Monthly Archives: August 2009

What I Learned from Claude C. Hopkins

my life in advertising“Every 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?” (p. 94 – My 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 ‘bang for their buck’,
  • 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)

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’ve 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 – whether it’s  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’t 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’re considering buying for rent (or rent to own). When people contact us we just explain that we don’t yet have access to the property but will take their name and number and will call them when we have it. We don’t 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… one final piece of advice … if you’ve read my short article called “Before you Buy that Rental Property” you’ll know that I almost passed on a very lucrative deal because I couldn’t 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:

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

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Investing in St. John’s Newfoundland

st johns housesBesides being the location for a long awaited wedding we attended on the weekend, St. John’s is a very historical city!

On June 24th, 1497 John Cabot sailed on the shores of Newfoundland making St. John’s the oldest English-founded settlement in North America. It’s a city full of history. It’s also only a short distance from the most eastern point in Canada found at Cape Spear. It’s a city filled with friendly people, interesting culture and surprisingly, a booming economy!

Real estate prices in St. John’s are on the rise, for sale signs are on the decline and the attitude of the locals is optimistic.

Many of the people who’d left during the boom years in Alberta are now returning home because there are jobs again.

A view of St. John's from Signal Hill

A view of St. John's from Signal Hill

The weather in St. John’s is not very pleasant most of the year, but what it lacks in climate it makes up for in spirit, culture and charm. From late night celebrations on George Street (yes, we even sang some karaoke at Karaoke Cops), to whale watching in Bay Bulls, to friendly and lively chats with locals …. there is SO much to love about St. John’s.

With the recent oil and gas activity off the shores of St. John’s bringing big bucks into the province, Memorial University continuing to attract thousands of students to the City, and the ongoing fishing industry activity there is a lot going on in the City. So, it shouldn’t be that surprising that vacancy rates are low, the inventory of homes on the market is minimal and prices are on the rise.

Would St. John’s make a good place to invest? Personally, I would love to have a collection of the cute and colourful houses but the time, effort and energy required to fly there from the west coast to check up on them is a little too daunting for us at the moment. It’s a 12 hour trip to get there from Vancouver.

But, there are 5 reasons to like the idea of investing in St. John’s real estate:

  • There’s good job growth – mostly in the Oil sector.
  • Students continue to struggle to find good rentals – so there is demand for good quality units. According to a recent article in Canadian Real Estate Magazine (September 2009), the 18 – 24 year old segment of the province is a key source of tenants given that 80% of these people are renters.
  • A vacancy rate of under 3% means rent rates are on the rise.
  • The government doesn’t have a bunch of one sided laws that work against the landlords in the province making it more friendly to an investor than plenty of other provinces in Canada.
  • If you’re looking at a two or three unit property there’s a good chance you will be able to generate some decent cashflow from it. While rent rates are still low, you can find good properties in the $200,000 – $300,000 range which will bring in $1400+ in rent – at least that is what we’re estimating given our chats with a local developer and investor. He also suggested that executive style rentals on the water will bring in $1500/month for a one bedroom. The math on that starts to look good if you’re able to secure good financing rates!
Dave is the son of a fisherman and a fisherman himself - so it only makes sense that he felt right at home in St. John's

Dave is the son of a fisherman and a fisherman himself - so it only makes sense that he felt right at home in St. John's

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Be an Active Real Estate Investor – Even if you want passive income

Julie has spent a lot of time talking about why the pursuit of passive income can be dangerous. I just wanted to share a little tip about staying active in whatever investments you have … even if you’re looking for passive income!

Weekly Real Estate Investing Newsletter

Weekly Real Estate Investing Newsletter

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Pricing Risk into Your Investment Property Deals

Risk is a funny thing … you can’t avoid it completely no matter what you do. I take a risk that I am going to hurt myself when I get out of bed every morning. And, often I do. I stubbed my toe just yesterday walking quickly to get to the phone. I have scars and bruises all over my legs from different accidents … usually from doing little more than walking.

I’m not trying to trivialize risk. Instead, I want to point out that we take risks but we usually do so with an understanding of how high the risk is relative to the reward. You should do the same with your real estate investments.

When you’re making an offer on an investment property think about all the risks that you can’t control … and if there’s a big one like I’ll discuss in this video … make sure you factor that into whatever price you offer to pay on the property.

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