I was walking in the park the other day as we are having an amazing spring this year here in Calgary, which is quite frankly a rare site! Normally I don’t consider even booking my summer tire swap until just about the beginning of June due to the threat of a huge snowfall! As I was walking in the park I was just thinking how amazing the dandelion plant is, how even before the grass has had its first thought of turning green there are thousands of of these plants that have grown, polinated (with what insects and how I will never know) and seeded – truly amazing! This make me think a lot about how these plants are similar to real estate investing in both Calgary and abroad.  There has been an economic shake up in Alberta as well as a new majority government put into power, but guess what? The dandelions don’t care about any of that; here they are to welcome in spring before there are leaves on any of the trees. Real estate investing is very similar in that the houses don’t really care what political climate or economic climate that the rest of society is currently in.  There are of course different strategies that will work best in each of those climates, but at the end of the day a house is a house and if you buy on the fundamentals then what it happens to be worth on the market does not matter one little bit. Similar to the dandelions real estate in term of passive income is a lot like the seeds you see flying all over the place in the spring, if you planted 1 dandelion on your back yard you better believe you will have 10 more the next year – buying passive income properties will give you the cash flow for years to come and eventually (not as fast as the dandelions to be sure) you can leverage that house to be able to buy more (plant another real estate seed) if you structure things properly.  Real estate is also a patience game, a lot like gardening or the forestry business – you need to think long term and be able to set up your cash flow to be able to weather the economic storms that will come and go over a 10-15 year period.  Those that are currently buying up properties on the expectation that they will make money on appreciation only will be unpleasantly surprised when the market tides change.  Enjoy the weather here in Cowtown or wherever else you happen to be in Alberta this spring the outlook for real estate is looking especially bright in our opinion, much like the forests little yellow plants on all the medians all the parks around this city!

To you success!

Tim R

There are always some anomalies in real estate markets in all areas of Canada, and right now Toronto is one of those things that just doesn’t belong in a world based on the fundamentals.  According to Christy’s international sales of luxury real estate in this city rose by around 37% last year.  How does that make sense in a province that is supposed to be a “have not ” area of the country at this time? This does show that there are always places in this country and others that do not follow the rules – and also that those people successful enough to own a multi-million dollar home generally stay that way in all economic climates and many of those hard working people did so with real estate.  Toronto happened to beat out a lot of other “sexy” markets such as miami, san francisco, LA, london, and new york in luxury sales last year, not something you normally see – which is great for the realtors in that area.  They also did not have to work very hard for it seeing average days to sale averaging only 1 month which is about 1/5 the normal amount of time to sell a luxury property.  In contrast to this Calgary and other areas of Alberta were hit very hard due to the downturn in the oil and gas sector over the last few months.  The exorbitant prices that we saw in 2014 have swiftly crashed down to earth, and the high end real estate always gets pummeled first when the high ticket execs get moved back to the US where they originally came from after all the projects dry up and engineers and middle managers are scrambling for work.  These employees were not often here in Calgary to stay so they are downsizing, moving back home, or panicking now that they can’t make the payments on their homes/cars they bought when times were booming here in Calgary.  This trend is normal when times get tough, the luxury end tanks first, then you see the high end drop second, then a slow third you will see the prices of mid and lower priced homes start to slide.  Calgary is not new to the boom and bust cycles in real estate, this happens roughly every 10 years or so on average and real estate investors that can see the signs/opportunities in every part of the real estate cycle are gearing up to reap some huge profits when prices start to drop and sales become harder to come by with less buyers in the market.  The winds are changing in Calgary real estate, and I for one have an eye out for the deals that are quick upon the real estate horizon!

To your success!

Tim R

There are lots of houses that look amazing in the pictures online either on MLS or for sale by owner websites.  Professional photographers and even hobbyists are able to do magical things through post production these days.  When looking at houses to renovate, rent, rent to own or any other strategy in real estate – looks can certainly be deceiving.  The ability to confirm comparables is also severely affected by these factors – because your realtor is just looking at the same square footage and beds and baths to give you a comparative market analysis. They might be basing those numbers of fancy pictures that do not really tell the whole story of value for the home you are thinking of buying.  One of the ways around this is to ensure that the realtor has been inside at least a couple of the homes in the area – or you may want to consult another realtor who is an area expert because they would have actually seen some of the comps in your target area first hand. Experienced real estate investors will make a point to go and see some of the homes for sale in the area to get a feel for things such as the quality of finishings, solid as opposed to hollow doors, color of appliances used, gas/electric range, flooring that is common, and the types of fixtures used in the bathrooms and kitchens to confirm the after repair values.  These items can all look very different in the pictures – also the layout of the rooms and their sizes can not be truly experienced unless in the home, some houses are just plain awkward in how they are laid out and this is rarely something you can determine from the photos. How a house feels within the first 10 feet of walking inside will be what turns your buyer/renter on or off so that awkwardness drops the value of a house considerably which could be an opportunity for you if you can think of a way to change the layout to something more attractive.  Having an experienced real estate team that knows what is going on in a certain area can help greatly reduce the time you spend looking at properties to buy – ultimately putting more money in your pocket! Think about taking a closer look at that property that you think needs about 20,000 in improvements it could very well be a mangy alley cat in lions clothes!
To your success!

Tim R

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