The Amero – single unified currency for North America ? Nor Yeretsian

Well some of us are still optimistically waiting for NAFTA to happen.

A level playing field for all businesses in Canada – USA – Mexico .

Open borders with free access for products/services and
people flowing back and forth , something like Europe.

When we mature enough here in North America , we may get there.

The things that would have to change  and the new things we would have to learn and re-learn.

With a new currency – like the Amero .
Valuation of everything into the new currency.

The basic principles of valuation would not change, so it would be good to learn and know them.

This would really be the New World, with free and open boarders and a new currency .

We can see why they , the powers that be – may not want all these changes in an election year.

The implications on many levels from taxation , to zoning , to productivity , etc – would be vast.

Brave New World – of efficiency , less governmental regulations  -
larger private sector working and producing with less down time and
red tape…just imagine the possibilities.

How would all this impact real estate ? 

The value of real estate in your city or town ?

How long would it take for us to learn to adapt to the new system , new rules and new taxes ?

Let’s discuss it at  www.yinvestthinktank.com

email :  capitalmoves@gmail.com

Twitter : EnvoyCapRealty

Envoy Capitol Realty Inc., brokerage     Toronto , Canada
Buy/Sell/Lease/Manage/Develop/Syndicate

Blog : www.capitalmoves.blogspot.com

Nor Yeretsian  ( August 11 , 2010 )

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 .

Opportunities in the Busted R.E. Economy ? ……… Norair Yeretsian

Big Money is interested again in real estate and they have started buying
with huge discounts off the previous values .
Prices greatly below the previous purchase prices, below the  cost of the
infra-structure paid for sewers/roads and substantially below the
mortgage(s) on these properties.

Where you may ask can an investor/purchaser find these opportunities ?

In the beaten-down markets of Las Vegas and Phoenix.
Where some buyers are getting properties for ten  to twenty cents on the dollar.
Completing the necessary work, and reselling these building lots to builders who
again need these lots to continue their business of building .
As their current inventory of building lots ready to go diminishes.
This is a good news story for real estate in these depressed/ hardest hit areas
of the U.S. real estate market. [ WSJ ]

” Some of the savviest investors [Paulson & Co.] on Wall Street, including some who made
billions on the housing bust, now are snapping up barren plots of land in places like”
: Las Vegas ,Phoenix and California .

Investors are now making a bet that land is undervalued and that it can profit from
reselling lots to home builders.”  The Paulson & Co. is bidding on some 8,000 residential
lots in Arizona,Colorado and Nevada .

Meanwhile in Las Vegas, Angelo,Gordon & Co.” recently paid $35 million for land
parcels zoned for about 2,500 residential lots. That is roughly half the amount the
former owner sank into the property for roads, sewers and other infrastructure alone”.

At the same time says the [WSJ] land investor “SunCal Cos. is working with firms like
D.E. Shaw & Co. to close a dozen land deals in Arizona and California.

Builders including KB Home, Lennar Corp., Ryland Group Inc.,and Meritage Homes
Corp. are cautiously buying prime parcels in preparation for ramping up construction”.

Deep pocketed investors are buying large portfolios of land from banks, bankruptcy courts
and auctions run by Federal Deposit Insurance Corp with hopes of selling them to eager builders.

” The renewed interest in land has led to increases in land prices. In the first quarter,
the average price paid per acre in the U.S. rose to $ 41,651 from $36,829 in 2009 according
to real estate services firm CoStar Group. But that figure still paled in  comparison to the level
seen in 2007, when the average price per acre was $102,631 .

Some private equity firms already have reaped big profits in land deals.

For example: SunCal and D.E.Shaw bought 1700 lots in Las Vegas for
about $16,400 a lot.
Within eight months after the acquisition, the venture sold the land to
builders including KB Home, Lennar and Ryland for between
$35,000 to $ 40,000 a lot. ” [WSJ]

The above are examples from the U.S. market place , real estate is local.
The Canadian experience is much different, City by City.
Canadian real estate did not in most markets experience anything near the U.S experience.

Our systems, financing ( liquidity and credit/ lending practices ) are simply different
and so much less volatility is experienced in the Canadian real estate economy .
Not to mention tax system and stimulus packages less attractive than the U.S.

American news maybe more interesting and entertaining, but their
investment strategies do not easily overlap in Canada.

Land investments are the most speculative and most risky .
Win big and lose big, be careful.

Do your research and use a licensed/insured /knowledgeable professional .

Let’s discuss it , leave a comment….Is it the time to buy ?

Also on Twitter @ EnvoyCapRealty

nyeretsian@yahoo.com    July 2, 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

Where’s the money? Show me the Money ! Norair Yeretsian

Analysts turned gloomier about the outlook for U.S. home prices as
sales slump and home re-sales declined in May .[WSJ-6/23/2010]

The classical way to turn this around would have been lower interest rates
and increase available money for mortgage lending purposes.

However the  weak real estate market in the US also has another problem.

Lenders not lending to potential borrows ( who may qualify ) to
purchase the real estate because they don’t want the exposure to real estate risk.

Has the pendulum swung the other way now, where lenders are being conservative
and tight on lending money for real estate ?

Are the Banks paving the way for a Double Dip Recession and a further crashing in real estate ?

In one of my class this week a student spoke about the difficulty his son and
daughter in law were having trying to obtain a mortgage to purchase a house
in the US because they felt the timing was right for them to do so.

They are both  employed at reasonably good jobs with income(s) and a down-payment.
Yet they were having great difficulty finding a willing lender.

In an article by Ben Tripp on the Huffingtonpost.com , Ben posted his story and titled :

The Real Estate Plague Nobody is Talking About .
Ben describes his family’s challenge and difficulty in trying to get a mortgage
to purchase their  house — without success .

He wonders how America can come out of this Housing Crisis if no one is lending the
money to finance the purchase.

“If it’s this difficult for qualified buyers to get into a house.
I don’t see real estate making a comeback any time soon – and if the banks want another
bailout, they can send the request care of current resident . ”

He has been told ” this situation is epidemic.
Vast numbers of highly qualified buyers can’t get into houses, because the banks
don’t want to lend.”We were told that crisis had passed, but it hasn’t… the  American
economy runs on consumer spending,
and the queen of all consumer expenditures is a house in the suburbs.”

So the U.S. went from everybody and anybody get a home loan to nobody,
even if you qualify get a home loan.

Wow, sounds like the major leaking financial crisis has been capped ,
but this could make the problem a lot worse for America’s real estate.

Leave a comment or two, you can also Twitter @ EnvoyCapRealty

nyeretsian@yahoo.com     June 28, 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

Discounted Cash Flow : NPV– IRR % Calculation Norair Yeretsian

Here is a sample calculation — for practice , running cash flows
determining NPV and IRR% . Give it a try on your financial calculator .

With an initial investment ( equity : investment at purchase ,
which includes your down payment plus costs of acquisition) : $ 86,350 .

Cash Flow After Tax ,with a Sales Proceeds After Tax number(s) as follows
with the inputs in to the calculator …

Initial Flow (0)  86,350 [+/-] [CFj]

Flow (1)  15,621  [ CFj]

Flow (2) 13,932 [CFj]

Flow (3) 11,287 [CFj]

Flow (4) 14,863 [CFj]

Flow (5) 15,849 + 94,700 (SPAT) [CFj]

using a given discount rate of  : 10.75 [I/YR]

We solve for  NPV by pressing [shift] [NPV] … + 23,651

and solve for IRR% by pressing[shift][IRR%/YR] … 17.91% .

Thanks to OREA for resource materials from REIA course.

You can follow the same template and simply change the
cash flows and sale proceeds and re-run the numbers.

You can do the above for Before Tax or After Tax numbers.

The real challenge becomes the interpretation of the results
the analysis and the determined action which follows the analysis.

Do we like the investment opportunity

Is it a okay / good / great opportunity for our investment dollars ?

What were our goals and did the results indicate a positive or negative ?

What other tools or metrics work for you as you invest ?

Let’s hear your comments below or Twitter at
EnvoyCapRealty

nyeretsian@yahoo.com       June 16, 2010

Even Professionals Learn Valuable Lesson, Norair Yeretsian

G.E. Capital was struggling with its huge commercial real estate
portfolio of approximately $80 billion.

GE Capital is planning to reduce this by about half to $40 billion.

” It was just the toughest market I’ve seen in my lifetime. ” said GE Capital’s
chairman and CEO Mike Neal. Coming through the economic crisis,
GE Capital will be” smaller and stronger with a goal on returning to profitability.”

The goal is to make its real estate portfolio about 10% of its overall assets.

The company will be exiting commercial properties as it can.

On commercial real estate market conditions,  overall
” we are largely through the free fall , better days are ahead.”
said Mike Neal.

In addition to cutting back on real estate assets, the portfolio is
also likely to shift to more debt holdings than equity.
And that the company’s goal is to transition to more of an
asset management platform, according to Neal.

” When you talk about what we learned, Neal said,
“one is that with small operations at a distance you can’t earn very much.”

This advice was given many years ago by a master builder and founder of
Tridel Corporation Jack Del Zotto,’ try to buy properties that are within a
day’s drive of your home — you will be able to manage them and
you will make more money ‘.

Sage advice, as Pension Funds and other large entities are searching the planet
to invest the billions of dollars intrusted to them and believe they must diversify
it all over the world to better protect the capital for their stakeholders / investors/ pensioners .

I have a feeling they too will learn this simple lesson years from now.
However it will not be at their expense.

Keep your investments close to you. So that you can see them everyday, as need be.

Let’s continue the discussion and comments below or at Twitter @ EnvoyCapRealty.

Costar was source of material information, June 14/2010 .

nyeretsian@yahoo.com     June 15, 2010

Calculating a Canadian Mortgage HP10BII Norair Yeretsian

Here is a sample of a Canadian Mortgage calculation on the HP 10 B II , with
the appropriate keystrokes so that you too can reproduce these results.

Sample illustration A :

A property is sold for $ 4,250,000 in Toronto, Ont, Canada and the buyer needs
to  finance it. He approaches a mortgage lender and a package is prepared and
presented to several lenders. One lender offers :  a 65% loan to value ,
with a 5 year term mortgage  and 21 year amortization with monthly payments
with  monthly payments (representing both principal and interest ;
at an interest rate of    8.25 % .

Make sure your first clear all [shift] [C] this resets the calculator to zero.

We must next convert the interest rate from the stated rate 8.25 % to the
appropriate rate which will assist us in getting the correct Canadian monthly
payment, based on a semi-annually compounded  not in advance arrangement
as per Canadian law for blended rate mortgages of principal and interest.

8.25 [ shift] [ Nom%]

2 [shift] [P/YR]

[shift] [EFF%] … displays shows : 8.4202

12 [shift] [P/YR]

[shift] [NOM%] … display shows : 8.1117 this is now parked in [I/YR]

This 8.1117 , is the HP Canadian Mortgage Factor .

The balance of the TVM menu Icons can now be populated
with the appropriate data.

21 [shift] [N] display shows : 252

present value of the mortgage amount $4.25 million x 65%= 2,762,500 loan amount

2,762,500 [ PV] display shows : 2,762,500

0 [FV] display shows : 0

solve for the payment by pressing : [PMT] display shows : - 22,859.30

We can multiple this by  [X ]  12 , which will give us the Annual Debt Service.

ADS = 274,311.64

To get into the Amortization Schedule of the Calculator, we simply press …

[shift] [ Amort ] on the display we see :  (1-12) ,
this represents the full first year : EOY1 numbers ,
Then we press [ = ] display shows Principal payments .
When we  press [ = ] display shows Interest payments.
Then we press [ = ] display shows Balance outstanding for the EOY1 .

By pressing [shift] [Amort] : (13-24) , we get EOY2 numbers, and
again [=],[=],[=] …

If we wanted the EOY5 numbers ; we would press the following ;

1 input 60 [shift ] [ Amrt ] gets us to the end of year 5 :

display shows : (1-60)  [=] 308,437.84 principal amount paid over 5 years

[=] 1,063,120.37 this is the total interest payments paid over 5 years.

Again ; [=] gives us the Balance outstanding at the end of 5 years :
2,454,062  EOY5

Let’s put it all into a Mortgage Schedule :

……………… Principal ………….Interest ……….Balance

EOY1… ….$ 52,137 ………….$ 222,175 ……..$ 2,710,363
(1-12)

EOY2…  ...$ 56,527 …………$ 217,785 ……$ 2,653,837
(13-24)

EOY3 … …$61,286 …………$ 213,025 …….$ 2,592,550
(25-36)

EOY4…….$ 66,447 ………..$ 207,865 ……..$ 2,526,104
(37-48)

EOY5 ……$ 72,042 ………..$ 202,270 ………$ 2,454,062
(49-60)

Totals …$ 308,438 ……..$ 1,063,120 ………$ 2,454,62
(1-60)

Hope this works for you. If you have any suggestions for improvement
sent us a comment below or Twitter @ EnvoyCapRealty

nyeretsian@yahoo.com       June 5, 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