First Rental Property

Every real estate investor has a TSN Turning Point. If you are Canadian, and if you are a sports fan, you may know what I am referring to when I say, ‘TSN Turning Point‘.

If you have no idea what I am talking about, not to worry.

Here is what I mean…

For many years TSN had been Canada’s leading sports network.

After each televised sports game on this network, the sports commentators covering the game would review the highlights of the game as well as what they called the ‘TSN Turning Point’.

The TSN Turning Point was the time in the game where the momentum shifted for the winning team.  It was a time in which the winning team took stride.

It was a point in which the winning team made a key play that helped them win the game.

All Real Estate Investors Have A TSN Turning Point

Every experienced real estate investor can tell you when their own personal TSN Turning Point occurred.

A TSN Turning point for a real estate investor is a time in which they gained momentum, confidence, and belief in themselves.

For myself and many other real estate investors that I know, The Real Estate Investment Network ACRE Event was The TSN Turning Point.

Today I have a treat for you. The Real Estate Investment Network and Don R. Campbell have a guest post for you. In the post Don and the Real Estate Investment Network refer to the real estate investing space in Canada as well as the upcoming Toronto REIN ACRES Event.

Enjoy the post and feel free to leave your comments for Don in the comments section below.

Best Regards,
Neil Uttamsingh

ps: Don’t forget to subscribe to my blog if you are a new to the world of real estate investing. You will find very valuable information on this blog that will help you to buy your first rental property.

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A Canadian
Real Estate Market

Doesn’t Exist in 2011,

So Don’t Be Fooled

What does 2011 hold for
Canadian Homeowners and Real Estate Investors?

Almost a quarter of the way into the new year, many
people are still looking for ‘predictions’ of what 2011 will hold. That’s why
you see so many pundits come out of the woodwork to share their insights. I do
find this a bit strange as nothing about the market really changed from December
2010 to January 2011 and through to March 2011, other than a few new pictures on
your kitchen calendar. Those who pay close attention to the underlying economic
fundamentals aren’t struggling with what is coming next.

But having said that, let’s take a look at what the next 12 to 18 months hold
for Canadian real estate.

Quick 2010 Overview – Multiple Levels of Confusion

In order to look forward, we do need a quick review of
2010. The year in real estate turned out to be exactly as predicted in January
2010. It was a year of turmoil and confusion (the big economic ‘W’) and those
who were unaware that we were riding this 2010 ‘W’ allowed themselves to be
shaken out of the market (right at the wrong time!)

The economic ‘W’ does have a real cleansing effect on the market as it always
chases out most of the speculators (those who profit only when market values
increase dramatically) and leaves the market to the real professional investors
and landlords.

This confusion was especially felt by those using housing market numbers to
analyze the market. Investors understand that:

If You Are Making Decision based
on Housing Market Numbers

… You are Driving By, Looking In The Rear-view Mirror, and are Bound To Crash!

Government Meddling Led To
Unsustainable Mini-Boom

More confusion was thrown into two very large markets
(BC and Ontario) with the announcement of the HST. Despite some limited efforts
by both provincial governments, how the HST was going to affect real estate
purchases and sales was not clear – into this vacuum sped confusion and an
almost breathless panic to get purchases done before July 1st. This caused a
higher percentage of purchases to be pushed into the first half of the year than
would normally be expected. Due to their sizes, these two markets hold such a
high percentage of the Canadian real estate transactions that this activity made
the Canadian average price and activity jump despite most other markets
underperforming.

This cursory analysis led some housing analysts to predict that a bubble was
forming. This, of course, turned out to be false as markets slowed down again
later in the year. Those of us who analyze the real estate market by looking at
underlying economic conditions knew this boom would be short lived and was a
product of desperation rather than true market sentiments.

A ‘Canadian’ Real Estate Market Does Not Exist

Overall, 2010 proved to investors and homeowners alike
that a ‘Canadian’ real estate market doesn’t exist in and of itself. The
Canadian real estate market is actually a series of very regional markets all
which perform relatively exclusive of each other.

In fact, in 2010 and in 2011 the market really will be a ‘Goldilocks’ story.
Some markets will be too hot (compared to underlying economics), others will be
too cold, and some will perform just right. As our regions continue to detach
from each other economically this trend will continue for many years to come and
will compel investors and homeowners to ignore national real estate numbers and
trends. They must focus on what is happening in their region.

2011 Market Predictions

To make it easier to predict what is going to occur in their
local real estate markets, investors can use the formula shown below. Long term
increasing prices of real estate stem from economic (GDP) growth. Without
economic growth, a real estate market is not sustainable. Sure there can be
upward and downward blips not attributed to economic growth (such as when the
governments meddle as in 2010), but these are just short-term unsupported blips.

Figure: The Long Term Real
Estate Formula

GDP Growth = Job Growth = (12 months later) Population
Growth = Increased Rental Demand = Decreased Vacancies = Increased Rents = (18
months later) Property Purchase Demand = Increase in Property Prices

This cycle works both ways, over roughly the same time lines. Sustainable real
estate price increases occur approximately 18 months after a region’s economy
begins to grow and they drop approximately 18 months after the economy in a
region begins to shrink.

We can use Alberta’s markets as the perfect illustration of this formula in
action. Alberta’s GDP grew so quickly for years in a row and the real estate
markets skyrocketed over that time and even after the economy began to slow
down. This set up a number of high expectations and assumptions by people not
understanding this formula and scared a lot of people out of the market. Even
today, despite the fact that Alberta is going to lead the nation in economic
growth in 2011, those who experienced the 20% annual increases in the past are
sitting on the sidelines waiting for the market to come back. Smart investors
who understand the inevitability of this formula are quietly picking up pieces
of Alberta cash-flowing real estate, positioning themselves for the inevitable
increase in demand 12 to 18 months from the start of the strong economic growth.

Because Canada’s 2011 market is going to be even more regionally fractured than
in 2010, it is imperative that investors and homeowners understand this formula
and they make their investment decisions based on it, rather than the
fluctuating housing market numbers.

CREA & Competition Bureau
Settlement Leads to Unintended Consequences in 2011

As with any structural changes to an industry, the settlement
imposed by the Competition Bureau on Canadian Real Estate Association’s MLS
website will have many unintended consequences on the health of the Canadian
real estate market. We are currently completing a full report and analysis of
these consequences (some of which are OK and some of which are not good news).
Here are some preliminary conclusions that will affect the overall market:

1. Housing metrics will indicate incorrect readings of the
   health of the market, leading to inaccurate analysis by some market
   commentators during the year
2. Often used metrics such as ‘sales to listings ratio’,
   ‘days on market’, and ‘overall number of listings’ will be impossible to use
   as comparisons to previous year’s performance. This is because under the new
   rules, there will be many more listings being posted by people just fishing
   the market at very little cost (many poorly priced, poorly managed listings
   left in the system too long).
3. These additional listings will lead to average price
   increases being softened more than the underlying economics would usually
   lead to.

The complete Unintended Consequences of the CREA
Settlement with the Competition Bureau report will be publically distributed to
all who are subscribed to
www.myREINspace.com.

Finally, the distinction between real estate “investors” and real estate
“speculators” is created by one thing – a sound and unbiased education in real
estate fundamentals. Done properly, real estate investing produces results in
any market conditions because it incorporates economic fundamentals, proven
business practices, and a long-term vision. On the other hand, real estate
speculation requires perfect timing, lots of hope, and a strong enough stomach
to ride out the cycles in the market!

By far the quickest, least expensive and most engaging way to become a
sophisticated real estate investor is to set April 16th and 17th aside to attend
the

2011 Toronto ACRE™ Live event. Now in it’s 19th year, the ACRE™ system
continues to be where Canadians go to receive an unbiased real estate investing
education that works – not because if focuses on the “Canadian” market, but
because it teaches investors to drill down into the economic fundamentals that
drive regional real estate markets.

Hi Everyone,

I hope you are all doing well.

It has been quite some time indeed since my last installment of my Business Life Story.  It has been so long that many of you probably don’t remember the previous posts, or have not been subscribed long enough to receive them.

Fortunately, I am able to share all installments with you, with just a simple click of your mouse, you can relive my ‘story’ by checking out the previous installments below.  By reading through the articles, you can learn how I became a real estate investor, and learn about the path that I took in order to get to where I am today.

Business Life Story Part One

Business Life Story Part Two

Business Life Story Part Three

Business Life Story Part Four

Business Life Story Part Five

Business Life Story Part Six

In the Business Life Story Part Six, I discussed the first 2 property purchases.  In this installment, I am going to describe the remainder of the property purchases.

After my second property purchase in October 2008, I went on to buy 3 more properties between October 2008 until August 2010.

At the time of writing, it is November 12th 2010 and I own 5 rental properties in total.

The three properties that I purchased between October 2008 and August 2010 have all been located in Hamilton, Ontario Canada.

The fact that I purchased these properties in this particular market had a lot to do with the education I received from my real estate investment group, which is called The Real Estate Investment Network, more affectionately referred to by it’s members as REIN.

My association with REIN allowed me to and continually allows me to meet very smart entrepreneurs, business owners, and savvy real estate investors.  Many of these people have helped in making me smarter.  I have become smarter as an investor simply by observing what other more successful people are doing and trying to recreate what they are doing to the best of my ability.

My three Hamilton properties are all generating positive monthly cash flow.  To the novice investor this means that with the monthly rent that I collect, I am able to pay for all of the monthly expenses and still have some money left over as my profit each month. The fact that I could buy these properties in Hamilton and cash flow them monthly was a big selling feature which resulted in me buying these properties.

A number of years ago, Hamilton was identified as a region in Ontario with a very bright future.  Jobs are being created in this area, and where there is job growth, real estate values are always effected in a positive manner.

My plans are to continue to grow my portfolio of rental properties.  I am keeping a careful eye on the management of these properties.  I am always looking to move forward and acquire more properties by partnering up with the right joint venture partner.

As I have mentioned in previous posts, it is good to exercise extreme due diligence when selecting joint venture partners.

Through my association with REIN and after meeting a large number of real estate investors, I began to notice that a good number of these members had different types of products and services related to real estate that they sold.

Some people were Realtors, some people offered real estate services at a cost, and some people sold real estate informational products.

Watching all these people essentially ‘monetize’ real estate products and services really got me thinking as to how I could do this myself.

After some careful thought and some research on my end, I decided that I would establish my own real estate blog.  It was at this time that First Rental Property was born!

Picking the focus for the blog was easy for me.  I have always been genuinely interested in helping other people.  Therefore the theme of providing knowledge and confidence to new and aspiring real estate investors made complete sense to me.  I knew that this was a topic that I could write about with great ease.

Although my intent was to monetize First Rental Property from day one, I have yet to do so.  The blog has been in existence for about one year now and I have not generated any revenue from the blog.

I have enjoyed building a large readership, however, the monetization of the blog has always been the plan.  As the blog continues to grow, I will be incorporating different monetization strategies into the blog.

The Future

As far as the future is concerned, I plan to continue to actively manage my real estate portfolio. I will continue to acquire more properties with  joint venture partners, and continue to produce quality content for First Rental Property, as well as to incorporate monetization strategies as the blog continues to develop.

Best Regards,

Neil Uttamsingh

PS: To keep up to date with my blog, enter your e-mail address on the LEFT hand side of the blog.  To receive The First Rental Property Newsletter, enter your e-mail address on the RIGHT hand side of the blog.  In the newsletter experienced real estate investors will share with you tips and tricks on how to buy your first rental property.

Hi Everyone,

I hope that you are all doing well.

Don R. Campbell, fellow real estate investor and President of The Real Estate Investment Network, a.k.a. REIN, is a wise man.  Don is a Canadian Best Selling Author of the book Real Estate Investing in Canada.

Don made a comment a few months ago that I particularly enjoyed.

His comment was…

“Fools get wealthy.”

Over the past several years, Don has been instrumental in changing the conversation on real estate investing in Canada.  In my opinion, Don provides a lot of insightful commentary on the real estate market and the key economic factors effecting the real estate market in Canada.

With regards to Don’s statement, “Fools get wealthy”,  he explained that the super successful people are often referred to as fools, by the rest of the population.  They are ‘fools’ because they are not normal people, nor do they behave like normal people. These ‘fools’ do things that normal people would never consider doing…

What I am trying to explain to you is this…

If you are a new or aspiring real estate investor, you are a fool!!!

Here is why…

Real Estate investors are a unique segment of the population.  There are not very many of us.  As an example, in Canada, it is estimated that 94% of homes are owner occupied.  This leaves us with 6% of the homes in Canada as rental properties.

Plain and simple, if you own a rental property, you are not like the rest of the population.  You are in the minority.  Since you are in the minority, many people will classify you as being a ‘fool’ for taking on the ‘risk’ of owning a rental property.

As a new or aspiring real estate investor, here is the first point you need to recognize.  The point is:

• People will think you are a ‘fool’ for owning a rental property.  Having a rental property is not a ‘normal’ thing to have.  You are a ‘fool’ for taking on the risk of owning a rental property.

Further, if you take the time to study some of the people who have achieved great success with real estate investing, you will notice some common characteristics.

Fools will have done and continue to do a lot of things different from the normal population.

Here are some examples of what ‘fools’ do differently from the general population.

• Fools study successful people, in order to find out common characteristics between these people
• Fools get up early in the morning, in order to get a head start on their day.
• Fools continue to work hard, even when they have ‘made’ it.
• Fools want to constantly improve themselves everyday
• Fools generally never focus on making money, they focus on what they enjoy
• Fools know that working hard does not necessarily guarantee success
• Fools know what they are surrounded by opportunity everyday

In your opinion, what are some other things that ‘Fools’ do differently when compared the rest of the population?

If you are a fool, be proud of yourself!  After all, “Fools get wealthy.”

Best Regards,

Neil Uttamsingh

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

Hi Everyone,

I hope that you are all doing well.

It seems that lately, the topic of ‘fear’ has been on my mind, and for good reason as well.

As an active real estate investor, ‘fear’ should constantly surrounds you.

In my last post, I talked about how fear is constantly felt by experienced real estate investors. I described how these experienced real estate investors are able to decipher a secret to success. It is this very secret that gives them the confidence, focus and follow through in order to invest in real estate.

Today I want to talk about why I dislike fear so much.

I dislike fear so much because I have seen first hand how fear smothers the dreams of aspiring real estate investors.

I cannot count how many times, I have been contacted or approached by people that are interested in investing in real estate.  They come to me with such hesitation.

They are hesitant because they are afraid.

With this hesitation, they also show some excitement.  They are excited about the opportunities that investing in real estate will one day provide them with.

By nature, I thoroughly enjoy helping others, and I never turn down an opportunity to talk to someone about real estate investment, and share my knowledge with them.

I always pour my heart out and give them as much advice as I possibly can. I always share all the knowledge that I have, and I don’t keep any secrets as to how one can get started.

However, I know in the back of my mind, that the chances of this person’s success in real estate investment, lies only with them.  Time after time when I have conversations with people about getting started, despite how much time I have spent encouraging them and despite how much knowledge I have given them, I never know if they will ever succeed.

The reason why I dislike fear so much is that fear stops most of these people from ever doing anything.

Every single person that comes to me for advice, I tell them the same thing.

“You have to surround yourself with people that are investing in real estate, so that you can learn from them.”

This is a simple enough suggestion, right?

Wrong!

It is disappointing as to how few people take this advice.  The people that do take this advice (the minority) are the ones that forge ahead, become smarter, more confident, and become successful at investing in real estate.

The people that do not take this advice, are the ones that usually never get started.  They constantly stay limited with their knowledge of real estate, because they have no one to learn from. The people that they are surrounded by may be fantastic people, however, they may have no clue about anything related to real estate, business, or wealth creation.

When someone finally comes to the realization that the closest people in their lives, the ones that they love the most, may not have all the answers for them..that is when change starts to happen.

Aspiring real estate investors have to realize that you have to bring into your lives people with knowledge of real estate, people that you can learn from, and people that will push you to achieve more.

I can tell you this from experience, as I have learned so much from my friends and fellow colleagues at The Real Estate Investment Network. (REIN)

In my opinion, REIN  is the best network of real estate investors in North America.  I would be surprised if there was a group of equal integrity found anywhere else in the world.

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, experienced real estate investors will share with you their experience of when they bought their first rental property.  They will also share with you some tips and tricks as to how to get started investing in real estate.

Best Regards,

Neil Uttamsingh.

Hi Everyone,

I will be making a change to my blog shortly, that I wanted you all to know about.

For the past few months, I have been releasing a blog post daily. Many of you have been following my daily posts, and I thank you very much for that.

I have recently decided to make a modification to the frequency of which I will be releasing content to my blog.

I have come to this decision, as I am going to be studying for the Canadian Securities Course.

This is a course that I need to get under my belt, as this will help me to advance in the banking industry.  The industry that I currently work in.

I have actually attempted this course a couple of times over the past several years, and failed it both times.

The exam is in multiple choice format, a format that was never really my strong suit.

Needless to say I am going to have my hands full studying for this course over the next several months. I anticipate that he course is going to take up the lion’s share of my spare time over the next 5 months or so.

I am still planning on releasing weekly content on my blog, however, I cannot commit to the daily blog posts that you have become used to over the past few months.

I want you to all stick with me, and continue to read my posts, even though they will be a little less frequent than you have seen over past few months.

Hang in there. It will be worth it.

In closing, I would like to refer you over to an article written by a fellow real estate blogger and REIN member.

Chris Davies wrote a very good article outlining the recent mortgage changes in Canada. His article was much better than mine.

So far in this article series, we have discussed the first three steps that you must take in order to buy your first rental property.

In Step One, we discussed the importance of determining WHY you are buying your first rental property.

In Step Two, we described on how to finance the rental property.

In Step Three, we talked about methods that you can use in order to determine what location you will invest in.

In step number four, we examine the economic influences of the location that you have chosen to invest in.

This is a crucial step because if the economic fundamentals are not strong in your chosen area, you have picked the wrong area.  If you have picked the wrong area you need to go back to the drawing board, and pick a different area.

Step four is essentially a check and balance in place in order to make sure that you are on the right track, and that you have chosen a location to invest in that has has a future.

I have derived the majority of the information for step four from Don R. Campbell’s Property Goldmine Scorecard.  Don R. Campbell is the President of the Real Estate Investment Network, REIN.  I have used the information contained in the Property Goldmine Scorecard in order to assist me in purchasing rental properties.

Many other successful real estate investors and REIN members have also used the Property Goldmine Scorecard to varying degrees, in order to help them with the purchase of rental properties. REIN members that have a very good working knowledge of the Property Goldmine Scorecard are members such as Wade Graham of Higher Ground Real Estate Investment Inc., and one of the guys I know behind the scenes at The Rentables.com

With step four, we begin our examination of the location that you have chosen by asking property specific questions.

Property Specific Questions

1) Can you change the use of the property?

This is an important question to ask.  If you can change the use of the property, you can potentially increase the income you are generating from the property.  For instance, if you are dealing with a single family home, are you able to easily convert it into a legal duplex?  If that is the case, you may be able to dramatically increase the income potential from this property.

2) Can you buy it substantially below retail market value?

Many real estate investors live by the rule that you can only make money when you buy a property.  They put emphasis on always buying below market value.  Whenever you can buy below market value, definitely do so.  However, buying below market value is not the only way you can make money investing in real estate.

3)  Can you substantially increase current rents?

You would be surprised how many landlords have rental properties, and on their properties they are charging the wrong rental amount. Many landlords are too lazy to increase their rents with their tenants on a yearly basis. As such, a landlord could own a rental property for many years, and never once increase the rents on the property. If this landlord ends up selling their property, and you buy it with the existing tenant still occupying the property, the rent that the tenant is paying will be well below what the market rent should be.  If this is the case, you now have the opportunity to increase the rents substantially.

4) Can you do small renovations to substantially increase the value?

It is amazing how little effort is required in order to dramatically increase the value of a property. To increase the value, you have to focus on all of the right things. Some cost effective things that you can do to increase the value of a rental property would be:

• Freshly paint the property
• Replace worn carpets with a neutral tone carpet or with laminate flooring
• Re-finish old looking kitchen cabinets
• replace outdated appliances with new, slick looking appliances

In the next article of this series, we are going to conclude Step Four.

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

Step Four Continued – How to buy your first rental property