Two NEW contracts secured!

We've secured two new contracts meaning two excellent properties available for rent!

Check them out at our new website and blog:

http://www.brodylanwhite.com/

Can Negative Cashflow actually be Positive Cashflow?

Have you ever come across the perfect investment property in London only run the numbers and discover you’d be cash flow negative each month, forcing you to pass on it?

That’s a common frustration shared with those who invest in real estate.

Maybe you're just looking at that property the wrong way... Click on the link below and read the rest at our new blog at Brodylan White Property Management:

http://www.brodylanwhite.com/can-negative-cashflow-actually-be-positive-cashflow/

Sorry for the absence

We're sorry for the long absence. Here is a great local site we've found for periodic information on London Real Estate Investing: http://www.brodylanwhite.com/category/blog/

MOI (Months of Inventory) May 2008

Time for our monthly inventory (MOI) report.

The Months of Inventory -MOI- is basically a ratio of the Inventory of homes for sale by the number of homes that have sold over a period of time.

The higher the months of inventory, the slower the market and visa versa. Keep in mind the following before reviewing the charts below:

• Generally, 4-6 months of inventory signals a balanced market, less than that would undoubtedly be a very strong Seller’s market, & more than that would be a Buyer’s market. In the most basic sense, a strong market will have an MOI of under 5 (As an extreme measure, from what I've been hearing, some of the crashing markets in the US like Phoenix Arizona have MOI of over 15, some over 20 months).

Residential (single family) Activity by Area for May 2008:Residential (single family) Activity by Area for the previous year, May 2007:Current active listings on mls is 5063. And we have the number of closed sales at 888:This means that if no other properties are listed and sales continue at the same pace we will burn off all the inventory in exactly 5.70 months.

Remember, we're watching this MOI for the following possible things to transpire:

1. Inventory (Listings/Supply) can drop, thus likely lowering the MOI & thereby the upward pressures on price continues.
2. Demand (Sales) can accelerate, thus lowering the MOI & again the upward pressures on price continues.
3. The opposite of the above 2 points transpires and prices of course decline.
4. Low listings & low MOI with flat lining prices may signal prices could be topping.

Click here for more information on what MOI is and why we are using it to chart London's progress.

May 2008 Official Stats

May 2008 "official" stats are out & we've updated our charts for the month.

Average Sales Price YTD (year-to-date) for May 2007 was $216,928 & May 2008 it is now $227,557 - this part includes London and area. That's the only information in this post that is. I'll explain in more detail, but this pretty much corresponds to the information in my target area of just London for this month.... Click here for that report.

Confused about what I'm talking about regarding target area & official stats & stuff? Allow me to clarify:

• The following information is a breakdown of residential (SFH) activity only & also I've omitted the St. Thomas & area. This information is according to London & St. Thomas Board of Realtor's Stats. This is the info you read about in the public & local media. I however, only track London & I omit St. Thomas and area. My stats are found here. The stats I track myself are from my own sources, so I like to compare them to the factual stats printed & collected by the professionals at the London & St. Thomas Board of Realtors.

First up as always is Average Sales Price. The official London stats shows a minimal decrease... $237,195 was the average sales price in April 2008 compared to last month's $242,252 (April). And, when compared to previous May of years past, there's an increase from May 2007's $236,804 & May 2006's $210,332 (and May 2005's $199,103) :Sales in May '08 came in at 513. This was higher MOM (month over month) compared to April's 433 sales. When we compare sales from the May of years past, YOY (year over year) in sales it proves to be a mixed bag - May 2007 (560) , and May 2006's (542) & May 2005's 490:Listings for May '08 increased... they clocked in at 899. This is higher MOM against April 2008 (866). YOY listings came in higher as well (May '07 was 828, May '06 873, May '05 740):The sell/list ratio was higher MOM but lower YOY. Last month April came in at 50.33%) but lowest for all recorded YOYs here... May'07 was 67.67%, May 2006 (62%) & May 2005 (66%) YOY. The sell/list ratio came in at 56.33%:

Ozzie Jurock: Why I Will Always Buy Real Estate

An insightful article by Ozzie was released on his website http://www.jurock.com/. Here is the article link in full.

I think that London's historical performance has stability as a major selling point compared to other areas in Canada and I'll briefly touch on that before we get to the article.

Most novice investors would look at London Ontario as a sleepy investing town because the real estate investing returns are far from sensational compared to other areas of Canada. However, more experienced players understand the role of leverage and when applied to a stable market returning approx 5-7% per year, magical returns happen. Furthermore, with regards to the notion of risk, do you really want to apply tons of borrowed leverage to a wildly fluctuating real estate environment like Toronto, Calgary or Vancouver? Didn't think so.

In my opinion, the number one mistake that Londoners make is when they're guilty of only purchasing one home.

Remember, leverage can significantly enhance your returns, & a stable market can prove to give you substantial returns. For instance, putting down 5% on a $200,000.00 average home in London returning 7% per year means that in twelve months that home has increased $14,000. You only put down $10,000 (5%). Assuming break even cashflow (the tenant's rental income services all expenses on the property including mortgage payments, property taxes, insurance etc...) then in one year you've earned 140% return on your investment in one year & that's not even accounting for the mortgage balance pay down nor the favourable tax implications of investing in Real Estate. Not too shabby.

Try going to a bank and asking for an investment that will give you over 100% in one year and watch the roar of laughter take over the room.

Anyways, here's some valuable information compliments of Ozzie... here is the article in full:

Why I Will Always Buy Real Estate

If you place a good portion of your assets into real estate today, you won't have to worry about tomorrow.

By Ozzie Jurock

Received tons of email ... Not all favorable. Some people wish to bet me money - some a case of beer, that real estate is going to go down ... just wait and see. Likely they are all the people who never bought anything. If you go to http://www.realestatetalks.com/ you can see some 16,000 people arguing for more than 14 years the ups and downs of Vancouver real estate. It is always the same guys and gals that argue collapse and (yep) often the same that argue that eventually we will always be higher (because of monetary expansion creating it).

So, take it easy. If you had listened to the experts who were dispensing the best advice available 20 years ago and locked yourself and your wealth into a plan which guaranteed to remit the then prevailing 'safe amount' of an income stream of $500 per month (a lot back then - pocket-change today) for the rest of your life, imagine the desperate poverty that you would retire to today. Stone soup would be a luxury.

Yes, we need more money now but who knows what this money will be worth tomorrow. Yes, we need more income, but who can possibly know the state of the world three months from now ... much less 20 years from now? Nobody knows for sure the 'what and where' of interest rates and inflation rates and the value of money. It's just not possible.

What we do know is that the safety that was inherent in the projected big income of 20 years ago is a pitiful joke today.

Yep, forecasting is never easy - particularly when it's about the future. Crystal balls crack, vaunted talk-show soothsayers wither and drop off the television scene and the books that were treasure maps wind up in the remainder bin at the bookstore. In the last three decades stock markets have surged up and crashed down. Certain mutual funds that looked like they were blue chips sprang leaks and sank while others soared like rockets only to burn out and fall back down.

Through all of this the average folk watched their savings chewed away by insidious inflation.

However, in all the turmoil of this sound and fury, one asset has weathered the changes. Three decades ago, had you bought good quality real estate you would not be concerned about your future today. That real estate would have kept up with inflation, remained secure in value, and steadily appreciated. Sure, there would have been some temporary dips. There has to be because real estate is cyclical in nature. But one thing is certain - over the years, the base values have been steadily increasing. Back to that purchase 30 years ago - today it would be paid off and clear title - which means either a mortgage-free home (no more monthly 'rent' payments to the bank) and/or a steady rental income courtesy of your tenants.

Put into perspective, if you place a good portion of your assets into real estate today, you won't have to worry about tomorrow. It doesn't matter how wild or turbulent the economy or the marketplace. It's like riding a horse with one spur - if half the horse goes, the other half has to go along with it. No matter how deep or tempestuous the water, you're going to be floating on top of it.

Let's review something all of us already know. The Chinese have used real estate holdings for wealth creation for 2,000 years. All huge fortunes were either started or extended with real estate. Home ownership (the most common form of real estate holding) has been the single largest factor in the accumulation of wealth for the average North American, firstly because of straight appreciation due to inflation, secondly, due to the leverage involved and thirdly real estate has a use and therefore always a value.

This basic principle of appreciation holds true for pretty well any healthy major urban center. Let's take Vancouver, B.C. for an example.

In 1960 the average Vancouver home sold for $13,105. Thirty-eight years later in 1998 the average sale price was some $310,000. Almost a 2,300 per cent return. But in March 2008 the average sale price was $895,000. Almost a 6,830 per cent return. That's on the price. Play with the return on down payment of $655 and you get tens of thousands per cent returns
If this kind of appreciation is going to continue, you have to be on the conveyor belt. If you're not, you're going to be left so far behind that it will be financially disastrous. And here we're only talking from the perspective of a place to live. This isn't even addressing the investment aspect of those monies outside the family home.

When you combine appreciation with leverage, you unlock the great secret of achieving the optimum result with real estate investment. And as you can see from the foregoing numbers, the 'lever' can lift you up or the 'appreciation', if you're on the wrong side, can crush you down.
When your gain is measured on the capital invested, not the actual price of the property, some really astounding results come into focus. But the game is not as simple as it used to be. The goal posts move. The only constant is that everything is always changing. The secret of surviving and prospering is the ability to adapt to the changes.

The 1980s were very forgiving for the amateur. Benign with a capital 'B'. That 'B' could also represent 'Bucks' and 'Brainless'. Back then if you had a few dollars you could buy any piece of real estate, anywhere, and you would make money. Even if you could barely hear thunder and see lightning, it was almost impossible to make a big enough mistake. If you paid too much, it only meant that you had bought a little too soon. The clock and the calendar made you into a financial wizard. Thanks to inflation, prices soon caught up to you and bailed you out.
Still, there were lots of people in the early 1980s who managed to lose all their money in real estate. Those were the people who put their money into the wrong syndications, limited partnerships or real estate investment trusts. But we'll talk more about that later. In the late eighties fortunes were made.

But after the 1980s the real estate world became less forgiving. For some investors the times were downright terrifying. All of a sudden there was the sudden change. Markets fluctuated area by area both as to volume of sales and prices. Different real estate categories rose or fell without any apparent linkage to each other. You could see in one market area the average single-family detached home rise in value by 40 per cent while in the exact same market area downtown condos slumped in value by 12 to 20 per cent (Vancouver 1990-1995).

The people who tried to play by the old rules found themselves playing someone else's game. And most of the time they were handed their heads. Was it possible to avoid the dangers and yet at the same time prosper with the good stuff) Yes it was, but you had to put aside location, location, location, and instead you had to read the trends, position yourself as to the timing and then implement some new techniques.

To be successful real estate investors we must understand ourselves. That means we have to understand our investment objectives in relation to the risks we are willing and able to tolerate. But having done that we then must understand that aspect of 'ourselves' that is part of the New Consumer.

Published in the Vancouver Sun, Thursday, May 01, 2008

Friday May 23rd Numbers

Friday (May 23rd) brought 52 new listings versus 31 sales-for a sell/list ratio of 59.62%.

The 14 day rolling sell/list ratio now stands at 56.18%.

Average list price of the sales was $213,358 & average sales price was $211,735.
This means that average sales price today sold below the list by $1623 or 0.8%.

Of the 31 sales that occurred, 10 sold at or above over the asking price.
That's 32% of the listings sold either at or over the asking price.

Thursday May 22nd Numbers

Thursday (May 22nd) brought 68 new listings versus 53 sales-for a sell/list ratio of 77.94%.

The 14 day rolling sell/list ratio now stands at 57.91%.

Average list price of the sales was $208,445 & average sales price was $205,178.
This means that average sales price today sold below the list by $3267 or 1.6%.

Of the 53 sales that occurred, 11 sold at or above over the asking price.
That's 21% of the listings sold either at or over the asking price.

Wednesday May 21st Numbers

Wednesday (May 21st) brought 56 new listings versus 8 sales-for a sell/list ratio of 14.29%.

The 14 day rolling sell/list ratio now stands at 58.25%.

Average list price of the sales was $207,900 & average sales price was $205,188.
This means that average sales price today sold below the list by $2713 or 1.3%.

Of the 8 sales that occurred, 2 sold at or above over the asking price.
That's 25% of the listings sold either at or over the asking price.

Monday May 19th & The Long Weekend Numbers

Tuesday (May 20th) & the long weekend brought 70 new listings versus 37 sales-for a sell/list ratio of 52.86%.

The 14 day rolling sell/list ratio now stands at 61.33%.

Average list price of the sales was $221,911 & average sales price was $219,468.
This means that average sales price today sold below the list by $2443 or 1.1%.

Of the 37 sales that occurred, 8 sold at or above over the asking price.
That's 22% of the listings sold either at or over the asking price.