Roadmap to Millionaire as an Investor

7 years of experience on Finance and wealth building, this blog is created to generate ideas how everyone can make a million dollar through actively investing.

Friday, August 28, 2009

How to obtain Financing

In today's market there are limited funds available for commercial financing.

Putting a proposal with your commercial lender definitely helps.

Here are some of the points to be include in your proposal:

+ Financing application in a clear, concise and organized manner

+ Details of opportunities with facts and documentation for income and expenses

+ Provide why are you investing in the ype of commercial property and the specific location

+ Highlight any potential problems and how you may counter them

+ Meet with the lender and take the time to explain your soild investment and how you maintain or improve performance and your exit strategy.

+ Hightlight your credibility - your company - your investing experience and prove information on your support team.

HST - Burnaby Board of Trade

Yesterday Morning, I went to Burnaby board of Trade meeting to discuss with the trade member about the impacts of HST. So far the bottomline from my understanding is there will be changes in how business does their accounting, Real estate development sector getting screwed on their cashflow and such, so to expect higher housing prices. The restaurant sector is getting hammered too. There is alot of undecided how to handle the details of the taxes, we will just have to sit and watch what is coming.

The good news is Trade members voice are being listen to..

Monday, August 24, 2009

How to Accomplish Effective Due Diligence


Due Diligence by Definition - making sure things are right with inspections.
Letter of Intent - A sample at bottom
Formal Agreement
Inspection and Review Period
Environmental Inspections
Code Violations
Zoning Use
Allowed Use

A simple Letter of Intent

Dear Property Owner,

My name is _______ and I am a real estate investor from Vancouver, BC. In a recent visit to your area I become aware that you may consider selling a shopping center you own. I would like to purcahse that center and I will pay you $10,000,000 cash at closing. The closing will occur 60 days following my approval of my due diligence, and I will have a reasonable time to complete the necessary inspections. This time will be detailed in the formal agreement once the seller has supplied the buyer with proerpty data.

If I do not approve of my due diligence inspections and review for any reason whatsoever, then I may withdraw from the contract, and any deposit placed in escrow by me, as indicated by the terms of the contract, will promptly be refunded to me. If this is acceptable to you (the seller), then so indicate below and I will have my lawyer draft the formal agreement for your review. That document will be in your hands within five working days from your notice to me that these or any other mutually acceptable terms are accepted by both parties.

As this is a letter of intent and not a formal contract, no binding agreement to purchase and sell will be in effect until the parties have executed a formal agreement. However, both parties agree that they will act in good faith in the negotiations of this agreement, and if this or a subsequent letter of intent is acceptable to both parties, the seller agrees not to negotiate with any other party for the sale of this property for a period of 30 days so that the formal agreement can be drafted, reviewed, and if acceptable, executed.

If I don't hear from you on this matter by noon this coming Friday, then this letter of intent shall be considered null and void.



How to Accomplish Effective Due Diligence

How to Build An Effective Commercial Real Estate Comfort Zone

Goal: Steps Necessary to Establish Comfort Zone

Concepts to Build your knowledge

Listings Services
Active listings
Tax Assessor
Map Quest
Zoning Maps

Initial Comfort Zones

1. Close proximity
2. Limited number of opportunities
3. Within one governing area
4. Well-defined area

Key Factors to Becoming Expert in your Area

1. Learn the simple things
2. Get the right tools
3. Keep records of important data
4. Research what happened in success stories
5. Build walls around your comfort zone

Comfort Zone Checklist

Building setback minimum allowed by zoning code
Building heights allowed by zoning code
Commissioners (city and county) for the zone
Emergency plans for storms or other emergencies
Fire code
Fire stations serving the zone
Libraries serving the area
Master plan for transportation and traffic ways for the zone
Nearest emergency room and hospital
Public transportation
Public parks in the zone
Residential density per acre allowed by zoning code
School districts
School locations
Shopping areas for the zone
Storm or emergency shelters
Utility upgrade plans for the zone
Zoning Codes

Choosing your comfort zone

1. Pick two categories of real estate you want to own
2. Discover what kind of zoning allow that use.
3. Review the city zoning maps for that zoning code
4. highlight the areas of town with that zoning
5. Drive around town and decide what areas appeal to you
6. Combine one or more areas until you have mini of 100 properties
7. Mark the boundaries of these areas.
8. Watch for notices of public meeting or homowner meeting pertaining to your zone
9. Begin to become an expert in each area.

Commercial Real Estate Investing - Education

Book Summary:
Title: Commercial Real Estate Investing - 12 Easy Steps to getting Started
Author: Jack Cummings

"Hi, I just want to add some value and share some interesting way to get started."

Commercial Real Estate Defined:

Any Real Estate that has the ability to produce outside revenue or income for you as an investor.

Investment verse Use
A property that you wish to invest in, is a property that you will anticipate a profit at a future date.

A property that you intend to use may end up being a good investment, but your original goal is not to profit directly from the real estate, but rather, to profit from your personal use.

Comfort Zone

In order for you to invest and sleep at night, you need to cut out an investment area call the comfort zone where you know exactly what is going on.

Realistic Goal setting <--- Refer to my later posts on goal setting-it's a must do.

Invested Amount = Cash + Debt + Time

What Makes Real Estate Value go up or down?

Community Planning
Departments of Transportation
Fire and Health Codes
Lack of Concurrency -current requirement to enable you to develop the property
Land Use Changes
Condemnation and Eminent Domain Proceedings-government purchase and use of the ppty
Building Moratoriums- fast pace level of services available to ppl is outstripped
Economic Obsolescence- value of the actual use of the ppty comes to halt
The Rule of Small- small movements in the smallest increment of income stream having high impact on largest element of income stream.


Monthly rent per apartment $ 650
Gross rent per month from 10 apartment $ 6,500
Annual revenue $ 78,000
Income less operating expenses $ 58,000 (Not including debt service
An investor will buy at a 9 percent return $644,444 ( max price investor pays )

Increase Rent
Decrease expenses
Leverage the transaction
Do a combination Above

let say Rent got increased to 675, expenses cut by 300 80% loan from at 8%

Gross rent $ 81,000
Less new expenses $ 16,400
New Net operating $ 64,600
Annual cost of debt $ 41,244

New Cashflow $ 23,356
Captial invested $128,889

Price $644,444
Loan 515,555
Cash invested 128,889
Cash flow $23,356

Return on Cash 18%

Six Primary Factors that makes R/E value

1 Supply and Demand
2. Local Zoning
3. Changes in infrastructure
4. Economic obsolescence
5. Maintenance procedures
6. Motivation to buy or sell

Friday, August 14, 2009

Acquired: 234 Cumberland St - 8 units Total, 6 Multi-Family- 2 Commerical units

The beginning of my Commercial Real Estate Investing Empire.
CREI - Commercial Real Estate Investment, is more challenging, when I come into the game, people expect more from you, they expect you know a lot more, there is many details and things that require more attention to, and not to mention, it's more costly and expensive.

However, the profit and cash-flow definitely makes up for it.

How would you like to receive $4,000 in rent per month?
I sure don't mind, holding a few more of those... :)