First Rental Property

Hi There,

A lot of people want to make BIG money from investing in real estate.

I recently received a question from a young, aspiring real estate investor.  In his email, the young man asked me for advice on how to get started as a new real estate investor.

I am going to share the email that he sent me along with my response to his email.  The answer that I provide to his email will be very helpful to those of you who are interested in buying your first rental property.

Here is the email that he sent me:

Neil,

Any real estate investor with experience in managing tenants knows that non-payment of rent is an issue that has to be dealt with from time to time.

If you are thinking about buying your first rental property, good for you!

Owning a rental property is a lot of hard work, and the experience may not be as glamorous as what you see on TV. However, if you have the discipline and stamina to deal with the issues that come up, you will be well on your way to success.

As a new real estate investor first starting out, you should know that at one point in time, you will encounter problems with collecting rent.

Non payment of rent can come in different forms.  Here are some of the different ways…

1) The rent is due on the 1st of the month, and your tenant is late in providing you the rent. (cash, cheque, or electronic transfer)

2) You deposit a rent cheque on the first of the month and the rent cheque bounces (is returned by the financial institution due to non sufficient funds)

3) Your tenant does not have the money to pay rent, and does not provide you with the rent money for that particular month. 

There are so many factors as to why tenants sometimes don’t pay their rent on time.  Some are real, legitimate reasons, where as other times, the reasons are not sound and in fact are very flaky.

As a new real estate investor you must know that you have to…

“Prepare For The Worst”

Meaning…

Be ready for the first time that you do not receive your rent on time from one of your tenants.  It will happen to you at some point.  The only question is when.

We all learn our lessons from different life experiences.  Some of us learn faster than others.  Whether you learn slow or fast doesn’t matter.  What matters is that  you learn, and evolve and make changes in your real estate business so that you are prepared for the next time when one of your tenants does not pay rent on time.

How to prepare for late rent payments

Get familiar with your local Landlord and Tenant Governing body.  In each City, State, Province and Country the legislation regarding how Landlords and Tenants can interact with one another differs.

Get familiar with the forms you need to serve to your tenant when non payment of rent occurs.

The point that I am trying to make is that you need to become familiar with these forms before a non payment of rent issue ever happens to you.

You need to be armed with knowledge for when you do encounter a situation in which one of your tenants is not paying their rent. You need to be comfortable with the forms, you need to be able to understand them, and be able to navigate them easily.  You need to know how to fill them out properly.  You also need to know the rules surrounding when you are allowed to submit the forms to the tenant if they are late with their rent.  You need to know how many copies you need to retain and how many copies you need to present to your Landlord and Tenant Governing body.

Practices that I have Incorporated

It has taken me over 6 years as a real estate investor to learn one very important rule. This rule is to always have printed out and on hand the necessary forms and paperwork that needs to be served to a tenant in the event that they do not pay rent on time.

I have these forms printed out and I keep them in my ‘real estate’ binder, so that I can quickly access them.

I have learned with experience that I have to do this because I have been involved in multiple situations in which rent was not paid on time.

When I look back, the longer that I waited to collect the rent that was owed, the more problems occurred as a result.

As such, I have learned from my own experience to be proactive and to be prepared.  That is why I now carry these forms with me.

I have learned to prepare for the worst.

In preparing for the worst, I am becoming a better real estate investor.

How have your experiences been with collecting late rent payments? If you do not own a rental property yet, what scares you the most about non payment of rent?  Leave your comments below.

Best Regards,

Neil Uttamsingh.

“Happy Birthday to you.  Happy Birthday to you.  Happy Birthday Dear First Rental Propertyyyyyyy.  Happy Birthday to you!”

Guess how old First Rental Property is?

One year old, as of today.

The first article that I posted to First Rental Property was on December 17th 2009.

The blog has come a long way thanks to all of it’s great readers!

The next year for First Rental Property is going to be very exciting.

Check out my video in order to find out what is in store for First Rental Property in it’s second year.

Best Regards,

Neil Uttamsingh

ps:  You will also want to check out the first five blog posts ever written for First Rental Property.  Here they are:

How To Find The Money To Buy A Rental Property

4 Crucial Tips When Selecting A Mortgage Broker

How To Become A Better Real Estate Investor

Real Estate Investors Are Liars

What Is A Transitional Area?

pps: Be a part of the excitement of First Rental Property during it’s second year.  Don’t miss out! Subscribe to the blog today!

[youtube]http://www.youtube.com/watch?v=F9WNBTfuUl0[/youtube]

Hi Everyone,

I hope you are doing well.

As you begin your real estate investing career, the people that you surround yourself with become increasingly important as time goes on.

Throughout your investing career, you will have many different experiences and will face many different obstacles.

The people that you surround yourself with will either be able to help you during these tough times, or they won’t be able to help you a all.

It becomes increasingly important that you network with purpose, because as you encounter obstacles as a real estate investor, you want to be able to reach out to people that you have met along the way that will be able to help you.

As an aspiring real estate investor, the challenges that you face will be quite different than the challenges that someone who owns 5, 6, or 7 rental properties will face.

This is why it is also very important that you are meeting and networking with new real estate investors, with varying levels of experience.

You constantly need to be adding on people to your social network.  When I say social network here, I mean it in the context of people that you know that you can reach out to at any time.  Whether it be during a time of need, or just to simply say hello.

Birds of a feather flock together

I pay attention to detail and I have noticed some similarities within real estate investment groups.  In these groups, real estate investors with similar levels of experience tend to gravitate to one another.  They gravitate to one another because they have something in common.  For example, aspiring real estate investors who have not purchased their first rental property can often be seen associating with other aspiring real estate investors.

Further, real estate investors with one rental property may feel comfortable hanging out with others who have just bought their first rental property as well.

In addition, real estate investors with multiple rental properties often enjoy the company of others that have also achieved what they have accomplished.

Real Estate investors just like the rest of the population tent to gravitate toward and feel comfortable around people that share similarities with them.

It is your responsibility to know that in order to become a better real estate investor, you cannot always hang out with people that have the same level of experience that you do.

In order to get to the next level, you have to network and hang out with real estate investors who have accomplished more than you have.

So how does one network properly?

Networking properly is really quite simple.  It is something that I have been very good at, however, it came so naturally to me that I never even realized that I was good at it.  I began to realize that I was good at it, when people started to ask me for advice on how to network.

In my opinion, here is the most important thing that you need to do when networking:

YOU NEED TO LISTEN

Many people think that networking should be an intense experience where you go out to an event where you need to power through the room and talk to every single person in the room and exchange business cards with each and every person.  To some, this may be an ideal form of networking, however to me, it is a waste of time.

If you approach networking as an opportunity to listen to what people have to say, you will find it tremendously worthwhile.

SIMPLY APPROACH PEOPLE AND ASK THEM WHAT THEY DO

Students of Dale Carnegie know that people like to talk about themselves.  The more you can master listening to others, and talking less about yourself, the more the other person will appreciate the conversation, and the more you will learn about the other person.  (I highly recommend trying this if you have not done this before — you will be very impressed with the outcome)

Be genuine.  Listen to what the other person has to say.  If you feel a good connection with this person take note.  Also, if they repulse you beyond believe, also take note.

IT IS NOT ABOUT TAKING, IT IS ABOUT GIVING

Another very important lesson that people have to learn is that you don’t enter into a networking event to take from others.  You enter into a networking event to give to others.  If you listen to what people have to say, and where appropriate you offer them help as to how they can improve their real estate business, you are providing them with real value.  You have to be genuine with your intentions.  If you cannot offer them any help, don’t.  Just listen to what they have to say, and perhaps follow up with them at a later date and time with any help that you can offer.

It is also a good idea to follow up with them at a later date, asking them to talk more about themselves.  For instance, if there was something that they had mentioned in their real estate business that you found particularly interesting, take a mental note of that.  Ask them further about this, and let them talk about it.

The bottom line is that people enjoy talking about themselves.  Allow people to talk about themselves and you in return will benefit a great deal.  You will learn a lot about them, and the other person will have appreciated the conversation the two of you had shared.

In summary, networking as a real estate investor is not that hard, you just need to focus on doing the right things.  If you approach every real estate investment group meeting with the same game plan, you will be very happy with the outcome.

To network properly you need to first listen.  Listen to what others have to say.  Let them talk.  You do not talk.  If you are talking more than they are, you are not listening.

You then need to simply ask people what they do.  Let them explain what they do, and let them tell you all about their real estate business.

Finally, never approach the activity of networking from the position that you are looking to take from others.  Always keep on the forefront of your mind that you are there to give something of value to others.  Look to help others with their real estate business.  Perhaps you can share with them the name of a good property manager, the name of a good painter, or you can share with them some of the key things that you have learned as a landlord.

Make these 3 changes to how you network, and you will notice a dramatic change in how people respond to you.

Best Regards,

Neil Uttamsingh

PS: To keep up to date with my blog, enter your e-mail address on the LEFT hand side of the blog.  To receive The First Rental Property Newsletter, enter your e-mail address on the RIGHT hand side of the blog.  In the newsletter, experienced real estate investors will share with you how they purchased their first rental property.  They will also share with you some tips and tricks in order to help you get started.

Hi Everyone,

I hope you are doing well.

Real Estate investing is an interesting thing.

There are people that become extremely successful at it, and there are also people that try it out for a bit, but end up throwing in the towel and giving up altogether.

The people that give up, do so as a result of a variety of reasons. I would argue that most of the people that give up are giving up because they are burnt out.

The stress of investing in real estate really gets to them, and they feel that their only course of action is to sell off their real estate.

Then, there are those people who think about investing in real estate, however, never end up doing so because they defeat themselves.

These people are defeating themselves in their minds, well before they have even physically started to invest in real estate.

Focusing on and speaking directly to this particular group through this blog post is very important to me.  It is very important as many of you reading this very article may fall into this group.  You may be considering investing in real estate, and buying your first rental property.

The reality is that most of the people that fall into this group, never end up getting started, and it is due in my opinion exclusively to limiting beliefs that these people hold.

Before I explain these  limiting beliefs, I would like you all to know that this article was inspired by Yaro Starak.  As I have mentioned in a previous post, Top 3 Reasons Not To Become a REIN Member, Yaro’s teachings have been instrumental to me. He has taught me pretty much everything I know about blogging through his Blog MasterMind Program.

Yaro wrote a great article recently titled, 3 Limiting Beliefs You Must Eliminate From Your Mindset.  It was this very article that inspired my blog post today.

So here we go…  Here are the:

Top 3 Limiting Beliefs of Aspiring Real Estate Investors

3) “I am not prepared to deal with midnight calls”

One thing that seems to really freak out aspiring real estate investors is the midnight call from tenants.  If you polled 100 experienced real estate investors, I bet you that at the very highest 2 or 3 investors would tell you that they ever got a call in the middle of the night from a tenant. The fear of a midnight call is what scares off wannabe real estate investors.  They are so afraid of dealing with potential tenant issues, and they think that it is normal to get calls from tenants in the middle of the night.

This is a limiting belief that prevents aspiring real estate investors from taking action.  As a successful real estate investor, you have to work in managing many different aspects of your real estate business.  Part of this involves managing the relationship you have with you tenants.  Being proactive with your tenants and dealing with tenant issues when they arise earns you respect by your tenants.  If your tenants respect you and are confident in your capabilities, even if there was an issue that came up at midnight, they would probably wait until the morning to contact you.  By the way…what do you classify a midnight issue as???

2) “I am not a handy person”

You do not need to be a handy person in order to be a successful real estate investor.  I am pretty bad myself when it comes to being handy.  At the beginning of my real estate investing career, I struggled terribly with trying to complete repairs myself on a few of my rental properties.  Once I made the realization that I did not need to be handy, and that I could outsource this work out to someone that was, I was able to grow my portfolio, and focus on buying properties as opposed to completing repairs.

The long story short here is that it doesn’t matter if you are handy or not.  To be a successful real estate investor, you need to learn how to leverage on others that have specialized knowledge in certain areas.  A Handyman is someone who has specialized knowledge in knowing how to complete repairs and do maintenance on properties.

Learn to leverage on people that are smarter than you in specific areas.  This is the secret to becoming successful as a real estate investor.

1) “Real Estate is risky”

Sure…I definitely agree with you here.  Then again, so is crossing the street.  No matter what you get involved in, regarding investments, there will always be an element of risk.  If there is a chance for a greater return on your investment, the risk will be higher.  Conversely, if you are receiving a low, predictable rate of return, the risk will be low.

Bottom line here is that some people never end up taking action because they are always afraid that the ‘market is too risky’.  In order to combat this fear, you must educate yourself with regards to the market you are choosing to invest in.  Knowing your market and the local economy is key.  If you are investing in a declining market with limited job growth, then yes I agree with you….the market here is risky.

Far too many people give up on the idea of investing in real estate simply because they can’t get over the mental block that the ‘market is too risky’.  The more you take the time to learn about real estate an the ‘risky’ markets…the more you will realize that you have to take steps in order to mitigate any potential risks.  One form of mitigation can simply be, knowing your local economy, and knowing the major employers in the area.  By knowing this, you will be able to ascertain if the local economy is prospering or not.

People that I have seen that have gone from owning one rental property to owning one or more rental properties in a short period of time have been able to do this because they have NOT allowed limiting beliefs to hold them back.

They were aware of the risks involved with investing in real estate, however, they did not let this information paralyze them from taking action.

If you can figure out that you WILL have limiting beliefs, and that it is your JOB to fight past these limiting beliefs…I am excited for you because you understand the principles of success.

…not many people do.

Best Regards,

Neil Uttamsingh

PS: Keep up to date with my blog by entering your e-mail address on the LEFT hand side of the blog.  To receive The First Rental Property Newsletter, enter your e-mail address on the RIGHT hand side of the blog.  In the newsletter, experienced real estate investors will share with you how they purchased their first rental property.  They will also share with you some tips and tricks to help you get started.