Rob is really on a roll with his musings from Canada so here is todays's installment - Love it ! Grahame
If you have 10 rental properties that provide you with $1500.00/month positive cashflow and you sell them and buy 8, it doesn't seem like a good idea!.... But what if the sale of the 10 rental properties allows you to buy 8 properties that will still give you $1500.00/month positive cashflow.
Sounding better, right.
What if you can sell 10 properties, buy 8 properties, get the same $1500.00/month positive cashflow, cover all the selling costs, pay for renovations to improve the value and the rent, and still have money left over.
No brainer right!
Plus now you only have the upkeep on 8 houses, sweet.
So this is my big breakthrough.
There are opportunities galore in Canadian cattle industry to do this exact trade.
My example in the previous email was that I had 10 heifers weighing 550lbs. I could have traded back to 450lb heifers and got a $1.03/lb return on gain ($0.80 COG so $0.23/lb profit), or I could have kept them and put on more weight and recieved a $0.95/lb ROG ( .75 COG so $0.20 profit).
Then I started to look at it like this.10 heifers gaining one pound a day are making me $2.30/day profit That's all the market is willing to give me today for the gain on10 heifers.But the market is paying 1.30 ROG on some steers.
How many of those steers would I have to buy to at least make $2.30/day.1.03 divided by 1.30 = 8 steers I could make the same money grazing eight 450 lb steers as ten 450 heifers.
The next question is can I sell ten 550lb heifers and have enough money to replace them with eight 450lb steers plus have the money to replace the 100lbs of gain and cover trade costs.
The answer YES.
I can sell 10 heifers replace them with 8 steers, still make $2.30/day, cover all my costs, use less grass, and have a surplus of cash from the trade.
But wait there's more!
The surplus of cash from the trade will buy me another steer and all the grass to get it back to 550lbs. Awesome, I can make more money with less cattle today.Less is more and trading from heifers back to steers is easy!
By the way could you please ask everyone you know to leave their vehicles idling so that we can speed up global warming. It's suppose to be summer here and my furnace just kicked in!!
Rob Hiebert Alberta, Canada
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