“Ipsa scientia potestas est” said one great thinker, which translated, meant in knowledge itself is power. In today’s global quest for power, everyone is looking into the sky for the answer. And no, it’s not blue sky thinking, but satellites.
While we have the one Hubble looking out into the universe, we have hundreds more pointing back at us. These earth-facing satellites tells us stories of ourselves that we could otherwise not know. Here are ways these eyes in the sky impact human lives and investments.
Estimating global oil inventories
Oil inventory is one application of satellites. Ursa Space Systems can estimate oil inventory globally using proprietary algorithm and space images. This is important as official state figures are deliberately inaccurate. This is for national security reasons.
Hence, it helps investors to know what exactly is in storage. Low storage means high demand. Inversely, high storage means oversupply and potential price drop.
Forests and woods
The rate of deforestation is another area of interest. Imazon provides government with imagery showing the rate of deforestation of the Amazon. This helps policy makers to understand the severity and rate of deforestation. Investors can use this information to assess the risks of policies against their portfolio.
Farms and Crops
On the flip side of deforestation is agricultural data. TellusLab Inc specializes in rationalizing satellite data to understand and estimate crop yields. This started with soy and wheat has expanded into palm oil, coffee and cocoa. These data helps commodity investors to hedge against a particular crop and country.
Surveying oil fields
Iceye is a unique satellite system helping oil producers unlock trapped oil and gas reserves in cold environment. This system can pinpoint where the permafrost is melting and releasing trapped natural gas. This takes away all the guesswork of Artic oil and gas exploration. This level of certainty gives investors confidence in their related portfolio.
Global fishing activities
Fishing is one area satellites help both private sector and public sector. NGOs like Global Fishing Watch use satellite data to map vessels, location and rate of fishing. Vessels that fish in non-fishing zones are reported to the authorities for swift action.
In general, this data helps investors to predict the trends in fishing supply and demands. Where there is over-fishing, prices will drop. After some time, the inevitable correction will kick-in for a strong buy.
Time to fishing for the right stocks then!
Urban Development with satellite guidance
Urban development has high impact on human lives. A poor design could lead to high loss of lives. However, if done well, it could make a city into a powerhouse. Using images from NASA’s Landsat and the European Space Agency’s Sentinel-1 satellite programs, World Bank researchers track expansion of urban cities. It helps town planners to understand potential risks.
It also helps economists and policy makers understand the impact of urban expansion. So, when disaster strikes, investors can assess the impact on their investments.
Satellites on a budget
SpaceKnow offers a DIY spatial analytics platform approach to use of satellites. It can track number of cars in a parking up to shipping vessels and shipping lines. Any investors inclined in specific companies or industries can order custom reports.
This is the sort of powerful tools investors can play with today. It’s like having your own satellite without the hassle.
Besides helping investors make sound decisions, satellite also help governments and NGOs. They use the power of satellites to observe climate change and biohazards such as virus spreads. Even pilots use tools like EarthCast to predict actual turbulence during their flights.
The next time you look up the skies, smile. You don’t know who’s looking back at you.
Net Operating Income (NOI), Explained
Goes without saying, if you’re a new landlord, there are some metrics you just have to know. And if this is the most important metric to master, this one may be the most important, period…
(Pause for dramatic effect…)
Whether it’s vetting, buying or managing real estate, NOI—short for Net Operating Income—is arguably the most crucial metric for real estate investors.
NOI is simply your net profits from rental income, after your expenses are paid. Here’s why it matters and why it’s more important than you think.
Your bottom line
When you have a rental property, your end game is to make a profit. You get your rental income. Deduct your operating expenses like maintenance, repairs and so on. Now you have your net operating income, which is your bottom line.
Net operating income is real estate’s equivalent to corporate finance’s EBIT. Here’s how it looks:
NOI = all revenue from the property – all operating expenses
It’s a simple enough formula, but there are ways you can manage it.
In business, there are two ways to increase profits. 1) Increase revenue. 2) Decrease expenses.
Simple enough, right? With rental income, there’s only so much you can do to increase revenue. So managing your OPEX is a basic but extremely important metric to monitor — and very often the hack for value-add investors to unlock crazy profits.
Here’s the real beauty of NOI. Unlike single-family properties, the value of income-producing real estate (using the cap rate formula) is derived directly from the net income you can squeeze from it. Not supply and demand. Not the market. Not the S&P. Not bubbles. None of that.
“Net Worth Hacking”
In other words, if you manage your NOI, you can literally enhance your asset’s value. This is at the core of the value-add strategy. This New Jersey group bought a building for $57 million, hacked the NOI through upgrades and management, and BOOM! Sold it three years later for $101 M’s.
DIY: How To Improve Your Personal Finances
Even if you’re not looking for a property this exact second, you always want to be improving your position.
So, focus on the downtime to improve your finances, get your debt squared away, and put yourself in a better position when you are ready to buy!
It’s important to be sure of your financial position before you buy a property because you might find it’s harder to get that property than you would have originally thought.
Here are a few ways to quickly improve your finances to help you save more, pay down more debt, and qualify for better loans.
One of the most common reasons that people struggle financially is because they simply don’t pay attention to what is going on in their own financial life. If you are not paying attention, you can’t hope to know what is going on and therefore know how to improve matters.
So, the first item on your list is to start paying attention to your finances!
When I’m working on a project, I’m laser-focused on the budget, the details, the costs, etc. But, sometimes in my personal life, I let this slide.
The reality is, when we do have a budget and focus on sticking to it, our bank account balances grow so much faster than when we aren’t using one.
I love to eat out, and my wife loves to buy small things around the house. One day, we looked back over the previous year of spending and found we each averaged over $1,000 per month on our hobbies!
By pulling back a little in each area, we were able to save over $1,000 per month but still do the things we enjoyed.
So, start by having a budget!
Even if you are financially well off and can afford most of what you want, by budgeting for the items and spreading the costs out over several months, you’ll find that you buy less, spend less, and save more.
Also, if you budget to pay down certain debts faster, you’ll see those balances dramatically drop!
So, do not overlook the importance of a family budget.
Save On Other Purchases
There might be a number of other big purchases you need to make before you get hold of your next property, and it is a good idea to make sure that you are only spending as much on those as absolutely necessary.
For any big ticket items, we actually start searching for them months or even a year in advance. For example, let’s consider kitchen appliances.
As you know, a full set of appliances can easily cost $5,000-$10,000 if you are getting high-end products. It includes a fridge, double oven, gas cooktop, microwave/fan, and dishwasher.
The first thing we did was go to the store and decide on two or three brands, styles and product lines we wanted. It’s hard to compare prices unless you are looking at similar products between stores.
Then, for months we’ll watch these items and their prices. Occasionally there will be sales and by tracking the pricing all year, we know which sales are worth getting or not. When we feel we are getting the best price, we’ll buy.
And by doing that, we can easily save $500-$1,000 or even more.
We did something similar with our TV, computer monitors, etc. Basically, anything that is currently working that we want to upgrade. Over the course of a year, we are saving thousands of dollars.
You might also use a money saving app to help.
Saving money in all these places will make an enormous difference when it comes to saving for your next down-payment
Pay Down Debt
With all the money you are saving by budgeting and by planning out major purchases, you might want to use some of it to pay down debt.
You’ll have to decide if it’s better to pay down debt or have a larger down payment because both will hold you back on your next purchase.
But, generally, paying down $1/month in debt is worth about $3/month in income. At least, as far as loans are concerned.
If you do decide to work on paying down your debt, I fully detail a unique debt pay down method to get you into your next rental property faster.
Increase Your Income
Most people just focus on debt, but the reality is you can only cut your expenses so much.
Income, on the other hand, has unlimited potential. So, why not focus on growing your income?
Increasing your monthly income can be done in a number of passive and active ways, and it is worth looking into as many of these as you can to find the right one for you. I outline a number of ways to increase your income in this article on how to earn $10,000 per month.
While earning $10,000 per month in side-income might seem a long way off, it’s important to start! Even if you can earn an extra $500 month now, and grow it slowly over time, it’s worth it!.
Don’t Focus on Just One Thing
As I mentioned already, focusing on just budgeting, or debt paydown can be detrimental to your overall financial goals. It’s important to combine a number of different things into an overall strategy, which includes budgeting, debt paydown, and increasing your income.
VIDEO: 3 Things You MUST Know About Your Credit Score
We all know what a credit score is. Sort of. But what really goes into your credit score? In this video, Investopedia breaks it down. Here are the top 3 factors that affect your credit score — and what you can do about it.