Hi Everyone,

I thought that I would change things up a bit with today’s post.

I have attached a video that I recorded today.

The video is of a new condo development going up in Oakville, Ontario, Canada.

I have had my eye on this development for the past few months.

I would like you to analyze this deal based on the information I presented in the video.

Put yourself in the shoes of a new real estate investor…

When considering whether or not to buy into this project, what are some of the key questions that you should ask yourself with regards to this project?

I intentionally left out a lot of details with respect to this new condo development.

Let me know your thoughts.  If you were or are a new real estate investor, what are the key questions that you have to ask yourself, prior to purchasing in this development, or prior to purchasing your first rental property in general?

Please leave your comments in the comments section below.

Also, on the topic of new construction, I encourage you to check out the most recent update of the Rock Star Mansion.

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

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

I began investing in real estate about 5 years ago.  It was at this time that I purchased my first rental property.

Since I started investing, I have spoken to many experienced real estate investors.  Many of these investors currently own, or did own at one point multiple properties.

Since I started investing, I have also spoken to many people who have expressed interest in investing in real estate.  I have noticed that there are a number of factors that prevent these people from investing in real estate.

No matter how much they may say that, “One day, I am going to invest in real estate”, I know that the vast majority of these people never will.

So, why is this the case?  Why do so many people want to invest in real estate, however, never end up doing so?

I could probably write a book on why people don’t end up investing in real estate (hint – hint), however for the purposes of this article, I am going to focus on ONE of the factors that prevent people from investing in real estate.

Arguably the number one reason why people don’t invest in real estate is that they are afraid of the repairs and maintenance that they will have to perform on the property.

This fear is real, and I have witnessed it stop would be real estate investors dead in their tracks!

I know from personal experience that this fear lessens as time goes on, and as the real estate investor gains more experience.

Here is a personal example to help illustrate this point:

When I first began investing in real estate 5 years ago, repairs and maintenance issues were one of my biggest fears.  I was never really a handy person, nor am I a very handy person today (I have gotten better over the years though).

As a result, when repairs and maintenance issues would come up, I would feel anxiety because I did not know how to handle it.  I did not know whether I should repair the item myself, or whether I should hire a handy man who could come in and do the job.

One of my greatest fears was that one of my rental properties would get a leaky toilet and that I would not know how to repair it.

I am very proud to say that I have come a long way in 5 years, and here is why.

Just yesterday, I was visiting my newest rental property.  I had met my new tenants at the property, and we were doing a walk through of the property.  We were doing a final walk through of the property, as the tenants were moving in the following month .  As we were walking through the property, we were testing the toilets by flushing them, in order to make sure that they were working properly.

As soon as we flushed the toilet in the upstairs bathroom, a stream of water began to flow out of the back of the toilet.  The stream of water was steady, almost like the water coming out of a slow running tap.

My property manager was also there with me.  So when this happened, we jumped into action and turned the water off.  We cleaned up the water quickly so that there was no damage to the floor.

As we were cleaning up the water, the property manager and I were sticking our heads underneath the toilet and  discussing the problem with the toilet.  We identified the problem and concluded that the best remedy would be a brand new toilet.

This all happened pretty fast, and when everything was over and done, I was pretty happy with how I was feeling about the situation.

I had always feared this type of repair the most — the leaky toilet that is.  I had always experienced the most anxiety around the thought of this type of repair.  However, while the toilet was leaking, while we were cleaning it up, and after the situation was under control, I realized that I had experienced no anxiety at all.  I was pretty calm throughout the whole ordeal.

The fact that I was so calm I believe is a direct result of the Real Estate Team I have in place.

I have confidence in my Real Estate team and their ability to get things done for me.

As an example, my property manager is going to be replacing the toilet with a brand new one in a few days.  Which means…. problem solved!

The number one way in which you can eliminate all of the fears you have with respect to real estate investing, is to have a strong Real Estate Team that you can rely on.

This team can sometimes take some time to assemble.  However, once the team is assembled, nothing will be able to get in your way of real estate investment success!

Please keep up to date with my blog.  You can do this by entering your e-mail address on the left hand side of the blog.  Or, you can click on the orange RSS button at the top right hand corner of the blog.

To check out some of the members of my Real Estate Team, click on the following links:

Mortgage Broker
Real Estate Lawyer
Realtor

Greetings Everyone,

There was a time, not too long ago that I thought that people who intentionally chose not to keep a  Television in their home were absolutely weird.

I felt that if someone had the financial means to own a TV, they should.  No questions asked.

Whenever I came across the occasional person who did not own one, by default, I thought that they were some sort of hippie. I could not understand why someone would chose NOT to have a TV.

Over the years, the more I stared to network with successful real estate investors and successful people in general, and the more I started to learn about their habits.  As such, it started to  become clear to me why some people don’t chose to own a television set.

A common belief that these successful people would express was that,

“There is no shortcut to success.”

Because there is no shortcut to success, one has to use up all of the time in their day very wisely.   Afterall, there is an equal amount of time in the day for every single person.

It goes without saying that most real estate investors, and aspiring real estate investors are ‘cut from the same mold.’

These are people that generally try to overachieve and obtain ‘more’ than they currently have.

When you look at the population on the whole, these people are definitely in the minority.  In fact, it is not uncommon that these people feel that they are outcasts.

Personally, I feel like an outcast a lot of the time, as my level of motivation and overall ambition is quite high.  This often intimidates people, OR, this makes people think that something may be wrong with me…

Have no fear my fellow and aspiring highly motivated real estate investors because,

It’s Okay To Be Weird

So much of whether we become successful as real estate investors, or not, depends on how we are using our spare time.

In order to achieve success, we always have to be making the decision to work during our spare time, as opposed to relaxing during this spare time.

It is obviously okay to relax now and then, but if you are always relaxing and never working, success is not just going to fall into you lap while you are on the couch.

My fellow blogger and real estate investor, John Fedro, a.k.a. J-Fed, hit the nail right on the head with a blog post earlier this week on this very topic.

J-Fed is a hard working man and because of his hard work, he has realized much success investing in mobile homes.  I really encourage you to read his thought provoking article titled, What Will You Do For Success In Real Estate?

So what do you think?  Are there any exceptions to the rule?  Does success only come to those who work hard?  Or, do you know of a shortcut to achieve success?

Keep up date with my blog First Rental Property.  Enter your e-mail address on the left hand side of the page, or, you can click on the orange RSS button on the top right hand corner of the blog.

2008 – The Year of The Investment Group

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 at the top right hand corner of the blog!

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

Greetings Everyone,

I hope that everyone is doing well today.

I have a very important tip that I would like to share with all of you.

Any experienced real estate investor will tell you that the true learning with respect to real estate investing only begins after you have purchased your first rental property.

The more properties that you acquire, the more ‘things’ you will have going on that you need to stay on top of.

Even if you only ever purchase one rental property, there are many ‘things’ that you need to deal with. An inability to deal with these ‘things’ can be detrimental. In the worst case scenario, not staying on top of these things can even result in you losing your rental property.

So what is this valuable tip that I am talking about?

It really is quite simple. In fact, it is so simple, you would think that it should be common sense. However, unfortunately it is not. I am going to tell you what the tip is and then I am going to give you examples as to why you need to take this advice. I will also give you some personal examples that I have with regards to practicing this tip.

The tip is…

“As a real estate investor, you have to be organized. “

This sounds like ridiculous advice, does it not?  On the contrary, it is very important advice, and here’s why…

A lack of organization will defeat real estate investors, EVERY TIME!

A lack of organization can often be the begining of the end for a real estate investor.  When you have no organizational skills, little problems very quickly become bigger problems.  If these big problems are not dealt with properly, the impact to you as the real estate investor can be severe.

Example

With my most recent rental property purchase, I obtained a rental policy through my insurance company.  This rental policy covers me in the event that anything terrible happened to the house. (house fire, natural disaster, etc.)

I gave my insurance company the necessary details for the property that they had requested.  Since this was the 3rd rental property that I had insured through this company, I thought that everything was ‘smooth sailing’ after I had submitted my information to them.

I thought wrong, as I got a call from the insurance company saying that I had not submitted the necessary details.

I knew that I had submitted the details that they had requested.  So instead of getting mad at them, I simply decided to reproduce the documents that they were requesting.

Fortunately, I was able to do this with ease, as I had kept very good records.

In this example, even though the insurance company was the one that made the error, at the end of the day, if I was late in producing these documents a second time to them, or if I decided not to produce the documents again to them, I would be in big trouble.

I did not want to run the risk of my insurance company being discontent and challenging my insurance coverage. So, I jumped into action and produced the documents that they needed.

My organization skills helped me to deal with this problem quickly.

As a real estate investor, it is so important to be orgnized.  I have learned the importance of being organized, the longer I have been investing.

My advice to new investors is to get organized from the very beginning.  Keep good records, and know where to find things when you need to.  This will save you a lot of frustration down the road.

If you are just starting out as a real estate investor, I encourage you to sign up for the Rev N You with Real Estate newsletter. Julie and Dave do a very good job explaining the fundamentals of investing to new investors.  Check them out!

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

Happy investing everyone!

Greetings Everyone,

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

Today I am going to talk about,

Financial Intelligence a.k.a. Financial IQ

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

This goes without saying…You definitely need knowledge.

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

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

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

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

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

My friends, this is not true.

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

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

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

To quote Donald Trump,

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

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

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

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

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

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

Here are the changes that I have made:

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

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

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

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

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

If you like reading my blog, keep up to date with new posts.  In order to do this, you can enter your e-mail address on the left side of the blog.  You can also click on the orange RSS button at the top right hand corner of the blog.

Step Seven is where the rubber hits the road.  A lot of people investing in real estate for the first time feel a lot of anxiety at this step.  If you begin to feel anxiety yourself, rest assured that this is normal.

In this step, you travel to and visit your short list of potential rental properties with your realtor and you put in an offer on a property!

The thought of putting in an offer on a property may make you feel like the picture of the monkey above!

Like I said, feeling anxiety is normal.  If you have followed Step One through Step Six thus far in this article series, you will be in a very strong position when you put in an offer on your first rental property.

After you have viewed the short list of potential rental properties with your realtor, it is up to you to pick one of these properties and put in an offer to purchase.

Since these potential rental properties are nearly identical (property type, geographical location, etc.), it is wise to base your final decision on which property to chose based on which property yields the highest monthly cash flow.

You will be able to know which property will yield the highest monthly cash flow by analyzing the property using the 10% Rule, referred to in step six.

The Holy Trinity of Writing Offers

I heard a saying not too long ago referring to ‘social media’. The saying was that,

‘The Holy Trinity of Social Media is Facebook, Twitter, and Linkedin’

I thought that this was a creative saying, and quite accurate as well.

With regards to offer writing there is also a ‘Holy Trinity’ of conditions that you must abide by.

Holy Trinity Rule #1

The Financing Condition

In your first offer to purchase that you submit, you will be entering in a financing condition into the agreement.

What is The Financing Condition?

• It is a condition built into the purchase and sale agreement that protects the interests of the buyer (you)

• It allows the buyer to arrange financing for the property. The condition is time sensitive, meaning that buyer has X amount of days in order to fulfill this requirement.

• If the buyer is not able to obtain the necessary financing for this property in the required time period, the condition is structured such that, it allows the buyer to walk away from the deal.

• This condition should be included in every single offer to purchase that you make.

Holy Trinity Rule #2

The Home Inspection Condition
As equally importnant as the financing condition is the Home Inspection condition.

• You should never skip getting a home inspection.

• I know some real estate investors who foolishy skipped this step, and it ended up costing them thousands of dollars in repairs.

• You always need to have a qualified home inspector inspect the house before you purchase it.

• Just like the financing condition, you have a set amount of time in order to carry out the inpection.  If for whatever reason, the inspection is not favourable to you, you can walk away from the deal.

• Instruct your realtor when he/she is writing up the offer to purchase to insert the home inspection condition into the offer.

Holy Trinity Rule #3

Lawyer’s Approval Condition
Before you agree to purchase a rental property, you will want your real estate lawyer to review the purchase and sale agreement.

Having your real estate lawyer review the purchase and sale agreement provides a check and balance in the process.

Not all real estate transactions are the same, and not all of them are straight forward, that is why you always want your lawyer to review the deal before you agree to it.  Good real estate lawyers have years of experience working on real estate transactions.  They have worked on many straight forward transactions, and they have seen their fair share of deals end up going sideways and upsidedown…

If there is something unusual in the deal, the real estate lawyer will be the first to notice it, and can advise you accordingly so that you are able to mitigate your risk.

Once you have put in your offer, and all three of the Holy Trinity Conditions have been satisfied…

Guess what?!

You have just purchased your first rental property!

Take some time to click your heels and celebrate!

So now, all of the hard work is done, right?!

Not really.

The easy part is over.  Now the hard work begins…

Stay tuned for Step Eight of How to buy your first rental property…

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.

Related Articles:

Step One – How to buy your first rental property

Step Two – How to buy your first rental property

Step Three – How to buy your first rental property

Step Four – How to buy your first rental property

Step Five – How to buy your first rental property

Step Six – How to buy your first rental property

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

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

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

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

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

1) It was a list article

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

• bullet points

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

• bullet points

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

2)  It discussed a common problem

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

3) It provided a solution

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

4) It promoted discussion

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

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 the orange RSS button on the top right hand corner of the blog.

In this article we continue to examine the fourth step you MUST take in order to buy your first rental property.

You can review the first half of Part Four here.

After we ask the Property Specific Questions outlined in the first half of Step Four, we now have to examine the economic influences of the location that you have chosen to invest.

Area’s Economic Influences

There are 13 questions that you have to ask yourself about the Economic Fundamentals of your chosen area. The answers to these questions will be ‘yes’ or ‘no’. When answering these questions, pay close attention to how often the answer is ‘yes’. The more ‘yes’ answers you get, the better.

1) Is there an overall increase in demand in the area?

Do people want to move into this area, or are people moving our of this area? A simple question, that you must ask yourself.

2) Are there currently sales over list price in the area?

If there are sales over list price in the area, this is a very good sign that people want to actually live in this area. Not only that, it demonstrates that there is a demand for housing, and people with good incomes are moving into the area, because they are able to afford prices that are over list price.

3) Is there a noted increase in labour and materials cost in the area?

If there is an increase in labour and material cost in the area, this will have a direct impact on the prices of new homes. If the prices of new homes are rising in value, more often than not, the existing housing stock will be influenced upwards as well.

4) Is there a lot of speculative investment in the area?

Speculators often invest in areas where they feel that there is a future. They will never invest their money in a City or Town that is not performing well economically. Speculators try to make their money on huge upswing in markets. As a result, when there is a lot of speculative investment in an area, you know that there is a strong belief that there is going to be an upswing in the market in the not too distant future.

5) Is it an area in transition?

Is the area going from bad to good? In areas of transition, you often see significant increases in housing prices. What was once a decrepit neighbourhood riddled with prostitution and crime, on occasion can become a trendy, up and coming neighourhood full of higher income earners.

6) Is there a major transportation improvement occurring nearby?

Transportation improvements have a significant impact on real estate values. Whenever you have a new highway/freeway built, a new train station, or other form of transportation built, real estate values surrounding the transportation improvement increase. This is because the demand increases for housing in these areas. People want to live close by to major transportation channels. Living close by to transportation channels makes life easier for people, as they can use  these transportation channels to commute to and from work.

7) Is it an area that is going to benefit from the ripple effect?

Throw a stone into a pond and watch the ripples form around where the stone splashed.
If where the stone splashed represents where the transportation improvement occurred, the highest increases in real estate values will occur there.

As the ripples go out in the water, we can see the impact it has as the water is displaced. The ripple effect with real estate occurs in the same way. Housing values increase in a positive manner in surrounding areas, outside of the centre of the transportation improvement. These surrounding areas feel the ‘ripple’.

8 ) Is the property’s area in Real Estate Spring or Summer?

The Four Seasons of Real Estate are:

The Autumn – a time to harvest profits
Winter – a time to plan, study, and research
Spring – a time to buy
Summer – a time to manage.

9) Has the political leadership created a growth atmosphere?

The political leadership can really make or break a City or Town. If the leadership is forward thinking, they will do everything in their power in order to promote growth, and make the area attractive for investment.

10) Is the area’s average income increasing faster than the provincial average? (Canada)

If this is the case, this is a very good thing. This means that people with above average incomes are moving into this area. People with above average incomes are able to afford things, such as houses.

11) Is it an area that is attractive to baby boomers?

Baby Boomers have money to spend. If money is being spent in a local economy. The economy will continue to perform consistently, all things being equal.

12) Is the area growing faster than the provincial average? (Canada)

Again, this is a good thing because it shows that people want to live here. If the area was decreasing in population year over year, this would be a sign that people do not want to live there.

13) Are interest rates at historical lows and/or moving downwards?

Low interest rates can often times promote confidence with consumers. Low interest rates are also helpful for real estate investors looking to purchase more rental properties. With low rates, cash flow on rental properties has potential to be more robust, versus when interest rates are at a higher level.

To keep up to date with my blog, 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 left hand corner of the blog.

Article Reference: Don R. Campbell‘s Property Goldmine Score Card.

How to buy your first rental property – Step Three
How to buy your first rental property – Step Four (Part I)
Step Five – How to buy your first rental property

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.

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Step Four Continued – How to buy your first rental property