Bryan Baeumler – Make Money with Income Properties
Date: February 5, 2017
Name: Bryan Baeumler – Make Money with Income Properties
Presenters: Bryan Baeumler, and Mac Boyter
With the proper knowledge and management, real estate is another revenue stream for entrepreneurs. Pathway Events invite Bryan Baeumler, the Star of HGTVs House of Bryan, to discuss his mindset on his path of entrepreneurship lifestyle. The event also invites Mac Boyter, the Associate from Interactive Trader, to discuss the importance of trading. In this presentation, entrepreneurs will also learn the framework of real estate property strategy. Moreover, entrepreneurs will explore the opportunities from the benefit of real estate revenue stream.
Bryan Baeumler is the host of many HGTV Canada shows. This includes “Disaster DIY”, “Leave It to Bryan”, and “House of Bryan”. Baeumler is also the judge of Canada’s Handyman Challenge. Baeumler is Founder of Bryan Inc and Baeumler Construction company. He manages to help many people to renovate their houses for a higher profit.
Baeumler believes in travel and work balance lifestyle. He always wanted to be better than his father. His father took care of him when he was young. At a very young age, he understood the concept of “making your own luck”.
After the television series, he discovers many people refer him as “lucky”. In the show, Baeumler might look perfect and happy; however, not everyone knows the work behind the scene. Baeumler believes in his career, “keep trying” is attitude that attracts success. Passion will follow as long as work is committed. Currently, Baeumler has employed over 100 people in his company. In his company, he believes in fundamental.
Baeumler mentions many people in this generation forget about the work behind success. They often give up easily. He was taught to fish and farm; however, many young kids are forgetting the reason behind farming. When they are offered seeds, they can either waste it or plant it. When seeds are planted, it is beyond their imagination. Baeumler uses the analogy of Sheep and Shepard. The difference between these two is that sheep can one day stand up and lead the rest of the sheep.
“Everybody needs to be a fisherman someday; otherwise, they will get the fish”
“Until you master the bucket, I will then teach you how to use the broom”
Baeumler wants entrepreneurs to commit on something long term. Real estate is an example of long term investment. Stocks can fluctuate from market. However, as long as entrepreneurs do not sell the property, they will sustain the captain investment. When the property value is low, it is rare to see people lower rental income.
Knowledge of Real Estate Income Properties
Wholesaling is a form of real estate flipping strategy. The market is used to have many buy low and sell higher opportunities. People are creating bidding war to capture the gain from flipping. The new strategy is to buy low and sell low. The key of that strategy is to roll the gain from the real estate to the next deal.
Real estate can be owned and produced rentals. US Properties are great because entrepreneurs can obtain these properties with a fraction of cost and capture the rent exchange rate. There is a difference between cash and cash flow. Investment is to help entrepreneurs create as much cash flow as possible. These cash flow can be used for retirement, pay off the debt and etc. However, why not everyone is in real estate? Because of two factors.
- Lack of knowledge that creates fear
- Lack of funding
Instead of asking how much the property will make today, the key question is “what is the property worth today?”
The first rule of real estate investment is not to fall in love with the houses. Entrepreneurs can fall in love with the opportunities, but not the properties. To evaluate properties, entrepreneurs need to know the current value, location, and current condition. For example, when entrepreneurs see a property of $200,000 that is worth $300,000 today, it does not mean they will get $100,000 because of bidding war. In real estate, money is made in the buy or purchase because the discount can do more opportunities in the future. The secret is wholesale. If entrepreneurs are not finding good deals, they are not looking at the right spot. They should avoid places that many people are often to visit. People creates competition, which is high bidding war.
The strategy is called “Below-Wholesale Competition Advantage”. For Canadian properties, entrepreneurs can look for foreclosure, probate, and bankruptcy. For US properties, they can look at foreclosure, 25 to 1, wholesalers, and pre-foreclosure.
For example, A property is listed for $200,000 and the value can go up to $400,000. Entrepreneurs will put in contract obligation and sell for $322,000 (discount of $78,000 from $400,000). Entrepreneurs will pay the seller $200,00 after the property is sold. With around $30,000 additional costs associate with the property, entrepreneurs will get a profit of $92,000.
Entrepreneurs can have high knowledge, but they can be broke because of lack of action. There are 9 ways to get funding for real estate investment: personal cash, retirement account, profit from wholesale deals, partner money, hard money lenders, strategic funding partners, and OPM.
Take control of your financial future
Mac Boyter is the Associate of Interactive Trader. In real estate, profit will get taxable. Trading can be option for entrepreneurs with their profit from real estate. When US market is down, Canadian market will follow. The key question for entrepreneurs is if their money is protected. Many people are putting their money in a place that do not do anything for them. 85% of mutual funds are under perform and average broker only have 1,500 clients each to take care of. Successful entrepreneurs use option on trading.
“Nobody cares more about your money more than you”
Boyter wants entrepreneurs to keep 3 things in mind.
- What you want to do?
- What you should do?
- How long you need to do?
“It is not how you make money it is what you do with it”
Many people are living paycheck to paycheck. The reality is many of them will never retire. They are fearful of outliving their money and they are not protected against market drop. Most of them are making the bank and brokers rich with their own money. Moreover, inflation is taking away their money. Currently, the market is high, which means more opportunities; however, there are warning signs that it will go down soon. Based on statistic, the market has 6-7 years’ cycle. It is called pendulum effect. The drop from 2008 was lower than the drop from 2000, and many people are not aware of it. People have insured their cars, home and life, but they do not insure their money.
A strategy for entrepreneurs is to use “hood”. The key is to keep the money liquid. Many people put their money in GIC because they do not know other options. With the effect of inflation, GIC is actually has negative return. Bankers give cheque account to people, so they can rent their money for 0% interest.
Entrepreneurs need to have a managing account. It is a way to use money in the cheque account and give 2% interest. Entrepreneurs will buy stock for long term income. They will use option for immediate income. Option can be inexpensive, limited risk and unlimited potential. There are two types of option: call and put. Call is having the right to buy asset at certain price. Put is having the right to sell asset at certain price.
For example, entrepreneurs can use call option of $1,000 to buy $200,000 property. When the market is up, property is now $1,000,000. The profit is $799,000. Another example, entrepreneurs will use pull option of $1,000 to sell $200,000 property. When the market is down, the property is $150,000. The profit is $49,000.
Many people are not doing this because others are taking charge of their money. Brokers and Bankers are doing trading, but they are not obligated to tell others.
Another strategy is to use “straddle”, which is combination of both call and put options.
Boyter wants entrepreneurs to look for 4 components. The first component is fundamentals. To pick the right stock, entrepreneurs should look for 7% on earnings, 5% on revenue, as much as possible for cash flow, and if stock pays dividends. The second component is the key ratios. They need to look at 15-50 days moving average and see when lines are crossed. Every cross is a turning point. The third component is inner cycle. This means insider and institutional activities. The last component is valuation. This refers to project value.
“Investing is a teachable skill”