April 2007 Volume 3, Number 4
In This Issue
· The Lottery
·
Managed Risk
·
In Closing
Real Estate Links
Stef Lukas, our Realtor
Richard Anderson, our Mortgage Broker
The Real Estate Investment Network
An Online Listing Service
Another Online Listing Service
The Multiple Listing Service
Contact Us
Bill Biko
President/Investor Relations
403-870-4663
In This Issue
· The Lottery
· Managed Risk
·
Real Estate Links
Stef Lukas, our Realtor
Richard Anderson, our Mortgage Broker
The Real Estate Investment Network
An Online Listing Service
Another Online Listing Service
The Multiple Listing Service
Contact Us
Bill Biko
President/Investor Relations
403-870-4663
The Lottery
At some time in our lives haven't we all played the "lottery
game"? If you haven't, the premise is what would you do if you won
the lottery? What would your life be like? How would you spend the money,
what would you buy, or where would you go?
When I was younger it was a great question and fine to answer with cars,
vacations, and other grown up toys. Now many years later the answer to
the question seems to be change. Also a million dollars just doesn't seem
to go as far as it used to.
Common answers include quitting a job, paying off the mortgage and credit cards, or buying a car. Of course another is going on a Vacation (which I whole heartily agree). They all sound great, but are any the wisest answers? Ideas of money and what we do with it has changed over the years.
As a whole we tend to be a "now" society and people buy TVs,
cars, and clothes on credit without planning for the future. Saving for
luxury items is something our parents did, but we can have it now and
for only five easy payments of....you get my drift?
Back to the million dollar question, what would I do with
a million dollars? It's not hard to make $150,000 in returns off of a
million dollars, as long as you don't spend the million the day you get
it. I already live fairly comfortably, so at this point I would consider
making my money work, so I eventually wouldn't have to. So if I worked
one more year as if I didn't have the million and just made some smart
investments I would now have $1,150,000 after one year. Of this I would
have to probably share half of the profits with the tax man (I am taking
the easy route here, depending on circumstances, it could be capital gains
at a lower tax rate, I will pretend it is classed as straight income).
So now I have $75,000 to live a whole year off of.
Well what if I could get 20% instead of the 15%? Then by the end of year
one I have $1,200,000. That gives me $100,000 to live off of. What if
I practiced a little self discipline (after all I love my job - of course
working with Karen is like Heaven), and left all the money in the investments
or looked for five year investments. If I could maintain that 20% return
for five whole years I would have $2,488,320.00 which would really make
me smile.
As you may have guessed when I refer to investments at this point I am
talking Real Estate and my examples are holding rental properties long
term. When the numbers get larger so quickly you can see why the wealthy
like to invest in Real Estate. You may not be able to just go out and
buy an apartment or commercial building, but by partnering with someone
with the knowledge and expertise it becomes more achievable.
As a side note I would probably spend $50,000 of that Lottery million
on us (there's that vacation) and then in five years I could make the
hard decisions about spending the extra $1.3 million from my investments.
So what would you do? Send me your thoughts, or if this helps to pique
your interest in what we do, and what opportunities will get you closer
to your million without a lottery, email or call me today at bill@housez.ca
or 403-870-4663.
P.S. If you won the lottery last night call me!
Managed Risk
When people hear what we do most are usually interested in the idea, but tell us it sounds risky. I'm amazed when I hear this, but only because as we purchase the risk becomes less with each transaction. We are more experienced and continue to establish systems and procedures that streamline our efficiency and reduces risk even more.
Sure there is the threat of oil dropping to a dollar a barrel, or the government instituting a new National Energy Program, but these are tremendous long shots due to current Canadian and World economic situations. Oil will be in steady demand for years to come because of the growth of new economic powerhouses like India and China. With the continuous instability of the Middle East, Central America, South America, and Africa, there will also be a steady demand for stable deliverable supplies of oil such as the Alberta Oilsands.
When we evaluate a property either as a long or short term investment we examine many factors. Some of these include the price versus similar properties in the area (over 75% of the properties we purchase are below market value), the potential for the area to increase in value over the short or long term and the possibility to increase value by improving the property through renovations. If we buy under value we have already wiped out the biggest risk as we own the property for less than it is worth. If we know the area has a pending increase in value due to transportation changes, or other desirable changes (think the extension of Deerfoot to Okotoks in Calgary, or the Anthony Henday Bridge in Edmonton). If we can increase value by replacing original carpets and repainting it also creates a winning situation for risk management by increasing desirability of a property.
Imagine if you could invest in the stock market and buy a stock for less than everyone else is buying the same stock, would that be risky? Now what if you knew the stock was going to go up in value? Is that risky? Finally if you could do something to your single stock to improve its value, could you? No. I have control of my investments when they are Real Estate.
Some of the people who inform me Real Estate sounds risky should think
of it this way in comparison to their stock market investments, which
include RRSP's. My risk is managed, controlled and mitigated by our systems,
our experience and the markets we deal in. Perhaps that's why I sleep
so well at night?
If your investments are currently looking risky, why don't you call or
email me when you finish reading this and we can talk about how you too
can add Real Estate to your portfolio and maybe you can also start sleeping
better at night. My email is bill@housez.ca
or I can be reached at 403-870-4663.
In Closing
We are going through a bit of change over the next few months. After working with us for the last two years Kim McLeod is leaving us. She will still be involved with us as a co-owner of one of our companies, but will be more focused on building her career for the next few years, which we wish her the best of luck with.
This leaves the door open for a tremendous opportunity for someone looking to get into the Real Estate business as we have need for a full time contract employee. The position is being modified to become more of a personal assistant type of role with some work in marketing and accounting. As we continue to evolve and grow this position will continue to expand, as it did with Kim, and the individual we choose will be in for many exciting opportunities.
If you know someone who this would be ideal for please have them contact Karen at 403-880-5256 or Karen@housez.ca. The person we are looking for has to be detail orientated, great with people and able to deal well with deadlines. Any marketing, sales or bookkeeping background is only a bonus as we are able to train people to our systems as we move forward.
I hope you are all enjoying the Spring snow storms and as always I look forward to hearing from you.
Bill &
Karen Biko
Kat
Legal
Disclaimer
KatSid Housez Inc. and Bill Biko provide investors with
a monthly newsletter involving Real Estate. KatSid Housez Inc. and their
directors are not registered investment advisors. Forecasts and insights
are based upon data gathered from various sources believed to be reliable,
complete and accurate. However, no guarantee is made by KatSid Housez
Inc. or its contributors as to the reliability, completeness and accuracy
of the data so analyzed. All statements and expressions are the opinion
of KatSid Housez. Inc. and are not meant to be investment advice. Our
opinions are subject to change without notice. KatSid Housez Inc. may
point to other affiliates or contributors that may be of interest to you,
but for which KatSid Housez Inc. has no responsibility. The Services includes
facts, views, opinions and recommendations of individuals and organizations
deemed of interest. No information accessed through the Investors Housez
newsletter or KatSid Housez website constitutes a guarantee of the investment.
Past performance does not guarantee future results. KatSid Housez strongly
advises readers to conduct thorough research relevant to decisions and
verify facts from various independent sources before making any investment
decisions. All investments contain some level of risk; therefore Investors
should seek the advice of a qualified investment professional prior to
making any investment decisions.