Article marketing is employed to build backlinks to your targeted sites. You create an article, fit diverse backlinks in it, and upload it on a blog or at an ezine.
To be resourceful you generate one article, and then re-spin it to construct multiple unique articles for use at various sorts of sites.
The content should always be original or Google will reduce the value of the links. There are a bunch of types of programs employed to re-spin articles. I've been working with Jetspinner.
Using Jetspinner is rather trouble free. The whole system is based totally on code using curly brackets and the the vertical bar.
You find the word or phrase you want to swap and place a the opening curly bracket in front of it to announce that the spinner has to go to work, you place a the vertical bar after the word or phrase, then you stick in the alternate you want to utilise, and close the code snippet with the the closing curly bracket. When you spin the article the program will choose one of the options between the curly brackets, which you've separated by the the vertical bar. You can place in as many alternate words or phrases as you want, as long as you separate each one with a the vertical bar.
Once you've coded the article Jetspinner will re-spin it, give you one randomly spun article, and allow you to create a zip file of 50, 100, or any other number of randomly spun articles. It is a huge time saver, and it's free.
The first thing you have to do is write the article. I generally start off right in Jetspinner, although I also build things in other text programs, including emails or notepad programs on my iPhone. This allows me to come up with articles and blog posts anywhere.
Once the article is writtenit's time to code it. Sometimes it's worth setting the article away for a period of time in order to clear your head. This allows you to find errors and unclear meaning more easily. Whether you do this or not the next job is the coding.
If it is a short article I just start deciding on words or phrases and putting in the first curly bracket and the vertical bar. Jetspinner offers an Ajax thesaurus that provides alternate words and phrases as soon as you enter the the vertical bar after the first curly bracket and the word you want options for. It can be a little tricky, so watch outwhen you choose the options and be certain that that they are going in where you want them to.
It is necessary that you save the re-spin code periodically. There are 2 reasons for this. First, since you're working on the web a misplaced finger can navigate you off the page, losing your work. Second, spinning periodically will tell you when you've made a code mistake. The error will stop the spinning, so if you have a 500 word article coded for spinning, bu t the spin is only 35 words long you'll discover that you've made a code error. You'll also recognize that the mistake is around the 35 word point. Once you've spun the article once it's saved, and you can just click the edit button to go back to editing it.
You can use Jetspinner coding in the title, which is a timesaver, especially when you're outsourcing the work to a non-native-English speaking country. In fact, an awful lot of these suggestions are valuable for outsourcing, if, for example, you jot down the original piece but outsource the re-spinning to a virtual assitant overseas.
You have got to watch over capitalization. Native English speakers know that we don't capitalize words or phrases unless they are the start of the sentence or the name of something that should be capitalized. Frequently, if the word you're switching isn't capitalized, don't capitalize the replacement. Jetspinner's thesaurus will generally give you both options, so watch out to either pick the correct one, or fix the alternate in the spin coded article. If you don't you'll have errors in your randomly spun articles which may mean more editing labor for you, and that means more time needlessly wasted.
There are two kinds of words and phrases that are easy targets for re-spinning. The 1st kind are words with lots of close synonyms. An example is the word "start". Jetspinner provides at least 16 alternatives (begin, commence, start off, start out, get started, launch, initiate, beginning, establish, get going, set up, kick off, develop, get started with, begin the process of and get started on). When you identify target words like this, especially ones that recur, you can save yourself time.
The second category of word (or phrase) is one peculiar to your topic. If you're writing about cars the "cars", "drivers" and "wheels" are likely to crop up throughout the piece. The fact they keep repeating make them targets. Pick your alternates once, and carefully. If you're writing about mortgages you can expect the word "lender" to repeat. Some of the options are loan provider, loan company, financial institution, bank, lending agency, loaner, mortgage lender, financier, loan service, broker, financial institution and finance company. Not all of them will be well suited. An assortment of the deficiencies won't be noticeable to a non-native English speaker. You can pick out the alternates once, and let your VA employ your informed choice.
After you've picked out alternatives for repetitive words or phrases a real time saver is to employ cutting and pasting with the recurring words and phrases. You have the option of actually cutting and pasting in Jetspinner, or, you can open a text editor like Notepad and use the "find and replace" tool.
Open Jetspinner in one window, and open Notepad in another. Copy and paste the entire article into Notepad. Return to Jetspinner and select the word or phrase you want to spin. Get your alternatives from the thesaurus. Highlight them, including the curly brackets on each end, and copy them. Switch to Notepad and select "Edit" and then "Replace". In the "Find what" box insert the target word or phrase and in the "Replace with" box, put in the code. Return to Jetspinner and move on to your next target word or phrase and repeat.
A range of times you need to make certain that your cut and pastes are alright - you often have to change them to plural (for example, if you substitute "lenders" with the alternates to "lender" you'll have to pluralize the alternates).
Think what you've accomplished: If you have a particular word or phrase with 13 variations occurring 10 times throughout the article you have absolutely increased the unique character of the article based on switching one word or phrase. Once you switch all the painless target words and phrases and the target words that are subject specific to your article you will have achieved a lot with simply keystrokes.
There is yet another trick for swapping phrases. You can quickly add an adjective, like "good", "great" or "real" in front of a noun. "Another trick" turns into "Another great trick", or "Another good trick".
There are other hints, but they are not as quick. Once you've plucked the low hanging fruit, so to speak, you can review the article and check if there are words and phrases that you want to completely turn around, shorten or lengthen or delete entirely. This requires a range of thought, and a good grasp of English, writing and style. Non-native English speakers may have a challenge with it. My VA will often use words from the thesaurus that aren't pertinent in a certain situation, which is not a surprise. When it comes to editing whole phrases it's not fair to expect him to be able to do it.
Here's an example:
"Begin by writing down your main ideas" can become "In my opinion it's really important to start by jotting down your main ideas on a scrap piece of paper before you even start to build your article". You can do that in Jetspinner by addting the the opening curly bracket in front of "Begin", the the vertical bar after "ideas" and before "In my opinion", and then a the closing curly bracket after "article".
You can also stick code inside of code. "Begin by writing down your main ideas/In my opinion it's really important to start by jotting down your main ideas on a scrap piece of paper before you even start to produce your article" can turn into "(Begin/Start/Start off by) by (writing down/jotting down/setting out) your (main/most important/key) (ideas/points/concepts)/(In my opinion/I think/In my experience/Experience tells me) it's (really important/important/best/critical/smart) to (start/begin/start off/start out) by jotting down your main ideas on a scrap piece of paper before you even start to
generate your article" (where the regular brackets signify the curly brackets and the "/" represents the the vertical bar)
Try these straightforward tips with Jetspinner and see if it operates easily for you. They function for me!
Wednesday, May 18, 2011
Sunday, April 10, 2011
5 Tips For You
Five Tips For Doing Circuits
Every student spends time in the circuit. PSTAR The circuit is an agreed upon routine that fliers use in order to preserve traffic separation and simplify the lives of air traffic controllers more convenient. Everybody does the circuit at each airport the same way, so all the fliers know where everyone ought to be.
There are guidelines and protocols that are pretty standardised. Normally the circuit is a left hand one, meaning the pilots turn left from one leg to the other, but now and then they are right hand circuits.
The circuit contains five parts: the take off leg, the crosswind leg, the downwind leg, the base leg and the final leg. Sometimes the last two legs are called the approach legs.
The take off leg begins on the runway and lasts until the turn out, which is commonly at 500 feet AGL. A left turn delivers you to the crosswind leg. With some aircraft, like a 170, you climb to one thousand feet above ground level through the crosswind. With others, like a 150, that doesn`t ascend as well, you could possibly begin the turn at 800 feet above ground level. Bush pilot Whatever the case, circuit height is commonly 1000 feet AGL, and you`d want to arrive at circuit height when you`re ready to turn into the downwind. If you turn at eight hundred feet above ground level you naturally will be required to perform a climbing turn.
The downwind acquires its name because we land into the wind. An alternative way of saying into the wind is upwind. The opposite of upwind (which is the way you`re flying) is downwind, hence the name.
The downwind is the leg during which you do your pre-landing checks and make the call to the tower for the clearance. After you`ve made the turn from crosswind to downwind check your spacing from the strip, ensure you`re parallel with it, establish yourself in straight and level flight, and then promptly get on the checks. The sooner you perform this the more time you`ll have to make your call for your clearance and startbush pilot training looking for traffic. That`s tip number 1. Get into straight and level quickly, verify your position and perform your checks. Be speedy, but be consistent every time.
After you`ve received clearance from ATC you can begin getting ready for your turn to base. The point to turn is when the end of the runway is at a forty five degree angle from a point in the center of the rear wing root and the stabilizer.
You have to slow down to go down, meaning you need to get to your approach speed and attitude as early as possible. To complete this you should try to complete the whole thing precisely the same way each time. You have a bit of latitude in the order, but ordinarily you`ll back off the power first. Pick a set RPM and pin the needle right on it. If you make it into the white arc that allows you to apply flaps you can either apply them in stages or set them at 20 degrees right off the bat. The critical point is to be consistent every time.
If you don't get into in the white arc you can still set up your turn. This will bleed off energy and gets you into the white arc. At this point you can apply your flaps. Again, apply them in stages, or apply them all at once, but be consistent. That`s tip 2 - consistency.
If you haven`t turned yet, do so now(assuming you`ve made your calls, received the clearance and are ok with traffic).
When you scale back power the nose will drop and you`ll have to pull back on the yoke to maintain the desirable attitude. When you apply your flaps the nose will rise, and you`ll have to re-adjust. Trim the aircraft each time. Trimming makes it easier to fly and will allow you to concentrate on other things, like rate of descent. You would like to be descending at four hundred to five hundred FPM. Tip 3 is to confirm your target RPM, your approach speed, and your rate of descent. Get them set up at the earliest opportunity during the base leg.
A good approach makes for good landings. Proper approach speed, power setting and rate of descent should put you on an effective approach, and if you do everything consistently you`ll have consistently better chances of setting up the right approach. At this point on the base leg you need to look at the airstrip to consider when you want to turn to final. Consistency kicks in here once more: I like to set up the turn when the landing strip has passed the pitot tube and is almost at the strut. You can easily opt for a different time, but be consistent. If the end of your turn puts you in line with the runway you`re doing it correctly.
All that`s left is to stick on the glide path all the way down and then land. If you`ve done everything correctly and consistently you should have no problem.
The only problem with this is that temperature, wind and loading conditions differ every time we take wing. Being consistent with your inputs from flight to flight won`t put you at the same point on the strip all the time because your inputs are only part of the equation. You have to compensate for ambient conditions.
bush pilot training And here is tip #4: if you`ve been consistent with all your inputs you`ve set up a consistent target. You can now adjust intelligently for wind, temperature or loading so you can stick on the optimum glide path. In fact, you will almost always have to make adjustments. The tip is that you must be aware that you are adjusting from a benchmark that you established in the first place, not just guessing what you ought to do based on how things look.
The last tip is pretty uncomplicated, but it took me quite some time to notice it and start practicing it. You fly circuits to practice, and we do it repetitively. It stands to reason that if you`ve performed everything consistently and you`re high on your first approach you can fix it on the next attempt by lengthening the downwind leg somewhat, or reducing the power more. And that`s the fifth tip: if the last approach wasn`t excellent, make the sensible adjustments to correct it on the subsequent one. Remember, you're the PIC.
Every student spends time in the circuit. PSTAR The circuit is an agreed upon routine that fliers use in order to preserve traffic separation and simplify the lives of air traffic controllers more convenient. Everybody does the circuit at each airport the same way, so all the fliers know where everyone ought to be.
There are guidelines and protocols that are pretty standardised. Normally the circuit is a left hand one, meaning the pilots turn left from one leg to the other, but now and then they are right hand circuits.
The circuit contains five parts: the take off leg, the crosswind leg, the downwind leg, the base leg and the final leg. Sometimes the last two legs are called the approach legs.
The take off leg begins on the runway and lasts until the turn out, which is commonly at 500 feet AGL. A left turn delivers you to the crosswind leg. With some aircraft, like a 170, you climb to one thousand feet above ground level through the crosswind. With others, like a 150, that doesn`t ascend as well, you could possibly begin the turn at 800 feet above ground level. Bush pilot Whatever the case, circuit height is commonly 1000 feet AGL, and you`d want to arrive at circuit height when you`re ready to turn into the downwind. If you turn at eight hundred feet above ground level you naturally will be required to perform a climbing turn.
The downwind acquires its name because we land into the wind. An alternative way of saying into the wind is upwind. The opposite of upwind (which is the way you`re flying) is downwind, hence the name.
The downwind is the leg during which you do your pre-landing checks and make the call to the tower for the clearance. After you`ve made the turn from crosswind to downwind check your spacing from the strip, ensure you`re parallel with it, establish yourself in straight and level flight, and then promptly get on the checks. The sooner you perform this the more time you`ll have to make your call for your clearance and startbush pilot training looking for traffic. That`s tip number 1. Get into straight and level quickly, verify your position and perform your checks. Be speedy, but be consistent every time.
After you`ve received clearance from ATC you can begin getting ready for your turn to base. The point to turn is when the end of the runway is at a forty five degree angle from a point in the center of the rear wing root and the stabilizer.
You have to slow down to go down, meaning you need to get to your approach speed and attitude as early as possible. To complete this you should try to complete the whole thing precisely the same way each time. You have a bit of latitude in the order, but ordinarily you`ll back off the power first. Pick a set RPM and pin the needle right on it. If you make it into the white arc that allows you to apply flaps you can either apply them in stages or set them at 20 degrees right off the bat. The critical point is to be consistent every time.
If you don't get into in the white arc you can still set up your turn. This will bleed off energy and gets you into the white arc. At this point you can apply your flaps. Again, apply them in stages, or apply them all at once, but be consistent. That`s tip 2 - consistency.
If you haven`t turned yet, do so now(assuming you`ve made your calls, received the clearance and are ok with traffic).
When you scale back power the nose will drop and you`ll have to pull back on the yoke to maintain the desirable attitude. When you apply your flaps the nose will rise, and you`ll have to re-adjust. Trim the aircraft each time. Trimming makes it easier to fly and will allow you to concentrate on other things, like rate of descent. You would like to be descending at four hundred to five hundred FPM. Tip 3 is to confirm your target RPM, your approach speed, and your rate of descent. Get them set up at the earliest opportunity during the base leg.
A good approach makes for good landings. Proper approach speed, power setting and rate of descent should put you on an effective approach, and if you do everything consistently you`ll have consistently better chances of setting up the right approach. At this point on the base leg you need to look at the airstrip to consider when you want to turn to final. Consistency kicks in here once more: I like to set up the turn when the landing strip has passed the pitot tube and is almost at the strut. You can easily opt for a different time, but be consistent. If the end of your turn puts you in line with the runway you`re doing it correctly.
All that`s left is to stick on the glide path all the way down and then land. If you`ve done everything correctly and consistently you should have no problem.
The only problem with this is that temperature, wind and loading conditions differ every time we take wing. Being consistent with your inputs from flight to flight won`t put you at the same point on the strip all the time because your inputs are only part of the equation. You have to compensate for ambient conditions.
bush pilot training And here is tip #4: if you`ve been consistent with all your inputs you`ve set up a consistent target. You can now adjust intelligently for wind, temperature or loading so you can stick on the optimum glide path. In fact, you will almost always have to make adjustments. The tip is that you must be aware that you are adjusting from a benchmark that you established in the first place, not just guessing what you ought to do based on how things look.
The last tip is pretty uncomplicated, but it took me quite some time to notice it and start practicing it. You fly circuits to practice, and we do it repetitively. It stands to reason that if you`ve performed everything consistently and you`re high on your first approach you can fix it on the next attempt by lengthening the downwind leg somewhat, or reducing the power more. And that`s the fifth tip: if the last approach wasn`t excellent, make the sensible adjustments to correct it on the subsequent one. Remember, you're the PIC.
Wednesday, April 6, 2011
Two Approaches to Real Estate Investing
People invest in real estate for two reasons.
I'll talk about the second approach first . Investment real estate is immobile. In fact, that characteristic is why the French and Spanish call it what they do ("propriéte immobilière" and "bienes inmuebles"). That means that real property doesn't disappear and doesn't expire. Its value may go up and down, and its title may be stolen, but it never ceases to exist.
This quality can make properties a reliable place to parkwealth. These qualities can make property a healthy place to park capital, especially for real estate investors who obtain enough income in other endeavors. These buyers superior quality real estate that is dependable and consistent. They are in most cases unconcerned with the rate of return on the investment. They really want realty that can, in the future, stay in demand. it could be city real estate or agricultural land. The key requirement is usually that it be in a location where rule of law and minorities or foreigners are respected.
An illustration of this sort of buyer is a Chinese business person who has made lots of money in China's recent financial boom, but who doesn't have faith in the future of the country. It's important to appreciate, in this circumstance, that a 50 year old Chinese was born in 1961. If his parents were involved in the Party at that time, and had acquired some authority, there is a possibility that they went through some major reversals during the Cultural Revolution which began in 1968. An illustration of this can be found in Xi Jinping, said to be the next President of China. His father, once a Vice-Premier, and former Communist guerrilla, was cleansed in 1968.
Things are totally different now, and that fact is not lost on many of China's nouveau riche. But things could change again. They do not trust Chinese society and would like a sound place for their funds. International real-estate can fill this need.
One other case is the classic one of criminal activity. Proceeds of crime placed into property remain safe. This is the grounds behind money laundering rulings. It has been argued that profits made by raising marijuana has made a contribution to falsely raising Vancouver area property costs.
Those are two extremes of the spectrum, but what they illustrate is a longing for shelter and security, and lower interest in profits and growth.
The same qualities apply to well-to-do men and women looking for an inflation hedge. If local variations are taken out. The critical point is income. The qualities of safety and immobility are gravy.
There can be a clash between the two approaches, although it isn't always in existence. When properties are attractive to buyers seeking growth they can be twice as eye-catching to investors trying to find stability. But, when individuals searching for a safe sanctuary decide to compete with individuals trying to generate income, the stability seekers simply out compete the revenue seekers. They typically have deeper pockets and are not constrained by income investment methods. This has happened in Vancouver, where Chinese money has chased typical income investors out of the market place.
I'll talk about the second approach first . Investment real estate is immobile. In fact, that characteristic is why the French and Spanish call it what they do ("propriéte immobilière" and "bienes inmuebles"). That means that real property doesn't disappear and doesn't expire. Its value may go up and down, and its title may be stolen, but it never ceases to exist.
This quality can make properties a reliable place to parkwealth. These qualities can make property a healthy place to park capital, especially for real estate investors who obtain enough income in other endeavors. These buyers superior quality real estate that is dependable and consistent. They are in most cases unconcerned with the rate of return on the investment. They really want realty that can, in the future, stay in demand. it could be city real estate or agricultural land. The key requirement is usually that it be in a location where rule of law and minorities or foreigners are respected.
An illustration of this sort of buyer is a Chinese business person who has made lots of money in China's recent financial boom, but who doesn't have faith in the future of the country. It's important to appreciate, in this circumstance, that a 50 year old Chinese was born in 1961. If his parents were involved in the Party at that time, and had acquired some authority, there is a possibility that they went through some major reversals during the Cultural Revolution which began in 1968. An illustration of this can be found in Xi Jinping, said to be the next President of China. His father, once a Vice-Premier, and former Communist guerrilla, was cleansed in 1968.
Things are totally different now, and that fact is not lost on many of China's nouveau riche. But things could change again. They do not trust Chinese society and would like a sound place for their funds. International real-estate can fill this need.
One other case is the classic one of criminal activity. Proceeds of crime placed into property remain safe. This is the grounds behind money laundering rulings. It has been argued that profits made by raising marijuana has made a contribution to falsely raising Vancouver area property costs.
Those are two extremes of the spectrum, but what they illustrate is a longing for shelter and security, and lower interest in profits and growth.
The same qualities apply to well-to-do men and women looking for an inflation hedge. If local variations are taken out. The critical point is income. The qualities of safety and immobility are gravy.
There can be a clash between the two approaches, although it isn't always in existence. When properties are attractive to buyers seeking growth they can be twice as eye-catching to investors trying to find stability. But, when individuals searching for a safe sanctuary decide to compete with individuals trying to generate income, the stability seekers simply out compete the revenue seekers. They typically have deeper pockets and are not constrained by income investment methods. This has happened in Vancouver, where Chinese money has chased typical income investors out of the market place.
Friday, March 25, 2011
How to invest in Real Estate
It's strange how rental real estate is thought of as an investment. Like Rodney Dangerfield, it gets no respect. While bonds and equities get the Wall Street Journal and Financial Post, Google "how to invest in real estate" and you'll run across all kinds of no-money down methods that seem planned to sell books and tapes instead of rental real estate. On television there is Report on Business TV, but for real estate love it or list it. It strikes me as sad that such a solid investment opportunity gets such bad reviews.
Of course it is possible to acquire property with no money down, but it involves arranging a 100% mortgage, and for rental property you only do that if you have equity in other properties. For example, if you have one property bought and paid for its not difficult to arrange a line of credit at prime. A $100,000 condo would cost about $400 per month, plus taxes and maintenance of about $200. In short, it would carry and give you cash flow to feed the mortgage costs.
A more regular method to buy real estate is with a down payment of some kind. Generally is you can make a property carry itself with less than 40% down its worth purchasing. These properties are easier to find in balanced markets.
There are several reasons to own income property.
Reason #1 to own income property is because the renters buy it for you. Even if the other benefits didn't kick in, that alone justifies it. But the fact is, there are other advantages to investing in rental property
Reason #2 is leverage. The best description of leverage is in the book Buy, Rent, Sell, by Lionel Needleman (Needleman is not a huckster; on the contrary, he's a very accomplished author and professor with many books and articles published on housing in Canada and the UK. His assumptions and math is a bit simplistic, and should be adjusted for your particular market, but the book is worth it).
He explains leverage this way: John and Mary each purchase a house $100,000. One year later both places have gone up 10% in value. Both purchasers sell the properties and compare the results.
John started with $100,000, and now he has $110,000, so he has earned a 10% return on his money. Mary, meanwhile, put $10,000 down on her investment, and mortgaged the rest for$90,000. After selling and paying off the mortgage she counts her money. She also got a $10,000 profit, but since she only placed $10,000 in the property, she's got a 100% return on her investment. And, as you guessed, the real trick is that while John bought one rental, kept it a year and then sold it with a $10,000 profit, Mary got 10 houses, held them one year, and then got rid of them for a $100,000 profit. Both started out with $100,000, but after 12 months John has only $110,000 while Mary $90,000 more. The numbers are simplified in the example, but they decisively indicate the wonder of leverage.
Reason #3 is taxes. In most tax jurisdictions expenses incurred on income property is a deduction. And, you can usually incur depreciation costs on the structure that in effect are paper losses and that actually reduce the tax. Depreciation functions like this: we know that the value of a durable item, like a house, decreases with time. Even if the property is well maintained, an old house is not worth the same amount as a new house. This loss in value is called depreciation, and you can use that loss to reduce the tax burden.
Of course, when we invest in income property we usually expect that it will go up in price, and over the long term it often does. What happens with the depreciation in a case like that? The taxman was told the property decreased in price through depreciation, but at the end of the process we sold for a profit. The tax agency will generally say that you’ve “re-captured” the depreciation and will tax you.
Re-capture is terrible. Its like finding that you’ve already spent the savings that you were planning on spending in the future.
There is a good solution. When you buy the investment you divide the original investment between the structure value and the land value. Without cheating you try to value the land as low as is reasonable and the building as high as you can (do the math and you’ll see its worthwhile to be reasonable on your estimates). When the property goes up in price and you sell the property, you tell the taxman that you didn’t recapture any depreciation since the structure did depreciate, while the land increased in value. This profit is capital gain, and capital gain is usually taxed at lower rates than income like…rent. You depreciate the money you make when it comes in as rent, and pay tax on it when it comes as capital gain.
Owning rental real estate also enables you to write off the costs of things that you may have bought anyway, from office supplies to a trip to see the property.
Reason #4 is capital gain. Capital gain doesn’t always happen, but it often does. As we’ve seen with leverage, the capital gain can be leveraged. Even better, the capital gain can, in some years, be greater than what some people earn from a year's work.
Reason #5 pulls everything together by combining free cash flow, leverage, and tax planning. Rental real estate earn cash flow. To start the cash flow may be neutral or even negative, but given enough time it will usually becomes positive. When it changes you have to pay income tax on the additional rent. The solution is to re-mortgage and incur some more interest costs, reducing your taxes. You also re-leverage your first property. The next step is to take the funds and acquire another income property. You don't pay income tax, get depreciation, and receive a capital gain. Better, with two properties you spread your risk, and when it's time to sell you can stretch out the timeline and sell the properties in different years to minimize tax.
It can't be emphasized enough that you have to buy the property wisely. You need to be familiar with the location and the potential tenant. Properties that are desirable and are in a desirable area stay rented. “Desirable” doesn’t have to mean “mansion”, but clean and well priced are key. Whether you buy a small apartment or a three bedroom house with a suite isn’t critical.
Metrics are critical. The first is price-to-rent ratio. This means that you take the purchase price, for example, $100k, and divide the monthly rent of $1000 into that. In this case the result would be 100. Numbers between 75 and 175 are good, but never forget that projected capital gains and interest rates impact what numbers you use. Low interest rates lead to higher numbers, and good capital gain projections will command higher numbers. Over 200 is scary in almost every location unless all you are looking for is dependable income, aren't concerned about capital gain or don’t plan on ever selling.
Another excellent metric is the break even point. This is the percentage of the price need for a down payment to allow the realistic rent to carry the property. The rent has to be a) market rent, not “optimistic” rent, and b) net rent, not gross rent. If the house will carry itself at less than 45% down its worth taking a good look at. Obviously, if interest rates are low the net rent will carry more, meaning the break even rate can be high. Remember that low rates don’t last forever, so unless you can lock in very long term you have to assume that the break even rate should be low in low interest rate environments, and can be higher in higher interest rate environments.
If you come across an investment property that has a desirable price to rent ratio and a good break even rate (and is in a good location and isn’t a inferior proeprty), its worth the effort to put the numbers onto a spreadsheet and calculating the internal rate of return (a real estate investment metric that combines various income streams) and projected cash on sale. There are spreadsheets and programs that can do this for you, but the key is “GIGO” – garbage in, garbage out. Get the correct taxes, the realistic interest rates, your projected income tax rate, and realistic estimates of capital gain and maintenance. Investment properties in urban generally appreciate in price more than properties in depressed or remote locales. They also often have what seem to be worse metrics – a downtown city condo may have a much worse price to rent and break even point than little house in a small town. However, capital gain in the rural area is likely much more spotty. Plotting mortgage pay down and tax benefits on a detailed spreadsheet let's you fairly evaluate precisely how competing purchases match up.
It would be wrong to ignore the issue of a property bubble, or crash. Buying on metrics both helps and hinders. It helps because if you are hard-nosed with break even rates and rent multipliers you won’t buy overpriced property (underpriced investment property doesn’t really exist in a bubble, and it doesn’t crash in value). It hinders because you can’t buy on metrics in a bubble, no matter how much you want to, because metric compliant properties aren't around.
The flip side of this is that when a market crashes there are plenty of metric compliant properties, but generally little mortgage financing and plenty of reluctant buyers and distressed sellers.
At the end of the day, a stable market is the optimum for buyers, although buyers who invest on metrics and exit the market near the top of a bubble often feel like they’ve hit the jackpot.
Of course it is possible to acquire property with no money down, but it involves arranging a 100% mortgage, and for rental property you only do that if you have equity in other properties. For example, if you have one property bought and paid for its not difficult to arrange a line of credit at prime. A $100,000 condo would cost about $400 per month, plus taxes and maintenance of about $200. In short, it would carry and give you cash flow to feed the mortgage costs.
A more regular method to buy real estate is with a down payment of some kind. Generally is you can make a property carry itself with less than 40% down its worth purchasing. These properties are easier to find in balanced markets.
There are several reasons to own income property.
Reason #1 to own income property is because the renters buy it for you. Even if the other benefits didn't kick in, that alone justifies it. But the fact is, there are other advantages to investing in rental property
Reason #2 is leverage. The best description of leverage is in the book Buy, Rent, Sell, by Lionel Needleman (Needleman is not a huckster; on the contrary, he's a very accomplished author and professor with many books and articles published on housing in Canada and the UK. His assumptions and math is a bit simplistic, and should be adjusted for your particular market, but the book is worth it).
He explains leverage this way: John and Mary each purchase a house $100,000. One year later both places have gone up 10% in value. Both purchasers sell the properties and compare the results.
John started with $100,000, and now he has $110,000, so he has earned a 10% return on his money. Mary, meanwhile, put $10,000 down on her investment, and mortgaged the rest for$90,000. After selling and paying off the mortgage she counts her money. She also got a $10,000 profit, but since she only placed $10,000 in the property, she's got a 100% return on her investment. And, as you guessed, the real trick is that while John bought one rental, kept it a year and then sold it with a $10,000 profit, Mary got 10 houses, held them one year, and then got rid of them for a $100,000 profit. Both started out with $100,000, but after 12 months John has only $110,000 while Mary $90,000 more. The numbers are simplified in the example, but they decisively indicate the wonder of leverage.
Reason #3 is taxes. In most tax jurisdictions expenses incurred on income property is a deduction. And, you can usually incur depreciation costs on the structure that in effect are paper losses and that actually reduce the tax. Depreciation functions like this: we know that the value of a durable item, like a house, decreases with time. Even if the property is well maintained, an old house is not worth the same amount as a new house. This loss in value is called depreciation, and you can use that loss to reduce the tax burden.
Of course, when we invest in income property we usually expect that it will go up in price, and over the long term it often does. What happens with the depreciation in a case like that? The taxman was told the property decreased in price through depreciation, but at the end of the process we sold for a profit. The tax agency will generally say that you’ve “re-captured” the depreciation and will tax you.
Re-capture is terrible. Its like finding that you’ve already spent the savings that you were planning on spending in the future.
There is a good solution. When you buy the investment you divide the original investment between the structure value and the land value. Without cheating you try to value the land as low as is reasonable and the building as high as you can (do the math and you’ll see its worthwhile to be reasonable on your estimates). When the property goes up in price and you sell the property, you tell the taxman that you didn’t recapture any depreciation since the structure did depreciate, while the land increased in value. This profit is capital gain, and capital gain is usually taxed at lower rates than income like…rent. You depreciate the money you make when it comes in as rent, and pay tax on it when it comes as capital gain.
Owning rental real estate also enables you to write off the costs of things that you may have bought anyway, from office supplies to a trip to see the property.
Reason #4 is capital gain. Capital gain doesn’t always happen, but it often does. As we’ve seen with leverage, the capital gain can be leveraged. Even better, the capital gain can, in some years, be greater than what some people earn from a year's work.
Reason #5 pulls everything together by combining free cash flow, leverage, and tax planning. Rental real estate earn cash flow. To start the cash flow may be neutral or even negative, but given enough time it will usually becomes positive. When it changes you have to pay income tax on the additional rent. The solution is to re-mortgage and incur some more interest costs, reducing your taxes. You also re-leverage your first property. The next step is to take the funds and acquire another income property. You don't pay income tax, get depreciation, and receive a capital gain. Better, with two properties you spread your risk, and when it's time to sell you can stretch out the timeline and sell the properties in different years to minimize tax.
It can't be emphasized enough that you have to buy the property wisely. You need to be familiar with the location and the potential tenant. Properties that are desirable and are in a desirable area stay rented. “Desirable” doesn’t have to mean “mansion”, but clean and well priced are key. Whether you buy a small apartment or a three bedroom house with a suite isn’t critical.
Metrics are critical. The first is price-to-rent ratio. This means that you take the purchase price, for example, $100k, and divide the monthly rent of $1000 into that. In this case the result would be 100. Numbers between 75 and 175 are good, but never forget that projected capital gains and interest rates impact what numbers you use. Low interest rates lead to higher numbers, and good capital gain projections will command higher numbers. Over 200 is scary in almost every location unless all you are looking for is dependable income, aren't concerned about capital gain or don’t plan on ever selling.
Another excellent metric is the break even point. This is the percentage of the price need for a down payment to allow the realistic rent to carry the property. The rent has to be a) market rent, not “optimistic” rent, and b) net rent, not gross rent. If the house will carry itself at less than 45% down its worth taking a good look at. Obviously, if interest rates are low the net rent will carry more, meaning the break even rate can be high. Remember that low rates don’t last forever, so unless you can lock in very long term you have to assume that the break even rate should be low in low interest rate environments, and can be higher in higher interest rate environments.
If you come across an investment property that has a desirable price to rent ratio and a good break even rate (and is in a good location and isn’t a inferior proeprty), its worth the effort to put the numbers onto a spreadsheet and calculating the internal rate of return (a real estate investment metric that combines various income streams) and projected cash on sale. There are spreadsheets and programs that can do this for you, but the key is “GIGO” – garbage in, garbage out. Get the correct taxes, the realistic interest rates, your projected income tax rate, and realistic estimates of capital gain and maintenance. Investment properties in urban generally appreciate in price more than properties in depressed or remote locales. They also often have what seem to be worse metrics – a downtown city condo may have a much worse price to rent and break even point than little house in a small town. However, capital gain in the rural area is likely much more spotty. Plotting mortgage pay down and tax benefits on a detailed spreadsheet let's you fairly evaluate precisely how competing purchases match up.
It would be wrong to ignore the issue of a property bubble, or crash. Buying on metrics both helps and hinders. It helps because if you are hard-nosed with break even rates and rent multipliers you won’t buy overpriced property (underpriced investment property doesn’t really exist in a bubble, and it doesn’t crash in value). It hinders because you can’t buy on metrics in a bubble, no matter how much you want to, because metric compliant properties aren't around.
The flip side of this is that when a market crashes there are plenty of metric compliant properties, but generally little mortgage financing and plenty of reluctant buyers and distressed sellers.
At the end of the day, a stable market is the optimum for buyers, although buyers who invest on metrics and exit the market near the top of a bubble often feel like they’ve hit the jackpot.
Friday, March 18, 2011
Getting Off Grid
Living off grid real estate is getting increasingly popular. From time to time people just take on vacant pieces of land, or live semi-permanent lives in trailers. A sustained off grid lifestyle, though, requires finding an off the grid piece of land.
Discovering off grid real estate in BC isn't too difficult. There are plenty of classified listings, on the web or in the papers, to complement what you can find on the Multiple Listing Service (which is also available online).
This raises the issue of what, precisely, qualifies as "off grid real estate"? Most pieces of land will have some kind of access, even if only by the roughest road, and so is, strictly speaking, at least a little bit on grid. It's also possible to, of course, look (or ask a realtor to send you an automated search)for land parcels that do not have electricity hook ups, water, sewer or telephone. These can be negatives for property vendors, and so you're likely aren't going to be facing too much competition from other other buyers.
Satisfying local codes and inspections can be something to get past, but its possible to find unserviced property in areas that do not don't require building inspectors. These can be properties that are often far from the nearest urban area. In reality you are still supposed to comply with the BC Building Code, but its improbable that anyone will turn up to enforce the building code.
Of course, complying with the building code is possible. The building code has allowed lots of styles of building systems, and is supposed to ensure that the housing is safe, not that its hooked up to the grid. There are fantastic off the grid buildings that satisfy the BC code and which have been inspected and passed by building inspectors.
You can find pieces of land in BC that you can't reach by road. Most of this is water or boat access, either by lake or, more generally, by sea. There are also properties that are accessible by walking, plane or horseback. This might seem more interesting remember that difficult access makes home construction difficult, and once you're done you'll still have the challenge of obtaining medical aid or supplies.
Going offgrid in BC means making it through Old Man Winter. Winters are demanding enough throughout the province that you'll need a dependable heat source, and in some parts it gets really cold. The best solution is to burn wood, but for that you need a a fireplace or stove, and cords and cords of cordwood. Perhaps the most attractive and most sustainable is geothermal, which can be built in many ways.
Solar and wind won't supply enough heat. They can, and do, give enough electricity electricty to run an off grid real estate, although your habits will probably have to change. Solar can be very expensive, as can wind, when you make the intial set up. You can build your own, though, and there are plenty of plans on the internet that work.
You can also go off grid bc with a generator, and as long as you have enough diesel or gas you'll lots of electricity. This is how remote set ups, whether farms, lodges or ranches, have been powered for years throughout the remote parts of the province, but a old style generatorlikely isn't too attractive to modern day off gridders.
The biggest thing to consider when considering off grid real estate is that it is not easy, it likely will be more difficult than you imagined, and there will be obstacles that you never anticipated. On the other hand, most offgridders are independent - its in their bones.
Discovering off grid real estate in BC isn't too difficult. There are plenty of classified listings, on the web or in the papers, to complement what you can find on the Multiple Listing Service (which is also available online).
This raises the issue of what, precisely, qualifies as "off grid real estate"? Most pieces of land will have some kind of access, even if only by the roughest road, and so is, strictly speaking, at least a little bit on grid. It's also possible to, of course, look (or ask a realtor to send you an automated search)for land parcels that do not have electricity hook ups, water, sewer or telephone. These can be negatives for property vendors, and so you're likely aren't going to be facing too much competition from other other buyers.
Satisfying local codes and inspections can be something to get past, but its possible to find unserviced property in areas that do not don't require building inspectors. These can be properties that are often far from the nearest urban area. In reality you are still supposed to comply with the BC Building Code, but its improbable that anyone will turn up to enforce the building code.
Of course, complying with the building code is possible. The building code has allowed lots of styles of building systems, and is supposed to ensure that the housing is safe, not that its hooked up to the grid. There are fantastic off the grid buildings that satisfy the BC code and which have been inspected and passed by building inspectors.
You can find pieces of land in BC that you can't reach by road. Most of this is water or boat access, either by lake or, more generally, by sea. There are also properties that are accessible by walking, plane or horseback. This might seem more interesting remember that difficult access makes home construction difficult, and once you're done you'll still have the challenge of obtaining medical aid or supplies.
Going offgrid in BC means making it through Old Man Winter. Winters are demanding enough throughout the province that you'll need a dependable heat source, and in some parts it gets really cold. The best solution is to burn wood, but for that you need a a fireplace or stove, and cords and cords of cordwood. Perhaps the most attractive and most sustainable is geothermal, which can be built in many ways.
Solar and wind won't supply enough heat. They can, and do, give enough electricity electricty to run an off grid real estate, although your habits will probably have to change. Solar can be very expensive, as can wind, when you make the intial set up. You can build your own, though, and there are plenty of plans on the internet that work.
You can also go off grid bc with a generator, and as long as you have enough diesel or gas you'll lots of electricity. This is how remote set ups, whether farms, lodges or ranches, have been powered for years throughout the remote parts of the province, but a old style generatorlikely isn't too attractive to modern day off gridders.
The biggest thing to consider when considering off grid real estate is that it is not easy, it likely will be more difficult than you imagined, and there will be obstacles that you never anticipated. On the other hand, most offgridders are independent - its in their bones.
Wednesday, March 16, 2011
Property Management
Property management in Vancouver|http://www.coronetrealtyltd.com
Owners in investment property one of the main obstacles to surmount is managing renters. A good fix to this is to use a property management company who will oversee promoting,choosing the renters, checking them out, getting a deposit, getting monthly rent, doing inspections at time of move in, handling repairs and sending in tax and strata corporation fees.
Usually these property managers also purchase income property, and can offer advice to the investor.
A licensed company is always a a better way to go than an unlicensed firm or other non-professional individual. Licensed management companies will usually have better service standards and in many areas will have professional errors and omissions insurance.
They will also maintain trust accounts, meaning that they will be receiving revenue on your behalf and putting it into a segregated escrow account that must be audited annually. The advantage of that is that an escrow account can't be attached by creditors of the property management firm - after all, they're your funds not the property manager's.
Owners in investment property one of the main obstacles to surmount is managing renters. A good fix to this is to use a property management company who will oversee promoting,choosing the renters, checking them out, getting a deposit, getting monthly rent, doing inspections at time of move in, handling repairs and sending in tax and strata corporation fees.
Usually these property managers also purchase income property, and can offer advice to the investor.
A licensed company is always a a better way to go than an unlicensed firm or other non-professional individual. Licensed management companies will usually have better service standards and in many areas will have professional errors and omissions insurance.
They will also maintain trust accounts, meaning that they will be receiving revenue on your behalf and putting it into a segregated escrow account that must be audited annually. The advantage of that is that an escrow account can't be attached by creditors of the property management firm - after all, they're your funds not the property manager's.
Tuesday, March 15, 2011
NRX Taxes
Residential property is a good investment and can produce reliable, cash flow. It has to be bought wisely, and managed intelligently, but so long as it's in a desirable area it will always generate revenue.
Canada is a safe place to buy income property. Legal immigration status is not necessary to buy real estate in Canada. All you need to do to buy rental property in Canada is have good ID, and have the funds to pay for it.
Mind you, if you're a non resident for income tax purposes, you will have to pay non-resident tax.
First things first. "Canadian resident for income tax purposes" is a tax status, not your immigration status. Someone who files a tax return on their income in Canada is likely a Canadian resident for income tax purposes. It's possible for a person to live in another country and still remain a resident of Canada for tax purposes. In my experience, though, most offshore property owners in Canadian real estate pay income tax where the really live. The result is that they are also non-residents in the opinion of the Canadian Revenue Agency (CRA), so long as they receive income from Canadian residential real estate.
Canada is a safe place to buy income property. Legal immigration status is not necessary to buy real estate in Canada. All you need to do to buy rental property in Canada is have good ID, and have the funds to pay for it.
Mind you, if you're a non resident for income tax purposes, you will have to pay non-resident tax.
First things first. "Canadian resident for income tax purposes" is a tax status, not your immigration status. Someone who files a tax return on their income in Canada is likely a Canadian resident for income tax purposes. It's possible for a person to live in another country and still remain a resident of Canada for tax purposes. In my experience, though, most offshore property owners in Canadian real estate pay income tax where the really live. The result is that they are also non-residents in the opinion of the Canadian Revenue Agency (CRA), so long as they receive income from Canadian residential real estate.
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