George Schiaffino Real Estate Agent: Real estate investing is an investment strategy where an investor purchases property in order to earn a profit. In most cases, the investor will either rent out the property, or improve on it in order to resell it at a higher cost than it was purchased for. Real estate investing can be riskier than other investments since the property cannot usually be sold quickly.

1. Points of Interest of Real EstatePoints of Interest of Real Estate
InvestingInvesting
GeorgeSchiaffinoGeorgeSchiaffino

2. IntroductionIntroduction
Inve sting in re al e state is as
advantag e o us and as attractive as
inve sting in the sto ck m arke t. George
Schiaffino wo uld say it has thre e tim e s
m o re pro spe cts o f m aking m o ne y than
any o the r busine ss. But, But, But. . .
since , it is e q ually g uide d by the
m arke t fo rce s; yo u canno t unde rm ine
the co nstant risks invo lve d in the re al
e state . Le t m e be g in discussing with
yo u the advantag e s o f re al e state
inve stm e nts. Ge o rg e fo und the
advantag e s as m o st suite d and re ally
practical.

3. Real EstateInvestments areLessReal EstateInvestments areLess
RiskyRisky
As co m pare d to o the r inve stm e nts, le ss o f m isadve nture is invo lve d in a
re al e state pro pe rty. Iwill no t g e t away fro m the fact that just like s any
inve stm e nt yo u m ake ; yo u have the risk o f lo sing it. Re al e state
inve stm e nts are traditio nally co nside re d a stable and rich g aine r, pro vide d
if o ne take s it se rio usly and with full sag acity. The re aso ns fo r the re al
e state inve stm e nts be co m ing a le ss risky adve nture prim arily re late to
vario us so cio e co no m ic facto rs, lo catio n, m arke t be havio r, the po pulatio n
de nsity o f an are a; m o rtg ag e inte re st rate stability; g o o d histo ry o f land
appre ciatio n, le ss abo ut inflatio n and m any m o re . As a rule o f thum b, if yo u
have a g e o g raphical are a whe re the re are ple nty o f re so urce s available
and lo w, stable m o rtg ag e rate s, yo u have g o o d re aso n fo r inve sting in the
re al e state m arke t o f such a re g io n. O n the co ntrary, if yo u have the co ndo
in a place , which is burg e o ning unde r the hig h inflatio n, it is far-fe tche d to
e ve n think o f inve sting in its re ale state m arke t.

4. NoNeedforHugeStartingCapitalNoNeedforHugeStartingCapital
This is what yo u call Hig h Ratio
Financing . If yo u do n't have the ide a
as to ho w it wo rks, the n le t m e e xplain
yo u with the he lp o f an e xam ple .
Re m e m be r that saying . . . Exam ple s
are be tte r than pre ce pts.
Suppo sing , yo u buy a co ndo wo rth
$20 0 , 0 0 0 , the n yo u have to just pay
the initial capital am o unt say 1 0 % o f
$20 0 , 0 0 0 . The re m aining am o unt can
be finance d, ag ainst yo ur co ndo . It
m e ans that in a Hig h Ratio financing ,
the ratio be twe e n the de bt and the
e q uity is ve ry hig h. If ne e de d, yo u can
also purchase the co ndo o n 1 0 0 %
m o rtg ag e price .

5. HoningInvestment SkillsHoningInvestment Skills
A re al e state inve stm e nt, e spe cially
whe n yo u buy a co ndo fo r yo urse lf, will
be a ple asurable le arning e xpe rie nce . It
g ive s yo u the o ppo rtunity to le arn.
Acco rding to George Schiaffino, whe n I
we nt ahe ad with m y first re al e state
pro pe rty, Iwas to tally a dum p m an. Ask
m e no w, and I can te ll yo u e ve rything ,
fro m Ato Z. Ne ce ssity is the m o the r o f all
inve ntio ns. Ihad the ne ce ssity to buy the
pro pe rty and so Itrie d with it, and Iwas
succe ssful. Iacq uire d all the kno wle dg e
and skills thro ug h e xpe rie nce o f se lling
and purchasing the re side ntial pro pe rty.
Thanks to m y jo b. It g ave m e the
e xpe rie nce to be co m e an inve sto r.

6. Not aTimeTakingAdventureNot aTimeTakingAdventure
Re al e state inve stm e nt will no t take o ut all yo ur e ne rg ie s, until yo u are
pre pare d and fo re sig hte d to take the adve nture in full swing . Yo u can save
a he ll lo t o f tim e , if yo u are vig ilant e no ug h to kno w the te chniq ue s o f
m aking a judicio us inve stm e nt in the rig ht tim e and whe n the re are g o o d
m arke t co nditio ns pre vailing at that po int o f tim e .
Yo u sho uld be pre pare d to tim e yo urse lf. Take so m e tim e o ut, and do
m arke t re se arch. Initiate sm all adve nture s that invo lve ne g o tiating re al
e state de als, buying a pro pe rty, m anag ing it and the n se lling it o ff.
Calculate the tim e inve ste d in yo ur re al e state ne g o tiatio n. If the tim e was
le ss than the o ptim um tim e , yo u have do ne it rig ht. And if yo u e nd up
inve sting m o re tim e , the n yo u ne e d to wo rk it o ut ag ain, and m ake so m e
re al co rre ctio n fo r co nsum m ating ne xt de als. Yo u have vario us ways and
m e tho do lo g ie s, calle d the Re al Estate Strate g ie s that can m ake it happe n
fo r yo u in the rig ht m anne r.

7. Leverageis theRight WayLeverageis theRight Way
The co nce pt o f le ve rag e in re al e state is no t a ne w o ne . It im plie s inve sting a
part o f yo ur m o ne y and bo rro wing the re st fro m o the r so urce s, like banks,
inve stm e nt co m panie s, finance co m panie s, o r o the r pe o ple 's m o ne y (O PM).
The re have be e n m any instance s whe re pe o ple have be co m e rich by
practically applying O PM Le ve rag e Principal. As I had discusse d unde r the
subhe ad - No Ne e d fo r Hug e Starting Capital, the hig h ratio financing sche m e
g ive s an o ppo rtunity o f no risk to the le nde rs, as the pro pe rty be co m e s the
se curity. Mo re o ve r, in case the le nde r is inte re ste d in se lling the pro pe rty, the
ne t pro ce e ds re sulting fro m the sale o f the pro pe rty sho uld co m fo rtably co ve r
the m o rtg ag e am o unt.
No w co nside r a situatio n, whe re the le nde r le ve rag e s the pro pe rty at a to o hig h
ratio , de bt, says 9 8 % o r e ve n m o re , and all o f the sudde n the m arke t sho ws a
do wnturn, than bo th the inve sto r as we ll as the le nde r. He nce , g re at is the
m o rtg ag e de bt, m o re is the le nde r's risk, and it is the re fo re ne ce ssary that the
le nde r pays hig he r inte re st rate s. The o nly way o ut to e ase the risk fro m
le nde r's he ad is to g e t the m o rtg ag e insure d.

8. Real EstateAppreciationReal EstateAppreciation
An appre ciatio n is an ave rag e incre ase
in the pro pe rty value o ve r the o rig inal
capital inve stm e nt, taking place o ve r a
pe rio d. The re are so m e ne g le cte d re al
e state pro pe rtie s that have an
appre ciatio n be lo w the ave rag e m ark,
whe re as, so m e o f the pro pe rtie s lo cate d
in m aintaine d g e o g raphical are as,
sho wing hig h de m and, have an abo ve
ave rag e appre ciatio n. In such ce ntrally
lo cate d and hig h de m and are as, the
ave rag e appre ciatio n can re ach up to
25% in a ye ar. Iwilldiscuss appre ciatio n
in the chapte r o n re al e state cycle s. Fo r
no w, fo r g e ne ral unde rstanding ,
appre ciatio n is what g o e s up.

9. YouMakeYourEquityYouMakeYourEquity
As yo u g radually pay yo ur m o rtg ag e de bts, yo u are cre ating yo ur e q uity. In
o the r wo rds, yo u wo uld be re aching to o rig inal ho use price o n which yo u have
no de bt. Yo ur e q uity is abso lute ly fre e o f pe rce ntag e incre ase in appre ciatio n.
Fro m the inve sto r's pe rspe ctive , in the re ale state m arke t, e q uity is the am o unt
that is fre e o f de bt and it is the am o unt that an inve sto r ho lds. Whe n yo u sale
yo ur pro pe rty, the n the ne t m o ne y yo u g e t, afte r paying all the co m m issio ns
and clo sing co sts, be co m e s yo ur e q uity. Le nde rs do n't want to take a risk by
allo wing a lo an o n o ve r 9 0 % o f e q uity. The re fo re , in this m anne r, the le nde rs
take the safe ty m e asure s in the wake o f the ir lo an be ing de faulte d.
Ho we ve r, the re are ce rtain co nditio ns, whe re in, CMHC o ffe rs the purchase rs
o f re al e state pro pe rty q ualifying the insurance , a m o rtg ag e o f up to 1 0 0 % o f
the purchase price o ve r yo ur principal ho use value . In the wake o f an e ve nt
whe re bo rro we rs want m o re m o ne y fro m the le nde rs, the y wo uld ide ally se ttle
fo r se co nd and the third m o rtg ag e s.

10. Low InflationLow Inflation
Inflatio n is the rise in the price s o f the
pro ducts, co m m o ditie s and se rvice s, o r
putting it ano the r way, it is the de cre ase in
yo ur capacity to buy o r hire the se rvice s.
Suppo sing , a co m m o dity was wo rth $1 0 a
de cade back, will no w co st $ 1 0 0 as the
re sult o f inflatio n. Fo r pe o ple who have
fixe d salarie s fe e l the re al brunt o f the
do llar, as the inflatio n rise s.
If we analyze clo se ly, the land appre ciatio n
value fo r the re side ntial re al e state is 4% to
5% hig he r than the inflatio n rate . The re fo re ,
whe n yo u inve st in re al e state , the n yo u are
paying m o rtg ag e de bts o n hig h do llar value .
No w, as yo u are g e tting m o re , salary to pay
le ss am o unt than the am o unt that yo u had
paid o n the o rig inalm o rtg ag e .

11. TaxExemptionsTaxExemptions
Yo u g e t vario us tax e xe m ptio ns o n yo ur principal and inve stm e nt inco m e pro pe rty.
The tax e xe m ptio ns available in re al e state pro pe rty inve stm e nt are m o re than
available in any o the r inve stm e nt. In o the r inve stm e nts, yo u lo se te rribly o n the
inve stm e nts in yo ur bank in the fo rm o f inflatio n and hig h taxe s the re in, but in re al
e state ; yo u do n't actually have such hindrance s.

12. Net PositiveandHighIncomeisNet PositiveandHighIncomeis
GeneratedGenerated
If take n in the rig ht dire ctio n and playe d se rio usly, a re ale state inve stm e nt can be
yo ur virtue , m aking e nde avo r no w and in tim e s to co m e . Yo u will no t o nly be
having an additio nal asse t building in yo ur favo r, but also with po sitive cash flo w,
yo ur re ale state pro pe rty value willincre ase auto m atically.

13. HighReturnonInvestmentsHighReturnonInvestments
Re al e state inve stm e nt g ive s yo u po te ntially hig h Re turn o n Inve stm e nts (RO Is)
be fo re and afte r the taxe s le vie d o n yo ur inco m e . In fact, inve sting in re al e state
g ive s yo u hig h RO Is afte r the taxe s.

14. DemandforReal EstateIncreasesDemandforReal EstateIncreases
As a natural instance , whe n the po pulatio n
o f a re g io n incre ase s, the to tal usable land
de cre ase s, and this pro vide s the im pe tus
fo r hig h re al e state price s. The re are m any
co m m unitie s that can o r canno t have
g ro wth and de ve lo pm e nt re g ulatio ns,
the re by, re sulting in lim ite d land available
fo r use . The re fo re , the re al e state price s in
the are a se t up. Re m e m be r ho using is the
ne ce ssity o f an individualand the re fo re it is
m uch in de m and than any o the r sing le
co m m o dity take n. Furthe rm o re , the re are
pe o ple who purchase additio nal ho use s fo r
the ir re cre atio n, re cluse o r as a past tim e .
This in turn incre ase s the de m and fo r land.

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16. Contact UsContact Us
GeorgeSchiaffinoGeorgeSchiaffino
1 0 220 S Do lfie ld Rd, Suite 1 0 6 ,
O wing s Mills, MD 21 1 1 7
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