Step On It: Record Keeping

The only way to know how your business is doing is to have updated record keeping. For me, record keeping includes the bookkeeping as well as keeping track of all the details for each properties we own.

For our rentals, I keep a spreadsheet with the details of the tenants, the rent collected, all the expenses and the debt repayment. I keep such a spreadsheet for each property for each year. As my property managers send me their report, I transfer the information of the income they have collected and the expenses they where in charge of. I keep most expenses in my control but the management fees and any maintenance fees I leave in their care. Before any major maintenance they contact me with a quote for approval. This system works for me, since I keep the control. Should I ever list one of my properties to sell, I have all the information ready to go.

The struggle is to keep on top of it. It is easy to get behind and to just randomly update our records. I'll admit that is a struggle for me. With work, and kids and life in general it's easy to put this on the back burner.

So I'll make a half way through the year and then some resolution. I shall catch up to my record keeping and maintain it. The kids are about to go back to school, I'm hoping having days to myself will enable me to catch up.

What A Life: Acadian Day

Did you know that August 15th is Acadian Day? Probably not, not very many people out west know. I am of Acadian decent, with my boys being born and raise in Alberta, they will never be truly expose to my heritage so I decided to do what I can.

For years now, since visiting New Brunswick during Acadian Day we have been celebrating it with the boys at home. We have been making acadian food and having our own Tintamare. A Tintamare is basically a noise parade. This is what a Tintamare can look like in the Maritimes.

Of course there is not that many Acadian in my area, in fact I may be the only one. So instead we invite our friends and neighbours to join us. This is what our Tintamare looks like.

So although you may not be an Acadian, Happy Acadian Day!!

Rich Dad Radio: Back To School

This week on Rich Dad Radio, Robert and Kim have Tony D'Angelo for a guest. They are discussing the back to school season for students getting ready to attend college.

Student loans are the financial burden of this generation. There is more student loans then credit card loans at this time. The student loan wont go away by declaring bankruptcy. In fact there are only three way to rid yourself of a student loan: pay it (and if your are able to find suitable employment that is fine), become disabled, or die.

That is why every student should take a close look at the cost of education and if it will matches what you receive. With the high rate of unemployment and under employment, it may not be the case.

Inspirational Corner: Show Me The Money

I was talking to someone about education for real estate investing. He was concern about the high cost of the courses up front, which is a legit concern. He was also concern about the amount of the presentation that was spent on motivation, he said my motivation is "Show Me The Money", the presentation should be about showing the money. I asked if he meant an example on paper. He said no, helping us to make a deal and prove that you can make money.

Here is the main problem with that, as far as I'm concern. If you are looking to learn to become a real estate investor and you can only be motivated by the money you make you will never be successful.

If you are unable to keep yourself motivated during the learning process, or during mistakes you have made, you will never reach a level where you can be successful. You will quit at the first hurdle. That is why to have a high success rate for a real estate investing education company, the screening process should cut out the non motivated. Their likeliness of success is low and they might as well save their money.

Good To Know: Appraisal

I have been sending many offers out lately insulting many realtors and property owners in the process. I have been contacted by realtor justifying the listing price and the value of the properties in the area. I agree with them, they are right.

Properties are appraised in three different ways. There is the cost approach, direct comparison approach and the income approach.

Cost Approach: This would be today's cost to purchase the land and construct the building to replace the subject property after depreciation.

Direct Comparison Approach: This compares the subject property to similar properties that have sold in the market place over the past six to twelve months depending on the market activity.

Income Approach: This calculates today's value of the future income of the subject property by analysis of current and future cashflow and actual or anticipated income.

Realtor's use the direct comparison approach as they should, but for a Buy/Rent/Hold property I want to add to my portfolio I use the income approach. With some of the properties I've purchase, the income appraisal is higher then the direct comparison appraisal, that is a great deal for me. Sometimes (most of the time) the income appraisal is much lower then the direct comparison appraisal. This is when my offers offends the realtors and sellers.

Here is a copy of an appraisal I had done on a property in the past.

Cost Approach:

Direct Comparison Approach:

Income Approach:

We ended up with three very different amount. I expected to get an average of all three but that was not how it worked out. Here is the summary of my appraisal:

I found it odd that the appraiser averaged the value to $217,500 when the average was around $234,500. The reason is because he was looking at an other amount; the accepted offer. I had an accepted offer at that time to purchase this property at $197,000.

My sister was upset with a neighbour a while ago. She owns a town house and the neighbour put his up for sale. He was a motivated seller, eager to sell and accepted an offer that was below the property value. Going forward that sell as significantly affected the Direct Comparison Appraisal on her property and those of her other neighbours.

What Are You Reading? Why "A" Students Work For "C" Students - Part One, Chapter Two

Chapter's two action step for parents was: Take time to discuss money and the role it plays in life.

When I was growing up, money wasn't abundant in our household. It was a big source of stress to my parents and as a result, talking about money was taboo. If money was part of a conversation, that conversation was more an argument. I learned very little about money in that stage of my life.

In this chapter's action step, Robert suggest money issues should be discussed as a family. Discuss real life money problems when they occur in the course of the everyday life. Talk about the problems and challenges, what causes them and how to resolve them. Make your home a place to discuss money not argue about it.

Tools Of The Trade: Google Map

When looking into purchasing properties, I look across Canada. I do not visit each property, in fact I haven't visited any of them. I send my property management to view the property and they assess the property and neighbourhood. Of course I request that they send me photos of their inspection. I also like to use Google map. Although the image on Google map is not always very recent I don't mind seeing what the property looked like a few years ago. Did they cover any problems with a lipsticks solution? Sometimes those things would show.

There was one property I was evaluating a while back. This is the photo the realtor provided to me.

When on Google this is what I saw.

What I was able to see on this picture is that the paint is severely peeling on the other side of the building.

I now know to inquirer about this issue and get a quote so that I can use this in my negotiation. Of course my property manager would be able to provide me with this information as well, but if he doesn't I would question him about it. If he doesn't disclose this maybe he is not the property manager for me.

I can also go on a virtual walk around the neighbourhood and seeing what is around and the quality of the neighbourhood.

This is a great tool, easily accessible and completely free; might as well put it to good use.

Step On It: Follow Up

I don't know about you but I hate to pester people to follow up with something I've already contacted them on once. Makes me feels troublesome. But follow up is a very important part of a real estate business. There can be a lot of missed opportunity if we do not bother to follow up. I guess I will just have to get over being bothersome.

A big part of my real estate system is requesting the income and expenses on a property and sending in offers. I send request on so many that I need to keep a database to keep track. Once I receive the information back I contact the realtor with the details of my offer. If the gap between my offer and asking price is too big, I still send an email explaining where my first offer would be and explaining that I am aware that we will probably not come to an agreement.

This is where the following up starts. When I receive information on a property I change the status on my database from "requested #'s" to "sent offer" or some other comment depending on the situation. I need to also keep track of which properties I have not received the required information. For those properties I call the listing agent. My email as already gone unanswered so I do not bother to email again at this point.

Sometimes when I send my request for further information, I am made aware that an offer as already being accepted. I take note of this on my database. These are the ones that really needs to be followed up on. I normally asked for the date when the final condition is to be lifted. Shortly after that date I contact the realtor again, this time probably by email and inquire about the status of the sale. If the deal fell through, as they often can, this is a great position for me to step in with my offer. In fact I have gotten some of the best properties under contract using this method.

What A Life: Movie & Arcade Fun

My sister and my nephew visited us one Saturday morning. We decided to take to the boys to see movie Turbo. It was cute, and right up the boy's alley. That's their kind of movies.

The movie theatre also had an arcade. Well now these boys where in heaven. To top it all some of these video games paid out tickets to redeem for various prizes.

Rich Dad Radio: Death Is Cheap

This week on Rich Dad Radio, Robert and Kim have Dr. Radha Gopalan as a guest. If you have been a listener of Rich Dad Radio, you will recognize Dr. Gopalan, he as been a guest on the radio show many of time.

Many people out there preach that money does not matter, yet not one of them give up their monthly pay check. The truth is money does matter. It matters to maintain you daily life. This week on rich dad radio they are challenging the listeners to ask themselves "Can you afford to live?" "Can you afford to become ill?"

There are a few problem with the health care system. One of those problems is that the health care is really a sick care system. They do not support preventive treatment. An other problem is that health care is a business. Hospital fees are three times higher then the actual cost of treatments. What if you become ill? What if you require additional care and need to move in a home? Are you financially prepared for the additional expenses (and loss of income in some situation).

Did you know obesity is now considered a disease? I get that some medical issues can make someone more likely to gain weight. But come on; becoming obese is not a disease. We are becoming victims to our lifestyle but at the end of the day, we are in control.

Inspirational Corner: Tanner Bros. Ice Cold Lemonade

The lemonade stand as been the business that started it all for a lot of entrepreneur. It's the perfect kid's business. It's great when parents will get involve and support their children's introduction to entrepreneurship by helping them make a stand and by being their best customers. This morning I came across a lemonade stand business brought into the digital ages.

The Tanner Bros. Ice Cold Lemonade business as it's own facebook page. Informing it's followers of when their stand is open for business and when they close due to supply depletion.

These parents have inspired me to look outside the box when it comes to the traditional kid run business. What a perfect way to teach our children about marketing, supply and demand, and so on. I hope it also inspires other parents out there to do the same for their kids. Lets give them an advantage into the real world of business.

Good To Know: Exit Clauses

I've been getting a kick out of the real estate reality shows on HGTV but their are definitely a few investing mistake they seem to be doing. On "Income Property" they go around viewing a few different rental potential and pick the one they like the best and renovate the income suite. If they were educated investors, they wouldn't pick they favourite and then place an offer, they would place an offer on all three and take into consideration the price they where able to negotiate.

Sometimes on "Property Brothers" they negotiate their purchase with a lot of emotion. They almost always go above asking price and I've seen them remove all condition to ensure they get the property they have their heart set on.

Having exit clauses makes it that in the first scenario you would be able to place an offer on all three properties even when you only intend to purchasing one. An exit clause is like the exit signs, it's your way out should you need it. It is your safety net should something happen that the property you are trying to purchase is no longer a deal. So in the second scenario, I don't agree with taking away the safety net.

You can put in as many exit clause as you would like, but at the end of the day you only need the one. Your exit clause should indicate that it needs to meet your approval and the realtor will make sure that there is a date associated with it. I like to stagger the dates of my exit clause, for example: inspection at a certain date, insurance a week later, and financing a week after that. Those are the three condition I normally use for my exit clause. You could also add partner's approval, or lawyer's approval, and so on.

I also add a few terms, the right to assign and depending on the type of investment (lease option for example), the right to show. Be sure not to waive your last clause until all your ducks are in a row and you are ready to move forward.

What Are You Reading? Why "A" Student Work For "C" Students - Part One, Chapter One

I've mentioned in a past post that I wanted to refer my future "What Are You Reading?" posts to the book Why "A" Students Work for "C" Students; but I also don't want to take away from the information you would learn from reading the book so I will post about the "Action Steps For Parents" that is found at the end of each chapter. To fully get the most of this book, I highly recommend you purchase and read it.

Chapter one's action step for parent was turn your house into a place of active learning. Robert suggest you create a WEN, a "Wealth Education Night". Set one night a week or one night a month to be a night to actively learn about money. Make it a family ritual and make it fun.

Our children are slowly learning about money, whether we are involved or not. In fact, this morning my youngest snuggled with me for a little while. He was playing with the calculator on my phone. He showed me a large number he had entered on the calculator and said: "I'm going to save up this much money in my life."

Most parents would probably smile and be glad that their child is already thinking about saving money but I've educated myself into thinking differently. I got a sense of dread hearing those word coming from him. It is my belief that saving will not provide anyone with financial freedom, it won't even support retirement; even more so if you take inflation into account. So since saving for you future is not something we preach in my household how is it that this is what my child, at the age of six, sees this as his financial goal? It may be school, television, grandparents or neighbours. My point is there is information out there, if we do not take an active part of our children's financial education they will end up being slave to the system. Thinking their J.O.B. will provide them with security.

When he was a child, Robert's "Rich Dad" would play Monopoly with him to teach him about money. He suggest you do the same with your child, may it be Monopoly or Cashflow for kids, 101 or 202. Obviously, I need to take a more active approach to educating my kids about money.

Tools Of The Trade: Cardful

Cardful is an app that is part of the Evernote series. Meaning all the information on it would be also available on all devices and computers sharing the same account.

Very much like the app CardMunch which I had a post on in the past on this blog, Cardful has very much the same features. With the added benefit of having access to the business card you have collected on all your devices.

Another feature that I really enjoy is the Tag List. You can set up a list of tag words you can later assign to the business card. This feature is perfect for creating your contact database. At the same time as you receive a business card and take a picture of it with your phone. You can ask the person handing you the card what kind of real estate investor they are. You can then quickly add if they are wholesalers, hard money lenders, if they concentrate on Buy/Rent/Hold, lease option, commercial properties. Or do they go for single family homes, multi unit. Are they Rich Dad Education students or are they part of REIN.

The one draw back is that this app does not link with LinkedIn.

If you have used CardMunch and liked it, you may want to also try this one and see which better suits your need. At this time, I'm not sure I have a preference, except maybe that since Cardful is available to all device and computers, loosing your phone or having a malfunction does not mean you have lots all your contacts.

Step On It: Maximize Your Education

Financial education for most of us comes in our adult life. I don't mean learning the value of money here, I'm talking about seeking financial freedom. Most of the population will not seek out this type of education. If you are reading my blog, you are different. You are seeking further education to obtain financial freedom.

There are many courses and webinars out there dedicated to financial education and investing. As you may be aware, I reached out to Rich Dad Education to grow my knowledge on financial freedom. Regardless of the method you choose, we are all exposed to the same hurdle. We are adult students.

In my past life, I was a pharmacy technician. I came at a point in my career where to move forward I would have to upgrade my high school education and proceed to a more advance pharmacy technician program. At one point I decided I would give it a try and enrolled for a correspondence biology course. At that stage in my life I was married with two toddlers. Finding time to dedicate to studies was very hard for me. When I did sit down with my text book, the distraction proved to be too great for my learning success. I never did pass that course.

Sometimes, we have younger attendees at the three day basics. Whether it is real estate or stocks, the young teenagers will answer questions that are asked to the group correctly before everyone else in the room (the adults). Kids are little sponges and can absorb a vast variety of information much better then adults can.

So how, as adult students, can we ensure we will get the most of this education we are seeking out later in life?

You may come across a great teacher and your learning experience will be effortless. If the presenter is not to par, you should be able to still make sure you get the most of the information provided. Or if your source of learning is directly from books, you will have to take a few extra steps with the information you are getting to truly get the most of it.

The 8 Learning Principals:

1- Multi-Sense Learning: When two or more senses are used.

Confucius says:
I hear and I forget
I see and I remember
I do and I truly understand

 When getting access to new information, may it be from a presentation to a book, be sure to get access to the information in multiple ways. Take notes when a presentation is verbal. If reading a book, read out loud to also hear what your eyes are seeing. Most of all, put to practice what your are learning.

2- Active Learning: Learning by doing. When actively involve in our learning there is a greater learning and application. For example, problem solving, discussion, case studies. Put to practice what you are learning to the events around you, present of past.

3- Primacy and Recency: We have a tendency to remember more the first and the last part of any sessions. Introduction and summary are vitally important for learning.
To maximize your learning you can cut up your exposer to the material, this is called "Chunking". Lots of mini sessions aid memory. If the presenter is not doing this for you; in between those session create your own introduction (summarizing what you learn in the previous session) and at the end of you session create a summary (what you learn in the session you have just completed)

4- Feedback: The learners and the presenter needs feedback to ensure that the material is been understood. When in an interactive session (live webinars or live classes) be sure to provide feedback. Participate to the questions and discussion to make sure you are properly absorbing the information that is been presented. When learning from a book feedback may be a little harder, but when summarizing the portion you just learn; feel free to reread the passage that may not be clear to you.

5- Reward: We all feel better if our efforts are rewarded. Training must include tangible results to feel positive and satisfied. This set up a virtuous cycle for learning. Be sure to take the time to take notice and to reward your success.

6- Practice and Repetition: Memory requires repetition; practice and recall of the material. The doing is such a big part of the learning process. If you are not going to do the doing, you may as well forgo the learning. When reading, I really enjoy the books that have the action list at the end of each chapter. When an action list is not made available to you may they be your books or other form of learning, be sure to create your own.

7- Meaningful Material: You will learn best when the material is relevant and can be utilised in practical ways. Be sure you expose yourself to the education that you are seeking to reach your goal. I was at the library today and noticed a book titled "A Canadian's Guide To Saving Money". I didn't pick up that book. I am not interested in learning to save, I'm seeking to learn how to invest my money to make it grow.

8- Holistic Learning: Get the context on the big picture and then specific details will provide a logical framework of thinking. Our mind will be better equipped to properly store specific information when it know where that information will fit in the grand scheme of things.

Humans are social creatures and have a need to belong within a social setting. When a course is well prepared, they will take the social aspect of their course in consideration and it will fit into the curriculum. If not, be sure to take those task upon yourself to get the most of your experience.

• Introduce yourself
• Participate to group activities
• Take advantage or outside socialising opportunities

We need to be comfortable to learn effectively. But too much comfort could also make us drowsy. In a larger group setting it is hard to keep everyone comfortable. So take a few steps to ensure your comfort to maximize your learning. Dress in layers so that you can keep comfortable no matter the room temperature. Bring snacks and drinks so that you are not distracted by hunger and thirst.

Try to keep distraction to a minimum if you can. You will probably not learn a lot from a book in front of a TV with your favourite show on.

Looking back now, I can see why I struggled so much with my biology studies. I exposed myself to one form of learning, the text book and the distractions where great and it was information I did not put to practice. With the Rich Dad Education classes, the information was made available to me in different stages and in different mediums with lots of hands on practice. My learning from those classes were very successful. 

What A Life: Mining For Gold

My boys love watching reality TV. Not the drama kind like Big Brother, their favourite is Gold Rush Alaska, Mantracker, The Amazing Race, Truck Universe and so on. They like them so much that it's become part of the play time as well.

We have had a pile of gravel for a while and the boys have been mining it for years now. We don't dare spread it out any more, they are having so much fun with it. Over the time they have added a "wash plant" aka the hose. They have also started panning for gold in the puddle using a pie tin for a gold pan.

It's been serious business, they have also found a lot of loonies and twonies in there (thanks to Nana).