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         JOHNSON'S PASSION NEWS

"Focusing on QUALITY not quantity of Real Estate Investments"

Winter  2012
portrait 
In This Issue
My Real Estate Investment Career
Do the Exercise!
Buying Distressed Income Properties
"Energy and persistence conquer all things."
-- Benjamin Franklin, Inventor

BEST OF 2005-2011 

I feel I have lost touch with some of my subscribers. And so this month, I will not only introduce myself to new subscribers but also share different ideas with those who know me.
I will also feature in the next couple newsletters what I think are the best articles I have published in the last six years of "Passion News".

MY REAL ESTATE INVESTMENT CAREER

I currently manage a fifteen unit apartment complex, a residential construction project, and several rental properties in Edmonton, Canada.  Recently I have changed the condo complex from large negative cash flow to $2500/month positive cash flow.  I did this uncompensated, to improve the performance of my investors’ condos in the building.  Under the supervision of a structural engineer, I also learned a lot  as we rebuilt another property.

I am currently buying multi-family and storage facilities in several growing U.S. cities with investors.  I have access to bank REO ...

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 DO THE EXERCISE!

 

I have decided that working on a part-time business is much like going to the gym. Many people go to seminars and learn about real-estate and different things, but never take action. It is like someone learning all about...

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BUYING DISTRESSED INCOME PROPERTIES 


The greatest wealth is created during economic downturns, when jobs are scarce and people are afraid to invest.  How can that be?  The reason is that profit is created when you buy a property, not when you sell it.  In difficult economic times, owners default on their mortgages, businesses fail, and properties are available for discounted prices.  Debt is the reason most of these properties become available at much lower prices.  For example, in the last two years, I have seen so many multi-family and storage properties sell for a fraction of the price that was paid only a few years before.  The most extreme example is a large apartment complex that sold for $35M in 2005 and was sold by the bank again for $2.5M cash in 2010!  I expect the original buyer was a REIT (Real Estate Investment Trust) and the price was inflated.  But, whoever bought it in 2010 got a great deal!

In the multi-family and storage property sector, there were lots of deals available in 2010 and 2011, but now is a good time to secure your future financial freedom since prices/unit are likely at their lowest.  I will include diagrams later in this article.  This segment of income properties has recovered quickly because of increased demand for rental housing due to foreclosures and tightened lending, the down-sizing rental needs of the aging baby-boom generation, and the demands of natural population growth.

After looking at hundreds of REO multi-family and storage properties, I am buying two bank-owned storage facilities in an area with recent job growth.  The properties consist of 520 units, built in 2003, located within 20 minutes of each other, with a total acquisition price of $1M.  The deal has exciting upside potential!  When I am able to bring the property to 85% occupancy (the average in the local market), the property will be worth $2.8M or more.  Cash flow is so good, based on current and projected future occupancy, I could pay respectable interest on the principal, pay back the full initial invested amount with additional interest, and then continue to pay monthly interest (even though all principal and interest have been returned).

I have studied and visited…..

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