SlideShare una empresa de Scribd logo
1 de 23
Descargar para leer sin conexión
CANADIAN REAL ESTATE
INVESTING 101
By John W Carter, CEO
Parkhurst Asset Corp
March 2013
Content
Background on John
Historical returns vs. other investment options
Why invest in real estate
Hurdles and challenges, and how to overcome
How to run the numbers on a property
Options for investment in real estate
Questions
Background on John W Carter
John has over 10 years of experience managing
his personal portfolio of single family properties &
apartment buildings as well as a number of joint
venture holdings. He has done so successfully
through all market cycles.
Since 2002 he has transacted business volume
with clients and his
personal portfolio of over
$70,000,000 and over
100 property transactions.
Historical returns vs other options
Historical returns vs. other options
Why Invest in Real Estate
Why Invest in Real Estate
“Ninety
percent of all
millionaires
become so
through
owning real
estate.”
-Andrew
Carnegie
Leveraged appreciation
Equity repayment – tenants pay
down your mortgage for you
Tax advantages
Cash flow
Should achieve 12-20%+ ROI on
cash invested.
Depending on financing strategy, breaks down
as: 3-5% cash on cash return, 5-8% with
equity paydown, and overall return includes
appreciation over 5 years+.
Leveraged Appreciation
Equity Repayment & Appreciation
Income Grows too
Long Term Appreciation Formula
Research provided by Real Estate Investment Network & www.donrcampbell.com
Tax Advantages & Cash Flow
Tax advantages:
Can write off interest on debt used to buy investment
property
Depreciation of asset value against other income
Growth of capital is tax deferred until sale
Tax on sale treated as capital gains, and thus only 50% of
gain is taxable
Cash Flow
Should always invest into positive cash flow from day one
Debt should be positively leveraged (explained later in
numbers)
Invest in growth areas, and where high demand for tenants.
Ideal property types are 2 bed condos, 3 bed townhouses, or
3+2 bed suited houses
Hurdles and Challenges
Hurdles and Challenges Overcome
“You make
your money
real estate
investing on
the
appreciation,
but you need
cash flow to
wait for that”
- John Carter
Not enough cash
Friends, family, business associates to JV with
you
Qualifying for mortgages
Get co-signer
Finding viable properties
Hire a Realtor that owns investments properties
themselves
Target growth markets where numbers make
sense
Fixing toilets, tenant horror stories, and 2am
phone calls
Hire property managers, have cash flow to pay
for them by structuring investment properly up
front, and do annual inspections yourself.
The Numbers
The Numbers
Key terms:
What is NOI?
What is a cap rate?
What is positive and negative leverage?
Proforma examples
The Numbers
Net Operating Income (NOI)
Income after all expenses, but not including debt payments. Is an
equalizer to compare investment properties, and the primary value
of an investment property
Capitalization Rate
Simply put, it’s the NOI divided by the purchase price. Represents
the return on investment assuming purchasing the property with
zero debt. Is the equalization for comparison of various properties.
Positive and negative leverage
Positive leverage is where the interest rate for debt on a property is
lower than the cap rate. The result is the investor achieves an ROI
on the banks money as the spread between cap rate and interest
rate.
Negative leverage is where interest rate is higher than the cap rate.
This means cash flow is reduced to pay debt payments, and can
result in the investor being short on cash to pay the mortgage and
potentially losing the property to foreclosure in future.
Proforma Examples
Proforma Example
Options for investing in real estate
Options for real estate investment
Equity options:
Buy rental property – 12-20%+
Invest cash as a joint venture partner with a
successful real estate investor – 10-20%+
Invest cash into a limited partnership or private REIT
– 7-15%+ (some are RRSP eligible)
Invest in public REITs – 7-18%+ (avg. 18% in 2012)
(RRSP eligible through self directed account)
Debt options:
Invest in private first or second mortgages – 8-12%
MICs (mortgage investment corporation) – 8-12%
RRSP eligible
Options for real estate investment
If have $40-50k, and
ability to get debt, buy a
rental property
If not, invest cash with
JV proven investor
(amount varies)
If less than $10k, invest
in public REITs
If over $10-25k, invest
in private REITs, but do
diligence
Best options for starting out
Real Estate Investment Success Plan
1) Own your own home
2) Keep your first home as a rental, and move up
3) Buy single family properties with secondary suites
4) Real life monopoly… buy 4 houses, then move to
apartment buildings
Focus on tenant screening up front, effective
management, cash reserve
Slow, strategic moves. Buy and hold min. 5 years
Refinance when possible to bring debt costs down.
Use caution when refinancing equity. Must still be
cash flow positive, and use equity for re-investment
only
Increase rents with market, but keep tenants better
Additional Resources:
www.ptrust.ca – Download investment
guide and review ‘Learn’ section. Signup for
our email newsletter
www.reincanada.com REIN – take the
ACRE system intro. course and signup for
newsletter
Any Questions?

Más contenido relacionado

Similar a Canadian Real Estate Investing 101

Investment Home Seminar: Flipping is for Pancakes
Investment Home Seminar: Flipping is for PancakesInvestment Home Seminar: Flipping is for Pancakes
Investment Home Seminar: Flipping is for PancakesInvestmentSeminarGroup
 
Math, Math. (And only then, Location)
Math, Math. (And only then, Location)Math, Math. (And only then, Location)
Math, Math. (And only then, Location)Betty Kincaid
 
Math, Math. (And only then, Location)
Math, Math. (And only then, Location)Math, Math. (And only then, Location)
Math, Math. (And only then, Location)Betty Kincaid
 
Investing in Real Estate by Ty Rhame
Investing in Real Estate by Ty RhameInvesting in Real Estate by Ty Rhame
Investing in Real Estate by Ty RhameTyson "Ty" Rhame
 
Are you a potential business angel?
Are you a potential business angel?Are you a potential business angel?
Are you a potential business angel?WinterRuleLLP
 
Investing in Commercial Property (Series: REAL ESTATE INVESTING MADE SIMPLE 2...
Investing in Commercial Property (Series: REAL ESTATE INVESTING MADE SIMPLE 2...Investing in Commercial Property (Series: REAL ESTATE INVESTING MADE SIMPLE 2...
Investing in Commercial Property (Series: REAL ESTATE INVESTING MADE SIMPLE 2...Financial Poise
 
Commercial Equity Partners Intro
Commercial Equity Partners IntroCommercial Equity Partners Intro
Commercial Equity Partners Introlschmidtcep
 
Commercial Real Estate Investing 101
Commercial Real Estate Investing 101Commercial Real Estate Investing 101
Commercial Real Estate Investing 101AQUILA Commercial
 
REOreseller Presentation Slides
REOreseller Presentation SlidesREOreseller Presentation Slides
REOreseller Presentation Slidescflowent
 
Spyglass REIA Deck
Spyglass REIA DeckSpyglass REIA Deck
Spyglass REIA Decklgientke
 
Tax-Advantaged Real Estate Investing When You've Maxed Out Your Self-Directed...
Tax-Advantaged Real Estate Investing When You've Maxed Out Your Self-Directed...Tax-Advantaged Real Estate Investing When You've Maxed Out Your Self-Directed...
Tax-Advantaged Real Estate Investing When You've Maxed Out Your Self-Directed...Tom Rutkowski
 
LVA Private Investors Prospectus
LVA Private Investors ProspectusLVA Private Investors Prospectus
LVA Private Investors ProspectusKenneth Turner
 
EQUITYMULTIPLE Investor Intro
EQUITYMULTIPLE Investor IntroEQUITYMULTIPLE Investor Intro
EQUITYMULTIPLE Investor IntroSoren Godbersen
 
Should I Buy a Building for My Business?
Should I Buy a Building for My Business?Should I Buy a Building for My Business?
Should I Buy a Building for My Business?American River Bank
 
Mini fund overview for investors - BetterCapital Real Estate Fund
Mini fund overview for investors - BetterCapital Real Estate FundMini fund overview for investors - BetterCapital Real Estate Fund
Mini fund overview for investors - BetterCapital Real Estate FundBobby Sharma
 

Similar a Canadian Real Estate Investing 101 (20)

Investment Home Seminar: Flipping is for Pancakes
Investment Home Seminar: Flipping is for PancakesInvestment Home Seminar: Flipping is for Pancakes
Investment Home Seminar: Flipping is for Pancakes
 
Real Estate 101
Real Estate 101Real Estate 101
Real Estate 101
 
Math, Math. (And only then, Location)
Math, Math. (And only then, Location)Math, Math. (And only then, Location)
Math, Math. (And only then, Location)
 
Math, Math. (And only then, Location)
Math, Math. (And only then, Location)Math, Math. (And only then, Location)
Math, Math. (And only then, Location)
 
Investing in Real Estate by Ty Rhame
Investing in Real Estate by Ty RhameInvesting in Real Estate by Ty Rhame
Investing in Real Estate by Ty Rhame
 
Ditr Private Lender Slideshow
Ditr Private Lender SlideshowDitr Private Lender Slideshow
Ditr Private Lender Slideshow
 
Are you a potential business angel?
Are you a potential business angel?Are you a potential business angel?
Are you a potential business angel?
 
Investing in Commercial Property (Series: REAL ESTATE INVESTING MADE SIMPLE 2...
Investing in Commercial Property (Series: REAL ESTATE INVESTING MADE SIMPLE 2...Investing in Commercial Property (Series: REAL ESTATE INVESTING MADE SIMPLE 2...
Investing in Commercial Property (Series: REAL ESTATE INVESTING MADE SIMPLE 2...
 
Commercial Equity Partners Intro
Commercial Equity Partners IntroCommercial Equity Partners Intro
Commercial Equity Partners Intro
 
Commercial Real Estate Investing 101
Commercial Real Estate Investing 101Commercial Real Estate Investing 101
Commercial Real Estate Investing 101
 
REOreseller Presentation Slides
REOreseller Presentation SlidesREOreseller Presentation Slides
REOreseller Presentation Slides
 
Spyglass REIA Deck
Spyglass REIA DeckSpyglass REIA Deck
Spyglass REIA Deck
 
Tax-Advantaged Real Estate Investing When You've Maxed Out Your Self-Directed...
Tax-Advantaged Real Estate Investing When You've Maxed Out Your Self-Directed...Tax-Advantaged Real Estate Investing When You've Maxed Out Your Self-Directed...
Tax-Advantaged Real Estate Investing When You've Maxed Out Your Self-Directed...
 
Reia news no47-tax time-july 2015
Reia news no47-tax time-july 2015Reia news no47-tax time-july 2015
Reia news no47-tax time-july 2015
 
2 12 acctg
2 12 acctg2 12 acctg
2 12 acctg
 
LVA Private Investors Prospectus
LVA Private Investors ProspectusLVA Private Investors Prospectus
LVA Private Investors Prospectus
 
Private Lending 501
Private Lending 501Private Lending 501
Private Lending 501
 
EQUITYMULTIPLE Investor Intro
EQUITYMULTIPLE Investor IntroEQUITYMULTIPLE Investor Intro
EQUITYMULTIPLE Investor Intro
 
Should I Buy a Building for My Business?
Should I Buy a Building for My Business?Should I Buy a Building for My Business?
Should I Buy a Building for My Business?
 
Mini fund overview for investors - BetterCapital Real Estate Fund
Mini fund overview for investors - BetterCapital Real Estate FundMini fund overview for investors - BetterCapital Real Estate Fund
Mini fund overview for investors - BetterCapital Real Estate Fund
 

Último

05_Annelore Lenoir_Docbyte_MeetupDora&Cybersecurity.pptx
05_Annelore Lenoir_Docbyte_MeetupDora&Cybersecurity.pptx05_Annelore Lenoir_Docbyte_MeetupDora&Cybersecurity.pptx
05_Annelore Lenoir_Docbyte_MeetupDora&Cybersecurity.pptxFinTech Belgium
 
The Economic History of the U.S. Lecture 22.pdf
The Economic History of the U.S. Lecture 22.pdfThe Economic History of the U.S. Lecture 22.pdf
The Economic History of the U.S. Lecture 22.pdfGale Pooley
 
The Economic History of the U.S. Lecture 21.pdf
The Economic History of the U.S. Lecture 21.pdfThe Economic History of the U.S. Lecture 21.pdf
The Economic History of the U.S. Lecture 21.pdfGale Pooley
 
Gurley shaw Theory of Monetary Economics.
Gurley shaw Theory of Monetary Economics.Gurley shaw Theory of Monetary Economics.
Gurley shaw Theory of Monetary Economics.Vinodha Devi
 
The Economic History of the U.S. Lecture 26.pdf
The Economic History of the U.S. Lecture 26.pdfThe Economic History of the U.S. Lecture 26.pdf
The Economic History of the U.S. Lecture 26.pdfGale Pooley
 
03_Emmanuel Ndiaye_Degroof Petercam.pptx
03_Emmanuel Ndiaye_Degroof Petercam.pptx03_Emmanuel Ndiaye_Degroof Petercam.pptx
03_Emmanuel Ndiaye_Degroof Petercam.pptxFinTech Belgium
 
Booking open Available Pune Call Girls Talegaon Dabhade 6297143586 Call Hot ...
Booking open Available Pune Call Girls Talegaon Dabhade  6297143586 Call Hot ...Booking open Available Pune Call Girls Talegaon Dabhade  6297143586 Call Hot ...
Booking open Available Pune Call Girls Talegaon Dabhade 6297143586 Call Hot ...Call Girls in Nagpur High Profile
 
High Class Call Girls Nashik Maya 7001305949 Independent Escort Service Nashik
High Class Call Girls Nashik Maya 7001305949 Independent Escort Service NashikHigh Class Call Girls Nashik Maya 7001305949 Independent Escort Service Nashik
High Class Call Girls Nashik Maya 7001305949 Independent Escort Service NashikCall Girls in Nagpur High Profile
 
Booking open Available Pune Call Girls Wadgaon Sheri 6297143586 Call Hot Ind...
Booking open Available Pune Call Girls Wadgaon Sheri  6297143586 Call Hot Ind...Booking open Available Pune Call Girls Wadgaon Sheri  6297143586 Call Hot Ind...
Booking open Available Pune Call Girls Wadgaon Sheri 6297143586 Call Hot Ind...Call Girls in Nagpur High Profile
 
Independent Call Girl Number in Kurla Mumbai📲 Pooja Nehwal 9892124323 💞 Full ...
Independent Call Girl Number in Kurla Mumbai📲 Pooja Nehwal 9892124323 💞 Full ...Independent Call Girl Number in Kurla Mumbai📲 Pooja Nehwal 9892124323 💞 Full ...
Independent Call Girl Number in Kurla Mumbai📲 Pooja Nehwal 9892124323 💞 Full ...Pooja Nehwal
 
Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...
Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...
Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...ssifa0344
 
Top Rated Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
Top Rated  Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...Top Rated  Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
Top Rated Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...Call Girls in Nagpur High Profile
 
VIP Independent Call Girls in Andheri 🌹 9920725232 ( Call Me ) Mumbai Escorts...
VIP Independent Call Girls in Andheri 🌹 9920725232 ( Call Me ) Mumbai Escorts...VIP Independent Call Girls in Andheri 🌹 9920725232 ( Call Me ) Mumbai Escorts...
VIP Independent Call Girls in Andheri 🌹 9920725232 ( Call Me ) Mumbai Escorts...dipikadinghjn ( Why You Choose Us? ) Escorts
 
Booking open Available Pune Call Girls Shivane 6297143586 Call Hot Indian Gi...
Booking open Available Pune Call Girls Shivane  6297143586 Call Hot Indian Gi...Booking open Available Pune Call Girls Shivane  6297143586 Call Hot Indian Gi...
Booking open Available Pune Call Girls Shivane 6297143586 Call Hot Indian Gi...Call Girls in Nagpur High Profile
 
TEST BANK For Corporate Finance, 13th Edition By Stephen Ross, Randolph Weste...
TEST BANK For Corporate Finance, 13th Edition By Stephen Ross, Randolph Weste...TEST BANK For Corporate Finance, 13th Edition By Stephen Ross, Randolph Weste...
TEST BANK For Corporate Finance, 13th Edition By Stephen Ross, Randolph Weste...ssifa0344
 
High Class Call Girls Nagpur Grishma Call 7001035870 Meet With Nagpur Escorts
High Class Call Girls Nagpur Grishma Call 7001035870 Meet With Nagpur EscortsHigh Class Call Girls Nagpur Grishma Call 7001035870 Meet With Nagpur Escorts
High Class Call Girls Nagpur Grishma Call 7001035870 Meet With Nagpur Escortsranjana rawat
 
20240429 Calibre April 2024 Investor Presentation.pdf
20240429 Calibre April 2024 Investor Presentation.pdf20240429 Calibre April 2024 Investor Presentation.pdf
20240429 Calibre April 2024 Investor Presentation.pdfAdnet Communications
 
Pooja 9892124323 : Call Girl in Juhu Escorts Service Free Home Delivery
Pooja 9892124323 : Call Girl in Juhu Escorts Service Free Home DeliveryPooja 9892124323 : Call Girl in Juhu Escorts Service Free Home Delivery
Pooja 9892124323 : Call Girl in Juhu Escorts Service Free Home DeliveryPooja Nehwal
 
VIP Call Girl Service Andheri West ⚡ 9920725232 What It Takes To Be The Best ...
VIP Call Girl Service Andheri West ⚡ 9920725232 What It Takes To Be The Best ...VIP Call Girl Service Andheri West ⚡ 9920725232 What It Takes To Be The Best ...
VIP Call Girl Service Andheri West ⚡ 9920725232 What It Takes To Be The Best ...dipikadinghjn ( Why You Choose Us? ) Escorts
 

Último (20)

05_Annelore Lenoir_Docbyte_MeetupDora&Cybersecurity.pptx
05_Annelore Lenoir_Docbyte_MeetupDora&Cybersecurity.pptx05_Annelore Lenoir_Docbyte_MeetupDora&Cybersecurity.pptx
05_Annelore Lenoir_Docbyte_MeetupDora&Cybersecurity.pptx
 
The Economic History of the U.S. Lecture 22.pdf
The Economic History of the U.S. Lecture 22.pdfThe Economic History of the U.S. Lecture 22.pdf
The Economic History of the U.S. Lecture 22.pdf
 
The Economic History of the U.S. Lecture 21.pdf
The Economic History of the U.S. Lecture 21.pdfThe Economic History of the U.S. Lecture 21.pdf
The Economic History of the U.S. Lecture 21.pdf
 
Gurley shaw Theory of Monetary Economics.
Gurley shaw Theory of Monetary Economics.Gurley shaw Theory of Monetary Economics.
Gurley shaw Theory of Monetary Economics.
 
The Economic History of the U.S. Lecture 26.pdf
The Economic History of the U.S. Lecture 26.pdfThe Economic History of the U.S. Lecture 26.pdf
The Economic History of the U.S. Lecture 26.pdf
 
03_Emmanuel Ndiaye_Degroof Petercam.pptx
03_Emmanuel Ndiaye_Degroof Petercam.pptx03_Emmanuel Ndiaye_Degroof Petercam.pptx
03_Emmanuel Ndiaye_Degroof Petercam.pptx
 
Booking open Available Pune Call Girls Talegaon Dabhade 6297143586 Call Hot ...
Booking open Available Pune Call Girls Talegaon Dabhade  6297143586 Call Hot ...Booking open Available Pune Call Girls Talegaon Dabhade  6297143586 Call Hot ...
Booking open Available Pune Call Girls Talegaon Dabhade 6297143586 Call Hot ...
 
High Class Call Girls Nashik Maya 7001305949 Independent Escort Service Nashik
High Class Call Girls Nashik Maya 7001305949 Independent Escort Service NashikHigh Class Call Girls Nashik Maya 7001305949 Independent Escort Service Nashik
High Class Call Girls Nashik Maya 7001305949 Independent Escort Service Nashik
 
Booking open Available Pune Call Girls Wadgaon Sheri 6297143586 Call Hot Ind...
Booking open Available Pune Call Girls Wadgaon Sheri  6297143586 Call Hot Ind...Booking open Available Pune Call Girls Wadgaon Sheri  6297143586 Call Hot Ind...
Booking open Available Pune Call Girls Wadgaon Sheri 6297143586 Call Hot Ind...
 
Independent Call Girl Number in Kurla Mumbai📲 Pooja Nehwal 9892124323 💞 Full ...
Independent Call Girl Number in Kurla Mumbai📲 Pooja Nehwal 9892124323 💞 Full ...Independent Call Girl Number in Kurla Mumbai📲 Pooja Nehwal 9892124323 💞 Full ...
Independent Call Girl Number in Kurla Mumbai📲 Pooja Nehwal 9892124323 💞 Full ...
 
Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...
Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...
Solution Manual for Financial Accounting, 11th Edition by Robert Libby, Patri...
 
(Vedika) Low Rate Call Girls in Pune Call Now 8250077686 Pune Escorts 24x7
(Vedika) Low Rate Call Girls in Pune Call Now 8250077686 Pune Escorts 24x7(Vedika) Low Rate Call Girls in Pune Call Now 8250077686 Pune Escorts 24x7
(Vedika) Low Rate Call Girls in Pune Call Now 8250077686 Pune Escorts 24x7
 
Top Rated Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
Top Rated  Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...Top Rated  Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
Top Rated Pune Call Girls Viman Nagar ⟟ 6297143586 ⟟ Call Me For Genuine Sex...
 
VIP Independent Call Girls in Andheri 🌹 9920725232 ( Call Me ) Mumbai Escorts...
VIP Independent Call Girls in Andheri 🌹 9920725232 ( Call Me ) Mumbai Escorts...VIP Independent Call Girls in Andheri 🌹 9920725232 ( Call Me ) Mumbai Escorts...
VIP Independent Call Girls in Andheri 🌹 9920725232 ( Call Me ) Mumbai Escorts...
 
Booking open Available Pune Call Girls Shivane 6297143586 Call Hot Indian Gi...
Booking open Available Pune Call Girls Shivane  6297143586 Call Hot Indian Gi...Booking open Available Pune Call Girls Shivane  6297143586 Call Hot Indian Gi...
Booking open Available Pune Call Girls Shivane 6297143586 Call Hot Indian Gi...
 
TEST BANK For Corporate Finance, 13th Edition By Stephen Ross, Randolph Weste...
TEST BANK For Corporate Finance, 13th Edition By Stephen Ross, Randolph Weste...TEST BANK For Corporate Finance, 13th Edition By Stephen Ross, Randolph Weste...
TEST BANK For Corporate Finance, 13th Edition By Stephen Ross, Randolph Weste...
 
High Class Call Girls Nagpur Grishma Call 7001035870 Meet With Nagpur Escorts
High Class Call Girls Nagpur Grishma Call 7001035870 Meet With Nagpur EscortsHigh Class Call Girls Nagpur Grishma Call 7001035870 Meet With Nagpur Escorts
High Class Call Girls Nagpur Grishma Call 7001035870 Meet With Nagpur Escorts
 
20240429 Calibre April 2024 Investor Presentation.pdf
20240429 Calibre April 2024 Investor Presentation.pdf20240429 Calibre April 2024 Investor Presentation.pdf
20240429 Calibre April 2024 Investor Presentation.pdf
 
Pooja 9892124323 : Call Girl in Juhu Escorts Service Free Home Delivery
Pooja 9892124323 : Call Girl in Juhu Escorts Service Free Home DeliveryPooja 9892124323 : Call Girl in Juhu Escorts Service Free Home Delivery
Pooja 9892124323 : Call Girl in Juhu Escorts Service Free Home Delivery
 
VIP Call Girl Service Andheri West ⚡ 9920725232 What It Takes To Be The Best ...
VIP Call Girl Service Andheri West ⚡ 9920725232 What It Takes To Be The Best ...VIP Call Girl Service Andheri West ⚡ 9920725232 What It Takes To Be The Best ...
VIP Call Girl Service Andheri West ⚡ 9920725232 What It Takes To Be The Best ...
 

Canadian Real Estate Investing 101

  • 1. CANADIAN REAL ESTATE INVESTING 101 By John W Carter, CEO Parkhurst Asset Corp March 2013
  • 2. Content Background on John Historical returns vs. other investment options Why invest in real estate Hurdles and challenges, and how to overcome How to run the numbers on a property Options for investment in real estate Questions
  • 3. Background on John W Carter John has over 10 years of experience managing his personal portfolio of single family properties & apartment buildings as well as a number of joint venture holdings. He has done so successfully through all market cycles. Since 2002 he has transacted business volume with clients and his personal portfolio of over $70,000,000 and over 100 property transactions.
  • 4. Historical returns vs other options
  • 5. Historical returns vs. other options
  • 6. Why Invest in Real Estate
  • 7. Why Invest in Real Estate “Ninety percent of all millionaires become so through owning real estate.” -Andrew Carnegie Leveraged appreciation Equity repayment – tenants pay down your mortgage for you Tax advantages Cash flow Should achieve 12-20%+ ROI on cash invested. Depending on financing strategy, breaks down as: 3-5% cash on cash return, 5-8% with equity paydown, and overall return includes appreciation over 5 years+.
  • 9. Equity Repayment & Appreciation Income Grows too
  • 10. Long Term Appreciation Formula Research provided by Real Estate Investment Network & www.donrcampbell.com
  • 11. Tax Advantages & Cash Flow Tax advantages: Can write off interest on debt used to buy investment property Depreciation of asset value against other income Growth of capital is tax deferred until sale Tax on sale treated as capital gains, and thus only 50% of gain is taxable Cash Flow Should always invest into positive cash flow from day one Debt should be positively leveraged (explained later in numbers) Invest in growth areas, and where high demand for tenants. Ideal property types are 2 bed condos, 3 bed townhouses, or 3+2 bed suited houses
  • 13. Hurdles and Challenges Overcome “You make your money real estate investing on the appreciation, but you need cash flow to wait for that” - John Carter Not enough cash Friends, family, business associates to JV with you Qualifying for mortgages Get co-signer Finding viable properties Hire a Realtor that owns investments properties themselves Target growth markets where numbers make sense Fixing toilets, tenant horror stories, and 2am phone calls Hire property managers, have cash flow to pay for them by structuring investment properly up front, and do annual inspections yourself.
  • 15. The Numbers Key terms: What is NOI? What is a cap rate? What is positive and negative leverage? Proforma examples
  • 16. The Numbers Net Operating Income (NOI) Income after all expenses, but not including debt payments. Is an equalizer to compare investment properties, and the primary value of an investment property Capitalization Rate Simply put, it’s the NOI divided by the purchase price. Represents the return on investment assuming purchasing the property with zero debt. Is the equalization for comparison of various properties. Positive and negative leverage Positive leverage is where the interest rate for debt on a property is lower than the cap rate. The result is the investor achieves an ROI on the banks money as the spread between cap rate and interest rate. Negative leverage is where interest rate is higher than the cap rate. This means cash flow is reduced to pay debt payments, and can result in the investor being short on cash to pay the mortgage and potentially losing the property to foreclosure in future.
  • 19. Options for investing in real estate
  • 20. Options for real estate investment Equity options: Buy rental property – 12-20%+ Invest cash as a joint venture partner with a successful real estate investor – 10-20%+ Invest cash into a limited partnership or private REIT – 7-15%+ (some are RRSP eligible) Invest in public REITs – 7-18%+ (avg. 18% in 2012) (RRSP eligible through self directed account) Debt options: Invest in private first or second mortgages – 8-12% MICs (mortgage investment corporation) – 8-12% RRSP eligible
  • 21. Options for real estate investment If have $40-50k, and ability to get debt, buy a rental property If not, invest cash with JV proven investor (amount varies) If less than $10k, invest in public REITs If over $10-25k, invest in private REITs, but do diligence Best options for starting out
  • 22. Real Estate Investment Success Plan 1) Own your own home 2) Keep your first home as a rental, and move up 3) Buy single family properties with secondary suites 4) Real life monopoly… buy 4 houses, then move to apartment buildings Focus on tenant screening up front, effective management, cash reserve Slow, strategic moves. Buy and hold min. 5 years Refinance when possible to bring debt costs down. Use caution when refinancing equity. Must still be cash flow positive, and use equity for re-investment only Increase rents with market, but keep tenants better
  • 23. Additional Resources: www.ptrust.ca – Download investment guide and review ‘Learn’ section. Signup for our email newsletter www.reincanada.com REIN – take the ACRE system intro. course and signup for newsletter Any Questions?