Hi Folks,

I hope you are doing well.

Over the years I have been asked a lot of questions from new real estate investors.

One of the most popular questions that newbie investors ask me, is:

“How many rental properties do I need to buy?”

In my mind, the anwser to this is simple.

Most new real estate investors don’t realize that all they need to purchase is ONE rental property.

At the beginning of a real estate investor’s “investing career”, it is easy to get caught up with aspirations of buying multiple properties.

Few real estate investors will be able to do this successfully.  Most will only end up buying one property.

Over the years I have observed some limiting factors that have prevented investors from buying more than one rental property.  Here they are in no particular order:

1.Limited Capital

The reality is that most people who purchase their first rental property, will only have the capital to buy one property.  There is always the exception, and a select amount of investors are able to purchase more properties.  These investors utilize their cash savings, or they leverage existing real estate, in order to buy multiple properties.

2.  Lack of Ambition

Lots of people do not want to own multiple properties.  They are content with what they have.  They have no desire to take on joint venture partners.  Life is easier for them with only one property, and they want to keep life that way…Easy.

3.  Lack of Knowledge of The Real Estate Market

People might be interested in buying more than one rental property, however, they may not know much about the market they are interested in investing in.  As a result of the lack of knowledge of the market place, people decide to pass up on the opportunity to buy another rental property.

4. Tenants win the battle

Being a good landlord is not easy.  Anyone who has been a Landlord for over 10 years, knows that there are many ups and downs, many great tenants and many horrible tenants.  When a landlord encounters a horrible tenant, it can be enough to break that landlord’s spirits.  Landlords have to deal with non payment of rent, damage to their rental property, just to name a few things.

Having dealt with these difficult situations myself, I have seen first hand how it can take the ‘wind’ out of a landlord’s ‘sails’.  Investors can become ‘deflated’ and nervous to buy another rental property, due to their difficult challenges dealing with a problem tenant.

5. Limited Cash Flow

An investor needs to have cash flow generated from their rental property, in order to make it over the long term.  If an investor owns a rental property that is generating a positive cash flow (Rent is greater than expenses), then this investor is putting themself in a strong position to succeed.

If a property is generating ‘cash flow’, this cash can be used towards paying for:

• Repairs on the property
• Paying for vacancy when there is no tenant
• Carrying the property when a tenant is late on rent, or stops paying

Investors get into trouble when they have limited ‘cash flow’.  Meaning that they do not have enough funds to pay for repairs, vacancy, or paying the expenses when a tenant is late on rent or stops paying.

If an investor’s cash flow is tight, and they are struggling with their first rental property, chances are, they won’t be too thrilled to take on another headache and buy a second rental property.

Having said all of this, do investors successfully buy more than one rental property?

Absolutely.  Many investors do this, all the time.

With some discipline, and running your first rental property like a ‘business’, you too can also manage to buy more than one rental property.

Happy Investing!

Neil

ps: For tips on how to buy your first rental property, please sign up for my First Rental Property email newsletter.

I hope you are doing well.

One of the big questions new real estate investors always ask me is this:

“Should I manage my rental property myself or should I hire a property manager?”

My answer to this question used to always be…

“You should manage the property yourself”

After 10 years of buying rental properties, my answer to this question has changed, my answer is now…

“You should do both”

This is what I mean by, “You should do both”.

As a real estate investor, you are a landlord. As such, you need to learn how to be a good landlord. The only way you can effectively learn how to do something properly (in my opinion), is by doing it yourself.

I speak to many new real estate investors who want to buy a rental property and then outsource the management to a property manager without first managing  the property themselves. I used to think this was a terrible idea. Now I don’t think this is that bad of an idea. Here is why:

A lot of people SUCK as landlords.

To be a landlord you have to wear many hats.

You have to be a:

• Relationship Manager
• Collections Specialist
• Book Keeper
• Business minded individual
• An extremely tactful person

…just to name a few.

Not everybody is good at everything. If you naturally do not have the proper skill set of being a good landlord, you should not be one.

If you are a bad landlord, you rental property will suffer.  It may suffer in the following ways:

• You are not good at building relationships with your tenants
• You are not effectively collecting the rent rolex datejust 116244bkmdo herren 36mm perlmutt that it owed to you, and the tenant is falling behind in payments more and more…
• You do not keep track of your expenses properly and you do not keep track of the partial payments of rent that your tenants are paying you, as they are behind and are trying to get paid back up
• You don’t have the vision of knowing what improvements to make to your property in order to attract a better tenant profile
• You are moderately offensive and rub your tenants the wrong way, which reduces the amount of respect your tenants have for you and in turn reduces the amount of respect that they have for your rental property.

If you know that you will not be a good landlord, don’t become one. Hire a professional property manager who is an expert in dealing with all facets of property management.

If you are a new real estate investor and you are choosing to not manage your rental property because you are lazy or you are too afraid of doing it yourself, that is not the right decision.  If you have the skill set, and if you live close enough to loewe 4455 fashionable unisex pants your property to manage it, at the beginning, you should manage it.

You should manage it so that you learn the ins and outs of management.  One day if you become too tired of managing your properties or if your skill set changes and you become deficient in some areas, you should hire a professional property manager.

Investing in real estate is not easy.  It is a long term game that you have to stick with.  If you would like to receive tips from experienced real estate investors for free, sign up for the First Rental Property Newsletter.

Happy Investing!

-Neil

Hi Friend,

I hope you are doing well.

If you are looking to buy your first rental property, you need to understand very quickly the importance of finding great tenants.

By far, your tenant is your greatest asset, and not necessarily the rental property itself.

Having respectful tenants that pay you rent every month will make your life as a real estate investor much easier.

Not all landlords are good at attracting quality tenants.

That is because, not all landlords are good!  🙂

There are a lot of horrible, confrontational landlords out there.

Being confrontational with your tenant, in a destructive way is one of the worst things that you could do as a real estate investor.

Starting conflict with your tenants when problems arise is not a good strategy, because this will never benefit you.

As the saying goes, “You attract more bees with honey”.  Try it!

Let’s now address the question you are asking yourself:

How do you find quality tenants that pay rent every month?

Well my friend, there are quite a few strategies to achieve this.

However, the one strategy that I would like to share with you is:

Obtaining referrals from existing tenants

This is a strategy that very few landlords every try, but it is a strategy that works great.

Your existing tenants are a great source to tap into in order to obtain referrals for other great tenants.

This is also a great method in reducing the length of vacancy you may have with a given rental property.

For example, let’s assume that you have 2 rental properties.  You have great tenants in both of the properties, and one of the sets of tenants have decided to move.  You are now in need of new tenants.

The first step that you should take is simply asking both your sets of tenants if they know of anyone who is looking to rent.

In the majority of cases, your tenants would be thrilled to refer you someone they know who may be looking to rent.

In addition, if you have treated your tenants with respect and been kind to them over the course of the tenancy, they will serve as an advocate for you in helping you find another quality tenants.

There you have it!

The best way to find quality tenants that pay you rent on time is by asking your existing tenants for referrals!

Happy Investing!

Neil Uttamsingh

ps: If you are looking to buy your first rental property, please sign up for the First Rental Property Newsletter, by entering your name and email address in the top right hand corner of this blog.  By doing this, you will receive tips and tricks from experienced real estate investors on how to buy your first rental property.

pps: I am a Licensed Realtor in Ontario and I help people like you buy their first rental property everyday! If you need help purchasing your first rental property or your next rental property, write to me at NEIL@FIRSTRENTALPROPERTY.COM. I will help you negotiate the best price, terms and conditions on your rental property. Buying in the US? No problem!  I will refer you to one of my trusted partners.  Happy Investing!  🙂

Hi Friend,

I hope you are doing well.

I have been helping people buy their first rental property for many years now.

During these years I must say, I have seen it all.

I have witnessed people buy multiple properties at once, become extremely successful at investing in real estate and never look back.

On the flip side, I have seen people take the plunge into investing in real estate, become overwhelmed, lose money, and quit by selling their rental property shortly after they purchase it.

By a simple conversation with a prospective real estate investor, I can usually tell if that individual is going to be successful or not at owning and managing a rental property.

I have noticed one trend over the years that usually determines whether or not someone is going to succeed or fail as a real estate investor.

The trend is…

How Long The Person Owns The Rental Property

Simply put, when someone buys a rental property and sells it after around the one year mark, this person is going to fail as a real estate investor.  These individuals may end up buying properties again some years down the road.  Even if they purchase more properties years after, this trend still holds true.  They will more than likely sell off their rental property again shortly after purchasing it.

The reasons as to why someone would sell their rental property around one year after purchasing it could be many.

The most common reason is that people find the management of tenants the most difficult part.  In turn, they end up selling the property at the height of their frustration.

On occasion I will meet former real estate investors who have owned properties in the past.  They may be in the market to buy rental properties once again.  The moment I find out that they owned their former property or properties for about one year, I know that they will end up failing again if they purchase more properties. This is what the trends have shown me time and time again.

Another important threshold is the…

5 Year Mark

I have witnessed real estate investors own and manage rental properties for a 5 year time frame and then sell their property or properties after the 5 years elapse.

The reason why some investors do this is because their mortgage term expires after 5 years.  Instead of renewing their mortgage or obtaining a new one, they decide against doing both and end up selling their rental property.

For these types of investors, the decision to sell the property does not happen all of a sudden.  I have noticed that these investors are either not pleased with their investment or not pleased with their tenants for a period of time.

The expiration of the mortgage term gives them a great opportunity to throw in the towel and sell off their ‘troublesome’ property.

So there you have it.

This post is short and to the point. However, it gives you valuable advice on how to avoid failure as a real estate investor.

Don’t sell your property.  That is the bottom line.  Despite what other people may tell you, don’t do it.

No matter how challenging the management of tenants become, don’t sell your rental property.

If you sell your property, you fail.

The objective of owning real estate is to generate cash flow and generate wealth.

Cash flow and wealth generation are not created by giving up.

Happy Investing!

Neil Uttamsingh

ps: Learn tips and tricks from experienced real estate investors on how to buy your first rental property by signing up for the First Rental Property Newsletter.  All you need to do is enter your name and email address in the top right hand corner of the blog!

pps: I am a Licensed Realtor in Ontario and I help people like you buy their first rental property everyday! If you need help purchasing your first rental property or your next rental property, write to me at NEIL@FIRSTRENTALPROPERTY.COM. I will help you negotiate the best price, terms and conditions on your rental property. Buying in the US? No problem!  I will refer you to one of my trusted partners.  Happy Investing!  🙂

Hello Friend,

I hope that you are doing well.

I have a short post for you today, but a very important one.

I first learned about state management from the very famous Anthony Robbins.

I attended one of Tony’s live events in New Jersey, USA, called Unleash the Power Within.

State Management is a very important concept for you to know about if you are going to purchase your first rental property.

More importantly, if you are going to be successful as a real estate investor over the long term, you need to know what state management is and how to master it.

The important thing to realize about state management is that as a real estate investor, if you do not develop the ability to control and master your state, you could very well fail.

Without state management mastery, you can fail very easily…

With a lack of awareness of state management and how it effects the human mind, you could decide to quit real estate investing once and for all, and sell all of your properties after one bad day.

With real estate investing, you will come to learn, if you have not already that there are many ups and downs that you will go through.

It is your responsibility to manage those ups and downs.  Overall, it is important to not remain too excited when experiencing the highs, and not to remain too down and out when experiencing the lows.

If you are feeling down and out on one particular day, and you don’t know how to snap out of it, you could be moments away from throwing in the towel once and for all with real estate investing.  You may make a rash decision when you are feeling too low.

Therefore, the importance of state management is critically important for you the real estate investor.  You need to maintain a level and balanced state throughout the duration of your real estate investing career.  There will be happy and sad experiences that you will go through as a landlord.  Whether it is a happy or sad experienced, it is important to maintain a consistent state.

Check out the videos below on State Management.

Best Regards,

Neil Uttamsingh

ps: First Rental Property will be making a big announcement soon.  Check back into the blog frequently for the upcoming news! You don’t want to miss it!

[youtube]http://www.youtube.com/watch?v=u6V75B_K2kM[/youtube]

[youtube]http://www.youtube.com/watch?v=O0XE8-pcy1Y[/youtube]

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!

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.

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.

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!

[youtube]http://www.youtube.com/watch?v=IAsnlT3Lpz0[/youtube]