Archives for 2015

There are a lot of investors out there that get taught by this course or that course that you need to make 5000 for a wholesale deal and 50,000 for assignments of deals with larger profits.  This is not necessarily the profits that you will see in a lot of the deals that are out there, having an extra 5000 cut out of the deal could make or break the deal for the investor you are trying to sell it to.  If the investor only has 3000 up front to pay you – then I say you should take it! The common mistake that I see investors making out there is trying to ask for fees that are too high to make the deals appealing to investors that have smaller profit ranges.  There is a river of money to be made closing LOTS of deals were you can make 30-10,000 per deal rather than waiting to wholesale the 2 or 3 deals out of 10000 that will get you 20K in assignment fees.  This same phenomenon holds true when looking at renovation projects in Calgary and area, the real estate market in Calgary is still very expensive and unless you want to spend 80-180K on your renovation project (which you could do in just about any area in Calgary) then you will have to consider smaller/faster projects where the profits might be a bit skinny but they will start and close a lot faster.  The way to get ahead in your real estate business in the beginning is to set your sights on the low hanging fruit – which are the quick and easy projects we like to call “lipstick and rouge” renovations that only require the basics such as paint, flooring, appliances, and some clean up in the bathrooms and kitchens.  This type of renovation deal can be done in Calgary and area for cheap and then you can get the property back on the market for a quick sale.  There are also a much larger and less picky buyers pool for these properties because of the lower price point, the other options will all be very dated in need of some serious TLC so if your newly cleaned up property is next door then you will get a great price in less time in these areas than you would in the higher end areas of town where the buyers have the budget and time to take as long as they want.  Think about the math here…it is always far better to make say 20k on the property that you actually DO as opposed to 100% of the 80K flip that never happens! If you are able to make even 10k per property with a joint venture partner and you do 5 of those each year then you put an additional 50,000 on your bottom line.  Keep your eyes on the bigger prize of profits and consider doing a bunch of smaller deals rather than waiting for the big fish that could be an expert and avoiding your real estate fishing line!

To your success!

Tim R

The real estate market in Calgary definitely has been affected since the oil prices plunged a couple months back, but what that means is the lofty prices that sellers were getting are starting to come back down to earth.  That means that renovation projects and even buy/fix/hold projects are starting to pop up all over town.  We are currently vetting out a number of projects to renovate and sell, there is a lot more to choose from in the 250-400,00o range than there was even just a month ago.  When the market starts to panic and the sellers get nervous prices start to make a lot more sense, however that does not mean the game gets much easier – there are still many competing offer situations happening right now in Calgary showing that there are investors both new and seasoned, coming out of the wood work to snap up some deals now that spring is here.  Renovations are one of our favorite real estate strategies because it works in any market: up, down, sideways you can find the right property at the right price and add value creating a profit in all market conditions.  There are some things you have to watch out for to be sure -such as keeping your costs in line, getting the project done on time, and having your holding costs being a low as possible.  Once you have a great renovation crew and a system in place to make sure you have the property financed a the lowest costs possible then renovations become a trick you can pull out of your real estate toolbox any time of the year to drive some profits to the bottom line.  These profits are also short term and normally high rates, which can help to build your capital to fuel your buy and hold passive income strategies or rent to own practice.  The deals are not just in Calgary however, surrounding areas such as strathmore, airdrie, okotoks, and chestermere are also places we are seeing deals pop up this spring.  Due to the downturn in the market (also at all other times of the year) there are owners going into foreclosure creating deals for investors to get into properties cheaper which increases your renovation profits.  Common opinion is that you only get a fast re-sale in the big cities, but if you price the property right in the smaller regions with an excellent agent you can get the fast timelines you are looking for just like in the big city.  Smaller centers do have one main challenge, which is confirming the after repair value based on a small (or very small) number of comparables.  This can make the numbers trickier to nail down, but you could consider looking to adjacent towns with similar populations and demographics to give your numbers some more confidence.  Renovations are a strategy that you can make huge profits in short time periods if you have a great system in place, take a closer look behind the renovation curtain and you just might find your pot of gold waiting for you!

To your Success!

Tim R

How much time of you free time is spent doing productive things? After adding up all the hours we are awake over the course of the week then subtracting the work hours/travel time/kids/sports for the kids we are left a finite amount with which we can better ourselves.  How much of that time is spent watching TV? Shopping? (cue dramatic sound) Messing around of social media sites (not for business)? Try keeping a time log for a month and the results could be shocking indeed! When someone decides to get into real estate investing in Calgary or anywhere else in Canada, they have often taken a seminar that told them they could make a large amount of money in a short period in their free time after work.  This could be true in some rare cases but at it’s core real estate investing is a patience game – not a get rich quick scheme.  Real estate Investing also requires a large, focused, and sometimes tenacious effort to get things done and deals closed.  This also requires a very large investment of time to make the business successful and find the right deals, negotiate them, and execute them for those that have a couple hours each day to devote to real estate will likely be very disappointed with how far they are getting and how fast.  When you decide to have a hobby such as scrap-booking, photography, puzzles, or poker you could do those things for as little as 1 hour per night and if you missed a few nights due to work or what I like to call “life happens” then no big deal – you can always pick up where you left off some other day no harm done.  Also, you could have a bunch of hobbies that you can alternate back and forth causing to real detriment to any one thing you do in your spare time.  If you plan to get into real estate investing and also plan to make money, then you have to focus on a few things at a time to find deals/profit from them and find a system to make those activities repeatable.  Investing in real estate is at its core a patience game that takes long hours, fierce commitment, and often competition just like a race to the finish line having to beat out other investors to get the best properties.  Don’t get me wrong, you can have a successful career or other job and still be able to invest in real estate – you just need to become very strategic with the time you have available outside of that career/job.  Most people that decide to get into real estate investing took those seminars that told them they could make huge money in a short period of time only spending a few hour each week working on their business.  This may be true in some very rare cases, but those are the exception and not the rule!  Real estate takes a lot of effort, the mistakes are very costly, and a lot of precious time: s0 a hobby-like commitment will not get you the results you are expecting.  I would say that part time hours are the most effective way to look at scheduling your real estate investing business, especially in the start up phase for the first year when you are building your network, anything less will get you moved forward but at a lot slower pace.  Think about it, start a time log for a month, after all do you want to be a turtle in real estate investing “hobbying” along or a swift fox chasing down that next deal?

To your success!

Tim R

Rent to own has 2 main strategies and today I would like to talk about the best fit for the Calgary market at the current time.  Both strategies still work, so those sandwich lease advocates can still work their magic but they will be having a tougher time finding motivated sellers willing to get their payments covered.  Tenant first rent to own is the strategy that investors use when they have credit to qualify as well as down payment dollars to fund bank mortgages.  This method works very well because you get to qualify a tenant buyer, let them loose with a realtor, then they PICK the house they want to use for the rent to own program.  These tenant buyers will normally need very little credit repair (hopefully none) and they make good money from being a self employed business owner, or just simply do not have the whole down payment saved.  This high quality tenant buyer will be much more likely to close because they do not have the credit issues, as well as picking the house they wanted to live in makes them much more invested in closing the deal at the end of the term.  Tenant first works well if you have large capital reserves/credit capacity, if not you will run into the “brick wall of finance” with these just like buy and hold investors because you need new mortgages for each deal you plan to do.  This is where partners come in, you will have to seek out joint venture partners to help you qualify and put in the down payments to gain new mortgages for each new deal.  There are many people out there looking for a better return on their investments and rent to owns almost always have double digit returns year over year – that you can count on unlike mutual funds!  Once the investor has seen the returns for the first deal they will be more than happy to do more with you so long as each deal is a win-win for both parties.  Tenant first rent to own deals can sometimes be closed in less time because they buyers often have more money up front for the option deposit, and are often more motivated to close on the home to be able to call it their own!  Rent to own is a great strategy to help people realize their dream of home ownership.  Rent to own has two flavors, this one works best for the “taste” the Calgary market has right now!

To your success!

Tim R

Building relationships in real estate investing is just as profitable as building houses and selling them.  The value of each new relationship you cultivate can not really be measured by simple metrics like dollar value.  Think to yourself how much could your next Joint Venture Partner be worth – 50,000, 100,000, over 7 figures?  These partners in your real estate career should not be looked at for just the deal you could work on today… but in terms of all the deals you could do together (or refer to each other) over the lifetime of your real estate investing business.  Often, when we have a deal on our desk either 1 of 2 things happens: first, we could send that deal out to our mailing list and see what happens (sort of the throwing spaghetti at the wall to see what sticks) or secondly we could start sitting down with all the contacts that we think could be interested in the deal – which I think would be a much better option.  However, all of those coffees or lunches will only be possible if you are constantly in close, engaged, contact with your network and you know what they need and when they are looking for it.  Harder said that done – but this type of knowledge of what your contacts are looking for will shorten the average time to deal close like nothing else in your real estate toolbox. Making a habit of reaching out and meeting with your contacts in person also helps your mind-share from their perspective as well so you start to become the investor that they call when they are looking for help or a deal of their own – which you might just have sitting on the corner of your desk forgotten about!  There are invaluable insights into marketing strategy, deal structure, what to watch out for with tenants, that your network will share with you once they are on the other side of that coffee table…you never know what you might learn that is working for them that could work just as well for your line of business in real estate. I also think that you should never be doing all the work in your real estate business and working with your contacts will lessen the load on complex deals that take a lot of due diligence, extensive renovation projects, owning multiple single family rentals, evictions (who wants to be in court anyways?) and many other areas that having a second pair of hands/eyes will make your days a lot smoother.  Having partners that you know well, like, and trust can be challenging because those investors are people just like you and I and they make mistakes – this could cause issues, but how these problems are dealt with is what matters.  If your partner and you have built a friendship as well as a business partnership then you are more likely to get to the other side of the obstacles relationship intact – this is the true value of creating “sticky connections” with those that are willing to stick it out with you when the project isn’t going well as well when things are all aces!

To your success!

Tim R

Right now in Calgary there are a lot of people scared about what the market has done and what it might do over the next 12 months.  There are a lot of investors out there waiting to be able to capitalize on what generally seems like a downward trend in prices, renovation projects will be cheaper, buy and hold more attractive with higher cash flows – but how far will the prices drop and how fast?  Nobody can know for sure, but with oil prices where they currently sit and new oilfield projects being put on hold, if history has anything to say about it the prices should slowly decline as inventory goes up and the influx of new people and jobs in Calgary and area goes down.  This is the natural order of prices in a commodity backed economy, however the DNA of the job market in Alberta is not the same as it was in the 80’s and the impact will be different this time but what that means for investors will remain to be seen.  Those that are considering selling their homes at this time might want to re-consider that option unless they are certain that they could reduce their list price to get the sale as the buyers in the market are doing a lot of “wait and see” right now to see where the market goes.  If you need to sell for whatever reason then the best thing to do is price the property competitively based on comparable SALES not what other properties are listed for – listen to your realtor’s advice on this one they see the sales and know what your house should sell for in a short period of time. I do feel that prices are going to drop, and we have seen the beginnings of this in the market but they have not come back to earth compared to the sky-rocketing prices we saw over the last two years leaving a lot of sellers hopeful that they can still get a high price for their home in the current market place.  Unfortunately many of those sellers will see longer waits for the offer as buyers are able to take back the advantage due to the uncertainty in the economy.  The big banks have also just lowered their interest rates-which is typical for spring time to encourage people to sell their homes and initiate new mortgages which could buoy prices for a few months leading into summer.  This will put a lot of pressure on those that have not reached the end of their term on their current mortgages to hold onto their homes to avoid the dreaded IRD or interest rate differential.  The rates have dropped a few times over the last two years and everyone with a newer closed term mortgage could be in for some serious sticker shock if they pay out early.  Make sure you check with your mortgage lender if you plan to/have to sell over the next few months to make sure you do not incur some costly fees.  Those that have seen great appreciation in their longer term investments in Calgary and area might have longer waits to sell like the rest but won’t have to worry about penalties being at the end of their current terms.  Those who hold rental properties in Calgary will still enjoy higher rents and low vacancies and I would say the best move is to hold on tho those cash flowing properties until the next uptick in the market after all the oil panic subsides.

To your success!

Tim R

There are times in my real estate ventures that I have thought to myself “man it’s really hard to find good deals in Calgary” and at some points that has been true – but only for certain investment strategies.  During those days I had to take a step back and look at the whole forest of real estate deals and not just the skinny little sapling that happened to be my current focus.  In real estate there are ALWAYS deals to be found for the strategy that you are working on as well as others, they may not be in your back yard in the city that you live but they are out there for sure.  We can become so focused on trying to find that next rent to own/renovation project that we overlook the great rental property or commercial deal that we would be able to make great returns on if we took a second the think more creative about the deals that come across our desk.  Other investors out there that do things differently than you do are an excellent resource to be able to wholesale that deal to so long as you give the potential deals that don’t fit your current line of business more than 30 seconds of time and effort!  Hands down the easiest way to make money in Real estate or any other business is referrals – sending business to another real estate investors will put cash in your pocket with less work than any other activity.  This can also lead to Joint Venture opportunities that you never saw coming looking at your tiny saplings in that forest of deals!  Other markets are something that  highly encourage new and seasoned real estate investors to consider – there are not always that many deals in your own back yard and thinking outside the borders of your local area can reap huge profits if you are daring enough to step outside your comfort zone.  Working outside of your city does require some extra work in the beginning to set up a team or draw up and agreement with a partner in that area, however that work will pay off 10x by not missing out on a deal.  The velocity of money is very important in business because what is really important is not how much money you make deal-deal it is how much money you can make how fast – think of what missing an opportunity could cost your business : 50,000?100,000?1,000,000?  Keep those eyes open, look in all the corners you come across especially when your current digging isn’t coming up with any gold!

To your success!

Tim R

I just saw a foreclosure in northwest Calgary today and while I was waiting for my team to arrive at the house I finally figured out how to get the Nav in my car to stop thinking the car is in the US! I know that has nothing to do with real estate but that item has been on my list of things to do for a long while – nothing better than scratching a long standing item off your list!  The property that we went to see today is an excellent deal and I think that my partners will agree that we should jump on it – there is about 50K to be made in this house in about 3 months of renovations are required.  Foreclosure homes are almost always in need of repairs and a lot of them are very dated but if it has good bones this is a renovators dream project! There was a long period in Calgary that I did not even think about foreclosure properties due to the banks being stubborn on the prices, but there are still deals out there if foreclosures at all times of the real estate cycle.  When considering a foreclosure in Calgary and other markets there are some things that you do need to be careful of for sure.  For instance, when you purchase the home from the time you get the accepted offer until you take possession and get your own insurance the bank will not cover damage to the house such as vandalism but they do cover catastrophic damage such as the house burning down so don’t worry about that.  Some of these homes also have the water shut off and the plumbing cleared of all water and this can cause some issues with pipes leaking and other water related problems.  Just like any other property that is older foreclosures will be rough around the edges with older fixtures, lighting, laminate flooring from the 70’s and sometimes asbestos around pipes or used as insulation.  This type of repair is not the end of the world but does require some special attention to make sure the home is safe for the contractors you are using and your end buyer. Be sure to check your local regulations on how these things need to be remediated, some areas have strict rules on how asbestos and other hazards need to be dealt with.   Being able to look past the dated interior and the fact the roof needs replacing is something that your every day buyer and even a lot of investors are not able to do – if you have the right perspective to see the potential in foreclosures then you could make some large profits on houses that nobody else wants.  The best part about foreclosures (if priced right from the bank) is that you can negotiate a significant discount due to the repairs needed by making a strong offer – no conditions is best but if you have a great renovation team you may not need an home inspection condition or you could use private financing and not need that as a condition.  With lower prices and less competition you might want to consider starting your real estate fortune in foreclosures both in Calgary and Abroad!

To your Success!

Tim

In real estate courses abound they give you the general 1000 foot view of how to do marketing for your real estate business.  Further, there is a lot of advice out there given by American-focused educators that advise you gain access to lists of your target market from public records – which will not work for Canadian investors due to the freedom of information act.  These courses also offer some conflicting information such as shoot-gun marketing as well as laser focusing on a certain target market.  Well using the shotgun approach to marketing in any business is only something that large companies can do with enormous marketing budgets and frankly all this really does is boost their mind share in their potential customers heads.  The simple fact is this does not work very well in real estate (and most other businesses) you need to focus your marketing efforts at your ideal prospects and propel them to your offers through engagement and quality content.  Gone are the days where interruption marketing (commercials, flyers, telemarketing) will get your results you need to get your customer’s  interest first and get them to know, like, and trust your company before you have a fair chance at having them open their wallets no matter how good your offer is.  Think of how many advertizing messages that we see on a daily basis now having smart phones in our pockets – the din of marketing noise is getting louder and louder by the day and you need to stand above that crowd drawing your prospect’s interest to your content first and the offer second, third, or eighth on your list of activities. In real estate planting bandit signs and broadcasting direct mail letters to random parts of your local area will cost you a lot of money/time and likely meet with poor results without first doing some homework into what your clients are really after – this is using the sledge hammer to pound in the marketing nail… when a well placed strike from a standard issue ball-peen hammer would do the trick just fine.

To your success!

Tim R

There are a lot of Canadian and international investors that have bought properties in the US since the downturn of 2007-2008.  However, there is a lot of uneducated money buying up properties in “sexy” markets such as Florida, Phoenix, Las Vegas that are only buying in these areas based on the hope that the properties will appreciate and then they can sell for a profit.  This was certainly the case in phoenix about 2 years ago and those that bought in saw over 30% in appreciation – however this is not something that you can count on, what the market will do and when is something that no one can know for certain.  There are always the fundamentals that can be monitored such as job growth, transit projects, population changes but no one can know for sure when exactly the changes are going to start.  In real estate the speculators are the first to go broke when the tides of the market change, having properties that cash flow very little or not at all hoping for the market to go up.  There is a lot of money to be made in US real estate but you have to pick the right markets where you can get quality properties for a good price such as Atlanta, Texas, and Kansas just to name a few.  These two markets have very strong economic fundamentals which is what you need to ensure your properties cash flow both now and in the future.  Many Canadians are afraid to invest south of the border worrying about taxes and liability issues.  I can tell you for sure that these two things are nowhere near as hard to compensate for as people think, but you do need to have a excellent team on the ground to help you invest from abroad.  Properties in Calgary need a down payment of around 80-90K for investment property and in Houston Texas you can buy a whole house for cash for the same amount! Doesn’t that kind of perspective make you wonder what it could be like to invest in the US? In Houston you can buy tax lien properties for as little as 8000.00 and at that price the property would cash flow around 500-700/month there are not many places in Canada where you can get 1 unit to cash flow that well.  There are places in Canada that make a lot more sense than Calgary and Vancouver for buy and hold – if you are looking in Canada places such as Ontario and Winnipeg and Saskatoon are worth a look for sure.  I highly suggest that if you are afraid of investing in the US for whatever reason give us a call to answer all your questions about how you could get started and put those fears to rest!

To you success!

Tim R