First Rental Property

Take a about 10 seconds to reflect upon this first question…

Do you have confidence?

Now that you have reflected on this first question, ask yourself the following three questions:

How do you know for sure that you are confident?

If you have low confidence, do you think that people can notice this?

It has been my observation that most people do not have confidence in every aspect of their lives. People may feel confident in some areas of their lives, and not very confident in other areas. So if I were to make a sweeping generalization, (which I am), I can confidently say that most people do NOT have confidence.

I see this as a problem. As a result, I would like to share with you 3 tips that if you implement, can increase your confidence.

1) Identify people that are more confident than you

Surely, we all know people that fit this category. This person may be a friend, co-worker or aquaintence. We notice that there is just something about this person that makes them confident.

Perhaps it is in the forceful way that they speak or maybe it’s because of their posture, or perhaps it’s due to their ability to take risks. Whatever the case may be, take some time out of your busy day and identify at least 3 people that you know that are more confident than you are.

2) Identify what they are doing differently than you

You will have to observe closely here and pay special attention to everything that this person is doing. Look for things that they do differently from you. The key word here is differently. What are they doing different from you?

What things stand out in your mind? As mentioned in the first point, take a look at things such as their tone of voice, their posture, or perhaps even their overall outlook on risk. Don’t only look at these variables, rather, examine EVERYTHING about them that they do differently, that you wish that you could do.

Do they have an ability to speak in public, and have no fear? Are they able to approach a complete stranger and begin a conversation? Do they maintain solid eye contact with you the entire time that they are speaking to you, without looking away? If they are trying to ‘sell’ themselves to you, are they doing a good job at it? If so, why do you think that they are doing a good job?

Write all of our observations down, so you can review your notes at a later date.

3) Mimic the characteristics that you lack

This is the stage where you will have to take action. If you don’t take action, you will have no results. What characteristics or behaviours did this confident individual have that you can copy and incorporate yourself into your life? Before doing this, you have to know yourself what areas you are looking to improve upon. For instance, if you know that you maintain poor eye contact when speaking to people, and you always look away, mimic what you saw from the confident person. Perhaps you noticed that the confident person maintain consistent and unwavering eye contact. If so, copy this behaviour and have a complete conversation with someone looking them in the eyes the entire time, without looking away.

Confidence is just a behaviour. Anyone can have confidence. For some, it may take a little bit of work to build confidence, but do believe, it can be done.

For real estate investors, having confidence is the key to success. If you feel that you currently lack some confidence, then you must be diligent in putting together an action plan so that you can gain more confidence. If you feel that you do not have what it takes to build cash flow through real estate investment, you simply just have to study the habits of successful real estate investors. Observe what they did, and take notes. You can do it too!

Do you ever wonder how people end up making so much money through investing in real estate?

I used to.

At the beginning, I thought that the only way to make a profit in real estate was to buy a house, keep it for a really long time and then sell it for a higher price than what it was paid for.

There are many people who use this strategy and this strategy alone, but not Canada’s Most Versatile Investor, Mark Loeffler.

Mark is one of the leading authorities in Canada in the Rent To Own System of real estate investing. He was featured in the Canadian Real Estate Magazine not to long ago. It was this Magazine that dubbed him The Versatile Investor. This name has stuck since.

Mark and I met about a year and a half ago through the Real Estate Investment Network, also more commonly referred to as REIN.

REIN is a network of Canadian real estate investors investing in Canadian Real Estate. REIN has been said to be one of the best real estate investment networks in North America by real estate gurus such as Ron LeGrand.

Mark and I recently sat down for an interview. This article will be the first of many articles focused on successful real estate investors. Specifically I asked Mark questions about his first rental property purchase, and how his real estate investing career has evolved since then.

Here is my recent interview with the man himself, The Versatile Investor, Mr. Mark Loeffler:

Neil: “Mark, where did you buy your first rental property and what type of property was it?”

Mark: “My first rental property was a duplex. It was located in Newmarket, Ontario.”

Neil: “What year did you purchase it, how much for, and what do you think it is worth now?”

Mark: “I bought the duplex in 2003 for $205,000. Comparable properties are selling for nothing less than $270,000 now.” (Interview took place on January 5th 2010)

Neil: “What was your reason for buying your first rental property?”

Mark: “I bought the property for cash flow“.

Neil: “At the time of your purchase, did you know of anyone else investing in real estate?”

Mark: “No”

Neil: “Did you purchase this house yourself, or did you have any partners that you
purchased it with?”

Mark: “I purchased this house by myself.”

Neil: “What was your biggest fear about buying your first rental property?”

Mark: “I was afraid that I would not be able to find any tenants.”

Neil: “How did you come up with your down payment?”

Mark: “I used my savings. I put $5,000 down as my down payment.”

Neil: “How did you get your first mortgage?”

Mark: “I got my first mortgage through the Royal Bank of Canada (RBC)”

Neil: “Who managed the property for you?”

Mark: “I managed the property by myself.”

Neil: “What is the current state of the property?”

Mark: “I still own the property, and it is rented. A couple of years after I purchased the property, I brought in a partner who joint ventured on the property. As a result, I was able to take out some equity.”

Neil: “What did you do with this equity?”

Mark: “I reinvested the money into real estate. I did a couple of flips in Toronto. The money that I made from the flips eventually went into Rent to Own real estate investments.”

Neil: “Where are your Rent to Own homes located?”

Mark: “Across Canada. In Ontario and Alberta.”

Neil: “Why did you decided to invest with the Rent to Own strategy?”

Mark: “I decided to invest using the Rent to Own strategy because of the increased cash flow. There was also less maintenance with Rent to Own. Also, flipping was getting too tight.
Also, it was around this time that the Government changed their policy regarding the 100% financing rule when purchasing a home. This created an opportunity for me, this allowed me to change strategies and invest using RTO. Also, I found it tough to find good property management for small units. You don’t make your money managing, you make your money buying.”

Neil: “What current projects are you currently working on that you want to let people know
about?”

Mark: “I have a new book out called, Investing in Rent To Own Property: A Complete Guide to Canadian Real Estate Investing. I also have a Rent To Own Course called Rent To Own Made Easy. You can take the course from home and it has a 60 day e-mail mentoring component. The course takes you from A to Z and it shows you how I run my
business and how I find tenants. We take a tenant first strategy. We find people that
can’t qualify for a mortgage and we help them purchase a house. We do between
3 to 5 of these types of deals a week.”

So there you have it, a one on one interview with The Versatile Investor, Mark Loeffler. Mark and I have chatted about doing subsequent interviews for my blog, and he is agreeable. So stay tuned for some more great content from Mark Loeffler, The Versatile Investor. In fact, we may even get him on as a guest blogger!

If I was given a number of those cool gold looking statues seen at the Academy Awards, I would waste no time in putting them to use.

I would hand them out to a select number of bloggers. Not just any blogger though. I would give them out to bloggers that blog on the topic of real estate investment and who have written an article that I have enjoyed reading this past month.

Fortunately, there are a number of very well written articles that I have read over the past month.

The purpose of my article that you are reading now, is to send a ‘shout out’ to these bloggers. I would like to draw attention to their articles and thank them for creating such quality content.

I also encourage you to check out these articles. There is value in all 5 of these articles.

The Oscars go to…

1) John Fedro, Mobile Homes Contributor of the premier real estate social networking website, BiggerPockets.

John, also known as J-Fed invests in Mobile homes in the U.S.A. According to some of John’s writing, he purchases a mobile home, pays off what he owes on it in 10 months, and then the remaining incoming payments that he receives is profit. I find this topic interesting so I am going to follow more of John’s writing.

You can read John’s article on Moblie Homes here.

2) Peter Kolat, Online Marketing Contributor of the premier real estate social networking website, BiggerPockets.

Over the past month, I have been studying blogging and internet marketing in greater detail. As a result, I found Peter’s article a timely read.

You can check out Peter’s website here, and his awesome article that he wrote for BiggerPockets here.

3) Chris Davies, Edmonton REIN member and real estate investor. Chris wrote a humor article on Property Management and the fear of finding dead bodies. I am enjoying Chris’ humor. Check him out.

4) Sheldon Johnston and Sara MacLennan of the Edmonton Real Estate Blog recently published a great article. From what I have read thus far, Sheldon and Sara really understand the real estate profession. They take a very responsible and pro-active approach in educating newcomers into the business. I wish more real estate brokerages had the foresight that Sheldon and Sara seem to have. Read their recent article to figure out why I am so thrilled with them.

5) Stephani Davis, Real Estate Wholesaling Contributor for the premier real estate social networking website, BiggerPockets.

Stephani wrote a recent article titled, Four Easy Ways To Increase Your Productivity in 2010. I liked the article as it was short and to the point. I picked up a few good tips from her article.

Also, she has a pretty cool website that I was just checking out. Cool colour scheme and all!

So there you have it. 5 bloggers who I would give an Oscar to for their outstanding contributions. Keep up the great writing guys and girl!

If you have no idea what RSS is, have no fear, because you are not alone!

I suggest you start off by watching this video by Yaro Starak and Gideon Shalwick from, BecomeABlogger.com.

Definitions

The terms related to the syndication of content can be very confusing, especially if you have not heard of or seen these terms before. Again, have no fear we will take it one step at a time. With the help of our good friend, Wikipedia, when I was learning this concept I took the time to read the following definitions. This is a good place to start. The definitions are, XML, RSS, Web Syndication, and Web Feed.

The Basics

Simply put, RSS (Really Simple Syndication) is used to syndicate or subscribe to the feed of a website. Not only can you use RSS to syndicate or subscribe to a website, in addition, you can use it to subscribe to blogs and any other digital media on the internet, such as audio and video.

Once you have subscribed to the feed of the website, blog, or digital media, you no longer have to return to the original website to receive the latest content.

This is where feed reading software comes into play. You use this software or a website to read all of this latest content.

Syndication is a very significant concept. With Syndication, you no longer have to go back and visit your favourite websites any longer, as you are now able to collect all of the feeds of these websites in the same place.

Think of how amazing this is! You are now able to consume (read all of your favourite content) without jumping all over the internet and visiting different websites.

Therefore, it can be hypothesized that the main reason that Syndication was introduced was to make consuming (reading) information much more efficient for the web browser (you and I).

If you are really confused right now, don’t worry. Some people get this, and some people do not. I am not going to lie, I have a pretty difficult time getting my head around all of this as well. Note here that XML mentioned earlier is the formatting language that software and websites use to distribute content to your feed reader. The important point to take away here is that XML is the coding language that makes syndication work.

Now, let’s take a look at how I use RSS. Hopefully with some practice and examples, it will become more clear to you.

Feed Reading Software

I am currently using Google Reader. To date, I have found Google Reader quite user friendly.

Web Based Feed Reading

There can be some limitations with Feed Reading Software. As a result, people can chose to have a Web Based Feed Reader. The most popular of these is, Bloglines. Because Bloglines is entirely internet based, you can access your syndicated feeds from any computer, anywhere on the internet. Whereas with Feed Reading Software, you are limited in the sense that you may only be able to access your feeds from the computer that installed the software on. Browse our , with a variety of options to suit every taste and budget, available to buy online.

Therefore in my opinion, Web Based Feed Reading such as Bloglines is much better.

Subscribing to a Blog

In continuing with my example, you would be correct in assuming that I subscribe to my own feed, the RSS of this blog.

At the top right hand corner of my blog, you will see an orange RSS feed button.

To subscribe to my feed, you copy and paste that link into feed reading software or a web based reader like Bloglines.

You may also have to name the feed, and if you do, the name of my feed is “First Rental Property.”

The RSS feed link for this site looks like this – http://feeds.feedburner.com/FirstRentalProperty/

Also note that I use a special third party service called, Feedburner. This service adds extra features to my feed output, however most importantly, it provides me with statistics as to how many people are subscribing to my blog.

The Future

RSS is designed to make your internet life easier. As time goes on, it is going to become more popular, and you are going to be seeing a lot more of it. Big companies are fully utilizing the RSS button and syndication currently. The more familiar you become with it, the less frustration you will experience down the road because RSS is here to stay!

Hola,

Me Llamo Neil y me gusta real estate. Vivo en Toronto, Ontario, Canada.

Okay…

That is about all the Spanish I can remember from my high school Spanish teacher! (Sorry Miss D)

Unless you have a good working knowledge of the Spanish language, most of you probably read the heading of my article as well as the opening line, and had no idea what it meant.

In English it reads:

Hi,

My name is Neil and I like real estate. I live in Toronto, Ontario, Canada.

Now that I have got your attention, here is the point wholesale lemon tart e liquid flavour concentrate diy vape juice 0mg of this article:

People new to real estate investing often cannot understand the language that experienced real estate investors speak.

There are a lot of terms, and some acronyms that are very confusing to new investors. Sometimes when I am speaking to someone interested in real estate investing, I forget sometimes that they do not know all of the terms that I know, and what happens is that I will use a word or a term that will completely confuse them. This is when they will stare at me with a blank look on their face.

So let’s cut to the chase. I have put together a little glossary of some key terms that I feel that all beginning real estate investors should take the time and learn. Here they are.

Hasta Luego! (See you Later!)

LTV or Loan To Value – When someone says this phrase, they are referring to the ratio of the loan in comparison to the value of a property. For example, if I say, “My rental property has a LTV of 80%” This means that the loan (more specifically the mortgage) is 80% of the value of the home. In this case, if my rental property was valued at $100,000, since my loan (or mortgage) is 80% of the value that means that my mortgage amount is $80,000.

First Mortgage – People generally understand what a mortgage is, however, when you throw the word ‘first’ in front of the word mortgage, this can cause some confusion. Simply put, the first mortgage is usually the largest mortgage (in terms of dollar value) that is placed on a property. A large institution, such as a bank or credit union, often issues the first mortgage. The mortgage is in first position, which means that upon the sale of the rental property, this mortgage has to be paid back FIRST before any other debts are repaid.

Second Mortgage – If you understood the concept of the first mortgage, then you should understand the second mortgage as well. The second mortgage is usually smaller in dollar value than the first mortgage. A private finance company, or a private individual can offer the second mortgage usually. The interest rate of the second mortgage tends to be higher than the interest rate of the first mortgage. This is because vaporesso osmall replacement pod cartridges the lender that offers the second mortgage is taking on more risk that the lender that is offering the first mortgage. There is more risk to the lender because upon the sale of the rental property, the second mortgage lender is in second position. This means that they get paid back after the first mortgage has been paid back. They are lower on the food chain, compared to the first mortgage lender.

Lender – This phrase can refer to any institution or individual who lends funds in the form of a mortgage or loan. Examples of lenders can be major banks, credit unions, private lending companies, or private individuals.

Mortgage Broker – I have noticed that people do not understand the difference between the services offered by a mortgage broker, and the services offered by say, a major bank. A mortgage broker represents their customer (you or I), and deals with many different lenders. When they are working to obtain a mortgage for your rental property, your mortgage broker will speak with many different lenders in order to find the mortgage with the right terms and conditions for you. A mortgage broker has a network of lenders that they deal with.

Amortization or Amortized – This phrase refers to the life of a mortgage. In Canada, it is very common for mortgages to be amortized over 25 years. This means that if you consistently make your payments over the next 25 years, once 25 years is up, you will have paid off the entire balance of your mortgage. Real Estate investors often amortize the life of their mortgages over 25 years in order to maximize their monthly cash flow. Currently, mortgages can be amortized in Canada up to 35 years.

Market Rent – This phrase refers to the estimated rent that a rental property should be able to get. For instance, let’s say that you are looking to rent out a 3 bedroom 2 bathroom townhouse in your hometown. Over the past 6 months, there have been 10 townhouses similar to yours that have rented out between $1250/month and $1350/month. Therefore, the market rent for your townhouse would be between $1250/month to $1350/month. This is because it is the estimated amount that you think your rental property will end up renting for.

Actual Rent – This phrase refers to the actual rent that you collect on your rental property. If you are looking to rent out a rental property and the market rents for your property are between $1250/month and $1350/month, and you end up renting your property for $1200/month, this means that $1200/month is your actual rent.

Cash Flow – This phrase has many definitions, however, in the context of real estate investment, someone might say, “My rental property cash flows.” What they mean by this is that their total expenses on their rental property are lower than their total revenue on the property. This means that they have a surplus of funds available. Real estate investors often refer to the cash flow on their rental properties on a monthly basis. For instance, if real estate investor says, “My first rental property has a cash flow of $500 a month”, this would mean that after subtracting the total monthly expenses on the rental property from the total monthly rent on the property, there would be a surplus of $500/month.

The beginning of the calendar year is always a time of reflection for a lot of people. It is a time where, people set goals that they would like to achieve in the coming year. These goals may be goals that someone wants to achieve in a number of areas of their life. Goals can apply to such areas as relationships, health, finances, or your career.

As a real estate investor, you should also have very specific goals that you want to achieve in the upcoming year. Goal setting is very important because it gives you something to aim for.

Many experienced real estate investors often have multiple goals with regards to their real estate investing career. In addition, goal setting is especially important for people who are looking to buy their first rental property.

If you are new to the real estate investing game, and you have not purchased your first rental property yet. Here are some action steps that you need to take:

1. Write your business plan

This is the most important thing that you need to do. A business plan is essential to a real estate investor. I suggest that you start simple, and write out specifically what you are trying to accomplish with real estate investment.

2. Write your mission statement

Just like how major companies have mission statements, write out your own personal mission statement. This action will help clarify to you why exactly you are getting involved with real estate investment. Once you complete this task, you may be surprised as to what your inner motivations are.

3. How many properties do you plan on purchasing

It is imperative that you write down how many rental properties you are planning on purchasing. This is important to ‘commit to paper’ as this simple act will cause you to stay focused and committed to achieving what you have set out in writing.

It is important to note that the timeline in business plans can vary in length. For instance, a business plans can be written taking into account the next 5 years, or it can be written taking into account the next 10 years. To new real estate investors just starting out, I recommend that you begin by writing your business plan over 1 year at least. What this means is that you are writing down all of your goals with regards to real estate investing over the next 1 calendar year.

4. Where are you going to get your financing from?

As part of the business plan, it is important that you document where exactly you are going to get the financing to purchase the properties that you have committed to purchasing. This is important, because by planning exactly where you are going to acquire the financing, allows you to have a game plan moving forward. To take a simple example, let’s assume that you have decided that over the next one year you are going to buy one rental property. At this point in time, you do not know where you are going to obtain the money to purchase said rental property. As such, in your business plan, you need to write down specifically where you are going to obtain the money. As a result, you would have to write down that you are planning on purchasing one rental property over the next year, and that you would be partnering with a joint venture partner who would provide the funds required to purchase the rental property

As another example, let’s assume that you have a goal of purchasing 2 rental properties over the next calendar year. You know that you have enough personal savings to purchase one rental property, however, for the second property, you are not sure where you are going to get the financing. In this scenario, you would write down in your business plan the follow:

“I will purchase one rental property this year, and will utilize my own personal funds in order to make the down payment. I have X amount of funds saved, and all of these funds will be used towards the down payment.”

Further, you may also write down in your business plan the following:

“I will purchase a second rental property this year, by partnering with a joint venture partner. The joint venture partner will provide the funds required for the down payment, and I will do all of the work required in purchasing the property, negotiating the sale price, overseeing any repairs and maintenance, finding tenants, maintaining the ongoing relationship with the tenants, and I will also oversee the eventual sale of the property at the end of the holding term. The joint venture partner and I will split the cash flow on the property 50/50 and I will distribute the returns to my joint venture partner on our agreed upon intervals. Upon the eventual sale of the property, the joint venture partner will receive all of her initial funds and then the profits will be distributed 50/50 to the joint venture partner, and myself.

The more detail that you have in your business plan the better. A business plan is like having a road map. You begin at point A, and you need to plan your route so that you can eventually get to point B. Point A is a position where you don’t own any rental properties and point B is a position in which you finally own a rental property or properties.

In Part One and Part Two of The Evolution of the Real Estate Investor we looked at the first four stages that a real estate investor goes through as they ‘evolve’ as investors.

Stage One through Stage Four are generally forward moving stages, in which the real estate investor continues to progress, and moves closer to the their eventual goal of purchasing a rental property.

Before we move onto Stage Five, there is still a little bit more to cover on Stage Four, so that is where we will begin:

Stage Four – Continued

You begin to research real estate

It is noteworthy to mention that financial analysis also occurs during this stage. The level of financial analysis between real estate investors will vary quite substantially here, based on the fact that the investor in not sophisticated with real estate investment at this point. The financial analysis consists of crunching number, in order to determine how the real estate investor will end up purchasing their rental property. If the real estate investor has knowledge as to what amount of down payment is required, they will start to figure out from what sources they will draw these funds from. The sources that they consider, could be personal savings, a line of credit, borrowed funds from a family or friend, or perhaps the funds would be coming from a joint venture partner.

In this stage, the real estate investor will also calculate what numeric value their down payment will be. For example, if they are looking at purchasing a rental property for $100,000, their required down payment may be 20% of the value of the home. If this is the case, the real estate investor will know that they will have to come up with $20,000 as their down payment. The figure $20,000 is obtained by multiplying $100,000 by 20%.

In this stage the real estate investor begins to form relationships with either mortgage brokers or their local banks. This is being done because, the investor knows that they will have to call upon these individuals in order to get financing set up for their rental property in the not too distant future.

Stage Five

Fear Strikes

Fear is ugly. I hate fear because fear kills dreams.

Fear is a thorn in the side of a real estate investor. In this stage all of the confidence and forward momentum that the real estate investor built up during the first four stages is eliminated.

This is a point where the real estate investor begins to doubt their plans. They begin to doubt that real estate is a wise investment to make. Fear causes the real estate investor to see all of the negative sides of real estate investment. It now becomes very difficult for the investor to see any of the benefits that they were once very excited about. It is at this stage where a lot of the negative feedback from people significantly affects the investor. For example, the investor may have some friends that think that investing in real estate is a bad idea. They may think that it is a bad idea because their uncles’, neighbour’s, sister’s, friend, once invested in real estate and had a bad experience. This negativity affects the morale of the real estate investor. They quickly find themselves in a downward spiral, with depleted confidence, and uncontrollable fear.

Stage Six

Digging Deep

In my opinion, this is the most mysterious stage. This is the stage where the real estate investor is able to overcome all the negativity produced by Fear. They are fully able to overcome their fear and move onto the next stage.

However, let’s make one thing clear. There are many individuals who are never able to defeat their fears in stage five. As a result, their fear continues to consume them and they never end up investing in real estate. All successful real estate investors were able at some point overcome their fears by digging deep.

You might be asking, what does digging deep mean? Below is an explanation as to what I believe it means.

A real estate investor goes from being paralyzed by fear and inaction to overcoming their fears and regaining their confidence. I have observed that three are a number of different variables that can contribute to the regained confidence on the part of the real estate investor.

One of the ways in which a real estate investor is able to set aside these fears and move forward towards their goals is by:

1) Staying positive

A positive outlook kills fear. It takes a concerted effort to remain positive. However, those that are positive, and make a strong effort to remain positive are always able to overcome their fears and move forward.

Another way that a real estate investor is able to overcome their fears is by:

2) Surrounding themselves with like minded people

Like-minded people provide encouragement to one another, they also all push one another toward achieving their goals.

A third way in which real estate investors over come their fears is by:

3) Having a supportive family

This does not apply in all cases. However, I have seen very successful family partnerships of real estate investors. Also, in some cases, because family values are the same among family members, it is easy to collectively move forward in investing in real estate as a family. Throughout the journey, these family members can lean on one another for support during the tough times, or in order to stay motivated. All of my personal success is a direct result of my supportive family.

A fourth way in which real estate investors over come their fear is by:

4) Having the X-Factor

There are some cases where real estate investors are easily able to overcome their fears. In addition, there are other cases, where fear never enters the mind of the investor. I call this the x-factor, some people have it, and most people don’t. The x-factor really means that a real estate investor is indifferent to fear. Fear does not affect them. Or at least, they do not let fear affect them in the same way as it might affect other people.

In summary, it is in this stage where the real estate investor is able to dig deep and overcome all of their fears.

Stage Seven

You Buy Real Estate

All your efforts pay off in this stage as you purchase your first rental property. A real estate investor experiences a big adrenaline rush in this stage. Also, there is a great sense of accomplishment felt during this stage. Often times, months, or even years of research and anticipation have led up to this stage and this purchase. Although a fantastic accomplishment that should not be overlooked, this however is only the beginning of a real estate investor’s life. This stage often feels like the end of the journey. However, as all veterans’ real estate investors will tell you, this is only the beginning!

The journey continues.

Real Estate Investors are continually gaining more experience in the world of real estate investment. That is of course if they are the type of real estate investor who chooses to take continuous action.

Part One of The Evolution of a Real Estate Investor discussed the first 2 stages that a real estate investor experiences.

The first stage that occurs results in the real estate investor feeling that real estate does not exist. In this stage, the investor is definitely not an investor at all at this point. They have no interest in real estate and see no benefit in investing in a rental property.

As the investor moves into the second stage, this is where they find that something happens with real estate. In this stage, something significant happens in the real estate investor’s life with respect to real estate. As a result, they take notice of this occurrence.

We will now take a look at the third and fourth stages in the evolution of a real estate investor.

The Third Stage

You become interested in real estate

It is noteworthy to mention that there is a big difference between the second stage and the third stage. In the second stage – something happens with real estate, an investor’s interest in real estate has not yet developed. It is only in the third stage where a true interest in real estate begins to form. This stage is one of the most exciting stages. It is an exiting stage because the individual begins to see real estate in an entirely different light. What was once uninteresting houses or buildings, now becomes assets that cash flow. Once the individual’s interest develops, they will no longer view real estate the same as they did in the past. In this stage, you as the individual become very excited about the specific aspects of real estate that interests you. In my particular case, I became very interested and fascinated by all of the new development that was occurring in my town. I developed an extreme interest in the construction of new homes and subdivisions which I am still very interested in even today. As this interest develops, you may spend more time speaking to friends, family, or acquaintances about their experiences with real estate. At this point, you will really talk to anyone about real estate that is willing to have a conversation with you. You may be out in a public place such as a restaurant, and if someone 15 tables down from yours, sitting in the corner of the restaurant is having a conversation about real estate, you hone into this conversation, and can hear every word of it. This happens to me all the time when I am out and about. If people are having a conversation about real estate, I often, always listen very carefully.

The Fourth Stage

You begin to research real estate

Once again, there is a big difference if you compare this fourth stage to the previous third stage. In the third stage, your excitement level is high, and you are so thrilled about real estate that you just can’t contain your emotions. This is where stage three ends.

Stage Four is where you take things to the next level, and begin to make some serious progress towards your eventual purchase of a rental property. This is the stage where all of your research begins. This is a significant stage, because to this point, the real estate investor has never done this type of analysis before. Remember, the real estate investor has previously been at a point where they had felt that real estate did not exist. They were indifferent to real estate as an investment. Then they got to a stage where something happened with real estate that resulted in them becoming very excited and interested in it.

The research stage can vary dramatically for different real estate investors. It tends to vary due to the different and often limited resources that the real estate investor might have at their disposal at this stage of their evolutionary process.

In my case, my research was very basic, now that I take a look back upon it. For about a year, I spent time visiting the new development sites in my town. I would go into the sales offices at times, pick up floor plans for the homes as well as the price lists. I think I probably visited every new homes development in my town over the course of a year. There were a lot at that time. If I were guess, there were probably about 10 of these sales offices. I am sure that I visited some 2 or 3 times.

I would spend a lot of time also driving around in the new development sites and look at the new homes that had been constructed.

Some might consider these actions to be a waste of time. I would not disagree with those people. Waste of time, or not, the actions that I took were essential. They were essential because it allowed me to become more comfortable, it allowed me to learn more about new homes, and it gave me the confidence to move forward and take action when the time was right.

The journey that a real estate investor goes through as they evolve is filled with both excitement and disappointment. Through the experience that you gain, you become a different person. I believe that your perspective changes on the topics of money, business, and risk, to name just a few. My perspective on life has definitely changed when I look back upon my experience as a real estate investor.

The question can be asked: What is the biggest change that takes place with an individual? It is tough to say, as I believe this change differs with each and every individual. I have seen people change for the better and for the worse as they have ‘evolved’. I have seen some people’s egos inflate, and at the same time I have witnessed people become more humble and grounded as they continued to obtain more experience as a real estate investor.

In this article I am going to outline some of the significant stages that I believe a real estate investor goes through. I have gone thorough all of these stages myself.

The First Stage

Real Estate Does Not Exist

I believe that all real estate investors start off at this point. No matter what an individual’s life experiences are, there is a point in time in a real estate investor’s life in which they are not interested in real estate and frankly; they do not know that real estate exists. When I say that, ‘they do not know what real estate exists’, I mean that they are oblivious to it. Of course they know that houses, apartment buildings, and shopping malls are physical structures, however, they are indifferent to these structures, and they do not see these structures as assets, nor is there any appeal whatsoever.

If a person grows up in a family of real estate investors, then obviously they are exposed to real estate investment at an early age. Often people who grow up in a real estate investment family become investors themselves. However, when they are young, there is a time in which they do not know what real estate is.

The minority of the population are real estate investors. As such, most people grow up not knowing anything about real estate, or the benefits of owning real estate investments. These people grow up and are socialized in a certain way. Perhaps they are conditioned to believe that going to college or university is the appropriate and responsible thing to do. As a result, they grow up, go to school, graduate from college or university, and end up getting a job in their field of interest. There is absolutely nothing wrong with this, as this is the normal course of life for a lot of people.

Alternatively, perhaps an individual is taught from a young age that going to school and then studying a trade is the right way to go. So they do exactly that. A very good living can be made by working in the trades, so there is nothing wrong at all with this course of action either.

Real Estate Investors can have any educational background at all. In fact, real estate investors can have absolutely no academic educational background and still be very successful as an investor. There is however a common characteristic that I have noticed with these stage one investors. This common characteristic is motivation. These people who are in the first stage want to achieve more in life than what they are currently achieving. They have motivation, and they want to move forward in life.

The Second Stage

Something happens with real estate

As a real estate investor evolves, in the second stage, something happens with real estate. There can be a variety of occurrences that happen to the investor here. I will share with you what happened with real estate in my life.

I was in stage one probably for the first 23 years of my life. During these years, I did not know that real estate existed. I did not even consider the benefits of owning real estate as an investment. I went to school, did very well through high school, and off to University I went. I graduated from University with a Psychology degree started working for one of Canada’s largest banks. It wasn’t until something happened with real estate that got my attention. Here is what happened:

About 7 years ago a long time family friend that lived close by to us put a down payment on a townhouse located in our town. They had plans of downsizing by selling their much larger house. The townhouse that they bought was brand new and it was yet to be constructed. Over the next year, as the townhouse was being constructed, they continued to live in their existing house. This all was happening as the real estate market was booming. As a result, the value of the townhouse that they had put a down payment on was continuing to climb month after month. The townhouse was located in a new area of town, where there were a lot of young families moving and a lot of new homes being constructed. After the year was up, they sold their existing larger home, and moved into the townhouse. They spent 2 years in the townhouse and then sold it and moved to St. Lucia where they bought another house.

Sitting on the sidelines, I watched this all happen before me, and I saw that they made $120,000 in 3 years. They bought the townhouse initially for $200,000 and ended up selling it for $320,000 after 3 years. Not taking into account any realtor, legal, or admin fees, their gross profit was $120,000 in 3 years. Not bad at all! Like I said, I sat on the sidelines and watched this happen. Clearly, something interesting was happening, and I was taking note of it.

The Evolution of a Real Estate Investor – Part Two
The Evolution of a Real Estate Investor – Part Three

Personalized hand written notes are an effective sales tool that are utilized by business owners in order to create rapport with their customers.

Businesses that have a good understand of effective relationship management techniques will effectively use these notes in order to win over their customers.

Have you ever bought something or received service from a business, and then subsequently received a personalized thank you card in the mail? Was the card hand written? I am willing to bet that it was. If this card was handwritten, it was not by accident. The business owner does this intentionally in order to foster a stronger relationship with you. Their intention is that you become a satisfied customer, willing to refer other people to their business, or that you become a loyal customer, that will come back and buy their product or service.

Here is an example of this relationship management technique in effect. I once took my car in to my car dealership in order to get some scheduled maintenance. There was nothing special about my scheduled appointment in terms of customer service. The dealership completed the required maintenance, I paid, and then I left. About a week after my maintenance appointment, I received a letter in the mail from the Service Manager thanking me for my business. I thought that this was a noteworthy gesture, and I made a mental note of it. When it was time for my next maintenance appointment, I ended up taking my car back to the dealership for the required maintenance. I could have taken my car to another service dealership that was a bit cheaper, however, I decided that I would take my car back to my original dealership.

Perhaps their personalized hand written note worked, and resulted me in becoming a loyal, repeat customer. I don’t think there is a measurable way of knowing what effect that hand written note had on me or any other of their customers for that matter. For whatever it’s worth, I am still taking my car to that dealership for maintenance, despite it being a little bit more expensive than other service locations.

Hand written notes are used all of the time in the world of real estate investment. They are used for many of the same reasons noted above. As such, I would like to share with you how writing hand written notes as a real estate investor, can positively impact your real estate investing career. For the purpose of this article, we will focus on the benefit of using hand written, personalized cover letters.

There are select, experienced real estate investors who always use personalized, hand written cover letters whenever they are submitting an offer to purchase a rental property.

If you are looking to purchase your first rental property, I strongly recommend that you adopt this strategy. Here are some reasons why you should use this strategy:

1) Very few people use this strategy

When I say, ‘very few people’. I should actual being saying, ‘hardly anyone’. Because hardly anyone uses this strategy when putting in an offer on a rental property, you will, and your offer will stand out from all of the other offers, if there are any. This is a good thing because with increased attention on your offer, chances are that the seller of the property will want to at the very least enter into some sort of negotiation with you.

2) You are adding a personal touch

A personal touch also helps you to stand out from the crowd. In your personalized cover letter that you send to the seller, include things such as who you are and give a little background and some of your experience. If you like the house that you are putting an offer on, comment on some of the features of the house that you like, and why you like them. If you compliment the seller in the personalized cover letter, this can go a long way. People generally like to be complimented, and as such most people who are complimented will take a liking to you, and your offer, despite the fact that they may have never met you before.

3) It opens up a communication channel

In your personalized cover letter to the seller, you can also add any questions that you may have for the seller. For instance, you can ask the seller if they know of any defects in the property. Although, this is a simple question to ask, it can have a very powerful effect. If there are any problems with the house, at this point, because the seller has been asked directly by you, they may be willing to disclose this information.

I have been using personalized, hand written cover letters for 5 years, whenever I have purchased a rental property. Every cover letter that I have used has resulted in opening up a communication channel with the seller. With these channels I was able to obtain information from the seller that probably would not have been disclosed to me otherwise.