Profits in Real Estate Rentals: Double Your Income with Short Term Rentals

© Copyright 2012 Evelina Mannarino.

All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted, in any form or by any means, electronic, mechanical, photocopying, recording, or otherwise, without the written prior permission of the author.

isbn: 978-1-4669-7020-5 (sc)

isbn: 978-1-4669-7019-9 (e)

Trafford rev. 12/12/2012

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Table Of Contents

Chapter 1.Real Estate: The Best Long Term Investment

Chapter 2.Basic Suite Set Up

Chapter 3.Paperwork!

Chapter 4.Marketing a Rental Property

Chapter 5.Staff: Friends, Family and Real Employees

Chapter 6.Customer Service

Chapter 7.Policies & Systems

Chapter 8.Freedom from Real Estate

Chapter 9.Gossip about the Author

Chapter 10.Contract, Manuals & Checklists

Attitude of Gratitude

Of course no project is complete without the help of other people involved. People come in and out of our lives at a precise time for a specific reason.

I attended a free Raymond Aaron seminar in Edmonton in 2011. One of his ideas was to write a book to promote your company. Although I didn’t make it to the last day of the seminar, I did remember that the seminar was about writing a book. So, thank you Raymond Aaron for the idea!

My sister, Julene has been a great inspiration! She checked in with me every week to see how I was doing and kept encouraging me to keep going and finishing this book. She supports me in everything I do and is a constant inspiration to me. Thank you, Julene!

My husband has always supported me with his don’t bother attitude. That always fuels me to get it done! This book has been in my computer for about a year now until he told me to get a job, apart from being a full time stay at home mother. So, thank you hunny. If it weren’t for you, this book would still be sitting in my computer! I love you, my husband.

I appreciate the help I received from Don Campbell, owner of the Real Estate Investment Network. As busy as this man is, he took time out of his monthly seminar to help me with how to write a book on real estate. He has thousands of people demanding his attention but still got back to me about a question that I had. I was very surprised that he remembered I had a question but very thrilled that he took the time to research my question and get back to me. I was very impressed. Thank you, Mr. Campbell!

My sister Fawn has always been a great motivator. Through our ups and downs and our matter of fact advice to each other, we make it through thick and thin. What kind of sisters would we be if we didn’t throw something at each other every once in a while?

Drew, my friend and fellow author and has always answered thousands of questions that I had about writing a book. He answered all of them and has given me endless advice and help. Thanks so much, Drew and best wishes with Grecko the Gecko!

Most importantly are my little darlings. Tyson is my little man whom I am always proud of. I love you, big guy! My little baby princess: she makes writing a book challenging with her squealing, drooling and hair pulling. Love you and your big, brown eyes and huge smile.

A huge thank you to you: the reader. I appreciate you taking the time to purchase and read the book. I hope you enjoy it, learn something from it and most importantly, profit from it. Thanks again!

Chapter 1

Real Estate:

The Best Long Term Investment

Real estate investments are by far the safest and most secure investments out there, in my opinion. Yes, they may be slow and boring at times and you generally don’t double or triple your income over night like the stock market can, however, you can sleep at night knowing that it’s going to be there when you wake up.

During times like this when the economy is not at its best, there are still some good things about it. Real estate is like most business cycles—it has its ups and it has its downs. Just like a stock market, it’s a good idea to purchase when the prices are low and sell them when they are high. Your specific goals and plans in real estate will determine where and when you make your purchases. Some people like to purchase and hold for the long term. I personally like to buy and never sell unless the transaction will make a huge difference in my portfolio. If I have one property where the value is going down, cash flow is very poor and it’s hard to rent, then I may consider selling that one if I can exchange it for a property that will gain in value and have positive cash flow as well as being an easy money maker. Then, I would go ahead and sell one for another one.

The approach with long-term investing is that you should expect to make money in three ways when owning this property. You will make money without doing anything when the property goes up in value over the years. You will also make money when your tenants pay down your mortgage, in turn, increasing your equity in that house. You will also make the extra cash flow every month when your rental income is higher than your monthly bills. I personally like to take this extra cash flow and add it to my principle so that the mortgage gets paid down faster. I save interest and have more equity to play with in case I want to pull some money out for another property.

In this day and age where most people are not having a good time financially, instead of bragging how well you are doing, let’s just join them for now. I don’t mean be poor, I mean let’s just act as if we don’t have the extra cash at the end of the month. All the extra money we will put away so that we have money for a down payment on another house or pay down those mortgages so that when those interest rates finally do go up, it won’t affect us as much.

Most people got in trouble because they were spending much more than they were earning. Don’t get me wrong, I too am guilty of that. I did not need a Maserati Quattroporte, a Cadillac Escalade and a Toyota Matrix. Not only was the Toyota Matrix paid off, it was great on gas, had low insurance costs and the best part of all, it never went into the shop other than its routine oil change! However, I guess I needed the world to know how well I was doing and now I can join the rest too. I suggest, before making any big, spontaneous purchases, read a Dalai Lama book and get past the material possessions. This will not put you on towards a comfy retirement. Of course, I believe in rewarding yourself and those luxuries in life are made for all of us to share and use. One day, you can drive whatever you want but in the meantime, let’s make some huge goals and make sure that you have your tenants making your Ferrari payments, not your positive cash flow.

With this uncertain economy, I also don’t want you to rely on any old-age security payments, government pensions, your company pensions, etc. As we have all seen, companies go bankrupt. These are huge companies that no one would think would ever go down. If those big ones go down, yours may as well. That pension is not guaranteed, not matter what anyone tells you. Government pensions are not set in stone and these could change any day. You have noticed that some countries have changed their pension age as well so those people now have to work extra years to receive that pension. What about if we don’t even make it to 67 years old? Even if we did, I don’t know about you but I do not want to wake up when I’m 66 years old and have to go to work. Life is too short to spend this much time working towards a pension. I’m sorry, but a leaky toilet in the middle of the night sounds much better if I can retire at 50 or 60 at the latest. You must worry about this today, not tomorrow. And if I’m wrong, sorry, you’ll just end with a couple of paid-off houses giving you a much higher monthly income than the government pension. I’m sure you will still forgive me then.

I got into an argument with my mother-in-law the other day. Well, she’s Italian, so it’s not an argument. They just talk and yell very loud so it seems like an argument but we are just talking. You have to know Italians to know what I’m talking about. She is a 65-year-old woman trying to convince me that my husband and I need to be paying into the CPP (Canadian Pension Plan) so that we can get that when we are older, otherwise we will be left with nothing. I was explaining to her that I don’t trust the government or trust that the plan will be there when I retire.

It’s guaranteed! She yells back.

It’s not guaranteed, nothing is guaranteed. I tell her. If I have to put away $100 towards the CPP until I retire, then that’s $38,400 when I retire. Now they have moved the age of retirement up to 67 and I am definitely not going to be working until I am 67 years old. My husband and I definitely want to retire much sooner than that. I would rather put that money away towards my mortgage and get that paid down so that when we do retire, and much sooner than 67, we can live off the rental income instead. I doubt that the CPP money we receive will even pay for our lifestyle that we enjoy. The only guarantee is that I will have a paid-off house when I retire. I thought I convinced her for sure.

No, it’s guaranteed, it’s the government! She insists.

Okay, well I am not going to argue. I am absolutely terrified if all I had to count on was the government to get me through my retirement years. I also don’t want just enough for living expenses. My husband and I both want to have homes in Canada and Italy and be able to get up and get on a plane and go anywhere in the world at anytime. I doubt that anyone is living off a government pension and jet setting around the world. That is what we want and that is what we are working towards. We can only count on ourselves for that, not the CPP!

With the new and increased age of retirement, the government is now hoping that we lose extra seniors from the age between 65 and 67. A few seniors will not make it and this plan is strictly for financial reasons. The first one is that the seniors in that age bracket will have to contribute for an extra two years. Also in that same time frame, we will lose a few seniors. Mathematically, the government gains two years’ worth of payments as well as loses a certain amount of seniors that they no longer have to pay out. Do you seriously want to work until you are 67? Really? And for what? A measly pension?

Although real estate investments can be tricky, I’ve had a few challenges myself. You cannot give up. You must keep talking to people until you find one that can explain everything in a way that does make it sound easy. It’s not that difficult at all, just find the right person that will work with you and find something to invest in. That investment vehicle will make all the difference in your retirement years. An extra $1,000 or $2,000 is pretty good compared to receiving only a couple of hundred a month from the government. Not only that but you always have the option of selling the entire house in case a major expense comes up that the government would otherwise not give you money for. Or, you have the option of taking out a line of credit and have both the extra cash as well as the cash flow. You will need choices and options and you will want to be in control of your own finances. Counting on the government with no backup is absolutely terrifying and I don’t know how anyone can sleep at night with that as the only option.

After my argument, I mean, talk, with my mother in law, I ended up talking with my sister in law. There was no yelling as she is not Italian, so it really was just a discussion. She just got a job at a bank and is pushing RRSP’s as a great retirement option. Again, this is for the government to help themselves, not to help you. The more they get you to save your own retirement money, the less money they will have to give you in the end. I look at it as a clue: the government is telling you to save your money! They give you incentives today to do this as if they already know that the Canadian Pension Plan and other government plans won’t be there. They are already encouraging you to save! To me, that is a big clue.

My other favorite part about that is that although you don’t have to pay taxes on that today, they will certainly be taking their share of the taxes when you retire. Either way, they are getting your money, not saving you money. Their main incentive is that you have your own savings for retirement so that they are not feeling obligated to pay you. By the time you retire, the rules will have changed again and if you have saved up a certain amount, they will give you even less. You really can’t win with them and again, they have all the control and make up all the rules.

In my personal opinion, I prefer owning a house instead of stocks. Stocks have the possibility to be worth absolutely nothing overnight or over a short period of time. You can lose all of your money without any control over it and without the option of ever making that back, no matter how long you wait it out. Once a company is gone, it’s gone and it is not coming back. Worst case scenario with a house, let’s say it burned to the ground and you didn’t even have it insured. It is still worth something! No matter what, even if it blew up overnight, that property is still worth something. It will not be worth zero, ever. Yes, you would be in a bad spot, of course, but your investment will never become completely worthless as is possible with the stock market.

Yes, I do hear about those people that lost half their money in real estate. How did they calculate that? Let me tell you a little story here. I have my Toyota Matrix worth about $5,000. I go out one day and someone offers me $6,000 so I think about it. I then have someone offer me $7,000 for the same car. Wow, this is exciting, I didn’t know my car was actually worth $7,000! He said that his friend just bought one for $7,000 and he wants the same one. I am definitely selling this car for $7,000 because I didn’t know it was worth that much. So we agree and I’m waiting for the guy to show up with a check. No one shows up. I can’t even get a hold of the guy who offered me the $6,000. Obviously, if that other guy sold that car for $7,000, plus mine is in better condition, then my car is definitely worth $7,000 and that other guy is getting a super deal if he shows up with $6,000. No one does show up. I go to bed that night being upset how I lost $2,000 that day.

The same story is happening with people’s homes who claim that their homes are worth half of what they were worth last year. The truth is, your home was never worth that much to begin with. Yes, a couple of those houses sold for that much but they were never worth that. If you purchased that house for the highest price last year then yes, you can claim that your house is worth half of what you paid for it. Most people had that same house for many years, paid about $100,000, they think their house was worth $250,000 last year and are now depressed because their house is only worth $125,000 and think they lost half their money. The truth is, you made money—your house is worth $25,000 more than what you paid for it. In fact, you probably didn’t put down more than $25,000 of your own cash, probably even much less. So, if you put down $25,000 on that $100,000 house and its now worth $125,000 then you have already doubled your money. No reason to be upset, it was never worth more than that anyways. Be happy that you have doubled your down payment.

Everyone should have at least one investment property in their portfolio for their retirement. I don’t believe in RRSP’s too much or any other form of government retirement savings. This is the government’s way of asking you to save your own money because they probably will have none