It’s been proven that Real Estate Investing provides a lucrative ROI (Return on Investment) and a builder of long term wealth. Bagorio Corporation believes Real Estate is a must have item in terms of your investment portfolio. When it is done right, it provides a four way return advantages based on its:
- Monthly positive rental Cashflow.
- Year to year Appreciation in property value that will be gained upon exit.
- Amortization of loan.
- Lastly its Tax Shelter benefits.
Choosing the right investment property is the key to success. Preferably a “B” area oppose to an “A” where it is already too expensive, or a “C” area where it is too hard to find good tenants. As always been mentioned by investors in the field, it is important to have the right location. A property in a desirable neighbourhood will perform well in every aspect including low vacancy, quality tenants that bring steady income stream, and long term property value appreciation.
When purchasing a property, it is important that the income outweighs the expenses. Find ways to attain this situation by improving and maximizing the use of the investment property.
The 50/50 Joint Venture Limited Partnership is structured as follows:
You the Investor:
1) Provide the initial funds to cover the expenses required for the property acquisition, initial tenant placement, and 3 months reserve fund.
We gladly do the rest:
1) Property Selection: Properties are selected using a proven real estate Due Diligence System that will bring you closer to your investment goals. We aim for properties that will provide the highest returns with the lowest risks possible.
- Location: With our research team, we remain up to date with the latest fundamentals across the country. Areas are analyzed to determine where the best, NON SPECULATIVE markets exist. With the help of our Realtors and agents, we focus in on specific properties, in a specific neighborhood, in a specific city/town, in a specific province. Properties are selected in area’s which are benefiting from the greatest fundamentals which have historically proven to drive property values and rents in the long-term. All the while, areas are always selected with an exit strategy in mind – Area’s with a Future, Not a past!
- Monthly Cash flow/Appreciation analysis/ Pro-forma: We determine the rents, operating expenses, and estimated appreciation in the area to determine if a property is consistent with our system and meets your goals. Property Pro-forma’s are reviewed with the investor before the property is purchased.
2) Property Acquisition: Once property is selected, we will handle everything required for acquisition.
- Placing the Offer/Purchase negotiations:Includes all communication/working with the seller and/or Realtor or buyers agent required to secure the deal.
- Further Due Diligence: This includes a property inspection, appraisal, and Strata corp. document reviews for condos/townhouses before the subjects are removed
- Obtain Financing: We will arrange and organize everything required for obtaining suitable financing
- Closing: We will co-ordinate our effort with the lawyers in order to complete the deal.
- Insurance: We will obtain suitable insurance for the property – arranged prior to closing so coverage begins at the moment that ownership is transferred.
3) Renovations: When required, we will co-ordinate the renovation team in order to bring the property to a clean and safe rentable condition.
4) Tenant Placements/Management: With the co-ordination of our Property management team, we will advertise the property and screen qualified applicants in order to place a suitable equity building tenants. We will maintain all related management responsibility throughout our ownership of the property including: maintenance, insurance, tenant occupancy, financing renewals, bookkeeping, accounting, and cashflow distributions.
5) Property Sale/Profit Distributions:
- Sale: We will monitor the area’s economic fundamentals to determine the best time of sale. Once both parties have agreed upon a time of sale, we will handle everything involved in the disposition of the property. This includes, but not limited to the hiring and co-ordination of realtors and lawyers, advertising, and buyer negotiations.
- Profit Distributions: Upon sale of the property, funds are distributed as follows:
- All initial and further property contributions are paid back to investor and/or Bagorio Corporation
- 50% (in this example) of all remaining profits are paid to investor. Profits include those from positive cashflow, mortgage pay down and equity appreciation. A final statement indicating investor profits/losses will be provided for tax purposes.
50/50 Joint Venture
A win-win joint venture partnership designed to complement all parties’ needs, level of involvement, and interests. Investors or Money Partners will put up the initial capital cost and leave the rest to the Expert Partner (Us) to do the rest.
Tenant First Rent To Own
Be a partner in helping our tenants attain their dream of home ownership! This is a tremendous win-win-win situation for all parties involved (money partners, tenants and expert partners).
Are you tired of the ups and down roller coaster ride on your RRSP investments? Earn up to 8 – 10% Fixed Returns.
Zero Cash Investments
Investing by using little to no cash can be an excellent inroad to property investment, and can in fact increase your returns.
Leverage is probably the largest differentiating factor that sets Real Estate investments above other investments. Because of its proven history for long term appreciation and security, there are multiple banks/lenders that will gladly give a loan of 80%+ on a well selected piece of property. What makes leverage so powerful?
A few basic examples are as follows:
House Purchase – cash versus loan
House for sale $200,000
A) No Leverage:
Investor A purchases house with $200,000 cash
House appreciates 5% in one year.
Investor A sells house for $210,000 ($200,000 x 1.05).
Profit = $10,000 (sell price – purchase price = $210,000 – $200,000)
Return on Investment (ROI) = 5% (profit/initial cash investment = $10,000 / $200,000
Investor B purchases house with a conventional 20% down payment ($40,000 down, $160,000 loan)
House appreciates 5% in one year.
Investor B sells house for $210,000 ($200,000 x 1.05).
Profit = $10,000 (sell price – purchase price (assuming no mortgage pay down) = $210,000 – $200,000)
ROI = 25% (profit/initial cash investment = $10,000 / $40,000
As seen from the example above, the profit of investor A is the same as investor B, but the ROI of investor B is 5 times that of investor A’s. Now, if investor B were to invest the same initial amount of cash as investor A, he could purchase $1,000,000 worth of property and substantially increase his profit.
Stocks/mutual funds versus Property returns
A) Investor A buys $20,000 worth of stocks/mutual funds. Shares go up 15% in one year.
B) Investor B uses the same $20,000 for a conventional down payment to purchase a $100,000 rental property.. House appreciates 5% in one year.
Which investment performed better?
Profit = $3,000 ($20,000 x 1.15 = $23,000, $23,000 – $20,000 )
ROI = 15% (3,000 / 20,000)
Profit = $5,000 ( $100,000 x 1.05 = $105,000, $105,000 – $100,000)
ROI = 25% (5,000 / 20,000)
(Example includes equity appreciation only. Doesn’t include positive cashflow or mortgage paydown)
As seen from the above example, the rental property provided better returns than the stocks/mutual funds with only a 5% increase compared to 15% on the shares. In fact, the rental property, assuming break even cashflow and no mortgage paydown, would only need to increase by 3% in order to provide the equivalent returns provided in shares increasing by 15%. This is the power of leverage!
What is left on the rental income after deducting the vacancy allowance, overall operating expenses (advertising, taxes, property management, repairs & maintenance, sometimes utilities, community association fee, legal fees, etc… ), and dept service.
- Make calculated decisions based on fundamentals. Don’t get your emotions in the way of your investment decisions.
- “Look both ways”. Don’t cross the RE highway blindly without looking diligently enough.
- Leverage other people’s skills. Don’t do it all yourself for it will hinder your growth.
- Stay focused and motivated. Stay away from the doom and gloom headlines.