Continue reading »]]> There comes a point in some parent’s lives when theyway want to help their kids to buy a house. There are many ways parents can do this, let’s take a look at a few, and some of their implications…

Gifting Money

There is no tax or limits to the amount of money you can gift to your children, as long as it is after tax money you are gifting. This money could be used by the child to purchase the house, which would be in their name.

Co-sign the mortgage

If your kid’s credit rating doesn’t allow them to qualify for a mortgage, you may be able to co-sign the mortgage. Basically you, and your credit rating, are ensuring that payments will be made. If they aren’t, the bank can go after both you and your child for the money.

Wile you are ensuring the loan, you do not need to be listed on title.

Joint ownership

With this method, you are usually listed as joint owner on title, and maybe also on the mortgage. If you, as a parent don’t live in the house as your primary residence, you would have to pay capital gains on your portion of the house when it is sold, or if you decide to give your portion to your child or someone else.

For example, if you buy a house jointly for $100,000, then 5 years later (the house is now appraised at $200,000) you decide to give your portion of the house to your child who has been living there, you are liable for a $50,000 capital gain. This means $25,000 is added to your taxable income (capital gains are taxed at 50%).

If you decided to sell at this time, you would still be liable for the capital gains, your child would not because it was their primary residence.

If you were to die, the property would go directly to your child and not be part of the estate, allowing you to avoid probate.

Loan them the money

This method gives you a couple of options. Instead of an outright gift, you loan them the money and register the mortgage against the property. This means your loan is secured by the property and would be paid back if the property was sold. You would have to claim the interest income, but there is no law that says how much interest you must charge.

In the future, if the house is sold, neither of you would be liable for capital gains. Also, should you decide to forgive the loan, and gift it to your child, there would be no tax implications.

These are just a few of the ways in which you can help your child buy a home. Maybe these will help you to find a better solution which has advantages for everyone.

Lesson: there are many ways to lend a hand, but they have different implications you need to be aware of.

Continue reading »]]> It may be difficult for you to handle bad credit card debt. This is because it not only affects you financially but disturbs you emotionally too. You spend restless nights worrying how you will deal with bad credit card debt. However, by opting a debt eradication procedure, you will be able to boost your credit score and reduce credit card debt problems.

4 Ways to handle bad credit card debt

Have a look at the 4 ways to handle bad credit card debt.

1. Collect the credit card statements – While handling bad credit card debt, you need to collect the statement of all the credit cards. Make a list of all the cards you have and the outstanding balance you owe on them starting from the highest to the lowest. Do not look at the interest rate and concentrate only on the present balance that you need to pay off.
2. Make the minimum on each card – While planning to pay off your credit card dues, you should make the minimum payment on each card except the one that has low balance. Put all the extra money towards the card with low balance. You should try to repay the outstanding balance of the card that has high interest rate. This is a great feeling that will motivate you to pay off the other credit card dues.
3. Add the minimum monthly payments on each card – You need to add up the minimum monthly payments that you will have to make on each card. By making only the minimum payment, you will be paying off the outstanding debts to some extent. Assess your budget and find out where you can reduce the expenses so that you can make more than the minimum payment towards repaying your debts.
4. Keep only one card for emergency purpose – Once you pay off your credit card dues, you should cut down all your credit cards and keep only one for emergency purpose. Keep it in your drawer safely and use it only when emergency situation arises. Do not feel tempted to carry it when you go out somewhere because this will again put you into credit card debt problems.

Thus, by following the above ways, you will be able to handle bad credit card debt on your own and manage finances efficiently.

Continue reading »]]> Well, it looks like friday will see the “IPO of the Year”, unless Facebook changes it’s mind again.

Will this be a life altering day? Probably, if you already hold Facebook shares and can cash out during the feeding frenzy that’s predicted to occur. If, on the other hand, you are one of the “sharks” trying to get in on the deal…I don’t like your chances much.

If you look at historical IPOs, you’ll see an interesting trend…the first few days, the stock can rise to mind boggling levels. The news media goes wild, everyone laments a missed opportunity…then life gets in the way and we await the next big thing. That’s how it happens right? Well, not exactly. In truth, most IPOs don’t do very well. Of the few who do make headlines, something interesting usually happens over the next few weeks (after the headlines fade)…the stock drops. Yes, big names like Google, Apple, etc. all dropped below the IPO levels shortly after and didn’t recover to their IPO levels for quite some time…if you were lucky and didn’t get caught in a dot-bomb.

So, with that in mind, what about Facebook? Will it buck the trend? Is it truly a different company? Personally, I don’t think so.

According to it’s “2011 financials” Facebook looks like this:

Assets: $5.6 billion
Cash/cash equivalents: $3.5 billion
Debt: $0
Shareholder equity: $4.5 billion
Operating cashflow: $1 billion
Revenue: $2.5 billion
Operating income: $1.2 billion
Net income: $714 million

Ownership:
Employees 30%
Mark Zuckerberg 24%
Digital Sky Technologies 10%
Accel Partners 8% (had 10% but sold 2%)
Dustin Moskowitz 6%
Eduardo Saverin 5%
Sean Parker 4%
Goldman Sachs clients 3%
Microsoft 1.3%
Peter Thiel and/or Clarium Capital 3%
Greylock Partners 1.4%
Meritech Capital Partners 1.6%
Chris Hughes 1 %
Goldman Sachs .8%
Li Ka-shing .75%
Interpublic Group .5%

On paper, they don’t look too bad…zero debt, cash on hand, profits…but when you add in a valuation predicted to be upwards of 100 billion, the stock looks like a bad joke.

To me, the cash on hand looks to have come from investors, who should make a killing when they cash out at the IPO. The next thing to worry about is all the IPO millionaires who’ll soon come to the realization that they can have a life now outside of Facebook coding…It could mean a loss of talent.

So, the next question is about the “potential” for the stock. Now, I don’t claim to have any psychic powers, but with revenues of less than 1 billion dollars, it will take quite a while to make this a 100 billion dollar company. Where does Facebook really make money?

Advertising. Google makes a lot of money from advertising, so it’s a genuine source of revenue.

Facebook, however, is about networking with people. The advertising on the site generally irritates people, unlike Google where the ads are usually for products people are looking for. People don’t go to Facebook to search for stuff to buy, they go there to post pictures and information about what they are doing…which brings up another issue.

Privacy.

People post a lot of things on Facebook that they probably shouldn’t. When people realize that they do stupid things, they generally do two things. Sue the company that enabled them to do stupid things, and get the government to legislate against their ability to do stupid things in the first place.

Neither of these bode well for Facebook. I can predict lawsuits aplenty in the future from people fired from work because of a posting on Facebook, or because they posted information that lead to their identity being stolen, or whatever. Even if Facebook wins all these cases, it will tie them up in court and burn off their messily profits rather quickly.

Also, look at he history of other sites. Anyone remember DIGG? Pretty popular site, until it wasn’t. Myspace? History. If someone builds a better site, Facebook could disappear virtually overnight.

Will any of this stop Facebook from becoming the IPO of the year? Nope. Will people make a killing on Facebook? Yep, no doubt about it. Is Facebook a good investment? Well, there is nothing here that I can see except “irrational exuberance” for the time being.

Do I hate Facebook? Not at all. I just see no need to jump on the bandwagon right now and lose my shirt in the short term. Let’s see how it deals with the growing pains of success. Success has killed many a company. How will Facebook deal with an exodus of people? How will it deal with the pressures of being public? How will it deal with finding revenues to match it’s valuation? How will it avoid becoming the next dot-bomb?

Out of all the companies what went public in the dot-com era, some still exist today (Amazon, Ebay, Google, etc.) some are wandering lost (Yahoo), and many have disappeared even from our memories…To me, Facebook doesn’t look like the survivor companies who had real products that generated real money, so I’m thinking Facebook is not the next Apple computer.

I think it’s worth sitting back a while and watching where Facebook is going, let the other people make the current shareholders rich. If things change, maybe I’ll buy some stock later, but I want Facebook to make me rich before I’ll do that.

Lesson: Don’t get caught up in irrational exuberance, it may make you money short term, but investing is a long term job.

Continue reading »]]> From the title of this post, was your first thought that this article would be about failure, or did you think it would be about adventure? My guess would be the former.

We live in a negative society. People tend to hate success it seems, unless they are the successful ones. Let’s tax the rich more, to support the poor (note: no one ever says let’s teach the poor to take care of themselves, it’s we need to take care of them).

I’ve been in the scenario of being poor, and in the even rarer situation of not being able to take advantage of the myriad of safety nets our society has in place, so I was really poor, not just poor on paper, while my bills are being paid kind of poor. To compound the problem, I was also injured, so I do know what life is like at that end of the spectrum.

I’ve never lived a standard life. When I got out of school, there were no jobs. Instead of waiting for the jobs to appear, I made my own. My family thought I was nuts, and wouldn’t make it. People are supposed to get a job, work, save and retire.

When I sold my first house, I took the buyer’s old place in trade for the downpayment and start off my real estate investing. My family thought I was nuts, and would lose my shirt, or at least suffer from bad tenants. Rentals are nothing but a bad investment, full of nightmare tenants, way to risky.

When I bought stocks, I invested in companies I liked, understood, and that were out of favour with the “experts”. My family thought I was nuts, and could kiss that money goodbye. If you had to invest in the market, the only way to do it was to buy a well diversified portfolio of mutual funds.

Being male, I already suffered from being insecure when I was growing up. The fact that I never found support for my life decisions was very hurtful, and still is. The good thing is, I didn’t listen to people.

I’m always amazed at the number of “experts” out there, especially those “family experts”, who’ve never deviated from the path of “go to school, get a job, save money in a well diversified portfolio of mutual funds, and retire”. These same people complain constantly about their crapy job, their lousy returns, and their fears that they’ll never be able to retire because they can’t afford it. Yet they still preach the sae mantra…and attack those who deviate from the chosen path.

The “standard path to success” doesn’t work, yet millions follow it each day, like lemmings, or lambs to the slaughter. Feverishly attacking those who even think of straying… Fear of the unknown empowers them.

It’s tough to strike out on your own. I think it’s a human need to have approval of others, especially family, but you’ll rarely get it. If you do succeed, it will be discounted as luck, maybe something nefarious, or at least exploitive. Society will want you to give more back to them, even if it means killing your company (and destroying the jobs you created in the process).

It’s a lonely path.

There were many times I questioned myself, was I doing the right thing? When I hit the bottom (though I didn’t know it was the bottom at the time), I worried I’d screwed up not just my life, but that of my family as well. Should I give up on my plan, which math said would work, sell everything, try to find a real job or stay the course I’d set. I knew what family thought, they were never shy to share their opinions…but they also never understood my lifestyle choice, it was alien.

I’ve never been one to heed opinion, I value experience. When I was starting out, I didn’t know many real real estate investors, but I had many people with opinions on it. If they’d never done it though, their opinions were about as valid as my own. I was fortunate to stumble across one investor shortly after I got started. He confirmed that, with proper choices, real estate investing was profitable and that most people were wrong about it.

When I first started investing in the markets, I turned to my mother-in-law, for she had been investing for years, so I thought she was knowledgable. Unfortunately she wasn’t really an investor, she followed the advice of an advisor and bought mutual funds. My first investments followed her advice. Now, decades later, that original investment is basically at the same level as where I bought it. My mother-in-law is also concerned over their retirement as the funds have been stagnant at best over the years, but then they had quite a cushion anyway. My individual stock purchases however, the ultimate taboo in investing if you read anything, have gone through the roof in most cases. Warren Buffet doesn’t buy mutual funds, in fact picks individual stocks, but no one seems to mention that.

Finally, as to my job, I still run my own company. Most of the critics I had when I started have changed jobs several times over the years (so much for stability) and still complain about how lousy work is. My company has changed focus over the years, it’s evolved as my tastes change. I’m at the point where I can choose my clients, and my projects, and I’ve been at it for decades.

Lesson: Striking out doesn’t mean striking out. Society will try to convince you it does, but then most of society is too afraid to even try.

Continue reading »]]> A few years back, you could have picked up Bank of Montreal (BMO) for as low as $24/share. This stock pays a dividend of $2.80/share, but hasn’t increased it’s dividend in a while.

Now 10–12% return on a safe stock is nothing to sneeze at, especially in today’s ultra low interest rates, but what if we could boost those even higher with not much more risk?

Let’s look at a hypothetical trade.

Let’s say you managed to buy BMO at $28, giving you a 10% dividend.

Today, BMO is trading around $56/share, making the dividend payout 5% on any stocks you bought at today’s prices. You, however are still getting 10%.

If you can find a safe stock that pays higher than 5% today, you could sell your BMO stocks, buy that stock with the money, and increase your profits. So, let’s say ACME Corporation is paying 6% dividend (I had to make up a company, since I can’t find a safe, higher paying stock). You sell your BMO, and buy ACME paying 6%, you’re now making 12% return on the money you originally spent on BMO.

Confused? Let’s look at actual money.

You initially buy 100 shares of BMO for $2,800. Each year it would pay you $280 in dividends.

The stock has appreciated to $5,600, but still pays you $280, you haven’t put in any more money.

You sell BMO for $5,600, and buy $5,600 worth of ACME (your initial investment is still only $2,800), but ACME pays out $336/year instead of $280. $336/$2,800 = 12% return.

Of course, this would have to be done within a TFSA or some other form of account that doesn’t trigger the capital gains on the $5,600 when you sell to actually work, otherwise you’ll be taxed on $1,400 of capital gains, and some of the money would probably be withheld for taxes when you sold.

I’d also stress that you understand the company you’re buying into. For example, I did find Pitney Bowes was paying 8.8% as a dividend when I was picking names for this article, but I think Pitney Bowes, even though it’s an old company is dying (see Don’t bet on Dying Stocks). Just because you can do something, doesn’t mean you should do it.

Lesson: Sometimes there are ways to boost returns even when the stock market is flat, and no one is increasing dividends.

Continue reading »]]> There are many game we play growing up. Many of these games serve no real purpose other than entertain us. A few however, may actually be fairly beneficial to people. Let’s look at a few.

Chess

There is probably a reason this game has been around for hundreds of years. This game teaches you to think strategically, analyze situations, plan ahead, and more. All skills which would serve you well into the future.

The Game of Life

Hasbro’s game is filled with life’s challenges. Marriage and kids, unexpected expenses, job loss and eventual retirement. While it may not be as gritty as real life, it does tend to show that you’re not always in control, and life doesn’t always turn out perfect.

Monopoly

This classic game arose out of the depression era United States. It is a good introduction to real esate investing and business deals.

Cash Flow

KIyosaki’s game takes Monopoly to the next level, bringing in employment and investing to real estate. It’s the most expensive game listed here, but if you play it, there is a lot to learn from it.

Scrabble

Expanding one’s vocabulary is never a bad thing. Improving your spelling is also a side beenefit.

Team Sports

Hockey, Football, Soccer, Baseball, Basketball, Rugby, etc. If you have a good coach, these can be life changing experienes. Teaching you to work with others, how to win and, more importantly, how to lose.

Individual Sports

Archery, Horseback Riding, Gymnastics, Track and Field, etc. These can teach self reliance, confidence and focus amoung other skills.

Unfortunately, many of these activities are being left behind in this digital era. Passed over for the more addictive video games. While some of these games loosly may involve some “teamwork” and “strategy”, I doubt they will benefit today’s youth nearly as much as the classic games.

Of course, I doubt the classics will suffer much, or disappear but, as a parent, I know which games I’ll encourage in my kids and which ones I’ll discourage.

Lesson: Not all games are a waste of time. Some can teach valuable skills, or prepare people for the future. Remember to exercise, not just your body, but also your mind.

Continue reading »]]> I’m not a genius when it comes to picking stocks, but most of the ones I’ve picked have tended to make me a good return, and I’ve never seemed to have suffered a major decline (let’s hope that continues). My strategy is pretty simple, so let’s look at what I do.

Buy what you know

If you look at the stock market’s alphabet soup of companies, you’ll find just about everything. Mining, oil, consumer good, technology, home alarms, food, cigarettes, alcohol, clothing, agriculture, etc. It’s impossible for anyone to be an expert on even a fraction of the companies out there.

I do however use a bunch of products on a daily basis. Things I’ve come to trust over years of experimentation. Things I know my friends and family also use on a daily basis. These could be consumer goods, technology, home alarms, food, cigarettes, alcohol, clothing, agriculture, etc. People I know work for Mining and oil companies, and they often talk about their jobs. These are usually excellent places to start looking at for investing.

If you’ve never heard of a company, and know nothing about it’s industry, you are gambling, not investing.

Ignore the “Experts” (sort of)

I read a lot of books, magazines, and webpages. I hear the “experts” touting this stock or that all the time. The year before the great financial crisis, Moneysense magazine put out it’s list of the Top 200 stocks in Canada.

As Bank of Montreal fell to $24, while paying out $2.80 in dividends (11.7% return) we were told to avoid them at all costs…but a few months before they were given one of the highest ratings…

Using the “Buy what you know rule”, I have had many dealings with Canadian banks over the years, I knew their lending process what no where near as loose as in the USA, and I knew they’d be stable. Ignoring the “experts” could have more than doubled your money in a year while earning you 11.7% return.

I’ve found most “experts” don’t even know the companies they cover, they just tend to regurgitate the material someone els has fed them.

Crisis time

The stock market has been a volatile place for the past few years. It’s the perfect place to make money. If the stock market were to climb steadily at 3% every year, then you’d only make 3% on average. I love a good “crisis”, that sends the entire market into a free fall. I tend to ignore the market when things are going good, as the prices are at least “fair”, if not overpriced, but a crisis is when I focus my attention.

Psychology has a big role in the market. When it falls, people panic and the babies get thrown out with the bathwater. When an individual stock falls, there is probably something wrong with that company, but when a market falls, the good companies go down too, and that is a buying opportunity (just like the Bank of Montreal example above).

The other nice thing about buying good companies in a crisis is that they tend not to fall as much later on, and recover faster when we hit the next crisis. Over the past two years, BMO has fluctuated between the low $50’s and the mid $60’s, no where near the low of $24, so your original investment was pretty secure.

Show me the money

I don’t like buying something that won’t make me money. Dividends is a good thing to look at but I fear, with all the talking heads out there promoting “dividend investing” that their prices are probably inflated. Still if I can pick up an 11.7% dividend on a solid stock in a crisis, I’d jump on the opportunity.

Another area to look at is book value and debt. You wouldn’t believe how many companies out there, and out of favour with the “experts” have more cash in the bank than they are worth on paper. Seems like a pretty good bet if I know the company. Even today’s “darlings” have experienced this…Look at Apple back around 1996 they had 4.5 billion in the bank, but had a market capitalization of 3.5 billion. No one wanted to touch this company…today they are flirting with being the most valuable company in the world with over 100 billion dollars in cash.

Avoid Fads

I’m a buy and forget kind of investor. I buy the stock, then forget about it. I’ve got no plans to sell it, and I don’t worry about the fluctuations in prices. You can’t do this if you buy “fad” stocks.

To me a fad stock is best exemplified by clothing. Ten years ago, everyone wore GAP clothing, today Lululemon is hot, though I think it’s cooling… Both stocks could have made you a fortune had you ridden the wave of consumers, but if you weren’t watching it, you may have ridden the stock on it’s way down as well.

I prefer to buy things that should be around and popular for years. Some stocks like technology, you’d also have to follow, but probably not as closely. When Apple came out with the iPhone for example, the writing was on the wall for RIM. A clear sign that it was time to cash out. Those who held on hoping that RIM would respond were gambling, and ultimately lost. You had plenty of time to cash out, but you had to keep an eye on threats and can’t believe in companies staying on top forever. Even Apple will come down again, whereas companies like BMO & JNJ have, and will be around for a long time.

If it’s News, ignore it

If you read an article in the newspaper, or hear it on the radio or TV, forget about it, you’ve already missed the boat. The media is full of “experts” who’ll tell you just why something has happened…the fact that they couldn’t predict it happening means their explanation is just guessing as well. I love hearing how “the markets fell today because of concerns of the European debt crisis”, or “profit taking”…they may as well have said “markets fell today because I was wearing black socks”.

The news is out of date, and mostly fabricated and controlled messaging to the general populace who wants a neat explanation for everything. Do some real research, something the others probably haven’t done, and keep an eye on the industry.

Lesson: The KISS principle seems to work in investing. If you choose to have others invest for you, well you deserve what you get.

Continue reading »]]> A friend of mine has a husband in the final stages of cancer. It’s a hard time for her, and I know because I went through it with my mother. It’s times like this that make me appreciate the life I’ve chosen to live.

My mother was a work-a-holic, she’d volunteer for nearly everything she could in her spare time as well…politics, girl guides, the crisis phone line, you name it. This lifestyle choice took a toll on her health. I know this because she once had to work out of the country for a couple of years and basically only worked normal hours, or sat at home (no extracurricular activities as it were). She hated the lifestyle, but her health improved tremendously. When she returned, and took up her old lifestyle, her health deteriorated again, but she felt like she was making a difference.

My mother’s choices not only affected her health, it affected her family. I truly respect my mother for raising her family on her own. She worked hard, kept the house clean, cooked meals for us, and we never wanted for anything. In the later years however, she couldn’t turn off the drive. She replaced taking care of her family with taking care of others…be it her fellow workers, or her volunteer groups.

In her final days, she was continually worried about her job, and what would become of her office. Maybe we’re a little selfish, but the rest of our family always felt forgotten about. I actually understood my mother better than my siblings. With the age difference, the mother I grew up with was different than the “stay at home” one my siblings had. I knew what drove her, and understood…but that didn’t mean I agreed.

When I started working, it was tough times. I was one of the few people I knew who managed to find a job. Back then everyone was worried that they were going to be cut in the upcoming weeks. I managed to get a good contract though, and started down the path of what I’ve now termed “the golden handcuffs”, as best exemplified by a guy I used to work with…

As I said, at the time jobs were almost more precious than air. The guy I knew thought he’d hit the jackpot though. He was still in school, but got a government job, working in his industry. He’d be allowed to continue his schooling while he worked, and get industry experience and contacts to boot. He was heavily in debt, and wound up getting married that year to a nice girl who also had a lot of student debt. They got married in Hawaii, and paid for it on credit cards. When exams were approaching, he got involved in a major project that was a priority for his boss. Instead of being allowed to write his exams, the boss made him work. It cost him a full year of school, since he couldn’t write the exam, but he had no choice…he was handcuffed by his need for the gold. He had no control over his life anymore. The last time I checked, he was still working in the same job, and was still heavily in debt, though he’d gotten several raises and promotions.

I was lucky though. I was hit in a car accident and forced to look at life differently. I watched as my company went from making a good income dropped to not being able to make the rent. I watched as my savings disappeared. I watched as everything I’d ever been taught about life was stripped away…and I had to make choices.

It was during these times that I had to figure out what was important to me. If we only get about 100 years to live, I wanted to spend as much of that time living as possible. Things that became important to me were my family and my lifestyle. I wanted to spend as much time with my family as I could, as opposed to spending time in an office with coworkers. I am a food snob, I like good food, not garbage. Good food makes me feel good, junk makes me feel sick. I wanted the freedom to choose my own life. When I thought about it, life became very simple.

No where in my thinking did money or a job factor in to happiness. Sure, they may be needed to accomplish my goals, but I didn’t want my goals to be sacrificed by an obsession or a desire to work so I could accomplish my goals.

No where in my goals did it say I needed a lot of money to do them either. Spending time with my family doesn’t have to be expensive. We don’t fly to exotic locations to have a vacation, we find alternatives like camping. My desire to eat good food does not mean expensive restaurants, but rather purchasing quality products and cooking at home…which also allows me to spend more time with my kids and teach them to shop and cook.

We adjusted out lifestyle to focus on our goals. I learned to make passive income, not out of a desire to become rich, but out of a desire to not work. We aren’t the kind of people who obsess over the latest gadget or toys, we don’t try to “keep up with the Jones’”, we choose to walk our own path.

I’m sure, had I chosen to focus on it, I could have become a successful executive, or very well compensated financially…but would I have lead a richer life? Is there a point in being the richest man in the cemetery?

Coming to terms with what’s important to you is something a lot of people never seem to do. I know many people who just seem to be “going through the expected motions of life”. When they get to the end will they be happy, will they be missed, I can’t say.

Do I think my mother made the wrong choices in her life? No, for her it was what made her happy, for us we wanted more of her, but even still I don’t think we’d have wanted her living a miserable life being bored, but healthy. Her example however, changed my goals for my family. Will my kids like and appreciate what they got from me? Maybe all the time they spend with me drives them nuts. I really don’t know, but I do know they make me happy, and in the end I only have control over my life, and I want to enjoy the little time that I’ve been given.

Lesson: Figure out what’s really important. Don’t spend all your time working so that you can enjoy life later…you can never be sure there will be a later, life should be about living.

Continue reading »]]> I’ve got a place up for rent, and am truly amazed at some of the things people have said to me over the years when it comes to applying for a place. Here are a few which may bring a chuckle, and should be obvious as to why you should probably keep looking for a different tenant.

Hi there ! This place looks lovely! I really need to move out by the end of the month , I have the cash ready to go, How does the process work?

Okay, the person doesn’t even want to see the place before plunking down cash. I’m not that desperate for tenants. He never returned the inquiry when I mentioned I screen my tenants as part of the process.

One of the things I do before going to show my place is have the person give me a call an hour before our scheduled meeting. As I explain to them, it’s a screening technique, I’ve been stood up a number of times when I first started out, so now I don’t show up if you don’t call first. Also, I understand how things can come up, so I like communication.

Many potential tenants are completely understanding about this an assure me that “they’d never do something like that”…but still about a third of the time I never get that call…and the people never show up.

I’ve got a line on my application form that asks about employment information. I’m always amazed that people who earn less than the rent think that they can pay their bills…

I’ve got a line on the application that asks about their bank…if they don’t have one, it’s probably not a good sign…

Can I sign a lease for only a couple of months, my court case is coming up soon and I probably won’t be needing it for long…

Okay, I admit I made that one up, but it’s more of a composite of several “less desirable” people’s comments put together. I’m not saying not to rent to people who’ve made mistakes. I’ve rented to people who admit they’ve had troubles with the law. The difference was when in the process it happened. Remember an adult criminal record is forever, even if you did something stupid decades ago…if your honest about it, and it’s not a chronic situation, and happened a long time ago, I’ll look at differently than if you lie about it and I find out. I do specifically ask about criminal backgrounds and I do check.

We smoke, but only do it outside…

To be honest, I don’t really care for most of my properties, but I don’t like people who lie. Even still, I won’t turn someone down just because they say this, but I also don’t believe a word of it, and I’ll be looking for other lies.

I’m on social services, but my roommate is on AISH. I’ve also got child support coming in for my three kids, and I’m taking their various fathers to court to enforce the order.

Umm…do I even need to explain this one? The scary part is how often I see variations on this.

One final one, if you notice that the work references, personal references, past landlord, and/or financial references all go to Cell phones  it’s a pretty bad sign. Also, I ask for the name of the company, as well as a contact and phone number. Then I do a quick search for the company’s actual contact information and call the general number. If the two don’t match, they are probably faking their references…

Lesson: Sometimes the screening process can be pretty simple.

Continue reading »]]> As the seasons change, we come to expect different things. In winter, we expect to wear warmer clothes, spring brings rain, summer the sun, and fall the colours…

After being a landlord for several years, I’ve noticed a seasonality to renting as well. Winter is not a good time for rents for example. I bought two, basically identical apartments recently, I rented one out in February, and the second I waited until April. The April one rented for $125/month more just because of the time. It turns out to be more than a month’s rent difference (yes, I realize I lost two months of income, but I also moved the renewal date later, plus I had a reason to wait the two months outside of the experiment).

The type of person looking also changes. Students/Parents with kids are looking in July/August, people who are usually in difficulty look in the winter months. Spring seems to be the influx of workers.

Interestingly, I was talking to my realtor and he was saying that even though the peak buying/selling period, in terms of volume, is usually February/March, the peak price per sale is actually June/July. The hardest time to sell, meaning one of the best times to buy, is December/January.

This information may be useful in making you some money. Obviously you should try to buy in December, and sell your place in June, but what about asking your bank to refinance in August? When they send out their appraisers, the comparable properties will have sold at their peak prices, allowing you to access the most out of your property, probably better than refinancing in January.

If you are planing on renovating your rentals, winter would probably be a good time to do it. Not only is it a low rent time, but contractors are probably less in demand than during the summer.

When negotiating a possession date, you may want to consider your target client. Buying a rental near a university and taking possession after the term started may make renting it more difficult, even though it’s in a prime location. If you do rent it, you may want to only rent month to month until you can get to a more favourable lease range (i.e. September to August).

I’ve known investors who’ve struggled with finding good tenants, and sometimes it just boils down to the seasonality issues that come with the market, something they didn’t consider at the time. By waiting two months, I’ve managed to move my income potential to a higher level for the long term, as the lease will now expire in April (when worker demand is starting to raise rental rates) as opposed to February (when rents are near the lowest).

Now, seasonality changes by the region, so you need to observe your area and don’t take my observations as gospel. In Australia their Summer is during Canada’s winter, in your area the peak price point may be in December.

Lesson: Understanding the seasonality of the real estate market can give you an edge in making profits.