Hello Hamilton real estate investment owners!!
I hope you all took some time to rest and recharge to prepare for your best 2016 EVER!!
Some Hamilton investor friends and I took an evening out to rock climb on a wall indoors. Â Why is it called rock climbing when we are literally climbing a wall with hand/foot holds? Because wall climbing sounds like something Spider Man would do? 😛
Two investor friends have an obvious fear of heights yet they both progressed higher and higher with each climb. Â Roger Auger of Auger Properties came as well. Â He was planning to help out and watch his kids climb but I challengedÂ him to join in andÂ he did complete several climbs to the top. Personally, its been four years since my last climb so I warmed up with some easier climbs and challenged myself until I failed on 5.9 difficulty walls. I did complete a few 5.8 difficulty walls which I understand is decent for a beginner with no training.
I always look for lessons and reasons to be grateful in everyday life and these investor friends all made me grateful to be able to spend time with good people willing to push their limits. A friend told me how 80% of the population wants steadiness and consistency in life, 10% are driven to rise above (your typical entrepreneurs), and the final 10% are too calculating to ever take a risk.
Cherry and I are grateful to be able to spend so much of our time and business lives with those driven 10%. As the saying goes, like birds of a feather flock together.Â ItÂ is the law of attraction at work between successful, driven investors and by spending time together, we can only raise each other to higher levels when rock climbing, in life, health, fitness, and investing. I encourage you all to continue to push your limits and spend more time with like minded people in 2016.
Cash Flow is NOT How You Make The Big Money in Real Estate
As I was talking to my neighbour who worked on a transaction to assemble 45 acres in rural Hamilton, he was explaining the details of the development (if you can call it that). The buyer, a Big Name home builder/developer in Ontario, plan is to sit on the property for the next 15 years before developing it. That’s not by choice. The property is very rural, where the roads, sewers, hydro, zoning, etc… are 15 years away from allowing development. If you’ve seen the development projects we invest in then you know developers make BIG MONEY. If you’ve seen my friend and occasional guest speaker, Donato Cascioli, then you know he’s still two years away from developing his lands in Ancaster and he bought them over 20 years ago. Don’s big money from developing the land will dwarf his cash flow.
From the Rock Star Inner Circle Article:Â Cash Flow is NOT How You Make The Big Money in Real Estate
The big money in real estate does not come from cash flow.
But as sophisticated real estate investors weâ€™re taught to only look for properties that produce positive cash flow.
That properties that produce negative cash flow are bad.
If the rental revenues donâ€™t cover the expenses and debt service â€“ itâ€™s not good.
Hide from those.
And thatâ€™s 100% correct.
We are big fans of cash flowing properties.
Hereâ€™s the problemâ€¦
Most people, and especially beginner investors, believe that successful investing is all about cash flow.
And that thereâ€™s really nothing else that matters.
Thatâ€™s bad â€¦ wrong â€¦ and dangerous.
Link to full article here:Â Cash Flow is NOT How You Make The Big Money in Real Estate
My wife Cherry and I personally invest for both cash flow and appreciation with a lean towards the latter as we’re after the big money. Big money from appreciation means we have greater net worth, more capital to invest, down payments for additional properties, capital to pay down other mortgages.
One exit plan Cherry and I have is to one day in the future, sell everything and reinvest our capital for 10% annual returns, paid in cash monthly. That would equate to tens of thousands of income each month from ZERO effort and we could travel the world, live abroad, be financially and work free. The cash flow returns from our properties cover our operating costs and cash flow TODAY is one consideration as we purchase our next property but our main consideration isÂ economic fundamentals over the LONG TERM, those that drive higher rents, price appreciation that matter the most to us.
Five years ago, we all knew about the Hamilton James St North Go Station. Â Houses surrounding the area are on the smaller side so no opportunities for big cash flow from student housing or secondary suites (which are near impossible anywhere in Hamilton). Cash flow back then was maybe $100 per month or $1,200 per year or $6,000 over these past five years. Â Appreciation on the other hand is around $100,000 over those same five years so a pat on the back to those of you who took action and long-term view.
Going forward, we all know where the Stoney Creek Go Station is going and Light Rail Transit, again cash flows will be limitedÂ on a single family home but where do you think the big money is at?
Thanks for reading and happy Hamilton real estate investing everyone!
Erwin |Â MrHamilton.ca
PS:Â If you are just starting out investing, start byÂ spending more time with like minded people and take guided tour of Hamilton by joining us for the next Mr. Hamilton Inner Circle by clicking here!!!