Hello Friend,

I hope you are doing well today.

I received one of the most important pieces of advice a few years ago from one of my real estate mentors.  I have known this real estate mentor for years, long before I ever bought my first rental property.

On the surface, this piece of advise seems very insignificant.  However, in actuality, it is extremely important advice.

Obeying this advice can ensure that you succeed as a real estate investor over the long term.  Going against this advice can result in you crashing and burning and failing very fast.

The funny thing about it (if you want to call it funny) is that obeying this advice is a lot more difficult than going against it.

Meaning that, it is human nature to want to naturally go against this advice.  Whereas, it takes significant effort and discipline to obey this advice, as it is one’s natural tendency to not want to obey the advice.

I know that you are now probably itching for the answer…

You are wondering what advice my real estate mentor gave me that is so important, are you not?

The advice is simple.

The advice is that you must:

Bat 1000% as a real estate investor in the beginning.

I know that most of you follow baseball and as such know the rules of baseball.

For those of you that do not follow baseball, and do not know the rules, I will give you a simple example to help explain.

In Baseball…

In the game of Baseball a team will take turns with being on offense and defense.  With offense, a batter will try to successfully hit the ball where the defensive players are not standing.  If the offensive player (batter) hits the ball where the defensive players are not standing, this is a good thing.  If the batter is able to run to first base before a defensive player has obtained the baseball and throws it to or touches first base, then the batter is safe, and the batter has what we call ‘a hit’.

This was a very simple explanation, and there are many other variables and details that come into play.  Any knowledgeable baseball fan will know that by reading my example above.

The point that I am trying to make is that if the batter successfully reaches first base before a defensive player gets him ‘out’ then the batter has a ‘hit’.  This is good.

Generally speaking, it is much easier for batters to hit a ‘single’ and run to first base than it is for them to hit an extra base hit.

An extra base hit occurs when the batter hits the ball (generally harder) to a part of the playing field (diamond) in which there is no defensive player.  The batter then has the ability to run (advance) to bases beyond first base. (second, third, home plate)

With extra base hits, there is an inherent degree of risk involved.  Due to the fact that an extra base hit involves the batter taking risks in advancing to subsequent bases, there is a chance that the batter could be thrown or tagged out by a defensive player.

If the batter is thrown or tagged out, this is not a good thing. (for the team that is currently on offense)

How are Baseball and Real Estate Investing The Same?

If we examine the advice of my real estate mentor we can see that this advice is very simple yet extremely insightful.

He said you need to…

Bat 1000% as a real estate investor in the beginning.

 What does this mean?

This means that as a new real estate investor, you need to have a series of successes.  It means that there is no room to make error.

This also means that as a new real estate investor, you should not be taking too much risk.

Breaking the statement down further, it means that in the beginning you need to be successful.  You need to purchase properties that will have good cash flow and decent appreciation.  You cannot take a gamble at the beginning of your real estate investing career by purchasing high risk properties.  Your capital is very important, and you should be very careful with it.  Don’t take huge risks with your capital because if you lose it, it will be gone!

My real estate mentor also told me…

My real estate mentor also told me a very important thing. He explained to me that the reason WHY we must…

“Bat 1000% as a real estate investor in the beginning”

He explained that it is because when we do make mistakes as  experienced real estate investors and we do lose money on high risks projects, we will still end up batting .750 or .900, which all baseball fans know is insane!

Insane = Very good!

Best Regards,

Neil Uttamsingh

ps: First Rental Property is going to be making a HUGE announcement soon.   Check back into the blog on a regular basis for the upcoming  news!

Hi Everyone,

I hope you are doing well.

Today is November 11th and that means that it is  Remembrance Day here in Canada.

The majority of the readers of First Rental Property are from North America, and as a result are very familiar with this day and what it means.

To the many American readers I have, your day is known as Veterans Day and it  also occurs today, as you know.

Remembrance Day, also referred to as Poppy Day, Veterans Day, or Armistice Day is observed in Commonwealth countries.

The purpose of the day is to remember the sacrifices of members of the armed forces and civilians during times of war.

Increasingly, this special day is also acknowledged by many non-Commonwealth countries.

I find it fitting to give this background of Remembrance Day as readers of First Rental Property come from 50 different countries and territories around the world, and as a result may not even know what Remembrance Day is.

Today I took the opportunity to attend a Remembrance Day ceremony held in my Town.

It was great to see the event so well attended.  Many people took the time out of their day to show their respect and remember those that gave their lives in order to protect their country.

It was great to see a good number of living veterans in the crowd. For some reason, I thought there would be a lot fewer in attendance given the fact that they are all aging.  It was great to see so many of them, decorated with all of their medals.

I also took note of the fact that there were kids in attendance.  Remembrance Day is not a holiday here in Canada.  As such, this meant that these kids had coordinated with their parents or teachers in order to attend the event.  This I found impressive, as many adults are indifferent to this day, and don’t take nearly as much time to reflect when compared to kids.

Here is a picture I took at the event:

I have consciously made the decision not to talk about real estate investing in this post.

I decided this because in life there are more important things than real estate investing.

Today is an example of one of them.

If you so incline, don’t forget to take some time today to remember the sacrifices made by others, so that we can live in peace.

Best Regards,

Neil Uttamsingh.

PS: Follow my blog.  Enter your e-mail address on the LEFT hand side of the blog.

Hi Everyone,

I hope that you are all doing well.

It has been some time since my last blog post.

I have spent some time enjoying the summer and travelling with my family.

Now that the summer is coming to an end here in Toronto, it is back to the ‘grind’.

Today I would like to talk to you a little bit about an age old debate that never seems to go away in the real estate investment world.  Quite frankly, this debate will never go away…

It is the debate surrounding:

Cash flow versus Appreciation.

More specifically, the question at hand is:

Is it better to buy investment real estate for cash flow or appreciation?

If you ask this question to any experienced real estate investor, who has been around for some time, and has invested in different stages of the market cycle, they will most likely tell you that they invest for cash flow.

I would like to turn this discussion on it’s head, and say that the most successful real estate investors are the ones that purchase for appreciation, not for cash flow.

When I first began my real estate investing career, I purchased for appreciation, simply because I did not know any better.  Purchasing for appreciation I thought was the only reason anyone would purchase real estate as an investment.

As time went on and I started to learn more about real estate, real estate investment, and the methods required in order to obtain financing on investment real estate, I started to buy for cash flow.

I started to buy for cash flow because I wanted to grow my real estate portfolio.

I wanted to buy property after property, and quickly discovered that I was only able to do this if in fact I purchased cash flowing properties.

Thanks to my amazing mortgage broker, Kevin Boughen, we were able to obtain financing on 4 properties within about a 2 year span.

As of August 2010, I have a portfolio of 5 single family residential homes.  3 of the homes I have purchased for cash flow, and the other 2 I have purchased for appreciation.

The largest gains in terms of equity appreciation that have occured have come from the properties that I have purchased for appreciation.

Today I was speaking with a very experienced real estate investor (who may be reading this).  Over the past 5 years, he has made 4 strategic purchases for appreciation.  After the 5 years, he currently still holds all 5 properties and has realized an appreciation gain of $500,000 from these 4 properties.

After a detailed discussion with him today, he really got me thinking.  Why would anyone buy for cash flow, when they could buy for appreciation and have much greater returns?

What do you think?

As a new real estate investor, should you buy for cash flow, or should you buy for appreciation?

To keep up to date with my blog, you can enter your e-mail address on the LEFT hand side of the blog.

To receive The First Rental Property Newsletter, you can enter your e-mail address on the RIGHT hand side of the blog.  In this newsletter, I will be interviewing experienced real estate investors.  They will describe their first rental property purchase and share with you some of the secrets to becoming a successful real estate investor!

Best Regards,

Neil.

What’s up Everybody?

I am always speaking with new and aspiring real estate investors.

I love chatting with people and hearing about how they are starting to get involved with real estate investing.

Most conversations I have are very positive.  However, I had a couple of recent conversations that I found somewhat concerning.

A small hand full of aspiring real estate investors were doing all the wrong things, in that they were setting themselves up for eventual failure.

When I spoke with these new and aspiring investors they were not in good spots in their real estate investing careers. Some of these people had been investing for a few years, while some others had just started to invest.

In speaking with them, I could easily tell that they did not have what it takes to make it as professional real estate investors.

It was easy to notice this, as there were commonalities shared among these investors.

These investors shared 2 ‘traits’ that will eventually lead, in my opinion to the destruction of their real estate investing careers.  These traits were:

1) Greed

There is no good way to sugar coat what I am about to say, and that is:

Humans are greedy.

As a new or aspiring real estate investor, if you are motivated by greed, or you allow greed to continualy influence your decision making process, chances are that you will get your rear end handed to you at some point in your real estate investing career.

Greed clouds judgement and it forces individuals to make poor decisions.  If you are a real estate investor, and you are continually making poor decisions as influenced by greed, sooner or later, one of these poor decisions will end up costing you financially.

2) Lack of due diligence

The second trait that these investors shared was that they exercised a lack of due diligence. Simply put, these wannabe investors did not do any of their homework, and got involved in real estate transactions that they had no business getting involved with in the first place.

Personally, I cannot fathom how people invest in real estate without doing their homework first.  Buying a rental property is often times one of the biggest investments one can make.  If you are making a big investment, surely one would think that you would do your homework first.  Right?

People take so much time researching what type of flat screen TV or car to buy.  Sometimes people take years doing this research.  Why isn’t the same due diligence exercised when people buy real estate?

I know the answer to this.

It is because Greed will often cloud their judgement.

If as a new real estate investor, you are constantly suppressing your desire to be greedy, and you are completing necessary due diligence before investing, you are two steps ahead of those individuals that are not.

To keep up to date with my blog, click on the orange RSS button at the top right hand corner of the screen.

To sign up for The First Rental Property Newsletter, you can enter your name and e-mail address on the right hand side of the blog. (All the cool people are doing it)

Onwards and Upwards!

Neil Uttamsingh

[youtube]http://www.youtube.com/watch?v=G0j7F5wQzfE[/youtube]

ps: learn how to make it as a real estate investor by following Don R. Campbell’s Blog

In Part One of this article, we discussed the first four common questions that Joint Venture Partners ask.

In this article we are going to cover the last four common questions that are asked by Joint Venture Partners. I have listed them below in no particular order.

Before we kick things off, I would like you to check out after reading my article,  a recent article by Florence Foote.  Florence discusses, investing in the path of progress, a concept that I will soon be writing about on my blog.

Now, back to business…

5) JV Partners will ask, “What is your share in the deal?”

The answer to this questions is very simple and straight forward. You tell your JV Partner that as the real estate investor you will be doing all of the work, the joint venture partner will be putting up all of the money and the profits and cash flow will be split 50/50.

6) JV Partners might ask, “This seems rich, is this negotiable?”

Your answer to this is, “No”.

You must say no politely but with authority.

There are 2 reasons why your answer is ‘No;.

First, if you have never purchased a property with a JV Partner, you will learn quickly that you are going to be earning your 50% because there is a lot of work involved in buying and managing rental properties. There is a lot more work than many people think, especially people who have never invested in real estate before.

Second, when asked if the split is negotiable, if you waiver and say that it is negotiable, you have lost value in the eyes of your JV Partner.  You will also seem less attractive to give money to. If you are backing yourself into a corner in which you are re-negotiating, your perceived value has decreased.

There will be instances where people will push you on this. They will want to make you agree to a split other than 50/50.

Take note that you will not agree to a split other than 50/50. There is a lot of work involved on your end.

If you cannot come to agreement with the potential joint venture partner with regards to the 50/50 split, politely tell them that this opportunity is not for them.  End of conversation.

7) JV Partners will ask, “Can you offer a guaranteed rate of return?”

Your answer to this is, “No.”

You have to be honest if you are going to attract joint venture money. The real estate market is not linear, rather it trends up and down. By knowing historical trends in real estate values, we know that in the long term, it trends upwards.

Knowing this, you should never guarantee anything. To say that you ‘guarantee’ a rate is wrong. You can provide projections to your joint venture partner of your anticipated returns, however, never guarantee anything.

One year you may have a return of 57%, the next year the return may be 18% and the following year the return could be 27%.  The ride may look something like this:

It is important to emphasize with your joint venture partner that if they don’t make money, then you will not be making money.

You can also tell them that you do not wok for free, so you are going to make sure that both you and the joint venture partner are going to make money with this particular venture.

8 ) JV Partners will ask, “Can I see the property before we buy it?”

Your answer to this yet again is going to be….

You guessed it…

“No”

I have never shown a joint venture partner a property before purchasing it.

You never show a joint venture partner a property before purchasing it because real estate investing in not based on emotions, it is based on numbers.

I say again…

Real Estate investing

is not based on emotion,

it is based on numbers!

For example, if you are investing in the stock for Telus, you do not drive to the Telus headquarters, open the doors of the building and look inside. If you do not like the tile in the building, or the light fixtures, or the way the front reception desk is designed, do you chose not to invest in the company? Of course not! You chose whether or not to invest in this company based upon your analysis of the company’s numbers, or if a trusted party that you know says that Telus stock is a good stock to buy.

It works the same way with real estate investing. You either crunch all of the numbers yourself, or you take the advice of a trusted party who has done all of the due diligence into the deal at hand.

Once you have closed on a property, you can take pictures of the property and send them to your joint venture partner.

Remember, there is no emotion with real estate investing. Leave your emotion out of it.

To keep up to date with my blog, click on the orange RSS button on the top right hand corner of the blog. Or, enter your e-mail address on the left hand side of the blog.

Part One – The Eight Common Questions that Joint Venture Partners Ask