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Matching Investments with Your Goals

by jevin on December 14, 2011

It was said once “if you don’t know where you’re going, how do you know when you’ve arrived!”.  I wanted to give you some examples of common goals for investors, and some type of investments that might match up.

Monthly income NOW

Everyone would love to be able to quit their job and collect a monthly cheque for residual income from their investments.  Using real estate here are some examples:

  • Provide a loan at 6%-8% interest as a downpayment for a real estate investor to buy a property.  It may only cost you 3.5% to borrow that money, the difference is your profit.  Depending on how much you lend out, it could receive a few hundred dollars a month.

Short term investment (less than 1 year) for a lump sum.

  • A good option would be provided a high percentage (10-12%) loan for someone wanting to do some quick renovations with the hope of selling the property for significantly more than the renovation costs.  The pay you upon sale of the property.

Medium or long-term investment (3-15 years) for a lump sum.

  • Provide the money for a down payment as an equal in the property purchase.  The investor takes care of finding the property, the offer and negotiations to acquire the property, management issues, filling the property, repairs, market monitoring for the time to sell, and the negotiation in selling the place.  This means you split all the monthly income, and mortgage paydown and the sale of the property.  The monthly payout will likely be less, but the returns when the property is sold in our experience will be 13-17% per year!

There is good reason why it has been said: “for real estate, it’s not as important WHEN you time the market, but the length of time IN the market”.  Some of the most profitable returns are in the long term.

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3 Joint Venture landmines to avoid

by jevin on December 5, 2011

Everyone wants a joint venture to go smoothly.  I know a few people who have had really negative experiences.  Had they not done these few mistakes, maybe things could have gone differently for them:

1. Not understanding the written Joint Venture Agreement in place.

My parents got involved in an investment recently with a big name here in town who had developed a large portion of Ottawa.  One day my parents stopped receiving their dividend cheques.  My dad called up the company who preceded to tell them that they hadn’t selected which project they wanted to convert their shares to!  Huh?  Turns out the company had sent a notice in the mail saying the original project wasn’t going forward and that their shares were being converted to another opportunity available.  Yikes, this is not what my parents signed up for.  After having a lawyer look at the joint venture documents, turns out this was allowed.  If I had seen that initially, that would have been a big red flag.

2. Not having common expectations

It’s important going into a project knowing exactly what the plan for the joint venture is.  While the ROI percentage is important, does this project actually meet your investment goals?  Some ideas of things to discuss BEFORE investing in a project:  – What are the risks I am exposed to? – What is the proposed exit strategy?

3. Not checking out the investor’s history

You need to be sure they have enough experience to get the job done!  Have they ever invested in real estate before?   Are they an expert in the area of interest?  Do they have references of people they have worked with before?

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Using foresight to not loose more money

December 5, 2011

Despite Real Estate being a great asset, are your assets diversified enough? With all investments comes with an inherent risk that things can go south.  Anyone who had real estate investments  in 2008 understands what this means.  However, consider what would happen had your real estate assets been spread out to different countries and continents!  [...]

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