You might call it a trade secret of the Real Estate market, but one of the simplest ways for us to filter out property is to use a little technique called the 10% solution. This is one of the quick tools we use to measure whether a property will work as a long term hold property.

When you evaluate a property as a rental, your first step, once you have confirmed rental rates in the area, is to find out what the combined rents for all the suites or rentable sections of the property are for the year. Once you have this number you simply divide the possible purchase price by it and this number multiplied by 100 is the percentage of rent generated each year versus the purchase price.

As a standard practice for investors, if this number is 10% or higher then this property may be a good rental prospect, hence the term the 10% Solution. While this is not a perfect test, it does drastically reduce the hundreds of properties available down to a much smaller subsection. In addition with the current low interest rates the 10% Solution will even work with 8.5%.

This is really just the first of multiple steps to evaluate a potential property, but when you look at many properties, it truly does save you time, and helps you get to the true diamonds amongst the rough!

If you would like to see more articles like this please let us know.

Hot Properties

Longer Term Investments

1) Pensdale Green - $25,000 cash on a rental townhouse located in Penbrooke in South Calgary. This is an equity appreciation investment with some minimal cash flow payouts. The cash flow is paid twice a year and the equity portion would be paid out at the end of the term. The Return on Investment is projected to be 15% return per year. Length is five to eight years.

2) Ranchland - $50,000 cash on a Rent to Own house in the Northwest Calgary community of Ranchlands. This is a combination of quarterly cash flow checks and equity growth with an approximate return to the investor of 20%. We are being conservative on this property at present, but once the LRT expansion is done, the values and return should increase dramatically. Length of term is one to five years.

Short Term Investments

· It was brought to my attention by someone (Thanks Kim) that I hadn't provided enough information as to what a Short Term Investment consists of. These investments are usually three to nine months and pay up to an annualized rate of 18% interest. We use these funds to cover renovations costs and pay the interest payments out of profits when the house is sold. These opportunities are an excellent way for a first time investor to get into Real Estate as they are of a much shorter duration and can now be as little as $5,000 to get started.

· Our Deer Run renovation has now started and there is still some room left for either one person or several people to get involved in this one. If you currently have an investment only making 2.5% (GIC anyone?) and would like to substantially increase your return, call us today.

Investments with us can either be registered on the title of the property, or a caveat can be placed on the property. Either method ensures you are protected and helps safeguard your investment.

If you would like more information about investing in Real Estate, visit our web site

http://www.housez.ca/Invest/CalgaryRealEstateInvesting.htm

Call either Karen or Bill today at 880-5256 or email us at info@housez.ca and we’ll get you the information you need to start your investments tomorrow.

Questions and Answers

What is a mortgage broker?

Mortgage Brokers can be your best friend when you are looking for a mortgage. When you are dealing with a bank, their job is to sell you one of that bank's mortgages. This may not necessarily be the best mortgage for you. A mortgage broker's job is to shop many banks to find the best mortgage available for you. There are a myriad of mortgage options available and with their intensive training they can ensure you receive the best overall product that is tailored to your personal needs. If you have any mortgage questions, give Nikki Labbe, our mortgage broker, a call at 403-270-7639 and maybe she can help you out!

If you have any questions you would like us to answer in the next Newsletter let us know!

In Closing

We wish you all a Merry Christmas and a Happy New Year from all of us and our employees! As always any feedback or thoughts you can provide will be appreciated and if you know anyone else who would be interested in either receiving our Newsletter or investing in Real Estate please have them contact us directly at 403-880-5256 or via email at info@housez.ca.

Bill & Karen Biko

KatSid Housez Inc.

www.housez.ca

403-880-5256

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