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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. ūüôā

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 ‚ÄėThe Housing Bubble‚Äô defines as ‚Äúan 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.‚ÄĚ

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 РFrom 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 РInvisible 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. ūüôā

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. ūüôā

Image Credit: © Artmim | Dreamstime.com

 

More Than Cashflow: The Real Risks & Rewards of Proftitable Real Estate Investing

Truth About Investing in Real EstateI have been working away for almost 10 months on this.

I thought the day I said “My book is here!!” would be filled with excitement and joy. And I do feel a lot of excitement, but it’s followed very closely by a TON of fear. I can’t believe how scary it is to put myself out there in this way. But, I opened myself up and shared my own personal stories, thoughts and feelings in this book; covering details that almost nobody knew about. I also revealed many things you should know about the real estate industry; Things that nobody else is talking about.

One person who read a pre-release copy of my book said “my only fear is that one of those gurus may put a hit out on you”.

I’m not really scared of that happening … but this book will open your eyes to some things. And that thought is incredibly exciting and terrifying.

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

More Than Cashflow Book

 

Best Canadian Real Estate Book, Period.” That is just one of the fantastic Amazon reviews that has already surfaced from the pre-release copies of my book.

 

 

And now, today I can invite you to get your copy!

I want you to know the truth so you can make the best decisions for you.

Please help me prove that YOU, the reader, the client, the investor, WANT the full story. Grab your copy, grab a copy for a friend and when you’re done reading it post a review on Amazon, share it with your friends/family and get the word out that there is a book that really truly is there to help you figure out if you want to invest in real estate (and, if you do, how you can do it in a way that makes sense). Together we can make this book a best seller and help a lot of people really truly understand the whole picture of what it means to achieve success in real estate. And maybe even change the stories that get told about real estate investing.

To thank you for your support, I’ve gathered together some gifts from some of my most trusted colleagues in the industry. If you get your copy today you’ll receive these fabulous gifts.

All the details are here: http://morethancashflow.com/home/promo/

This special promotion is only available June 19th – June 26th so make sure you get your books today!

My advice – head over there now! Amazon is already sold out of the books (more are on their way!) so the earlier you order, the sooner you’ll get your copies!

After you’ve ordered – come back – I’ve shot a video for you about the book:

Get Your Copy At Amazon

Buy More Than Cashflow from Amazon.ca

Buy More Than Cashflow from Amazon.com

Buy 1 copy and email your receipt to OneBook@revnyou.com

Buy 2 or more copies and email your receipt to TwoBooks@revnyou.com

(See the promotion details at http://morethancashflow.com/home/promo/)

Headlines and the Coming Housing Boom

 

The time to buy is when the values are just about bottoming out. Sellers are at their most vulnerable at that moment. Once the market bottoms, sellers lose that feeling of a ‘free fall’ and get their confidence back. That translates into a stronger negotiating posture among sellers.” Greg Rand,¬†Crash Boom!

Headlines and Coming Housing BoomWe used to get a lot of emails from folks asking us if we thought¬†now was a good time to buy. We haven’t had an email like that in months. These days the emails we primarily get are from people who want to invest but aren’t sure of their first step or that want to¬†invest in real estate¬†but can’t find the right deal.

Does that mean most people believe that, generally speaking, now is a good time to buy? Or does it mean that only those that believe that the market is recovering or going to recover soon are even considering investing right now and everyone else is hiding?

I am not sure.

I can tell you that it doesn’t matter where you live in North America, the headlines are never going to tell you the answers.

TheGlobe and Mail Businesssection on April 27th, 2011 was a confusing array of headlines regarding the real estate market.

  • “Silicon Valley’s Real Estate Rebound: As technology companies race to expand operations, office space is once again a high priority.”
  • “Home prices continue slide in U.S.”
  • “Consumer confidence resting on housing market” and the subheading mentions that three in five respondents to a survey said their home is worth more than four years ago.

That is just one newspaper on one single day!

No wonder so many new real estate investors are scared and not sure what steps to take! If you read the paper (which I don’t, by the way, I picked this up while enjoying a leisurely breakfast at a hotel with Dave on a morning off) you are facing a barrage of conflicting messages each and every day. Most of them steer towards the negative side of every story but even when they don’t, it never proves to you conclusively what you need to do.

At least they won’t unless you pay attention to the headlines that matter. And, even then you won’t know what to REALLY look for unless you¬†understand the real estate market cycles.

I’ve shared some thoughts around the housing market cycles before when I asked “Are we in a housing boom? Slump? Or Recovery?”,¬†but today I want to get into a few points I’ve pulled out of another book I’ve just read. This one came to me straight from the publisher who was looking for me to share it with everyone if I liked it. Since the book made some great points I decided to do that.

One little note before I give you three key points from Greg Rand’s book Crash Boom!. I enjoyed the read and I do recommend it but I think it’s a bit on the general side. I also felt this book was a little too bullish on the US. He didn’t address the fact that the US does faces troubling issues with it’s currency in the international arena. It is also highly likely that the lack of responsible fiscal policy shown to date will prolong the economic pain in many areas of the US for years to come. He just focused on real estate cycles and how it will be back because it’s America. I agree, but not in such a general way.

You’ll get a lot from the book – especially if you live in the US and want to invest in your local market – but keep in mind that¬†real estate is local. It doesn’t matter if you’re in Lethbridge, Alberta, Canada or Palm Beach, Florida, USA you have to look at what is happening locally to really get a sense of what’s happening in your real estate market.

People can debate all day long whether the US housing market is recovering and it doesn’t really matter if, in your little pocket of St. Paul, Minnesota there’s job creation, immigration and a positive local government spearheading positive growth. All that matters to you is where you’re going to buy because you have a hot new pool of tenants coming your way!! Just like it doesn’t matter what’s happening anywhere else in the US if you own a house in one of the neighbourhoods of Detroit that are getting bulldozed over.

Crash Boom Book Review by Greg RandGet my point? So –learn the cycles, read this book, and keep in mind what’s happening in your local market.¬†National numbers mean very little in a game that is very locally based. So follow LOCAL headlines and watch for growing signs in your local market so that you prepare yourself ready for a housing recovery, followed by a boom, because it’s coming. In every market area it will be different and in some areas it may even be started, but you won’t know unless you know what to look for.

So with that pre-amble, here’s my three favourite points from Greg Rand’s book,¬†Crash Boom!:

  • Find Your Florida: Florida has taken a beating in the recession. Bad behaviour on the part of developers, speculators, lenders and home owners came together to create a complete disaster. But Florida’s economy has been growing for 40 years and, arguably will continue to grow because of climate and demographics. “Florida has a short-term problem, but a fantastic future. Situations like this exist all over the country. Sometimes they are high-profile like this, but usually they are obscure. Find your Florida.” (p.120)
  • Have a kid, buy a condo: This strategy is brilliant and we’ve actually seen more and more people doing it, and we love it! Rather than a savings plan or an RESP, buy an investment property that pays itself off while your child grows up. When it’s time to go to University the cash flow from the property can help pay for their education, OR you sell it and use the proceeds to fund their schooling. And I love what he says about this: “Consider how a college savings plan compares to a real estate investment during a painful recession. Would most people have the fortitude to continue a long term savings plan that requires a monthly instalment of $1,000?” Most people wouldn’t but with a tenant in a condo paying down the mortgage for you that is exactly what happens!
  • Prices WILL go up again: The American housing market has appreciated during every 10 year period in history. Even after the tough years we’ve been through prices have still not dipped to where they were 10 years ago. He argues that things will begin to flatline for about five years and then we’re going to have another economic boom and the revival of housing values will come. Hard to argue with all the historical charts and graphs he shows … but what I liked best is found at the end of the book when he looks at specific markets, their house prices and the story of what’s happened in that market. It’s a fun and quick overview of a dozen or so major markets.

At the end of the day his point is one that can’t be made enough, and that is that you need to focus on the fundamentals. Specifically, look into your local market numbers and see if your population is growing. Look at the job market. Figure out if it is growing and if it is, determine why and if it’s sustainable.

Housing market cycles exist… it’s been proven repeatedly. We are coming out of a slump (and depending on where you are, you may be in recovery already), and the smartest real estate investors are enjoying the good times shopping right now, looking to the future when they can cash in on their patience and relax while everyone else scrambles to try and find deals as the market heats up.

You could wait until you’re sure recovery is here – or you can do what we’re doing and find great cash flowing properties that you’re happy to hold for five years or longer as the market rocks and rolls it’s way into recovery.

The Driving Factors Behind Real Estate

Julie Broad TwitterA couple of days ago my Twitter feed was alive with talk of several real estate related subjects that caught my attention:

  • Confirmation of Canada’s Housing Bubble
  • Record home sales are forecasted for 2010 in Canada
  • New Mortgage rules forcing non-owner occupied properties to have 20% down, refinancing your homes to a max of 90% of value and other regulations aimed squarely at cooling a hot condo market
  • Affordability of Vancouver¬†homes have hit¬†at an all time low.

Of course these headlines all hit at the same time as the headlines in the US are declaring massive foreclosures are still to come in many states and stats from Q4 2009 were announced that one in five homeowners in the US are underwater.

I don’t know about you but it can be really hard to tell what is going on.And frankly, the national numbers really mean nothing for real estate investors. It’s what is going on in the backyard of your investment areas that matters. But how do you tell if your area is booming, slumping or recovering?

That’s where Kieran Trass, author of¬†The Housing Bubble¬†comes in.

The Housing Bubbly by Kieran TrassThis book is going to go on my “Must Read” books for all real estate investors– no matter what country in the world you’re in – because he has spent 20 years studying real estate cycles around the world.¬† And while I do understand the fundamentals of what makes a good market to buy in and I have for years, his book made things absolutely crystal clear for me. I could see through the fog before, but now the fog has lifted.

The big difference comes in understanding what is actually DRIVING the market versus what is INFLUENCING it. And the thing I’ve always inherently known but never clearly understood is that the media headlines are almost always based on the things that INFLUENCE the market not the things that drive it.

The influential factors are more sensational. Not too many media outlets are going to be excited to report that the population of an area increased by 8% for the third year in a row. It’s just not interesting or exciting. But they are going to jump all over any suggestions that a new harmonized tax is going to destroy the new home real estate industry, or that banks aren’t going to be lending money to anybody because of the tightening of rules, or that consumer confidence in house prices is at an all time high or an all time low.
The difference? Things like interest rates, cost of borrowing, laws, consumer confidence and the investment alternatives like the stock market are all things that influence the real estate market. These are not actually the factors that drive it.

 

Population changes impact housing book or housing slumpThe driving factors behind real estate, according to Kieran’s extensive research are:

  • Factors influencing demand¬†such as population changes, construction, the number of people per household and employment levels;
  • Factors influencing the financial elements¬†of house prices like the average rental rates, average income of residents, availability of financing;
  • Emotional factors¬†like the number of days it takes the average house to sell, the number of listings on the market and the overall sales volume.

The drivers of the market are what will actually take the real estate market from one phase to another¬†and it takes a combination of factors to move the market not just one strong element. Market influencers, on the other hand, might present short term opportunities or red flags to be aware of but they aren’t driving the market into a new phase or out of an old phase.

So fellow Canadians if you’re getting wrapped up in the media hype about the housing bubble and boom allow me to use this quote from the book to tell you what I am trying to say:

“Many real estate market observers mistakenly believe that a real estate boom has begun when the real estate cycle enters the beginning of the recovery phase.” p. 71

By the way …Keiran Trass¬†also says that¬† this is also the point when wise investors enter an aggressive buying pattern with an intense focus on cash flowing properties.

One might say that sending 5500 letters out to home owners, placing signs on posts, posting ads online, and in newspapers is aggressively pursuing cashflowing deals. We might be wrong about where the market is at …. but we’re buying properties with $500 – $800/month positive cash flow so we’re ok to be wrong while we take those cheques to the bank. (If you don’t know what¬†I’m talking about then it’s time you checked out our blog –¬†Life As Real Estate Investors).

And for our dear American friends … we welcome you to invest in Canada if you’d like. Things are pretty stable up here these days but we definitely don’t have the same juicy opportunities that you have around you!! But I have some wise words from Kieran Trass¬†for you as well:

“Before the sunrise everything is dark as the previous night comes to a close. They say that the night is always darkest just before dawn, but as the sun moves closer to breaching the horizon the reduction in darkness is subtle. Then slowly it gets lighter and lighter until suddenly the sun rises and floods the landscape with light. While this light is strong, initially it is not accompanied by too much warmth, although before long the warmth increases. So too the recovery phase seems subtle in its arrival, until suddenly real estate values start to rise and everyone recognises the recovery.” p. 71

It’s always darkest just before dawn my friends.

We’ve said it before, but it’s worth saying again:Ignore what the headlines in the paper are saying about the housing market. Focus on what is going on in your backyard.And, pick up a copy of this book –The Housing Bubble– you’ll be glad you did.

Published on February 18th, 2010

10 Reasons Real Estate Investors Underperform

Confessions of a Real Estate EntrepreneurAlright, I confess, this wasn’t my original idea. I actually stole the idea from one of my real estate mentors,¬†Jim Randel. Jim is author of one of the best real estate books out there¬†Confessions of a Real Estate Entrepreneur. He is also writer and creator of the Skinny On series of books. These books can be read in less than 2 hours and are full of fun stick people sketches and easy to understand concepts but they pack a punch full of information.

I read Jim’s weekly newsletters and a recent one was about “10 Reasons (Some) Entrepreneurs Underperform”. It got me thinking about the reasons real estate investors underperform.

Now, this is not a scientific study. I did not go out and survey 5,000 real estate investors and determine who were successful and who were not and then look at the characteristics that shape their success (or lack thereof). This is based on years of investing ourselves and what we have learned from other successful real estate investors.

If you lack these traits (or characteristics), there is a good chance you will underperform as a real estate investor. You don’t have to have ALL of these, but the more you have, the more likely you will be highly successful.

So, without further adieu, here are my 10 + 1 Reasons Why (some) REI’s Underperform.

1.Passion¬†– I feel strongly that if you have passion, real passion about real estate (and investing in it), you will perform better than if you don’t. We know quite a few investors that are not passionate about real estate that have been successful but they feel worn out and want to leave the business. The only reason they don’t leave is because it’s making them money … but they aren’t having fun and they aren’t making as much money as they would (I think) if they were passionate about it. Besides, why spend so much time, energy, focus, and money on something you don’t love? Life is too short!

Real estate investors need mental strength2.Mental strength– There are so many times where you may want to just give up because you’re doing so much heavy lifting mentally. Challenges like¬†insurance issues, and¬†property financing¬†troubles, and tenant challenges are part of the business of real estate investing – be strong and you’ll do well. And by the way – the more physically fit you are – the better you’ll perform mentally. That’s a fact that has been proven by scientific study.

 

3.Belief– No one, and I mean no one will (or should) believe in you as much as you do. If you don’t really believe that you can be a successful real estate investor, then you may as well stop trying. There will be times when it seems like you are the only one that believes in what you’re trying to do so you have to be there for yourself! You should also surround yourself with folks that believe in and support you … but that’s a different point.

4.Guts– You have to be willing to go the opposite direction from the rest of the people you know. You have to be able to make your own decisions and have the guts to take action on them. This is not an easy thing to do especially when you first start out. And, to continue and advance as an investor you will still need guts to try new¬†real estate strategies¬†and techniques. In fact, we are working on several creative techniques right now and believe me, my guts are rumbling and churning as I push myself to get’r done. The more guts you have, likely the better you’ll perform.

5.Integrity– Sadly, I have met many folks who have become successful without integrity but I believe that their success is likely only financial. I am confident they don’t have the relationships nor the personal satisfaction that comes with doing business with integrity.¬† Doing business in a way that treats everyone with respect in turn makes you easier to respect and like … and makes it easier to attract the folks that will help you grow your business.

6.Focus– This is probably the most underrated trait or action for becoming successful. If you lack focus, it is still possible to become successful. Heck, over the years I have had trouble staying focused but I have still performed fairly well in the REI game. But, my lack of focus has certainly played an important role in keeping me from reaching my full potential. And, the best part about focus, along with most of these other traits is you can learn it/them! In fact, Julie’s been helping me to re-train myself to become (and stay) more focused! I am getting better all the time (at being focused) and our achievements are moving in sync with our focus.

Communication is a key to success as a real estate investor7.Communication– If you dislike talking to people, emailing, or just all around don’t communicate well with others, good luck performing and being successful with real estate. You have to communicate constantly with realtors, mortgage brokers, banks, accountants, lawyers, vendors, buyers, tenants, appraisers, inspectors, contractors, the list goes on and on. If you aren’t at least somewhat effective at not only getting your point across but also being a good listener and understanding others, forget about being in the REI game.

 

8.Hustle– Lining up your¬†joint venture partners, obtaining financing, managing all the appraisers, inspectors, realtors, placing and showing tenants the property all require a large amount of hustle. Sure, you don’t need to hustle 365 days a year to perform well, but you sure better be able to hustle every time a deal starts to come together!

9.Commitment– Are you committed? Really committed to being an amazing investor? Are you making it a priority everyday that you do something that will move you towards your goal of being a real estate millionaire? Now, you don’t have to do something everyday, but your level of commitment is directly related to becoming better, stronger, faster, smarter, and wealthier.¬†No commitment = Little to no payoff.

MOMAR Adventure Race - Persistence pays off10.Persistent– In my humble opinion, this is absolutely the most critical reason why some real estate investors underperform. If you want to succeed in this business, you HAVE to be persistent. You will find the best deals by continuously following up on opportunities. You will secure the best financing by continuously trying to find a better option. If your partner backs out at the last minute you have to pick up that phone again and again until you find a new partner. Keep trying, keep pushing, keep being persistent. Do not give up.

Support/Network– this is my +1 (of the 10 + 1) reason or trait that is why some real estate investors underperform. I call it +1 because it’s not necessarily within you….it’s those around you. All of the 10 traits I mentioned are part of who you are or who you need to be, but this is those around you.¬†I have yet to find 1 successful real estate investor that doesn’t have a good support group or network around them.¬†This goes beyond your realtors, brokers, insurance agents, accountants, etc. This is the someone or some people who are there when you need them most. They give you that “push” or helping hand when your persistence, hustle, and guts are on empty. This could be a spouse, friend, investing partner, business partner, parent, child, or even mentor. This is one of the reasons we always suggest investors join real estate investing clubs or start investing with a like-minded individual. You will not only learn a great deal from that support person, but you can also look to them for help or guidance when you struggle.

Sure, there are likely several more traits that you need to have to rise to the top of the real estate investing pile, but if you have most (or all) of the above, you should become a successful real estate investor.

“So what do we do? Anything. Something. So long as we just don’t sit there. If we screw it up, start over. Try something else. If we wait until we’ve satisfied all the uncertainties, it may be too late.”

~ Lee Iacocca

Published on January 31st, 2010

What I Learned from Claude Hopkins


my life in advertising‚ÄúEvery great move I have made in life has been ridiculed and opposed by my friends. The greatest winnings I have made, in happiness, in money or in content, have been accomplished amid almost universal scorn. But I have reasoned in this way: The average man is not successful. We meet few who attain their goal, few who are really happy or content. Then why should we let the majority rule in matters affecting our lives?‚ÄĚ (p. 94 ‚ÄstMy Life in Advertising and Scientific Advertising¬†by Claude C. Hopkins)

It was a glorious accident that I found this book. I’d been helping my Mom and Dad clear out their recycling and reusable goods. Mom sent me into the book exchange to drop off a bunch of old books she was giving away and as I was sorting the books onto their proper shelves I found this gem of a book. I’d looked for a copy in the past but without much success … and here it was … FREE!

This book was a fascinating look at the life of a man who devoted his life to advertising. His accounts of turning money losing products into household names were brilliant and inspirational. His life lessons shared were priceless. And, I found many of his lessons applied to real estate just as much as advertising.

The easy application of his advertising lessons to real estate was delightful but not surprising. I spend quite a bit of time in our Real Estate Millionaire: The Essential Starter Course explaining the fundamentals of marketing and sales strategy because I believe that a good marketer WILL make an exceptional real estate investor.

A marketer must understand it’s audience in order to be able to entice them to take action. This means a good marketer will:

  • Determine what the market wants through¬†careful market research,
  • Understand what needs to be said and what mediums should be used to deliver that message,
  • Be able to appeal to the underlying emotions that motivate the prospect,
  • Measure the results of their actions carefully in order to fully understand what messages, mediums and methods are providing the best ‚Äėbang for their buck‚Äô,
  • Be good communicators, both in spoken and written words.

Bram and I on Knox Mountain in Kelowna where we were doing market research for potential purchases (click for the latest details)

I believe the exact same skills are critical to success as a real estate investor! Before we buy a property we spend at least a few months researching the market area. We typically narrow our focus down to an area as small as 4 or 5 square blocks. We find an area that has potential for growth due to increasing employment, improving infrastructure and desirable amenities. Then we learn what the tenants in that area want. Once we understand what area is poised for growth and what properties the tenants of that city are attracted to we go out and find it.

And, because we‚Äôve spent so much time researching the market we already know what are the features to focus on when we advertise to a tenant. We already know what attracts people to the area ‚Äď whether it‚Äôs¬† a short commute to downtown, an award winning school, trendy shops and restaurants or access to the beach.¬† We also know what features of the property are most important to our prospects. If very few places in that area have a large back yard or air conditioning but those are the most desired features we will be sure to emphasize them.

Understanding the market area and the tenants in the area right through to knowing how to market your property to attract the best tenants are critical skills. And, of course, you have to be able to communicate with people if you’re going to negotiate real estate deals and be a landlord!

Claude Hopkins would have made an exceptional real estate investor because he was a master marketer.

Here’s a few additional things Claude writes about that you might want to consider as you think about your next (or first) real estate purchase:

  • Always try to get immediate action from your prospect.¬†Tell them what delaying will cost them. In other words, get them to fill out a rental application on the spot because if they don‚Äôt the property could be gone before they even have a chance to submit it!
  • Do nothing to merely interest, amuse or attract.¬†Do what you have to do to win over your prospect in the cheapest possible way.
  • Answer any questions you have with a test campaign.¬†In our case, we will use Craigslist or Kijiji to advertise a property we‚Äôre considering buying for rent (or rent to own). When people contact us we just explain that we don‚Äôt yet have access to the property but will take their name and number and will call them when we have it. We don‚Äôt share the address but will explain the features and the area of the property. Within a few days we know whether there is demand for that property or not.

And‚Ķ one final piece of advice ‚Ķ if you‚Äôve read my short article called ‚ÄúBefore you Buy that Rental Property‚Ä̬†you‚Äôll know that I almost passed on a very lucrative deal because I couldn‚Äôt imagine ever living in that house. Well Claude Hopkins has some wise words on the subject of confusing your wants and needs as those of everyone else:

‚ÄúWe must never judge humanity by ourselves. The things we want, the things we like, may appeal to a small minority.‚ÄĚ (p. 24).

Recommended Real Estate Books

Real Estate BooksEvery week we receive at least one email asking us about the books we recommend. Personally, I find that a tough email to answer because it really depends on what you’re looking for. I read all kinds of books from real estate to marketing to biographies to wealth building and business building. I call it “feeding my brain” and I love giving my brain good food. That’s not to say that I never grab the latest Candace Bushnell book (guys, she was the author of the t.v. show Sex in the City and writes some fabulous chocolate for my brain!); But, in my brain diet of a book a week, I try to stick to the healthy brain foods 80% of the time. So, I’ve read a lot of books and most of them I would recommend for various reasons!! Last week, when Sebastien (from Quebec, Canada) asked what books we recommend, I wrote: Sebastien, It really depends on what you’re looking for. Here’s a few in different categories (if I’ve written about them in the past I included a link to the article):

General Wealth Creation Strategy Books:

Real Estate Investing (specifically for Canadians):

  • What, When, Where and How to Buy Real Estate in Canada by Ozzie Jurock
  • Real Estate Investing in Canada by Don R. Campbell

Real Estate Investing (US based so not all information in them is applicable but they are really good reads):

Dave recommends¬†Confessions of a Real Estate Entrepreneur¬†by James Randel but I haven’t read it yet. We actually have him speaking on an upcoming teleseminar so you could try and tune in and listen to him before you buy his book if you want. Hope this helps! Best regards, Julie confessions of a real estate entrepreneur(I’ve since read¬†Confessions of a Real Estate Entrepreneur¬†and if you’re interested in reading about commercial real estate deals, I would put it on the top of the list! It was an EXCELLENT read!! And, I can’t wait to dig into his “Skinny On” books that just arrived!! My brain is excited for what is sure to be some very satisfying brain food!!). ūüôā ¬† Published June 19th, 2009

The Law of Attraction and Real Estate

If I asked you to describe your perfect real estate deal to me, would you be able to give me five things that HAD to be in the deal to make it “ideal”?

If I asked you the same question about your perfect real estate agent or mortgage broker or investment partner, would you be able to give me the 5 most important qualities of each off the top of your head?

When¬†Michael Losier, author of¬†Law of Attraction, asked me to describe my perfect joint venture partner, I froze! Um, ah – “I want him to have money”.

Michael said, “Well, I have lots of money. That doesn’t mean I am going to invest it with you.”

Ouch! But, his point was well taken. I wasn’t clear. And, I am pretty sure this lack of clarity has been holding me back! How do I know what I am looking for if I can’t clearly describe my ideal joint venture partner? The same goes for a deal, a realtor, a mortgage broker, a lawyer and so on!

You see, many things are important to your success as a real estate investor. Taking the time to complete good market research, carrying out careful due diligence, and using a little creativity are all important. Some things are helpful but you can work around them like good credit or cash in the bank. And, other things, may not be necessary at all when you first start out like finding a high powered courtroom attorney and a full time book keeper. But the one thing that you do need is an idea of what you’re doing and why.

We’ve always said that you start with your goals. Figure out where you want to go, then make a plan to take you from where you are today, to where you want to be. We’ve said it’s the one thing you must do in order to overcome¬†emotions in real estate investing¬†and it’s always the¬†first step in our real estate investing process. But, as we sat down with Michael Losier, author of¬†Law of Attraction¬†it became obvious that we hadn’t taken this step quite far enough yet.Michael Losier Law of Attraction

And the most beautiful part of this whole story is that it only took Michael about 5 minutes to help all of us on the call describe our perfect joint venture partner. This one single tool (and he gave us many tools on the call to use in our lives and our investing business) has already changed my real estate investing life.

He told us to:

1. Take out a piece of paper and draw a line down the middle to create two columns.

2. At the top of the left hand column write CONTRAST. At the top of the right hand column write CLARITY.

3. Beside CONTRAST write negative.

4. Now, in the column of CONTRAST write down everything you DO NOT like or DO NOT want in a joint venture partner.

Suddenly – I had a long list. I don’t like partners that don’t call me back, that never have money, that are too controlling … I could go on and on. It was really easy to describe everything I didn’t like or didn’t want in a partner.

Next, Michael said, “So, what DO you want?” You don’t want a partner that never calls you back, so you want a partner that is “Responsive and easy to get in touch with”. You don’t want a partner that never has any money, you want a partner with “lots of investment money they will use for your investments”. And we went down the list … and every time we created the specific detail about what we DID WANT, we crossed out the corresponding negative item. (You can download a copy of my Contrast/Clarity Example Here)

It felt great! I had clarity. And, I felt good about it. No wonder Oprah loves this man!

I’m now sitting down to create a contrast and clarity sheet for every aspect of our real estate investing business. I know that I will find better partners, better deals, and better team members in the future because I will know exactly what I am looking for and what is ideal!

Check out Michael Losier’s work on his website:¬†http://www.lawofattractionbook.com

He has a $99/year program where you can get on the phone LIVE with him for 60 minutes every month. He also has a new book coming out in June – all about improving the connections in your lives. As real estate investors, our entire world is about connections so we’ve already preordered it!

Oh, and if you want to listen to the call to learn all the tools and read the transcript, you can order a copy¬†here. But you’ll want to do so soon as we’re only selling it until May 21st!

Posted on May 14th, 2009

The Peebles Path to Real Estate Wealth

The Peebles Path to Real Estate WealthWe’re witnessing a point in time where we’re “going to see the wealthy get wealthier, at the expense of the average person who doesn’t recognize a buyer’s market” (p.43). That is according to¬†R. Donahue Peebles¬†the author and multi-millionaire real estate investor, developer, entrepreneur and author of¬†The Peebles Path to Real Estate Wealth.

Peebles can make such bold and strong statements because he made tons of money in the last down market Рbuying properties nobody else wanted, and either redeveloping them or just holding on until the market strength returned. He understands the fundamentals of real estate investing. Fundamentals like:

  • Market indicators¬†of strength, stability and future expansion potential,
  • The indicators that really matter (job growth, income stability or growth, growing industries),
  • What¬†area features attract people, and will continue to attract people (like beautiful areas with waterfront or mountain views, good school systems, strong tourism and good quality of life),
  • And, that you¬†make your money on the way into a dealand to do that you need to understand what a property is valued at and how you can create more value.

He also understands that real estate, purchased in areas with good fundamentals, will always go back up. He said specifically “they say that what goes up must come down. In real estate, what goes down generally comes back up. It’s just a matter of timing, and that depends on picking the right geographical locations based on the underlying fundamentals of a given region, a given city, and a given neighborhood. Just make sure you do your homework first(p. 117).”

The key we’ve discovered, and Peebles reinforces, is buying in an area that people are going to always want to live in. And then, buy the property under market value and for it’s cash flow. It’s a pretty darn near guaranteed formula for success. However – you have to understand how to value a property to be able to buy it under market.

Valuation is so important to successful real estate investing that I actually sat down one weekend a few years ago and read the entire Appraisal of Real Estate textbook from the Appraisal Institute of Canada. It was a large, dry and painful exercise, but I knew that understanding the key concepts of valuating property was essential to my career, at the time, and to my passion as a real estate investor.

Peebles really understood this because he worked as an appraiser for years! He understood everything about residential and¬†commercial property valuations.¬† He emphasized the need to understand how to value properties, explaining that if you have no idea how to value a property you’ll always be relying on someone else. And, how will you know if that other person is right or wrong?! Plus,an understanding of value enables you to act quickly on opportunities and gives you the ability to know how and when you can create value.

In essence, Peebles’ book is all about understanding what is happening in today’s market and why. He walks you through the credit crunch and how it’s different than previous recessions and housing crashes. He shows you how this confidence crisis is creating the perfect market for opportunity seekers, and how you can find the deals and take advantage of them. If you are feeling a little shaken by today’s market (especially if you live in the U.S. – because the book is focused only on the American situation) then I would highly recommend you pick up this book. It will give you a confidence boost to overcome the doom and gloom media messages and it’s very informative and useful.

I’ll leave you with my favourite quote from the book:

If getting rich were as easy as follow the leader, then we’d have a whole society of rich people… When everyone else is buying that’s the worst time to buy, and when fewer people are buying and lots of people are trying to sell, that’s the best time to buy(p.92).”

Published April 10th, 2009

Peebles, R. Donahue.The Peebles Path to Real Estate Wealth. John Wiley & Sons, Inc., 2008.

 

The Day We Became Real Estate Investors

Real Estate Investors 3 Year Newsletter AnniversaryIn a way, it was like learning that the tooth fairy didn’t exist. Even with the wild imagination that I had as a child, I don’t remember ever REALLY believing that the tooth fairy really wanted to give me money for the teeth I’d lost. But, I wasn’t about to argue with something that put coins under my pillow while I slept!

As I sat in this seminar though, and listened as my whole vision of reality was splintered, I felt a bit like I did when I learned that there definitely was not a tooth fairy. I had always suspected something wasn’t quite right with the story; It didn’t change how I felt about the tooth fairy, but it was still a bit surprising to learn the truth.

I am talking about the story behind the book that got us started …Rich Dad Poor Dad¬†by Robert Kiyosaki. You see, I read so many of the Rich Dad books that I actually started to feel like I personally knew the characters in the story. Even though the whole story behind the book always seemed a little off, I never really questioned it.

Then, I met “Rich Dad”. He’s far too young to be the age of Robert Kiyosaki’s rich father portrayed in the book. Yet, he is every bit the exceptional business man, gifted educator and brilliant communicator I had expected. I’m talking about Keith Cunningham, who worked with Robert Kiyosaki for nearly a decade. His teachings are what Robert based his books upon. Keith is the author of a book called Keys to the Vault, and with his wife Sandi runs some extraordinary business coaching programs in Austin, London, Sydney and a few other places around the world.

Sitting in Keith’s course, learning that “Rich Dad” was not really who the book made him out to be shook me up a bit, but I was not totally shocked. Like I said, it’s like the tooth fairy. It really didn’t matter if the tooth fairy was real as long as she kept putting money under my pillow! It really doesn’t matter that “Rich Dad” isn’t who Robert Kiyosaki says he was, because that book still change my life (and Dave’s).

We wrote about¬†Rich Dad Poor Dad¬†before. Today, I want to share 7 revelations from that book that turned Dave and I into real estate investors and changed the way we looked at money (and I am going to add a few newer thoughts from Keith’s teachings):

  1. Rich people acquire assets. The poor and middle class acquire liabilities, but they think they are assets.” p.58
  2. As an employee who is also a homeowner, you will find yourself going to work every day to pay for your house, to pay your taxes and to pay the bank. The more you make, the more you pay. The more you pay the harder you feel like you have to work so you can keep up with the payments. You have to learn a way to make your hard work pay YOU more. You need to learn how to get your money working for you instead of you working for the money.
  3. Use assets to buy luxuries. “Too often today, we focus to borrowing money to get the things we want instead of focusing on creating money. One is easier in the short term, but harder in the long term. It’s a bad habit that we as individuals and a nation have gotten into. Remember, the easy road often becomes hard, and the hard road often becomes easy.”p.182
  4. Take action … immediately. It’s not about waiting for the perfect market, the perfect moment or for something else to happen. Take steps today to learn what you need to learn and do what you need to do. Keith said to us “When we can’t find the perfect solution we stop moving … instead of looking for the perfect solution figure out what you can do TODAY to improve your situation.”
  5. Most people actually make choices that result in the easy path – which is not the path to wealth. Most people are actually choosing NOT to be rich. “Financially, with every dollar we get in our hands, we hold the power to choose our future to be rich, poor or middle class. Our spending habits reflect who we are. Poor people simply have poor spending habits.”¬† p.167
  6. Smart investors aren’t trying to time the markets and they are not listening to the ‘chicken littles’ of the world that will always tell you why something can’t be done. “Why this is hard for most investors is because buying what is not popular is frightening to them. Timid investors are like sheep going along with the crowd. Or their greed gets them in when wise investors have already taken their profits and moved on.”p.171
  7. You have to start where you are today. Keith suggests that most people want to start at the front of the line, not at the back of the line. You can only start where you are today. So instead of focusing on all the reasons you don’t have time to wait to get to the front of the line or on any of the excuses why you won’t ever get to the front of the line, ask yourself “What are 5 things I can do to improve the situation?” Your problem may not be solved right away but if you do those five things you will move closer to the front of the line.

The book didn’t teach us how to invest in real estate, but it gave us the perfect mindset to start. We knew we wanted our money working for us, and we knew we wanted to buy assets not liabilities. And, we started immediately by getting control of our expenses while we read a couple of books on real estate investing. That is how we began. Of course, after buying a few properties we went off track a bit. Thankfully we did because those mistakes taught us our biggest lessons and gave us great stories to share with our readers. But our first investment which was inspired by this book was one of our best. When we began our real estate investing, we did so with a great mindset for wealth creation!We hope you will too!

Published on April 3rd, 2009

Kiyosaki, Robert.Rich Dad Poor Dad. Warner Books, 1998.

The Real Estate Investing Dip

It’s ugly out there. And, I know a lot of real estate investors are feeling some serious pain. And we can relate to pain.¬†We’ve had more than one conversation about giving up… just selling all of our properties and forgetting about our early retirement plans.

You see, several years ago, Dave was being fined by the City of Niagara Falls for fire code violations at the same time as his former property manager of the same building was on trial for second degree murder. We were dealing with this while discovering that our Toronto tri-plex property manager had been robbing rent money from us! We clearly were in over our heads with our real estate investments and as problem after problem arose we thought seriously about selling it all.

The DipWe didn’t. Somehow we found a way to just deal with all of the real estate investing problems we were having…but, then it got worse. We soon found ourselves with a $25,000 bill to rewire the Toronto tri-plex (the owner before us had used telephone wiring inside of the walls instead of electrical wiring and our wires were fried), and this came only a few months after spending $5,000 to fix the plumbing in the basement where tree roots had taken over and caused the sewer to back up into the suite.

So, just as we thought it couldn’t get worse, it did. We had gone head first into“The Dip”.

My coworker Jason recommended I read a short little book called The Dip by Seth Godin. He thought it would be a great one for me to read because I have just quit my job (that is a story for another day). Turns out, it was a great read, but I found myself relating this 80 page book to our real estate investing even more than I related it to my career.

The guts of the book is about “getting through the hard stuff and coming out on the other side. Quit the wrong stuff. Stick with the right stuff. Have the guts to do one or the other“.p. 4

Real estate investing is not easy, but it is simple. Anyone can do it. But not everyone will succeed. And I think Seth has found the fundamental reasons why many people won’t succeed. It’s not because real estate is difficult to understand or hard to implement. It’s because sometimes the stress, the pain and the challenges are just so darn hard all you want to do is quit. And, according to Seth’s book, you’re quitting at the wrong time. “You can choose (in advance) to do whatever you need to do in order to get through the Dip, knowing it’s going to be difficult; or you can give up before you get there. Quitting in the Dip, though, isn’t worth the journey.“p.37

We pushed throughThe Dip, and it’s good we did.¬†Had we sold out at that time we would have missed out on one of the largest upswings in the housing market in history.

I don’t want to spoil the entire book, because I think it’s a great read for anyone, real estate investor or not. But I’d like to share¬†three tips fromThe Dip, as they apply to real estate investing in my mind:

  1. When you hit that moment where quitting seems like the best solution, push through. Strive to be the greatest real estate investor in your world. And remember, you define your world. This could mean in your family, in your town, or in your country. The point is to push through with the dream of being the best!
  2. Quit when you reach a Cul de Sac Рsell any properties that are losing money or that are not going to make you more money tomorrow than they are making you today.
  3. Know when you’ll quit before you start anything.¬†In real estate investing terms: before you even think about buying your first or your next property, think about when you will sell it. I wrote about this for¬†Early to Rise. To me it’s the biggest real estate investing tip ever. Think about how you will sell your property when you buy it.

Published October 15, 2008

7 Habits of Highly Effective Real Estate Investors

Recently my friend Mike wrote me and said “I reread the¬†7 Habits of Highly Effective People¬†over the weekend. It won’t be the last time I read that book this year”. It’s pretty rare he comments on a book so I pulled it out and gave it another viewing. My 1989 copy is so old the pages are yellowing and the text is faded. I guess you could say it was like buried treasure in my book shelf.

As I flipped through it and soaked in some of the long forgotten golden nuggets the book contains, I pondered what the seven habits of a highly effective real estate investor would be. It occurs to me that none of the habits of a real estate investor are particularly extraordinary. In other words Рanyone could be a highly effective real estate investor if they wanted to be. Of course, this is only my opinion, and without scientific study. But check out my thoughts and feel free to send me yours.

Habit One: Know Your Goals
If you do not change direction, you may end up where you are heading.” – Lao Tzu

Most of the real estate investors I know set out with a goal. One of my MBA alumni started off simply by selling his home to buy two lots side by side and built an 8 unit townhouse complex. He has turned that project into a company that sells and builds hundreds of homes in Toronto every year. Some goals are simple, but lead to big things. Other goals are big and have to be broken down into simpler shorter term goals.

Your goal does not have to be big (although I like to start with my five year goal and make smaller goals for each year to help me get to my five year goal). But I think that if you do not have any idea of what you want to achieve then your first step is going to be difficult to determine. And, you can’t just say I want to be rich. A goal by my definition has to be as specific as possible, measurable and with a time frame.

Habit Two: Make Your Money when you Buy
Price is what you pay. Value is what you get.” – Warren Buffett

It’s very risky to pay over market value for a property in the hopes that the rent will go up, the area will improve, and/or the property’s value will increase. This is an entire article unto itself, but essentially you want to buy a desirable property below market value, in an area with a lot of potential for future growth. Really, it’s not unlike beginning with the end in mind. Envision yourself trying to sell that property and what, if any, problems you may encounter when you try to sell (e.g., is it such a unique property you’ll have a limited buyer pool or is it in a “challenged” location that may never improve, which will severely impact your ability to sell). If there is something that concerns you when you’re buying it, then unless you can easily fix that problem, it’s something that will likely concern the next purchaser.

Habit Three: Hire Help
Unless you want to buy yourself a job when you buy a property, hire a property manager. Unless you are an accountant, hire one to help you with taxes and bookkeeping for your properties. And, in most cases, we also recommend you hire a real estate agent. Just take some time to find one that will work with you to achieve your goals.

I always tell Dave that we should only be doing the things that are the highest and best use of our time or the things we really enjoy. We should hire someone else to do everything else. Of course, when I say this I am also advocating we hire someone to paint or clean our own house. These are both things that I loathe doing and feel someone else can do better and for less cost than my time is worth. Dave takes a different stance on things – why pay someone else to do what we can do for free. But, as we find ourselves with less and less time he is starting to realize he can’t do everything and there are professionals out there that can do the job better and faster than he can. So, even “do-it-myself” Dave is finally paying the experts to do what they do best so he can focus on what he does best!

Habit Four: Use Just the Right Amount of Leverage
A bank is a place that will lend you money if you can prove that you don’t need it.” – Bob Hope

Every single money-making real estate investor that I have met has made money in real estate, in a big part, due to the ability to use leverage. Even the richest people will eventually run out of cash if they keep buying property. Leverage allows you to use a small portion of your own money to buy a property. The less money you put in the higher your potential return on investment. In really simple terms, if you put in $10,000 on a $100,000 property and earn $5,000 in a year your return on investment is 50%. If you had paid cash for that $100,000 property your return would only be 5%. Too much leverage equates to too much risk though, so find a balance. If you buy a $100,000 property and only put in $2,000 of your own money and the market value of that property drops to $90,000 you now owe more on that property than it’s worth.

Habit Five: Find Good Partners
Keep away from people who try to belittle your ambitions. Small people always do that, but the really great make you feel that you, too, can become great.” – Mark Twain

I love the success stories where someone with nothing but big dreams and a lot of initiative ties up one or more properties with contracts. They had little to no money, so while they had the properties under contract, they went out and found people who did. I am not going to name names here, but maybe one day I will introduce our readers to at least one of the three guys I personally know of with a story like this. But the bottom line is that it’s tough to make your millions in real estate if you aren’t willing to partner with others. Your partner might be a family member, a friend, a colleague, a company or someone you haven’t met yet. Dave has partnered with friends, family, and myself to help us build a nice real estate portfolio in only a few short years.

Habit Six: Be persistent
Genius is one percent inspiration and ninety-nine percent perspiration.” -Thomas Edison

The other characteristic of the three guys I’ve mentioned above, and every other investor I have ever met is being persistent. You will hear “no” a lot. Get ready to face the objections and find creative solutions. In our experience we’ve been turned down by:

  • Potential partners not wanting to get involved in a deal we’ve invited them into,
  • The banks – on just about every deal we had trouble getting financing and had to deal with multiple lending issues,
  • Family – sometimes we try the bank of parents and we almost always get rejected but we still try because the interest rates are so favourable,
  • Insurance companies – so few companies want to deal with out of province landlords and it seems like we’ve been turned down by nearly every company in Ontario where some of our properties are located (we’re in B.C.),
  • Property Managers – sometimes the company you want to work for you doesn’t want to manage the property you own.

And even though we have been turned down by all of the above at one time or another, we keep pushing ahead to reach our goals. Don’t let the “naysayers” stop you.

Habit Seven: Research – Always be learning
I am always ready to learn although I do not always like being taught.” -Winston Churchill

The best investors are the ones that ask a lot of questions, keep their eyes open for new opportunities and do a lot of research. Many get right into the details of a city. They go to the municipal offices and pull the official plan. They get zoning details and applications. They talk to the city councilors about plans, they attend city council meetings and know everything that is happening in an area. Besides the above, many of the really successful investors will always be learning about:

  • Local transportation plans,
  • New economic forces that will impact their investment area,
  • Changes to political leaders that will impact the real estate values (if you don’t believe this is a critical one ask just about any investor in Toronto that owned land around the legislated Greenbelt),
  • House values,
  • Land values,
  • Listings to sales ratios for an area (shows sales pace and amount of supply in a market),
  • Latest demographic and economic trends for an area, and more.

Not every good investor I know possesses every one of these habits. And I know there are habits that many good investors have that I haven’t covered. But as I thought about the most effective and successful investors that I have met or read about, I realized that almost all of them did possess each of the above habits. And, that anyone could really do what they did if they set out to establish these habits and practices in their real estate investing.


 

If you’re like me, now you’re trying to remember Stephen Covey’s 7 Habits.¬†Just in case you can’t remember Covey’s seven habits, here is a very brief summary to refresh your memory:

  1. Be Proactive: There are things we can control and things we cannot. Focus positively on the things you can control and worry less about the things you can’t.
  2. Begin with the End in Mind: Envision your funeral – what do you want people to say about you. Now, think about what you have to do to be that person. From there, develop a personal mission statement that encompasses your values and your vision of yourself.
  3. Put First Things First: Focus on the important tasks. Don’t spend time on¬†not¬†important and¬†not¬†urgent tasks; try to delegate urgent but not important tasks.
  4. Think win/win: It’s not your way or my way, it’s a better way. There is plenty out there for everybody – the abundance mentality versus the scarcity mentality.
  5. Seek first to understand, then to be understood: Seeking to understand takes consideration but seeking to be understood takes courage.
  6. Synergize¬†: Finding that solution that is likely different than any other solution pursued because you’ve understood and been understood and you’ve sought out win/win scenarios. It’s the old saying of one plus one equals three.
  7. Sharpen the Saw: Practice in a balanced way. Covey talks about the four dimensions of renewal which are essentially physical well being, mental well being, emotional health, and spiritual strength. Maintaining balance in these areas keeps your saw sharp and ready to act and work on the other habits.

Published on June 18, 2008

Identifying Emerging Real Estate Markets

 

By Learning to Identify Emerging Markets

“Many investors make the mistake of investing in hot areas. These are the places you read about in popular magazines. Everyone is talking about them because they’ve performed great for several years”. – David Lindahl

While soaking up the sun on the beaches of Ambergris Caye in Belize this month, I picked up “Emerging Real Estate Markets: How to Find and Profit from Up-and-Coming Areas” by David Lindahl. I have to admit that I struggled a bit with his attitude (especially towards “burnt out landlords”), but if you are interested in Apartment investing, it’s a really good read.

Lessons in the Market Cycle and Investing in Emerging Markets from David Lindahl

Even in times where most markets are crashing, you’ll find a market that is just about to explode. Maybe that market is on the other side of the country, or maybe it’s just a small neighbourhood within the city you live in, but either way there are opportunities out there. You just have to find them.

Lindahl splits the market cycle into four phases:

  • Buyer’s Market Phase 1: A market that is oversupplied with properties
  • Buyer’s Market Phase 2: The market starts to absorb the oversupply, vacant units become occupied and abandoned properties get purchased.
  • Seller’s Market Phase 1: Demand has reached it’s highest point. There are plenty of investors that want to buy what you are selling.
  • Seller’s Market Phase 2: Job growth slows, properties take longer to sell, and the market is slowly getting oversupplied by new developments.

The ideal situation is to get in during Buyer’s Market Phase 1 with very little money of your own. Enjoy cash flow from that property as you ride into Phase 2, and then the early stages of Seller’s Market Phase 1. Then you sell, and find a new market that is in Buyer’s Market Phase 1. Simple concept – so how does he suggest you find the next emerging market?

Well, an emerging real estate market is one that has people moving into it, rather than packing up and moving out. It’s also an area where there is job creation. An interesting point he makes repeatedly in his book is that an emerging market has great leaders. “It takes aggressive and thoughtful leaders to analyze a city and determine what needs to be done. They then need to have the courage and strength to implement their vision in order to help the city achieve greatness” p.26. Learn about the leaders in a city, review the Master Plan, and check out the local news to find out what companies are coming to town.

Published February 25, 2008

Automatic Wealth

Wake Up Richer Everyday

It’s time to face the hard facts. If you haven’t committed to yourself that you are going to build your wealth, made a plan to do so and started working on that plan, then you are probably only building your wealth when you are awake and working. Isn’t it better to know that when you sit down to watch t.v. or you close your eyes at night you are still making money?

Passive wealth creation, or being able to¬†wake up richer everyday, is one of the reasons we love investing in real estate. We talked a bit about this in our March issue this year. Of course, there are other reasons why real estate is one of the main ways we’ve pursued to build our wealth. We’ve never been as scared of investing in real estate as we have of stocks (we started right around the time that most of our friends and family lost buckets of money in the Nortel stock crash). And we’ve never found real estate as daunting or as time consuming as creating a business.

This month we’re investigating the advice on wealth creation found in Michael Masterson’s “Automatic Wealth: The 6 Steps to Financial Independence“.

¬†Michael Masterson’s “6 Steps to Financial Independence”

 

by Julie Broad

Recently, Dave and I attended a 4 day marketing bootcamp in Delray Beach, Florida put on by¬†Early to Rise. We each went with different objectives, but we both came out incredibly impressed with Michael Masterson, the keynote speaker of the conference. I think he is best known for his copywriting expertise and affiliation with the American Writers and Artists Institute, but he started with little, held many jobs over the years, and has built his wealth through just about every kind of business imaginable. He’s owned businesses for things like pool installations, direct marketing, selling discount jewelry, and has been involved in half a dozen real estate development ventures. This book was a great mental tune up. Masterson offers sound advice in the book from someone who has been there and hasn’t lost touch with reality despite his profound wealth and success. He’s a guy who wakes up richer every day. I thought some of our readers would enjoy a snapshot of his 6 steps to financial independence.

The Nuts and Bolts of the 6 Steps:

  1. You¬†will make¬†you¬†wealthy…and it won’t happen as easily as putting 10% of your income away each month,
  2. You have to¬†plan to be wealthy¬†– wishing won’t work,
  3. You must¬†develop rich habits¬†as the rich are different from ordinary people and it’s not just because they have more money,
  4. Increase your income¬†radically. He isn’t talking about a 3% a year raise here, he is talking about boosting your income by 150% for starters,
  5. Get rich automatically Рtrue wealth is built through the creation of equity,
  6. Retire early, if you want to.

After you have taken stock of your current financial situation, you must plan to become wealthy. As we have said in several issues, “What are your real estate investing goals?”. His approach to goal setting asks you to imagine your funeral. What do you want people to say about you? What are the words from your family or close friends? A coworker? A mentor? And someone you didn’t know? Based on that, determine your goals in the long term, and then dive in and figure out what the medium and short term looks like. Make them specific and measurable, and write them down.

Plan in hand, it’s time to develop wealthy habits. My favourite chapter of the book is “Step 3:¬†Develop Wealthy Habits“. Masterson says “Budgeting is like dieting: It’s enormously sensible but almost never effective”. I have been a budgeter for over 10 years. I have a great understanding of where I spend my money, but I also have a lot of stress about spending money.

Instead of continuing to focus on where I spend my money, as I already have a deep understanding of where my money goes, I’m taking the Masterson approach of doing a personal balance sheet.

Create a spreadsheet that lists all of your assets and all of your debts. Conservatively estimate the value of all of your valuable assets (stocks, bonds, real estate, art) and how much you owe. Then, each time you check your balance sheet, promise yourself (And take the steps necessary to make it a reality) that next time you check you will be wealthier. Before you make a purchase or a decision to do something new, you will find yourself asking “Will this make me richer or poorer?”.

Let me skip ahead in his book now, as this is a newsletter about putting the “Rev N You with Real Estate”, not about general wealth accumulation and life goals.¬†Step 5: Get Richer While you Sleep¬†is all about¬†investing in real estate, stock investing and investing in businesses to build your wealth. He gets right to the meat of real estate investing as a means to create wealth by saying “While you are building wealth, you should treat your rental real estate portfolio as an equity play. You will want to use leverage (by taking mortgages) to get the maximum appreciation on your cash…As your equity increases in each property, you should consider taking some of that money out of it and reinvesting it in other properties” pg.185.

This has been our strategy, and it’s worked very well, especially since the market has been so strong. It hasn’t put cash in our pockets (in fact it often feels like our properties take cash out of our pockets) but our balance sheet is better every time we look at it.

He goes into a lot of detail and examples to convince you to invest in real estate. But his bottom line, and we agree, is “If you haven’t already begun investing in real estate, start doing so today. If you are a budding real estate tycoon, resolve to add to your empire this year. You’ll find that actively investing in real estate can give you much-better-than-the-stock-market returns, and the comfort of knowing your investments can’t disappear” page 219. Couldn’t have said it better myself Michael! Pick up a copy and check it out for yourself.

PublishedNovember 18, 2007

The Book That Got Us Started

rich dad poor dad

Rich Dad Poor Dad

BUY THE BOOK NOW: Rich Dad Poor Dad

You might roll your eyes when I tell you that the book that motivated us to set some goals, and actually start real estate investing five years ago was¬†Rich Dad Poor Dad¬†by Robert T. Kiyosaki. I admit that it’s a bit ridiculous how many different versions of the same concept have sold since then. I think they’ve diluted the power of their concept by over-selling it. Six years ago though, the messages in the original book really hit home for us.

Specifically, the two concepts that I carry with me today are:

  • The Rich don’t work for their money,¬†their money works for them, and
  • Why¬†your house is NOT an asset.

The Rich have their Money Work for Them

My parents have worked incredibly hard all their lives. Most recently they’ve been successful B&B owner/operators on Salt Spring Island, BC. They have set themselves up very well for retirement, have some money to spend now and have enjoyed being self-employed for over 30 years. What they haven’t had is freedom. Tied to their businesses 24 hours a day 7 days a week, until recently they had only taken a handful of vacations in their lives.

After reading Rich Dad Poor Dad my dad said to me, “We have been buying ourselves jobs instead of buying businesses”. At the time, I had been working for less than two years, and already realized it was going to be a long life of “punching my time card”, if I didn’t make a plan to get my money working for me. That is when Dave and I set out to figure out some ways to create income streams that didn’t require our attention every day. Neither of us was prepared to start a business, so we decided to build wealth while working for “the man” as Dave calls being employed. The objective, is and always was, to become financially free. We are working to be at a point where our assets make us enough money that we only work because we want to.

Your house is NOT an asset

This concept has been the subject of many debates in the media and amongst our friends and family, but it really made sense to both of us. The essential concept is that assets generate income, liabilities generate expenses. “The rich buy assets. The poor only have expenses. The middle class buys liabilities they think are assets. (p.81)”

The enlightening concept here is that as a homeowner that works, you are making everyone else rich (the owner of the company you work for, the government, and the banks that loan you money to buy your “assets”). If instead of becoming a homeowner, you bought an income producing asset (stocks, bonds, real estate, intellectual property), you would increase your income, decrease the amount you pay the governement (in some cases), and your financial “cycle” would be generating cash instead of generating expenses.

Most of us get a raise, then think about buying a bigger house. A raise means more money for the government. A bigger house means a bigger mortgage, which means bigger payments to the bank (liabilities). A home, we’ve noticed, also means many trips to Home Depot, Home Outfitters, Sears and other stores to make your home nice. If you have recently changed from renting to owning you will likely have noticed how many things you suddenly “need” to do to your house or buy for your house. It’s a never ending cycle of expenses.

So, does this mean you shouldn’t own a home? No. What it’s about is awareness – don’t fool yourself into thinking that your home is an asset just because the rules of accounting say it is. Your home does not create income for you and your family, it creates expenses.

For us, Rich Dad Poor Dad got us into real estate early in order to begin getting our money working for us. We bought an investment property before we bought a home. But, the second place we bought was a small condo for us. We would rather pay down our own mortgage than someone elses. We have since lived in three places we have bought, and they have always been homes below our means. We put the rest of our money to work for us. We do this knowing that our home is a liability, but one that we have chosen both for lifestyle and financial reasons.

Published March 22, 2007

**April 3rd, 2009 Update: Check out the article celebrating Rev N You’s 3 Year Anniversary by Julie Broad called:¬†The Day We Became Real Estate Investors. It’s a tribute to the lessons this book taught us**

 

Archives: Evaluating a Real Estate Investment

Evaluating a Real Estate Investment Articles

Considerations & Questions to Ask Before You Buy a Condo

Knowing When to Walk Away From a Deal 

Find, Screen and Select Joint Venture Partners

What’s Your¬†Return on Time?

Where the heck is easy street for my investments?

The Challenge with Investing in Condos

Home Inspections 101

Real Estate Market Research

Are Rent to Own Real Estate Deals a Cash Cow?

How to Analyze Risk in Real Estate Deals

Multifamily vs Single Family Real Estate Investing

Tax Advantages of Real Estate (for U.S. residents)

Four Ways to Check Reality Before Buying a Rental Property

Rental Property Location Research: Where to Buy

How to Evaluate a Property in 60 Seconds

Is Now a Good Time to Buy Real Estate?

5 Ways to Know You’ve Found a Great Investment Property

5 Questions to Ask Before you Buy a House

How to Value Commercial Real Estate

Why it’s Ok to Sell your Property at a Loss

The Truth about goal setting

Sweating the small stuff

It’s Not All in the Numbers When Investing in Real Estate

Evaluating your Property Purchase

The Starbucks Area

Real Estate Investing Goals

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