First Rental Property

What’s up Everybody?

If you are new to real estate investing, and are looking to buy your first rental property, there are many things for you to consider.

One very common question that new real estate investors ask is,

“Where should I buy my first rental property?”

I recently polled experienced real estate investors who each owned multiple rental properties.  I asked these investors if they had purchased their first rental property close by to where they live, or far away from where they live.

These investors revealed that there are generally 2 schools of thought as to where a new investor should buy their first rental property.

As you may have guessed, the results of the poll were split.  Half of the experienced investors had purchased their first rental property close by to where they lived, and the other half had purchased their first rental property far away from where they lived.

How Far is Too Far?

The furthest distance that one of the investors ended up purchasing their first rental property, ended up being thousands of kilometers away from where they lived.

Are you surprised?

If you are, don’t be…because this is not uncommon.

A number of real estate investors actually do start out with their first rental property very far away from where they live.

Why would someone purchase a rental property so far away?

Often times, people end up buying a rental property very far from where they live because of a better opportunity.  Not all cities and towns make for good places to invest.  As such, if you find yourself living in a place where there is no upside to the real estate market, it is very wise to invest in another city or town.

Once an individuals begins to research the different cities and towns in their respective country, they may find a much better opportunity to invest many kilometers (or miles) away!

The Key to Success if you buy ‘far away’

If you end up purchasing your first rental property thousands or hundreds of kilometers (or miles) away from you, you better be well organized…otherwise your investment could end up being a disaster!

The experienced investors that took my poll spoke about one very important key to success with purchasing a rental property far away from where they lived.

The key to success of the investors that purchased far away from where they lived was that they had a very good property manager, and a strong real estate team.

This variable was absolutely critical to the success of these real estate investors.

Why purchase a rental property so far away, when you can purchase close to home?

On the flip side of the coin, many real estate investors who purchase their first rental property, end up buying a rental property close to where they live.

Sometimes these investors are fortunate in that they live in, or close by to cities and towns that have great real estate markets and a very solid economic future.

As as an example, many real estate investors living in Southern Ontario in Canada, are located in a great location.  This is a great location as there are at least 10 strong cities and towns to invest in all within about an hours drive.

The disadvantage to buying close to where you live

With the good there is also the bad.

Sometimes people who end up buying a rental property close by to where they live, obsess about it too much.  This obsession is not beneficial because at the end of the day, it does the real estate investor no good.

This obsession can take on the form of… constantly driving by the rental property.

During these drive bys the real estate investor often can become too concerned about the physical appearance of the exterior of the property.  I have known real estate investors to grumble that their tenants had not cut the grass, or that they had not picked up the flyers from the front porch.

The funniest story I every heard about an obsessed landlord/real estate investor was quite scary actually.  This landlord was always so concerned about the physical upkeep of the property, that he came by one afternoon without notifying the tenants and started to sweep with a broom the outdoor porch, that was connected to the property.  The tenants came out of the house, as they heard some noise on the porch, and they saw their landlord there standing with a broom.  The funny part is that the porch wasn’t even dirty at all.  The landlord had some explaining to do…

If you own a rental property close by to where you live, there is no need to obsess about the property.  This will do you no good.

So there you have it.  There is no simple answer as to where you should buy your first rental property.

It can be close by or far from where you live.

If you do buy the property far away from where you live, please make sure that you have a very good property manager and a strong real estate team that you can rely on.

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Onward and Upwards!

Neil.

[youtube]http://www.youtube.com/watch?v=emN0qGCjtIw[/youtube]

2008 – The Year of The Investment Group

At the very end of 2007, I finally realized that my true interest in real estate was with real estate investment and not real estate sales. It was at this point that I began to start reading a lot more about real estate investing. As I continued to real more about real estate investing I began to learn how little I knew about the topic. I also discovered that there were so many real estate investors out there in the real world. I committed to myself to seek out and learn from these people.

The more I read about real estate investing, the more I kept on coming across different real estate investment groups.

Joining a real estate investment group seemed like the next logical step for me, as I found that it was very difficult for me to come across and meet real estate investors any other way.

In April 2008 I joined my first real estate investment group. I was meeting as I had never before very impressed with the first meeting as I found myself in a room full of real estate investors…approximately 500 in total.

Heading into the meeting I was a bit sceptical as to how many true real estate investors would actually be in attendance. I also had my back up, as I thought that the real estate investors meeting would just be a high powered sales pitch in order to get you to join the group and pay membership fees.

Despite having a terrible memory, I can remember that first meeting like it was yesterday. I was sitting at a round table with 5 other people. We all took turns introducing ourselves. At this time, I had one investment property. I introduced myself and described my property. By reading my About Page, you know that my first rental property was a freehold townhouse in my hometown of Oakville, Ontario.

I was amazed when I found out that everyone else sitting at the table all owned at least one rental property.

There were 3 people that I remember from my table very clearly. They each had an interesting real estate investing history.

There was one guy who owned a six-plex in a suburb east of Toronto. The building was owned by his family. He managed the property, and collected the rent. His brother helped with the management as well, and mainly looked after the repair of the building. This particular gentleman found managing the property difficult at times, but he was committed to the investment, and understood that the benefits to real estate investing are realized over time.

There was another lady who had purchased a large home in downtown Toronto as a rental property. It was a very expensive purchase, and after hearing her tell her story, her analysis of the investment property did not make any sense to me. It seemed to me, by her explanation that she was not realizing a positive cash flow with the property. It was evident to me that she had purchased the property without doing much due diligence. It was definitely an emotional purchase.

There was another lady who owned a condo in a suburb west of Toronto and another multi-unit building southwest of Toronto.

This lady was very concerned as she was trying to sell her condo, as she was not realizing a positive monthly cash flow from this property. She was trying to be a little bit cheap as well, as she was not willing to hire the services of a real estate agent, and she was trying to sell the property herself.

About 2 years after this initial meeting, bring us to today. 2 of these 3 people are still members of the real estate investment group. I have not seen the guy with the six-plex in several months, which leads me to believe that he has left the group.

Joining a real estate investment group was definitely very instrumental for me. I joined the group at a time when I was ready to learn and embrace the teachings of other real estate investors.

The most important take away that I had from joining this real estate investment group can be explained in a few sentences.

I felt that if other people were investing in real estate and were successful doing it, there was no reason that I could not do the same!

Actually, I explained that in one sentence.  A run on sentence…

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Business Life Story Part One
Business Life Story Part Two
Business Life Story Part Three
Business Life Story Part Four
Business Life Story Part Six

2006-2008

Very eager to begin my career in real estate sales, I joined a real estate brokerage in my hometown of Oakville, Ontario.  I had met with several real estate brokerages, in order to make sure that I was joining the best brokerage.  I ended up joining a particular real estate brokerage, as the owner had known my Mum for many years.  I chose this brokerage due to the personal connection.  At the end of the day, I was happy with the choice that I had made.

I lasted about one and and a half years as a real estate agent, before I threw in the towel. I had mentally checked out, and as a result, I knew it was time for me to move on.

During this time, I had made enough sales in order to sustain myself.  My eventual departure was not due to the fact that I was not making sales, rather, the departure was caused by my lack of due diligence in learning about the profession before I entered into it.

I will be the first to admit that I threw in the towel too early, and if I had stuck it out longer, I would have achieved consistent results year over year.

The reason that I ended up exiting the profession was twofold.

1)  I realized that I really liked real estate, however, it was not real estate sales that I liked.  It was real estate investment.

Also,

2)  The lack of structure that I had during my working day, and the lack of routine drove me a little bit crazy.  I felt that I was being unproductive with much of my time, and this feeling made me extremely uneasy.

It was best that I exited the profession when I did.

All was not lost during my days as a Real Estate Agent, as I made some decisions that helped to propel my real estate investing career to the next level…

Business Life Story Part One
Business Life Story Part Two
Business Life Story Part Three
Business Life Story Part Five
Business Life Story Part Six

Greetings Everyone,

I am particularly interested in the topic that I am writing about today.

Today I am going to talk about,

Financial Intelligence a.k.a. Financial IQ

It is believed that in order to be successful as a real estate investor, you have to have real estate knowledge.

This goes without saying…You definitely need knowledge.

The more knowledge you have, the better you can become as a real estate investor.

Many believe that in order to gain more knowledge with regards to real estate investing, you need to join real estate investment groups.

This is a very good strategy to take as you are able to network and learn from the experience of other real estate investors.

However, you must be aware that real estate investment groups can be a trap.

These group can be a trap for many aspiring real estate investors because they serve as a ‘crutch’. Many wannabe investors join these groups and think that just because they have joined an investment group, they are magically going to become so much smarter with respect to real estate investment, and be able to instantly make, one million dollars…

My friends, this is not true.

Being associated with a real estate investment group, does absolutely nothing for you.*

*YOU are the one who has to be in control of you destiny. As such, YOU have to be in control of increasing your  financial IQ.  No investment group will do this for you.  You have to do this yourself.

You have to take the initiative to further yourself by increasing your financial IQ independent of these investment groups.

To quote Donald Trump,

“Good investing requires financial intelligence. Billionaires are often blessed with a high financial IQ. Most of them could be considered financial geniuses. But your financial IQ is not a fixed number, and you can improve it each and every day. My financial IQ is constantly improving as I watch over my many businesses and my staff. I work hard to make sure that they remain assets, not liabilities, and you should look at your holdings in the same way”

As straight forward and common sense as this concept may seem, it is not straight forward and it is not common sense.

The reality is that many people do in fact use real estate investment groups as their real estate ‘crutch’.

Just by being a member, they think that that is sufficient action required in order to become a smarter real estate investor.

I personally came to the realization myself that I was relying too heavily upon my investment groups for Financial knowledge.  I quickly realized that I was not putting in enough of my own time in order to increase my financial intelligence.  This is a fatal error.  Once I realized this, I made a push to increase my intake of real estate related materials.

Below I have listed the two changes that I have made, in an effort to increase my financial intelligence.  I recommend that you make 2 changes as well in order to increase your financial IQ.

Here are the changes that I have made:

1) I am going to focus more of my time reading The New York Times Business and Real Estate section.  Located on this site, there is great information on what is happening both in the real estate and business world.

2) I am going to spend more time reading the blog of John Fedro, a.k.a. J-Fed. John is a fellow blogger who invests in mobile homes. This is a concept that I am interested in and want to learn more about.

In summary, I realized that I was relying too heavily on my real estate investment groups for financial intelligence.

As a result, I am making sure that I take the bulls by the horn and proactively educate myself each and everyday in order to increase my financial IQ, just like The Donald recommends.

If you are serious about increasing your financial intelligence, and you are interested in investing in real estate, I encourage you to do the same as well.

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Greetings All,

I am back with another blog post.  Sorry it has been so long.  The studying for my Canadian Securities Course is in full swing, and as predicted is taking up much of my spare time.

Regardless, I am going to keep the blog posts coming.  Once my studying is over, I will post more frequently.

Now on to business.

Today I want to talk to you about Emotional Investing and Gut Instict Investing.

My fellow real estate blogger John Fedro, a.k.a. J-Fed wrote a very good article discussing emotional investing. You can read his article here. It was posted last week on Josh Dorkin’s premiere real estate social networking site Biggerpockets.com.

Last week I was having a detailed conversation with an experienced real estate investor on this topic.  It was a good conversation as we were both in agreement on this topic.

Here is a summary of what we talked about.

Emotional Investing

As you may or may not know, emotional investing is the worst type of investing you can do. If you are emotional with real estate investing you will definitely screw up many a deal.

What does emotional investing mean?

Emotional investing essentially is when you make decisions based on your feelings, and not based on logic. When you are investing in real estate you have to ensure that you work out all of the numbers on a particular rental property, and make a decision on whether to buy the property based on these numbers.

If you find that your emotions are taking over on a particular deal, this is the time where you need to pause and take a step back. More often than not, if real estate investors make emotional decisions with regards to purchasing rental properties, they are bound to make errors.

It is commonly believed by experienced real estate investors that all emotion MUST be removed from your decision making process. I agree 100% percent with these real estate investors. This is age old advice, so I will leave the explanation at that…

However, here is where the interesting, and perhaps controversial opinion comes into play.

Sure, we all know that we need to remove our emotions from our real estate investing decisions. Fine. Done and done.

However, how many of us know that we always have to invest according to our gut feeling?

The Gut Feeling

Whenever I am making a decision, and I go against my gut feeling, I can always feel it. I always know at that particular time that I am in fact, going opposite of what my gut is telling me to do. And guess what???

My gut feeling always is correct.

I cannot recall a single time in which my gut feeling has been wrong.

With regards to real estate investment, we need to always go by our gut feeling and invest in rental properties using this strategy.

For example, you may be considering a potential rental property that you want to purchase. The numbers and your analysis may look absolutely great. The cash flow could be awesome as well. Despite all of this, you have a funny feeling, a gut feeling that you should not invest in this property.

Your gut could be telling you this for a number of reasons. Perhaps you do not feel comfortable about the location that the property is located. Also, you could be concerned about your ability to find and locate tenants. Further, you might be concerned about your reserve fund, in that you feel that you do not have sufficient cash reserves in place in order to fund the property in the event of vacancies.

If there is ‘something’ that is holding you back from moving forward on the deal, you have to pay attention to this feeling. Often times, it could be your gut instinct ‘talking’ to you.

Listen to your gut people, it is always right!

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Ladies and Gentlemen, what a great blog post I have for you to read.  It is not one of my own, rather, it is a post that I read from a fellow real estate blogger.

The blog post appeared on Josh Dorkin’s premier real estate social network, Biggerpockets.com

The author of this article was Shae Bynes of Good Faith Investing.

The article that I am talking about is called, Your Significant Other Hates Real Estate Investing – Now What?

In my books, here are the reasons that made this article so good.

1) It was a list article

A list article is an easy article to read. List articles often have a lot of bold headlines or

• bullet points

Bold headlines and bullet point when incorporated into an article, make the article easy to read, as your eyes tend to focus on the bold headlines
and

• bullet points

As a result, when someone is reading a list article, they are able to easily absorb the information in the article, because it is easy to follow.

2)  It discussed a common problem

Successful real estate blog posts often discuss a problem that people face.  These types of blog posts tend to be very popular as the problem that is discussed is experienced by many people.

3) It provided a solution

Real estate blog posts that discuss a problem are good. However, if there is also a solution provided to the problem, the post is even better. Shae’s article did in fact provide some solutions to the problem that she was discussing.

4) It promoted discussion

Good blog posts because they are well written, result in people leaving comments in the comments section. A blogger knows when they have written a particularly good blog post when there are multiple comments left by their readers.  Shae’s article had a lot of comments from the readers, meaning that her blog post definitely struck a cord with many of the regular readers.

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A few days ago, I was approached by someone who was looking to raise joint venture money. I know this person through one of my real estate networking groups. He was looking at putting together a group of investors, raise a significant amount of capital, and buy into a large real estate deal.

The guy definitely had ambition and a vision. However, there was another thing that he had, and it was not a good thing. He also had what I like to call, ‘the creep factor’.

When he was pitching the deal, he came off as very creepy. As a result, I put my guard up, and mentally blocked out everything that he was saying.

There are a handful of reasons that I found this guy to be creepy. Unfortunately, I have come across quite a number of people that have this creep factor. The creep factor often displays itself when people are trying to pitch joint venture partnerships to potential money partners.

Here are some key things that you should AVOID when pitching to a potential money partner.

1) Don’t be insincere. Be honest, and tell the truth.

Generally speaking, people are not dumb. People know when they are being lied to. As a result, when you are speaking to a potential joint venture partner about a prospective deal, be straight up, tell the truth about your analysis of the project, and don’t lie. If you do lie, most people will notice this right away, and this will ruin your credibility.

No one trusts a liar.

2) Don’t be mysterious

Some people think that it is a good strategy to be somewhat mysterious about a potenail real estate deal. For instance they might tell a potential partner, “I have something that I want to talk to you about. You can make a lot of money, but I can’t tell you what’s it about. Trust me, it is a good investment, and you should invest with me.”

There is nothing more sketchy than the statement made above. If you seem like a sketchy character, people will not want to invest with you and they will not trust you. Again, be straight up with people and get right to the point. You can tell them,

“I am a professional real estate investor. I purchase positive cash flow properties with joint venture partners in (Insert you City here). We hold the properties for X years and then we sell them. The joint venture partner provides all of the funds required to purchase the property, and I do all of the work with the property. I search for properties that meet our investing criteria. When we find the property, I am involved with the negotiation of the purchase. Once purchased, I spearhead any repairs and maintenance that needs to be completed. I search for and place tenants into the property. I also manage the ongoing relationship with the tenants. When we are ready to sell the property, I take care of this as well. At the end of the holding period, the money partner first gets back all of their initial investment. We then split the profits 50/50. Also, throughout the time that we own the property, we also split the monthly cash flow 50/50.

This explanation above is straight to the point and it tells your potential money partner, what you are all about. This description is not confusing nor does is create a sense of mystery.  If you are more straight up with people, and you tell them the truth, you will not creep them out.

My fellow REIN member, Chris Davies is very knowledgeable regarding joint ventures.  I really liked this article that he wrote.  Check it out!

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Catchy subject title, eh?

It is better than yesterday’s…I know.

Maximizing your profits with real estate investing is honestly, a very simple thing to do. However, it may not seem simple at first.

Possibly, you have heard about the concept I am about to describe in one way, shape or form. If so, fantastic. If not, no worries. I will explain the concept in detail and give you practical examples to further illustrate the concept.

The number one way in which you can maximize your profit with Real Estate is through:

The Principal of Progression

This is a very cool concept. Basically, this concept means that a house of lesser value, can be influenced by houses of greater value.

In English, this means, if you own the smallest house on a street, that is surrounded by other, bigger, nicer homes on the street, the value of your small house will be affected in an upward manner, and you will realize appreciation of this home as a result, through The Principal of Progression.

It is always a good idea to find the smallest house on a street, and buy it. However, don’t get fooled here, as you also have to be purchasing this home in an area where there is a demand for housing.

You don’t want to buy the biggest, nicest house on the street, as The Principal of Progression will not work here. Since this house is the biggest and the best already, there are no other homes in the immediate area, that will influence the upward trend in value of this home.

Here is a practical example of The Principal of Progression at work.

In one of my earlier articles, I talked about my first rental property, and all of the ‘mistakes’ that I had made with this particular purchase.

What I did not realize at the time, was that The Principal of Progression was dramatically influencing the value of this home.

This rental property of mine was a 1,400 square foot townhouse that was surrounded by semi detached and detached homes. I purchased this townhouse for $250,990 CAD straight off of the plans from the builder. The other, larger homes, surrounding my townhouse were selling for double the price. As such, there were many of these larger semi-detached and detached homes selling for $500,000 CAD.

Since my townhouse was of lesser value, but surrounded by more expensive, larger homes, it realized a healthy appreciation in price over a very short period of time. This is the principal of progression at work.

Today, I was visiting with a Condominium Builder as I am looking to trade up my principal residence. As such, when I was examining the floor plans and prices of the units available, I was only paying attention to the units of lesser value. In this particular condo project, there are units selling for 3 times the value of the least expensive units.

For example, the units that I was considering were valued at $245,000 CAD.
There are other units in the building selling today for $800,000 CAD.

There is no doubt in my mind that The Principal of Progression will be at work again here, and as a result, the units of lesser value will be worth more in a given period of time, as the higher priced units will bring up the value of the lower priced units.

When you are purchasing a home, whether it is your own home to live in or a rental property, keep in mind the principal of progression, and the effect that it can have on the value of your property.

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If you are interested in buying your first rental property and you do not have the funds that are required, you have to determine where you are going to find this money, if you want to eventually buy your first rental property.

One method of acquiring money is through finding a Joint Venture Partner.  In a classic joint venture partnership, the money partner provides all of the required capital, and the real estate expert does all of the work.  A fair trade off.

Many new investors tend to find it difficult to attract joint venture partners.  Often times new investors complain that they are having no success in finding joint venture partners.  New investors are often baffled at the ease at which experienced investors are able to secure joint venture capital.

The more experienced a real estate investor is, the more ease they have in attracting capital.

New investors should not sit on the sidelines and sulk because of this.  Rather, new investors need to study the principals that make experienced investors good at attracting partners.

My friends, it all comes down to one word:

CREDIBILITY

[youtube]http://www.youtube.com/watch?v=uAN7uRALf8M[/youtube]

People will invest in YOU if you demonstrate to them your credibility.

So what can make a new investor, who is struggling to find joint venture partners credible?

4 things can.

Here they are, in random order.

1)  Get some credentials

What makes you knowledgeable in real estate investment, other than you interest?  This is a valid question that many joint venture partners may ask you.  You need to demonstrate to your potential partners that you do have specialized knowledge in real estate investment.  This can be done by being an active member of real estate investment groups.  Many of these groups serve as tremendous information and networking centres.  Many real estate investors only become successful due to their association with these investment clubs.  Personally, my success in real estate investment has skyrocketed ever since I made the decision to join real estate investment networks.  The best Canadian real estate investment group is, The Real Estate Investment Network, REIN.

Once you are a member of a few of these investment groups, let it be known!  Put these credentials on your business cards, in your e-mail signature, and draw reference to your association within these groups when speaking to potential joint venture partners.

2)  Get published in a leading newspaper or real estate industry magazine

Increase your credibility by being published by the media.  Contact the editor of a newspaper or magazine and ask them if you can contribute to one of their upcoming editions.  Write about a topic, that people will be interested in reading about.  This topic that you chose should demonstrate that you have knowledge in real estate investment.  You can write about any topic that you want.  Remember, that you do not have to be a complete expert on this topic, you just need to know more than the general public about this topic.  If you know more than the general public, then you are coming from a position of expertise…because you know something that they do not.  You are sharing your knowledge with them. Sharing is caring.

If you are struggling to find a topic to write about, you can easily come up with a topic idea by doing the following…

3) Read at least 5 of the best selling books in the real estate industry

This point is crucially important, as this will help you to increase your knowledge.  Many of the leading minds in your industry wrote these books.  As a result, there is a wealth of knowledge in these books, and much that you can learn from them.

4)  Become a real estate speaker

Becoming a real estate speaker, can take your credibility through the roof.   Speakers generally have a noteworthy amount of knowledge on the given topic that they are speaking about.  When someone says that they are a real estate speaker, this carries a certain degree of weight and people respect this.  This shows that you are an action taker and a go getter.  Someone with knowledge, who is getting out there and sharing their own knowledge with others, who serve to benefit from this knowledge.

To demonstrate to you that I practice what I preach, as a real estate investor who is actively attracting joint venture partners, I am:

• A BRONZE Member of the Real Estate Investment Network, and co-organizer of the REIN Hamilton Mastermind Meetings
• I was featured in the October 2009 issue of The Canadian Real Estate Magazine

• My 5 favourite books on real estate investment and investing in general are:

1. 97 Tips For Canadian Real Estate Investors – Don R. Campbell
2. 51 Success Stories From Canadian Real Estate Investors – Don R. Campbell
3. Real Estate Investing in Canada: Creating Wealth With The ACRE System – Don R. Campbell
4. Investing In Rent-To-Own Property:  A Complete Guide For Canadian Real Estate Investors – Mark Loeffler
5. Rich Dad, Poor Dad – Robert Kiyosaki

• I am also a real estate video blogger, speaking in numerous short videos on YouTube.  You can check out my videos on my YouTube Channel.  My audience for these videos are novice real estate investors.

For my latest real estate speaking opportunity, I am presenting at a real estate investment conference for W & B Academy. I will be speaking alongside a Senior Market Analyst from Canada Mortgage and Housing Corporation.

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!