Monthly Archives: October 2008

“I Have a Dream” to Become a Real Estate Investor

Dear Julie,
I read your article on “five ways to protect yourself from a bad property manager“. I have a dream to invest into Real Estate as I believe this is the best vehicle to get me out of the rat race. As I am still a dreamer, I read a lot of articles on the subject before I take the plunge.
This is how I intend to go about it:

  1. Set up a company (Real Estate) even before I buy a property;
  2. Recruit a long experienced manager(poached from existing reputable management company);
  3. Buy property in the name of my company(as opposed to in my own name);
  4. Engage a reputable firm of Accountants to foresee the financial management of my company.They will do this through quarterly interim audit reports.

So what do you think of my dream?
A. Juma

Julie Wrote:
Hi A,

Thank you for your e-mail! I think your dream is fantastic and I wish you all the best of success with it. Without knowing your experience level, I am going to assume that you are a relatively new real estate investor. If that is not the case much of what I have to say may not be necessary feedback. But assuming you’re fairly new to investing I’d like to say: ..

1) Set your goals. This is a great vision for what you want to achieve, but quantify things. For example, in the next five years I want to be making $1000/month from my real estate investments. This year, I want to buy one property that will generate $100/month in cashflow. This month, I will begin researching the market that I plan to buy in, and will meet 3 potential real estate agents to work with. Basically take your longer term goal and start breaking it up into smaller goals.

2) Put first things first – and to me the first thing is not a company, it’s goal setting and then finding a property to buy that meets your goals. (We live in Canada so I speak from a Canadian perspective. I am not sure where you live?). Dave set up two corporations when we began to get serious about investing and we have not yet been able to buy any real estate inside of those companies. Banks really make this difficult for investors to start this way. And even if you do convince a bank to provide you with financing on your property that your company owns they will probably still make you sign a personal guarantee so you now have the extra costs and work of a corporation and still have the liability. It can be done – but I would worry about it later. Get the property first.

3) Property managers won’t need to be poached – they will often just take on your properties in addition to the ones they have. Just make sure you’ve taken the time to research the one you are looking to hire.

4) A good accountant is absolutely essential for annual tax returns and advice on the best way to structure deals to minimize your taxes, but when you first begin, you will not need quarterly reports. That would be expensive and really isn’t going to tell you much more than you can figure out for yourself using a few simple Excel spreadsheets. Once you have dozens of properties you will probably have someone that will run these reports for you quarterly and you will need them.

Keep things simple so you get started. Once you get started and have bought a property or two – then you can start worrying about the details.

I wish you all the best with your investments.

Regards,

Julie

Have you got a question about real estate investing? Please let us know!

We publish a newsletter to help new real estate investors make money in real estate. When you sign up for that newsletter you’ll also get our Real Estate Investing Starter Tips Guide Free. Please check it out at our website Rev N You with Real Estate.

4 Comments

Filed under investing, real estate

The Mortgage Market in Canada – An Interview

Last weekend we sat down with Cindy Faulkner, owner and President of Meridian Coastal Mortgages and our mortgage broker, and got the facts on the crazy mortgage market in Canada. I’ve just finished posting the 5 part interview to our website and wanted to let you know. Check it out! We cover everything from what’s the right mortgage to get right now, should you lock in your rates, and even financing for Canadians buying real estate in the U.S. It’s packed full of great information! Let us know what you think!

3 Comments

Filed under real estate

Parade of New Homes… Continued

In our last post, I shared some pictures of our visit to Intracorp’s Glenmore at Morgan Heights townhome development. In this post, I want to share with you pictures from my favourite home…and a few other random photos from the day.

As judged by me, and with no scientific reasons behind the award…

THE AWARD FOR BEST SHOW HOME goes to Wallmark Homes at Morgan Heights.

So, what makes this home so special? Well, as much as I loved the decor and functionality of the Intracorp’s townhomes, the Wallmark Home is pretty much a custom home. They build these houses FOR YOU! And, they had, hands down, THE best salesperson of all of the homes we visited that day (I think we went to a total of 8 different builders show centers). Brad was friendly and informative, and sold me on Wallmark! He clearly loves the product he’s selling. When he said they had great customer service, I believed him. They obviously spent quite a bit of time finding and training their salesperson.

He couldn’t sell me on living all the way out in Surrey, but he assured me that if we found a lot in our area, Wallmark would build on it.

So, what’s so great about Wallmark? Well… first of all… they had one of the ONLY bath tubs that I liked!

My FIRST requirement for any bathtub is that I can actually fit in it. CHECK - Wallmark you were the ONLY one of the day.

My FIRST requirement for any bathtub is that I can actually fit in it. CHECK - Wallmark, you had the best bath tub of the day!

Second, according to Brad, when you buy a Wallmark Home you will get your own interior design consultant and she will work with you every step of the way to ensure your home is built to suit you. She will walk you through the colour, the finishings and design of the home. And, this is done as part of their home cost!

Dave had no problem envisioning himself at the BBQ in the backyard

Dave had no problem envisioning himself at the BBQ in the backyard

And the third reason I loved Wallmark was their attention and focus on a better and more sustainable living environment. The floors were made of bamboo. The carpets were made of recycled pop bottles. The cabinets are made of wood, not pressed wood, and do not have the toxic emissions that many cabinets have. The list was long of the things they have done to be more environmentally friendly and less toxic. Interestingly, Wallmark was the only builder that mentioned any environmental initiatives to us. A few had some signs up about the heating pumps and energy efficient features, but nobody talked about toxic air or environmental impact except Brad. It’s a big selling point for us.

Wallmark was beside a few homes that were clearly less prepared for the traffic from the Parade of Homes. Some of the sales people we met were clearly inconvenienced by our presence. One woman didn’t even make the effort to get up to greet us. Her email was much more pressing…she grunted a hello and let us wander through the home. Another was totally unaware of the Parade of Homes! Sure, her home was not in the Parade, but she was in a cluster of show homes with Wallmark, so you’d think she would have known! She tried to tell us the Parade was an old promotion… but we showed her the magazine that clearly indicated that it had begun on Saturday! OOPS! So, Brad was good, but his competitors helped him look even better!

Wine Cellar... can't remember which builder had this in their basement but we had some fun with it.

Wine Cellar... can't recall which home this was in but it was fun!

Some of the themes for the rooms were over the top!

Some of the themes for the rooms were over the top!

Dave's Winner for Exterior Design Goes to Vinterra

Dave's pick for exterior design goes to Vinterra

Vinterra was not part of the Parade of Homes, but when we drove by Dave was instantly intrigued by their style. We went in, and met the second best salesperson of the day. I didn’t catch her name, but she toured us around the homes they had open. She also took the time to explain the area to us, and what new stores and amenities were coming (including a lovely park where our dog Bram could play!).

I could write an entirely different post about how to sell to new home customer…some of these sites did a great job, but some of them did a very poor job. But, I can’t imagine a ton of people would be busting to read about that… so I think that is it for this year’s Parade of Homes.

There is still 4 days left in the Parade. I highly recommend you get out there and check it out… even if you aren’t shopping for a home right now! Details on the Parade of New Homes can be found here.

If you want to learn more about Wallmark check out their website at: http://www.wallmark.ca/index.htm or go and see their show home in Surrey at 2589 – 164 Street, South Surrey.

(And no, I am not making any money off of referals or from sending traffic there… it was just a quality home customized to your needs with respect shown to the environment! And one fantastic bath tub!! Who could ask for more?) 🙂

2 Comments

Filed under real estate, Vancouver

Parade of New Homes in Greater Vancouver

I’m not sure what you spent your Saturday doing, but I am pretty sure you didn’t do what we did!

We started the day off with a nice run around Rice Lake in North Vancouver, then we got ourselves cleaned up, hit Starbucks and drove out to Surrey to meet with Cindy Faulkner of Meridian Coastal Mortgages. We spent a few hours with her discussing:

  • The changes to variable rate mortgages in Canada
  • What impact the removal of $0 down mortgages and 40 year amortizations will have on her business and mortgages in general
  • The financing options for a Canadian buying real estate in the U.S., and for Americans interested in buying a nice vacation rental in Canada
  • And, our biggest market related questions.

The mortgage market has changed dramatically in less than a  few weeks so it was great to get our heads wrapped around what has happened.

It was a fantastic interview, and we will be posting the sound bites and sending some of the script out to our Rev N You with Real Estate readers this week.

If you are a Canadian, and you invest in residential real estate, you won’t want to miss this fantastic and timely market update on the changing mortgage market! Make sure you’re on the Rev N You with Real Estate Newsletter List!

After meeting with Cindy, we drove into South Surrey, and took in a ton of show homes, in the Greater Vancouver Home Builders Association’s Parade of New Homes.

It’s only on until October 26th, so get out there and check it out!! We had a blast. In fact, we had so much fun in each show home we didn’t get to see nearly as many homes as we wanted because we ran out of time. Check out some highlights from our home tours:

First Stop, Intracorp’s Townhomes in the Glenmore at Morgan Heights development.

These are townhomes priced very reasonably (ok, everything seems cheap in Surrey compared to what we paid for our place in Burnaby) starting at $329,000. Each townhome had a theme… one appealed to a family, another to a retired couple, and then there was even one that appealed directly to us:

Intracorp Townhome

Parade of New Homes: Intracorp Townhome

When you walked in the door, it had a great little gym off to the left. Dave and I both gave this balancing thing a try. Thankfully Dave took this photo at the EXACT second that I found my balance…right before I fell off!! 🙂

The garage of my dreams... place for kayaks and bikes

Intracorp Townhome: The garage of my dreams... place for kayaks and bikes

And the rest of the place was very comfortably decorated (with pictures of races everywhere… and they even had a dog bed and dog food out! Did they KNOW we were coming??).

Sellers beware! Dave snoops in EVERYTHING! But, inside this cupboard protein powder, dog treats...

Sellers beware! Dave snoops in EVERYTHING! Daves says "Look Julie they have protein powder and dog treats..."

Intracorp did a great job helping us envision ourselves living here. They were selling to US!

I'm not kidding -  Dave looks in EVERYTHING! Turns out this is a bed. Very cool use of space.

I am not kidding - Dave looks in EVERYTHING! Turns out this is a bed. Very cool use of space.

From there we moved on to the single family detached homes in Morgan Heights… but it’s sunny out here today, and that just isn’t common in October, so we’re going to hit the North Shore to ride for a few hours. I will post the rest of our parading around the new homes in Surrey later today or tomorrow night!!

Let us know if you check out the Parade of New Homes put on by the GVHBA! It’s really worth your time… they put so much effort into decorating and designing these show homes. Even if you aren’t shopping for a new place to live you can get great new ideas for your own home and just see what the latest trends are! Or, you can just check back here and see what other goodies we found in the homes!!

Thanks for stopping by!

3 Comments

Filed under real estate, Vancouver

Real Estate Renovations

Do you ever wonder what EXACTLY people are referring to when they refer to a house and say “the place just needs a bit of lipstick”, or “it’s just ugly but has good bones”? Well, we have a property in Nanaimo that fits that description. Our tenants are leaving and we’re getting ready to either sell it (nice timing, eh?) or rent it out to new tenants. When our realtor walked through, he said that it needed some touch ups to make it look better. I sent my Mom through the property – she is incredible at envisioning what a property can be with some simple changes – and she said all it really needed is to pull down the sunshine ceiling in the kitchen and some paint. And, she kindly offered, “your Dad can probably do the work”.

Well the only thing I love better than something being easy is something being easy and free. So, I got up at 5am on Saturday and boarded one of BC’s lovely ferries to go to Nanaimo for the day and help my Dad. With 6 hours of a work a few hundread dollars in materials we made a big difference. It’s all about the simple and cheap real estate renovations.

Check it out:

The Sunshine Ceiling in the Kitchen EXACTLY how it was when we arrived.


Who would put the wires on the outside of the ceiling? What a mess!

Who would put the wires on the outside of the ceiling? What a mess!

After

Ceiling needs painting...but otherwise...much better

Ceiling needs painting...but otherwise...much better

Simple changes make a big difference:

Old Hardware and New Hardware - Big Difference!

Old Hardware and New Hardware - Big Difference!

Once the painting is done, it will look much fresher and way more appealing. It’s tough to translate that into dollars directly, but I can assure you we are more likely to get new renters at the highest possible rental rates with it looking like that!

We’ve never bought properties to flip – we make changes like this to attract renters, get higher rents, or if we’re interested in selling the property, to increase the speed of the sale or increase the sale price. Knowing what simple changes can make a big difference can really help enhance the value of a property. Here’s a few ideas for low cost and low skill but high impact changes you can do yourself, from the outside in:

  • Simple yard maintenance like mowing the lawn, pulling out the weeds, raking leaves
  • Power washing the outside of the home to get it clean
  • Painting the window trims or the outside of the house
  • Inside of the house…change the hardware (as shown above) to update cabinets and cupboards
  • Fill holes in the walls
  • Paint!! ALWAYS makes a difference… stick to neutral colours
  • In the bathroom instead of replacing a counter top you can paint it. There are special paints you can use. We’ve done this and it’s such a cheap and effective way to cover up the 70’s purples or oranges
  • Replace light fixtures with more modern ones
  • Clean! With a fresh coat of paint and a good cleaning almost every place looks much better.

Want to learn more about real estate investing? Check out our website at http://www.revnyou.com

We’ve got a free Real Estate Investing Starter Tips Guide you will get along with our e-mail newsletter articles and tips.

Being able to spot the ugly houses that simply need a few light cosmetic changes can be tough. There are programs that can help you make sure you don’t waste your money on renovations. One book you can download to help you learn more is Renovating Real Estate for Profit. With steps to take to help you avoid making mistakes AND a money back guarantee, you can’t go wrong. Check it out here.

6 Comments

Filed under financing, investing, real estate, renovations

Ignore the Fear and Loathing in Real Estate

It’s almost overwhelming right now…everyone is talking about the pain in the market. The stock market just dropped again today…the banks in Canada are pulling some of their most popular mortgage and financing programs…the declarations of doom and gloom are hard to ignore. But, you should ignore them. Stay focused on your objectives, and find good deals!

Continuing on our theme from the last couple of posts:

we bought the deal, not the market about 7 years ago. It was our first purchase together, and what a deal it was! It was a foreclosure duplex. The building was only 11 years old at the time and had potential for great cashflow. The market where we bought had crashed and this property had been listed for sale on and off for over 15 months. The price had dropped from $199,000 to $179,000 to $169,000 and then went into foreclosure.

Our First Purchase Together

Our First Purchase Together

We ended up getting the property for $159,000 and within 12 months, had a nice positive cashflow of $300 per month. Since then, the rental rates have almost doubled, and while the value has more than doubled, it hasn’t mattered because it’s all about the cash-flow. We “timed” the market well, but that wasn’t the objective. Our goal was to get a solid property that would cash-flow for us.

It has been one of the best purchases we’ve made and we are grateful we have it. Not all of the deals we have made have turned out as well (if you want to learn about our real estate investment lessons – sign up for our free newsletter at www.revnyou.com). Our objectives in real estate investing have changed a bit since then, but we are still looking for good deals. While we look for strong market indicators (future job growth, stable government, population growth, investments in transportation), we don’t look to buy into a market. We look to get into a deal. Stay true to your objectives and search for the deal, don’t try to time the market.

Leave a comment

Filed under financing, investing, real estate