Vancouver Apartment Buildings

I read a report from a Commercial Realtor today. I've subscribe to their report for free for several years now. Today, I've found the cap rate for apartment buildings in Vancouver has finally increased.

It used to be around 2% last year when the market is hot. 2% cap rate is not very good. Now it is about 5 or 6%. This is an indication that the purchase price has come down a bit in Vancouver apartment buildings.

The investment properties I have are around 20% cap rate which is calculated by Net Operating Income (NOI) divided by the Purchase Price. NOI is calculated by annual gross income minus annual expenses.

A fast and simple way to look at cap rate is to use it to see if the investment makes sense.

For emample, for a property with 20% cap rate, the interest rate on borrowed money is say 7%, so 20 minus 7 is 13. That means I still have 13% in my pocket after mortage payment and expenses. For a 2% cap rate, in order to have positive cash flow, I need to find loans with less than 2% interest...extremely unlikely unless you have a rich aunt who pratically will lend you the money for free.

So to buy a investment property with cap rate of 2% and if I can only get mortgage about 7%, that means I'll have negative cash flow every months. This strategy is okay if you have a lot of money or are investing for appreciation. But I personally think apartment buildings are for cash flow.

A general rule of thumb is to find investment property with 2-3% higher cap rate than your interest on the loan.

Mind Blowing Documentary

It’s scientifically proven that your wishes do come true

Couple weeks ago, I watched a documentary called “What the bleep do we know?” It’s a complicated documentary that tries to tell people that your thoughts actually shape the world in a very strange way. Because there are so many concepts in the movie and that it’s impossible to tell you all about it. I will describe these ideas separately through my coming newsletters.

First idea that I would like to share with everyone is that your thoughts has the ability to shape your world. Also, your thoughts not only will shape the world in the future, but even in the past!! To prove this idea, there has been an experiment done. First, they have a random number generator that would randomly create “1” and “0” number continuously. They then record result of the machine generating “0”and “1” in two copies. They keep one copy in a safety box, and another one to an experiment target. They want the subject to take the copy home and meditate with it. They want the subject to “want” more “1” in the result. And during the experiment no one can know the result of exactly how many “1” or “0” were produced. When next day the subject comes back with the copy, guess what? There are more “1” than “0”!

What this experiment shows was that the mind can actually create things that you want (more “1” than “0”), and that the mind can create it the in the past (it was just the recording of what the machine generated). Very weird isn’t it? I know it sounds very out there, but it’s one of the Ah-Haah moments that I had. Everyone who have watched or read “the Secret” knows that it’s the power of intention, or the law of attraction put to work. What it means is if you want something in your life, you need to think about how good it would be to have it. You need to feel it with as many senses possible. And then get ready to receive it. But for me, it’s not really convincing enough of how this kind of phenomenon happens. Until I watched “what the bleep do we know” and it totally changed my mind. So now I make it into a habit that I would meditate everyday on what I want the next day would be like, and what I want my life to be like – with the “expectation” that it will happen. Strangely, bit by bit, it’s really working towards my goals. What a world. So for those who would like to try it, you can start with getting the best parking spot. Next time when you go some where busy, talk to the universe that you need a parking spot and “expect” it to be there. Try it a few times and let me know what happens. – By Jordan Lin