First Rental Property

If you are an aspiring real estate investor looking to purchase your first rental property, you need to change the way you are using Facebook.

Also, if you are an existing real estate investor looking to purchase more rental property, you also need to change the way you are using Facebook.

We already know that many people in certain demographics have Facebook accounts, this is a given.  I guarantee you that most of these people do not fully comprehend the powerful marketing reach that Facebook can offer.

When I first started using my Facebook account, I didn’t really understand how powerful a marketing tool it was. However, when I started to observe how others used Facebook, I began to understand it’s marketing reach.

So why do aspiring and current real estate investors need to change the way they use Facebook?

This is because they need to create an:

1) Image
If you haven’t yet invested in real estate and you are looking to attract joint venture partners, you can demonstrate your credibility through the use of Facebook.  In order to show your potential partners that you are knowledgeable, you can post real estate related items on your Facebook page.  You can post interesting articles, and you can provide your thoughts on the article, in the form of a commentary.

Create a dialogue on Facebook with your ‘Friends’ and demonstrate to them that you have a keen interest in real estate investment and that you know what you are talking about.  When ‘Friends’ ask you questions about real estate investing via your Facebook page, take the time to mentor them.  Provide your thoughts and feedback publicly.

You can join real estate related investment groups through Facebook as well.  By doing that, you further demonstrate that you are someone who is interested in real estate, and you are able to network with like minded people.

I personally always post my most recent blog articles on my Facebook status.  This is because, I want people to know what I am doing and I am building my image.  I am a real estate investing expert and blogger.  This is the image that I am projecting to others.

As a real estate investor, in order to get people interested in what you are doing, you need to create a positive image.  Be mindful of what you are posting on Facebook. Make sure that the content that you are posting is always consistent with the image that you are trying to project. This is important if you want to build a positive image of yourself as a knowledgeable real estate investor.

Facebook is a powerful marketing tool.  Use it effectively.

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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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I have met a lot of real estate investors over the years. The most successful of these investors have what I like to call The X Factor.

I have never met a real estate investor who is extremely successful, who does not have The X Factor. There are many, many real estate investors out there, but only a select few have this X Factor.

What is The X Factor?

I have come to realize through observation that The X Factor is twofold. The X Factor is:

1) Passion

Many real estate investors might say that they are passionate about real estate investment. However, I challenge all of these investors on this. Passion comes with different intensity levels. It is possible to be slightly passionate about something, and much more passionate about another thing.

I have witnessed a lot of real estate investors who own multiple rental properties, but who have lost the passion for what they do. It is almost like they are just going through the motions. They no longer have a passion which fuels them to continue to move forward, and purchase additional rental properties.

Once this passion diminishes, it becomes hard to stay motivated. When motivation declines, it is difficult to continue to execute against one’s goals. Once the passion leaves, the real estate investor’s spirits begin to diminish. As such, if you observe a lot of real estate investors, you see those that continue to purchase rental properties, and then those that stop acquiring at a certain number. Sure, the argument can be made that not all investors want to buy an unlimited amount of properties. However, I counter this argument by saying that all real estate investors truly want to buy an unlimited amount of properties. The ones that forge ahead and continue to purchase are those investors who have stayed passionate about their cause.

How you can bring your passion back!

This is simple to do, but it takes effort. When you feel that you are lacking passion in an area (real estate investment), you simply have to speak to and become encouraged again by people that are passionate. These people do not even have to be passionate about the same things as you are. However, they have to be very passionate about whatever it is that they do. When you speak to them, and as they encourage you, you will begin to rekindle the passion that you once had. Think of yourself as a rechargeable battery and think of other passionate people as the battery charger. The more time that you spend with other passionate people, the more ‘charged’ you will become. After you have spent sufficient time with other passionate people, you will be fully charged, passionate again, and ready to work towards achieving your goals.

The X Factor is also:

2) Confidence

Most people lack some degree of confidence in some area of their life. Just like ‘normal’ people, many real estate investors lack confidence. It is this lack of confidence that prevents many real estate investors from forging ahead and acquiring multiple rental properties. It is also this lack of confidence that makes certain real estate investors fearful from trying other investment strategies. It is also this lack of confidence that prevents these investors from coming out of their comfort zone. By not coming out of their comfort zone, they are not able to grow and develop as real estate investors.

How to bring your confidence back!

This is slightly harder to do than bringing your passion back. However, this can be done as well. Again, you have to surround yourself and talk to more confident people than you. These people should have high confidence in a number of areas of their life. Spend time with them and understand what makes them confident people. The more confident people you are around, the better chance you will have to figure out what you need to do to make yourself more confident again. For example, if 10 extremely confident people tell you ways in which you can become more confident, chances are that they have explained the same process to you in 10 different ways. Hearing this information in 10 different formats, makes the information more digestible to you. As a result, you are better able to utilize this advice, hearing it 10 times than if you only heard the advice once, and through only one person’s perspective.

By maintaining both Passion and Confidence, you will be a fearless real estate investor, afraid of nothing, and prepared to work towards achieving your goals.

Develop The X Factor and make sure that you never lose it. The X Factor is truly what makes the difference between good real estate investors and great real estate investors.

A very good example of a real estate investor who has The X Factor is Mr. Don R. Campbell. Don is the President of the Real Estate Investment Network, REIN. He is a person with great integrity and a clear vision.

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Social proof is a very powerful marketing concept that is used by many Internet marketers and bloggers.

I have been reading about this concept recently, and I am finding it to be a very interesting marketing tool.

In a nutshell, the most powerful influence over a person is other people. People often act like sheep. In the sense that they adopt a herd mentality, and always follow what others are doing.

Internet marketers and bloggers, who employ the concept of social proof effectively are easily able to influence their audience into doing something.

For example, there is a good chance that you have seen Feedburner feedcount chicklets on other blogs before.

Many bloggers and Internet marketers use these tools in order to increase the amount of subscribers they have to their blog.

Besides being a cool little graphic often in the top right hand corner of a blog, the Feedburner feedcount chicklet also serves as a social proof and credibility tool.

There is a good example of this social proofing tool on Yaro Starak’s blog
www.entrepreneurs-journey.com. Yaro is by far the best blog teacher, who instructs people how to build successful blogs. He has built an incredible blog with very valuable content and a large and loyal readership. I owe him a lot for the development of my own blog.

It is a common practice that many bloggers do not display publicly the Feedburner feedcount chicklet until they have reached a certain amount of subscribers. Once a blogger has reached a certain amount of subscribers, they begin to publicly advertise via this chicklet the exact number of subscribers that they have. The reason for this again is because…

The most powerful influence over a person is other people.

If a web surfer randomly comes across a blog while surfing the web and they notice that a blog has 500, 5,000, or 50,000 subscribers, they will perceive this blog to be of value, and they will be more likely to subscribe themselves.

On the flip side, if someone comes across a blog and they see that there are only 2, 3, or 4 subscribers to a blog, they will be less likely to subscribe themselves as they will perceive that the blog does not have value, although the blog could in fact be very valuable.

In essence, the feedcount chicklet is a social proof tool.

Remember that social proof is a marketing concept that takes into account that the most powerful influence over someone is other people.

Now, here is a real life example of social proof at work.

Yesterday was a very snowy day in Toronto Canada. There was a lot of snowfall on the ground just before the rush hour traffic hit the roads. As a result, when I was driving to work the salting trucks and snowplough machines were out in full force. It was also a very cloudy day yesterday, and with all of the salt on the roads, my car became very dirty on the drive into and out of work. At the end of the day, the car was a mess. It looked terrible.

Today was a sunny day. A sunny day during the wintertime is often a time in which people get their car washed in a drive through car wash. I went to the gas station to fill up some gas in my car. At this gas station there was an adjoining car wash. I looked at the adjoining car wash and I noticed that there was a long time up of cars waiting to get washed.

Seeing the incredibly long line up, I thought to myself that I would come back at a later time to get my car washed, as I did not want to wait in line.

I went into the gas station to pay for my gas, and when I came out of the gas station, the line up to the car wash was even longer, which meant, an even longer wait had I decided to join the line.

It was at this time that I realized that the line up of cars at the car wash, represented social proof. The fact that there were so many dirty cars already in line made other people feel that it was a good idea to get a car wash at that time as well. Everyone’s car was equally dirty due to the snowfall from the day before.

As a result, I decided that I would get my car washed as well, and I got in line. I fully realized that social proof had just affected me. It was also at this time that I knew I was going to write about this experience.

This example goes to show that just like the Feedburner feedcount chicklet…

…the more people are doing something, the more likely you will do it yourself. This is a classical example of social proof.

When we take a look at real estate investing, I can tell you with certainty that social proofing applies here as well.

Often times groups of real estate investors will be investing in certain geographical areas. In addition, within these geographical areas, these same real estate investors will be investing in certain types of rental properties.

I have seen many novice investors begin to invest in these same geographical areas as the veteran real estate investors. Novice investors do this because they see that veteran investors are already invested in a particular region. As a result, the novice investors perceive that, the geographical area must be good because people are already invested there.

This again is an example of social proof. Social proof examples come up everywhere. Keep a look out, and you will notice social proof in your daily life.

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The journey continues.

Real Estate Investors are continually gaining more experience in the world of real estate investment. That is of course if they are the type of real estate investor who chooses to take continuous action.

Part One of The Evolution of a Real Estate Investor discussed the first 2 stages that a real estate investor experiences.

The first stage that occurs results in the real estate investor feeling that real estate does not exist. In this stage, the investor is definitely not an investor at all at this point. They have no interest in real estate and see no benefit in investing in a rental property.

As the investor moves into the second stage, this is where they find that something happens with real estate. In this stage, something significant happens in the real estate investor’s life with respect to real estate. As a result, they take notice of this occurrence.

We will now take a look at the third and fourth stages in the evolution of a real estate investor.

The Third Stage

You become interested in real estate

It is noteworthy to mention that there is a big difference between the second stage and the third stage. In the second stage – something happens with real estate, an investor’s interest in real estate has not yet developed. It is only in the third stage where a true interest in real estate begins to form. This stage is one of the most exciting stages. It is an exiting stage because the individual begins to see real estate in an entirely different light. What was once uninteresting houses or buildings, now becomes assets that cash flow. Once the individual’s interest develops, they will no longer view real estate the same as they did in the past. In this stage, you as the individual become very excited about the specific aspects of real estate that interests you. In my particular case, I became very interested and fascinated by all of the new development that was occurring in my town. I developed an extreme interest in the construction of new homes and subdivisions which I am still very interested in even today. As this interest develops, you may spend more time speaking to friends, family, or acquaintances about their experiences with real estate. At this point, you will really talk to anyone about real estate that is willing to have a conversation with you. You may be out in a public place such as a restaurant, and if someone 15 tables down from yours, sitting in the corner of the restaurant is having a conversation about real estate, you hone into this conversation, and can hear every word of it. This happens to me all the time when I am out and about. If people are having a conversation about real estate, I often, always listen very carefully.

The Fourth Stage

You begin to research real estate

Once again, there is a big difference if you compare this fourth stage to the previous third stage. In the third stage, your excitement level is high, and you are so thrilled about real estate that you just can’t contain your emotions. This is where stage three ends.

Stage Four is where you take things to the next level, and begin to make some serious progress towards your eventual purchase of a rental property. This is the stage where all of your research begins. This is a significant stage, because to this point, the real estate investor has never done this type of analysis before. Remember, the real estate investor has previously been at a point where they had felt that real estate did not exist. They were indifferent to real estate as an investment. Then they got to a stage where something happened with real estate that resulted in them becoming very excited and interested in it.

The research stage can vary dramatically for different real estate investors. It tends to vary due to the different and often limited resources that the real estate investor might have at their disposal at this stage of their evolutionary process.

In my case, my research was very basic, now that I take a look back upon it. For about a year, I spent time visiting the new development sites in my town. I would go into the sales offices at times, pick up floor plans for the homes as well as the price lists. I think I probably visited every new homes development in my town over the course of a year. There were a lot at that time. If I were guess, there were probably about 10 of these sales offices. I am sure that I visited some 2 or 3 times.

I would spend a lot of time also driving around in the new development sites and look at the new homes that had been constructed.

Some might consider these actions to be a waste of time. I would not disagree with those people. Waste of time, or not, the actions that I took were essential. They were essential because it allowed me to become more comfortable, it allowed me to learn more about new homes, and it gave me the confidence to move forward and take action when the time was right.

If you are a novice investor, one of the questions that probably is going through your mind is:

“If I buy a rental property, how do I know that I am buying it in a good location?”

If this question is going through your head, this is a good thing.

With investment real estate, there are many great areas to buy a rental property and then there are also very bad areas that you could buy a rental property.

The key thing to know is how to identify which are the good areas, and which are the bad areas.

By spending a little extra time and doing your homework, you can ensure that you are buying a piece of investment real estate in a solid area.

There are many factors to consider when buying. I have highlighted some significant factors that you must take into consideration before you purchase your first rental property.

For starters, you must ask yourself if there are any transportation improvements that are occurring in the city or town that you are looking to invest in. Transportation improvements can consist of things such as a new train station, a new subway station, new highways, or new airports. The construction of new transportation channels in a region is always a positive sign that the local economy will do well in the long run. When the local economy does well, so too will the short to long term appreciation rates of real estate.

If you are noticing transportation improvement in a region, this is a good sign. Begin to study the region further.

Another sign that you potentially are buying a rental property in a good area, is if the area is experiencing population growth. Not only should the area be experiencing population growth, rather the population growth of this area should be outpacing other adjacent areas. If this is the case, we know that there is a demand here. People want to be moving into this area. It is a desirable place to live. People will not want to move into an area that is undesirable. As such, there must be something special about this area. Continue to research it as a potential area to buy a rental property.

A third factor that you should consider when selecting your geographical area is the average income of the people living there. Most importantly, you need to know if the average income of the population is increasing. It is important that you know this information, as people with increasing incomes will generally have more disposable income. Not only will they have disposable income, in addition, homeownership for them potentially is easier due to their above average earning power. It is important to note that not all of these above average income earners will be homeowners. Many of them may very well be renters. As such, if you own a rental property in an area, where people are making above average income, you will be able to market your rental property to an audience of tenants who you know can afford living in your rental property.

Another important factor to examine when you are looking to buy a rental property in a particular area, is to observe and determine if the property is located in a transitional area. Transitional areas are often areas that are a bit rough around the edges, however, they are also areas that are experiencing significant long term change. It is through this change that long term real estate values can be affected positively, and in an upward trend. Not all transitional areas are created equal however. Some transitional areas many be at the very beginning stages of the change, whereas other transitional areas might be much further along the way with respect to all of the changes occurring. As long as you have identified a solid transitional area, with potential upside, this area could serve well as an area to purchase your first rental property.

Another factor, that is very important, that a lot of novice real estate investors forget to consider, is the political leadership of the given area. Whenever you are looking to purchase an investment property in a particular town or city, you must always ask yourself, ‘How is the political leadership in this community?’

This is a tremendously important factor to consider, as strong, forward thinking political leadership can help to increase the value of real estate prices in the long run. A city or town that is very innovative, entrepreneurial, and flexible will attract good things to that particular area. Big companies want to open offices in areas where there is good political leadership. Businesses want to operate in these areas, where they know that business, opportunity, and an entrepreneurial mindset is being rewarded.
Big companies do not want to open up offices in places that are experiencing slow growth, or negative growth. These companies do not want to operate or be associated with policy makers that are not going to work along side with them.
Strong and supportive political leadership in a region has a great effect. These are the areas that you want to be investing in.

If you are considering buying a rental property, and you know the area, but are unsure about the political leadership, call the town or city council and ask to talk to the mayor. Forward thinking, innovative mayors will want to speak with potential investors. They want to talk to you because they want you to invest in their city or town. They want their local economy to do well, and it will do well, if real estate investors like you, inject money into their local economy by buying rental properties.

If the mayor of the city or town is too busy to talk to each potential real estate investor, someone in the mayor’s office will probably put you in touch with the Economic Development Office. This is the office in the city or town, that knows everything, or should know everything about the local economy, the current policies, and the future plans of the region. If you speak to energetic staff at this office that are really passionate about their region, this is a good sign. Note this region down as a good place to potentially invest.

Ideally, you want to see present all of the factors listed above in a particular region before you buy a rental property. There are many areas that have these characteristics, as such are great places to invest. On the flip side, there are many areas that do not have any of these characteristics at all and are consequently terrible places to invest.

No matter what area you chose to buy your first rental property, make sure you do your homework, and exercise the necessary due diligence.