Why Residential Real Estate Is A Better Investment Than Commercial Real Estate

Posted by neil on April 16, 2013
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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!  🙂

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How To Have Two Mortgages At The Same Time

Posted by neil on April 14, 2013
General / 1 Comment

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!

 

 

 

 

 

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How to Communicate With Your Tenants

Posted by neil on April 13, 2013
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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!

 

 

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Deal Of The Week

Posted by neil on April 10, 2013
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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

The Power of Leverage In Real Estate

Posted by neil on January 15, 2013
General / 4 Comments

Hi Friend,

I hope you are doing well.

If you are just starting out in the real estate investing game, you are probably learning about the concept of Leverage.  You are also probably trying to figure out if leverage is good or bad.

The power of leverage in real estate is a great thing, and leverage should be used in order to buy rental property.

A common question that I get asked by new real estate investors is:

Am I able to use the equity in my home in order to buy a rental property?

A follow up question that I get asked after this initial question is:

“How do I do this?”

For starters, it all depends on where you live.  The rules imposed by Lenders differ depending upon which Country, Province, State, or Territory you live in.

If you reside in Canada, then you should know that most Lenders (Banks) will allow you to Leverage your principal residence (property you live in) up to 65%, 80% or sometimes even higher.

The percentage in which the Lender will allow you to Leverage your property depends upon the lending product that they are providing you with.

For instance, the percentage in which your principal residence can be leveraged will vary if you are requesting from your lender a ‘secure line of credit’ or if you are requesting a ‘re-finance’.

A question that experienced real estate investors begin to ask is:

Can I refinance one rental property in order to buy more?

The answer to this is YES.

Refinancing existing rental properties is a great way in order to purchase more rental properties.  This strategy is used by many successful real estate investors.

Bringing it back to basics, as a new real estate investor you need to determine if you have enough equity in your principal residence in order to leverage it so that you can buy your first rental property.

Don’t delay. The Power of Leverage is an amazing thing.  It can help make your dreams of buying a rental property reality faster than you ever thought possible!

Happy Investing!

Neil Uttamsingh

ps: I am an experienced Real Estate Investor and  licensed Realtor.  I help people like you everyday purchase their first rental property.  If you have any questions or are looking to buy a rental property, feel free to get in touch with me.  Send me a note at NEIL@FIRSTRENTALPROPERTY.COM and I will help guide you through the process!

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Just Do It

Posted by neil on January 11, 2013
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Hi Friend,

I hope you are doing well.

The expert marketers at Nike once coined the slogan, Just Do It

What a great slogan this has become.

It is such a great slogan that it can literally apply to any aspect of your life.

What were the experts at Nike thinking when they came up with such a slogan?

Just do what?

Just buy Nike shoes?

I have no clue what they meant to be honest, and probably most people had no clue either.  What I do know is that this slogan is a perfect slogan for new real estate investors to  live by.

When a new real estate investor is on the fence and deliberating whether or not they should buy a rental property, I say…

Just Do It.

If you are a new real estate investor looking to buy your first rental property, you need to Just Do It  because:

  • Most people don’t ‘Do It’
  • Be different, and make things happen
  • If you don’t ‘Do It’ and buy a rental property you will not benefit financially
  • There will always be fear associated with buying a rental property
  • Real Estate education is good, but over thinking and second guessing yourself is not
  • You could be able to fund part of all of your retirement if you invest wisely in rental properties
  • You will become an entrepreneur and will be able to share your experiences of owning rental property with others
  • You will learn with time, that owning a rental property is not hard.  You just have to stay committed to it

I think that one of the reasons why Nike was so successful with their slogan is because it resonated with people on many levels.

People like action takers.  People gravitate toward others who say they are going to do something, and they do it.

Keep this all in mind as you navigate your way towards purchasing your first rental property.

Happy Investing!

Neil Uttamsingh

ps: I am an experienced real estate investor and Licensed Realtor.  I help people like you every day purchase their first rental property.  If you are interested in buying your first rental property, send me a message at NEIL@FIRSTRENTALPROPERTY.COM and I will help guide you through the process!

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Real Estate Investing Is A Game Of Endurance

Posted by neil on January 07, 2013
General / No Comments

Hi Friend,

I hope you are doing well.

Surviving long term as a real estate investor is not an easy task.  Experienced real estate investors know how much hard work and effort it takes in order to stay in the game.

New real estate investors for the most part have absolutely no idea how much commitment is involved once a rental property has been purchased.

The title of this post, “Real Estate Investing Is A Game Of Endurance” sums up very accurately the journey of purchasing rental property, owning rental property and managing rental property.

Throughout this game of ‘endurance’, you are tempted to give up when the going gets tough.  When you encounter difficulties with your rental property, the solution that presents itself seems to be to ‘sell the property’ and move on.

This solution that easily pops up, ‘selling’ is the wrong choice.  The urge to unload your investment during hard times should be resisted at all costs.

It is only through experience that a real estate investor is able to finally realize that real estate investing is indeed a game of endurance.

During the early stages of investing, it does not seem at all like a game of endurance.  Rather, the initial excitement of owning a rental property is usually the emotion that last for some time long after your purchase.

Most experienced real estate investors need a support group in order to win the game of endurance.

The support group can be fellow successful real estate investors, a wise business partner, or a fellow entrepreneur.

The support, encouragement and guidance offered by these individuals during rough times is paramount.

To last in the real estate investing game long term, and to endure all of the obstacles that lie ahead of you, draw on the support and encouragement of a select few.

Happy Investing!

Neil Uttamsingh

ps: I am an experienced real estate investor and Licensed Realtor.  I help people like you purchase rental properties every day.  If you are looking to buy your first rental property, send me an email at NEIL@FIRSTRENTALPROPERTY.COM and I will help you get started…

pps: For a step by step process on how to do things the right way, check out my most popular blog post as decided upon by readers, How To Buy Your First Rental Property

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How To Find Tenants

Posted by neil on January 04, 2013
General / 2 Comments

Hi Friend,

I hope you are doing well.

The most important part about owning a rental property, is not the property, but rather the tenants that live in the property.

Having good tenants that live in your rental property can be a contributing factor to whether you succeed or fail as a real estate investor.

If you have bad tenants that live in your property, it makes your life as the real estate investor and landlord very stressful as you are constantly dealing with unnecessary tenant issues.

If you are a new real estate investor and you want to learn how to buy your first rental property, you must first learn how to find tenants.  One of your goals as a new real estate investor is to find out how to attract the best tenants to your rental property.

Before you learn how to find tenants, let’s take a look at the two types of tenants.  The bad tenants an the good tenants.

Bad Tenants

  • A bad tenant is someone who does not treat your property with respect and causes damage to the property
  • A bad tenant is someone who has no regard for the neighbours that surround your rental property.  They may do things like leave piles of garbage on other people’s property, or have late parties at night which causes noise and disturbance to the people that live close by.
  • This is also someone who has no intention of paying rent
  • They will start conflict with you, the landlord.
  • A bad tenant is someone who will make major alterations to your rental property without consulting you first (i.e.: change locks to the house)
  • Bad tenants are generally poor communicators, and shy away or intentionally avoid communication with their landlord.
  • Bad tenants breed and often bring other bad tenants to come and live in the rental property without your permission
  • Bad tenants don’t have jobs or are underemployed for long periods of time
  • Bad tenants feel that they are always the ‘victim’
  • Bad tenants will also do nothing to change their current circumstances

Good Tenants

  • Good Tenants treat your rental property with respect
  • Good tenants often have the desire to buy their own home
  • Good tenants repair minor things in the rental property on their own accord
  • Good tenants pay their rent on time
  • If they are going to be late with rent, they give you advanced notice of when they will be providing you with the rent.
  • Good tenants are effective communicators.  They express themselves well and stay in contact with their landlord.
  • They give you the landlord, the occasional gift (at Christmas)
  • Good tenants do not want to leave your rental property (if you have treated them well)
  • Good tenants appreciate you

In part 2 of this post, I am going to explain in detail for you how to find tenants and how to ensure that the tenants you find are the good ones.

Happy Investing!

Neil Uttamsingh

ps: I am an experienced real estate investor and a Licensed Realtor.  I help people like you purchase their first rental property everyday.  If you are a new or experienced real estate investors and are looking to buy a rental property, send me an email at NEIL@FIRSTRENTALPROPERTY.COM and I will help you get started!

pps: If you live in the Toronto area, consider attending my FREE monthly real estate workshops titled Landlord Bootcamp For Beginners.

 

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New Years Resolutions Were Made To Be Broken

Posted by neil on January 03, 2013
General / No Comments

Hi Friend,

I hope you are doing well.

The bottom line is that I want to help you purchase your first rental property.

The reality is that most people who ‘want’ to buy real estate as an investment, never end up doing so.

Yesterday I wrote about New Year’s resolutions for Real Estate Investors.  If you missed the post, check it out here:

Article Number 1

Top New Year’s Resolutions For Real Estate Investors

I was not the only one who was writing about New Year’s resolutions for real estate investors.  When I ‘Googled’, “new years resolutions for real estate investors” this is what I found…

5 Real Estate New Year’s Resolutions You Should Make

This article was straight forward and well written.  In the article, the author talks about resolving to think of a property as a ‘product’.  An interesting point.  The article is worth checking out.

Article Number 2

7 New Year’s Resolutions For Successful Real Estate Investors

The first point addressed in this article by author Paul Esajian was bang on.  Paul said that real estate investors need to “keep eyes on the big picture”.  Far too often experienced real estate investors lose sight of why they are investing.  This is a dangerous thing because when you are not focused on the end goal, it can cause you to make short term decisions that do not benefit you.  (i.e.: sell a property)

Other Articles

There were a LOT more articles that came up when I ‘Googled’ the topic, “new years resolutions for real estate investors“, however, the above 2 were the most relevant to share.

So What Now?

Everyone talks about new years resolutions, but the vast majority of people never follow through on them.  If you are a new real estate investor and you are interested in purchasing your first rental property, and you have not done so yet, you need to get to work.

I suggested this in a previous article and I will suggest it again.  If you are new to investing and you live in the Toronto Area, consider attending one of my FREE real estate workshops.  The workshops are called, “Landlord Bootcamp For Beginners“, and they are designed to help educate the new real estate investor.  Click HERE to register for an upcoming workshop.

In Summary

Lots of people make new years resolutions.  Most people break them.  Don’t be someone who makes a resolution to buy a rental property in 2013 and does not follow through.  Use all of the resources at your disposal to help educate yourself further so that you can take action and buy your first rental property!

Happy Investing!

Neil Uttamsingh

ps: I am an experienced real estate investor and Licensed Realtor.  I help people like you everyday purchase their first rental property.  If you need help with purchasing your first rental property, send me an email at NEIL@FIRSTRENTALPROPERTY.COM and I will help you get started…

 

 

 

 

 

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Top New Years Resolutions For Real Estate Investors

Posted by neil on January 02, 2013
General / 1 Comment

Hi Friend,

I hope you are doing well.

With the start of a New Year upon us, many people have no doubt made some New Year’s resolutions.

I have never really put much thought into what some of the Top New Years Resolutions are, however, I am wondering if you have…

In my mind there is only one New Years resolution that new real estate investors should have.

If you are a new real estate investor, and you want to purchase your first rental property, then your singular new year’s resolution should be to:

Purchase A Rental Property

 Will You Pass or Fail?

Why do New Year’s Resolutions Fail?  Depending upon who you ask, there are a variety of reasons as to why New Year’s resolutions fail.  One of the biggest reasons as to why I believe New Year’s resolutions fail is because people do not have a clear and specific plan as to how they are going to fulfill their resolution.

Failure Is Not An Option

Since most people fail with fulfilling their new year’s resolution, you have to ensure that you do not fall into this category.  The best way to guarantee that you will be successful in achieving your New Year’s resolution is by creating a plan of action.

As a new real estate investor, if you are not currently doing the following things, you must start immediately.  You need to:

1) Attend Real Estate Workshops or Meetings where you can learn from experienced real estate investors

You are only going to learn about real estate investing from people who have done it already. As such, you need to start hanging out with real estate investors if you are not already.  There is so much that you can learn from them.  Most important:  Stop taking advice from people who do not own any rental properties.

2) Obtain a referral for a Mortgage Specialist or Mortgage Broker

You need to work with someone who can obtain financing for your rental properties.  Mortgage Brokers, Mortgage Specialists and Lenders who work with real estate investors are the best people to obtain your financing from.  They understand how to finance a rental property.  The advice and knowledge that you will get from them will be invaluable.

3) Obtain a referral for a Realtor who understands rental properties and how to work with real estate investors.

Working with a Realtor who understand rental properties and who understands how real estate investors operate is key.  You need to work with someone who knows how to find a good deal and you need to work with someone who knows how to analyze a property.  You can obtain this referral from any current real estate investor that you meet at one of the real estate workshops that you are attending.

4) Set Deadlines

Nothing gets done if there are no deadlines.  Make sure that you set deadlines for all of the above mentioned activities.  If you do not, the weeks and months will drag on, and you will not end up taking any action.  Deadlines are important.  Without them, you will not move forward.

5) Be Accountable To Someone

Share your goals, ideas and dreams of buying a rental property with someone that is close to you.  Tell them all about your plans of owning and managing a rental property.  By sharing this with them, it will hold you accountable to doing it.  You will not want to let them down, by not following through on your word.  It is also a smart idea to have them check in on you.  Ask them to periodically check on your progress.  Ask them to help hold you accountable.  This will be a huge help in pushing you into action.

Happy Investing!

Neil Uttamsingh

ps: I am an experienced real estate investor and licensed Realtor.  I help people like you everyday purchase their first rental property.  If you are interested in purchasing your first rental property, send me an email at NEIL@FIRSTRENTALPROPERTY.COM and I will help you get started.

pps: If you live in the Toronto Area, consider attending my FREE monthly real estate workshop called, Landlord Bootcamp For Beginners.

To read what new real estate investors are saying about the workshop, click HERE.

 

 

 

 

 

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