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Keep Criminals And Opportunity From Meeting In Your Life

The theory of crime opportunity suggests that criminals make rational choices and choose targets that offer a high reward with little effort or risk. According to this theory the commitment of a crime depends on two distinct factors:

1. the presence of at least one motivated offender who is ready, willing and seeking to engage in a crime.

2. an environment which makes the commitment of the crime possible, in other words, opportunity.

While we cannot control the plans and motivation of an offender, we can take steps to control our environment and minimize the availability of opportunity. Choices in our lifestyle may create or curtail the opportunity for crime.


Most burglars will check out or watch a property that they intend to rob before doing so. This may occur over a period of time – a few days, weeks, or even months as they study the habits of your coming and going. Or it may take just a few minutes as they observe things like an overflowing mailbox or a pile of newspapers in your driveway. The key is that they will look for a location which presents an easy opportunity to enter and exit with your possessions without being observed, including things that will provide them concealment, such as overgrown shrubbery.

There are several simple actions you can take to make it more difficult and minimize the opportunity a burglar has to enter your home and steal your possessions. These include:

  • Installing motion detector lights and alarms.
  • Trimming the shrubbery around your home.
  • Making sure to stop mail and newspaper delivery during extended times away from your home.
  • And above all, lock your doors and windows using secure locks.


Theft of vehicles and property left in vehicles is a profitable ‘business’ for criminals. Many people leave valuable items in their cars on a regular basis. Items such as laptops, purses and jewelry are commonly stolen from cars. We like to believe that the inside of our vehicle creates a safety zone, but this is often the furthest thing from the truth.

  • Park in well lit areas as close to the entrance as possible.
  • Always lock your doors, even if you are stepping away from the vehicle for only a minute.
  • Lock them when you get in the vehicle as well.
  • Never keep your car running if you are not in it.
  • Do not keep valuables in plain view.
  • Keep as little personal information in your vehicle as possible. If they steal your car with your keys inside and there is something that has your address on it – they now know where you live and have a means to get in.


Criminals look for easy opportunity when stalking a victim for personal attack as well. They may be looking to mug someone and steal their possessions, or they may be targeting someone to rape or murder. The reason women and the elderly are the primary targets of such attacks is because they are perceived as easy prey. While it is true that both groups generally lack brute strength, neither is doomed to be victims.

There are many things men or women, young or old can do to avoid being perceived as weak and an easy target:

  • First rule is to always be aware of your surroundings.
  • Make eye contact if you think someone is stalking you, even if that means turning around to face them.
  • If your gut tells you something is wrong, listen and get away from that situation as quickly as possible.
  • Don’t be so concerned about being polite that you allow a stranger to invade your space.
  • Walk with purpose. Remember all those times your mother reminded you not to slouch? It turns out there is a reason for that. Your posture speaks volumes to others. Don’t let it say you are easy to overcome.
  • Always carry and be ready to use a personal self defense weapon.

I always think back to an event that happened when I was a teenager. I was dating a young man whose father was a diamond jeweler. One evening we went out on a date. We went to eat, went to the arcades and then to a movie. Before taking me home, he told me he had to run an errand for his dad. We went into a building and entered an elevator. It was just the two of us inside as the doors of the elevator closed. He turned to me, reached in the front pocket of his jeans and pulled out a bag stuffed with diamonds! He told me there was about $5,000 worth of loose cut gem stones! I nearly fainted. I asked him if he wasn’t afraid to carry those valuables around all night. His response is something I have never forgotten. He shook his head and said “You have been by my side all night. You got closer to me than I would ever allow any one else to, and yet, you had no idea I had these in my pocket, right?”

I nodded my head, still in awe at what he had in his hand. He continued, “If you didn’t know I had all this, why would anyone else? I have learned not to act like I have anything special on me, and so no one ever guesses I do.”

The lesson I learned is that if you don’t look or act like a target, you aren’t likely to become one.

Remember, if criminals desired to work hard for what they want, they would have jobs. Instead they look for the opportunity to deprive others of their possessions, health or even life. Don’t make it easy for them. Don’t be a victim.

Not sure which personal self defense product is best for you? Visit Best Line Defense to view a comprehensive variety of products designed to meet your self defense and lifestyle needs.

How To Finance Multiple Investment Properties

Financing multiple properties

We have all heard phrases like; “Buy land, they are not making any more of it.” Own land, my son and you will never be poor.” “No man feels more of a man in the world if he has a bit of ground that he can call his own.”

These and many similar sayings are weaved into the character of every real estate investor inspiring each to go forth and nobly create a substantial portfolio of properties. Too over the top? OK, maybe you just want the income real estate can provide and realize that building a real estate portfolio can help you reach your financial goals.

As a real estate investor, I have seen firsthand the effects the new mortgage qualification rules set down by the banks are having on both the individual home buyer as well as the investor. Many lenders have further tightened their own guidelines, in turn making it extremely difficult for many investors to successfully grow their portfolios. (Many lenders have eliminated their rental property “products” while others have closed their doors altogether)

So what are the current financing options, what lenders are available and how do we “present” ourselves to potential lenders to get favorable results in order to buy our first rental property or add to our portfolios?

First, let’s address the lender presentation. When we can present ourselves (and our portfolios) professionally, we stand a better chance of getting more mortgage approvals. Many real estate investors do not have a proper “financing binder” and consequently have a tougher time with financing. You want to show any potential lender that you know how to run a legit real estate business.

A professional financing binder should include the following:

1. A copy of a recent credit bureau. You must know your credit score and you “standing” with your creditors before the lender does. Almost 50% of people who have not seen their credit bureau discover errors. These errors are usually from poor reporting on credit cards, loans or car lease accounts. In many cases the client has completed and fully paid an account (perhaps years prior) but the account has not been documented as a closed account. These issues are easily repaired by contacting the credit bureaus as well as the creditor. In the meantime that “open account” can be adversely affecting your credit score.

Go to Equifax or Transunion to “pull” your bureau. These companies provide your credit score at low cost (or free) and provide an historic outline with your creditors. There is no negative impact on your credit score if you pull your bureau 2 or 3 times a year (which I personally recommend).

Speaking of credit, it is wise when mortgage qualifying to reduce or better yet, eliminate credit card, line of credit and other debts. High credit card balances, leases, loans or credit lines can impede the qualifying process, as these debts are part of your overall debt service calculations.

2. Your last 2 years of Tax Returns). If you have existing income properties, make sure your accountant is properly reporting your rental income and expenses in the “Statement of Business Activities” section of the return. This gives a lender a realistic view of your business and indicates the income, expenses and write offs you are taking.

3. Your last 2 years of Notice of Assessments. (NOAs) It indicates whether there are still taxes owing to CRA and provides your (net) taxable income amount, which appears on line 150, both which are key to any lender.

Regarding your line 150… The result of a higher line 150 means we pay more tax, but it is better in terms of receiving more mortgage approvals, so this is clearly a double edged sword situation.

4. If you are self-employed, include a business registration or business license as a sole proprietor or Articles of Incorporation if a Provincial or federally incorporated company. If you T4 yourself from your company, include your recent T4s.

5. For salaried individuals, include your most recent paystubs and a Letter of Employment which includes your length of time with the company, your position and your annual salary.

6. Include statements for any non- real estate investments such as registered funds, stocks, mutual funds or insurance policies.

7. Include the latest mortgage statements from all the properties you own including your principal residence. These statements should include the current balance, interest rate, monthly payment and maturity date. It is also helpful for the lender to know the original purchase and original mortgage amount.

8. A current property tax statement or tax assessment is important to have for all properties.

9. If you hold any condo style properties, all up to date condo/strata documents such as minutes from the most recent Annual General Meeting (AGM), maintenance and engineering reports should be included.

10. A recent appraisal on your properties gives the lender an idea of the equity amount of your portfolio.

11. A net worth statement should give the lender a cross section of all income, assets, liabilities and expenses. Your assets may also include vehicles, precious metals as well as jewelry, furniture and art (providing it has real value… I’m not referring to your synthetic diamond earrings, Ikea couch or your black velvet Elvis painting… not that there’s anything wrong with these!)

12. Finally, you’ll need a section which outlines your properties. This should include pictures, all current leases, a list of repairs, a breakdown of chattels (if applicable) and a DCR or debt coverage ratio spreadsheet.

DCR is a calculation which equals a ratio that lenders consider (especially if you have multiple properties) for the purposes of understanding if your property or portfolio is “carrying” itself. Basically lenders want to see the ratio at 1.2% or higher (although some lenders only require 1.1%). What this means is the property is generating enough income to carry itself without the owner having to go into their own pocket to service the mortgage.

Once you have a well put together financing binder you increase your options as to the lenders you can go to and your chances for approval. That said, adding another mortgage to an already significant portfolio, even with a slick financing binder can still be challenging. It is entirely possible to exhaust the traditional ‘A’ lender’s risk tolerance, forcing investors to utilize alternative lending sources.

Most alternative lenders are less concerned with your personal financial situation and more concerned with their equity position in the property, often resulting in lower LTVs. You should be prepared for slightly higher rates, possible fees and shorter loan terms… usually 1 year. They are also concerned with the marketability of the property should they have to foreclose, so “geography” and current market activity are major factors in the approval process.

Loan of this nature can be accessed through mortgage brokers who have relationships with “Alt A” or “B” lenders, private individuals/estates and Mortgage Investment Corporations (MICs). Let’s break these lending sources down for clarity.

An “Alt A” or “B” lender can be owned or a subsidiary company of an “A” lender (although as of this writing, many of the A lenders have closed these divisions). Other alternative sources are trust companies and credit unions. Many of these institutions have both A and B lending divisions. Because many of these lenders are regionally based, they are often more favorable to purchases in smaller communities where many national “A” lenders are hesitant.

Private individuals or estates which are often represented by a lawyer can be excellent sources for financing. These sources often lend their own money or pooled money from a few investors. They each have their own guidelines as to the loan amounts, types of properties and geographical areas they are comfortable with. Some of these sources advertise locally but are commonly known to well-connected mortgage brokers.

The other alternative source which I am quite familiar with is Mortgage Investment Corporations (MICs). These entities are relatively unknown to many mortgage brokers and investors alike depending on where in Canada you are located. MICs came on the lending scene in the 80s but have gained significant momentum as of late, making their presence known initially in single/multi-residential properties, with some MICs lending to development projects and commercial properties.

MICs are governed by the Income Tax Act (Section 130.1: Salient Rules) and must operate in a fashion which is similar to a bank. In a nutshell, MICs get their mortgage funds through a pooled source of investors; the MIC then carefully lends the money out on first and/or second mortgages. The investors/shareholders make a return on their investment and mitigate their risk by being invested into many mortgages. MICs may also own properties like single for multifamily homes, apartments, commercial buildings and even hotels. All of the net income is returned to the investor/shareholders often on a quarterly or annual basis. MICs can also use leverage similar to a bank. (For more info on MICs, refer to my article entitled “Optimizing MICs” in the March 2011 issue of this magazine)

As stated previously, many of the above institutions may only lend 65% or 75% loan to value which can often fall short of the required amount needed. This is where you can enlist a combination of lenders. Using an “A” lender or any other lender for a 1st mortgage and getting a 2nd with another lender at a higher LTV is possible. Some lenders will offer both a 1st and a 2nd with different rates.

Other financing challenges may stem from the property itself. Lenders have become increasingly more concerned with the property’s age, condition and usage. Lenders want to make sure your properties are well maintained and the units are safe.

Remember, lenders are always concerned about the implications of resale should they have to foreclose, so a well maintained and well located the property is easier to finance and to market… which is good for the investor as well.

Syndication – The Pros And Cons

Most small residential investors, which is realistically most investors, would give anything to get involved in the commercial sector. The reason is the inherently more stable nature of commercial property when compared to its relatively volatile residential relative. There are other factors why commercial property is so sought after such as its hands off nature, long term contracts and lack of tenant contact. If a tenant decides to leave mid contract that’s their problem, not yours, the tenant has to find someone else to take on their lease.

The thoughts of being a residential landlord don’t actually appeal to a good proportion of investors in the marketplace so a contract where the tenant is responsible for virtually everything is a very attractive scenario. The longer term nature of covenants is also something which attracts investors, you are normally dealing with terms of five years or more. Even in Europe, where lease terms are traditionally shorter, you will come across ten year contracts but in the UK and Ireland you will often find terms of 15 to 25 years. On the residential side you could be looking for tenants every three months which is obviously not the most attractive scenario.

Of course commercial property isn’t without its downsides. For a smaller commercial investor, which can be anything from EUR2.5 million upwards, gearing is normally limited to 60% loan to valuation (LTV) which means having to come up with a lot of money to get off the ground at all. This very substantial barrier to entry is, understandably enough, what stops most people from entering the commercial arena.

A further problem with a commercial investment is that vacancy, if it does arise, is far more difficult to rectify than in a residential scenario. A vacant commercial unit reduces drastically the value of the property as the rental contract is in fact a very large proportion of that value. A residential property has the same value whether tenanted or not. If you are highly geared and a commercial unit becomes vacant, which can happen if a contract isn’t renewed or a tenant becomes bankrupt, then you run the risk of severe financial distress as the repayments will be very substantial, it can be difficult to re-tenant a building and if you do it usually takes a long time.

Allowing for these provisos a good commercial property investment is still obviously a highly desirable investment vehicle. One of the big problems for smaller investors is getting a foothold in the commercial property market. With levels of entry usually extremely high for quality product offering good covenants and in desirable areas it is very difficult for an investor with 100k or 150k to get a piece of the action.

This explains the enormous recent interest in syndication as a means of purchasing high value property both at home and overseas. Syndication is quite literally an association of people or firms coming together to invest in a specific project or projects. It is by no means a new concept but has, in recent times, been a real boon for the small to medium end of the commercial property market. Estate agents, banks, accountants, solicitors and private individuals have become involved in setting up syndicates often seeking to invest relatively modest sums of money in terms of commercial property, usually EUR100k or more, but looking to have the clout of a larger investor.

In a typical syndicate the investor purchases a share of the property investment and holds it for a specific period of time, normally between 5 and 10 years. It is usual for up to 85% of the value of the property to be financed with what is termed non-recourse debt. This allows the bank security over the property and rents emanating from it but contributors cannot be held liable for more than their investment stake. Such investments can be structured as a straight investment, through a pension fund or through a unit linked fund depending on what tax advantages are required and when income accruing is to be withdrawn.

By their very nature each individual investment will be relatively unique so it is difficult to be specific about exact returns, appreciation, debt repayment, mortgage arrangement or length of term as these are all project specific. A professionally organised syndicate will release a substantial information memorandum on a particular investment once an agreement has been reached to take on a particular property or properties. Having said that, most of these investment vehicles usually work in a range of 5 to 10% yield and 7 to 12% annual appreciation. It is not as exciting as some of the rates quoted for emerging markets, both commercial and residential, but it is far more likely that you will actually achieve the quoted figures.

Michael Moriarty of HOK Investors says that a project should not be considered unless proposed returns are based on current day yields. He says that if a project doesn’t work based on today’s figures then it shouldn’t be considered as you are second guessing the market if projected yield increases are a significant portion of the project’s proposed returns.

Unfortunately, as with anything else, when an industry, product or concept hits boomtime this is usually when applicable laws or norms can be overlooked or completely flouted. There are so many people involved in the syndication of overseas property at this stage that it is inconceivable that all of them are above board. The overseas property industry has no regulation of any description in this country, and most others for that matter, and as such it holds a magnetic attraction for companies and individuals intent on excessive profiteering or downright fraud. It is obviously not fair to tar the entire industry with the same brush but it is important to be aware that syndication is a concept which is very well regarded, with good reason, and there are those more than willing to take advantage of this good name to your detriment. Just because a company offers syndicated investment does not mean that you should not vet them thoroughly in advance. You should always check out a company’s bona fides and ask to speak with investors who have availed of their services before. It is also important to do some background research on the area being considered and then check out their knowledge of the marketplace, if it is not significantly better than yours then they are wasting your time and quite possibly your money.

One of the problems in the market at this point in time is that investors are queuing up to get involved in any particular project. You will rarely see one advertised as they tend to be promoted by word of mouth from within networks of banks, solicitors, accountants and real estate agents. Consequently a company may not even bother with you if you are causing them unwanted hassle as they have plenty more to choose from. Nonetheless you should stick to your guns as any promoter worth dealing with will be more than happy to answer questions relevant to their product and reputation.

There are further limitations inherent in the product which must be considered. “Lack of flexibility and the difficulty of extracting oneself from a syndicate ahead of the final property sale is also a major deterrent from syndicate participation” says Michael Moriarty of HOK Investors. Michael Scully of Castlecarbery Properties says that the fact that a fund seldom returns any income during its lifetime, which usually spans 5 to 10 years, means that it is not a suitable product for all investors. All returns made on the purchase are used to pay down the usually substantial debt within the fund.

Most of these funds will also have a fixed time of exit. Although there is some room for flexibility the restriction of having to sell within a set period can mean that the property is not sold at the optimum time thus inhibiting the performance of the asset. It is usual to need a 75% majority to agree to sell the asset and most people will have banked on having a return on their investment within a specified timeframe. There is the option of rolling the investment over but having to leave when the market is in a dip is obviously not the way to make money so these should be treated as a medium to long term investment vehicle.

Consumer Association of Ireland finance spokesman Eddie Hobbs’ agrees that a good syndicated investment can be an excellent investment vehicle with certain provisos. His main bugbear about syndicated product is the potential for significant costs to be rolled up in the product, often going unnoticed by those without a fairly good financial eye. If the costs aren’t transparent he says you should either consider another product altogether or ask the company to outline in detail what costs are involved and also a justification for these costs. If you are not satisfied with the answers received you should simply move elsewhere. He also feels that product which is purchased and financed by a financial institution can lead to a conflict of interest. It can be the case that the product is launched to profit from the mortgage rather than because it is a particularly good investment.

It is easy to be overawed by the thoughts of a commercial property purchase but it is essentially no different from its residential relative, the prices are just higher. If you approach it as you would a well planned standalone residential investment you won’t go too far wrong. You should satisfy yourself that the property is in a good location, that appreciation rates are likely to be attractive and that borrowings are taken out at the best available rates. You should also ensure that covenants are of sufficient length with strong tenants and that rent reviews are at regular intervals and index linked. Upward only rent reviews are something to aim for but seldom achieved outside of Ireland and the UK. Buying into a syndicate which has a lot of covenants up for renewal during its term can be painful if the contracts are not renewed. Companies in some of the quickly growing Eastern European capitals exhibit distinctly nomadic tendencies enabled by high vacancy rates. It is easy for companies up sticks and move to a cheaper unit when a contract ends. Larger companies tend to like constancy so it is obviously better to have blue chip tenants in your property where possible. Just remember that many of the emerging countries will have sub-offices of major companies incorporated in that country, these are not nearly as stable as the actual corporates themselves.

From this point of view it is as important to visit the location and get a grounding on the market as it is with a residential investment, the problem here is that most syndicates only have four to six weeks to move on a property when an agreement has been reached, this means you don’t get much time to do your research.

It is possible to borrow outside some of these funds to increase your level of gearing but as there is no actual property against which to borrow you will have to use something else as collateral so you would typically be re-mortgaging your own home or an investment property here in Ireland. This does reduce the level of deposit you need to access one of these schemes and brings them within the reach of reasonably modest investors.

Some legal experts have expressed considerable apprehension at the amount of smaller syndicates now being set up by completely unqualified individuals. They feel that the legal structure of the agreements often do not stand up to scrutiny allowing too much scope for legal manoeuvre which is never a good thing. This is particularly a concern where a group of friends or family set up a smaller syndicate without a proper financial or legal framework. Be aware that this is a very swift way to lose friends or estrange family members, there is nothing like a money squabble to create a schism which is often permanent.