I am starting to think I should sell - My TV!

[DonCampbell]

QUOTE (housingrental @ Oct 29 2007, 09:15 AM) I didn`t mean in your post - others though - I consider purchasing cash flow negative properties becuase of hopes of future appreciated and rent increases as reckless - Fear of losing money should guide every investment decision. (note I`m assuming current cash flow negative is because market rents don`t allow for cash flow, not rents that are below market level) -

Consistant negative cash flow can also be a red flag for CRA as they can deem that the investor didn`t have any `potential plan` for cash flow and was only going for the big hit of equity appreciation. This would lead to the potential dismissal of mortgage interest deductibilty as well as operations expenses because it would be considered `inventory`. This also occurs for those using lease options to sell their property (and increase their cash flow in the mean time) In an audit they may also have all of their operation costs etc disallowed - which would be quite traumatic to an investor who wasn`t aware of this.

That`s why we are bringing in a CRA & Accounting expert to the next REIN Workshops to uncover all of these risks so investors are running this like the business that it is.

One last thing - you CAN get positive cash flows in areas that have POOR economic fundamentals behind it. I don`t recommend running to these areas just for cash-flow because when the fundamentals catch up to the market to potential for capital loss far outweighs the cash flow. As with all investments there is no black & White answer, the key is to study the numbers, look at your goals, keep a LONG TERM outlook (not a day-trade mentality that responds to that day`s headlines) and make quality decisions based on the facts.

 

[RebeccaBryan]

Reading the posts on this topic, it`s pretty easy to see who the action takers are. My advise would be to listen to the people with monetary success rather than the ones (journalists) that are living paycheck to paycheck. If people really do their homework on what`s happening in the Alberta Economy, fear will dissipate, and they will take action with complete confidence. It saddens me to see grown men with tons of brains and more than enough capability to let fear overcome them and not take action.

Here are a couple of quote from my favorite author, Nathaniel Branden.

"Doing more of what doesn`t work, doesn`t work."

"If you`re going to accomplish anything worthwhile, you are going to know some fear."


Rebecca`s suggested reading:

The Six Pillars of Self-Esteem by Nathaniel Branden Absolutely fantastic book!!

Happy Investing!

Rebecca Bryan

 

[Choda]

I know this firsthand. A few years ago, before joining REIN, I bought an "investment" property in buffalo for $20k cash! (no fundamentals whatsoever, the downtown is actually a depressing and scary place). Sure it was cheap as heck (you can probably get houses in buffalo for a $1k now through auction ect) and supposed to cashflow like crazy and be paid off within a couple years, but what a disaster that investment turned out to be. I chalk it up to a learning experience, and a fortunately a relatively inexpensive one, but an avoidable one had i been involved with REIN sooner! My advice, don`t buy something just because it`s $30k or $50k for a house and seems like a bargain. Sure, there are great bargains in many cities in the US right now, but it`d take alot more than the price to convince me to buy. Having said that, if you know your US markets and the fundamentals, i`m sure you can get great appreciation there too.

QUOTE (DonCampbell @ Oct 29 2007, 11:24 AM) One last thing - you CAN get positive cash flows in areas that have POOR economic fundamentals behind it. I don`t recommend running to these areas just for cash-flow because when the fundamentals catch up to the market to potential for capital loss far outweighs the cash flow.

 

[jarrettvaughan]

QUOTE (timk519 @ Oct 28 2007, 01:35 PM) Do you think it`ll take 2 years for the subprime meltdown, a US recession, and higher CDN $ to affect the CDN RE market? We`re seeing manufacturing hurting right now, and with it loss of jobs. Warren Buffet`s been quoted that it`ll take about 2 years for the sub-prime mess to get cleaned up but in the meantime there`s going to be a lot of hurt spread around, so the question is how much of that hurt`s headed north, and where will it be concentrated?

In past years the situation in the US would of had a major impact on the Canadian Economy. Thankfully, the emerging giants of China, India, and Brazil (Along with many others) have become major Canadian partners as we have diversified our markets which means that we are not as dependant on our friends in the south. This will limit or stall some of the impact.