Feb 272017
 

The following was written by staff writer, Peter.

It is possible to quickly boost the value of a rental property by making minor changes. Each of the following changes will allow owners to rent their properties for higher prices. Choose which are the easiest to complete and begin with them and make plans to implement the other techniques in the future.

Enhanced Security

Renters are often concerned with the safety of the neighborhood and security of the property they are considering. One of the best ways to increase the value of your rental property is to make potential renters feel more secure.

The first thing to do is ensure all doors have deadbolt locks and that the locks are replaced or rekeyed between residents. In the past few years, new locks have been made that can be rekeyed easily and for far less money. Many landlords do not make this part of their standard practice due to the additional cost incurred, but proving to renters that you take their safety seriously will allow you to charge a higher premium.

Another upgrade that many renters are happy to see is a home security system. This is a premium feature that can substantially boost the value of the rental property. If you do install such a system, make sure you understand all the benefits and how each one is used to explain it thoroughly to prospective renters.

Boost Curb Appeal

While many people have heard the advice to not judge a book by its cover, most still do to some degree. This is especially true for those looking for a new place to call home. If the home itself is in great condition but the exterior doesn’t look welcoming, many people won’t even consider making an appointment to tour the interior.

To grab the interest of those who browse new locations before deciding to tour the property, or even to create a wow factor for potential renters as soon as they arrive, it is important to boost the curb appeal of the property. One of the easiest and least expensive ways to do this is painting the door, trim, and shutters in welcoming colors. For those who have even moderate handyman skills, this is an easy weekend project.

Another way to instantly elevate the property is to install a new mailbox. It doesn’t have to be the most elaborate selection, but a brand-new mailbox with no dents or rust can instantly make a rental property feel more welcoming and like home.

Finally, invest in decorative touches such as landscaping with season-appropriate flowers. This could be flower pots on the front porch, small shrubs along a walkway, or a flowerbed in the front yard. The amount doesn’t have to be substantial for the impact to be profound.

Interior Upgrades

Interior upgrades often require the greatest investment of time or money for the property owner. However, if chosen wisely they can also have the greatest impact for the longest period of time.

Upgrading flooring from linoleum to tile increases the value of the property and also makes it more resistant to damage over time. Removing old carpeting and replacing it with hardwood floors or stone has a similar effect. Carpeting can quickly become stained and torn while hardwood and stone are much more durable.

Laminate countertops offer another opportunity for an upgrade. While these are standard in most rentals, they are neither the most attractive nor the most durable option. Butcher block, modern cement, quartz, granite, and other natural stone options are all more durable and greatly increase the perceived value of the property.

When buying a residential property, it is important to take into consideration how much work will be needed to make it appealing to a rental market. It may be necessary to make upgrades over time and slowly increase the rental price to reflect the improvements.

 

Feb 232017
 

Several years ago I read a book called Millionaire Teacher by Andrew Hallam. The book explains 9 rules that allow someone on a teacher’s salary to become a millionaire by saving and investing. After purchasing the book I was pumped to find out how he did it. Afterall, if the author managed to pull it off then so could I. 🙂 So here are the 9 rules he outlined in the book.

  1. Don’t spend like you want to appear or feel rich. Instead, spend like you want to grow rich.
  2. Start investing right away to take advantage of time. Compounding interest is the 8th wonder of the world, says Einstein.
  3. Keep your investment fees low. A mutual fund with 1.5% annual fee will eat up a quarter of your investment returns every year given an 6% expected rate of return. That 1/4 return you could have made will stack up to huge missed opportunities in the future.
  4. Learn to control your emotions. Most people get worried and think about selling when the market goes down. But that’s often when stocks go on sale and valuations become more favourable so if anything, that’s the best time to buy. Don’t be emotional. Be rational.
  5. Balance stocks and bonds using the age rule. This basically means keep your age in bonds, and the rest in stocks. So for a 25 year old, his asset allocation would be 75% stocks and 25% bonds.
  6. Many investors have a home country bias. But it’s important to diversify globally.
  7. Many financial advisors and brokers have a strong incentive for you to stay in actively managed funds or other financial products. Understand that they are sales people, and don’t fall for their tactics.
  8. Don’t be seduced by the next hot stock or tempting investment opportunities that seem too good to be true. Stick to index funds.
  9. If you really must pick and choose individual stocks, limit your exposure to 10% of your total portfolio.

The author is one of the most frugal person I’ve know of. He house-sits for vacationers so he could live in their homes for free. He never turns on the heat in the winter and walks around the house wearing layers of clothing. He even catches his own food sometimes.

I generally agree with all 9 of his rules. I don’t follow rule #5 very closely as my asset allocation changes based on economic indicators and not just age. But for the most part I’ve been using Andrew’s advice for many years now, and my finances are in pretty good shape so I guess it’s working. 🙂 I would say the book is a great read for personal finance beginners. It explains lots of fundamental principles about money management. But I don’t think someone with an intermediate level of financial knowledge will learn anything new and substantial from the book.

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Random Useless Fact:

The US Postal Service moves mail using planes, trains, trucks, cars, boats, ferries, helicopters, subways, float planes, hovercraft, mules, bicycles and feet.

Feb 202017
 

For buy and hold investors, some like to actively pick and choose individual assets to buy, while others prefer to invest in the entire market. But which is a better investment strategy? Similar to a cronut, the answer is simple, but may not be obvious.

passive vs active

Which Investment Style is Better: Passive or Active?

The Cronut is a pastry that combines together a croissant and a doughnut. It was invented by New York City pastry chef Dominique Ansel and is trademarked. You should try one if you ever visit NYC. 🙂 They cost $5 each. But you can also find cronut knockoffs in Mexico that are much cheaper than the real thing, so you don’t peso much. 😄

Anyway, why is this relevant to investing? Because much like a cronut, the better investing strategy between passive and active, is not one or the other, but both. 😀 By combining individually selected assets, and index funds into one single pot, we can create the ultimate investment portfolio. This takes advantage of low-cost index funds, while adding alpha (excess returns) in certain segments of our portfolio. 😉

So how can we implement this? First, we actively pick and choose specific investments in the areas that we have extensive knowledgeable about. Then use the passive investing method to buy index funds for all other asset classes that we have insufficient knowledge about.

For example, I selected individual farms to buy in 2012/2013 because I knew how to look at soil quality, flood risk, earnings potential, etc. Therefore, I knew how to find undervalued land. Historically speaking higher quality farms appreciate faster than lower quality ones so I made sure to only buy farms above a certain quality. Farmland funds however, invest in all quality land. As a result I have outperformed every farmland or agricultural based ETF I could find on the stock market. So within the context of this asset class, passive investing would not have done me any good.

On the other hand, when I decided to get into the United Kingdom stock market last year, I decided to buy a low-cost stock market ETF. European stocks are beyond my comfort zone. I wasn’t about to perform due diligence on all 250 stocks of the FTSE 250 index. So that’s why I invested in a broad market UK index fund instead which contains those 250 individual stocks. 🙂

This is why self knowledge is very important for investors. We should try to use our strengths and specific knowledge to produce better than average outcomes in certain types of industries or asset classes. Then we can aim for average market returns in all other areas that we do not understand. Overall, this should give us a higher investment return than either a completely passive approach (which will give us average market returns), or a completely active approach (which will most likely result in under-performing the market.)

But in order for this combined investment approach to succeed we have to know the limits of our knowledge and capabilities.

Continue reading »

Feb 162017
 

A survey done a few years ago found that 34% of people rely on winning the lottery as a legitimate retirement plan. 😐 #smh. I’m no financial expert, but when it comes to aggressively planning for one’s retirement, playing the lottery more frequently probably isn’t the best strategy.

But of course some people can get very lucky, like Jane Park, who lives in the U.K. When she was 17 years old she bought her first lottery ticket and won the jackpot of £1 million. That’s roughly CAD $1.6 million, or USD $1.2 million. What did she do with her new found wealth? First, she spent £4,500 on a boob job. 😄 Then she purchased some properties, a Louis Vuitton handbag, and a chihuahua, because why not? 🙄

But it appears her lucky situation had unintentional consequences. At 21 years old today, Jane explains that winning the lottery has actually made her sick. That is to say, “sick of shopping for designer goodies.” She is also “struggling to find a genuine boyfriend who isn’t after her money.” Jane says that despite her wealth people don’t seem to understand her stress of being a millionaire. She says despite her material possessions her life feels “empty and without purpose.” Damn. Poor girl.

“I thought it would make it ten times better but it’s made it ten times worse. I wish I had no money most days. I say to myself, ‘My life would be so much easier if I hadn’t won.’” ~ Jane Park

But don’t feel too sorry for her just yet. Jane is currently thinking about suing the lottery company for giving her the money and ruining her life. She claims that the company should not be selling lottery tickets to 17 year olds because someone at that age can’t handle so much money. Again, I’m no expert. But if money caused her to feel empty and without purpose in the first place, then I’m not sure suing for more money is going to help her situation. 😄

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Random Useless Fact:

There was record snowfall this year in parts of Canada

This is what Vancouver looked like a week ago.

Feb 132017
 

Some psychologists believe that you are the average of the 5 people you spend the most time with. Whether this is accurate or not, the truth is we are influenced by everyone around us to some degree. This is why it’s important to surround ourselves with positive and highly productive people. Our environment should work for our success, not against it. 🙂

It’s not that we should trivialize or avoid negative people. We can treat everyone with the respect they deserve. But it would be beneficial to us if we make a conscious effort to spend more time with successful people. For example, to reach my goal of becoming independently wealthy I like to surround myself with friends who have the following personality traits.

  • They can see the big picture.
  • They don’t make excuses and know it’s up to themselves to make things better if it’s important enough to them.
  • They have or plan to have lots of resources, ie: wealth.
  • They are optimistic about the future.
  • They are curious about the world.

This is just my personal list I’ve thrown together. But there are many different definitions for what a high quality or successful person is. Of course if you work in the music industry, then you should surround yourself with “creative” people. We should also be aware of our biases. Being surrounded with too many “like minded” friends may trap us in an echo chamber of similar opinions. Doing so could make it difficult for us to expand our knowledge.

Unfortunately we can’t change the cards we’ve been dealt. But we can make the most out of our situations by developing the best environment for us to thrive. Part of this means choosing the right people to surround ourselves with. We can’t control what other people think, but we can manage our social circle, and choose who to hang out with. 🙂

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Random Useless Fact:

Even though the children below are born from different parents, they are actually siblings, genetically speaking.