First Rental Property

Hi Everyone,

I thought that I would change things up a bit with today’s post.

I have attached a video that I recorded today.

The video is of a new condo development going up in Oakville, Ontario, Canada.

I have had my eye on this development for the past few months.

I would like you to analyze this deal based on the information I presented in the video.

Put yourself in the shoes of a new real estate investor…

When considering whether or not to buy into this project, what are some of the key questions that you should ask yourself with regards to this project?

I intentionally left out a lot of details with respect to this new condo development.

Let me know your thoughts.  If you were or are a new real estate investor, what are the key questions that you have to ask yourself, prior to purchasing in this development, or prior to purchasing your first rental property in general?

Please leave your comments in the comments section below.

Also, on the topic of new construction, I encourage you to check out the most recent update of the Rock Star Mansion.

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[youtube]http://www.youtube.com/watch?v=DDAtAESuHSk[/youtube]

Hi Everyone,

Rental properties come in many different shapes and sizes.

Just like phones, some rental properties are mobile.

Today, I am pleased to let you know that we have a special video from John Fedro of Mobile Home Madness.

John is a fellow real estate blogger and investor. He is a regular contributor to the premier real estate social networking site BiggerPockets.

John is also an authority on Mobile Homes.

I have been following John’s articles for the past several months. I am intrigued by the work he does, and I think that investing in mobile homes can be a tremendous way to generate cash flow.

Whatever you chose as your investment strategy, mobile homes should be a strategy that you should consider as well.

In keeping with the theme of my blog, the following video outlines details on John’s first mobile home purchase.

If you have any questions with regards to investing in mobile homes, I am sure that John would be happy to answer them for you.

Enjoy the video.

As always, feel free to leave your comments in the comments section below.

To keep up to date with my blog, click on the orange RSS button on the top right hand corner of the blog.

[vimeo]http://vimeo.com/11062785[/vimeo]

I began investing in real estate about 5 years ago.  It was at this time that I purchased my first rental property.

Since I started investing, I have spoken to many experienced real estate investors.  Many of these investors currently own, or did own at one point multiple properties.

Since I started investing, I have also spoken to many people who have expressed interest in investing in real estate.  I have noticed that there are a number of factors that prevent these people from investing in real estate.

No matter how much they may say that, “One day, I am going to invest in real estate”, I know that the vast majority of these people never will.

So, why is this the case?  Why do so many people want to invest in real estate, however, never end up doing so?

I could probably write a book on why people don’t end up investing in real estate (hint – hint), however for the purposes of this article, I am going to focus on ONE of the factors that prevent people from investing in real estate.

Arguably the number one reason why people don’t invest in real estate is that they are afraid of the repairs and maintenance that they will have to perform on the property.

This fear is real, and I have witnessed it stop would be real estate investors dead in their tracks!

I know from personal experience that this fear lessens as time goes on, and as the real estate investor gains more experience.

Here is a personal example to help illustrate this point:

When I first began investing in real estate 5 years ago, repairs and maintenance issues were one of my biggest fears.  I was never really a handy person, nor am I a very handy person today (I have gotten better over the years though).

As a result, when repairs and maintenance issues would come up, I would feel anxiety because I did not know how to handle it.  I did not know whether I should repair the item myself, or whether I should hire a handy man who could come in and do the job.

One of my greatest fears was that one of my rental properties would get a leaky toilet and that I would not know how to repair it.

I am very proud to say that I have come a long way in 5 years, and here is why.

Just yesterday, I was visiting my newest rental property.  I had met my new tenants at the property, and we were doing a walk through of the property.  We were doing a final walk through of the property, as the tenants were moving in the following month .  As we were walking through the property, we were testing the toilets by flushing them, in order to make sure that they were working properly.

As soon as we flushed the toilet in the upstairs bathroom, a stream of water began to flow out of the back of the toilet.  The stream of water was steady, almost like the water coming out of a slow running tap.

My property manager was also there with me.  So when this happened, we jumped into action and turned the water off.  We cleaned up the water quickly so that there was no damage to the floor.

As we were cleaning up the water, the property manager and I were sticking our heads underneath the toilet and  discussing the problem with the toilet.  We identified the problem and concluded that the best remedy would be a brand new toilet.

This all happened pretty fast, and when everything was over and done, I was pretty happy with how I was feeling about the situation.

I had always feared this type of repair the most — the leaky toilet that is.  I had always experienced the most anxiety around the thought of this type of repair.  However, while the toilet was leaking, while we were cleaning it up, and after the situation was under control, I realized that I had experienced no anxiety at all.  I was pretty calm throughout the whole ordeal.

The fact that I was so calm I believe is a direct result of the Real Estate Team I have in place.

I have confidence in my Real Estate team and their ability to get things done for me.

As an example, my property manager is going to be replacing the toilet with a brand new one in a few days.  Which means…. problem solved!

The number one way in which you can eliminate all of the fears you have with respect to real estate investing, is to have a strong Real Estate Team that you can rely on.

This team can sometimes take some time to assemble.  However, once the team is assembled, nothing will be able to get in your way of real estate investment success!

Please keep up to date with my blog.  You can do this by entering your e-mail address on the left hand side of the blog.  Or, you can click on the orange RSS button at the top right hand corner of the blog.

To check out some of the members of my Real Estate Team, click on the following links:

Mortgage Broker
Real Estate Lawyer
Realtor

Hi Everybody,

I have an interesting story to share with you today.  Before I begin telling the story, I want you to pay attention to the following points as you read this article.  As a real estate investor you must:

• Always protect your money
• Never blindly trust anyone
• Always get second opinions
• Make sure you have detailed and valid joint venture documentation
• Always be careful with regards to all aspects of real estate investing

The story that I am about to share is currently a very controversial topic that many real estate investors in Ontario and Alberta Canada are learning about.  I have noticed that no one yet has talked about this on real estate blogs for whatever reason, even those who know what is going on.  I wanted to explain what is going on because I think that this story can serve as an example and help to educate aspiring real estate investors.  If I can help some of you reading this to learn from this example, then I am doing a good thing.

Here is the story…

There is a well know real estate investor based out of Ontario, Canada that is in deep trouble right now.  This investor managed to purchase approximately 50 properties. 30 of these properties being located in Ontario and 20 of the properties being located in Alberta.

These properties were primarily purchased using joint venture money.

This means that the real estate investor arranged a first mortgage on the property, and the joint venture money served as the down payment during the purchase.

This investor re-created this 50 times.  During this time, this investor became very well know and was considered a ‘big player’ in the real estate investment circles in Ontario and Alberta.

The you know what is hitting the fan right now as this real estate investor’s portfolio is collapsing, and all of the investor’s wrong doing are being exposed.

Here is what is happening:

All of the real estate investor’s joint venture partners were never registered on the title of the property.  It is not clear at this point how this detail was missed.  Some observers are speculating that it was wrong doing on the part of the real estate lawyer involved with the closings.  Again,it is not clear at this point how this detail was missed.  However, this detail was missed on the majority of this portfolio.  Which means that on paper, the Joint Venture Partners who supplied the money to the real estate investor has NO ownership in the property.  When I say ‘missed’, this was no accident on the part of the real estate investor.  Rather this detail was missed on purpose.

Observers who are following this situation, such as some real estate lawyers, are commenting that the real estate investor in question then put 2nd mortgages onto the properties.  The investor was able to do this without getting the permission of the joint venture partners because on paper the joint venture partners have no ownership interest in the properties.  Some are saying that the real estate investor then pocketed this money from the 2nd mortgages.

If this was not enough, the real estate investor then went onto put a 3rd mortgage over the entire portfolio of properties (a blanket mortgage).  Observers are also commenting that this real estate investor pocketed the money from the 3rd mortgage.

Since this real estate investor was so highly leveraged now, a few vacancies and non payment of rent by tenants caused their house of cards to come tumbling down.

What has the impact been of this fraudulent activity:

• Some observers, such as real estate lawyers believe that if this entire portfolio collapses, it will result in the Canadian Government stepping in and beginning to regulate joint venture agreements in Canada.

• The joint venture partners who invested with this real estate investor have more than likely lost all of their money.  Their equity was deleted the moment the real estate investor put a 2nd mortgage on their respective property without the permission of the JV partner.

• Observers of this situation, and some real estate lawyers anticipate that this real estate investor will serve jail time for this.

What lesson can we learn from this:

When something like this happens there are always so many lessons that we can learn from this.  The one thing I would like to stress to those people looking to get started with investing in real estate is to:

• Always be careful in all aspects of real estate investment
• Always protect your money
• Never blindly trust anyone
• Always get second opinions
• Make sure you have detailed and valid joint venture documentation

Again, there is much more information that is going to be coming out with respect to this story.  Some of the information that I have presented may not be 100% accurate.

I would rather share with you the information that I have thus far so that you might benefit in some way by reading this.

What are some of your thoughts with respect to this real estate investor and the fraudulent activity? What sort of punishment do you think this act deserves?  You can place your comments below.

As an aspiring real estate investor, it is so important that you educate yourself and learn from experienced and trustworthy people.  I know a lot of real estate educators and bloggers.  However, two of the most sincere and straight forward real estate investors and educators that I have met thus far are Julie and Dave from Rev N You.

Keep up to date with my blog.  Enter your your e-mail address on the left hand side of the screen.  Or you can click on the RSS button on the top right hand corner of the blog.

Greetings Everyone,

Welcome to my sixth installment of my ‘Business Life Story’ Article series.

You can read my previous installments here:

Business Life Story Part One
Business Life Story Part Two
Business Life Story Part Three
Business Life Story Part Four
Business Life Story Part Five

In this article, I am going to outline the time line of my property purchases, as well as some general thoughts on real estate and rental properties.

As you may already know, my first property purchase was a freehold townhouse in my hometown of Oakville, Ontario.  You can read about some of the details on my About the Author page.

This first rental property purchase was made in May 2005, and I ended up taking possession of the house in February 2006. This purchase has probably been the single smartest financial decision I have made thus far, as everything has worked out perfectly with this property —Knock on wood! (*knock*knock*)

The property has experienced very good appreciation over the past 5 years. The property is located in a very nice neighbourhood of Oakville with high income earners. There are new schools and a new hospital is being constructed very close by. I have been fortunate in that, I have always had quality tenants in this property.

When I first started blogging, I wasn’t sure how much of my personal information I wanted to share. As time went on, I realized that the more honest I am, the more people will want to read about what I have to write.

So here goes…
This first rental property was purchased in May 2005 as I mentioned above for $250,990. A few months ago (this article is being written in April 2010), a neighbour to this property (who owns a comparable property) sold for $365,000.

The next property purchase occurred in October 2008. With this property purchase, I was very much trying to re-create the same type of purchase as the first rental property, in that I was hoping to buy in an area that would see some solid appreciation over the long run.

My first rental property purchase was an emotional purchase, in that, I purchased the property with the belief that there would be good long term appreciation of the property.

Rental property number two was purchased with the same intent. It was definitely an emotional purchase again. Fortunately, I have made two very smart decisions on the first two properties, because I bought in areas with promise. These two areas that I bought in are also areas that people want to move to.

This second property that I purchased again was pre-construction (bought off of the plans of the Builder). This property is a condominium in the heart of the Toronto neighbourhood, The Junction. The Juntion is an up and coming neighbourhood that is receiving a lot of ‘buzz’.

The Junction has been talked about in many newspaper articles, including The New York Times.

This property is a one bedroom plus den condominium that was purchased for $223,245. This price includes a locker and a parking spot. The property is scheduled to close in September of 2010. The square footage of the condominium is 665 square feet. My long term plan for this property is to eventually have it as a rental property. I want to hold onto this property long term because I know that it is going to experience very good appreciation.

I am very confident that the price that I bought it for was a very good one. As many of the comparable one bedroom plus den units in Toronto that I have been looking at are selling anywhere from $265,000 to $320,000. Therefore, I believe that once this property closes, there will be instant equity built in. I am anxiously waiting to see what units start selling for on the resale market, once this property closes.

What do you think of my investment strategy thus far on my first two properties?  Please leave your comments below.

Also, please keep up to date with my blog.  You can do this by entering in your e-mail address on the left hand side of the blog, or click on the orange RSS button at the top right hand corner of the blog.