I don’t even know where to begin…

The experience I gained from my court hearing this past Thursday was incredible.

It was probably the most insightful day I have had as a real estate investor during my 6 years of investing.

To let you know how it went, I technically ‘won’ my case.  ‘Won’ is a relative term here, so don’t get too excited.  There is a lot more that still needs to play out, so stay tuned!

Before I jump into Part Two of this series, I would like to review the key learning point I shared with you from How to Evict a Tenant – Part One.

In Part One, I mentioned the following:

If the time ever comes where you are in the process of evicting a tenant, and you are attending a court hearing, you must over prepare. Do your homework, and take with you to the hearing all of the documents and evidence that you feel will help you to prove your point in court and help you to win your case.

Here is an example of how my over preparation helped me to ‘win’ my case on Thursday.

By nature, I am a very diligent person.  I am organized and I keep records.  As a real estate investor, these skills are paramount.  You need to keep information in order.  I am specifically referring to paperwork.

When you buy your first rental property, you may be surprised to see how much paperwork is involved with the property.  The constant flow of paperwork does not stop once you have purchased the property.  Rather, you will continue to receive new paperwork concerning the property on a continual basis.  This paperwork can come in a number of different forms.  Here is a short list of some of the different types  of paperwork that you will have to collect, sort and manage on a continual basis:

• Mortgage Documents

This is your original mortgage agreement that you get when you obtain financing on your rental property.  This is very important to keep as you may have to present this document in the future.  You never know when you might need to refer to it again, so keep it in a safe place.  I personally have a filing cabinet where I keep all of my mortgage documents.  That way, if I need to access them in a hurry, I know exactly where to find them!

• Mortgage Statements

This is a a periodic statement that you recieve from your lender.  Your lender being of course the bank or mortgage company that you hold your mortgage with.  This document gives you a snapshot of all of the ‘vital signs’ of the mortgage.  Things such as mortgage balance, interest rate, and remaining amortization are just a few things listed on this statement.

• Property Tax Bill

This is a record from your local municipality pertaining to the taxes that you owe on the rental property.  If you purchase more than one rental property, you will no doubt have to present your property tax bill for each property every time you obtain financing for a subsequent property.  This document is very important.  By taking a close look at this document, the reader can tell if you have been paying your property taxes or not.  If you have not, you better pay them fast, otherwise you can be at risk of losing your rental property.

• Utility Bills

Even when a tenant pays all utilities on a rental property, there will still be some utility bills that you may need to pay yourself, and that you need to keep track of.  I have a constant flow of utility bills that come in each month that I need to keep track of and sort.  This may sound overwhelming.  It’s not.

• Property Management Bills

Do you have property management on the unit?  If so, you will need to keep track of what you owe them for the monthly property management fee.  In addition, you will also have to keep track of any repairs and maintenance that they have done on the property.  The property manager will have to issue you invoices that you will have to pay, and then file for your records.

Before I get off topic too much, let me come full circle and talk about how keeping certain documents in order can help you during the eviction process.

The documents that you will have to keep in order are the documents that are directly related to the eviction of your tenant.  These documents will of course be the ones in relation to the legal proceeding that you are in the middle of.

No matter what state, province, territory or country you live in, the process of evicting a tenant can be very different.  However, in many of these jurisdictions, the is a set process in place that you must follow.  With this process there are also prescribed documents that you need to either file with your local authorities, or that you need to have a good record of.

My success during my hearing this past Thursday was a direct result of me being organized and having all of the required documents on hand.

Despite the fact that these documents were not filed properly the first time with the authorities.  However, that is a story for another day, and a story that I am not going to blog about.  If you are interested to know, contact me offline and I will share the story with you.

I was asked by the ruling authority at the hearing to present key documents.  I was able to present these documents without hesitation, because I WAS PREPARED AND I BROUGHT THEM WITH ME…

I can’t stress this point enough.

The point is:

You need to over prepare AND have all of your necessary documents in order when you are in the process of evicting a tenant.

In closing, I am going to leave you with another key point.

I share this key point with you in the hope that it will help you one day when you yourself are going through the eviction process.

This key point is to have an Entourage with you.  Have an entourage with you either at your court hearing or have them close by.   Have them close enough to you so that you can call them or e-mail them when you need them the most!

In Part Three of this post, I will explain the importance of your Entourage and how support from this group can help calm your nerves, and ultimately help you “win” your hearing!

Keep Learning,

Neil Uttamsingh

ps: If you are a new real estate investor, consider following my blog.  If you do, you will gain knowledge and confidence that will help you to purchase your first rental property.

Hi Folks,

This could very well be the shortest blog post that I have done in over a year.  In fact, it is probably the shortest post I have ever done!

However, although it is a very short post, this series of post which I have called, “How to Evict a Tenant” may provide the greatest value to you if you are a new real estate investor.

Here is what is going on:

• I have a court hearing today, as I am in the process of evicting one of my tenants.
• I am well prepared for the hearing, however, I am also prepared to expect the unexpected.
• I will elaborate on what I mean by, ‘expect the unexpected’ in Part Two of this series.

In closing, here is some extremely valuable advice for new real estate investors, who are looking to buy their first rental property.

If the time ever comes where you are in the process of evicting a tenant, and you are attending a court hearing, you must over prepare. Do your homework, and take with you to the hearing all of the documents and evidence that you feel will help you to prove your point in court and help you to win your case.

Until Next Time,

Neil Uttamsingh

ps: Sign up to my blog so you can obtain the necessary knowledge and confidence to help you buy your first rental property.

Ten minutes is all I need.  This is the about the time it will take many of you to read this article.

This article is especially directed towards the aspiring real estate investors out there.

If you are new to the real estate investing world, and you are currently researching how to buy your first rental property, you will find this article very beneficial.

Throughout your research, you may have spoken to or read about the importance of treating your real estate investing like a business.

This is probably some of the best advice you will ever receive on the topic of real estate investing, and here is why:

• Real Estate Investing Is A Business

You may not own any properties right now.  Some of you may own one property, and some of you may own multiple.

Whether you own one or 100 properties, you are in business, and you have to treat your real estate like a business.

• This Is Easier Said Than Done

This is definitely easier said than done.

The difficulty that most people have with running their real estate investing like a business, is that they don’t know HOW businesses run.

People who invest in real estate come from all different walks of life.

I have met people who own rental properties, from all different types of professions.

These professions have included Miners, Truck Drivers, Teachers, Dentists, Lawyers, Contractors, IT Professionals, and the list goes on…

No matter what profession a person is in, when you tell them that they need to run their real estate investing like a business, they may have absolutely NO idea what this means.

If you fall into this category, that is okay.  As humans, we do not automatically have a business sense.

It has been my experience that most people that have a keen business sense have either grown up surrounded by business and business owners, or they have developed this keen business sense through many years of studying business and entrepreneurship.

• Here are some things you absolutely NEED to know

If you don’t know anything about business and how businesses work, here are some things that you absolutely need to know.

1) The most important thing for a business is it’s cash flow

The number one indicator of the strength and longevity of a business, is through it’s cash flow.  Specifically, the more cash flow that a business produces, the stronger it is, generally speaking.

If you are a real estate investor, you have to ensure that your business…your rental properties are producing cash flow.

2)  Businesses have to manage their operating expenses

Every business has expenses.  Also, every business has revenues.

Generally speaking, the revenues being generated in a business should always be greater than the expenses of the business.

If the revenues of a business and the expenses of a business at the same level for a long period of time, this can be problematic.

• Here is an example to help illustrate

You are a real estate investor and you own one rental property.

The monthly rent that you collect from the tenant is $1000/month.

The rent is the total revenue that you are collecting off of the property each month.

You have a mortgage on this property, and your monthly obligation for the mortgage is $800/month.

You also have to pay property taxes on the property.  You own $200/month in property taxes.

Therefore, your total expenses owed on the property are $800 + $200, which equals of course $1000/month.

Therefore, in this example, you have a mothly rental revenue of $1000/month and a monthly expense of $1000/month.

As you can see, the expenses on this property of $1000/month cancel out the revenues being generated each month.

This is what is called a ‘break even property’.

• Why ‘break even properties’ can be a problem

Break even properties do not generate any monthly cash flow as evidenced above.

If this property experiences any vacancies or if repairs and maintenance are required on the property, there is no cash flow being generated to pay for these costly expenses.

• Working Capital, and the importance of a Working Capital Injection

Businesses that are experiencing challenges with their day to day operation can often benefit from a working capital injection.

• What is working capital?

Working capital is essentially money.  Let me rephrase that.  Working capital IS money.  It can be injected into a business through a variety of different methods.  It can be in the form of a loan, a third party can inject the funds into the business, or the owner herself can inject these funds into the business.

The main purpose of a working capital injection is to aid the business with their day to day operations.

If we use the real estate investing example above, a working capital injection of $5000 could help the real estate investor to pay for any vacancies and repairs that come up on their property.  This working capital injection would be absolutely crucial to help the real estate business to continue on, as no cash flow is being produced on a monthly basis in the above example.  If you recall, the monthly rent of $1000/month is cancelled out each month by the $1000/month total expenses (mortgage and property taxes.)

• Working Capital Does Not Help Out a Sinking Business

It may seem to you at this point that a working capital injection is the ultimate solution for a struggling business.  This is not the case.

In the long run, a working capital injection can only be beneficial to the business, if the working capital (a loan) can be repaid.

If the working capital (loan) cannot be repaid, a business will continue to need further working capital injections, especially if they are still struggling with their daily operating expenses.

• How working capital is repaid

Ultimately, working capital is repaid through cash flow generated from a business.  Let’s look again at the real estate investing example outlined above.

Let’s assume that you as a real estate investor needed the $5000 working capital injection mentioned above in order to pay for vacancies and maintenance on the property.

Let’s also assume that the monthly revenue (rent) of $1000/month and the monthly expenses of $1000/month are unchanged.

This ultimately means that there are $0 (zero dollars) a month that are being generated in order to repay the working capital injection.  This is not a good thing.

This is not a good thing because the debt level of the business (your real estate investing business) is going to continue to to rise.

Here is how working capital SHOULD be repaid

As mentioned earlier, working capital should be repaid from the cash flow generated from a business.

In order to repay the working capital injection in the real estate investing example, the monthly revenue and the monthly expenses cannot be equal.  Either the monthly revenues need to increase, or the monthly expenses need to decrease.  Here is what I mean…

In our real estate investing example, we need the following to occur.

Let’s assume that we were able to re-negotiate the interest rate on our mortgage on the rental property.  Through negotiation, we were able to get a lower rate.  As such, our payments on the mortgage have decreased. Now our monthly mortgage payment is $700/month, instead of the previous $800/month.  Our property taxes have remained consistent at $200/month.

Now if you add up our expenses, we have a $700/month mortgage payment and a $200/month property tax payment which equals…a total monthly obligation of $900.

If we assume that our monthly rent has remained consistent at $1000/month, we now have a positive monthly cash flow on this property of $100.  This is because $1000 – $900 = $100

Therefore, if no other vacancies or unexpected expenses are incurred, it will take us a little over 4 years to pay back the working capital injection (loan).  I get this number by dividing the $5000 loan by $100 cash flow per month.  If you divide these numbers (5000 /100) you get … 4.17, which is like I mentioned, a little over 4 years.

So what do you think?

So what do you think about working capital?  Is working capital a necessary thing to have in order to ensure that a business survives?  How would a business survive without working capital injections?  Please leave me your thoughts.

Real estate investing becomes WAY easier when you treat your investments like a business.

Best Regards,

Neil Uttamsingh

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If you are a regular follower of mine, you might be wondering where I have been for the past little while.  I would like to send out a big thank you to all of you who contacted me to see where I had gone.

First of all, I would like you to know that I am fine.  I couldn’t be better!

The reason for my absence from the blogosphere is a result of dealing with matters that arise when you are a real estate investor.

You will have to pardon my French, but I am currently getting my a$$ handed to myself.

I am in the eviction process with tenants that live in one of my properties.

So far I have lost about $4000 in rents owed and I am no where near out of the woods yet.

When all is said and done, I will be taking a financial hit on this property.

Unless things dramatically turn around and I am able to recover my rents from the tenant, which I highly doubt at this point, money will be lost on this property.

As such, it is going to take me a number of years to recover this loss on this property.  That is of course if I remain invested in this property without selling it prematurely, due to the poor performance.

If you are a new real estate investor wanting to purchase your first rental property, you can’t be afraid of things like this.  You can’t be afraid of things like this because if you stay invested for the long term, you will always, always, always win the game.  Here is what I mean…

Although I am currently taking a beating on this one property, I realize the following:

It is part of the business

As a real estate investor, you are going to have ups and downs.  If you are invested in real estate for the long term, you more than likely will have non-paying tenants.  You will lose money when they don’t pay you.  However, here is the cool part (if there is even a cool part about non-payment of rent)…

If you have owned multiple properties for a number of years.  These properties have more than likely appreciated in value and you have definitely had mortgage pay down on the properties.

Therefore, if you compare your total Return on Investment for your portfolio compared to your money lost on one property where you are not getting paid rent, chances are you are still coming out on top, and making a positive return on your investment.

This is the case in my situation.  The strength of my portfolio and the overall return on investment far outweighs the loss I am taking on the one property where the tenants are not paying.  However, it is important that you never underestimate how significant a financial loss can be.  This is important because you are responsible to your joint venture partners.

Your Joint Venture Partners

Many new real estate investors may have a joint venture partner on their first renal property.  If this is the case, and you take a financial loss on the property due to non payment of rent, both parties are losing money.  With the property that I mentioned above, I do not have a joint venture partner.  As such, the financial loss I am taking is entirely mine.  I am fine with that.  However, if I did have a joint venture partner on this property, we would be sharing in the financial loss.  Further, if this was the only property that we held together as partners, the performance of our investment would not be good.

Rather, if I owned multiple properties with a single joint venture partner, and we took a hit on one of the properties with non payment of rent occurring, chances are is that collectively we would be much better off, because our other properties would be performing well, with regular mortgage pay down and steady appreciation.

Nobody wants to lose money

Nobody want to lose money, especially a joint venture partner whose money you have invested.

You have to be aware

You have to be aware of the fact that you CAN lose money when you are invested in real estate.  This happens and it probably will happen to you if you are invested long enough.  Like I said earlier, new investors cannot let this scare them away from investing.  With real estate investing, you realize the benefits many years down the road.  Non payment of rent is a bump in the road.  You cannot let this bump stop you from realizing your long term goals as a real estate investor.

How to overcome the bump in the road

Here is how I overcame this non-payment drama that I am dealing with.  Tax time is slowly approaching in Canada.  As such, all of the banks and mortgage companies start to mail out to their customers their mortgage statements.

Today I was feeling a bit frustrated about the non payment issue.  I made myself feel better about the situation purely by accident.  This happened when I opened up the envelopes sent to me by the mortgage companies and took a look at a number of the mortgage statements for my properties.

When I saw how much my mortgages had been paid down over the past year, and when I reflected on the total appreciation of my portfolio, I felt a lot better.  The non payment of rent issue really did then feel like just a small tiny little bump in the road.

Best Regards,

Neil Uttamsingh

ps: If you want to buy your first rental property, follow my blog so you can gain knowledge and confidence.

Who talked you out of jumping in those puddles when you were little?

Your buddy probably did…

Who held your hand and warned you not to run onto the road?

Your buddy probably did…

Think back to your school days.  When you were a young student in elementary school or junior school, did you ever go on any field trips with your class?

Did you ever go for walks with your classmates outside of the school grounds?  Depending on where you attended school, maybe you went for a nature walk or a walk around the block…

Whatever the case was, whenever you would embark upon these journeys and leave the school grounds, to keep you safe, your teacher matched you up with a ‘buddy’.

Your buddy was someone that you would stick close to.  Both you and your buddy knew that you were each responsible for one another.  If something bad were to happen your buddy, you would be in trouble, as you were held accountable for the safety of your buddy.  After all, it was your duty to make sure that your buddy was okay at all times.

Your teacher assigned you a buddy so that you could protect one another.  Your mission was to make sure that your buddy did not get into any dangerous situations.

If you tried to wonder off the path you were walking along with your buddy and your classmates, your buddy was there to pull you back in line.

• The buddy system works the same way with real estate investing.

As a new real estate investor, you will embark upon a journey into the unknown, when you are researching how to buy your first rental property.  After you purchase your first rental property, you will especially be entering into the unknown, as you will probably have no experience as a real estate investor.    There will be times in which you will want to quit and deviate from the real estate investing path that you have chosen.

The role of the real estate buddy is to pull you back on track when you are losing focus.  Just like your buddy from grade school, your real estate buddy is there to protect you.

Your buddy from grade school stopped you from jumping into puddles.  Your real estate investing buddy will stop you from jumping ship from real estate investing when the going gets tough.

Your real estate buddy should be someone that is like minded, and who also invests in real estate.  Ideally, your real estate buddy should be more knowledgeable than you regarding real estate investing.  That way when the going gets tough for you, your buddy can offer you advice and proper guidance.

• Without question, all new real estate investors need a real estate buddy.

Whenever you are about to make a financial blunder or make a risky move with respect to your real estate investing business, your real estate buddy will be there to make sure that you don’t make a mistake.

After all, your real estate buddy is there to keep you in line!
Best Regards,

Neil Uttamsingh

ps: If you would like to learn how to become a real estate investor,  subscribe to my blog today!

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

Real estate investing is no different than grade school.  During your school days there were always those students that learned very quickly, as well as those that picked up on concepts a lot slower.

The same difference in learning exists with real estate investors.

Just because some real estate investors learn faster than others does not mean that they are any smarter.

More appropriately, the speed at which a real estate investor learns is directly related to two variables.

These variables are:

1) Volume

2) Market

Volume

Let’s look at the following example.

2 real estate investors are new to the world of real estate, and they buy their first rental properties on the very same day.

One real estate investor goes on to buy a total of 5 properties during the course of 5 years.

The other real estate investor does not buy any more properties, other than the first purchase.

The investor that bought more properties, will more than likely become a lot more knowledgeable than the investor holding one property.

This is due to volume.

When you are an investor holding multiple properties, you are exposed to multiple issues.

In this case, you would have 5 different tenants to deal with at any given time.  You will also have 5 furnaces to maintain, and 5 air conditioner units to maintain.

Overall, you will be responsible to carry out any repairs and maintenance as well as property management on 5 different units.

Due to the higher volume of activity, this investor will learn more and become more knowledgeable in general than the investor that holds one property.

Therefore, if you want to become a more knowledgeable real estate investor, increase the amount of properties you own and manage.

Market
The second variable that effects the knowledge level of a real estate investor is the market that they invest in.

In my experience, real estate investors learn who own properties in a  high income neighbourhood, learn at a slower pace than those investors that own properties in a low income area.

It has been my experience that tenants that occupy rental properties in high income neighbourhoods generally are more independent than tenants in low income neighbourhoods.

What I mean by this is that if you own a rental property with higher income earning tenants in a nice neighbourhood, you will probably not be dealing with any non payment of rent issues, or any evictions due to non payment.

This of course is not always the case, as any tenant, no matter what neighbourhood they live in can all of a sudden not pay rent.

However, generally speaking, higher income earning tenatns are more independent.  As a result, an investors that owns in this type of neighbourhood will deal with very few tenant issues.
As you continually learn more about real estate investing, keep in mind the importance of:

volume and market

If you can get more experience dealing with multiple tenants, and you can get experience owning and managing rental properties in a wide range of markets, you will be well on your way to becoming a well rounded and knowledgeable real estate investor.

Best Regards,
Neil Uttamsingh

ps: If you are interested in real estate and want to learn how to buy a rental property, subscribe to my blog today!

[youtube]http://www.youtube.com/watch?v=_wHGXqcxcw8[/youtube]

The greatest basketball player to every play the game once said, ” I have looked at every experience I have had either positive or negative and I have seen all those experiences as being positive.”  This legendary player was none other than the great Michael Jordan.

As a new real estate investor, you will have many positive and negative experiences during your real estate investing career.

The secret to lasting as a real estate investor over the long run, is to ignore the negative experiences and focus on the positive ones.  If you dwell on the negative experiences, you will have a horrible time as a real estate investor, and chances are that you will quit sooner or later.

Real estate investors are often criticized by others in the following ways:

First, people will tell you that real estate investing is too risky.  They may make you feel guilty by saying to you that you are taking on too much risk, or that ‘the bottom’ will fall out of the real estate market soon.

Second, another form of criticism that real estate investors face is from people who say that “real estate is not a good investment.”

I always love hearing people tell me this.  I guess it is because in my mind I know that they are SO wrong.  However, in their mind, they think that they are SO right.

It is humorous.  I laugh to myself when I engage in conversations with people that are trying to convince me that real estate is not a good investment, and that the stock market or financial markets are a better investment.

To survive as a real estate investor, you have to learn how to both ignore the negative criticism that you encounter AND use this criticism to fuel you.

There will also be negative people in this world, that will have something bad to say about real estate, or that will be jealous of your accomplishments.  These people will try to bring your spirits down.  You cannot let them.  You need to learn the art of ignoring these people.  Once you become good at ignoring these people, it really becomes quite fun.  (The act of ignoring)

Further, you have to be able to learn how to use negative criticism as fuel.  This fuel can be used to motivate you.

This is easier said than done.  However, once you figure out how to harness criticism and turn it into ‘fuel’ that motivates you, you will be an unstoppable real estate investor, just like Brian Persaud.

Best Regards,
Neil Uttamsingh

ps: If you liked this post and the video, and want to learn how to become a real estate investor, subscribe to my blog today!

[youtube]http://www.youtube.com/watch?v=9bVqJQN2B4A[/youtube]

If you are a student of real estate investing, you will hear the term “Real Estate Empire” a lot.

Successful real estate investors who have managed to build their own real estate empires have often done so by buying properties in the same location.  When I refer to location, I am referring to a specific City or Town.

This is a smart strategy as it helps to simplify your life.

For example, if you manage to assemble a portfolio of 10 rental properties in the same city, you will more than likely have an easier time managing this portfolio than if you owned 10 rental properties in 10 different cities.

If you own properties in 10 different cities, your life is going to be more complicated for sure.

Not only will things be more complicated for you, you will also need to have a lot more specialized knowledge in order to succeed.  Here is what I mean…

For instance, you will need to know the market rent and market values of all 10 of  these cities, as opposed to just 1 city.  You will have to stay up to date with all of the market information for all 10 cities.  As things change, and as market rents increase or decrease, you better be up to date on what the rents have changed to.

After all, if you don’t know the market rents, how do you know if you are renting out your property for the right price?  If you don’t know the accurate market rent, you could very well be renting your property out for $200 or more less per month than what you should be renting it for.

Also, if you do not know the market value of the properties, how do you know if you are buying the property for the right price?  If you don’t know the market value of the properties, you could easily overpay 20, 30, 40 thousand or more for the property than what you should be paying.

On top of it, if you are having your properties professionally managed, and if they are all in cities far apart, you may need to know and deal with up to 10 different property managers!  That is a large number of property managers to build and maintain relationships with.

Try to keep things simple by building your real estate empire in the same location.

Years down the road, when you look back upon your efforts, you will thank yourself.

Best Regards,

Neil Uttamsingh

FirstRentalProperty.com

ps: If you liked this video, I encourage you to subscribe to my blog, First Rental Property in order to watch more videos just like this one!

pps: Also, don’t forget….If you need help buying your first rental property check out REIN Live Events and REIN Home Study Courses.

[youtube]http://www.youtube.com/watch?v=J6dD3vHoohA[/youtube]

Providing value to other people is the quickest way to becoming a better real estate investor.

Very few people understand this concept and even fewer people put it into practice.

When you take the focus off of yourself, and put the focus on others, good things will start to happen for you.

Find ways of helping other people before you help yourself.

This can be done by taking the time to make referrals back to your Realtor, Property Manager and Mortgage Broker.

Treat them with respect.

When you do this, you will be amazed at the effect this has.

You will be treated with respect in return, and you will be well liked.

As a result, if you are ever in a time of need down the road, and need to leverage on some of your real estate team members, they will be there to support you, as you had supported them in the past.

Providing Value To Others is a difficult concept to explain properly.  Only by practicing this concept do you begin to see the importance of it.

Try doing this for a while.  Provide value to others that is.  Expect nothing in return…just give back to others.

You will be pleasantly surprised to see how you are received as a real estate investor by everyone you interact with.

The value of your ‘stock’ will rise.  People will begin to see you in a new light.

Please now view my video which explains the concept of Providing Value to Others.

Best Regards,

Neil Uttamsingh

ps: If you would like to watch more videos like this one, follow my blog and subscribe to First Rental Property today!

[youtube]http://www.youtube.com/watch?v=we0EFK0_DZI[/youtube]

New Real Estate Investors make a certain mistake over and over.  I have no idea why they keep on making this same mistake.  I can’t explain it.

What I can do is identify it, and offer recommendations as to how to avoid making it.

The mistake I see new investors make is:

Failing to get second opinions.

Let’s pretend that your car needs a tune up.

You take your car into your local auto body shop to get a quote on how much the work on your car is going to cost.

The manager of the auto shop quotes you a price.  You don’t know if the price is fair or not, given that you know nothing about cars.

What do you do?

Do you blindly accept the price?

Or do you seek out another quote before getting the work done?

I believe most people would answer by saying that they would get another quote.

I mean, after all, who would pay a price for something not knowing if that price was fair or not…right?

Well, dear real estate investors…

You will be surprised how often this happens in the real estate investing arena.  Specifically with new real estate investors.

Here are 3 Dumb Mistakes New Real Estate Investors Make

ONE

Picking the wrong neighbourhood

As a new real estate investor, you have to do your due dilligence in picking the right neighbourhood that you will invest in.  Being new to investing, you may know nothing about the neighbourhood that you are about to invest in.  If this is the case, you are probably learning from and taking the advice of a more experienced real estate investor or Realtor that knows that area well.

This is all fine and dandy but…

As a new real estate investor, you have to go one step further, and get a second opinion on the neighbourhood from someone else.  This second opinion can come from another Realtor or another experienced investor.  The opinion has to come from someone who knows that area well.

Why do you need a second opinion on the neighbourhood?

You need a second opinion because there may be something about the neighbourhood that the Realtor you are working with or the investor that is helping you does not know.

When I purchased one rental property, I bought it in a neighbourhood that I had heard from a number of people was a good place to buy.  Based on this information, I chose this neighbourhood as the place that I was going to buy.  When I found the particular property that I was going to buy, I bought that property, WITHOUT getting a second opinion from another Realtor or investor.

Little did I know that I bought the property a couple of streets over from a section of the neighbourhood that many investors avoided.  This smaller area, was avoided by a lot of investors because the tenant profile was a little bit rough and the properties were run down.

Fortunately, the property that I ended up purchasing was a good one, and I have had no problems with it thus far.

However, if I had done some more due dilliigence and asked for a second opinion of the neighbourhood, there is a chance that I would have passed on this property, knowing that the neighbouring streets had a rough tenants profile.

TWO

Paying the wrong price for a property

I have spoken to many real estate investors who have demonstrated great excitement when talking about buying their first rental property.

However, it is disturbing to hear how people are over paying for their properties.

Why is this happening?

I think it has a lot to do with the emotions that investors are feeling.  They are new to the game, and excited to get a deal done.  When they are in the moment, they don’t take the time to think if they are over paying or not….because they just want to own something.

When you are buying your first rental property, you need to take a step back and get a second opinion on the price that you are paying for the property.

You can get a second opinion on this by asking your Realtor to see comparable properties that sold, or you can ask an experienced investor that owns properties in that area how much properties are going for.

Further, you should never make your ultimate decision on how much you are going to pay for a property based on one person’s opinion. After all, they may not have your best interest at heart…

I have heard of cases where investors have purchased rental property using a Realtor, and without even looking at any comparable sales.

If you chose to buy properties like this, how do you know if you paid the right price???

You have just overpaid $20,000 for the property.

THREE

Overpaying for renovations

Once a real estate investor has purchased their first rental property, they may be overly excited to renovate the property.

A lot of the time real estate investors will buy properties that need some work done to them.  Perhaps the home needs some new flooring and a coat of paint.  Or maybe the home needs to have it’s furnace replaced, as the current one is a bit old. Or maybe all it needs is some new tiles in the bathroom.

Whatever the case is, new real estate investors are making mistakes when it comes to completing renovations on their first rental property.

A mistake that they are making is accepting whatever price is quoted to them by the first tradesperson they talk to.

For instance, if you need your floors and walls painted, you may get a quote of $6,000 dollars by a handyman that was referred to you.  Most new real estate investors accept that first quote that they get, and get the work completed based on that quote.

Very few investors, with their first property take the time to get multiple quotes from a number of handymen.

If you do this, you will be amazed at the range of pricing you will get…for the exact same work !!!

Here is a story that I will share with you, that hopefully drives home the importance of getting multiple quotes.

I was replacing the flooring in one of my renal properties.

I decided to deal with well known companies to get the job done.

I got a quote from a company who had multiple store locations in the same city.  I got a quote from one of the stores, however, I felt that the store manager that I was dealing with wasn’t telling me the truth about everything.  I just got a funny feeling from him.

As such, I decided to go to another store location of the Company in the same city.  I got a quote from this location that was 50% cheaper than the quote from the other store.  Which resulted in over $1000 of savings.

Nothing had changed regarding the quote…just the people, and store locations I was dealing with.

Had I just blindly gone with the first quote that I got, I would have been cheated.

Don’t make dumb mistakes.  Get second opinions on everything!

Best Regards,

Neil Uttamsingh

ps: Let other people make dumb mistakes, not you!  Be Smart and Subscribe to First Rental Property today!

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