fbpx

How to Determine the Rent Rate for Your Rental Property

money and a house

What the heck should you charge for your monthly rent?

Charge too much and you’ll struggle to find great tenants.

Charge too little and you’re leaving money on the table AND you’re probably going to have to sift through a ton of applications.

There’s a lot of work that has to go into figuring out what a fair rent rate is … and at the end of the day you won’t really know what you can charge until you start advertising it and evaluate the response (Want more on my process around renting out your property? Check out this article on troubleshooting a vacant property).

But, there is a lot of research you can do so that when you first post a rent rate, you’re in the ball park. Plus, figuring out rent rates for your area and what is happening with the rental market is always going to be a critical skill as an investor – not just when you’re renting out a property but also when you’re evaluating a property to buy! So, let’s spend a bit of time discussing this important piece of the puzzle.

Questions you want to try and answer when you are researching rental rate trends include:

• The specific rent rates for different bedroom sizes. What is the average two-bedroom unit renting for in my area, for example? What is the range being offered for 2 bedrooms? Can you identify why there’s a difference (whole house versus basement suite, apartment versus carriage home)?
• What is the average rental rate for the area and where is it trending? What was that rate last year? What about 6 months ago? Is it more, less or the same?
• What government controls exist on rents? Some areas have rent control, and that poses artificial controls on the market rents; so when you’re evaluating the numbers, you’ll want to know if that is the case.

Website resources to use (for Canadians):

• Rentometer (http://www.rentometer.com/)
• Craigslist (http://www.craigslist.org/)
• MapsKrieg (http://www.mapskrieg.com)
• Kijiji (http://www.kijiji.com/)
• Local newspapers
• Search for landlord/tenant legislation for your area to find out about rent controls.
• CMHC (http://www.cmhc-schl.gc.ca/).

A caveat about using CMHC: Please note that if you buy single family homes that CMHC is not the ideal source of information for you. They survey properties with at least 3 units. They ask for market rent, available and vacant units. They do this via phone and site visits. It’s always done in April and October so reflects that time of year as well as properties that are not the same as single family homes. Generally they will get more data on the larger buildings than any other property. This is why you’ll almost always find the rent rates they say apply to a 3 bedroom are much lower than what you can get for your properties. It’s useful for trend analysis but our rents are always higher than what they report. The one bedrooms are only a little higher but as the unit sizes increase the difference between what an apartmnet gets versus what we get for rent grows dramatically. For example, their 3 bedroom apartment was reporting a $1,011 a rent rate in their Spring 2014 report. The lowest we’re getting for a 3 bedroom suite is $1,300 and most are getting $1,400. If it’s an entire house we’re getting $1,550 or more.

Website resources to use (for Americans):

• Rent.com
• Craigslist (http://www.craigslist.org/ )
• Local newspapers
• Search for landlord/tenant legislation for your area to find out about rent controls – many states do have very strict landlord legislation to be aware of.
• http://www.letstalkpm.com/ – a great resource to find just about anything you need to know about rentals in the U.S.
• Bigger Pockets Forums (http://www.biggerpockets.com/).

Offline rent rate research:

Drive around your chosen area, and call the numbers on the FOR RENT signs that are not those of professional property managers (you know – the homemade ones or the signs bought at Staples). Get a sense of what’s available, what they are asking, and what amenities or features they emphasize (if any). We don’t need to call the professionally managed properties because a quick look on their website usually provides us with all the details we need.

Also, take a look at housing starts and how many of them are condos, apartments, or other properties that may impact the current rent stock and rental rates.

In 2009, we bought a couple of properties in Kelowna, BC. Prices were down and we saw a few opportunities to buy in fabulous areas with growth potential. The single-family home we purchased as a rent to own did fabulously and we sold it to the tenants a year later. The two-suited home near the lake, however, has been a struggle for us. While it’s in a stellar location and in good condition, the challenge has been the large number of condos that have been built in Kelowna. Because the condos didn’t sell, the builders rented them out, dramatically increasing the rental stock in the area. We’re only just now able to raise rent rates. We really underestimated the impact of the extra supply on the rent rates.

It’s economics 101 to know that when supply goes up without an increase in demand, it puts downward pressure on rents. Our rents dropped several hundred dollars a unit – killing our cash flow.

The good news is that rents pop up almost as fast as you feel them go down. And, in every market across Canada, we’re hearing reports of rents going up. We’re raising most of our rents by $50 – $100 per unit when the tenants vacate. But first, we always do some refresher research to see what else is on the market that we’ll be competing with today and in the near future.

If you have a favourite resource for researching rent rates in your area send me a Tweet by clicking right here! I will update this post with your Twitter ID and suggestion!

 

Rental Rate Resource Recommendations From Other Investors:

>> From Debbie in Alberta: Another website I’ve been using a lot is Padmapper.com. I’m not sure how it works in other areas of the country, but it’s been great in Calgary so far. In terms of time efficiency, I like it because it combines ads from Kijiji, Craigslist and a couple of others into one site. One note of caution though, it also lists B & B rates which skew the numbers a little. You just have to read each listing carefully to weed these out.

>> From Wade Graham in Alberta: Rentfaster.ca has amazing stats for Alberta. Helps me every time.

When Should You Sell Your Rental Property?

dreamstime image

Our tenants just gave us notice on a property we’ve owned for almost three years. The original plan was to turn it into a rent to own but we weren’t able to find a good tenant buyer for it, so we just rented it out.

Our investment partners were mostly interested in doing this deal for the cashflow that a rent to own can generate so they have expressed a desire to get their capital back (see things that can suck about doing rent to own deals). When the tenants gave notice, we pulled market comps and brought our realtor in to see what homes were selling for this year in that area.

The current market is not ideal for selling as things are just starting to improve, but we feel comfortable that there is enough value in the property for our investment partners to exit and get their money out plus hopefully a little bit of additional profit. We won’t make much money when we sell, but cashing in on a giant profit is only one of the many reasons you will sell a rental property. There are other situations where selling really is the best option, even when you thought you would hold the property for the rest of your life or you’re not maximizing profit to exit right now. An investment partner that wants out can be one situation where you’ll sell.

Selling a property is a huge subject. Are you selling it yourself or hiring a realtor? Do you stage the property or do you save money and sell as is? What is the right price to list at? Is the current market at the right phase in the cycle to list the property or is it really better to wait it out with whatever options you have to do that?

I’m not going to get into all the considerations around selling, but here are a few quick and lower cost ideas to help you prepare a rental property for getting maximum possible value in a reasonably quick time frame.

My biggest piece of advice is that it is usually better to have the property vacant.

I know you don’t want to be out a few months of mortgage payments so it’s really tempting to list your property while you have tenants living in it, but it’s much harder to set up times to have the home toured when you have to give a tenant ample notice. In many cases the tenants will refuse because it clashes with their schedule. Why should your tenants bend over backwards to help you sell your property? They don’t benefit from the sale. In fact, it is a big inconvenience for them and they might have to move.

As much as you might think people can see past dirt and junk, very few people can. It’s the biggest goldmine for you as a buyer … you (hopefully) can see what a clean up and a little updating can do to a place. Few other buyers can. Homes look best empty or staged. You will get a much better price for your property if you stage it, or at the very least, have it empty and clean.  Finally, you should prep your property for showings. To do that you want to have it clean, freshly painted, little things fixed like those closet doors that won’t close and that sink that always drips, and the curb appeal maximized. These are low cost things to do that can increase the appeal of the home by thousands of dollars. While it’s possible to do this while a tenant lives there, it’s more difficult. It’s also hard to ensure the tenant doesn’t just bang up the new paint job or mess up the freshly cleaned unit before anyone can see it.

Finally, many investors, like us, often do not want to inherit other people’s tenants so we’re going to ask for vacant possession if we can get it.

A little caveat on this advice: it only applies to homes with suites where your market of buyers is home owners and investors.  If you’re selling a trip-plex or any multi-unit property where your ONLY buyer is going to be an investor, I would not want it to be vacant unless it really needs a lot of work. Even if it needs work, I would probably try to do a lot of the work while tenanted or wait until the worst units are vacant, complete the work required on those units and then begin advertising while simultaneously seeking new tenants. The investor will be looking for the place to be tenanted so they have income coming in from day one.

There are a lot of reasons to sell a property. It’s not always going to be the right time in your market to get the maximum value for your property so if you do decide it’s time to sell then you must be ready to do what you need to do to make the property as appealing as possible.

5 Steps to Hire a Property Manager (And Questions You Should Ask!)

Julie black background

If you’re ready to hire a professional, here’s how we recommend you do it (and some questions to ask and what you can expect to pay)

I think it’s a great idea to manage your first investment property for a while, so you can get a solid understanding of what’s involved. You’ll know what makes a great property manager and have a better appreciation for how challenging the job can be. That said; managing your own properties may not be the right thing for you.

To find out if you could handle the pressures and challenges of property management, you’ll want to do a bit of a self-assessment. Are you a reasonably tolerant person? Do you have any knowledge and experience with doing minor maintenance and repairs? Or, do you at least know who to call for what issue? Can you visit the property on a regular basis? Are you capable of keeping good records? This is not usually an enjoyable part of the job, but it is absolutely necessary!

There is so much involved in managing properties … the best thing I can suggest to you is that you imagine the busiest possible day, and then imagine having to handle a call from one of your tenants about a frozen pipe or a broken door lock. Are you going to be able to handle that situation?

If you answer “no” or “I don’t know” to three or more of these questions, you should seriously consider hiring someone to help with your property management.

So if you know you need a hire a property manager, you’re probably wondering how you can find a good one to work with.

Most importantly, when you’re considering hiring a property manager, read the contract before you sign it! I’ve had a few too many coaching calls with people who actually have no idea what the property manager services they’ve signed on for actually include.

Other Articles You Might Like to Check Out:

>> Someone You Must Add to Your Real Estate Investing Power Team

>> Troubleshooting Your Vacant Rental – Why You Can’t Find Great Tenants

>> Renting Out Your House: How to Live For Cheaper

 

Why Can’t I Find Good Tenants? Troubleshooting Your Vacant Rental

Vacant room

Over the last thirteen years we have worked with many different property managers. Whenever we’ve had a property that was slow to fill the property manager would tell us “It’s just the market – it’s slow.

The property managers weren’t lying when they have said that to us. Vacancy rates were high and properties were taking quite awhile to fill on average. However, after investigation, a slow market was not really why our property was vacant. In one case, the property was run down and really needed some money spent to give it a good cleaning and updating. In another case, the ad was placed in the section for apartment units when it was the top half of a house. Fixing these issues resulted in finding good tenants fast.

But maybe you’re not sure what the issue is? Here’s how I troubleshoot my vacant rental properties to uncover the reason it’s not filling … whether we’re managing them or we work with a property manager.

1. Is the phone ringing with interested tenants?

We direct all interested tenants to CALL US to set up a viewing. I have three main reasons for this. The first is that I have wasted a ton of time in my life going back and forth over email answering questions from people who get an answer to a question only to have two more questions. Second, close to half of the people who set up appointments via email do not show up to their appointments. This wasn’t just one experiment where I tested this … I have periodically tested this over the last five years and this is consistently the case. Finally, not getting to speak with them on the phone means missing an important step in my tenant screening process.

If a tenant is interested enough to call about the property I find we’re well on our way to finding the right person for the property. And with this process firmly in place, I can now properly judge how many truly interested people are contacting us about the ad.

If the ad has been up for a week and I have had less than 5-10 calls (that’s my typical number but this number does depend on the target tenant type, price range, condition of the rental market and the time of year), I will go back to the ad.

Is Your Rental Ad Working For You?

How does the ad compare to the others on the market right now? Is the ad interesting and appealing? Do the pictures look great?

If everything is ok, the next thing to do is to change your ad headline and change the lead picture. The first picture people see when they are scrolling through ads can make or break your ad response so make it the best image of the exterior of the house, the kitchen or some other outstanding feature of the home.

Maybe It’s The Rent Rate?

If you think your ad is great then it’s time to reduce the rent. Typically we’ll drop it $50 to see if that gets the phone ringing. We’ll also look around to see what we’re currently competing with. Maybe there’s a bigger issue we need to pay attention to like lots of new product on the market or everyone else has a garage or some other feature we don’t have.

2. The Phone is Ringing … But People Aren’t Showing Up to the Showing

If you’re getting calls but people aren’t showing up—review your process. If you set up appointments by email or text message – stop. Only set up appointments via the phone (See above). Next, review other things you’re doing.

How long are you taking to return calls? If you take too long there’s a good chance they will be far along the process with another landlord by the time you set up your appointment. Your place becomes the back up property.

How much time passes from the time you talk and the time you show the property? We find that if people have to wait two or three days to see the property they often find another place to live before we can show it to them. Same day or next day showings are ideal if it’s possible.

When you’re on the phone with the person ask them to commit to coming to the showing and require them to take down your phone number. Have them confirm that they will call you if they can’t make it.

TIP: If a tenant doesn’t do what they say they are going to do at the beginning of the relationship—they never will. In other words if they don’t show up or they don’t call when they say they will—that is not going to change just because you have a lease. We give people one chance to redeem themselves but if they consistently don’t do what they say they will then they aren’t going to be a good tenant.

Our best tenants have always arrived for showings 5—15 minutes early. That doesn’t mean if they show up late we don’t rent to them but 99% of the time the indicators you get when you’re first speaking with someone and showing them the property show you what to expect throughout your relationship.

3. Tenants Are Viewing the Property But Not Applying

If you are showing the property but not getting applications—take a look at your unit and your rent rate again.

We’ve had to face the harsh reality a few times – sometimes a place doesn’t look as nice as you want to believe it does. Usually a good professional cleaning will do the trick to make a property show well but other times you just HAVE to do a little work to replace the stained carpet or paint the room that you tried to just touch up.

If you’re getting calls, the rent rate seems competitive, and people are showing up to see the property but nobody is interested take a hard look at the property. The other thing … and this is a big one for us now … if the unit is currently occupied and just doesn’t show that well you may have to wait until it’s vacant. It sucks to guarantee yourself missed rent but if it isn’t looking good, you are wasting your time showing it and you could be attracting the wrong kind of tenant showing a rougher looking property.

Finally, check your suite décor and features against other suites. Is yours outdated? Simple changes like upgrading the hardware on cupboards, changing light fixtures and paint can often update a unit cheaply and quickly and make it appealing.

Making sure the inside looks good is important, but curb appeal is critical. If there is junk in the yard or the yard is not maintained, this can make potential renters walk away before they even look inside. A lot of renters find their new homes by walking or driving around an area they want to live and looking for signs. If they see a run down exterior they probably aren’t going to be too anxious to check out what’s inside!

We’ve been through some really slow rental markets in the last 13 years. We’ve suffered from several vacant rental properties and these steps have always helped fill our properties within a few weeks of making adjustments. Sometimes it does mean putting in some time, effort or cash to make your property look better but it’s always worth it to get a great tenant in there paying rent again! If you have a place that has always attracted good tenants in the past or it’s in a great area, these simple steps will solve most of your rental challenges. In slow markets you do have to be a little more patient and you have to take special pains to make your property shine compared to the competition but again, it’s possible to keep your places rented most of the time.

We have plenty of videos and articles to help you manage your properties well. Here are a few others you might like to check out:

>> How to prep for your rental property showing

>> 5 Steps to Rent Out Your Property

>> Tenant Move Out Inspections – Things Tenants Never Remember to Clean Out

 

 

 

7 Ways to Be a Mediocre Real Estate Investor

Average check box

Do you like wasting time?

Does it make you happy to spend 20, 30 or even 50 hours on something that doesn’t get you close to the results you want to get?

When I go to a bad movie, I genuinely wish there was a refund for my time spent. Even though the price of a movie ticket is insanely high these days – forget the money – give me my two hours back!

Time management and “lacking time” are the two hot topics amongst people seeking real estate coaching, so why are so many investors working so hard, spending so much time and investing tons of money being mediocre?

Usually it’s because you’re not sure what to do. In fact, you might be here wondering how to get started, or what you should do next to grow your portfolio.

If you can’t tell what’s working and what’s not or you feel a bit like you’re stumbling around in the dark then this is for you. If you are often left thinking something *might* be a good deal, but you’re not sure, or every city seems like a better place to invest than where you’re looking then you might be doing one of these things that is making you mediocre. It can feel like a big, never-ending guessing game.

7 Things Real Estate Investors Do that Make them Mediocre

1. Squirrel Chasing

Our dogs Bram & Maya will be happily focused on a nice relaxing walk until a squirrel appears in a tree. Sometimes there doesn’t even need to be a squirrel … just the thought that MAYBE there is a squirrel can distract them completely.

This is often the case with real estate investors. We have a client who was well on his way to doing a buy and hold real estate deal in a carefully selected neighbourhood of Calgary. Suddenly, he feels the market is too hot and has decided he’s going to flip houses in Edmonton or do rent to owns in Edmonton.

There is ALWAYS something that seems more interesting/easier/more profitable than what you’re working on right now, but if you always quit before you finish then you’re never going to get anywhere. My dogs never catch a squirrel because they never focus on any one creature for very long. If one of them sat patiently under a tree and waiting for it to eventually come down … well I really don’t want to think about it … but they would get what they are chasing.

2. Buying Property Because It’s “Cheap”

We had coaching clients who were at a real estate seminar where houses in Detroit were being sold. Because the houses were under $10,000 people were running to the back of the room to buy a house on their credit card. Likely they were buying houses that were scheduled to be bulldozed, down but I’ll never know. That’s an extreme example but people do something similar all over Canada when they scoop up properties in rougher areas just because they are so much less than an average house in the city.

Who is going to want to live in that house? What other costs will you incur buying a cheap house in a tough neighbourhood?

It’s only a good investment if there is a very high probability you’ll get your money back with a return. Buying in bad neighbourhoods means you’re going to have a very hard time finding good quality tenants. You’ll experience a lot more hassles, which will cost you a lot more time and money.

It might be the right way for you to invest if your personality and skills are a fit for managing these kinds of properties … but for most folks interested in making money through real estate, buying these kind of properties is a quick way for you to start hating real estate (want to really understand why – check out my book which I originally thought of calling ‘Manslaughter and a Crackhouse‘ as a tribute to our very own ‘cheap’ properties).

3. Only Shopping for Deals Online

It happens all the time … I get an email from someone who says “I can’t find ANYTHING that will cashflow in my area.” When I investigate I find out that two hours have been spent searching on MLS. Usually for good measure the person says “I even looked in other cities!”

There are deals online. About 65% of the deals we have done have been listed properties which were on MLS. The problem is that you wouldn’t know they were a deal based solely on their MLS listing in most cases. What makes a great opportunity is so much more than the house price and the limited details that you can find online.

First, the neighbourhood presents an opportunity (we focus on buying properties with a CAUSE) because it’s well positioned for gentrification, a price increase, development or some other positive influence. This is not easy to understand unless you’ve worked that city to find the pockets with potential first. Second, the layout or potential uses of a home present an opportunity. You usually have to get off your butt and look inside the homes to see this. We can eliminate houses based on their MLS listing information because we know we don’t want to buy houses with certain configurations (2 bedrooms up and 2 bedrooms down for example does not work well with our desired tenant profile) but we can’t spot a deal until we see it. Third, the situation of the seller can create a problem you can solve in exchange for a great deal. This is also something you won’t learn from the listing. If anything, great pains are made to hide divorce, layoffs, moves and other factors that can create a great deal for you so you need to be snooping around the area, talking with neighbours, looking at houses to find out this information.

When you’re a focused area expert you’ll spot deals so easily it’s like a neon sign is on top of the house but if you’re just sitting at home looking online it might seem like there is nothing out there!

4. Focusing Only on the Numbers of a Deal

Of course, the reverse can be true too. People think something is a deal based on what they see online but when you get to the neighbourhood you’ll see part of the yard is crumbling into the ravine or the neighbours behind the house have more cars than a used car lot in their yard. Suddenly something that seemed like a good deal is a problem property! A mistake like this is easily made by focusing on the numbers of a deal.

Way back in our third Rev N You Newsletter ever (released in July 2006) Dave shared this little bit of wisdom about buying properties based solely on the numbers:

After a weekend at a real estate investing course that I paid dearly to attend, I was newly equipped with the mission to find properties with a Gross Rent Multiplier of 7 or less. It took me some searching but I found one with a GRM of 3.47! What a great find, or so I thought.

The numbers:

* Asking price = $150,000
* Monthly rent = $3,600
* $150,000/($3,600 x 12) = 3.47.

What a pleasant surprise when the Vendor was also willing to hold a second position on the property. So, not only was I able to secure the low GRM property, but I was also able to get a vendor take back loan.

The trick was that this property was run down, had problem tenants, and always needed a lot of work. Do you remember the crack house story I shared a few months ago that put me in court and cost me nearly $25,000 in court ordered work and fines? If you do, then you know about my GRM property of 3.47. To be fair though, it is possible to do well with a property like this. To do so, however, you have to live close to it, have thick skin, and be available 24/7 to maintain it. Or, have a phenomenal property manager that does not cost you an arm and a leg!

That was an extreme example, but the deals we’ve done with good numbers where we focus on whether we can solve a problem to get a good deal, properties that will attract our ideal tenant, and quality of area and construction, we have made a lot more money over the long term than we have when the initial buy numbers were strong. I’m certainly not suggesting you buy properties that will not cash flow from day one, but I am saying that good numbers do not mean a good deal.

5. Choosing Team Members for the Wrong Reasons

“I just don’t want to be disloyal to him” my client was saying. She had been working with the realtor who had helped her buy her house many years prior, but she was finding that he was just not the right person to help her with her investment deals. He wasn’t listening to her criteria, he didn’t understand what an investor looks for, and he was not helping her uncover the problems that could help her create a deal. She was so frustrated because she was missing deals and struggling to move forward with him on her team.

Feeling loyal to someone who is not the right fit for your team is not the only thing that will hold you back. Working with someone because they are a relative or because you want to help them out is also a down fall of many investors.

If your team is not full of people who are responsive experts, then you’re not going to be highly successful. It’s just not possible.

For most of the people on your team you want to find people who are also real estate investors, who specialize in helping real estate investors and who understand what you are trying to achieve. If you are in a smaller market and can’t find someone that specializes in real estate investments then you can potentially work with someone from a different market (our accountant, lawyer and mortgage broker are all in a different city than where we invest). We build relationships with lenders and our real estate agent locally but work with the specialists even if they are out of town. It’s more important to have an expert than to have someone local for most roles on your team (obviously I am not speaking about plumbers or real estate agents!).

6. Not Investing in Training & Coaching

After our bad experience in 2002 investing $20,000 in real estate investing training that taught us to buy high risk properties, charged us to set up two a tiered corporation (that we couldn’t even use for our deals at the time!), and even taught us some things that were illegal to do in Canada, we were pretty gun shy about more coaching and training.

We carried on buying property and fixing our messes as best we could, but we weren’t becoming experts very quickly. Our list of what not to do, however, was getting pretty long. About eight years into our careers as real estate investors, it was my parents that pushed us to get coaching. They signed me up for a Business Mentor and brought Dave and I to a huge conference in Calgary. Those were game changing moments for us. Suddenly, we realized there was a lot to learn and gain from training and coaching. We also realized that the crappy course we’d spent so much money on in 2002 was nothing like some of the high quality training available in the market. We started investing heavily in ourselves. Every year since 2009 we have spent at least $20,000 a year on coaching, training and education. There’s no other investment we’ve made that has returned us as much money, quality contacts (And friends!), and mental strength as having mentors, attending conferences and constantly learning has given us.

You likely can eventually figure everything out on your own but it will take at least twice as long and probably cost you at least double in terms of the size of your mistakes compared to learning from someone who has done what you want to do. You can get through tough times and celebrate good times on your own, but it will be so much more fulfilling and so much less painful if you have like minded people to support you along the way. Every once in awhile I meet people who have been lucky with their investments … they bought a few properties and have had few problems and made money. Most people I know, however, who have had success have invested heavily in mentor ship and training.

At a minimum you need a trusted third party who will give you sound advice to spot when you’re self justifying (You did read one member of your power team you must add, right?).

7. Quitting When the Going Gets Tough

There are going to be totally crap days. Most days if you’re following a pretty sound strategy and you’re making good choices, you’ll find that it’s a pretty straightforward business to run. You collect cheques, pay bills and watch your wealth grow. However, there will be days where the banks are being ridiculously difficult or you’ve got a tenant that calls every three days asking for something new to be fixed, added or renovated at their property and it’s driving you absolutely crazy. Every year or two you’ll have something major to deal with like a flooded property or five tenants giving notice in the same month, but if you let those things knock you down you’ll never get great. You will never get to the WHY you’ve worked so hard to create in your life.

In Brendon Burchard’s Millionaire Messenger he shared a fictitious story of a guy digging for gold. He said the guy would dig and dig in one spot for awhile but he wasn’t hitting gold so he would move to another spot and dig for awhile but not hit gold again. He did this many times before he finally quit. If only he knew that several times all he had to do was dig ONE MORE TIME and he would have hit gold he would have kept going, but you don’t know when you’re only one more step away from the gold so you need to keep going!

Real estate investing is not always easy but you can make it a lot simpler by pursuing excellence. The better you become at what you do – the more you know about your strategy, your market and the deals you’re willing to do, the simpler your business will get. And the more focused you become, the more money you will make. Happy investing!

 

 

 

Shopping for a New Construction Home? Market Research Just Got a Little Easier

Market Research WomanWe get the short end of the data stick in Canada when it comes to residential real estate information. I’ve spent many hours drooling over the information you can gather on Zillow, Trulia and other US real estate sites. And, with the recent announcement out of Seattle of Flipt, the options just got even cooler in the US. Flipt intends to use an algorithm to predict the best places to buy based on their future value. It’s a very cool idea. Not knowing the Seattle market very well I can’t judge whether it’s working well but I like the concept.

But asking for a website in Canada to predict future values when you can’t even figure out what all the listings are, and what has sold for what price without a realtor, is asking a lot. Even when you do have access to the same data that a realtor does, you still don’t have a full picture of the market because it doesn’t include private sales or new homes that don’t get listed on MLS.

We still don’t have options as robust as the US folks, but there are some resources popping up in Canada you might want to know about. One of them is a new Market Snapshot from BuzzBuzzHome, intended to help homebuyers track real estate market trends specific to new construction. As a real estate investor becoming an area expert (you are doing this right?!), this is absolutely data you’ll want. We wander into all the sales offices in the areas we buy in and collect the data ourselves … but if all we had to do was run a quick report that would save time and we’d be able to look at the trends much easier. That’s what this is all about! And if you’re in an area where there’s a lot of new construction activity, I think you’re really going to appreciate this.

Here’s what it looks like if you check out downtown Victoria, BC.

Market SnapshotYou can see median list price and size broken down by different unit types and well as the distribution of available units across all unit types.

As North America’s largest listing of new construction homes, BuzzBuzzHome collects a vast amount of data about housing markets across Canada and the United States. Market Snapshot allows users to create on-demand market reports for neighbourhoods and cities. Users can see important information like the average price per square foot in cities and neighbourhoods, the median list price and unit size for new condos, townhomes and houses, and a detailed breakdown of the unit mix within many geographical areas.

In the Greater Toronto Area this type of data has been available through RealNet Canada for years but only through a subscription service or, again, through your realtor who, had to subscribe.  I worked there for five years (2003 – 2008) and know the enormous amount of work that went into quality data collection each and every month. It was excellent information but expensive to collect … and therefore not something you would see for free.  Times are changing though and you’re starting to see some of this great information at your fingertips for no cost!

Real Estate Market Research

 

 

This report shows you data on units currently under construction and estimated completions in Toronto’s Entertainment District. You can easily navigate from the Listings section to Market Snapshot’s various tabs to get a more information on the neighbourhood.

Matthew Slutsky, the co-founder of BuzzBuzzHome said that: “The aim is to mine our database of over 11,000 new construction communities to give home buyers a better understanding how the type of home they’re searching for fits into the market they want to buy in.”

Market Snapshot is unique, Slutsky says, because no other company collects information that is this detailed and makes it freely available to homebuyers, investors, brokers and market researchers alike.

“BuzzBuzzHome’s mission is to help new homebuyers and investors make the best purchasing decisions and making this wealth of data available free for anyone to access furthers this goal.”

Market Snapshot is available for every neighbourhood in Vancouver, Calgary, Toronto and Montreal. You’ll also find information for the cities of Victoria, Burnaby, Surrey, Kelowna, Nanaimo and many other smaller towns and suburban areas where new homes are being built.

Nothing replaces getting your own boots on the ground to do your market research, but the more information you can collect from home the easier it will be to spend your time on the ground looking for WHY a house sold for more or less and what makes one area more desirable than another.

Go ahead … type in your city or neighbourhood and check it out: http://buzzbuzzhome.com/

An Introverts Guide to Real Estate Investing Success

girl with cards

I’d been sitting at a lively poker table at the Venetian Hotel in Las Vegas for about an hour when the guy to my right says to me, “You haven’t said much.” I had been laughing and enjoying the banter while I had also quietly raked in a couple of nice sized pots.

I smiled at him and said, “I usually am pretty quiet, but if I have something to say, I will.”

It’s not a poker strategy I’ve developed. I am an introvert. Some extroverts may mistake introversion for a lack of confidence or a dislike of people. If I didn’t like people, I wouldn’t be sitting at a poker table to play the game; I’d be online. To me, being an introvert just means that I need time alone to recharge and reflect, versus an extrovert who needs interaction with people to gain energy.

Introverts and extroverts come in all sizes and degrees so it’s not fair to say that I am like all introverts, but I did smile when I received an email from a woman named Lisa who is struggling to create the real estate portfolio she wants because she is an introvert. She basically said:

I have watched a lot of your videos and realize you’re not an introvert, but maybe you could write an article to help introverts who don’t want to deal with small talk, who get underestimated and don’t stand out in an extroverted world.

Extroversion, just like introversion has its challenges. Introversion, however, is only a weakness if you believe it is. There is a lot of power in the quiet reflection that comes with introversion.

Here’s 3 ways to use your natural tendencies as an introvert to your advantage and create massive success in business and real estate investing:

1. Listening Uncovers Opportunities

We were at an open house looking at a property that was an estate sale. The realtor mentioned that the sisters were coming into town on the weekend to “deal with” all the stuff in their brother’s home after he had passed. I tuned into this and asked a few questions of the realtor. I found out the sisters were his only family and they were just a few years younger than their brother. The house was packed with stuff and I suspected it would be overwhelming for them, so we offered with a quick close and put it in our offer than anything they didn’t want they could leave in the house and we would handle it. We got it for a great price, added a suite to this property and it’s now one of our best cash flowing properties.

It would have been easy to miss this opportunity without careful listening.

When people are selling their home they often try to hide the real reason, but good listening can pick up what people aren’t saying. It’s also ENORMOUSLY beneficial in screening out tenants who may not be telling the whole truth. And when you’re networking, there is nothing more powerful than being a good listener. You’ll build connections, people will think you’re smart (it’s a funny thing that happens when you listen more than you speak – the person you are speaking with thinks you’re smart probably because you’re listening to them), and you’ll walk away knowing more about everyone you meet.

Ask people interesting questions and you’ll find it’s way more fun to network, meet people and you will absolutely uncover opportunities in business and real estate that other people miss because they are just talking away about themselves. You’ll also be in a strong position to persuade or influence someone to your way of thinking because you’ll understand their perspective from listening to them talk so much.

2. Plan Your Networking in Advance

You DO have to get out of your house and network. When you encounter a big challenge in your investment business (And you WILL – I don’t know an investor out there who doesn’t hit some big problems here and there), who will help you if you haven’t built relationships with like minded people?

Networking events aren’t my favourite activity. They take up a lot of energy for me, but I have found ways to enjoy them more by asking people more interesting questions like ‘how did you meet?’ “what keeps you busy most days?’ ‘why did you move here/take this job/come to this event?” and “what’s gone really well for you this year / what’s been a really struggle this year?”.  I get to know some of the most interesting people asking questions like this.

To maximize your results and minimize the energy you expend to meet people, do your homework in advance. Find out who will be there (meetup.com is great because you can learn about the other people going to an event) and make note of 2 or 3 people you want to connect with. Google their names, check their Twitter feed or Facebook page to learn about them. When you see them, introduce yourself, let them know why you wanted to connect with them, and share a couple of things about yourself that will be relevant for them. If you want to make the in person connection even easier, find them online and say hello first. Let them know you’re going to be at the same event and look forward to seeing them. Most people, whether they are a speaker or an attendee, will appreciate the connection online and will remember you when you say hi at the event.

Bottom line, as an introvert, your best approach to networking is going to be to focus on making a few quality connections per event versus trying to meet everyone. And guess what? Small chat isn’t connection, so Lisa, no worries that you hate small chat, nobody remembers the person that asked them if they watched the Montreal Canadians sweep into the second round of the playoffs – but they do remember the person who shared a few personal details about themselves, asked great questions and really listened to their answers.

3. Shine in Your Own Way

Lisa said that one of her challenges is that “introverts don’t make a lasting impression. The wallflower is easy to ignore.”

We have a friend who talks to everyone he meets. He quickly becomes the center of attention in most scenarios and we love him for it. He’s entertaining and a little crazy. I sometimes feel a little envious of how easy it is for him to interact with everyone he meets (and make many of them laugh!). I don’t stand out in a crowd like he does. While I am envious, the real truth is I actually don’t want to stand out like that. I am far more comfortable to chat with someone one on one than I am to have all eyes on me.

Here’s the cool thing about this … everyone can stand out in their own way.

If you believe you will be underestimated or you’ll go unnoticed then you probably will, but not because you’re quiet – because you don’t believe in your value. Back to my poker example, I’ve only really just started to play poker in the last year. I win more than I lose, but I have a long way to go before I would call myself good. Interestingly though, I have found that my abilities get overestimated. Shortly after I sat down at the table, one of the guys looked at me and said “You make me nervous.” Another man, an older gentleman stopped calling me when I raised a bet because he said “I’m not going to give you the pay day you’re looking for”. I was totally bluffing when he said that. I am certain he had me beat so I was pretty happy when he folded.

I’ve done a lot of work on myself over the years and feel pretty confident and comfortable in my skin most days. I don’t need to be the center of attention to have that shine through. In fact, I have actually been told by a few coworkers, clients, and colleagues that I can be rather intimidating when you don’t know me. Imagine that – an introvert that tends to the quiet side – being intimidating?!

People will sense your power and ability regardless of whether you’re speaking or not. If you don’t believe in yourself, it doesn’t matter if you’re outgoing or reserved, your abilities will be overlooked and you won’t be as memorable.

The only thing that won’t work is trying to be something you’re not. Be who you are and find ways to accomplish your goals in a way that works for you. Many of the world’s great leaders (and real estate investors) are introverts. It’s only a handicap if you think it is. Great things only come when you step outside your comfort zone – it doesn’t matter where that zone is for you. Embrace your introversion and be your fabulous self! People will want to hear you when you speak and you’ll absolutely be memorable.

 

Tips for Better Landlording: The Property Management Toolbox Book

Property Management ToolkitIf you’ve ever had a late night call from a tenant or you’ve felt frazzled because you have wasted an hour trying to find a document for the insurance on your property or your tenant’s lease? These are the systems good landlords have in place to manage their properties and not lose their minds. And, these are the kinds of systems that allowed Quentin D’Souza to build a beautifully cashflowing real estate portfolio and start and develop a hugely successful real estate club in Durham, ON, all while working a full time job and spending time with his family.

Today, I’m excited to share a couple of excerpts from his new book, The Property Management Toolbox, to help you.

Property Management Tip # 1: Phone System

A well set up phone system is a major key to your ability to be able to manage your time well and set boundaries between your business and personal life.

1. Use evoice.com or grasshopper.com to create a phone system with prompts that filter tenant requests to different phone lines. Press 1 for one type of problem, press 2 for another etc.

Educating your tenants on the difference between types of requests is an important component in getting your filters to work for you. The tenant binder, which will be explained later on, and move-in are wonderful opportunities to do this.

2. Create a 2nd phone line to deal specifically with maintenance issues.

Set this line up so you’re not notified directly on your cell phone. Check these messages regularly and respond promptly, but not immediately. However, ensure that you manage tenants’ expectations reasonably when it comes to maintenance response times. Once the expectation is set, always respond within the expected response time. I generally provide a response within 24 hours.

3. Create a 3rd phone line to deal with vacancies.

As with the maintenance line, you should not answer this line immediately. Deal with it systematically, but not with emergency priority.

4. Create a 4th phone line to deal with emergencies.

Have these calls forwarded directly to your cell phone. If tenants contact you on this number, it means there is an issue that has to be dealt with immediately, not in a day or two.

5. Do not have tenants contact you directly by cell phone or text message.

Tenant requests can be overwhelming over time, and you don’t want to give the appearance that you are buddies with the tenant. Keep a professional relationship at all times. Keeping this boundary firm can be the difference between successful landlording and wanting to throw in the towel. If you are going to use a cell phone to communicate with tenants have a separate phone number that you use for your rental properties.

6. Put phone numbers on magnets with the name of your company and place it on the fridge when the property is rented out.

This allows easy access for tenants to the necessary information and insures they don’t forget the correct numbers. Remember to educate them about the proper use of each number and what does and does not constitute an emergency.

Property Management Tip #2: Create a Property Binder

Each unit should have its own binder that contains key information regarding the property. This is referred to as the tenant binder in other parts of the book. Here are the policies that govern the property/tenant binders:

1. Use a white one-inch 3-ring binder.

2. These binders remain in the property at all times.

3. Educate the tenant about everything in the tenant binder at the end of the move-in inspection.

Use this as an opportunity to create a relationship with the tenant and show how proactive you are as a landlord. Explain that the tenant binder is a friend of both tenant and landlord because it has the answer to many problems. If used properly, the binder can save much time for all involved, so being knowledgeable about it is imperative.

Landlord ToolkitSee www.theontariolandlordtoolbox.ca for a Sample Property Binder.

The Property Management Toolbox: A How-To Guide for Ontario Real Estate Investors and Landlords by Quentin D’Souza is now available. Grab your copy today for simple solutions to managing your property.

 

 

How to Find Great Tenants with Tenant Screening Questions

Tenant Screening QuestionsOnce you’ve taken the time to make sure your property is ready to show and you’ve written a great rental ad the next step is to screen the prospective tenants that call you.

Many people are content to exchange emails with potential tenants to set up viewing times and I have seen others that encourage text messages. You can do that, but you are missing out on a great opportunity to screen your tenants and you will absolutely waste time going to show your property for the wrong people or people that do not show up.

We’ve learned that if someone won’t pick up the phone to speak with us to set up a time to view the property, they really aren’t that committed or interested in the rental property. These are the folks that will email you to set up a time to see the place and then never actually show up or call to tell you they aren’t coming. And when they show up, a good percentage of the time, we would not rent to them because they want a shorter lease, too many people are going to live in the property, they don’t have jobs or there is some other challenge that we could have covered quickly on the phone and saved us all the trip.

My recommendation – get your potential tenants on the phone before you get up off your comfy couch and show your property. It’s up to you … but it’s been a much more effective way of handling tenant showings for us. But, what do you ask the tenants when you get them on the phone? I’m glad you asked … I shot a video to help you with just that very question:

Tenant Screening Questions to Ask Before You Waste Time Showing Your Property to the Wrong People:


When you are asking questions you’re listening for things that might be a yellow or red light. Not sure what I mean, check out this video Dave shot for you on our simple screening tenant screening process:

When you do get set up a time to show the property, here’s how to get ready:

Finally, if you aren’t sure how the whole rental process works, here’s 5 Steps to Rent Out Your Property and Handling Tenants Who Break Their Lease (prevention is the best medicine).  Tenants are your customers. You will not be a successful real estate investor without them. However, you need to find the right ones for you and your property to minimize the stress and strain you can feel. It takes work but a little effort finding the right people will go a long way! Good luck.

 


More Than Cashflow BookIf you want more help on picking great tenants for your property, grab a copy of More than Cashflow. There’s an entire chapter dedicated to finding great tenants – plus the whole book will help you understand why you get bad tenants and how to prevent them.

Where to Find People with Money for Your Real Estate Deals

finding people with money for real estate deals

Where to Find People with Money for Your Real Estate Deals

Raising Capital

Hey there, I’m Julie broad with Rev N You and today I want to answer the big question around raising money for your deals. Where are the people with money hiding? Well, if you haven’t found the super secret place where they all are. I’m going to explain how you can uncover people with money to help you fund your deals. So the first thing is you have to let people know that you’re a real estate investor. I have met a lot of people who keep it a secret from the people. They know that they have investment properties, that they’re taking training to become a real estate investor. You have to let people know! Now I get it at your job, it may not be appropriate, but your friends and your family, they can know what you’re up to and they should because they’re going to help you find those people with money.

  • Step one is to let people know what you do. When you meet people at social gatherings, you can say, I am an engineer by day, but I’m a real estate investor by night and soon real estate will be my full time gig, right? Or whatever the case may be for you. But you need to start letting people know what you do.
  • The second trick is that you can’t be boring about it. So find an interesting way to tell people what you do. I was just at an open house a week ago, just around the corner from where we live and it’s one of our investment markets. While we were there, some people come through to look at the home. One guy looked at me and he said, “how’s your guys’s house hunt going?” And I said “we live just down the street, but I collect old houses.” And he said, “Oh well that sounds like an expensive hobby.” And I said, “well other people rent them from us and they pay the mortgage, it makes it a more affordable hobby.” But I said, “yeah, it can be an expensive hobby.” And he started to ask me some questions and unfortunately his realtor dragged him away to go look at another house before we could carry on the conversation much. But you can see how quickly that engaged someone. Oh yes, I collect old houses. Right. It’s an interesting way to look at it. Be interesting!
  • The third thing, is it new? Because if they don’t hear something different then normal, you’re going to be ignored and it’s just going to go right over people’s head. If you say, Oh, I’m a real estate investor. I know this happened for us for years because people thought we were real estate agents! We actually buy the houses ourselves so we weren’t even being interesting enough. So you have to be new and interesting to people. You want them to remember you and think of you.

If you just start doing these 3 things, your conversations will change and you’ll start to find people asking you questions about your deals and soon people will ask you whether they can work with you on one of your upcoming deals.

 

Finding Money Resources

Watch more videos about Finding Money on Rev N You’s Raising Money Playlist.

Finding Money Section in the Course Real Estate Achievement Program.

 

Someone You Must Add to Your Real Estate Power Team

Most people, when directly confronted with proof that they are wrong, do not change their point of view or course of action but justify it even more tenaciously.” ~ Carol Travis & Elliot Aronson, Mistakes were Made (But Not By Me).

Real Estate Power TeamMy Mom used to joke that she had a third child named “Not me”. Growing up “Not me” was responsible for a lot of mischief. My brother and I didn’t agree on many things but we could almost always agree that “Not me” did the thing that one of us was about to get in trouble for doing. Thankfully, when I was a teenager my parents took in another kid so that there was now a third party to blame things on … making “not me” even more difficult to identify. 🙂

Now, as kids most of the time we knew we had done something wrong and just didn’t want to admit it. As we get older we still do things wrong but often convince ourselves it’s not wrong.

I’ve often wondered how seemingly good people turn into dishonest and self serving politicians. The book I am reading right now holds an answer to that. Mistakes Were Made (But Not By Me) covers a lot of experiments and examples that show how little by little, small acts of dishonesty, eventually lead to the justification of big acts of dishonesty. You get a man to lose his ethical compass one step at a time.

Self justification is a scary thing we do to preserve our ego and even ourselves. It’s more powerful than a lie and it is absolutely more dangerous than a lie because we’re not conscious that we’re doing it.

One study by a Yale Professor named Edwin Borchard reviewed 65 errors in criminal justice. 8 involved people convicted of murder where the victim actually turned up alive. Police and prosecutors refused to admit they did something wrong even though they convicted someone of murdering someone that was still alive.

Interesting, but how is this relevant to real estate investing?

The bigger the investment of time, money and energy into something you’ve voluntarily chosen to pursue, the more attractive that something becomes to you. In other words, the more effort you put into finding and negotiating a deal, securing the funding, or presenting to that potential investor, the less likely you are to process future information pertaining to that person/opportunity accurately.

How Smart People Get Involved with Bad Real Estate Deals

You wonder how smart people can get involved in bad deals? How great investors raise money from troublesome partners? Or even how you can end up spending a lot of money on something you never needed or wanted in the first place? It happens gradually … one step at a time. And the more time, effort and money you put into something the more critical it is to have a trusted third party who can look over your decision before you’re locked in; Someone who has no vested interest in your outcome. This means it can’t be your realtor, mortgage broker, business partner, spouse or child.

You need people in your life who aren’t afraid to tell you when something doesn’t sound good even though you’re super excited. As Travis & Aronson say “We need a few trusted naysayers in our lives. Critics who are willing to puncture our protective bubble of self-justification and yank us back to reality if we veer too far off.

Who You Need on Your Real Estate Power Team

Most people focus on getting a great real estate agent, mortgage broker, lawyer and accountant. These folks are important. You also will want some other folks as well like a great maintenance guy, a property manager, and probably a bookkeeper. But today I want to add someone to your real estate power team list that few people talk about – a trusted naysayer. For us, it’s almost always been a paid mentor or coach. For you, it could be a long time friend who is wise to the ways of the real estate world or someone in a mastermind group that you respect. It’s not that you’re looking for someone to criticize you or be a negative nelly – you want someone who can be a guardian over you, watching out for your self-justifications that one step at a time will sabotage you eventually, if they haven’t already begun!

More Than Cashflow BookWe’ve been guilty of self-justifcation many times. If you haven’t read More than Cashflow yet, you should grab a copy as reading about the many mistakes we’ve made at the hands of self-justification just might stop you. Plus, a reviewer from Texas posted this review on Amazon:

 “Hearing personal experience applied to a principle always makes information easier to understand and retain. This book reads as if you are having coffee with a friend. A gifted tested writer who keeps one engaged fully. This is one to come back to often for that help of a mentor.

How awesome is that?! Thanks Shelb!

 

3 Tips for Successful Real Estate Blogging

Real Estate BloggingGetting a blog going is a fantastic way to create credibility, help people get to know you and become known as a real estate expert. The problem is that it is harder than ever to get people’s attention online unless you’re sharing pictures of kids doing cute things or crazy cute cats. It is not “build it and they will come”.

Too many people put up a blog, post a link on Facebook and think that they are going to get blog readers.

Maybe if you are really creative and hit a concept that goes viral that could happen, but that is hard to do. It is much more likely that your Mom will be your biggest fan unless you put in some work to build your audience.

WORD OF CAUTION – A WEBSITE IS NOT FOR ALL INVESTORS: I am not an advocate that all real estate investors need a website. In fact, I think many investors waste precious time on a website when the most important things they should be doing to grow their portfolio are looking at properties, building their expertise and networking. Just like a lot of small business owners waste a massive amount of time trying to perfect a business card instead of focusing on sales and marketing – THE thing that pays the bills – I think many real estate investors lack confidence and spend time on a website that won’t solve their biggest problems: deal flow & funding for deals.

Assuming creating an online presence with a website and blog is a strategic move for you to get to where you want to go (establishing yourself as a specialized expert, helping you get speaking gigs, published articles and create more opportunities for you to find deals and raise money) and it’s worth your time to build your audience, here are three suggestions to get readers and connect with people online.

3 Tips for Successful Real Estate Blogging:

Oh and keep your eyes open in the video … you’ll get to meet one of my coworkers. I had to wake her up though – she was asleep on the job. 🙂

Renting Out Your House: How to Live for Cheap (er)

counting coins

Looking for a way to buy a home to live in without having to carry a giant mortgage on your own income? Buy a multi-unit property like a duplex, triplex or fourplex and move into one of the units. A well chosen property can find you living in a much better area than you could have afforded otherwise and paying a lot less “rent” than you would have otherwise done.

We did this in Toronto for a few years. We moved into a three-unit property that we owned. Our friends moved into the top floor; we lived on the main floor; and we rented out the basement to some university students.

The key benefits:

  • We did live for cheap. Our “rent” was substantially lower than it would have been if we had rented the same property;
  • Parts of our home expenses were a tax write–off, thanks to the rental income;
  • We got to live in the very desirable Little Italy area of Toronto, only minutes from a subway stop. We were also right across the street from a large off-leash dog park (which our dog Bram would stare at longingly as he sat in front of the window.)

The money we saved went towards some of our other investments, paying down student loans, and renovating this property to increase it’s value and generate more rent in the future.

It’s a great way to get into the rental market business, build your wealth and reduce your personal living costs. You’re also able to keep a really close eye on your rental and take better care of any issues that may arise.

The major drawback of living in your multiple unit rental is that the burden of managing the property and dealing with the tenants. Tenant selection is just as critical when you, the owner and landlord, are going to be living on site.

When we first moved in, we didn’t select our tenants so carefully in the tri-plex and the lessons we learned the hard way became one of the founding reasons we started Rev N You and I wrote More than Cashflow. We created a lot of problems for ourselves that were preventable!

While we were living in this property, our tenants in the basement were constantly fighting. We were often being called in to play referee until one morning at 3 a.m. it all came to a climax when one of the basement tenants pulled out a butter knife and threatened her roommate with it. The tenant without the knife was terrified, called the police, and moved out in the morning.

The knife wielding tenant stayed in our basement for two months after this but stopped paying rent. Imagine the joy we felt living above an unstable tenant who also wasn’t paying rent.

And worse for us was the fact that we could have avoided all of this by making better tenant choices.

The point here is to let you know that there are tremendous advantages and disadvantages to living in your investment property while renting out the other units to tenants. It is a great way to live for less and possibly enjoy a better home or area than you can otherwise afford. Nevertheless, as noted in the above, small residential properties with two, three or four units are a great option to consider.

Canadians – word of caution for your taxes when you use this strategy:

If you do decide to live in a property that has been a rental or will be a rental for you and you decide to call it your primary residence to avoid paying capital gains taxes on the value increase that takes place while you live there, you cannot depreciate it when it’s a rental only. If you do depreciate it, you can’t claim it to be capital gains exempt, even for the period that it was your primary residence. Plus you want to get clear on what you can and should write off, and how you can determine values for when it’s your own home versus a rental. A few hundred dollars spent on good advice could save you thousands in taxes.

 

 

Handling Tenants Who Break Their Lease & Other Tenant Issues

Dave speaking

Here’s some advice on the prevention side of things … simple strategy for screening and picking the best possible tenants.

The laws are different in every province and every state, so you have to look up your specific area but this will be a good general guide for most landlords.

“Well, we’ll just give him a few more minutes to show up,” the judge on the telephone line said.

We were waiting for our tenant to come onto our scheduled dispute resolution hearing (a conference call with the “judge”, the tenant, and the landlord) so he could defend his side of the story. We’d asked for an order of possession for our property because he was a month behind in his rent payments and had been paying a month late for a couple of months now.

To get this far, we had to issue several notices, provide multiple documents to the residential tenancy branch to prove he was behind on rent, and we had to prove that we had served him all the documents. This can be done in several ways, but in our case we’d chosen to send the final notice of the hearing by registered mail after posting several documents on his door.

It’s a lot of work to file all of this paperwork. There is also a filing fee of $50.

The judge put us on hold, to presumably call the tenant. If we had not showed up, the ruling would have been in favour of the tenant but it doesn’t work that way when the tenant doesn’t show. They make every effort to get him on the phone and look for ANY evidence that the tenant didn’t know or wants to dispute the notice.

Our tenant clearly did not answer his phone as the judge came back on and said “Ok well I guess we’ll begin.”

The judge then reviewed in detail whether we had given the tenant proper notification of the hearing. He went through the facts of the case next. It felt like he was asking us questions purposely designed to trip us up. For example, we had dated the receipt of rent payment but not noted what MONTH that rent was for. The judge questioned repeatedly why we did it that way and whether it was for the current month or the past month’s rent because it was clearly paid in time if it was for this month. We started to worry that the little mistake of omitting the month of rent that payment was for on the receipt was going to cost us the judgement.

All onus is on you Mr. or Mrs. Landlord.

If you’ve never had to take an issue to a hearing or a court – just know that you must prove everything and, in BC anyway, the judge looks for any reason to rule in the tenant’s favour.  In the end, the judge reluctantly admitted our case was pretty clear and gave us the right to ask for an order of possession. Now we had to wait two weeks so we can issue an eviction notice. It hardly felt like a victory, but it was what we wanted.

It was a  better result than the last time we had a hearing. Our tenants broke their lease and we lost several thousand dollars as we had to do some work to the property to repair their damage and we lost rental revenue. Despite the fact that they were breaking their lease and had a rent cheque that bounced, we weren’t allowed to keep a penny of their rental deposit. I’ll tell you more about that in a minute.

Bottom line, prevention is the best way to handle tenant troubles.

I’ve written a lot of articles to help you find the best tenants for your properties and below is a video on one of the ways we screen our tenants, but today I want to help you by informing you as to some of the most important things you can do to cover your butt in case you ever do have to try to win a judgement.

If a tenant is moving out – ALWAYS get notice in writing.

Verbal or text message is not enough. Get it handwritten on a piece of paper with their signature or at the very least in an email. Ideally, use the forms provided by the landlord tenant board for your area.

Which brings me to an important second point:

Use the Proper Notification Forms for Your Province (or State) AND Get Proof

If you have ANY issues with a tenant regarding violations in their lease, communicate this violation over the phone or in person and follow up with the EXACT notification that you are supposed to give (the notices vary by province and state and what notice to give for what violation). Make sure you have reviewed when you give what notice. Timing of notice is very important.

If you deliver a notification to a tenant and they are not home, in many cases you can leave it taped to their door. HOWEVER, you MUST have proof that you did this. Proof can be a witness who will sign off saying they were there with you or a time stamped photograph. It wouldn’t hurt to have both.

Finally, if you are dealing with a broken lease, the onus is on you to minimize your damages.

Begin advertising the property AS SOON as you get notice. PDF and save copies of any online ads. Take time stamped photos of any signs you put up or any flyers you put out. And if you put ads in the paper, keep copies of the paper. You have to prove that you made EVERY effort to rent the property.

It doesn’t matter if a tenant violates the lease six different ways – it’s 100% your responsibility to prove that you did everything you could to reduce the damages. And, it’s 100% your responsibility to follow the residential tenancy act rules. The tenants aren’t really expected to know the law, but you are.

It’s not fair, but there is no point getting upset about that fact. It is what it is. Just be prepared!

Keep records of every communication in a tenant file.

Note calls (times and dates and subject). Save text messages (take screen shot photos of your text messages). Give receipts for rent paid, if it’s paid in cash. If it’s not paid in cash, be able to show where it was deposited (here’s where it’s really helpful to have one bank account per property). If you have two units in the same property that collect the same amount of rent you’ll need additional proof to show who paid what rent – so keep receipts of e-transfers or pictures of the cheques or issue receipts.

If you think something will be important to note, then make the effort to note it with proof.

Here’s the good news. In almost 13 years of being rental property owners and having close to 300 different tenants, we’ve had 3 issues that led us to a hearing of some kind. That’s not that bad. Think about it … that is 1% of the time!

So don’t let this freak you out … but do let it inform you to know your local laws and if there are any issues (noise complaints, pets not approved, added occupants, late rent, bounced cheques …) make sure you document the issue and serve the appropriate notices just in case it ever gets to the point where you have to fight for cash or defend yourself in court. Also find out what you can and can’t add to your lease.

The Case We Lost

In that case we lost that I mentioned above, our biggest problem was because Dave was trying to be compassionate for the tenants’ situation. He tried to work with them too much and didn’t follow the actual letter of the law until we saw there was a big problem.

The two biggest issues were in not forcing them to put their notice in writing (they text messaged us their notice but it had ambiguity) AND we didn’t use proper notification forms from the beginning when the rent bounced, the lease was being broken and other issues arose. Because we didn’t follow the rules on little things, we were unable to win a judgement for the big things. Plus, we didn’t have a clause in our lease saying we were entitled to claim liquidated damages for a broken lease. We’ve since added it to every single lease and you might want to as well if you’re allowed in your area. Basically put it in your Lease or Tenancy Agreement that if they break the lease (by moving out earlier than the term states), that you have to right to charge Liquidated Damages. The amount has to be reasonable  – probably somewhere around $300-500. It won’t guarantee you will get it, but have it in the lease so you can argue for it if they break the lease. The judge won’t give it to you if you didn’t put it in writing to begin with!

Hope you never have to find out how important this is -but if you do – at least you’re ready!

 


More Than Cashflow BookIf you want more help on picking great tenants for your property, grab a copy of More than Cashflow. There’s an entire chapter dedicated to finding great tenants – plus the whole book will help you understand why you get bad tenants and how to prevent them.

 

How to Be the Smartest Real Estate Investor

girl smiling by computer

How many times have you been told that you have to keep your emotions out of your investment decisions?

I’ve even written about the dangers of emotional real estate decisions.

The problem with believing there is NO place for emotion in your real estate investing is that it ignores the simple fact that emotions actually allow us to make wise decisions and think clearly. Emotions help streamline our thinking so we can process many factors into a choice.

The issue isn’t that you allow your emotions to impact your investing decisions. The issue is when your emotions surge out of control or when you’re unaware of what you’re feeling and why.

In a fascinating read by Daniel Coleman called Emotional Intelligence, he says that IQ only factors into success 20% of the time. Emotional intelligence, like the ability to motivate yourself, understand someone else’s feelings and persist in the face of frustration, play a great role in your ability to succeed.

If you didn’t already fear a world of leaders who have been raised playing sports where you don’t keep score and where you’re given prizes just for showing up, thinking about this should do the trick. We need to learn how to handle frustration, disappointment, success and failure. We need to know how to motivate ourselves and others. These emotional factors are going to play into our ability to succeed and make great decisions 80% of the time.

Whether you did well in school or not, you can succeed. In fact, Coleman explains with repeated studies that academic intelligence and academic success offers virtually no preparation for the turmoil or opportunity that you’ll experience in real life. Being ‘book smart’ doesn’t translate into success. It’s why you often hear about the A student reporting to the high school drop out that started the multi-million dollar company. It’s also why you’ve probably been stunned to witness someone who is very smart by the traditional intellectual definition of the word make really dumb decisions that ruin his or her life.

So what does this mean for you as a real estate investor? First, you certainly don’t need an MBA to succeed as an investor. If anything, I can argue the MBA is a detour to your success as a real estate investor not a shortcut, but that is a discussion for another day.

Second, you don’t need to ditch your emotions. In fact, each feeling you experience has value and should be paid attention to.

I dedicated an entire chapter in More than Cashflow to the unique ability of women in real estate when they tap into their emotions and use them in investing (and men, you have this ability too!). Emotions are very useful in real estate. They will make you a smart investor if you know how to use them. So how do you do that?

Here are 5 ways to use emotions to make you the smartest real estate investor you know:

#1 Get to know yourself.

Self awareness is critical to success. When you know what you feel and why, you are going to be able to quickly identify when you’re overreacting. You’ll also be able to see when a fear might be irrational. For example, many new investors will panic to fill a vacant property. The fear of not having rent coming in can be overwhelming. That feeling can lead you to choose the wrong tenant (as we did once with the now infamous knife wielding tenant). The more you get to know yourself and what causes you to react, the easier it is to reduce the impact of an emotional surge on your business.

#2 Use your emotions to fuel you forward.

How bad do you want what you’re working towards? You have to create a vision that is compelling and that takes emotional connection to you goal. Mark Murphy wrote a great book on getting jazzed up to make big things happen called Hard Goals: The Science of Extraordinary Achievement. He says you have to get emotionally connected to your goals so that your goal is something you’re going to do instead of something you feel you have to do.

It’s not easy to get really charged up about making $10,000 a month. Yes, it sounds good, but when you have to squeeze the work in at 9pm at night when you’d rather be catching up on the last season of the Game of Thrones, that $10,000 won’t motivate you as much as you need it to. It is, however, much easier to get charged up thinking about being there for your kids – being able to take them to school, watch them play soccer, and not be tired and stressed at night when they need help with their science project. Getting emotionally connected drives you to get to completion.  Almost everything you want in your life is going to take work, effort and sacrifice.

Kevin Hogan put this beautifully in this week’s Coffee with Kevin Hogan “Working toward and achieving your ambitions is one of the best ways you can lead a more fulfilling life. The problem is that most people want to FEEL HAPPY WHILE they perform actions that will cause them to achieve and accomplish. And this where people quit.

Effort is “hard” by nature and happiness “feels good,” and people don’t know that effort precedes lasting happiness.”

So get emotional about what you want to do, work hard and drive yourself to complete it.

#3 Relate better to others.

Empathy is a business builder. Being able to see and feel things from someone else’s perspective will make it easier to grow your business. If you’re negotiating with a seller, a hard nosed approach won’t work as well as putting yourself in their shoes and finding a solution to their biggest challenges. If you’re raising money and someone says “I just need to think about it”, the faster you can connect to what they are actually feeling, the quicker you can understand what the real issue is. You will be a better real estate investor when you’re in touch with your emotions so that you can connect to how others must be feeling. Not sure what you can do to be more empathetic? Start by focusing on great listening. Really hear what other people are saying (and not saying) is a great first step to developing empathy.

#4 Kick the moody moments to the curb and get on with the pressing matters.

We all have bad days. We all face challenges. I could list about half a dozen challenges I’m facing right now. Sometimes I feel overwhelmed, but most of the time I kick that feeling to the side because I don’t have time for it. In order to accomplish big things I can’t spend too much time on a high or on a low. I have a zone where I perform best – you do too. Try to stay in that zone as much as possible. You can’t manage time, but you can manage energy. This is the critical component to energy management and making great decisions.

Tony Schwartz wrote about managing your energy to create massive success in his book, Be Excellent at Anything. Besides the fact that you need to make wise choices around how much sleep you’re getting, what and when you’re eating, and how active you are, he says that the key to being in your highest productive zone is to first be aware of what you’re feeling. The more aware of your feelings you are, the more power you have to influence them.

#5 Delay gratification.

Quick wins will give you a jolt – an emotional high – but ultimately making a choice to get a quick win will rarely result in sustainable happiness or success. In the past I’ve referred to this as ‘eating your babies‘. Be aware of when you’re choosing quick wins over the longer term gains to be made. People who can delay gratification are more successful. Coleman says that impulse control is essential to success, and the foundation of self regulation: “the ability to deny impulse in the service of a goal, whether it be building a business, solving an algebraic equation, or pursuing the Stanley Cup” (p.83, Emotional Intelligence)

The smartest real estate investors are in touch with their emotions. They recognize that when the emotions run too high or too low, you can’t make clear judgements. A smart investor will also realize that emotion plays a critical role in making deals, raising money and running a business – but that understanding what causes your emotions and what you’re feeling is the only way to effectively be an emotional and intelligent investor.

In case you don’t know the value of emotions in personal interactions I thought I’d share a great clip from Big Bang Theory with Sheldon demonstrating how not to show empathy:

If this video doesn’t play you can copy and paste this link into your web browser: https://www.youtube.com/watch?v=7U3S43O1Sqs

 

 

 

 

 

How to Create the Perfect Script for Raising Money

perfect script for real estate deals

How to Create the Perfect Script for Raising Money

Joint Venture Partners

I want to help you raise money for your real estate deals. And to do that, I’m going to give you the five questions that you need to answer in order to have an investor give you their cold, hard earned cash. So those five questions, get that pen and paper out.

#1 – Why me?

#2- Why now?

#3- Why this market?

#4 – Why this deal?

#5 – Why this strategy?

Now, there’s some key elements under each of those questions that you need to answer and you’ll also need to know that I’m not encouraging you to memorize a script to answer each of those five questions because the other person you’re talking to doesn’t have the same script. So if they don’t ask you the questions they’re supposed to ask you or follow the format that you’ve practiced to follow, then you’re going to be all messed up.

I recommend you get comfortable with the key points that you want to cover and know that those generally are the five key areas that you’re going to have to discuss. Somebody has a comfort level in what you’re doing. Now the key point and the point that a lot of people mess up is they memorize bullet points of facts and then they regurgitate them and… it’s not horrible, but it’s not a very engaging or a very influential way to communicate. Let me give you an example from a client that I was working with. Although I’m going to make up neighborhoods for the sake of protecting the hard research that she’s spent most of the year doing in the city of Toronto. She got on the phone with me to practice this cause that’s one thing we spend a lot of time helping our coaching clients do is refine their five why’s. If you want one on one coaching involving joint venture partners go to our coaching page. We would love to help you out.

She was working on these elements and one of the things was why this area, why this market? She picked the Albert area and how she’s picked Albert area after a year. She went on to tell me there’s 450,000 people working in downtown Toronto and they have high paying jobs in the financial industry, healthcare professionals and professional services. And those are good tenants because they have high paying jobs. This area is also mostly houses where as a lot of areas in Toronto are now totally condos. And she also said that it’s a 12 minute subway ride to downtown, so it’s really easy commute for people.It was a good family neighborhood. She gave me these facts and it sounds good, right?

Oh, I forgot one of the key elements, the price of houses in that area. It was still possible to find houses for under $500,000 and the layouts of them were conducive to adding a second and sometimes even a third suite so you could turn a single family family home into a duplex or triplex. So those were the facts and it’s good information but it’s not that engaging or interesting. So I made a little change and I basically said, okay, it’s good information. So now here’s how you want to tell somebody. You know what? I have spent all year finding the perfect area for investment. And for part of the year I was really excited about Lulu town and Francesca Ville because those two areas had the house layouts, they’re close to schools, they had good transportation. And I really thought that I’d be able to attract good quality tenants to those areas. But I wasn’t satisfied with the price of homes. I didn’t feel like there was enough opportunity there with the price of home that I wanted to buy and to be able to add suites. So I kept digging and I dug and I put hours and I’ve spent my Saturdays going into these areas and I finally found “Albert area.”

Albert area is perfect. I’m so excited about the area. I can find houses for under $500,000 I can put a little bit of money into it, $85,000 – $100,000 to turn it into a duplex or triplex and that house now has the potential to be worth $700,000 but I won’t go too far into the numbers I want to tell you about this area and why it’s so cool because it’s a 12 minute subway ride to downtown. There’s people commuting an hour or two hours into downtown Toronto for work and these folks, they can live in a house, not a condo, which is what a lot of people want, a lot of professionals want and they only have a 12 minute commute. The areas, the sub pockets of Toronto always get discovered. So I’m certain there isn’t that much time to act on this area because it won’t be too long before people realize that there’s still houses for under $500,000 that we can make a lot of money on.

She still has more information to convey, but she’s going to stop, right? You’re not going to do your whole spiel. She’s going to stop there and see if they have questions, comments, and then she’ll engage a little bit more. Maybe ask them if they’re familiar with the area and go from there. So it is a conversation you don’t want to get too enthusiastic and get too carried away and talk too much, but you also really want to turn it into a bit of a story. So I tried to turn it into a story of how she found the area, and I haven’t even gotten into the fact that she has a killer team that knows this area, that has insider access to city of Toronto information and a few other key details, which she would then work the rest of the conversation.

It’s a big subject and something I love working on. I love taking the facts that people have and helping them create an influential and story with impact that will help others raise money too. But for now, start thinking about your answers to those five why’s so that you can start crafting your own stories and creating your own conversations to raise money for your real estate deals.

 

Joint Venture Resources

One on one Coaching with the Rev N You Team

How to Buy 20 Real Estate Investment Properties

holding money with house in the distance

It was 8am on Boxing Day. Even after all the Christmas consumption, I’d managed to get myself up from my bed and out the door, and was now staring at Barbara. I was getting scared. She looked like she was really going to hurt me. “Maybe I should walk away from this one,” I thought as I looked around the room at the folks who were also going to take on Barbara. But, nobody was heading for the door – they were just getting ready for the battle.

If you’re into Crossfit, you’ve probably already figured out I am talking about a WOD (workout of the day) named Barbara. She’s 5 rounds of 20 pullups, 30 push ups, 40 weighted sit ups and 50 air squats. She is nasty.

How do you get through a workout like that?

You could look at it and think: “100 pullups, 150 push ups, 200 weighted sit ups and 250 air squats – I’ll never finish that!” You could defeat yourself before you even flex a muscle.

Or, you could look at the first 20 pull ups and think “Ok – let’s do 4 sets of 5”. Then, when that is done, you move on to push ups and do 3 sets of 10, and so on. With each section accomplished, you adjust your plans for the next round. Perhaps you do a few less or a few more reps before you rest. Maybe, you realize it’s just way more than you can do right now, so you find a way to scale your plans down (in my case as dropping to my knees for the pushups and adding some body weight support in the form of a band for the pullups was an immediate adjustment I made in the hopes of finishing).

No matter what, the best way to approach an enormous challenge is to break that big bad beast up into a series of smaller sets that are manageable so you have a shot at finishing – which is what I did.

It seems logical when you’re facing a workout, but why is it not what most people do when they are chasing their big goals in life? The majority of people we work with as real estate investment coaches arrive on our virtual doorstep with a daunting list of things they want to do. For example, they will say they want to own 20 properties. That alone is a big task – much like a Barbara WOD. But, that is rarely the ONLY thing people want to do. This same person may also want to start a rent to own business or a real estate club, raise a few million dollars and work on a development project. This is, of course, while they have a full time job and a family as well.

It’s not that these things aren’t possible over a period of time. It’s that all at once, it’s too much to take on. It’s overwhelming. It also creates a lot of stress.

Let’s say you do want to buy 20 properties – what do you do? Some will tell you that you need a plan to buy all 20 before you start. You might try to plan it out by thinking “ok that’s roughly $6,000,000 in real estate so I will need about $1,500,000 for down payments and renovations”. That is like looking at Barbara and telling yourself that you have 700 reps of exercise ahead of you and then trying to get motivated. GULP!

The Best Approach to Buy 20 Investment Properties

The best approach is to break it up and tackle one thing at a time, just like I had to do with Barbara. I didn’t look at it as 100 pullups. I looked at it one round at a time. In my case it was 4 sets of 5 pull ups. For the properties, take 20 properties and break it down. Maybe it’s 2 per year over 10 years. Maybe it’s 4 per year for 5 years.

Break it down.

That’s your overall plan, and it’s good to have in the back of your mind, but now I suggest you forget about it and just focus on getting one deal done. One deal is a lot to handle in itself. Do you know where you want to buy? Do you know what kind of property (commercial, duplex, four plex, single family home)? Do you know who you want to rent to & how you’ll attract them to the property? What resources do you have (financial, time, etc)? Who is on your team?

Get that first deal done. Assess what you liked and what you didn’t like. What needs to change to move forward with more ease? Can you handle the pace of 4 per year, or is it too much given the things that are important to you right now (family, health, career etc).

With that information, details that you can ONLY gather after you’ve made a huge step forward, you can make adjustments and then move forward.

Keep looking at that next most important thing you need to do to move forward. Know that you’re working towards 20 properties, but also realizing that you may not get there. You might not want to once you get to 10. That might be enough. You also might exceed it. You don’t know right now. What you do know is the next thing you need to do, so go and do it (and if you don’t know that next thing then get some support and help!).

I didn’t finish Barbara. The buzzer went off indicating the max time had been reached. I was on my fifth round but was at least another 4 or 5 minutes away from finishing. I’m ok with that. I have learned that it’s good to have an idea of where you’re going, but always look at the bigger picture of WHY you’re doing what you’re doing. For us, as real estate investors, we weren’t looking to create an empire. We wanted to create freedom and options. Once we reached that, we slowed our pace of acquisition down dramatically.

We hadn’t reached a magical number – we had reached our why.

In my workouts, I am doing it for health and to get stronger. I didn’t finish Barbara, but I can do a lot more pushups and pullups today than I ever have been able to in my life. Next time I meet Barbara I hope to conquer the challenge, but no matter what I will break it down and just keep focused on the next thing to do.

Online Presence for Real Estate Investors

Online Presence for Real Estate Investors

Do you need a website as a real estate investor? Should you be active on social media?

The answer really does depend on YOU and what you are doing in your real estate business. If you’re actively seeking new deals, new partners or new team members then the easier it is to find you, the better. You can hand out business cards to every person you meet (although that is not my recommended networking strategy – I don’t even take business cards with me anymore but that is a topic for another day) but then what happens when someone wants to pass your name along? Maybe they happen to have your card handy when the topic comes up, but usually that is not the case. So, how do they find you? They pull out their smart phone or hop on the computer and GOOGLE YOU.  The days of pulling out the white pages and looking someone’s number up are gone (sorry Mom but it’s true – nobody uses phone books anymore!). So, maybe you don’t need a website but you do need a strategy so people can find YOU and connect with YOU online.

We made an offer on a home a few years ago. They turned us down and decided to keep the home and rent it out instead. More than a year later when they absolutely had to sell and were in a time crunch, the seller remembered Dave’s name, and Googled him. The seller easily found us online, contacted us and asked us if we were interested in their home. We bought it for much less than we’d offered the year before because they absolutely had to sell and needed a firm deal quickly.

That’s what today’s video is all about. And before we get into it, I must thank Tim Collins for this. He doesn’t know it yet, but he made the perfect example for me to use to explain this (and by me linking his name to his website I just helped him a tiny bit solve his big challenge – which you’ll hear about in this video). 🙂

CAN YOU BE FOUND ONLINE? Watch Online Presence for Real Estate Investors here:


Want a little more help with networking, websites and social media? Here are a few other links you might like:

>> 3 lessons learned from Michael Masterson

>> Are you chasing someone else’s real estate investing goals?

>> Real Estate Investing Warren Buffet Style

 

The Neighbourhood Price Ceiling and Why It’s Critical to Understand

Beware Price Ceiling When RenovatingOne of the biggest reasons people lose money on renovation projects … especially flips … has almost nothing to do with the actual renovation process at all. It has everything to do with the selection of property and it’s location.

If you’re going to tackle a major renovation – whether it’s on your rental property or even your own home – you should understand this one concept. Missing this step and getting it wrong, almost guarantees you’re going to have to hold onto the property a long time to ensure you can recover your costs.

What is the money losing issues? It’s poor neighbourhood research. You see, you can buy a home for cheap and turn it into the most luxurious and beautiful home, and still not make money because you bought in the wrong area for what you were going to do. Every neighbourhood has a price ceiling and while the occasional home does burst through the ceiling, it’s rare. You need to know what you’re up against.

Here’s a video to explain what I am talking about when I say beware the neighbourhood price ceiling.

This really goes back to one of our fundamental investment principles – becoming an area expert. Part of your area expert research is to understand what your neighbourhood price ceiling is, and what factors may elevate a property above it.

Here’s some other real estate related articles that will help you save tens of thousands of dollars on your home buying and renovation projects:

>>Top 5 Real Estate Investing Books of 2013 – including 2 to help you plan those renovations

>> 5 Ways to Create Credibility as a Real Estate Investor

>> How to Choose a Great Real Estate Investment Market

Image Credit: © Christine Langer-püschel | Dreamstime.com

Top 5 Real Estate Investing Books of 2013

Real Estate Investing Books for Christmas 2013Christmas is around the corner … and if you’re like me, that means you’re starting to plan your shopping lists. It also might mean you’re making lists of what you would like for Christmas. To help you, I thought I would share my picks for the best Real Estate Investing Books of 2013. That way you know what to get the real estate investors, renovators and real estate agents on your list … AND you know what to ask Santa to get you. 🙂

Oh and just so you know … these books weren’t necessarily published in 2013. In fact only two of them were. I just think they are the most important books for real estate investors to have in their library right now – especially if they are negotiating deals and raising money.

So here it is … my Top 5 Recommended Books for Real Estate Investors in 2013

#1 – More Than Cashflow: The Real Risks & Rewards of Profitable Real Estate Investing

More Than Cashflow BookYep it’s my book and I have a bias in saying it’s top of the list but I wrote the book I believe that real estate investors need to read. I didn’t write this book so you would think I am the most amazing real estate investor in the world (I probably prove that I am not when I tell you some of the stories of what we’ve done wrong). I wrote it so you can make better decisions in your life as a real estate investor. I wrote it so you can hopefully never experience what it’s like to go to court over fire code violations. I wrote it so you can find the best property managers – and avoid the ones that rob from you. I also wrote it in the hopes that you ditch the idea that there is a perfect investment market or that there is one perfect system or perfect strategy.

I also wrote it so you would question the information you’re consuming. Just because someone wrote a great book or stands on a stage in front of you doesn’t mean their advice is right for you – or even has your best interests at heart.

This is a must read real estate investing book for all new and budding real estate investors.

#2 – Secrets of the Canadian Real Estate Cycle


Too many investors let the headlines in the media direct their investing strategies. In fact, the headlines often have the same message no matter what stage of the cycle a local market is in. Getting past those headlines and understanding what strategies and tactics will make you the most money at each phase in the cycle is what this book is all about.

When you understand the cycles, you will have a much better understanding of why the real estate market reacts the way it does to certain conditions. This book is written by Canadian investors for Canadian investors – and it’s a must have book in every investor’s library.

The real estate cycle is the term Kieran Trass in his book ‘The Housing Bubble’ defines as “an irregular but recurrent and predictable succession of causes and effects that the real estate market experiences with resultant impacts on the creation and destruction of real estate wealth.”

Recurrent and predictable … or, in other words, about as close to a working crystal ball as you’ll find.

#3 – Pitch Anything


There are very few books I refer back to again and again, but this book is one of them.

In 2011 when the book launched, the publisher of the book gave me a copy and asked me to write a review. I had no expectations of what this book would be like because the books I receive from publishers for review are very hit and miss. I couldn’t believe how amazing, practical and easy to read this book was. You can use what you learn in this book to negotiate with tenants, secure better real estate deals, ask for a raise at work, and of course, raise money for your real estate investments. I have been buying copies and recommending it to just about every real estate investor I know. This isn’t just how to raise money (or how to get more money in 20 minutes as I wrote awhile ago), this is all about getting results from your conversations.

If you haven’t read this book then you MUST read it. Anybody you know in sales of any kind will be grateful for this book as a gift. Enjoy.

 #4 – From Renos to Riches

If you EVER plan to do a renovation – small or large –  (if you are a buy and hold real estate investor and you plan to hold your properties for more than 5 years … that is YOU!!) this book is going to give you the greatest return on your money ever.

I was lucky enough to be a part of this project before it went to print. Thanks to my advance copy I’ve been able to apply what I learned to several very significant renovation projects (including adding a legal suite). Applying just a few tips from the book (shopping for the things we use on every renovation in advance and buying them only on sale for example) saved us thousands of dollars on each renovation and helped me get our renos on budget and on time.

You don’t have to do everything Ian teaches to make a big impact on your renovations. We’ve heard from many of our clients that just one tip or strategy from the book saved them thousands of dollars … so I promise you’ll be glad you have this book on hand when the time comes to renovation a rental or even your own home!

Here’s a video with a few tips I learned from the book … it’s called How to Budget Your Rental Property Renovations.

Ian Szabo also teamed up with Mark Loeffler to write another book called Fix and Flip: The Canadian How-To Guide for Buying, Renovating and Selling Property for Fast Profit. For the renovator in your life, these two books will make a great gift under the Christmas tree this year.

 #5 – Invisible Influence

What you actually SAY only makes up 15% of the message you are transmitting to someone else. Even if you are an expert and you clearly communicate VERBALLY what you want in a situation, you could be making a big mess of what you’re trying to accomplish just because you aren’t aware of the basic principles around influence. Body language, voice tone, presentation, the way you word your questions, and how you groom and dress are all saying just as much as your words are … and you need to be aware of that in order to be a better communicator. Each chapter of this easy to read book is tip or key principle of influence that you can apply to your communications and business operations. Some tips are more for marketing (which, by the way, applies when you’re advertising your properties for rent, for sale or you’re promoting yourself or your business), whereas others are specifically applicable to sales situations.

I am a big fan of Kevin Hogan, and I’m very grateful to him as well. He helped me work through my book cover and book title before I released More Than Cashflow. If it weren’t for him, I think it’s so much less likely that the book would have hit #1 on Amazon because the title and cover would not have been good enough to get there!

He knows what makes an impact and has put really key points into this one book. I know everyone in business and in real estate will gain some tips that they can immediately apply to start having a more positive impact in the conversations, presentations and negotiations you engage in everyday. Again this book is on my books for real estate investors list but anybody in business will appreciate this as a gift.

That is my Top 5 list but I must mention a couple of other books that you might want to give or read. Real Estate Riches: A Canadian Investor’s Guide to Working with the Right Agent by Tahani Aburaneh is a great gift for the real estate agent in your life. How to Win Friends and Influence People is always on my recommended reading list alongside The RRSP Secret: Defend and Build Your Wealth with This Powerful Investment Strategy which is the absolute best resources you can have to help you figure out how to lend out or borrow RRSP funds for mortgages on rental property.

So there you go! Hope this helps you figure out a few gifts …

CONTEST COMING UP!

We’re going to have a special Facebook contest the first week of December for a cool gift. If you don’t already have your copy of More Than Cashflow, order one now so you’ve got it for December 1st. The contest involves pictures, Christmas theme and the book. That’s all I will say for now. 🙂

Clicking on the books and links above will take you straight to Amazon.ca. You should know that I stand to make about 30 cents from every book you buy using that link above. I promise I will use the money for good not evil. I also can assure you that I am not recommending the books above in the hopes that I will make enough money to buy one whole book of my own … because you’d have to buy a lot of books from that link to do that. 🙂

Image Credit: © Artmim | Dreamstime.com

 

The Passive Income Myth

“Beware of little expenses. A small leak will sink a great ship.”  Passive Income Benjamin Franklin

Looking back at our early years as real estate investors, it’s astonishing how much money we paid that we shouldn’t have; how much income we should have made but didn’t; and how many problems we could have extinguished when there was smoke, instead of when the fire had consumed a large portion of our profits.

Our belief in passive income had us believing that we could work hard to buy a property, hire property managers and then kick back and let the money roll in. It only took a couple of years before this strategy blew up in our faces with terrible tenants, property managers robbing from us and even being charged with fire code violations. Then it took several more years to right the ship, but once we did it made a big difference. I’ve talked about my belief that passive income is a myth many times … today I want to talk about what you can do about.

First, let me give you one big example of how active involvement – even when you have property management in place – can save you thousands of dollars.

Every month Dave does a review of the expense and income statements for each of our properties. Because he does this every month, anomalies are easier for him to spot. In this one property, Dave noticed the water bill was double what it usually was.

He immediately contacted our property manager and asked that it be checked out. The property manager said it was because the billing frequency had decreased. We were now being billed fewer times, so it was expected that our bills would be double when we were billed.

Because we owned properties in four different cities at that time, Dave wasn’t sure if that was the case, but he seemed to remember that change had occurred over a year ago. He pulled up our property expense tracking spreadsheet – and sure enough – we’d moved to bi-monthly billing over a year ago.

He called our property manager back and insisted that he investigate.

Turns out we had a water leak. The leak was quickly fixed and the next water bill was back to normal. This home is a split level with a one-bedroom basement suite, and because the tenants aren’t on separate water meters we pay those bills. Dave’s swift action saved us hundreds of dollars that year, not just from wasted water but also because he minimized the damage to the home by catching the leak sooner!

It wouldn’t take too many little leaks like this to completely remove all the cash flow from this property.

So besides just monitoring the water bills … what else should you watch for with your rental property?

Rent payments: If you’re managing the property yourself, you’ll typically notice when you haven’t been paid; but when you have a property manager handling your rent collection, you might forget about it. You also might assume your property manager will let you know if rent has not been paid, but that is not always the case. Stay on it. If the rent wasn’t paid, find out why and what’s been done to address the matter. Never assume things are being handled. In every case, a non-payment-of-rent notice (or the equivalent type of notice for your state or province) should be issued, in case you eventually have to take steps to evict the tenant.

Utility bills: Whether you pay the utilities or not, you should keep an eye on the bills because increased utilities could indicate other issues, as in the case of the water leak. It could also indicate a broken seal on a window or a door if your heating or cooling costs have gone up … or just inconsiderate energy usage. When our tenants usage of electricity goes up more than 25%, we always let them know and remind them to turn lights off, turn the heat down, turn off the TV when not in use, and so on. It’s not just better for our bottom line; it’s better for the environment.

Repairs and maintenance: Your property managers should be getting three quotes for any major work. If it’s going to cost you more than $500 to do something, you need options. And you need to insist on this.

You also need to monitor what is going on. Unfortunately, we have many examples of where our property managers have mismanaged repairs and maintenance, not gotten more than one quote, or allowed the repair budget to go well over what was agreed upon. Even with diligent management, we still have these issues on a regular basis; and sometimes we don’t have enough time to deal with it ourselves so we spend money that we could have saved.

So listen to the warnings of Ben Franklin and watch out for those small “leaks.” Spend a few hours every month reviewing your monthly expenses and cash flow. Ideally, enter them into a tracking program or a spreadsheet so the discrepancies are easy to spot.

So what about financial freedom and buying enough property so you never have to worry about money again?

Let’s say you do the math … you figure out that if you own 30 properties that make you $300/month positive income, you will be able to quit your job. And if you can quit your job, you will have financial freedom! Finally!

What a romantic load of crap that is!

What is financial freedom? Most people try to convince me that it’s never worrying about money again. If that is financial freedom, you aren’t going to get there with real estate. “More properties” does not equal more freedom … more properties equals more roofs that leak, more appliances that break, more hot water tanks that flood, and a whole lot more tenants to deal with. Even if you have the best team, these things will still require your attention – and I assure you that it will be during the week when you’re trying to finally relax that you will have a tenant move out on short notice – leaving you with a property to fix up, a hot water tank split open, and a plumber that seems to have vanished off the face of the earth. And things don’t space themselves out nicely – they all happen at once. The expression “When it rains it pours” was not created because of the weather!

Let’s be clear on one thing: “Financial freedom” is bogus. It doesn’t really mean anything. It’s a fluffy phrase that sounds wonderful but doesn’t translate into any kind of reality.

And real estate is not the way to go if you never want to worry about money again. More properties is just that … more properties.

– – –

More Than Cashflow BookLike this article? You’ll LOVE More Than Cashflow: The Real Risks & Rewards of Profitable Real Estate Investing. This is just a tiny excerpt from the Amazon #1 Best Selling Book.

“Finally, an honest, real-life guide to Real Estate Investing! There are many Real Estate books available that talk about one aspect of real estate investing or another, but very few are as honest and concise as ‘More Than Cashflow’. I have a small library of Real Estate books and this one will definitely be the first on my list of recommended books to read.” ~ From Rick on Amazon.ca

 First Image Credit: © Photographerlondon | Dreamstime.com

– – –

And from the Rev N You Video Archives … some additional tips to help you make more money when you’re working with a property manager:

Item added to cart.
0 items - $0.00