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Investment-Real-Estate

The power of 10

Do you want the secret for how I find such amazing positive cash flow rental properties? Well this month’s article is all about one shockingly simple formula that once you're tuned into, things become almost ridiculously simple.

The simple rule I am referring to is the 10 times rent-multiplier. The best part of this formula is how easy it is to do in your head, which allows you to instantly analyze the positive cash flow potential of any Kelowna property for sale, anywhere. I will share 10 great examples of properties that fit this formula to eliminate any doubts that you may have.

First let me explain the formula;

Take the annual rental revenue for a Kelowna investment property for sale, and then multiply it by ten. That’s it, the entire formula! The number you now have is what you want the property price to be equal to or awfully close to if you are considering it as an investment property. For many people especially ones that have rental property that falls way outside this rule of 10 don’t leave me just yet, please allow me to show you some real world examples:

 

1.  5-plex in Enderby listed at $369,000

  • rents are 36,000/year
  • $36,000 x 10 = $360,000
  • Net cash flow = $ 1004 /mo

 

 

 

 

2.  5 bed House with legal suite purchased at $312,000

  • rents $31,000/yr
  • $31,000 x 10 = $310,000
  • Net cash flow = $ 981 /mo

 

 

 

 

3.  Condo at Discovery Bay listed 339,000

  • Rent $35,000/yr
  • $35,000 x 10 = $350,000
  • Net Cash-flow = $1083 /mo

 

 

 

 

4.  Half Duplex with in-law suite purchased $240,000

  • rents are $24,000
  • $24,000 x 10 = $240,000
  • Net cash flow = $810/mo

 

 

 

 

5.  2 bed Condo in Alexis Park Purchased $70,000

  • rents are $7,200
  • $7,200 x 10 = $72,000
  • Net cash flow $318/mo

 

 

 

 

6.  Side by Side duplex with in-law suites purchased $484,000

  • Rents $48,000/yr
  • $48,000 x 10 = $480,000
  • Net Cash flow $1398/mo

 

 

 

 

7.  Side by side duplex in Rutland purchased $360,000

  • rents are $36,000
  • 36,000 x 10 = $360,000
  • Net Cash flow $1107/mo

 

 

 

 

8.  House in Phoenix Arizona purchased for $160,000

  • rents $16,500
  • $16,500 x 10 = $165,000
  • Net cash flow $527/mo

 

 

 

 

9.  Condo in Scottsdale purchased for $118,000

  • rents $12,000
  • $12,000 x 10 = $120,000
  • Net Cash flow $ 456/mo

 

 

 

 

10.  House in Fort Mac Murray listed for $750,000

  • rents $72,000
  • $72,000 x 10 = $720,000
  • Net cash flow $2065/mo

 

 

 

 

The last few I included to illustrate the point that things fall into this factor of ten in all the hottest markets you've been hearing about, up north or down south. Most people are led to believe that these fabulous positive cash flowing investments are only if you are brave enough to invest someplace far far away. I’m here to tell you that the above examples are all real, and there are dozens more I could share with you. The bottom line is, they exist and with bank rates now under 3% for fixed term mortgages, the cash flow picture keeps getting sweeter. Let me illustrate for the fellow number geeks out there:

 

$360,000 Purchase price

$288,000 mortgaged

$ 72,000 invested in cash

 

$36,000 rent

$14,400 mortgage

$ 2,400 taxes

$ 1,400 insurance

$ 1,440 Vacancy (4%)

$ 2,160 Maintenance (0.6%)

 

$ 14,200 Net cash flow

$ 6,000 mortgage pay down

$ 20,200 per year in profit

 

Buy and hold this property for 5 years and let's see what we get for results:

  • Mortgage reduction $32,084
  • Positive Cash-flow $72,000
  • Total gain $104,084
  • Gain is 70% without factoring in any property appreciation.

 

Now this is obviously an overly simplified way of valuating a rental property, the long handed way of doing it, is to take the net operating income and divide it by prevailing market CAP rates at the time. This requires a thorough analysis from your professional Kelowna Realtor once you’ve decided to pursue the property.

For an updated list of Kelowna real estate for sale that cash flow well from day one please don’t hesitate to reach out us at any time.



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About the Author

AJ is the owner of Kelowna’s downtown boutique firm, Vantage West Realty. The firm takes pride in breaking the mould when it comes to how they practice real estate. With a well-deserved reputation as a real estate renegade, Hazzi has been shaking up the Kelowna real estate scene since 2002.

Having been a student of real estate through two market cycles, AJ has come to see an absence of truly qualified professionals specializing in investment real estate. This has become AJ’s role within the firm and the community: To educate clients on how to achieve financial freedom through real estate.

Arming his clients with knowledge on where to find positive cash-flow, how to renovate for profit, and other creative avenues that most agents completely ignore, Hazzi has carved out his niche as a real estate investment advisor (REIA), and loves nothing more than educating people on the right strategy to capitalize on both boom and bust years.  AJ is a firm believer that the Kelowna market is rich with opportunity, if one knows where to look.

If you are in search of an advisor who practices what they preach, consider that AJ has built his own real estate portfolio up to include multi and single family cash-flow rental properties, development property, resort property, fix and flips, and commercial properties. By sharing the lessons learned from his own experiences, his clients get the knowledge and confidence to invest without having to make the expensive mistakes he and many new investors have made along the way.

His goal is to impart on people, especially of the X and Y generation, that depending on RRSPs and Government Pension Plans to look after us down the road is risky business. Most people don't realize that as little as one or two properties added to your real estate portfolio now, can secure a comfortable, even lavish, retirement.

Bringing a consultant's approach rather than the tired, old-fashioned sales approach, AJ and his partners offer a world class service from finding, pre analyzing, and negotiating your next acquisition, to property management, all tailored to today’s busy investor.

To hear what AJ Hazzi's clients have to say about his service view the testimonials.

Contact Information

For more details or to reach AJ Hazzi, please visit www.vantagewestrealty.com

Email [email protected] Cell 250.864.6433



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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