First Rental Property

Hello Friend,

I hope you are doing well.

Today I have a special treat for you.

I am going to share with you 5 Helpful Resources.

These resources are going to be extremely helpful to you if you are interested in purchasing your first rental property.

Here they are:

1)  GetSmarterAboutMoney.ca

In an article titled,  “Investing In A Rental Property: The pros and cons”, the author highlights 3 key disadvantages about buying a rental property. Believe it or not, there are indeed disadvantages to buying a rental property.  To learn about them more, click here:

Investing In A Rental Property: The Pros and Cons

2)  Rent Smart Blog By Margot Bai

In this blog, Margot writes about ‘being your own property manager’.  I am a big fan of her comment.  She also says in her article, “Once you have a paid off-property providing a steady income stream, your best play is to simply hold on to the property as long as you are able to take care of the home and your tenants.”  She has some very wise words in this short article. To read the entire article, click here:

Be Your Own Property Manager!

3) MoneyCrashers Blog

In an article titled, “8 Issues With Buying Rental Property and Becoming a Landlord”, Angela talks about ‘surviving evictions’.  I could tell by reading the article that she has been through the eviction process before.  Keep in mind that the eviction process will vary depending upon where you live (Country, State, Province, Territory, etc).  To read about a general overview of eviction process, in addition to a few other issues with buying rental property, click here:

8 Issues With Buying Rental Property and Becoming a Landlord

4) The Mortgage Navigator

In an article titled, “How to Buy a Rental Property”, Charlotte writes about some of the lending requirements that you need to abide by.  The lending requirements talked about are Canadian guidelines, however, there are general commonalities with the lending requirements whether you live in The United States, Canada, United Kingdom, or any other country.  Charlotte also makes a distinction with the lending guidelines for salaried individuals versus self employed individuals.  To read the article, click here:

How To Buy A Rental Property

5) Million Dollar Journey

There is some really good advice in the article that FrugalTrader wrote, titled, “Criteria For Purchasing Rental Property”.  The first point that he states is, “The property must be cash flow positive.”  This is good advice.  He goes on to explain why the property should be cash flow positive and how to calculate the cash flow on a property.  To read the entire article, click here:

Criteria For Purchasing Rental Property

So there you have it!  5 helpful resources for new real estate investors.  Make sure you read all 5 of these articles as they all contain very helpful advice if you are trying to buy your first rental property.

Happy Investing!

Neil Uttamsingh

ps: Subscribe now to the First Rental Property newsletter by entering your email address and name into the top right hand corner of the blog.  Once you do this, you will start to receive tips and tricks from experienced real estate investors on how to buy your first rental property.  The best part is that all this information is for, you guessed it….. FREE !!!  Subscribe now.

Hi Friend,

I hope you are doing well.

Yesterday I received an email from a blog reader.

In the email, the reader provided some feedback as to why they had unsubscribed from  the First Rental Property blog.

With a blog readership in the thousands, I get messages from people all the time that have chosen to unsubscribe.  This is just the nature of having a blog with a large readership.

Some of the common reasons that I get from people who have chosen to unsubscribe are listed below:

• I am no longer interested (in general)
• I am no longer interested in buying a rental property
• I am getting too many emails
• No reason stated

These are the standard reasons as to whey people unsubscribe and I hear them all the time.

However, the most recent explanation that a reader gave me, struck a cord with me.

The reason they had stated, as to why they unsubscribed from First Rental Property was because:

• They wanted more VALUABLE information

Hi Friend,

I hope you are doing well.

If you are new to real estate investing, chances are you do not know how to calculate ROI (Return on Investment).

For many new investors, the topic of ROI is a confusing one and many people do not understand it.

If you are serious about buying your first rental property, and you think that you are going to purchase multiple rental properties, at some point, you need to understand ROI and become comfortable with calculating it.

So what are the reasons you need to know how to calculate ROI?

Reason #1 – Is the investment good or bad?

One of the major reasons you need to know how to calculate ROI is to know weather an investment is good or bad.  If you do not know how to calculate ROI, you will not be able to differentiate when you see a good investment, or when you see a sub par investment.

Reason #2 – Protect Yourself

Another major reason as to why you need to know how to calculate ROI is so that you can protect yourself.  You can protect yourself in that, if an investment is presented to you, and the ROI is stated, you will be able to double check the numbers and determine if the ROI is in fact the same as what is being presented.

At the end of the day, ROI is not hard to calculate.  It is comprised of 3 components.

Component #1 – The money you are investing.

When calculating ROI, you need to first take a look at the money you are investing.

If we are look at an example, let’s say that you are investing $100,000.

Now that you know how much money you are investing, you now need to look at component number 2.

Component #2 – How much money you are making.

With real estate investing, the money you make can come in different forms. It can come in the form of cash flow, mortgage paydown or appreciation.  In this example we are going to keep things simple.

Let’s say that they money that you made on your $100,000 investment was $14,000.

Now that you know how much money you invested, and how much money you made you need to look at component number 3.

Component # 3 – Time Period

When calculating ROI, you always want to take a look at the time frame.

For example, using the numbers above, let’s say that they money you made ($14,000) on your initial investment of ($100,000) was done in one year.

Therefore, when you are calculating your ROI, it would look like this…

$14,000 (money you made) / $100,000 (initial investment) = 14% in year one

As you can see from above, if you invested $100,000 into rental property and made $14,000 (with cash flow, mortgage paydown and/or appreciation) in the first year, your ROI when calculated would be 14%.

This is a simple explanation of how to calculate ROI.  Simple is good because most novice real estate investors do not know how to calculate ROI.  You need to have a basic understanding of it, and the explanation above gives you just that!

So what do you think?  Is calculating ROI is harder or easier than you thought?  Leave your comments below.

Happy Investing!

Regards,

Neil Uttamsingh

ps: If you are serious about buying your first rental property, sign up for the First Rental Property Newsletter.  All you need to do is fill out the form located at the top right hand corner of the blog.  When you do this, you will start to receive tips and tricks from experienced real estate investors on how to buy your first rental property!

Hi Friend,

There was a time, early in my real estate investing career in which I thought that commercial real estate was a better investment than residential real estate.  I was young and naïve at the time and have come to realize that residential real estate is the far superior investment.  Residential real estate is better because:

The possibility of owning a rental property it is not out of the reach of the average income earner.  

All things being equal, you do not have to be making a 6 figure income if you want to acquire a rental property in the residential world.   If you are an average income earner, with the help of a quality investment focused mortgage broker, you can purchase a rental property with relative ease.  Once you purchase this rental property, you can rent it out and have your tenant pay down your mortgage over the next 25 to 35 years, depending upon the length of the amortization of your mortgage.  What this means to the average person is that once you have reached the age of retirement, you will have an asset that is free and clear of a mortgage.  This strategy of investing in residential real estate  is realistic and it is attainable.  If you decide to purchase multiple rental properties, it is the best way to amass over a million dollars in equity over the course of your lifetime. 

What do you think about this blog post?  Do you agree that residential real estate is a better investment, or do you prefer commercial real estate? Leave your comments below.

Happy Investing!

-Neil Uttamsingh

ps: If you are serious about buying your first rental property, sign up for the First Rental Property Newsletter.  In the Newsletter you will get to read tips and tricks from experienced real estate investors on how to buy your first rental property!  You can sign up for the Newsletter in the top right hand corner of the blog.  Oh, and by the way…. it is free of charge!  Sign up today!  🙂

Hi Friend,

I hope you are doing well.

If you are a person who is looking to buy your first rental property, the topic of this blog post will be of great interest to you.

Currently I have 5 mortgages.  This is because I own 5 properties.  When I first started investing in real estate, I had no idea how to obtain more than one mortgage.  This was back in the year 2005.  Since then I have gone on to purchase Oakville real estate, Hamilton real estate and Toronto real estate.

It amazes me how few people know that they are able to obtain more than one mortgage.  The bulk of society (who have mortgages) are conditioned to believe that they are only able to have one mortgage at a given time.

If you are a new real estate investor, you need to know that:

You can have more than one mortgage.

Having more than one mortgage is essential if an individual is looking to build a real estate portfolio.

Dealing With Non-Believers

Whenever there is a minority of people doing something different than the majority of people, the minority is often critisized.  Staying with this theme, I often witness single mortgage holders being criticized by multiple mortgage holders.

Non believers make the assumption that:

“You cannot have more than one mortgage.”

Who Are The Non Believers?

Non believers are people that tell you that you CANNOT have more than one mortgage.

There are always people giving advice and false information to new real estate investors.  As a new investor, you have to very careful who you listen to and who you take advice from.  I have said over and over, that you should only take advice from someone who has accomplished something that you are trying to achieve yourself.

How Does a Real Estate Investor Obtain More Than One Mortgage?

In order to obtain more than one mortgage, you have to speak to a Mortgage Broker or Mortgage Specialist who has experience in getting multiple mortgages approved.  Some real estate investors are told that Mortgage Brokers are the only ones who are able to grant more than one mortgage to a real estate investor.  This is not always the case.  In many situations, major financial institutions are able to grant an individual borrower more than one mortgage.

In Summary

In summary, it is absolutely possible for someone to have two mortgages at the same time.  If you are new to real estate investing and want to purchase a rental property, you can feel reassured knowing that you can obtain two mortgages through the help and guidance of either a mortgage broker or a bank.

Happy Investing!

Best Regards,

Neil

ps: If you are serious about buying your first rental property, take a quick second and sign up for The First Rental Property Newsletter.  You can sign up in the top right hand corner of the blog.  When you sign up, you will get tips and tricks from experienced real estate investors on how to buy your first rental property, delivered straight to your Inbox, free of charge!

Hi Friend,

I hope you are keeping well.

One of the biggest mistakes that new real estate investors make when they buy their first rental property is:

Failure to communicate with their tenants.

Failure to communicate with your tenants ALWAYS results in a poor relationship with them and potentially future Landlord and Tenant issues.

If you are a regular reader at First Rental Property you know that I always talk about some of the fears that hold people back from purchasing their first rental property.

A couple of the major fears that people experience include:

• The fear regarding managing tenants, and
• The fear regarding the repairs and maintenance of a rental property

Far too often I see new real estate investors purchase a rental property, and then outsource the management of their rental property to a property manager.

There is a constant debate regarding whether or not new investors should hire a property manager or not for the management of their first rental property.

After you finish reading this article, click here to learn how to overcome your fears about purchasing rental property.

I personally am an advocate for new investors to manage their first rental property themselves.

The implications that arise when an investors does not manage their rental property themselves is severe.

When a new investor outsources that management of a rental property to a third party, a property management company, the investor becomes removed from the management of the property.

When you are removed from the management of the property itself, you are no longer communicating directly with your tenants.

Ideally, the property management company that you have hired is communicating with your tenants on a regular and ongoing basis.

Unfortunately, this is not the case in many scenarios.

Due to the nature of property management companies, their time is limited as they are managing hundreds of properties.

When a company is managing hundreds of properties, they often have no time to make warm and fuzzy calls to tenants.

The warm and fuzzy calls is what builds relationships with your tenants.  

As a new real estate investor, you need to be making contact with your new tenants once a month.

I recommend that on the first of each month, you call your tenant in order to touch base.

Do not hide behind email or text.  Actually call your tenant.

Email and text messaging is not as good of a tool when you are trying to build a relationship with your tenant.

Calling them is the way to go.

So there you have it!

As a new investor, you need to be calling your new tenants once a month, on the first of the month.  Touch base, say hello, and see how they are doing.

You will be amazed at how beneficial these telephone calls are in the long run.

This is because very, very few landlords actually do this…

Don’t be afraid.  Call your tenants every month.

Happy Investing!

Best Regards,

Neil Uttamsingh

ps: If you are serious about buying your first rental property, sign up for The First Rental Property Newsletter.  In the newsletter you will read about tips and tricks from experienced real estate investors on how to buy your first rental property!

Hello Friend,

I hope you are keeping well.

One of the most common questions I get asked is, “What type of property should I buy?”

Today, I have made it easy for you as I am giving you the exact answer.

The answer is:

Townhouse

If you are a new real estate investor wanting to buy your first rental property, you should buy a townhouse.

The first rental property that I ever purchased was a townhouse.

If you are residing within the Greater Toronto Area, or are looking to buy a rental property in the greater Toronto area, then this deal is for you.

The deal I share with you in this blog post reminds me of the first rental property I purchased back in 2005.

If you are serious about buying your first rental property now and want to know about more deals like this one contact me at NEIL@FIRSTRENTALPROPERTY.COM

Happy Investing!

Neil

Location:  Oakville, Ontario, Canada

List price: $389,900

Potential purchase price: $380,000

Downpayment: $76,000 (20% of purchase price)

First Mortgage Amount: $304,000

Mortgage Terms: 5 Year Fixed Rate at 2.84%

Mortgage Amortization: 35 years

Monthly Mortgage Payment: $1,140.18

Property Taxes (2012): $2,861/year –> $238/month

Property Insurance: $50/month

Association fee: $42/month (snow removal, exterior building insurance)

Total Expenses: $1,470.18/month

Current Market Rent: $1,600/month

Monthly Cash Flow: $1,600 – $1,470.18 = $129.82

Annual Cash Flow: $129.82 * 12 = $1,557.84

Mortgage Balance at end of Year One: $298,834.29

Mortgage Paydown at end of Year One: ($304,000 – $298,834.29 = $5,165.71)

Appreciation at end of Year One: (3% * $380,000 = $11,400)

Total Cash on Cash Return at end of Year One: $1,557.84 + $5,165.71 + $11,400 = $18,123.55/$76,000 = 23.8% ROI

23.8% Return on Investment

(Here are some pictures of the property)

If you are serious about buying your first rental property now and want to know about more deals like this one contact me at NEIL@FIRSTRENTALPROPERTY.COM