Every 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):
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 (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!!). 🙂Published June 19th, 2009
Here’s the really good news… when you know the signs to look for you’ll find that picking a good location for real estate investing is fairly simple. It takes a bit of leg work to research the locations and find one that meets all of the criteria on the checklist, but when you do, you will also find an enormous opportunity for wealth creation!
In an interview for Canadian Real Estate Magazine, real estate developer, investor and co-owner of Boston Pizza Jim Treliving said of real estate investing “The most important thing is to do your homework…You have to read a lot, find out about the areas you want to go into, where the emerging markets are. It’s often not the biggest ones necessarily; it’s a matter of where you see growth, go and find out, go into the markets yourself.”
The goal of the checklist is to have a barometer to use when locating a good area to invest in. Essentially you are trying to find out if the market is staying the same or is about to make a turn for the better or the worse.
The main elements in our checklist are:
Healthy Housing Economy
For some of the above items you want to see trends and where they are heading over a longer period of time for an overall market – like population growth for example. But, you will also want to find out what factors may impact that trend. In Vancouver, we are looking forward to the 2010 Winter Olympics. This has had a significant positive impact on employment opportunities and has likely contributed to a growth in the population in the last 24 months, but if you only looked at the employment or population trends you wouldn’t know that this trend could reverse or slow significantly after 2010. So, you need to take a look at the trend and then figure out why it is the way it is and what is likely to happen in the future.
Starting with an area you already know reduces your learning curve when you are starting out. Often this is not where we are currently living, but it’s somewhere we have lived or somewhere we visit on a regular basis. We do this to make it easier on ourselves. If we buy somewhere we don’t know anything about, it means we have way more research to do, and we have to start from scratch in building a network for that area. Then, we have to make an extra effort to stay on top of that market once we own a property in it. It’s possible, but it’s more work!
In my view, it is always better to buy locally, because you can do your due diligence easily and deal with a local realtor. If you live in Toronto and want to buy in Phoenix, however, get in touch with a Phoenix realtor, particularly if someone in Canada is trying to sell you a packaged deal. The local realtor has the property perspective.
He also says, of buying from a distance:
Go there, look at it, kick the tires. Once you get there, you might find an entirely different property that will be a much better investment. Also, you have to bear in mind that if you’re investing outside your area, the people who are presenting you with properties are going to show you only what they have in their wagon. They’re not going to go out of their way for a stranger unless they’re assured a piece of the deal.
As you research all of the elements on the checklist, think about prospective tenants. Where will they work? How will they get to work? Where else would they live, if not in the area you are looking at? And, of course, think about an exit strategy. Julie wrote an article for the popular online e-zine Early to Rise called The Biggest House Buying Tip Ever about buying any property with the end in mind. It doesn’t matter if you plan to live in the property or rent it out … before you buy, envision yourself selling it.
You are making an investment only if there is a reasonable probability that you will make money on it while you own it and that you will be able to make money when you sell. Good location research BEFORE you buy the property will increase the likelihood of making A LOT of money from the property!
Think location doesn’t matter in real estate investing? Location impacts the rents you can get, the tenants you attract, and the problems you can encounter. It also impacts the appreciation of your property and the opportunities you may have in the future.
Ozzie Jurock tells his readers to Forget about Location, Location, Location that it’s actually about value, value, value. Other experts have said to buy the worst house on a block regardless of where that block is located. We think it’s best to combine the search for value with the search for a location that will help you achieve your goals.
It’s still about location, location, location! Finding the location that is right for you and your goals
I would rather own a well built home that requires little to no work in a slightly rougher area, then the worst built home in a good neighbourhood. That doesn’t mean location isn’t important, it just means location isn’t everything in a purchase.
Last month we went over why knowing your real estate investing goals is a key step before choosing and locating your property type, and this month those same goals will come into play as you consider location for your investment.
If your goal is to “flip” a property (buy it cheap, renovate it, and resell) then you really do want to find that beat up house in a great neighbourhood. If your goal is to have a lower maintenance property that will attract good tenants, appreciate over the years, and you aren’t as worried about the amount you have to invest today, then you are looking for a great location and a good house. If you want good cashflow without putting much money down, you are likely going to have to look in the lower demand areas to find the motivated sellers.
You see how goals are important in your choice of location? Your personality and risk tolerance also come into play. If you need to see your real estate investment on a regular basis then you will want to look in your neighbourhood. If you prefer not to be involved at all, then you may want something further away from you.
If you aren’t sure where to look to find the properties that meet your goals, it’s time to begin your research. If there is one thing I know, it is researching real estate. Another day we can talk about my addiction to the Multiple Listing Service (Realtor.com and Realtor.ca), but for nowhere is how I find properties to buy:
Go to open houses (usually 2 – 4pm on Saturday and/or Sunday)
Look at local listings in your newspaper and at MLS or CLS (for more than four units)
Drive by your desired areas regularily, or better, go for walks along the streets you want to buy on
Speak to neighbours (walk by on a sunny day and people will be in their yards) or ask questions of the agents at the open houses.
Once you determine what properties are selling for and if they are within your price range and goal objectives, your next task is to figure out rents. To do this I usually:
Browse online classifieds offered by newspapers across the country
Review Viewit.ca on a regular basis as they take photos of each listing as part of their service
Read CMHC published information
Speak to the real estate agents at open houses and ask them what they think their listing would get in rent, and ask about other properties in the area.
Quickly you will identify areas where you can buy something and rent it out at prices that meet your goals. And, if you have done your research well, you will be able to act quickly and confidently on opportunities when they do arise. You also may be able to grab them before they get on the market, like we did in our most recent purchase in Vancouver. We have to save some stories though, so I will tell you more about that another month.
Now, you have found your location, and maybe you have even been lucky enough to find a property that meets your goals. Are you sure it is the right one?