McGuinty Government Mercilessly Targets Home Owners

Anyone who's listened to the news recently knows that we are in the middle of the worst recession since the Great Depression.

Except Dalton McGuinty that is.

He and his band of merry men and women think that now might be the right time to erase thousands of dollars in equity from just about every household in Ontario. They think that now might be the best time to force home owners to pay MORE to sell their houses. They think that this just might be the perfect time to 'stick it' to the little guy!

I say, enough is enough! The perception of doing something good for the environment just isn't enough reason to unleash this kind of boneheaded manoeuvre on the Ontario taxpayer. And this is on top of the government's plan to harmonize the sales taxes! (This will be my next post)

Let's go through an example, shall we? You want to sell your 1970's construction home and you live in a nice part of Peterborough, Ontario. You have a couple of REALTOR®s drop by to give you an idea of the market value for the property and to give you their sales pitch for the services that they would be prepared to offer you and the commission that they each will charge you. So far so good. You and your spouse talk it over and you decide to go with the REALTOR® who gave you the best marketing plan and has the best track record even though their commission is slightly more than their competitor. What, you didn't think I'd advocate the lower rate, did you? ;)

You agree to put your house on the market for $278,000 and also agree to a listing term of 120 days. After just 28 days, your REALTOR® calls you, she's very excited as an offer has been registered and the other broker would like to present the offer to you tonight right after dinner.

Sounds great! Until you get a chance to read the offer over with your broker. The buyer has inserted a clause requiring you, under newly enacted legislation, to have a home energy audit performed - at your cost. How much will this cost? No one knows for sure, but probably somewhere in the neighbourhood of $450. Ouch! You bite the bullet though, because you have to sell because you've been laid off and need to downsize (remember, this is the worst recession since the '30s!) The audit comes back with results that are less than splendid. The buyer looks at the report and says, "Wow...this place is a real energy hog! Guess you better drop your price by $15,000 so that I can afford to make the improvements necessary to get this place up to spec! What's that, you can't afford that? Guess I'll just buy the house down the street then..."

Now you do have choices, you could:
1. Drop your price to save the deal - equity erased courtesy of Dalton McGuinty.
2. Allow the buyer out of the deal and 'hope' that the next buyer to come along has a bigger bag of money.
3. Don't sell. Everyone does the same and the real estate market freezes. Prices plummet and the economy goes into an even deeper nose-dive - again, equity erased courtesy of Dalton McGuinty!

None of this even takes into account licensing the energy auditors, ensuring quality of inspections, administering the bureacracy created by this new layer of insanity and the huge tax burden placed on the tax payer to cover the cost of administration!

Write to your MPP and demand that this bill be repealed. Call them, fax them, email them, show up at the constituency office! Let's do everything we can to stop this!

Original article from CNW Group is here.

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How to go about reaching our target of $1 Million in Assets

In my last post I talked about the need to set concrete goals.  Without them, how will we know if we're on the right track?  How will we know that we'll have any chance of reaching $1 Million in 5 years?

So, let's break it down:

We have limited funds to get started, say somewhere in the neighbourhood of $40,000.  Since most commercial mortgage lenders will want a fairly sizable downpayment, that in itself will limit the size of our first investment to about $200,000.  If we can replenish our savings over the next year or so to that same level, through keeping our regular jobs, being frugal and adding value to the properties we buy, and putting any net income back into this project, then we should be able to buy one property each year at that level and reach our goal.

Okay, where to look?  I am still licensed, so I have full access to the MLS® and my network of contacts.  Here's where it gets tricky though - there are a lot of listings out there, and very few that I would personally buy.  I'm going to get a lot of flack for that, but let's be honest, really great properties almost sell themselves; REALTORS® aren't hired for the easy jobs, we get the hard work!  We'll need to sift through a lot of dead wood to find those few properties that will fit our criteria.

I read somewhere, and for the life of me right now I can't remember where, that to find the diamond in the rough in real estate, you need to look at 100 properties, make offers on 10 of them, and expect to buy 1.  If anyone knows where this idea comes from, please comment below and remind me!  From my experience in working for buyers looking for suitable investments, the concept is probably sound since on average about 1 in 10 of our offers actually close.

This means that if we want to buy one property per year at about $200,000 each, we need to look at about 100 per year.  'Look at' doesn't necessarily mean, physically look at, it means evaluate by several means including: reading the financial statements, reviewing the maintenance records, looking at the tenant mix and their viability moving forward, and actually looking at those properties that show promise based on these other measures.  Since 8 or 9 property evaluations per month should be really easy to do, I'm going to say we should look at 10 per month, on average, and do at least one offer per month.  Might be a little over the top based on our goal, but I think we'll have a better chance at success this way.

Keep checking back to see where we are in our search.  I'll be posting regularly with our ideas and progress.

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Freedom in 5 years or Less!

Hi there.  Let me start by confessing that I am currently working as a commercial REALTOR® and have been for the last dozen years or so.  I have made my clients millions of dollars over that period of time.  Probably tens of millions of dollars.  Even so, I still can't seem to get as much out of the experience as I would like.  I don't feel as though I'm earning enough, and I don't get the same charge out of doing the deals that I used to.

I'm getting tired of making other people rich. 

The market for real estate services is very competetive - as it should be to ensure that the client is getting the best bang for their dollar - but it is very stressful as a result.  I firmly believe that a competetive market keeps pricing honest, and forces the best to survive.  In the end, the consumer of those services wins by accessing the best service providers for the best price.  This is what I've been doing for the last decade, providing the best service I can at competetive pricing.  It's frustrating to see my clients make so much money though, and I'm unemployed at the end of every deal.

I want my share of the pie.  I want to own and manage my own properties.  I think it's time that I used this warehouse of knowledge that I've picked up over the last few years to benefit me.

So here goes:

Our goal (that's me and my beautiful wife!) is to amass a real estate mini-empire by the end of December 2013 valued at no less than $1,000,000 CDN and returning a net income before debt service of $100,000 CDN.  Simple, straight-forward, no nonsense goal - right?  Well, what's involved?

1. We need to set some concrete goals;
2. We need to start evaluating properties at a break-neck pace;
3. We need to start making offers on those properties we feel fit with our goals and our values;
4. We need to close deals with some creative financing (did I mention yet that we have very little cash to get started on?);
5. We need to manage those properties we are successful in purchasing; and
6. We need to continually re-evaluate our goals to make sure that we stay on target.

Next post:  Setting our goals based on measurable targets.

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