Archives for 2015

There are a lot of stories about the oil prices tanking, the dollar dropping, and a lot of general doom and gloom over the economy in Calgary and area making a lot of investors fearful of what is to come.  Many would say that now is not the time to invest – that holding off for right now would be a better ideal.  Did you know that more millionaires were created during the great depression than any other time during north American history?  Someone can always think of a lot more reasons to NOT to invest as opposed to reasons to just do it!  The market fundamentals still need to be considered to make sure that your exit strategy (or strategies) is sound, but there are new ways to make money in every part of the real estate cycle.  Fearful people generally make poor decisions, therefore you could capitalize on sellers panicking and selling their properties to you for a huge discount, at a minimum far cheaper than they would could get when they feel optimistic.  Sellers will want out faster so you can get quicker closes, legal fees paid, all sorts of new negotiation tactics are in play when people are afraid.  For those of you that buy and hold there will be an influx of renters when those panicked sellers sell and have to live somewhere possibly driving rents up in areas where rentals are already scarce. I am not sure if those of you outside of Alberta remember the great flood of 2013 but I can tell you that finding trades people for anything in this city and area as almost impossible for about 8 months, and if one could be found many were gouging customer on price making it impossible for some investors to make a profit on their renovation projects.  When the market dips and the housing starts and uneducated investors stop doing renovations due to fear – those trades offer lower prices and faster turn around times because they are now looking for work and need to pay the bills.  There are always advantages to a declining market – you just have to look at things a bit more creatively and compensate for the changes as they happen.

To your success!

Tim R

I recently had a conversation that had me answering a lot of questions about US real estate, normally that would be great because I love talking about real estate in Canada or the US and even abroad.  However, in this case the person asking all these questions had just weeks before told me they wanted to do renovations in Calgary.  I think that a lot of new investors can get excited by an article or by flipping back through their notes from the last seminar they were at and want to change directions or add a new line of business to their current real estate activities.  I was guilty of this at one point in my real estate business for sure – but I got over it and decided to focus more on what I was good at rather than trying to learn something new every few weeks.  There is a different marketing strategy, tools, pitfalls, capital requirement, for each and every strategy that you can use in real estate to make money so constantly changing course is a lot of work and takes a lot of time to re-adjust everything to suit the new line of business.  I got some good advice from my business coach that verified my new pathway of focusing on no more than 3 lines of business at any given time.  Once a certain line of business can be totally (or almost) systemized where it just about runs itself, then you can start looking at what other ways you could make some money.  The things we focus on in life and in business turn into a reality but only if you TRULY FOCUS on that thing.  Real estate investing no matter what the strategy – is hard enough without taking your eyes off the prize and fracturing your efforts.  Imagine that you are doing a renovation project and you have to be on regular calls with trades/suppliers and you constantly have rent to own tenant buyers calling you to get more information about your program – when your marketing stated a 24 hour response time…that could be a bit frustrating both for you and the customer.  Focus in business is just like focus in life, if you are planning to run a marathon you have to train like crazy to get ready and if your trying to learn fly fishing at the same time putting a lot of effort into that then it’s likely that your race may go less than stellar!  Pick a couple strategies and focus on those until successful – you will be happy that you did.

If strategic accountability in your business needs hand-up contact us today for a free consult to see how we could help.

To your success!

Tim R

Today I am going to come right out and say that most people are terrible with their money.  There was a time in my life where I was part of this very large herd of Canadians that spend just about everything that they make.  I have come a long way since then becoming VERY Finicky about my finances.  One of the things that I recommend that people should do is save every receipt for anything you buy no matter how small to see where your money truly goes each month – the results will be surprising.  Often in life when an opportunity comes your way you may look at the price tag associated with that investment whether it be in training, tools, a new rental property and say “I would really like to get involved but I don’t have the money right now” – well there is likely a reason why and that exercise mentioned can shed some light on the path that got you to “no money”.  I read in an article recently that statistically more Americans own cats than they own stocks, that is very telling on how well us north Americans are doing with investing for the future instead of buying TV’s and cars.  I am not a huge believer in paper assets but I think they have a place in a well balanced investment portfolio.  Clearly, there are a lot of Canadians that could be a bit more finicky about where they spend their after tax dollars. Some might want to consider putting a bit more money into tax deferred assets such as RRSP’s.  There are a lot of people that have lost a bunch of money in their RRSP’s in the last few years… and if they were a bit more finicky about how their money was being invested and not just trusting the banks/financial firms they might have considered Arms-length mortgages which are secured by real estate – one of the most common ways the bank makes their money in the first place! If someone is willing to inquire about what their options really are to invest they might realize that they could be just like the banks in a number of ways such as hard money lending for real estate projects.  Real estate provides a lot of opportunities but you need the right education to be successful in it because the profits are high in real estate but the mistakes can cost you big as well – make sure your being finicky with your finances to make sure you can invest in the next opportunity that comes your way.

To your success!

Tim R

There are those that might say you should not be “anal” about things or finicky in life for a variety of reasons, now in some contexts I would agree (and in general) you should not sweat the small stuff.  However, in terms of how you should finance your real estate deals you should be as finicky as possible! There are a number of reasons why – firstly knowing your numbers inside and out on any deal is imperative to be able to mitigate your risk and turn a profit.  Thus, you need to be as meticulous as a spider weaving a web to be able to nail those numbers down so being fussy here is a really good thing.  Also, the rates that you get from the bank, hard money lender, credit union may or may not work for your deal the way you wanted to execute, and if the numbers do not give you enough options to have a plan A and B then you are greatly increasing your risk profile having the 1 exit strategy – which is never a good thing.  In real estate no matter how well you plan and how much you focus on having your first strategy work, things could change in the market/economy that prevent that plan from working out with a good profit margin.  For example: you plan to do a renovation project and sell the home in 6 months for a profit but prices drop by 25% over that 6 months and now you have a house you can’t rent out for enough money to cover its expenses.  The way you could avoid this would be to make sure that the property will cash flow if you had to hold it, there is always more than one way to do a deal and make money you just have to think creatively enough to see all the options. Having the negotiation skills to make sure you are able to get seller financing is also a way where your finicky nature will ensure you realise greater profits than those that just accept their fate and have to constantly spend the full down payment to get into every property that they buy – eventually they will run out of money and a lot sooner than the picky investor! When talking with your mortgage broker (who uses just the bank to buy real estate anyway?) being “anal” over getting an open loan/variable mortgage is essential if you plan to flip any properties, otherwise you could be slapped with an IRD (interest rate differential) and trust me when I say that WILL eat into your profits in a big way.  Those investors who are very finicky about the renovation budget they set not being exceeded will always make more money than those that just say OK and pay the contractor’s bill that was over the quote but within scope.  There are a lot of things you should not worry too much about such as: spilt milk, bad weather, hangnails — but in real estate I am of the opinion that being finicky is just fine!

To your success!

Tim R

Questions arise about obligation to disclose whether property has stigma

original post on http://www.movesmartly.com/

I have seen this question come up a lot around grow-ops, I would disagree with the writer of this article in terms of grow ops that have been properly remediated specifically.  If a home was renovated and certified by a city licensed remediator – then the property is in most cases in better shape than it was before the grow op ever existed.  To have realtors out there needlessly narrowing the pool of buyers for these properties is just not necessary.

To your success,

Tim R

TD predicts the average price of a Calgary home will fall from $459,500 to $439,500 in 2015 (-4.4%) and then to $424,500 in 2016 (-3.4%).    Sales are expected to plummet by -47% this year and -1.9% next year.

The report goes on to say: “Calgary and Edmonton have already experienced a sudden and abrupt turn, and by January, existing home sales had already slumped by 45% and 30% from peak levels reached last year, respectively. Meanwhile, annual average existing-home price growth slid into negative territory.”

It’s too bad TD is focusing entirely on the average price which is a volatile and misleading measure in the context of the following facts:

• The median price was up 1.08% y/y in January
• Benchmark price was up 7.69% y/y in January
• Teranet HPI which tracks repeat home sales was up 7.1% y/y in January
• Luxury sales ($1M+) in January were down -42% y/y

If the Calgary real estate market continues on this path, price declines are obviously expected.  However, I think TD is jumping the gun by stating that prices have already slid into negative annual growth by referencing only the average price.

The above is an excerpt frohttp://calgaryrealestatereview.com/2015/02/12/td-calgary-edmonton-housing-markets-likely-to-correct/

This type of media attention is exactly the kind that can cause panic in the market place.  There have been layoffs in the oil sectors over the last few months with others expected to continue over the next 6 months, this will certainly have an effect on the average sale price in Calgary and the area but what that impact will truly be is yet to be seen.  There are still many people moving to Calgary for work – not just on the oil rigs but in construction and other sectors as well which are still doing well and are not as impacted as the oil patch and related industries.  I think that this correction was on the horizon for a number of months now and was going to happen no matter what the oil prices did, the oversaturation of high priced homes was incongruent with the buying power of your average Albertan.  I am speaking of the true buying power of the average Albertan and not the influx of buyers that are only buying due to the historically low-interest rates and are going to be in trouble in 5-8 years when the rates start to increase.  The media plays a large role in public perception of how a province is doing fiscally and they of course sensationalize the little things to sell advertising – the true fundamentals have not yet to greatly decline in Alberta from what I have seen so far, based on that I say again that it is too soon to tell on whether or not this current market blip will end up resulting in a downward trend.

To your success

Tim R

There are many self-help books and personal improvement books that teach a lot of great things, today I want to shift gears from real estate facts and information to touch on a very important point about what gets a person out of bed each morning.  I for one need something to inspire me to great things, this is a fact of life that I see written in a lot of those books I mention as well as there is some significance here because if you see something repeated in book after book written by many different successful people from vastly different backgrounds and industries then there just HAS to be a silver thread of truth in all that noise that surrounds us today.  There are a lot of reasons that I get out of bed personally: one, of course, is to pay the bills and keep the roof over my head and the power running to my house so I can write these articles – but unfortunately for most, this is where those motivations stop except for some consumer goods such as that new shiny TV someone may want and often that is bought with money that they don’t actually have! I use my credit cards to be sure, but I use them as effectively as I can and mostly for business activities and not leveraging my lifestyle.  I feel that many people out there dream big dreams of having financial freedom but I hear all too often the objections that they have placing restrictions on their lives for the most untrue reasons.  Phrases such as “when I win the lottery I’ll get into real estate” “the only way rich people get to the top is by stepping on the little guy” “I am not smart enough” just make me want t shake the heck out of those people and tell them that all they need to do is change their perspective a little bit, get off the couch and DO SOMETHING about their future and they can gain all the things in their lives they spend so much time complaining about not having.  The only person in life that cares about your success in life at the end of the day is YOU and the sooner someone comes to terms with that the better off they will be in every area of life.  Imagine if half the time spent complaining about things was spent working on fixing those things? I bet we could have found a way to fly or time travel by now! Most of these people do not have a clear vision of what they actually want in life, if they did then they would be able to formulate a plan to actually get them there and stop talking about it and take action.  The things that we only casually want to have in our lives are likely to never happen because there is no burning desire motivating us day after day to get there.  The famous author Napoleon Hill points out that once you have a thought in your mind of what you want to create or accomplish in this world as clearly as you are already using that creation or living that success in your every day then eventually your subconscious mind will show you the answers to the problems/obstacles that stand in your path to getting there.  It is no coincidence that his famous book was called “Think and grow rich” and I could not stand behind that advice more – once you think you can do something then you can, if you constantly create mental mountains to climb then it is hard to believe you will ever reach the paradise on the other side of the challenges in life.  With a crystal clear picture of what your life will be like when you reach your goals, not just having your fancy car or not having to report to a boss is nowhere near enough detail…actually being able to feel what it is like to achieve that freedom, have that time with you family, see the view from your villa in the south of France as the sun is setting, or whatever it is for you.  Having those types of end results to strive for WILL get you out of bed on a rainy day, stop you from procrastinating and watching TV instead of working toward your WHY.  There has to be balanced in all things to have true success, you need time for entertainment, your health, family, giving back to the community so working on your goals most of the time is critical but enjoying your journey is as well.  In closing, find what truly inspires you to do great things and if that is not what you do for most of the time maybe you need a different financial vehicle to get you there, and for me, that is real estate.

To your success in all things!

Tim R

I recently saw in the blogosphere something that bothered me a little – it was an article written by a realtor who was cautioning home buyers to not use the rent to own as a way to buy home and citing an example of how one of these deals had gone badly for one of their previous clients.  I will come right out and say rent to own as a business has the worst reputation in real estate – now this is for several reasons.  Firstly this is the scenario that most new investors get into without proper legal advice and not in many cases knowing how to properly analyze the deal both for the TRO company as well as the tenant-buyer.  This is really unfortunate because some well-intentioned newer investors could be inadvertently setting up their clients to not be able to close the deal because they did not have the numbers right from the beginning, now there is a solution to this: you can extend the term for another year or more to make sure the tenants can bump up their credit and be able to get a conventional loan.  There are some bad apples in every business and real estate is no exception with an above-average concentration of bad actors in real estate in RTO because it looks like easy money to put unsuspecting tenant-buyers in a home that they could never afford, take their deposits, not keep an eye on them and then disappear into the night.  That could happen with any business investment on either side of the RTO fence line buyer and owner alike – when you are thinking about getting into a rent to own with any company you need to do your homework getting the contracts looked at by a lawyer (a creative real estate lawyer so send me a note if you do not know the difference) and do some digging into how long the rent to own company is in business, how much checking up on you they plan to do over the term, is there an option to extend if something happens, and how long the mortgage broker they deal with has been in the business. The realtor previously mentioned has of course bias in this debate such that she suggested that you just save up the 5% down payment and go to your bank to get a standard mortgage which is great for her -because she gets to make a standard sale without doing any extra work or thinking outside of the box.  The main benefit of RTO is that you do not have to save up the whole down payment to start your path to homeownership not to mention if you have damaged credit you can’t get a loan from the banks these days.  I think all realtors could benefit greatly from helping the tenant buyers out there know that this is also a good option for their buyers who can’t get qualified right away for 3 reasons:

1. They get their client into a house faster getting referrals and the eventual sale of they sell down the road

2. Referrals for their mortgage brokers which helps their relationship

3. Standard sales through tenant first rent to own investors!!

Rent to own gets a bad rap, and in some rare cases they deserved it… but more often than not this is a great strategy that helps both buyers and sellers get what they want sooner.

To your success!

Tim R

The quality of the team that you have around you will ultimately determine your success in any business and real estate is no exception.  Picking all the members of your team is a very meticulous process that involves both personal criteria (working with someone you get along with) as well as business criteria such as their ability to frame a house or find the next up and coming neighborhood to invest in.  All professionals are not created equal because they are people just like you and I and they value different things – realtors are looked at by a lot of people as the real estate experts because they deal in real estate every day but as is true for a lot of industries just because someone deals in a certain thing every day does not mean they can deliver on what you are personally looking for.  Realtors are at the heart of things salespeople and the top 5% of salespeople are generally making all the money in any industry and the rest are performing at a modest level or lower.  Sales is a tough business but also the highest-paid second only to the entertainment industry (which includes pro Athletes) and there is a reason that most realtors do not make it past the third year in real estate it is very difficult to gain traction in this business and gain the skills to become a top performer.  There are a lot of great realtors out there just like other members of your team their style, goals, personality,  or punctuality may not fit with what your business is trying to accomplish.  Finding a top performer to fill any spot on your power team’s bench can and should take some thorough due diligence.  Make sure that the missing puzzle piece for your new team member fits into YOUR bigger picture!

To your success!

Tim R