by Julie Broad
On the weekend Dave and I attended Ozzie Jurock’s Landrush conference in downtown Vancouver with 600 other eager real estate investors (and a few dozen realtors too).
The conference had a jam packed line up of speakers covering everything from the latest mortgage rule changes to Canadians buying real estate in the US to market specific presentations covering various areas in British Columbia.
On the surface it really covered a wide array of topics relevant to British Columbians. And Ozzie’s jokes were, as always, funny and pointed. And his message about real estate was positive and forward looking.
We definitely got a few gold nuggets from the day, and really that is all you can ask for from a low cost seminar like this, but I fear that some people walked away with some troubling advice. Essentially the message was to buy real estate because it always goes up in value. … that was the message of most of the speakers.
They all said it in different ways but that was pretty much the message. “Buy in my area because the future’s so bright you gotta wear shades.” “Buy the biggest and best house you can afford to live in today because it’s best investment you’ll ever make“. “Buy a house and hold onto it and you’re going to make money”.
- If you’re new to real estate investing the worst thing you can do to yourself is just buy whatever property you CAN just because it will eventually go up in value. And I realize that is not specifically what was said but because none of the speakers got into what makes a good deal this is really the message that you walked away from that conference with. Yes … over 20 years the value is darn near guaranteed to more than double just because of inflation … but if those properties don’t have good solid positive cash flow they will eat you alive and you’ll likely not hold onto them for 2 years let alone 20. That means you’ll probably LOSE money not make money.You have to stick to the fundamentals of real estate and buy good solid properties in good or up and coming areas that generate positive cash flow.
One speaker actually said to the audience that his market had “Plenty of opportunities to break-even over time.” We hope he meant have break-even cash flow … but even at that … what a lousy selling point!! I don’t want break even cash flow… I want money in my pocket every month!
- Careful what makes a good deal. One of the speakers showed us examples of properties on the market that he thought were a great deal right now. This would have been really interesting except what made it a great deal to him was the difference between this year’s LIST PRICE and last year’s LIST PRICE (which the property didn’t sell for). He gave us one example of a home that was listed for $875,000 last year and didn’t sell. Now it’s on the market for $700,000 and he was telling the audience what a steal of a deal it was now.Sorry folks but if it never sold for $875,000 it was never worth that in the first place. So using a fake price to justify it as a bargain is a terrible way to spot a deal.
- Your home is not an investment so you shouldn’t treat it like one. Your home is a lifestyle choice and yes, if you hold it for a long time you will likely see some nice price appreciation that is capital gains tax free in Canada, but here’s the thing that always bothers me about this:YOU WILL NEVER ACHIEVE FINANCIAL FREEDOM IF YOUR HOUSE PAYMENTS ARE EATING YOU ALIVE!
In other words, buying the biggest house you can afford just because the gains are tax free is lousy advice if you want to be rid of your job. Instead you should buy a place you can pay off quickly so you don’t have mortgage payments to worry about. And even better, you should find a way to have your payments paid for by one of your investment properties. To do that, you would be smart to have smaller payments not bigger payments.
And if you want to challenge me about whether your home is an investment or not … let me ask you … if you lose your job … is your home going to feed you or is it going to starve you??
There were a lot of smart and experienced people standing on stage dishing out what I consider bad advice. Now, for the average Canadian that is happy to carry on going to work every weekday and just wants a comfortable retirement at age 60 or 65, it wasn’t bad advice. But if you don’t want to work for “the man” as Dave calls it, then you should pick and choose the advice you follow carefully. We picked up a couple of really good ideas and tips from the conference … but we also laughed at and discarded more than 80% of what we heard. That type of advice doesn’t fit the life we’ve created for ourselves.
We focus on buying positive cash flow properties in good areas because we want investments that take up as little of our time as possible while giving us the most amount of cash in our pockets today!! Of course, long term, because we’ve purchased in good areas with positive looking futures, we expect them to go up in value. But that isn’t what pays for our ski trips and dinners out today … it’s the positive cash flow that does that for us! And we didn’t do that by purchasing properties that breakeven over time. 🙂
As for the gold nuggets we learned … we’re going to check out one of the tools we found out about, and research a little further into a couple of the ideas we got, and we’ll get back to you on those!! If they pan out I think fellow BC real estate investors will be excited with what we learned…