Money Never Sleeps Nor Yeretsian

With the right investment, income and cash flow will be continuous.

With the wrong investment , expenses and de-valuation will be continuous.

Due Diligence is your short-term and pre-investment requirement
so that  risk(s) will be minimized / mitigated.

Let’s continue the discussion … email us @ capitalmoves@gmail.com

Twitter at EnvoyCapRealty.

Face Book : Nor Yeretsian

www.capitalmoves.blogspot.com

nyeretsian@yahoo.com    (July 19,2010)

Envoy Capitol Realty Inc., brokerage  Toronto, Ontario Canada

Buying/Selling, Leasing, Management, Development of Real Estate in Toronto .

Love or Money ? + Estate Planning , Norair Yeretsian

Why do we do it ?

Why do we go out each day , risk life , invest our time – risk opportunity of loss ?

Do we do it for Love or Money ?

Most of us do not do it for the love of money.
But necessity ; food and shelter .

Most of us , start doing it for money and we evolve into doing it for love.

That is after we have enough money ( food and shelter, a little reserve ).

However how much money do we need to inspire us to start enjoying life
and doing the things we do for love and be happy.
The answer is as different as each of us.
For some never is enough, for others happiness is here everyday ( regardless of money or material ) .

If we were to quantify life and our  average life span.
Most of us will have 30 to 40 good years to spend 8 to 12 hours a day working or worrying about work.
After which we get a few years of retirement –to perfect our hobbies.
Then it’s over, lights out and we move on to the next level of play.
Some to a higher cooler place others to a lower warmer place.

So if these are the two ends of the spectrum and the game does eventually end for each of us.
We have to play the game each day as if it is our last one. With a bigger dynamic view.

We need to plan our investments with this eventual possibility in mind.
We need to communicate with our spouses and children ( our loved one)
about the investments we make , where and how  they can find them and
have access to them ( add them as a joint account holder ? ).
Talk to a lawyer about estate planning and set up a proper will and last testament
( and keep it up to date , regularly reviewing it 3-5 years).
Discuss your investment philosophy with your loved ones.

Educate them with your wealth of experience.
Discuss taxes with your accountant and arrange your affairs
in the most tax efficient manner and ease of transfer.

Then after all your hard work, your loved ones can have the freedom
to do the things they love and time for contemplation about living and play life to the fullest.
This is what everyone wants for themselves and their children…

Be happy !

What are your thoughts? leave a comment and let’s discuss it.

Twitter @ EnvoyCapRealty

nyeretsian@yahoo.com  July 6, 2010.

Investment Values Norair Yeretsian

Three investors are considering an investment opportunity which has a

Net Operating Income of  $ 125,000 .

Investor One wants to achieve a return of  10% on the capital he invests.

Investor Two wants to achieve a return of  15% on his equity investment.

Investor Three demands 18.5% on his invested capital.

Using the direct capitalization approach to estimating Value
the three investors calculate the following :

Given the above :

Investor One determines :      125,000 / 10 %  = $ 1,250,000  Value .

Investor Two determines :      125,000/ 15%   =  $ 833,333 Value .

Investor Three determines :   125,000 / 18.5% = $ 675,676  Value.

Using the Rule of 72 we can quickly calculate the time it would take each

of our investors to double their money using each investors’ desired rate of return,

with the benefit of  Time Value of Money ( money being compounded ).

Investor One   72 / 10 =  7.2 years to double his money .

Investor Two  72 / 15 =   4.8 years to double his money.

Investor Three 72/ 18.5 =  3.89 years to double his money.

Be a more demanding investor, you will only get out of life

and investment what you expect and usually nothing more.

Let discuss it , leave a comment / make a suggestion …

Do you have any special techniques to make valuations ?

or Twitter @ EnvoyCapRealty .

nyeretsian@yahoo.com  June 30 , 2010

Investment Strategies : Tax free Cash ! Norair Yeretsian

Know your Risk Tolerance before venturing into any investment strategies.

Many options to consider and each has its associated risk(s) and reward(s).

You have the freedom to make money or lose money.

Here is an option : A-II , to consider. It works like this …

You start with a $ 150,000 income producing acquisition in year 2000.

You leverage your investment with a 75% loan- to- value mortgage and
hold the investment for approximately ten years (2009, end).

At which time (2009 / begin 2010) it’s appraised value is determined to be $ 500,000.

Year 2000 —-( ten years)———end of  Year 2009——begin Year 2010
$150,000 ———————————————-$500,000
LTV 75% : Debt equals : $112 ,500 ————LTV 75%: $ 375,000
Equity :   $ 37,500  ——————————- Equity  :  $ 125,000

Debt has been reduced over the ten years , however these principal payments are
with after tax dollars.

Assuming the balance of the mortgage at the end of year ten is $90,000,
we are increasing this with the new financing to $ 375,000.

So that we receive $ 285,000 of new funds into our account [ War chest ].

A number of big assumptions were made :

1. Property is an income producing property …generating Cash Flow !
( your home would work also, but you must have the income to support the debt)

2. For the whole thing to work — Property value must go Up!

3. There is enough Income to support the new financing and you get approved .

4. Since it is a loan to the investment : this amount is tax free ( for now –until sale) .

You have $ 285,000 new funds to enjoy , to invest – to buy another property.

On it goes, it could go on forever or if you over leverage and values drop : you’re out of the game !

The down side concerns :

(1). If property values go down ( and it all becomes upside down, Debt is greater than Values )?

(2) If your income drops off or your tenant(s) leave or stop paying :
can not pay the interest on the loans?

(3) If the  Bank decides not to renew or extend your financing this become a real concern -
may have to liquidate at an inconvenient time: values are low and you are selling under stress. ?

(4). Can you live with the uncertainty  and a little stress ?

(5). You could extend this type of financing indefinitely.

However , if you get to far ahead with a heavy debt burden it becomes
a monster that you may no longer be able to control.
And you are no longer the master ( lord), you have become  the slave to the debt.

Beware.

A professional is always in control.

IF the above numbers held and you Sold the property,
we could do some further calculations to figure out what returns the investor received.
Without the operational cash flows( CFBT – CFAT ; numbers )  to consider or worry about .

Investor Yeretz invests  :
$ 37,500 of equity (year 1 and by year 10) it has grown to and sold for $ 500,000 :
the mortgage has been reduce to $ 90,000 therefore $ 22,500 equity build up .

sale price……………………….. $500,000 sale price
cost of sale (less)…………………. 37,500
balance on mortgage (less)……..90,000

sale proceeds before taxes …. $ 372,500

Return over 10 years     :    $ 372,500
__________________________   =   X          ………..     X = 993 %increase over 10 years

Investment                      :          37,500

Average annual return ( without the benefit of TVM , so simple average ) :  99.3 % a year .

What a large number and yield , wow !

Average annual rate of return on investment (TVM menu on the calculator ): 25.81 % .

1 P-YR    End

N =10

I/YR =  25.8084 %

PV= 37,500

PMT = 0

FV = 372,500

With the beauty of  Time Value of Money , the simple average  of 99.3 % comes down to 25.81% annually .

This is still a great return , relatively speaking .

More in future blogs as we discuss similar types of investments and their returns.

Leave a comment below ….

nyeretsian@yahoo.com    June 18, 2010

Fraud or Theft by any other name….. Norair Yeretsian

The Den of  Thieves is legendary  , however now we have high tech
villians and they can steal without us even being aware the act was done.

As technologies get more sophisticated and try to make our lives more
interesting and theoretically easier. It has also made the work of thieves
easier, more assets can be stolen faster and hidden away in places no one
can seem to find.

In real estate the problem seems to be identity theft on properties,
mortgage fraud and a host of other variations of theft by deception.
A lot of these activities it is suggested are committed by insiders of
the industry ; realtors,mortgage brokers,lawyers,etc…

What about Ponzi scams and schemes ?
Why do we keep falling for them, don’t we learn from history ?

In the National Post, on June 3/ 2010 page A8 there is another story about a
Convicted bank robber named in Ponzi scam : “… whose  alleged deceptions
as head of the ‘ Pathway-2-Prosperity ‘ investment scheme were previously
flagged in 2008 by North Dakota fraud investigators and in 2009 by the
Ontario Provincial Police, is now believed to be in hiding in the Philippines.
And if allegations filed last week by the U.S. Attorney’s Office in southern
Illinois are true,…controls a fraudulent fortune amassed from the savings of
40,000  individual victims in  Canada, all but two of the 50 U.S. states and
118 other countries around the world.

He is alleged to have used a Netherlands-hosted website and a shell company
in the Turks & Caicos Islands to funnel millions of dollars from would-be
investors into his personal bank accounts around the world, including the Philippines.
The classic Ponzi scheme , designed to reward a few early investors with
substantial profits financed entirely by thousands of later investors–
almost all of whom lost everything.
The Pathway-2-Prosperity website that lured investors from six continents
promised annual returns of more than 500 % on initial payments that
ranged from a few hundred to tens of thousands of dollars. “

Recommendation to Buyers and everyone :

Buyer Beware !  Self defense …

But  How ?

Education, educate yourself how business and investments work.

Read books about the great investors and business people in Europe and North America.

Understand there is Risk in everything and in all investments,

and there is a chance ( a real chance ) you could lose it all .

Be prepared and invest accordingly.

Don’t give all your money to one investment or one promotor/ asset manager.

Stay interested in your investments and where your money is .

Understand how it is making more money for you, it should be clear.

Expect dividends or periodic cash flow(s) coming your way

Ask questions lots of questions until your understand.

Due diligence , do your homework ! Trust , but verify !

If it doesn’t feel right do not do it ! Another opportunity will come along.

Don’t get fooled by overly optimistic yields in the future, even if they guarantee it .

No body knows the future .  Caveat Emptor !

Use licensed professionals who also carry the appropriate level of insurance.

Let’s continue the discuss below or on Twitter @ EnvoyCapRealty

nyeretsian@yahoo.com   June 4, 2010

How much for a Phone Call ?

” In my business, developing networks is an integral part of the game”
As it should be in any business that’s successful.

” My business contacts have value“. says Robert Dilenschneider
“A man came to my office recently and asked if I would call four important people on his behalf.
I knew those people well, and knew I could get them on the phone immediately. I asked the visitor
how much he was prepared to pay for my calls.
“Well ,I will give you $5000“ the man said.

“I told him that I wanted $ 25,000 to initiate those four phone calls.”

” That’s awfully expensive for four telephone calls” the man said

You can’t do it without me,” I replied

” You mean you can just sit there now and make the four calls, and I give you $25,000?”
my visitor said.

“That’s how it’s going to work, ” I said.

” But it’s just four calls,” he said.

“If you only want to make one call, I’ll charge you $ 10,000,
but the bottom line is that you can’t  make the calls and I can,” I said.

Robert Dilenschneider claims he was strong and firm and he received
$ 25,000 for the four telephone calls he made.

Everything you do in your relationships and in your business is valuable .
Build your network , nurture and treat it seriously — it has value.

The above conversation was quoted from the book, Power and Influence :
The Rules have Changed by Robert L. Dilenschneider . (2007)

Let’s continue the discussion with you comments below or Twitter @ EnvoyCapRealty

nyeretsian@yahoo.com      May 30, 2010

Skyscraper Dreams…….. by Norair Yeretsian

Some of us just dream, and some of us actually acquire,build, manage and add value.

The story of the Great Real Estate Dynasties of New York is chronicled in
the book Skyscraper Dreams by Tom Shachtman (1991).

Harry Helmsley “could forecast the economic direction in which a
neighborhood was heading, knew what improvements (new elevators,
more shine to the brass, better windows) would bring in new tenants,
and could figure out which rental leases could most easily be renewed
at higher rates.” Helmsley’s business was not only brokerage ( sales)
like most brokerages, he made a significant fraction of his income from
management, ” which gave him a broader perspective.”

Harry Helmsley understood the sale-and leaseback structure, this
would enhance his company’s capacity to make deals for buildings
but also the fortunes of his property management firm, which could
operate future properties when sellers didn’t want to .

” At the time, the banks, insurance companies, and investment houses
wanted to have nothing to do with real estate.
Burned in the depression, they were overreacting by staying
completely out of the kitchen.

Scarcity of financing translated into fewer groups trying to buy, even
though a plethora of attractively priced buildings were available.
So there were tremendous opportunities for people with both the money
and the acumen to buy. Helmsley found and evaluated the properties,”
and his partner Wien checked his analyses and provided the cash to
buy them : ” a perfect match .”

” In acquisition real estate, partnerships are always desirable.
What you looked for was someone ( preferably a relative) with a body
of expertise that overlapped your own but was different, who could follow
your logic, correct fallacies or inaccuracies, and then bet with you on a
common project and accept the gains or losses from it without breaking
stride or quitting the field of play. You tested that partner on one or two
transactions; if you were still in tandem after several, you kept going and
grew closer together and more bold in your outside reach. “

Here is part of  the formula for your successful partnership and
acquisition vehicle, the other consideration(s) follow.

” In New York real estate, a successful operator later wrote,
” Property is appraised according to the return it brings investors, and
the effect of the syndicate has been quite simply to double values.
A building worth $ 5 million to a corporation is now worth $ 10 million
to a syndicate. ” Because the syndicate would pay taxes at an individual
rather than a corporate rate, Wien and Helmsley could offer top dollar,
spend more to acquire properties than other buyers, and beat out almost
any other bidder.

Though Wien invested alongside the other members of the syndicate,
Helmsley did not. Harry’s  income came from his broker’s fee and from Wien
allowing him to assign the management of the building to his own subsidiary ,
which guaranteed him a continued income from the building.
Wien and Helmsley pledged investors at least a 10% percent annual return
for a period of  ten years; after that, the building would probably be sold,
and investors would then receive 50 percent of any profit — which could
be very considerable, as most buildings went up in value.”

This could be the simple framework and timeframe for your syndicate in the future.
Becareful not to over estimate the returns you pledge to your syndicate partners,
you do not want to disappoint, by not delivering.

Your success going forward will be impacted by your delivery.

With the advantage of hind sight , there is a lot to learn from the  great real estate
Empires and Dynasties of New York, about their successes and failures.

As a real estate practitioner, Harry Helmsley covered all bases of the real estate
business and leveraged his experiences and knowledge to achieve great success
in the business of real estate. Having started as a bicycle courier in the City,
Harry Helmsley owned or had an ownership interest in over 200 buildings in
New York City and an empire valued above $ 1 billion,
by the end of his career in real estate.

Let’s continue the discussion @ EnvoyCapRealty : Twitter  or below…

nyeretsian@yahoo.com May 27, 2010

What is it worth ? Norair Yeretsian

” Art is a lie that makes us realize the truth .” — Pablo Picasso

What is it worth ? We keep asking the worth, about everything around us.

Well according to some U.K. realtors when asked , they  estimated -

that Stonehenge if available for sale, would be worth —  $ 75 million ,

$600 million for Windsor Castle and

# 10 Downing Street ( Prime Minister’s residence ) about  $ 8 million .

Pablo Picasso’s Garcon a La pipe ( Boy with a Pipe) ( 1905) Rose period

attracted the highest price at an Art auction of $ 104.2 million and his

other painting of  his former mistress’s Portait Dora Maar au Chat (1941)

brought in the second highest price near $ 90 million. A new high price was

paid at public auction recently according to Sotheby’s, for a cast bronze Sculpture

by Alberto Giacometti  ( L’Homme qui marche I ; Walking Man I ) at  $104.3 million

holds the world record.

Bidding started at $ 19 million and was all over within 8 minutes for the record price.

How do you price these things ? Or is it just emotions running wild?

How do you price an NHL team? Well according to Forbes magazine

The Carolina Hurricanes would be worth about $177 million .

The Phoenix Coyotes, a team that Forbes say is worth $ 138 million .

Forbes national editor– Michael Ozanian said ” Despite playing in

a great building ( RBC Center), I believe he will only get about $ 85 million

for half the club. The folks in North Carolina really don’t care about hockey. “

And that could be the real difference , you need desire/ passion/ emotion –

demand for that limited , one of a kind item/ product / talent / property .

What is it worth ?

As much as someone is willing and able to pay for it.

” Worth ( Value) ” is a lie that makes us realize the truth. (2010)

Let’s discuss in on twitter @ EnvoyCapRealty

nyeretsian@yahoo.com May 26, 2010

Over Leveraging Is not Fun, Caution ! Norair Yeretsian

Discussing the real estate market in Toronto last week,
an investor announced his latest purchase.

First among many he claimed !
I love the entrepreneurial spirit…

As he described the investment strategy they planned to
employ to quickly a mass a huge  portfolio of real estate assets.

We are going to start buying income properties .

We are going to leverage aggressively the assets and
the income to purchase more and more!
Never is enough ? I just listened .

At least you have a plan, that’s a good start.

I think I understand the logic and the rational of the investment plan.

This is the time for us to buy and build up the portfolio of assets.

But you are building up on Debt, I countered .
How do you plan to pay it off or control the level of debt going forward?

We will worry about that later, we are young.
Right now build up, ramp up : growth is the aim.

I began to worry for them. I recalled the War stories I had read
in Professor William Poorvu’s book The Real Estate Game.

As he ” invoked the lessons of some of the biggest players in
real estate in this century. Bill Zeckendorf, for example, was one
of the most creative and productive developers who ever played
the real estate game. He gave us Kips Bay in New York City,
Mile High City in Denver, Century City in Los Angeles,
Place Ville Marie in Montreal — and eventually had most of
his properties taken away from him.

It’s  important to understand what Zeckendorf got wrong
( for example, getting
too far out in front of reality and overleveraging his properties ),

as well as what he got right
( a vision of the future of our downtowns that was uncannily accurate).

We’ve recently seen more or less the same phenomenon replayed

at London’s Canary Wharf, developed by the ambitious Reichmann family

of Canada.”

Let’s discuss it , what alternative strategies would you recommend they consider ,

rather then building an empire of Debt ?

twitter :  EnvoyCapRealty

nyeretsian@yahoo.com May 18, 2010

When is the Best time to Buy ? Norair Yeretsian

The age old question : When is the best time to Buy ?

When everyone is selling you should be buying and
When everyone is buying you should be selling !

A couple of hundred years ago,the wealthest investor
on the UK stock exchange when asked this question replied :
“When blood is flowing in the streets it is time to Buy”
said Mr. Rothschild .

Buy after you have done your homework and have calculated
that you can buy it below its net asset value .

Buy when you have the money , say many advisors .

It is always a good time to Buy : Real Estate , hahaha !

You have to buy low and sell high !

Its hard to buy high and try to sell higher .

This just becomes the game of  greater fools .

That is trying to find someone/anyone more foolish then you, to sell to.

Be very careful, you don’t want to be holding the hot potato ,
when the music stops.

Buy when you can and Sell when you must !

What about cycles and wave theory?
Charting and market timing your investments.
Or is it better to be a buy and hold investor ?

Warren Buffett style, but even he sells and buys
shares of companies–evaluates and re-evaluates.

Real Estate is a long term investment !

You should not be playing with all these investment strategies,
however you should be aware and understand all these strategies.
You should do your homework , so that you understand the nature
of what you are buying/investing in .

How and where the money is being made.
Assess the risk associated with the investment.
That it is cash flow positive from the start, because you are investing
and not speculating ( buying and flipping ).

Study the opportunity and determine the opportunity cost
associated with your decision(s).
And when you are ready and satisfied, then jump in ;
with both feet ( make the commitment ).

Let’s carry on the discussion on Twitter : EnvoyCapRealty or
here leave a comment…

nyeretsian@yahoo.com May 15, 2010