Newmarket - Orillia and Barrie are two of the best cities for real estate investing in Ontario, according to a prominent local investor speaking on ‘In Tune With Real Estate,' on Rogers television in York Region this week.
"Barrie and Orillia are great cities to buy property for investment purposes," Mark Vosylius a Barrie-area real estate investor told host Rav Toor this week. "Barrie's transportation links, Orillia's planned university and Wal-Mart Super Centre all point to a strong local economy which is important for investors," said Vosylius.
In light of the downturn in the stock market, Vosylius still told host Toor that investing is about education, not speculation. "You need to educate yourself on the local economy,not what the national headlines say"
Mana investments, owned by Vosylius, has been investing in Barrie and Orillia for over five years and is looking to expand because of the tremendous opportunities in Simcoe County.
"Orillia has ample opportunity for healthy, smart growth and that's important for investors," said Vosylius. "The average age of Barrie residents is lower than the national average which means they are consumers who can spend more, which is also good for the local economy. These are the things that interest real estate investors," said Vosylius.
"Study the local economy, the local market and learn before investing."
Mana investments has over sixty apartments in the Barrie and Orillia area and is expanding. Training and mentoring other investors is also a key component of Mana investments. A copy of the TV interview is available upon request.
For more information
705 812 1033
Mana Investments - www.manainvestments.com - We invest in real estate investing as well as home ownership in the Barrie Orillia, Innisfil, Collingwood, Midland areas. We utilize using RRSP's as a 2nd mortgage for real estate investing in Ontario
Homes by The Owner - www.homesbytheowner.ca Helping Buyers and Sellers in the FSBO real estate market in Simcoe County and surrounding Oro-medonte areas
The Six Steps to Success - www.sixstepstosuccess.com - Get to your financial goal quicker...Helping you achieve success in goal planning.
The Numbers
When it comes to the analysis of numbers many people have gotten rich. And I don't mean from real estate. I mean that spreadsheet programs and number crunching analysis gets too much attention from real estate scam artists. And I am mainly referring to costly real estate programs where complex spreadsheets, bar graphs and pie charts display income, expenses, and loan payments in a myriad of ways. There is a great epitaph that works here "Bull** baffles brains". For small multi-family or commercial projects ( under 1 million) the following example will be all that you will need to make a purchase decision. Whether you are buying in Simcoe County ( Barrie, Midland, Innifil or Orillia) this speadsheet appliues to any property.
Please keep in mind this is a simplified version and with the inclusion of joint ventures or complex VTB's this spreadsheet may not suffice. But in my opinion it's all that you need to make a intelligent decision on a simple deal. ( Keep It Simple Stupid)
The financial statement is one of the first things you need to review before inputing information into any spreadsheet analysis. I will review the financial statement at a later session. It is a good idea to learn what to look for in a financial statement to access the properties strengths / weaknesses. I will first go through the basics of spreadsheet analysis by laying out necessary calculations and what they mean to your potential investment before looking a property financial statement. Learn the spreadsheet and you will learn what to look for in the financial statement.
The fully functional real estate analysis spreadsheet below is available for download from our website at www.manainvestments.com
You will notice Instruction/ explanations along the side for your guidance
| QUICK PROPERTY ANALYZER | Instructions | ||||
| Property Address: | Input amounts into GREY areas only | ||||
| Purchase Price | $200,000 | Enter purchase price | |||
| Gross Rents | Monthly | Annually | |||
| Total Rents | $2,000 | $24,000 | Enter total monthly rents collected | ||
| Operating Expenses | % | Monthly | Annually | ||
| Insurance | 4% | $80 | $960 | Enter required % amount (usually 5%) | |
| Vacancy | 3% | $60 | $720 | Enter required % amount (depends on area...usually 3%) | |
| Maintenance | 5% | $100 | $1,200 | Enter required % amount (usually 5%) | |
| Management | 6% | $120 | $1,440 | Enter required % amount (usually 5%) | |
| Condo Fees (if applicable) | $0 | $0 | Enter required $ amount from seller | ||
| Utilities | $320 | $3,840 | Enter required $ amount from seller | ||
| Property Taxes | $196 | $2,352 | Enter required $ amount from seller | ||
| Total Operating Income | $876 | $10,512 | |||
| Net Operating Income | $1,124 | $13,488 | |||
| Mortgage/Loan Information | LTV | Amount | LTV = "Loan to Value" | ||
| 1st Mortgage | 75% | $150,000 | Enter % of requested 1st mortgage | ||
| 2nd Mortgage | 10% | $20,000 | Enter % of requested 2nd mortgage | ||
| Financing | Rate | Monthly | Annually | ||
| 1st Mortgage Payment | 2.00% | $640 | $7,683 | Enter % of expected interest rate for 1st | |
| 2nd Mortgage Payment | 1.00% | $76 | $908 | Enter % of expected interest rate for 2nd | |
| Total Financing Payments | $8,591 | ||||
| Debt Service Ratios | |||||
| Debt Service Coverage Ratio (DSCR) | 1.22 | Desired minimum amount = 1.10 | |||
| CAP Rate | 6.74% | Desired minimum amount = 6% ( the higher the better) | |||
Mark Vosylius
(705)-812-1033
Email: mark(at) manainvestments com
Mana Investments - www.manainvestments.com - Educating not specualting. Learn techniques and strategies on real estate investing as well as home ownership in the Orillia, Barrie, Innisfil, Collingwood, Midland areas. We specialize in using RRSP's as a 2nd mortgage for real estate investing as well as joint venture agreements and assignment real estate contracts in Ontario
Homes by The Owner - www.homesbytheowner.ca Helping Investors buy and sell real estate properties that cash flow in Simcoe County and surrounding Oro-medonte areas
The Six Steps to Success - www.sixstepstosuccess.com - Get to your financial goal quicker...Helping you achieve success in goal planning.
The Battle of the Century- Consumer Confidence versus Economic Fundamentals
Many of you have commented that the "facts" in our current real estate market in Barrie and Orillia indicate a slowing down in home sales and price increases. Prices in some areas (Barrie's south end) have declined anywhere from 3-10% and homes solds has declined to 2006 levels. Yet in many recent articles we have made comments on the strength of the economic fundamentals. So what's going on?
This article can go on forever to re-explain fundamentals, but in a nutshell, consumer confidence is a non-fundamental factor that influences the market. That is, consumer sentient definitely affects the real estate market. How we feel the economy is doing, what we think the future holds bears great influence on real estate prices. Weather or not these "sentiments" are based on facts is inconsequential. They affect the cyclical nature of real estate.
But this is where (again) the educated real estate investor can move ahead of the pack. It seems that consumer confidence prevails over the economic fundamentals in our present condition. The general public's view of the near future has dimmed. This unfortunate prevailing view has affected real estate and reduced home prices in general. This is a time educated investors (NOT SPECULATORS) can find fantastic deals. Investments and decisions made in real estate now can show incredible foresight and business courage. Especially when we look closely at the LOCAL economic fundamentals.
The buying and selling of real estate in Barrie, Orillia, Midland and Collingwood will continue on weather the market is heading up or down. "Professional" real estate investors will tell you that you can make money in any "cycle" of the market. And once again I put my faith in the Fundamentals of the local market...not in the prevailing negative sentiment
Mark Vosylius
(705)-812-1033
Email: mark(at) manainvestments com
Mana Investments - www.manainvestments.com - Learn techniques and strategies on real estate investing as well as home ownership in the Orillia, Barrie, Innisfil, Collingwood, Midland areas. We specialize in using RRSP's as a 2nd mortgage for real estate investing as well as joint venture agreements and assignment real estate contracts in Ontario
Homes by The Owner - www.homesbytheowner.ca Helping Investors buy and sell real estate properties that cash flow in Simcoe County and surrounding Oro-medonte areas
The Six Steps to Success - www.sixstepstosuccess.com - Get to your financial goal quicker...Helping you achieve success in goal planning.
The Bright Side of Real Estate Price Corrections
With the headlines blasting out how much equity we have all lost in our homes and property investments in most major markets (they call them "Price Corrections"), I thought I would analyze where a price correction comes from and why it's a "good" thing. As well apply it to where I focus our real estate investing efforts, in the Barrie, Orillia, Innisfil and Midland real estate housing markets.
I can't help but view a price correction as a necessary component of a healthy real estate market. That it is a necessary correction that keeps the real estate market stable. It is not to be viewed as a negative component in the real estate business. Price Corrections occur when real estate values escalate too rapidly. It is just like when Ben Johnson won the Gold at the Seoul Olympics. It was a great "short lived moment" of glory for Canada. But we (Ben) won on a false pretense. It's the same when real estate market values rise past that of what the economic fundamentals can handle. We will eventually loose those gains because they were won on false pretenses.
For clarity, an over exaggerated example of a price correction is a real estate "bubble". It's caused by an extreme rapid rise in home/property values that escalates way beyond that of what the ECONOMIC FUNDAMENTALS can bear. That is, the real estate values increase PAST what the LOCAL economy can handle very rapidly. It is caused by over excited home buyers and investors( called "speculators"....I like that word ...it makes people who buy homes without considering real estate fundamentals, sound just like the Gold Speculators of the 1890's)
The idea that you can get rich quickly by buying real estate is exactly the same concept of the Gold Speculators of the Yukon gold rush. Yes some ( very few) got wealthy quickly by striking it rich. It is a concept and dream that only late night television empires are built on. Not reality and Real Estate Economic Fundamentals. But let me clear...very clear. Real Estate is not a get rich quick scheme. It's a get rich slowly scheme. With that mindset, all these flashy news headlines that can sound scary mean very little for our long range goals. Or better put, it's a get rich slowly scheme.
What are the economic fundamentals that the increasing or decreasing values in the housing industry is built on in Barrie and Orillia that I am referring too?
I think the number one fundamental to consider (and there are many) is the HOUSING AFFORDABILITY INDEX. It clearly shows what the LOCAL average person has left over to spend on a mortgage. The magic number is about 35-40%. That means above this number we will see housing prices decreasing (price corrections). Below that number, we will see housing prices increasing. This number means that 35-40% of our LOCAL (Barrie and Orillia) persons income is spent on housing. This what he can afford based on his income....35-40% of his income will be spent on housing.
For comparison purposes lets look at Vancouver. Right now the housing affordability index sits around 65%. That means that 65% of your AVERAGE LOCAL person in Vancouver spends 65% of his income on housing. Vancouver is in a classic housing Bubble.
Price corrections occur when the housing affordability index gets too high, or above the 35-40% range. The Housing Affordability Index in Barrie, Innisfil, Orillia, Midland, and Collingwood areas right now sits around 38%. That is right smack in the middle....so what do we see? A little of everything. Some areas are increasing, some slowing down or flattening out and even some decreases or PRICE CORRECTIONS. All this is GOOD and NORMAL. It keeps the house prices in line with the affordability index.
The reciprocal of this of course is that if INCOME INCREASES then the index will drop - we will have more money to spend on buying a house. So only one of two things can happen to keep prices stable when discussing the housing affordability index, either we have a price correction when we get above 35-40% or we see a wage increase in the average income.
So although we see a slowing down of price gains in Simcoe County recently, consider it a good thing, a NORMAL thing...it will allow us to grow slowly...remember in real estate slow and steady wins the race!!
Mark Vosylius
(705)-812-1033
Email: mark(at) manainvestments com
Mana Investments -www.manainvestments.com - Defining real estate values and economic fundamentals for investors and home owners the Orillia, Barrie, Innisfil, Collingwood, Midland areas. We specialize in using RRSP as for real estate investing as well as joint venture agreements and assignment real estate contracts in Ontario
The Six Steps to Success - www.sixstepstosuccess.com - Get to your financial goal quicker...Helping you achieve success in goal planning.
Todays financial headlines sure sounds bad....
Once again I read the papers today and the headlines blare out a collapsing stock market.."Worse drop then in 2000"...reads the National Post. I myself get caught up in the headlines. It is difficult to sip a tall, cool one while reading all this negative news. I have to step back and once again consider the fundamentals of where my (and maybe even yours) real estate portfolio lies.
So do I take my own advice from past blog postings and not panic? ...Do I really have a choice?. The answer is yes I have to take my own advice and go back and study the economic fundamentals of the Barrie, Orillia area and see how they affect my real estate holdings. So I ask, how do some of these national headlines affect real estate properties in Midland? In Collingwood? Does this dramatic drop ( over 700 points on the TSX in the past 3 days!!) affect real estate values of home owners on the Simcoe Shores? I have to say no...no real affect on home prices....yet.
Once again I espouse to the theory that the National news has little effect on home prices. Yes it may be a slow change coming down the road. But national news has little direct effect on real estate values TODAY. And besides, what am I going to do? Sell everything off today. When I read bad news like this I am reminded of the comment Jimmy Stewart makes in the movie "It's a Wonderful Life" where he tells all the panicked people during the bank collapse that old man Cotter is smart because he is not selling...he is buying....why, because everyone else is selling that's why!!
I write these words, in many ways, to alleviate my own uneasiness with the Canadian real estate market. We are definitely being affected by the slow down in the US. But that is because North America is like a giant bathtub economically where we are all in the same water. Canada just has more lifejackets we can cling to to ride out this storm.
Like you, my initial reaction to reading negative headlines is to think we are in trouble...I think maybe I need to sell all my properties, just to be safe? But this blog is like a journal for me. I write about what I love and it becomes therapeutic. I have to listen to my own words and relax. Economically Canada is on solid ground. I can prove that and I have commented on it many times right here. This is a temporary blip...and most important of all, real estate is a long term investment. Not values based on blips in the stock market. So I am going to relax now and get back to business.
There... I wrote about it and it calmed me down...no need for panic...and I feel better...do you?
Mark Vosylius
(705)-812-1033
Email: mark(at) manainvestments com
Mana Investments - www.manainvestments.com - Defining real estate values and economic fundamentals for investors and home owners the Orillia, Barrie, Collingwood, Midland areas. We specialize in using RRSP as for real estate investing as well as joint venture agreements and assignment real estate contracts in Ontario
The Six Steps to Success - www.sixstepstosuccess.com - Get to your financial goal quicker...Helping you achieve success in goal planning.
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