What Type of Cash Flow are You Dealing With?

One of the most misunderstood and commonly mistaken terminologies in real estate is cash flow. Every person and every business requires cash flow in order to survive. The question to ask is: what kind of cash flow are we talking about?

When I first started real estate investing, I remember this scenario as a perfect example of how a novice can misunderstand the principles of cash flow and land up in big trouble a few months later. Here’s the story:

We received a call from a business associate just starting out in real estate. He called to run the numbers by us to make sure the deal was as good as it looked on paper. He was buying a pre-sale condo and there was huge cash flow: a thousand dollars a month. We let him gush about the deal in order to vent his emotional fervor. This was red flag number one. Emotions never dictate a deal: only fundamentals. He was going to make a lot of money. Or so he thought … until we started asking him some clarifying questions.

What type of cash flow is the thousand dollars? Is it gross income, effective gross, NOI or net? Gross Income is the rent. Effective Gross Income is rent plus other income such as laundry and parking and less vacancy allowance. NOI, an acronym for Net Operating Income, is gross rent less operating expenses. Net Cash Flow is NOI less debt service. Debt service is your mortgage payment. Net Cash Flow is the bottom line and for me, this must be positive cash flow.

What is positive cash flow? This is the continuous flow of money over and above expenses and debt service that is deposited into your account every month just like a pay cheque. Positive cash flow equals freedom.

Less than five minutes later, we figured out quickly that our friend had neglected to deduct strata fees, property taxes, utilities, repairs and maintenance, factor in a vacancy allowance and – most importantly – his mortgage payments.

From a author_link perspective, the deal was a money drain. He would have been subsidizing the condo about $500 per month. This comes to $6,000 out of pocket expenses a year later. He didn’t have the fortitude to flip the property a year later.

Cash flow is intimately related to expenses. Both cash flow and expenses need to be managed and strategized. Some provinces have rent caps. Alberta has no rent caps which makes it an attractive place to buy investment property. Even so, the market dictates the rent amount. In an uptrending market, rents should always be managed up.

What are two types of expenses: operating and capital. These are some of the fixed operating costs associated with properties:

• Property taxes
• Property insurance
• Property management
• Utilities: water and sewer
• Utilities: electricity and oil & gas
• Repairs and maintenance
• Maintenance service contracts
• Refuse removal
• Vacancy allowance
• Advertising
• Bank charges
• Contingency allowance

A mortgage is not an operating expense. This is a debt service.

These are some of the capital costs associated with properties:

• Hot water tank
• Roof repair or replacement
• Appliance replacement
• Carpet replacement
• Electrical system upgrade
• Fire code upgrade

Capital expenses are capitalized. You cannot deduct 100% of these expenses all at once. This means that only an allowable percentage of the capital expense can be deducted each year similar to the capital cost allowance deductions for automobile deductions.

Owners of multi-family dwellings have a choice between creating an operating or capital expense. How? Suite by suite repairs and maintenance such as replacing the carpet and painting can be expensed. Replacing the carpet throughout the building and common areas or painting the entire building is a capital expense. These decisions are made in conjunction with our Bookkeeper and Chartered Accountant.

One of the most important calculations is the investor’s bottom line: their Cash-on-Cash Return. This is calculated using the Net Cash Flow per year and divided by the actual cash investment. Although this is not a true reflection of their total return on investment, it is a very powerful and compelling reason for investors to participate in your investment.

The next time you encounter cash flow issues, you have your clarifying questions to determine what type of cash flow you’re dealing with.

Source by July Ono

How to Obtain High Rate of Return on Your IRA

Cyclical changes in the stock market, economy and bank and government-base investments could be pretty damaging.  Diversifying retirement portfolio by the means of IRA real estate investing will allow you to deal successfully with the problems mentioned above.  Through income production and capital gains you could generate better than market rate returns, while real estate investments hold the potential to protect against the loss of principal.

When real estate investments are leveraged, both income and capital gains can flow back to IRA tax-deferred or tax-free if the IRA is a Roth IRA.

If you have your IRA investing in real estate from an unrelated party, you are not using the property for personal reasons while it is in your IRA.  In other words, it is an IRS approved transaction because it is strictly for investment purposes and not self dealing.

The popularity of having an IRA real estate investing is overwhelming.
Millions of taxpayers now have an IRA investing in real estate versus other traditional assets.  By having IRA investing in real estate, you are also avoiding what’s known as capital gains every time you sell property.  You can also use your retirement plan to keep your real estate investment, earning money and limiting what you have to pay in taxes.

Whether you currently have retirement funds or you are looking to set up funds for investment purposes, the time is right for you to make an IRA investing in real estate.

To invest your IRA in real estate you need to transfer your money to self-directed IRA.  The person or entity holding your money, the custodian, must allow you to self-direct.

One of the advantages of IRA investing in real estate is that you often have more time to make decisions, as opposed to investing in certain stocks.  You have more control over where the money is going.  You do need to be sure that you have a self-directed IRA and that you are allowed to be the decision maker as to what property is purchased.

You have options what to do with the property once you buy it.  You can chose to buy the property, fix it up and sell it for profit.  You can also invest in properties that are turn key and already have a tenants and property managers in place.

According to Kiyosaki, in order to obtain financial freedom, one must be either a business owner or an investor, generating Email.

Create your financial future with IRA investing in real estate.

Source by Lev G.

Jamie McIntyre Ebook – The Same As All Free Ebooks?

A friend recently send me a copy of the Jamie McIntyre Ebook ‘What I Didn’t Learn At School But Wish I Had’ and asked me to tell her what I thought of it. First of all I thought I should do some research on who Jamie McIntyre was and why he was giving away free Ebooks. After a quick search it became clear that he is a ‘Life, Success & Investment Coach’ and the creator of the 21st century academy. The Jamie McIntyre Ebook is given away free along with a Jamie McIntyre DVD to people who are interested in attending his 21 century academy seminars. So the question remains, is the Jamie McIntyre Free Ebook worth reading or is it a scam and waste of time?

Jamie McIntyre’s Ebook is interesting for a number of reasons. First of all the fact that he and his website SharesPropertyMoney are prepared to give away free DVD’s and Ebooks as part of their marketing strategy is amazing. When I looked at the website I didn’t believe that they would actually send me out a physical DVD but low and behold within a few days it came in the mail. The Jamie McIntyre DVD (same title ‘What I Didn’t Learn At School But Wish I Had’) actually goes hand in hand with the Ebook.

The next interesting fact about the Jamie McIntyre Ebook is that unlike lots of freebies it actually contains loads of very relevant and interesting information. He outlines his Tony Robbins inspired philosophies about how to achieve the correct mindset to become rich. Or the ‘Mindset of a Millionaire’ as Jamie Likes to call it. Lets be honest, whilst most people simply want to know the investment strategies the correct mindset is absolutely vital. The fact that most people who win tattslotto are actually worse off in 5 to 10 years is a direct reflection of the importance of your mindset.

In Jamie McIntyre’s Ebook and DVD he outlines his basic Investment strategy, which in short is as follows. Use the Stock Market to create Work from Home by ‘Renting’ your shares (writing covered calls is the technical name for this strategy) & combine this with a Real Estate portfolio designed to give you capital growth (he focuses on how to get ‘no money down’ deals). Now whilst this Investment strategy isn’t a brand new strategy he explains it in a very easy and relaxed way that novice investors will love. To be honest the would be plenty of so called expert investors that would also benefit from learning and understanding his simple yet effective strategies.

Renting shares is one of the best kept secrets in the entire world. It is starting to become more popular but the average investor simply MUST learn about this strategy. It is with out doubt the most powerful wealth creation tool that the average person can use. Most importantly it is incredibly safe strategy; in fact it is safer than just owning shares. So for everyone who is happy to run the risk of having superannuation fund, renting shares will be a walk in the park. So what’s my verdict of the Jamie McIntyre Ebook? Well it’s free and it has great information so it’s really a no brainer. Give it a read you really have nothing to loose.

Source by Scott Martin

Investing: Top Ten Reasons Why You Should Buy Multifamily Properties

When you sit down and examine the advantage of owning multifamily properties, you will be amazed at the multitude of benefits. While other avenues of income generation offer some attractive incentives, owning multifamily properties brings many great things to the table. Let us explore these advantages:

1. You can outsource your property management to professionals. You don’t have to be bothered by tenants and toilets. Even if you have smaller apartment properties, you can hire property managers. Leave the headaches to them and go on vacation! The apartment property doesn’t own you; you own the property.

2. You can buy with NONE of your own cash. You can raise private money to cover any cash requirements. You will find that it’s easier to get financing on apartments and that the MORE you borrow the LESS they look at the borrower’s credit. In some instances, they don’t even look at the borrower’s credit but at the borrower’s assets instead.

3. Apartments are made to cash flow even with nothing down. This means that instead of there being one house with one roof generating only one source of income, you have one roof with possibly multiple apartments under it creating multiple income streams. You have economy to scale. Apartments are designed to be income-producing properties.

4. Better leverage of your time and effort. Think about it. What would you rather do? Look for ten houses or a ten-unit apartment building? On the flip side, wouldn’t you rather sell a ten-unit apartment than sell ten houses? Of course! You have more leverage of your time.

5. The value of income properties is based on income. This is a function of Net Operating Income (NOI) and you can create value by raising the rents and cutting the expenses. This is a very predictable process. You can determine how much the property is worth based on how much you raise the rents.

6. Less competition. There are less people out doing multifamily apartment deals than single family deals because they lack mindset and they lack specialized knowledge. They have limited themselves by the mindset that says they must graduate from single-family homes to multifamily apartment properties.

7. There is less risk. With multiple tenants you have multiple revenue streams. If you lose one client, it’s not the end of your business. On the other hand, if you are relying on a house as your sole source of income and you lose that tenant, you are still pouring money into that house. There is mitigated risk through apartments.

8. Non-recourse financing. The more money you borrow, the easier it is to borrow. When you get to loans of two million dollars and above, it becomes non-recourse financing which means the asset is the sole security for the loan. No one is personally guaranteeing the loan.

9. Condo conversion. This has been very big in some parts of the country such as Denver and Tampa. As an example, you would take a fiveplex, convert it into condos, and then sell the individual units. It is a different strategy because you’re putting all your cash forward and then pulling out. It’s not a long-term hold strategy.

10. The sub prime lender bust. With sub prime mortgage lenders falling out of the market, there are people cannot qualify for home loans. These people have to live somewhere so the demand for rentals is skyrocketing.

As you can see, the advantages to owning multifamily apartment properties are solid and sound. With so many venues to consider when trying to find something to generate learning for yourself, you just can’t overlook the tremendous value created by investing in multifamily properties.

Source by Lance Edwards

Cool Travel Jobs – How To Work And Travel In Style!

Do you want to find out more how you can work and travel in style?

Having to work is a necessity. Even if it is hard and stressful, you need to work to earn a living. On the other hand, traveling and exploring is pure fun and excitement. However, it can be expensive and impractical.

A person who wants to travel and have an endless vacation will have to work hard and long to save money to achieve it. This is the conventional approach and most people do not like it that much. This is mainly the reason why people would rather wait into their senior years to realize their ultimate vacation fantasies.

It is rather sad if that is the only way to do it, right? Fortunately, there are other ways to travel and explore the world without spending as much. Travel jobs, freelancing, and Email earned through the Internet; these are great ways to pull off your desires for voyage and exploration.

It will not only help to make traveling practical, it is also a good career option for you. It is a great alternative to the conventional approach. With it, you are able to work and travel in style. So how does one take advantage of it? Here’s how.

If you want to find work that involves travel, you have to examine your skills and personality first. The hospitality, travel and tourism industry offers most of the positions that require people to work overseas. Jobs of this nature are typically service-oriented and require an outgoing personality.

Tourism jobs, to name a few, include tour guides, travel agents, adventure organizers, and trek leaders. Some jobs may require a bit more experience, certain certifications, and/or some other qualifications. Research agencies that recruit specialized workers.

If you have the aptitude for the work you will enjoy it a lot and the pay is usually decent with tips as incentives. Travels and adventures are already paid for you so, you don’t have to worry. You can save cash while on assignments.

Hospitality jobs are mainly found in hotels and other types of service-oriented establishments. People skills are essential in this line of work. Cruise ships are hot spots for hospitality job positions. Though highly competitive, anyone who can persevere and employ proper application techniques can land you a job in this very favorable work environment.

Some people harness the power of the Internet to accomplish their travel goals. If you have skills, whatever they are, you can find parties in need of them. Freelancing can be very lucrative. Post a job wanted ad on the web and hopefully, you can find clients that will employ you.

Travel photographers usually put their collection on their websites and sell them as well. A website is not only an advertising vehicle, it is also a place to make transactions and close deals. You can make money electronically it’s the fastest and most convenient way to get money.

If you’re willing to put in the work, you can make websites and earn from them passively. They can sell products, earn from advertisers, and receive commission from affiliate products. All they have to do is generate traffic to their site and voila, easy money while traveling.

Source by Tyson Hale

How To Use The Tipping Point & The Slight Edge In Your Steps To Financial Freedom

As I started to take steps to financial freedom, I realised that Malcolm Gladwell’s notion of the tipping point fits extremely well with Jeff Olsen’s concept of the slight edge.

Gladwell introduces the idea of the tipping point with reference to social epidemics – a good example being the way that news of the resurgence of US forces was passed around before the defeat of the British in the American War of Independence.  A modern example might be a “viral” news story which finds it’s way around the world rapidly via the internet – such as the moment captured on film when a whale crashed down on a private yacht off the coast of South Africa.

The slight edge comes from combining a series of small regular steps into a momentum for change.  A whole series of slight edge changes combine to create a tipping point and lasting change is assured.

The notion of the tipping point is apparent everywhere the moment we start to look – no more so than when a committed decision is made to achieve financial freedom. After a period of slight edge changes, someone reaches their own financial freedom tipping point and realises that the goal is highly achievable and literally just around the corner.  Passive income starts being created, debts are cleared, investments and assets start building up.  Until that point, it all feels like hard work with no reward.

Another example comes from the area of health and weight loss.  Four years ago, I weighed 50 lbs (22.5 kgs) more than I do now. I made a committed decision to lose a specific amount of weight in particular period of time (6 months) for my own unique set of powerful reasons.  Before long, my brain was making healthy choices because my body wanted them, not because of any external force or pressure. I can remember reaching the tipping point after about 10 weeks and after that, it was easy to go on and achieve the weightloss goal.

It’s often been said that achieving financial freedom, as with any other form of major life success is an “inside job”. In other words, you have to change on the inside for the circumstances and results in your life to change on the outside.  Sometimes, especially in the early stages of the journey when the cynics have come out to play, it’s hard to keep the momentum going.  However, recognising that you have reached the tipping point on your steps to financial freedom and that momentum is now unstoppable is a remarkable and very reassuring feeling.  You can enjoy that feeling – infact it’s your birthright!

Source by Andrew Bridgewater

Making Money Writing How-to Articles

If you’re interested in making money online, writing how-to articles is a great option. There are people trolling the internet constantly. They’re looking for information on how to do something.

When you want to learn how to do something new, or fix something that’s not working, where’s the first place you look? Probably the internet!

Capitalize on the how-to niche and make yourself some cash! There are a few companies that will pay you to write these articles such as eHow.com and Bukisa.com. You can make money with revenue sharing on these systems and get paid via PayPal on a regular basis.

If you can Google something, you can make money.  Write about something you already know (everyone is a subject matter expert on something!) or research hot topics and take a few minutes to learn a skill and write about that in your own words.

The great thing with sites like these is that you can make money off residuals so writing an article once could help you earn monthly for an indefinite period of time.Some writers earn hundreds each month from these programs.

Writing a great how-to article isn’t difficult if you take some time to learn:

  1. How to find hot topics to write about and good long tail keywords
  2. Learn to write for search engines (SEO)
  3. To write with an active and effective writing style

Good Keywords

Look on Google and see what people are searching for. Check out Google Trends and many online free keyword tools.  These tools can show you what’s hot so you can write about stuff people are actually interested in.


Search engines look for keywords. If you write with laterally related words and strong keywords in the title and in the article headings, you increase your chances of getting picked up and indexed by the search engines. Learning a little about SEO can definitely increase your online earning potential.

Active Writing Style / Conversational Writing

Tell people how to do something with strong action words and in a friendly conversational tone. Before publishing, try out your directions to see if they’re good or not. If you write well, not only will search engines index your article but more people will be reading your articles  as well.

Once you write these articles, do a little social marketing with them by bookmarking them and pointing your friends to them as well. All of the above can help you create a nice little make money online stream for yourself. There are several sites that will pay you to write these articles either directly or indirectly through revenue sharing.

Find out how to Make Money Online Writing For  eHow

Source by Dana Prince

Section 181: Why Aren’T You Usint It?

American film makers and savvy investors received a bailout of their own recently. H.R. 6049, the Renewable Energy and Job Creation Tax Act of 2008 (“Act”) recently passed the House of Representatives and then became law by passing the Senate with a 93-2 vote. Buried deep within the Act is an extension of Subsection (f) of Internal Revenue Code Section 181 (“Section 181”). The Act calls for the one year extension of Section 181 from December 31, 2008 to December 31, 2009. For the select few that were already aware of the benefits of Section 181, this is good news (great news if it passes the Senate). However, for most Americans, they have no idea what Section 181 is and how they could potentially benefit from it.

Section 181 was Congress’ reaction to what had come to be known as Runaway Productions. A Runaway Production was a movie or television show that was typically produced by Americans and filmed in the United States which left the to be produced and filmed on foreign soil. Hollywood, like many American industries, had grown tired of the high cost of labor and taxes in the United States. Canada and other countries, identifying the potential financial benefit, took advantage and successfully lured American film and television production to their soil.

The government’s reaction was to include Section 181 within the American Jobs Creation Act of 2004. Section 181 offers tax incentives for investors in independent film and television productions. An investor may deduct the money which is invested in a film or television production and actually spent or utilized by the production from his or her author_name earned in the same year. If the investor is also actively involved in the operation or direction of the production, he or she may deduct the amount of his or her investment from all income earned in the same year. Productions with budgets between o $1 and $15,000,000 (up to $20,000,000 if produced in a defined low-income location) which have at least seventy-five percent 75% of its production completed within the United States qualify under Section 181.

Investors can be either individuals or businesses. In order to comply with Section 181, an investor will need to complete the required IRS filings along with their normal tax forms. A qualified accountant and attorney are always a good idea when trying to decipher and utilize the benefits of Section 181.

Not wanting to be left out, several states got in on the tax incentive game. States such as Michigan, New Mexico and even Illinois appreciated the value of attracting Hollywood productions to their state and the boom to their local economies. State film offices are great resources for investors and film makers alike in determining what incentives are available.

Tax rebates and incentives for money spent on film or television production within a particular state combined with the benefits of Section 181 allow an investor to greatly minimize his or her risk on what would ordinarily be a somewhat risky investment. For example, if a tax payer is in the thirty-five percent (35%) tax bracket and a qualifying film is shot in Michigan which has a tax credit of up to forty-two percent (42%), an investor will be eligible to recapture seventy seven percent (77%) of her investment in a qualifying production. This recapture is realized before the film is even released and/or makes its first dollar. In today’s economy this type of investment assurance is hard to come by.

We will continue to monitor the Act and issue additional updates as they become available. For any questions related to Section 181 or private equity placements for film or television production please contact us at jkaplan@stahlcowen.com.

Source by Josh Kaplan

Rich Mindset Secrets: A Guide Revealing the Secrets to a Rich Mind and Tips on How to Become Rich

The secret to becoming financially wealthy is to have a rich mindset.  You have to work for it, work on yourself and also learn the secrets of those who have achieved success. Success will come to those who make it happen and it doesn’t necessarily mean that you have to work harder, you just need to work smarter.  You have to take charge of your time, be in charge of your spiritual growth and take responsibility for your own actions.

People with a Rich Mindset:

  1. Are willing to delay gratification and have the patience to wait for the fruits of your labour to materialise.
  2. Are willing to take calculated risks and are prepared to win or lose. They take advantage of new opportunities before the masses realise the potential.
  3. Are quick thinkers, have a sense of urgency to produce results, they make it happen, understand the principles of ‘Cause and Effect.’
  4. Are decisive and make plans.  They will be able to tell you where they are going and how they are going to get there.
  5. Persist until they succeed.
  6. Understand the importance of leverage and teamwork.
  7. Focus on having a good quality of life. They will retire comfortably whilst having a high standard of living and enjoy more free time and the good things in life.  They will also have good health and a sound sense of well-being.
  8. Always have more money at the end of the month so that they can use it for investing or spending as they wish.

Tips on How to Develop a Rich Mindset:

  1. Believe that you deserve wealth.
  2. Develop a mind that says that you have ample opportunities to create wealth.
  3. Organize your life and time.
  4. Network more with high achievers.
  5. Start thinking about developing Call to action.
  6. Visualise wealth. Imagine yourself having financial abundance.
  7. Think positively.
  8. Think about money as energy by being happy to give and receive.

Tips on How to Become Rich:

  1. Invest – Start saving early preferably when you are young.
  2. Marry a millionaire or preferably a billionaire.
  3. Win the lottery
  4. Inherit from rich parents
  5. Become financially educated. Read Robert Kiyosaki’s brilliant book Rich Dad, Poor Dad.  
  6. Attend wealth seminars.
  7. Become a star – if you have the talent.
  8. Invest In real estate.
  9. Invest in stocks and shares.
  10. Set up an internet business.
  11. Get good tax advice.
  12. Save 10% of everything you earn.
  13. Get a well-paid job.
  14. Re-invest income from assets to buy more assets e.g shares, mutual funds and property funds pay dividends.

Source by Penny Sterling

Are There Still Business Opportunities in Today’s Economic Climate?

Business opportunities for the individual are on the rise said a world famous economist renown for accurately predicting economic trends. The economy is booming and will create 10 million millionaires over the next ten years. This was a year ago. Given the current economic recession do you still think this is possible? Has this guru of economic predictions finally got it wrong? Could you perceive a scenario where these predictions could possibly happen in today’s conditions?

I believe that this is still possible. In fact, I believe this guru is still right on target. It was also said that the wealth was transferring from the large corporations to the individual entrepreneur because the larger corporations were dismantling. The millions in wealth that would have been in the hands of a relatively few major corporations would end up in the hands of millions of individuals.

Could the current economic crisis be a precursor to this? Certainly the power base has shifted although there may be a few optimistic bankers who disagree.

With so much tax payer money used to prop them up, the power base had better shift to the individual. We should not have to go through so much pain only to see nothing change. Remember, the banks have not only had our money to bail them out – it was our money they lost in the first place.

Basically, this is the era for the little guy. The best business opportunity now is to set up your own home based business. After all this is what 85% of you have been telling the poles you want to do.

It was predicted that millions of individual entrepreneurs will share the wealth that was hitherto held by the large corporations. The contention is that the economy is in great shape and if you position yourself correctly, you will prosper.

The business opportunities being talked about here are specifically network marketing (now called internetwork marketing). But it applies equally well to internet marketing. It is the explosive growth of the internet that will bring about this shift. The opinion is that the internet is just getting started.

This means that you online entrepreneurs have the advantage now. You have the luxury of maintaining multiple income streams from many different niches. If one of these goes belly up you have others that you can seamlessly switch to.

Even during the tough times, there are niches that are profitable. Also, there are the niches that have yet to be explored. You may not have seriously considered these when times were good – now they may have come into there own.

There are an ever-growing number of people searching for a new business opportunity. These are the recently displaced, those about to lose their jobs or those who are feeling vulnerable right now. This resonates with another prediction – that the pace of change is so rapid now that many people would find their jobs changing dramatically, or disappearing completely within 2 or 3 years, if not 2 or 3 months.

Now, ain’t that the truth.

So this is your chance. Help these displaced people get into internet marketing. It has often been stated that the best way to be successful is to help other people be successful. As an internet marketer you are well placed to put this maxim into practice.

And the best part of this is that start up costs for these online business opportunities are minimal. When compared to offline businesses they are miniscule. Domain names are cheap, websites cost very little and web hosting is also cheap. All that is needed is hard work and perseverance.

Other advantages?

You control your own destiny, not some large corporation.

You will eventually work from home.

You set your own hours of work.

Your overheads are practically non existent.

And the most precious of all – once successful you will never have to worry about the economy because you will have created learning which keeps coming in even if you take a break for a week (month) or two.

Today’s recession proof business opportunity, whether it be internetwork marketing or purely internet marketing, is online.

Source by John Hutchinson