Cottages Are Great Investments… Or Are They?

Buying a cottageLast year, my friend bought a cottage for $180K. His down payment was 25%, or $45K. This year he boasted to me that he had made $18K in a year off the cottage. It was recently appraised at $195K (+$15K equity) and he rented it out a few times this summer to earn $3K in additional cashflow. Not a bad return right? $18K total. If only it was true…

Here’s the reality…

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Preparing Your Net Worth Statement to Buy Investment Real Estate

checklist-628x363[1]In a previous blog (Get Organized Before Buying Investment Real Estate), I outlined a list of documents that anyone should have prepared before they seek financing for their real estate investment acquisitions.

One of the most important documents is your “Net Worth Statement”. In the last year I’ve had the pleasure of reviewing dozens of these and, as a result, it’s clear to me that many newbie investors have a challenging time filling it out properly. As a result they have reported having a challenging time obtaining financing approval within the time constraints of their deadlines.

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Financial freedom: Where Do I Begin?

Steps to Financial FreedomThe first step is to consider what area interests you the most; it’s always easier to choose something that you have some degree of interest in because you will be more likely to best absorb the materials and take action.

If you’re a beginner and not sure what area interests you most I recommend you read one of the following blogs I’ve written that are geared for beginners on these topics:

Blogs

Financial freedom

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How to Make Realtors Want to Work With You When Buying Investment Real Estate

Relationship with realtorTaking the time to inform a realtor that you will not bid on a real estate investment opportunity and presenting him / her with the reasons why is an important step in the communication process for a number of reasons.  It helps you to create a relationship with the realtor based on trust, transparency and shows a respect for his / her time.

Showing a realtor that you are experienced and have a set of investment guidelines that you follow while also informing that the property doesn’t cashflow provides the required information for him /her to discuss with the seller and assess their flexibility.

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Due Diligence: The Difference Between a Successful and Failed Investment

Performing your due diligence when considering a real estate investment opportunity is the single most important step to ensuring an investment that meets your expectations.Due diligence

Unfortunately most real estate investors that I’ve mentored have shared with me countless tales of errors and assumptions that have cost them severely. For this reason I am sharing an email that I sent this morning to help novice investors to learn.

The following email with attached cashflow analysis asks the questions required to ensure that I can make an informed decision without assumption. It also shows the realtor that I am serious, experienced and respectful of his time.

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How to Perform a Real Estate Cashflow Analysis

This is what a real estate cashflow analysis looks like. It informs you of your up-front costs, assesses cashflow positivity with current and potential future scenarios, budgets appropriately for vacancy/repair/contingency and accounts for overhead costs even if they may be unrealized (e.g. property management, accounting, bookkeeping, etc.). It is also vital to highlight any assumptions and verify them in writing, absolutely no exceptions.

real estate cashflow analysis

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How can I make money in real estate?

disorientedEarlier this week I had a meeting with one of the local startups that I am mentoring.  Over the last year his company’s bank account has been reaping the rewards of their hard work and so he has been considering his best option to invest the returns from his compounding successes.

Knowing that I am an active real estate investor he wanted to learn about how real estate makes money.  He had performed a number of cashflow analyses, but, was failing to find lucrative returns.  I could sense his frustration mounting in each additional word that he was saying.  “The best cashflow I’ve been able to find is approximately 8% on a real estate investment and that’s just… well average”.  He frowned.  I smiled and excitedly said “That’s fantastic, you should put in an offer, do your due diligence and buy this property if everything checks out.”

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Kickstarting a Retirement Plan for Small Business Owners

Financial successOver the last few years I’ve been blessed with the opportunity to mentor dozens of small business owners.  Helping entrepreneurs to monetize their passions is extremely exciting.  I learn a lot about various industries while helping entrepreneurs leverage their strengths and recognize their weaknesses.

One of the most troubling weaknesses that I’ve been helping entrepreneurs with is their lack of personal financial awareness.  Most entrepreneurs have very little savings and no idea how to get started.  This creates a significant risk for the majority of our small businesses, which more than 77% of all businesses fail due to lack of financial responsibility and awareness*.

Why should I start now?

Every business owner I’ve ever met has numerous tales of seemingly insurmountable challenges.  These challenges typically share a common theme, one of a financial nature.  This is one of the most difficult challenges to deal with – it causes stress, challenges…

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Counter-Intuitive Real Estate Investing (reposted from Dr. Bruce M. Firestone’s Blog)

REPOSTED FROM DR. BRUCE M. FIRESTONE’S BLOGGuest post by Brent Mondoux, Founding Partner, Amplified Investments; CEO, N-VisionIT Interactive

I’ve been an entrepreneur for the last fifteen years of my life—my motto is ‘Once Today is Gone You Can Never Get It Back’.

How can a person ensure that once today is gone that their time was wisely invested towards achieving their goals? Well, first they need to figure out what their goals are before they can reach them.

People are capable of extraordinary feats if they’ll just focus on completing one ordinary task at a time.

Brent Mondoux
Brent Mondoux, The Future is NOW

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Want to invest in real estate but don’t know where to start?

Ottawa real estate investingA solid start to learning about real estate investing starts with attending courses and events, reading books and building a network of experienced colleagues who have already succeeded in real estate investing through reputable and trusted organizations.

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