{"id":8632,"date":"2018-03-28T15:15:48","date_gmt":"2018-03-28T22:15:48","guid":{"rendered":"http:\/\/www.roryc.ca\/blog\/?p=8632"},"modified":"2018-03-23T09:24:57","modified_gmt":"2018-03-23T16:24:57","slug":"optimizing-returns-on-investments","status":"publish","type":"post","link":"https:\/\/www.roryc.ca\/blog\/2018\/03\/optimizing-returns-on-investments\/","title":{"rendered":"Optimizing Returns on Investments"},"content":{"rendered":"<p style=\"text-align: justify;\">Optimizing, not maximizing, returns on investments should be every real estate investor\u2019s modus operandi. According to the founder &amp; CEO of Sentravest Publishing, the way to do that is by diversifying revenue streams.<\/p>\n<p style=\"text-align: justify;\">\u201cMost people wonder what they can rent out their holdings for, but can you turn one year into two?\u201d asks Ian Harper. \u201cCan you rent out the garage separately, even to the same tenant? In multi-use buildings, is there an opportunity to put in a coin-operated laundry?\u201d<\/p>\n<p style=\"text-align: justify;\">Of course, there\u2019s more to optimizing ROIs than that. Harper notes that people\u2019s threshold for risk, and by extension, peace of mind, are also at play. He advises neophyte investors understand their capacity before beginning.<\/p>\n<p style=\"text-align: justify;\">\u201cAt what point do you go, \u2018Yes, this is going just fine, I\u2019m getting an adequate return?\u2019\u201d muses Harper. \u201cOr do you think about how you can incrementally increase your ROI, knowing it introduces other stresses in your life, whether financial and emotional stresses, or demands on your time.<\/p>\n<p style=\"text-align: justify;\">\u201cUnderstand your capacity. A lot of people, when starting out with investments in real estate, their only leverage is what their earnings are, what their T4 said last year, what liquidity they can borrow against. Your ability to continue buying properties diminishes greatly, so understand your capacity for risk and your financial capacity. How much can you borrow? Talk to your lenders about your ability to borrow rather than making assumptions.\u201d<\/p>\n<p style=\"text-align: justify;\">Harper is most emphatic about the importance of understanding debt. Alluding to our earliest lessons about debt\u2014particularly the need to pay it down as quickly as possible\u2014Harper says we don\u2019t hear enough about how debt can be harnessed. (Just ensure you have capacity to harness it first.)<\/p>\n<p style=\"text-align: justify;\">\u201cIt\u2019s important to understand that for a given investment property, presuming you have sufficient cash flow, the higher the debt the higher the return on investment. If you buy a $400,000 property and invest $80,000, being 20% down, and that property generates $8,000 a year in combination of net revenues and appreciated values, that\u2019s a 10% return on your investment. If, however, you had invested 25% down, or $100,000, the $8,000 a year is no longer 10%, it\u2019s considerably less.\u201d<\/p>\n<p style=\"text-align: justify;\">To ensure one\u2019s capacity to repay debt, Harper advises insuring cash flow and business operations, although he refers to it as the hard approach. He also says that if the monthly insurance payments eat significantly into ROIs, then more debt might not be a good idea.<\/p>\n<p style=\"text-align: justify;\">\u201cThis is about optimizing returns on investments, not maximizing returns on investments,\u201d he said. \u201cOptimizing has to do with capacity, your financial and emotional and time available capacity to manage your investments, and your ability to carry a certain amount of debt.\u201d<\/p>\n<p style=\"text-align: justify;\">\u201cSo, to manage risk is also being prepared to say \u2018no,\u2019\u201d Harper said of a tempting investment opportunity. \u201cSounds great but what is it really going to cost and is there sufficient upside? Can you make the investment, and can find the debt to give you the leverage to buy the property? Is it really an optimal place to be?\u201d<\/p>\n<p><a href=\"https:\/\/www.canadianrealestatemagazine.ca\/news\/forget-maximizing-rois-and-optimize-instead-239564.aspx\" target=\"_blank\" rel=\"noopener\">Forget Maximizing ROIs &amp; Optimize Instead<\/a> by Neil Sharma | Canadian Real Estate Wealth<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Optimizing, not maximizing, returns on investments should be every real estate investor\u2019s modus operandi. According to the founder &amp; CEO of Sentravest Publishing, the way to do that is by &hellip; [<a href=\"https:\/\/www.roryc.ca\/blog\/2018\/03\/optimizing-returns-on-investments\/\">read more<\/a>]<\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[13],"tags":[],"class_list":["post-8632","post","type-post","status-publish","format-standard","hentry","category-real-estate"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v27.4 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Optimizing Returns on Investments &#8226; Rory C Real Estate | Oakwyn Realty<\/title>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.roryc.ca\/blog\/2018\/03\/optimizing-returns-on-investments\/\" \/>\n<meta name=\"twitter:card\" content=\"summary_large_image\" \/>\n<meta name=\"twitter:title\" content=\"Optimizing Returns on Investments &#8226; Rory C Real Estate | Oakwyn Realty\" \/>\n<meta name=\"twitter:description\" content=\"Optimizing, not maximizing, returns on investments should be every real estate investor\u2019s modus operandi. 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