New URL, New Domain

Check out Bring the Cash Flow’s new home:

http://btcf.ngifford.com

I’m hoping to devote more and more time to blogging over the next few months, and this new home will help give me a bit more freedom in how I run the blog itself.

Also check out my photoblog:

http://luminescence.ngifford.com

I’m starting off with a few of my favourite photos taken over the last few years and will be moving towards the present. I just bought a new d-SLR camera, so I’m hoping to start generating more photos worthy of posting.

The Road Ahead: The Corporation

globereflection-200×267.jpg The image of the reflected glass globe symbolizes corporate success. However, to me, it also suggests sustainability, morality and social conscience. These are some of the core values I will strive to include.

Why?
Owning a successful company, no matter how it generates money, means several things to me.

1) It will bring financial freedom. This means I will not be reliant on managers and CEOs, in whom I have little faith, for my livlihood. In the traditional employment framework, one mistake, one economic upset, or one failed product could endanger my ability to provide for myself and my family.

2) Being free of the ‘rat race’ should also provide more time for family, learning, and volunteer work.

3) If all goes well, there should be enough capital and contacts to branch out into entirely differnet businesses (e.g. restaurants or bars, waste clean-up and reduction, clean and renewable energy technologies).

How?
This is the hard part. I’ve touched on various issues in the preivous Road Ahead posts. There are several steps to setting up a corporation for real estate investing.

1) Determine the corporate structure (LLC, REIT, etc.), then incorporate, quickly.
– Currently, I think the incorporating as a numbered company may be the quickest option, and converting to an REIT in the future would still be possible. Given the new taxation rules for income trusts, it may not be advantageous to go that route.

2) Solidify partnerships, and set a board of directors.
– I can not run this company on my own. I need 1-2 dedicated partners.
– I also need a support team (accountant, lawyer, property manager, etc.)
– Once

3) Investigate investment opportunities
– This is the easy part, and will be ongoing
– Having a few potential investments on the board will make it easier to find prospective partners as it will give me some hard numbers to present

4) Develop marketing materials
– A snazzy name
– Powerpoint presentations
– A short flyer
– Business cards
– I need information to present to prospective investors

5) Continue to develop a network of investors (this may have some impact on (1)).
– My current network consists mainly of friends or relatives. This has more disadvantages than advantages, and may pose a serious roadblock
– I will need to expand to other real estate professionals through my current contacts and other networking opportunities

6) Collect investments, issue shares, determine dividend rates, etc.

Questions, questions?

1) Do I currently have enough investors for this type of venture? How feasible is it all?
– Depending on the amount of investment capital I feel I can secure, my options could change. If it is under $50,000, the simplest investment would be rental property under a non-incorporated partnership. Hopefully the first property will be something commercial, however, because I would like to diversify my current holdings.

2) I am not sure about partnerships at this time. I have approached several people in the past, some have already invested, but I am not sure if I can find a partner who is willing to give time to the venture.

Outlook:

Obviously this will not happen over night. The process will take up the better part of the next year as I slowly move through the steps that are roughly outlined above. However, I remain positive that this is possible with the right marketing strategy, the right partners, and some luck.

I hope you have a happy New Year!!! May 2007 be prosperous and joyous for you and your family.

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Part of the writing project over at BiggerPockets.

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The Road Ahead: Blogging

Blogging Joke Blogging, where is this blog going?

1) I’m not sure about the name… anyone have any thoughts on it?

2) I need to move to a hosted blog because it seems like a bit of waste to keep it hosted at WordPress.com since I can’t have any advertisements. Yes, ads suck, but it would be nice if the site paid for its own hosting and domain registration. Item (1) is a major reason why I haven’t done anything on this front yet.

3) More graphics. I’ve tried to add graphics to this recent series, and I will continue to do so in the future. It is a tip I gathered from EscapeFromCubicleNation. I think it makes the posts more inviting to read.

4) More of the same, I will continue to be focused on real estate investing, but I will also likely want to branch out into other forms of investing for the odd post. I tend to spend most of my online reading time split 60/40 between REI and the stock market.

5) More interaction with other bloggers which will hopefully increase the number of comments. I’d like to build a good community similar to the one over at GetRichSlowly or CanadianCapitalist.

This doesn’t sound like much of a plan, I know, but blogging isn’t my major focus… the investing aspect is. Are there any comments on the current site theme?

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Part of the writing project over at BiggerPockets.

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The Road Ahead: Marketing

MoneyMarketing for student rentals. What a challenge.

In years past we have used the local university off-campus housing service to list our properties, and we have also put a few ads in the newspaper.

Medium:
For 2007, we plan to up the ante because we’ve had vacancies over the summer months that aren’t acceptable. We will advertise in three mediums, the off-campus housing site, the campus newspaper, and online through iiProperty and any rental listing sites I come across. We will also expand our listings to the local college which is a 20-minute bus-ride away, but at least it is a direct route.

Differentiation:
How can we differentiate ourselves from the thousands of per-bedroom vacancies in London? Number one, we include all utilities and wired/wireless highspeed internet in our homes. Second, our properties are fairly well-kept (upper-middle of the pack) and are thus well-priced. Third, we offer free laundry in our 5-bedroom houses.

Word of Mouth:
This-year we want to expand on the power of word of mouth advertising by offering incentives to our tenants.
1) We will offer 1-month free rent to current tenants who sign a 12-month lease.
2) We will pay $150 for each referral (obviously only ones who sign leases).

Property Managers:
Because we lost a lot of revenue due to having 6 vacant bedrooms last summer ($9600), we’re going to be in touch with one or two property managers this-year. Last year we had one, but we started using her too late in the game, and she couldn’t find any tenants for us. If we start earlier this-year, we should be in luck. Last-year she only charged 1/2-month of rent for the property, which works out to only $1000… a small price to pay!

Wish us luck!

This post is part of the writing project over at BiggerPockets.

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The Road Ahead: Organization

Organization, what organization?

Now that I have three properties to take care of and my Masters is out of the way, it is time to get serious about organizing my tasks and time. Up until now, I have done as little maintenance as possible to the properties because my schedule and budget didn’t afford much of an investment. However, this-year, I need to get serious about scheduling various activities.

First comes our marketing campaign. The worst thing about renting to students is that they tend not to be repeat tenants. Once their 12-months are up, its on to bigger and better things, and that brings the potential of vacancies. To counteract this trend in 2007, we will begin an integrated marketing plan starting in the first week of January. In past years, we have left the advertising too late into the spring, and I feel we lost many prospective tenants. More on the marketing plan tomorrow.

Furthermore, two of our properties are in need of some capital investment for repairs and upgrades. Property 1 needs a fresh coat of paint inside, some new carpeting, some drywall patching, a new screen door and a new railing. The railing and door are already purchased, so the only remaining task is to schedule their installation. The problem being that I don’t know whether I can find someone willing to do it in the winter. I may just leave the drywall and painting until later in the year because they are not pressing. Plus, we can always use a new paint job as a carrot for potential renters who are sitting on the fence. I don’t think carpeting is in the budget for this-year, so it will have to wait.

Property 2 is in fairly good shape, however, I was there yesterday and am quite concerned about the 2nd floor washroom. Some water has leaked around the tub, and has rotted the sub-floor slightly. I caulked up around the shower doors, which should stop the leak, but to repair the floor will require nearly a complete bathroom reno. In the spring I’ll need to get some estimates, right now I have no clue how much it could cost. Otherwise, property 2 is in good shape, but could use a bit of paint if there is money.

So, how will I get organized? I posted previously about using Monkey GTD, which is a variation on TiddlyWiki using the GTD principles to keep track of upcoming tasks, appointments, reminders, etc. It is really a great system. You can host one on the web over at TiddlySpot making it accessible from anywhere you can find an internet connection. There is built-in security for protecting your information, and if-required, multiple people can edit the same wiki. Here’s a screenshot of my Rental project:

My Monkey GTD Rental Project

Lastly, I plan to use Quicken to better keep track of my rental expenses in 2007. I think this will help me visualize where money is going, and how I can reduce expenses and increase profits. To keep track of tenants I intend to start using iiProperty. It is free, and should help me take better care of tenant information.

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Part of the writing project over at BiggerPockets.

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The Road Ahead: Investment Goals

For the next part in this series, I would like to discuss my investment strategies over the coming 12 months. First outlining investments over the past 2 years, followed by my aspirations for 2007.

In 2005 we purchased our first rental property for $143,000 CDN. The property rents 5 bedrooms at $400/month for a cap rate of 16.8%. This, I figure, is a pretty good investment. Unfortunately, it has been a struggle to find student renters for 12-month leases and thus, the property has under-performed over the summer months. However, we have consistently made money off of it to the tune of approximately $5-6000/year.

In August of 2005, we purchased a new primary residence which included a 3-bedroom basement apartment. The rooms are again rented for $400/month. The cap rate of 4.36% on this home is not as nice, but we have the added benefit of living in a nice house, in a very desirable neighbourhood.

Then in May of this-year, we purchased a second rental home. This time it was a 5-bedroom, 2.5 bathroom condominium for $145,000. Leases were already signed from May 2006 – May 2007 for $395/month. Thus, the cap rate is 16.3%. Overall, the property nets about $600/month plus the principal payments which is about $10,000/year.

So… 2007. Since I invest with my wife, it is a bit more difficult to plan perfectly, however I’ll take a stab. We should be able to save $30,000 this-year and I would like to pour that into one more investment property, a new Etrade account, and our 5% savings account. I’ve seen a few ads around for hard-money at 0% down, so I might investigate this, which would enable us to get another property with only 5%. Why 5%? I like to own a bit of the property off the bat just in case the market tanks, I don’t want to be stuck owing more money in uncertain times if I need to sell the property in a hurry. So, investigating my funding options is a primary task.

I also want to investigate starting a small REIT, or even a LLC selling shares to small-time investors. This way I can use OPM to really start getting into bigger, more diversified real estate holdings. I’d like to investigate commercial property opportunities.

My take on the impending housing burst, is I think that property values will not crash, but will correct. I hope that they will drop no more than 10-15%, and I hope this process will take a few years to pan out. If I’m lucky (i.e. correct), we will be able to weather the storm, and ideally will still be pulling in positive cash-flow throughout.

In my Etrade account, I’d like to get into some blue-chips, as well as some iShares index funds from Barclays. Hopefully the portfolio will do well, and it will balance my bond investments through my ESPP, and all of my real estate investments. There is a REIT iShare that I am very interested in as well.

I hope that my diversification strategy pans out, and most importantly, that the real estate market in London remains strong through 2007. The forecast looks good, but it really depends what happens south of the border.


Tomorrow: Organization… How can I conquer my natural tendency towards distraction?

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Part of the writing project over at BiggerPockets.

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The Road Ahead: 2007 Installment

 I have some time off coming to me next-week, so I thought it would be interesting to write a bit about my goals for the coming year.

Now that my Masters degree is out of the way (since August), I’m finding I have a lot more time on my hands than when I had a full-time job and a thesis to write. So-far I’ve been using it to write this blog and read other blogs for interesting ideas on investing, personal finance, and real estate. However, next-year, I’d like to accelerate my hobby/side-business. The purpose of these posts is to help me get a sense of what is possible in the next 12-months.

I hope you’ll joing me for this 6-part series, which I think will have some interesting thoughts on investing, real estate, blogging and personal finance. Here’s an outline of what to expect:

1. Net Worth (Dec. 26, 2006):
The first post in my first blog series will deal with my net worth results from 2006, and detail my net worth goal for the end of 2007, as well as how I think I can get there.
– 2006 results
– Goal for 2007

2. Investment (Dec. 27, 2006):
– First I’ll summarize the property investments I have made thus-far
– Next, I’ll talk about capital improvements made in 2006
– Finally, what is planned for 2007 (improvements and investments)

3. Organization (Dec. 28, 2006):
– Financial steps to keep track of my income and expenses
– Tracking tenants
– Leases, using Web2.0 to get organized, etc.

4. Marketing (Dec. 29, 2006):
– New outlets and the general plan for 2007

5. Blogging (Dec. 30, 2006):
– Where is this blog going?
– What are my goals?

6. The Famous Corporation (Dec. 31, 2006):
– What’s the general idea?
– What is required?
– Structure, and outline of the potential steps in 2007.

Part of the writing project over at BiggerPockets.

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