Some fixable holes can be any one of the following: some form of vacancy up to 30%; disrepair of building due to mismanagement; high expense ratio; under market rent.  We are not paying full price for these type of buildings as commercial properties are priced based on the income it generates.  The other key is to avoid fully priced, fully leased, newly constructed properties.

Julia’s Invitation To You

We are seeking additional investors as we are currently analyzing a few 20+ unit apartment buildings.  If you are interested, please e-mail julia@eaglequestproperties.com and you will be sent a copy of the NI45-106 accredited investor form, fax it back to 519-752-6155.  If we determine that you qualify as an accredited investor, we will add you to our newsletter list for the latest deals we’re working on.  Invitation for Accredited investors Only

A Tip To Write A Newsletter

We’ve received some nice compliments about our newsletter, thank you.  A newsletter is the best way to stay connected with family, friends and associates, and the best part is it keeps us in focus and accountable on achieving our goals.  We’ve had some readers ask about what software we use to produce our newsletters, and what the price was for it.  The software we use is called PHP List.  It is written in a web scripting language called PHP, which will run on any web server with PHP extensions installed.  It is completely free, but you can purchase paid support from Tin Can Software, the UK-based company that wrote the software.  There are also third party support companies for it.  It is open source software, and is probably just as good as some of the more popular commercial newsletter services.  On another note we’d like to announce the Feb 6, 2009 launch of July Ono’s new book, ‘Your Million Dollar Network’.  Help her make #1 that week on Amazon’s list!

Daniel and Julia Lynes

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