Continuing with our motivational series – today I wanted to touch on a topic that is often over looked when we thing about our success in real estate, in life, in relationships.  The comfort zone is the main enemy of success and growth, because simply put: if you are not growing your skills/knowledge/communication your results will remain fundamentally the same!

It has been said that “if you want to get something you have never had, you have to do things you have never done before – what got you to this level of success will not get you to the next level” I believe that is 100% true, when there haven challenges in our business it always traces back to something that we did not know.  Also, we never know what we don’t know – the paradox of life and business in real estate or any other.

Growth will always be uncomfortable, making the cold calls, dealing with upset customers, door knocking, figuring out social media – our mind is programmed to caution us from uncertainty, doubt, fear.  That is a normal response (from the hunter/gatherer perspective), it is how we acknowledge those thoughts and move past them that counts. We no longer live in a world where we can get eaten by a lion every day, so those old programs can be re-trained, if that sector of our brain had its way we would never do much at all!

This is why we have to develop a community of mentors, partners, associates, master mind groups to get outside of our current knowledge/abilities and push for that growth+ see within ourselves the potential that we can’t always see.  We are better together, business is a team sport and I would suggest to you that so is life in a lot of ways – having mentors/coaches for fitness, spirituality, relationships is the only shortcut to excellence/up-leveling your game.

It has been said also – I love this quote BTW “If you want to go FAST- go alone. If you want to go FAR go with others”. Often when we are going fast alone we could be headed in the wrong direction or right toward one of the pitfalls of business/life! We will fall into those no matter what, and that is how we grow – through the challenges of life.

The universe (or higher power of your understanding) gives us GIFTS they are wrapped up in challenges, and the larger the GIFT the larger the Challenge it will be wrapped up in.  I would suggest that you consider when a challenge comes up “what am I meant to learn from this challenge?” This has helped me orient my thoughts on solutions, being grateful, and moving forward.

To your success,

Tim Reid

-Respect The Hustle

Rolling forward with our motivation series, I wanted to go over today one of the most important ingredients for success in business, success in real estate, success in life in general.  Having a GOAL is that ingredient, now we have all heard this before right? Why is it then that when the statistics are tallied – more than 2 our of every 3 people don’t like what they do for work and where they are in life?

I would suggest to you that a ship or airplane with the best captains in the world, will go nowhere and drift through the air/water and more than likely crash and burn if there is no destination they can pilot towards.  Put another way – if you don’t know where you are going, how the heck can you MAKE A PLAN to get there?  It has been said that the difference between a goal and a dream is that one has a plan/deadline, I am sure you can guess which!

Without health goals, we generally (unless you have lucky genes) are less healthy than we want, we don’t earn the money we want, we don’t have the relationships we want.  The key is to have targets to shoot at in all areas of life so that you can measure if what you doing is working or not.  What gets measured gets managed, things unfortunately do not take care of themselves in life or business.

What is the thing that can tie all of the goals together? There are many different angles I have heard, your “why”/”purpose”/”destiny” — whatever you call it that resonates with you, I suggest to you that you sit down with a sheet of paper thinks about this in detail 5-10 minutes each morning and WRITE down ideas for the thing that you want to accomplish in life that if you die before it’s done OR you would feel embarrassed to be dead!

All joking aside if you have a destination that you want to go and you have a burning desire to make that thing happen then that will be your motivation to get back up when life knocks you down, when you get betrayed in a relationship when your deal goes sideways, everything in life is temporary the only place we exist is in the present moment – make that the one you focus on.  Learn from the past but don’t dwell on it because you don’t live there anymore.

To your success,

Tim Reid

-Respect The Hustle

WOAH What a title for a real estate blog! Well, I have been doing a lot of personal growth, motivational listening recently due to the current status of the world with the pandemic.  I will be continuing that practice at a higher level than I did before even after things to back to the “new normal”

I had recently been on a webinar with Les Brown speaking, and I have been studying his lessons over the last few weeks.  Personal growth is just as important as growing your success skills in Real Estate Investing or your profession – even if that is currently disrupted by the status of the world.

Les talked about a minister that stated that the wealthiest place on earth is actually the grave-yard! This is the final resting place of so many people that never pursued their dreams, their inventions never saw the light of day, books that never got written among other things. The primary reason for this is FEAR;

Fear can also be defined as: False Evidence Appearing Real. We are only born with 2 fears

1. fear of falling

2. fear of a loud sound

The rest of the fears in our life that we experience are LEARNED behavior, think about that for a minute.  Unfounded fear of failure, ridicule, making mistakes holds so many people back from getting what they want in life.  Do you know someone who complains endlessly about their job? relationship? health? Yet they do nothing about it? I think we all know someone like that – or at least we used to and are now upgrading our average of the 5 people we associate with the most.

Real estate, businesses, investing in stocks (actively) all have risks – being a highly successful entrepreneur takes being dedicated to a level that most people would call crazy~! That is OK, the people that think that is not your kind of people anyway…be confident in that, go after your dreams and level of success you WANT because you are capable of more than you can ever imagine.

To your success,

Tim Reid

-Respect The Hustle.

I have been doing a lot of reading these days, as much as possible considering the long workdays.  When working from home one might think you would be working less, but that is certainly not the case for our business in real estate!

One book I am ready by Brian Tracy talks about a formula that I have never heard before.  It is called the 3% rule for investing in personal development. I have been a huge fan of personal growth/professional growth for many years – my telecommunications engineering world was always changing so adapting and learning new things was just a matter of course of the industry.

This is not always the case in many professions out there, often you learn the job in the first 3 months, and then that’s it – you could do essentially the same thing for 25 years.  What would your professional life or business look like if you invested 3% of your earnings in courses, coaching, seminars, books/audiobooks each year?  The results in the book were staggering – about a 50% increase in income, each year was the case studies used! That is some incredible leverage! (one of the best things about real estate investing is the leverage)

I certainly make an effort at our company to be growing and learning all the time – because if we are not growing we are dying….both mentally and physically. Real estate, entrepreneurship, life in general I think everyone would benefit from taking whatever percentage works for you and making sure you budget for, purchase, and most importantly execute on the things you learn from personal/professional development resources, you will be happy that you did!

To your success,

Tim Reid

-Respect The Hustle

I was just on a call by a mentor of mine and the guest speaker was a very accomplished music producer, who worked with some of the best in the industry for years and still does to this day. There are skills in real estate and life that we must develop to be successful real estate entrepreneurs.

The phoenix group is on a mission to blend the “inner game” with the “outer game” – the problem with real estate training and education is that it is JUST real estate.  Now here is the dilemma: you have to pick something to be good at and teach.  That is the challenge with a lot of real estate and other success trainings out there is that they do not and frankly, cannot give you all the pieces of the puzzle.

That famous 80/20 rule holds true in a real estate business – the things you do to build a successful real estate company are the same things you need to do in ANY company and the 20% is industry specific.  There were many words of wisdom that I got from this call, and they can be applied to any business as well as other facets of our lives (after all we work to create the freedom so we can do what we want after all!) such as:

1. When you are already in a hole, stop diggin!

2. “I have not forgotten anything that I have discovered, but I have forgotten over half of what I have learned” A powerful reminder that we often learn best from experience, and being shown the path rather than being told where to go.

3. Ask what do I want? Then what can I control about this situation? (when faced with a challenge) Key reminder that worrying about things you can’t control uses up valuable bandwidth in your mind that could be used to get you closer to your goals rather than further from them.

When we thing of business often we get mired down in the strategy, tactics, marketing plans, sales techniques.  Business is really about people and the relationships between them – I encourage you to have a look at those fundamentals, continue to always grow your inner game in parallel with the tactics/strategy because they both affect your results equally.

To your success,

Tim Reid

-Respect The Hustle

There are many small towns in Canada that investors generally ignore because they are “not in my backyard” and having a property in other markets tends to be scary. While there are certain risks to consider in any market other than the one you live in, it is wise to consider the market where you will get the best returns in real estate.

We do recommend that investors get educated and learn the rules of the game from an expert in their local area to develop the skills of analysis, property management, renovations, financing, and structuring before venturing afar.  Learning the lessons will be more difficult in an auxiliary market, and each market has its own economic drivers, cycles, and factors to consider. One of the factors to consider is the CAP rate – which is a measure of the real estate property cash flow performance.

For example, a 1,000,000 building in Calgary that has an NOI (net operating income) of 60,000 after all costs would be calculated as follows: 60,000/1,000,000 = 6% CAP rate.  The guideline for  US properties is a minimum of 7% cap rate, here in Canada it would be more reasonable to expect 6% cap rates for fully optimized buildings.  Property in large “sexy” markets typically perform much below this mark, for example in Calgary at the time of this writing buildings trade around 4-4.5% cap rates for larger buildings and Edmonton Multi-Family rates at around 5%-5.5% cap rates. Industrial/commercial office is a sector that can have higher cap rates, however, these properties in Calgary and abroad have a much higher price tag!

Smaller centers such as those 1-2 hours from a major center will have lower taxes, cheaper land prices, lowering the total cost of the building allowing for an average of a higher CAP or cash flow performance.  These properties will require a solid management strategy or a great property management company – which are hard to find in my experience, I would recommend partnering with a local investor in the area you are interested in or get their recommendation on who the best service provider is in that marketplace.

Because of these factors, the cap rate will be higher and the rent typically a bit lower – however with good optimization the building costs can be lower giving you significant cash flow, also CMHC financing can be used to structure the financing for longer amortization and lower interest rates – you have to pay a premium and work with CMHC experts, but the extra legwork is worth it.  There are many small towns in Ontario within a few hours of major centers like Ottawa, Toronto, Thunder Bay, Windsor where you can get multi-family for significantly cheaper than markets like Alberta/BC – these areas have good jobs growth/industry driving demand for rental units.

Consider looking outside of your backyard for deals, the pioneers looking for gold had to trek across this continent looking for the hills to dig under to excavate those gold bars – you might have to as well to find the great real estate deals.

Respect the hustle

Tim Reid

Can you buy real estate No Money Down? Most Realtors will tell you no – typically 95% of realtors will tell you that.  Not their fault, they just aren’t taught that in realtor school – also most lawyers are never taught the creative strategies in real estate either.  Most sellers want top dollar for their house and they want to cash out their equity, and who can blame them?!

However, there are sellers that are in a bind and are MOTIVATED to sell their properties.  Motivation comes in many forms: death, divorce, taxes, job loss, downsizing, vacancies, partner troubles, moving due to job transfer, bad management, and many others.

When a seller is motivated you can educate them, and show them that if they have little equity in the property after all the selling costs (realtors, lawyers, holding costs) they will be at risk of having to pay out of pocket to get out of the property! For Example:

House in Calgary is worth 450K, they currently owe 430K – after holding the property for 3 months and paying all the holding costs they would be left with 10K if the property sold for list price – ouch! Not very great for the owner.  They are also in a position where they can no longer afford the payments, the investor could show the owner that they could pay them 5000.00 upfront and not take the risk on the market and they could be rid of the property right away for 430 (what is owed on the mortgage by way of assuming with qualification) pocket the 5K and be done with the headache. Investor “buys” 20K in equity for 5K which is like buying a 20$ bill for 5$ pretty good ROI.

You could even sweeten the deal (depending on your exit strategy) by giving them a 15K prom note for 6-8% for a 5-year term and 0 cash down which is almost giving them all the equity in the property and creating a great win-win for both parties.  Solve a problem crate a profit the tenant of all entrepreneurs!

Respect the hustle,

Tim Reid

With the current state of the world with the COVID-19 pandemic rocking the world, the equities market has taken some wild swings in the last few weeks. That said if you are a day-trader that could have made you a boatload of money! For most investors, however, that is passively invested in mutual funds in their RRSP, TFSA, 401K accounts…that market drop could have erased a lot of your returns that have been built up over the last decade or more.

I strongly believe there are 3 pillars of wealth:

1. Stocks
2. Business Investments
3. Real Estate

Naturally, one would think I tend toward real estate and have a bias for that, and you would be correct! The reason for that is that I understand real estate the best – and warren buffet teaches us that you should pick things you understand to invest in.  While real estate is IMO the most reliable way to generate wealth is also the slowest and takes a lot of management to do properly (which is why most people don’t do it).

Stocks are a great investment over time if managed, unfortunately, a lot of RRSP investors do not manage their portfolios – and now they could be staring down the barrel of a retirement that is no longer certain.  I was recently on a webinar with Kevin Harrington and he has some great advice for those worried about their retirement: “if you have got your investments wiped out in the market and you are close to retirement, start a business. You can’t earn that money back you will run out of time”  Brilliant advice, I think everyone should have category 2 investments.

Even if you are not the business type, you can partner with someone who is experienced in business and gain all the advantages of starting one yourself. Something to consider for sure, also this could be a time to look at your portfolio and re-balance for the longer-term into real assets such as real estate or others like precious metals.

To your success,

Tim Reid

Respect The Hustle

One of the common challenges we see when investors are getting started is they do not know how to price their properties so they will sell quickly – after all that is why they call it a FLIP to make a short term sale and then roll those profits on to the next deal.

1. You need to research the market to find out what the “Fence Posts” are for the community your property is in.  There are a lowest-priced comparable sale and a highest priced recent comparable sale for all neighborhoods, find out what these numbers are so you can price competitively.

2. Make sure your ARV (after repaired value) is between the median price and the top end price for your area (the higher priced fence post) this way your property will be positioned competitively for the area, and ideally, you will have a nicer product than all the other houses for sale at that time for a lot less than your competitors.

3. Realize that someone in your target area could have a house that they own free and clear with 0$ mortgage owing on it, and they can sell the property for drastically less than the market value which could in turn make your newly renovated property look VERY expensive by comparison.  Most realtors search for properties in a certain price range for their clients and due to this fact your property may look out of place for the area compared to that owner that sold for cheap just to cash out of their house. Be prepared to hold your property for a couple of extra months or sell for a lower price when this happens.

4. ALWAYS have a healthy contingency in your budget – this includes for a few areas: holding costs, renovation budget, price discounts.  There are a number of things that could go beyond your initial estimates even if you keep your costs under control – the market could shift, someone could sell too cheap as mentioned above, or you might have to drop your price if you aren’t getting any offers.  We suggest a 15% contingency in your budget to be prepared to adapt to all of these areas.

5. VERIFY your targeted renovations are actually going to raise the value of the property by the amount you think it will.  This will take some detailed research by you or your real estate team, for example adding a new hot water tank and furnace will not add much value to the home (owners expect a house to have heat and water!). Windows are a very attractive feature to upgrade, however, it’s very expensive and the value lift will generally not cover the price you pay.  Make sure you look at the comparable homes for your ARV and look at what they changed compared to the old listing for your area, this will give you a much more accurate number based on WHAT actually raised the value of the home in the area your working in – buyers can value different things in different areas so keep a close eye on making apples-apples comparisons.

The flipping game is a profitable one if you keep your numbers accurate and your project is managed successfully.

To your success,

Tim Reid

Respect The Hustle

In business, the old adage states that “the customer is always right” I disagree in fact the customer is often wrong, both are service-related scenarios and wrong for your business. Customer service is key, however, if someone is being unreasonable ….they are just that unreasonable.  When a customer complains it is actually a valuable opportunity to evaluate your systems, create goodwill by solving it, or determine that a particular customer is not the right fit for your company.

Keep the 80/20 rule in mind here: 20% of customers provide 80% of the revenue for any business – you have the right to choose who makes up that 20% – if you fill that category with as many ideal clients that you can and turn them into raving fans, the other business from tough customers that will drain your resources/margins will be insignificant over time.

There is a metric in sales that states:

1/3 of customers will never buy your product no matter what you say to them

1/3 of customers will buy based on what you say

1/3 of customers need what you offer right then and there and will buy no matter what you say

I suggest that the same guideline be used in choosing your customer base, do don’t want category 1 customers above getting into your organization, this will only created stress and heartache for both customer and service provider. Aim for quality clients more often than quantity – unless you using the Walmart business model and working on being the cheapest in the marketplace, which is a tough act to follow!

To your success,

Tim Reid

Respect The Hustle