Just reveiwing some sites and was reading Steve’s Blog
Do YOU have a profit plan for each property and what do you think of having a Profit Plan?
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I hope you had (or are having) a relaxing and enjoyable Christmas break.
As we turn the corner of a new year, now is a fantastic time to reassess whether your investments are performing as planned.
‘Cruising’ is a danger that inflicts a lot of investors in that they stop pursuing profits and instead just drift along with whatever the market dishes up.
Naturally, returns under such a lax strategy will be uncertain at best.
A better approach is to set a profit plan for each property that you own. It’s just a simple statement like the one shown below.
***Draft Profit Plan***
PROPERTY ADDRESS: 123 Smith Street
PURCHASE PRICE: $300,000
CURRENT ESTIMATED VALUE: $450,000
CURRENT LOAN: $210,000PROFIT STRATEGY: Growth (i.e. Capital Appreciation)
DESIRED GROWTH IN 2006: $15,000 (3.3%)
EXPECTED CASHFLOW IN 2006: -$7,000
NET RETURN: $8,000 (1.7%)It’s amazing, doing a simple statement like that allows you to see how your assets are really performing. That is, a 1.7 net pre-tax return is likely to be less than having your money in the bank, and there’s a lot more risk in holding bricks and sticks.
Yep, in uncertain times those who plan do well, but those who cruise often lack direction. How you proceed is your choice – choose wisely!
Happy New Year,
– Steve McKnight
“Money is a currency, like electricity and it requires momentum to make it Effective”
Count The Currency With This Online Positive Cashflow CalculatorOur profit plan is fairly basic. We are interested in cash flow so if the property will pay for itself before tax deductions then it is worth considering. Obviously growth allows us to continue to refinance to continue purchasing. We have considered some cash flow negative properties because of potential growth, but would only buy if we had another positive property to offset the loss.
How do other people decide whether or not to buy ?
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