1. Surrey Real Estate Investment Club
Welcome!
"Real estate is at the core of almost every business, and
it's certainly at the core of most people's wealth. In order
to build your wealth and improve your business smarts,
you need to know about real estate."
~Donald Trump

2. Surrey Real Estate Investment Club
Welcome!
“Risk comes from not knowing what you’re doing.”
~Warren Buffet

3. Sponsors
Welcome to the Surrey
Real Estate Investors Club!

4. Future Plans
1. Strategy & Getting Started
2. The RE Cycle and Selecting An
Investment Area
3. Property Selection and Cashflow
4. Financing
5. Due Diligence & Making an Offer
6. Tenant Selection & Management

5. Review of Last Meeting
• What is the real estate cycle and how do we use it to
our advantage?
• How do I decide where to invest?
• Location fundamentals – macro-environment,
economics, learning a sub-market
www.AspireRealEstate.ca/blog

6. Tonight’s Agenda
• More on property selection
• Rules of Thumb
• Calculating cashflow
• Calculating returns
• Some examples

7. The Legal Stuff…
The information contained herein (the “Information”) is intended for
general informational purposes only and should not be relied upon by
recipients hereof. Although the Information is believed to be correct, its
accuracy, correctness or completeness cannot be guaranteed and has not
been verified by either Aspire Holdings or any of its affiliates.
Views expressed in this presentation are based on research materials
available from sources that Aspire Holdings (d.b.a. “Aspire Real Estate”)
considers reliable but neither guarantees, warrants nor assumes any
responsibility or liability of any kind with respect to the
accuracy, correctness, completeness, or suitability of, or decisions based
upon or in connection with, the Information.
All real estate opportunities come with varying degrees of risk and past
performance is not an indicator or guarantee of future results. Prices can
go up or down and current performance may be lower or higher than any
performance data quoted for comparisons.

9. Picking a Property
What are your considerations when
picking a property?

10. Some things to consider
A. Area
B. Property Specific
C. Deal/tactic specific

11. Calculating Cashflow
Income – Expenses = Cashflow
In almost all cases, you need this to be
a positive number!!

12. Will it cashflow? Rules of thumb
• Income/financing ratio
65% of income should be max
for financing

13. Will it cashflow? Rules of thumb
• 1% rule
Need to know
1. Price of the property
2. Rental income
Ex: $200,000*0.01=$2,000
if you get $2,000 rental income you will most
likely cashflow.

14. Will it Cashflow? Rules of thumb
Gross Rent Multiplier (GRM)
Need to know
1. Price of the property ($200,000)
2. Rental income
Ex: $200,000/(2,000x12)=8.34
Up to about 10 it will most likely cashflow or
be neutral – in some cases up to 15.

15. Gathering information
• Valuation of a property
• What is the cashflow?
• What are other properties in the area
worth?
• What would it cost to build that
property right now?

16. Gathering information
• Rental Income
• www.padmapper.com
• www.craigslist.org
• www.kijiji.ca
• Other local sites (ex.
Usedvictoria.com)
• Local classifieds
• For rent signs

18. Calculating Cashflow
Income – Expenses = Cashflow
In almost all cases, you need this to be
a positive number!!

19. Calculating Cashflow
For a typical buy and hold, single-unit, residential
home, what are the income sources?

20. Calculating Cashflow: Income
• Primarily rent
• Storage = Gross Income
• Garage
• Other parking
Gross Income – Vacancy = Gross Operating Income

21. Calculating Cashflow: Expenses
For a typical buy and hold, single-unit, residential
home, what are the expenses?

22. Calculating Cashflow: Expenses
• Mortgage • Water Utility
• Other Utilities (heat, hydro) • Insurance
• Repairs and Maintenance • Property Tax
• Property Management • Strata Fees
Gross Operating Income – Expenses
= Net Operating Income

23. Property A A B
List Price $309,900 $309,900 $279,900
Potential Purchase Price $307,000 $295,000 $270,000
Price / sq.ft $246 $236 $196
Down payment % 20% 22% 20%
Down payment $ $61,400 $64,900 $54,000
Mortgage amount $245,600 $230,100 $216,000
Closing costs (2%) $6,140 $5,900 $5,400
Total cash required $67,540 $70,800 $59,400
Amortization (yrs) 25 30 30
Amortization (mnths) 300 360 360
Interest Rate 4.00% 2.89% 3.80%
Periodic Rate 0.33% 0.24% 0.31%
Mtg Pmt $1,292 $954 $1,003
Strata/Condo Fees $150 $138 $150
Property Taxes / Water $200 $180 $190
Heat $0 $0 $0
Electricity $0 $0 $0
Insurance $30 $15 $22
Maintenance $160 $132 $145
Prop. Management $160 $0 $0
Total $1,832 $1,419 $1,510
Rent $1,600 $1,650 $1,625
GRM 16.0 14.9 13.8
1% Rule 0.52% 0.56% 0.60%
Monthly Cashflow -$232 $231 $115
Annual Cashflow -$2,783 $2,767 $1,382
Comments Reserve Fund = 2 mths

24. Return on Investment
There are many methods and calculations to calculate
returns – some simple, others very complex!
For these examples we will use:
ROI = Gain from Investment – Cost of Investment
Cost of Investment

25. Calculating Cashflow: Expenses
Return on Investment Calculations
- Buy & Hold
$315,000 5 yrs 10 yrs
After 5 years - OSB on 1st = $194,633 $194,633 $194,633 $168,840 $168,840
Annual Appreciation 3% 0% 5% 3% 5%
Est value at X% annual = $365,171 $315,000 $402,029 $423,334 $513,102
Net Equity (after 5/10 yrs) = $170,539 $120,367 $207,396 $254,494 $344,262
Cashflow (after 5 yrs) = $6,911 $6,911 $6,911 $13,822 $13,822
Total Return (equity + cashflow) $177,450 $127,279 $214,307 $268,316 $358,084
Capital Invested $70,920 $70,920 $70,920 $70,920 $70,920
5 Yr / 10 Yr ROI 150.2% 79.5% 202.2% 278.3% 404.9%
Avg Annual ROI (not compounded) 30% 16% 40% 28% 40%

26. Need more cashflow?
• Increase rents? Pets?
• More cash down?
• Other income sources?
• Pay less?
• Reduce expenses?
• Increase amortization?

27. Take Away Summary
1. Look at the bigger picture, not
just the deal
2. Analyze the numbers and stress
test them
3. Leave your emotions at home!

28. Feedback, Prizes and Action plan!
Questions or comments? Please let us know!
Next meeting Wed. April 24th @7pm
Summary: www.AspireRealEstate.ca/blog/
• Find a new person in the group and tell
them what you are going to do in the next
month to achieve your goal!
• Follow up at next SREIC meeting.