Real Estate Investing is NOT For Everyone…

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Investing, no matter what market, is a tricky game. Some people are naturals at tracking the rises and falls in the market and know exactly when to invest whereas others end up using apps like etoro malaysia because they can just copy what other investors are doing! And there’s no shame in this but it’s important to admit to yourself when investing just isn’t for you. As the year rolls to an end, it provides a great time to reflect on what worked in the last 12 months and what didn’t. This important review should include not just your real estate investments but also other areas of your life: family, friends, relationships, business, partnerships and other investments.

Real Estate Should Not BE Your Life, It Should Fund Your Life

Many of us strategic investors across the country have had a stellar year in the real estate market this last 12 months. By closely following the real estate cycle?s underlying economics we have been able to identify opportunities when others were frozen in fear or confusion. While keeping a close eye on the economy, rather than real estate numbers, we were also able to identify regions whose markets were poised to flatten out or drop, thus forcing us to change our approach in those regions.

These insights, rather than the emotional uproar many read about on a daily basis, have made a real difference in 2013 for the strategic minded.

Success at Anything Takes Study, Work and Focus

As with any aspect of life, success in real estate investing takes time, effort, and pro-activeness. With this is mind, it makes sense to start building you knowledge of investing and also your funds sooner rather than later. You don’t have to be a fully-fledged adult to start investing; the best investments for young adults prove that is the case. By investing, results flow when you take time to do your diligence, take time to ask the right questions, and take time to get under the surface of the pithy quotes and petty arguments in order to get directly to the real heart of the issue. In real estate, the more of this homework you do the more you mitigate your risk and the luckier others will call you. You can also read up on blogs and articles (similar to https://cristalcellar.com/real-estate-investment-tips) to further your knowledge in this domain.

A Little Homework would have?

For instance, with a little homework, you would have known that in 2013 there were two windows of massive opportunity to lock in your long-term mortgages at ridiculously low rates. In fact, you would have known the specific words to use that opened up the ?special drawer? in your bankers’ office that contained that day’s best mortgage discount spreadsheet. Did you know that the AVERAGE discount off of 5-year fixed posted rates that Canadians were given in 2013 was a 2.15% cut according to CAAMP! Well, that was average; you were able to get much more if you knew how to ask. Many REIN? Members learned how this year went and are now smiling widely. You would also have known that outside of these windows the best choice was to ride the variable rate mortgage (which at this moment, you can get at Prime minus .5%).

A little homework would have revealed that five key cities, both in Ontario and out west, were poised to see their unemployment level drop, thus attracting a new and vibrant community into their cities, sparking a further increase in demand for quality properties in very specific neighbourhoods. A little homework would have shown that properties in January that were barely break-even (or even a little negative cashflow) in Edmonton or Calgary would be producing $200+ per month more by the end of the year. Of course, these are just a very, very few of the strategic opportunities that were revealed in 2013 by following the insights and analyses we discuss.

That was Yesteryear, What About Tomorrow?

2014 will also be filled with opportunity, confusion, excitement, protests, politics, procrastination, predictions, and pontificators? everything we witnessed in 2013 only elevated. Our job as strategic investors is simple: to hack our way through the reeds that obscure our view, to filter the noise that covers the true market signals and to stay focused on our over-arching life goal of why we want to create success. Here is a rule I live by to help me with this every year.

Talking To the Right People Makes You Money

A great strategy for getting a real life view on whether real estate investing would be good for you is to talk with other strategic real estate investors to hear what they’ve discovered. This is a strategy I use constantly, as I am always on the look-out for insights, perspective, and learning opportunities. You could also try talking to experts different from your zone. For example, if you are a real estate agent that only handles residential properties, you might want to get in touch with someone who is actively involved in commercial property sales (like Milwaukee Real Estate Commercial Sales and Leasing agents). Gathering all the information possible from other sources could prove beneficial in the long run.

Investor Insights That Provide a Wide Perspective

If you haven?t had a chance yet to speak to many other strategic investors, or you would like even further perspective, here are a few comments that have come to me from your fellow Canadian investors from across the country.

Opportunity.

?Real estate is a ?real? tangible physical asset. A stock simplistically represents a piece of paper that is given its value by someone else?s performance and yet another?s analysis and accreditation as to what that piece of paper is worth. This phenomenon is way too volatile to be reliable. Real estate has less guesswork and margin for error when you follow a proven system or set of rules for investing. The ?learning? of that system is not beyond the reach of anyone with the desire, gumption and stick-to-it-ness to learn it. I would rather control my retirement plans than count on a government plan that may or may not be there when I?m ready to retire (or slow down a bit), or ?take a chance? that that stock paper will have enough value at the time I retire.?
-Valden Palm

?God?s not creating any more land. Supply and demand says that real estate is a good investment.?
– Marty Green

More Control.

?Freedom. With a strong portfolio I can choose to work, or pack up and move to a new company where I?m happier, or not work at all. Too many people are chained to a job they hate because their families depend on them, but real estate generally gives them more freedom and more control over their lives.?
– Steve White

?Real Estate does not create the anxiety of being completely out of control, or that someone else has more control, like other types of investments such stocks or mutual funds. I can add value, I can add income, I can control operating costs, and I can adjust my marketing to match the market conditions. I feel so much more in control.?
–

?? stock investment relies on breaking information and/or ?what have you done for me lately?? scenarios. Real estate, especially as a long-term investment strategy, provides ways that you can succeed regardless of market conditions. If you follow the right formula, and have the right mindset, you can create a cash-flow positive portfolio that brings you financial freedom over time. In short, if you invest in stocks, you are constantly looking for home runs; if you invest in real estate and follow the correct formula, your portfolio will hit a home run for you.?
– Sam Hosseini

?You can plan and be sure that it will happen, for the main reason that the control of that plan remains in our hands, not like the stock where the control is out of our hands.?
– Ramon Gutierrez

?Let?s not forget the confidence factor. When you own the right piece of real estate, you can see it flourish every year with debt paydown and cashflow (not even including appreciation). Then talk to some of your friends and watch their shoulders droop when they talk about their retirement funds vaporizing in some mutual fund.?
– Harold Line

Investing for the Future.

?No one will care about your future like you will. Create a legacy to leave for your future generations.?
– Kris Fortner

?It is said that if you give a man a fish, he will eat for a day. If you teach a man to fish, he will eat in perpetuity. In that same vein, I look forward to imparting to my children, the same distilled wisdom and experience I have gleaned so that they may prosper and share this with their future generations!?
– Scott Crawford

?Not only does it create wealth in your lifetime, but it is wealth that will be transferred into my children?s lives and future generations. It allows me to bless others along the way.?
– Nelson Camp

Working Smarter, Not Harder.

?Start making money work for you; work smarter not harder.?
– Jarrett Brian Vaughan

?Real estate is REAL!! Real people pay real money every month for a real asset that is their real home. And thus real valuations based on real cashflow after real operating expenses can be easily obtained with real equity created through real mortgage pay down and real value appreciation! It is a very social asset with inflation protected rents and values where valuations are far tougher to manipulate than the stock market. Income for life with rising equity. Seems like a no-brainer to me.?
-Thomas Beyer

Superior Market Class.

?While equity markets go up and down, real estate has proven to be the most reliable hedge against inflation?superior to all other asset classes. It represents the last predictable and reliable cash-flow mechanism in the world [and] you don?t have to count on the ethics of top corporate executives to achieve the first two.?
– Calum Ross

?When done properly, best consistent rates of return with least risk of any of the readily available investment options.? – Harold Line

?[It?s been] proven time and time again that real estate is the best way to increase your wealth.

1. It allows you to (safely) use the banks money to invest
2. You can then make improvements and changes to add value
3. Options: live in it, rent it, flip it, lease it, leverage it, borrow against it, re-zone it, subdivide it . . .

– Rob Patenaude

?Real Estate is a “safe” asset over long-term: it?s like raising cattle. They provide milk over the long term, and eventually, it?s time to ?feast? on one of the herd. It pays all through its maturing process and pays extremely well at the end when you offer it to another to do the same (investor), or you provide a family with a home.

[As] I like to sleep well at night and I?m not worried about the economic world coming to an end. I have chosen my locations under heavy scrutiny where they will always be in high demand. People always need a place to live. I have zero worries about my investments crashing.?
– Nelson Camp

?You can always touch real estate; can you say the same about your stocks? [It?s] much easier to get good information about real estate; companies don?t freely share what they are up to.?
– Marty Green

Cash Flow.

?Cash flow provides choice. Choice provides lifestyle. Create a lifestyle of great choice.?
–

?With a proper system and due diligence, the returns are predictable and replicable.?
– Dineen Jogola

?Cash Flow, mortgage pay down and leverage in strong markets provide excellent returns for investors and you have more control in locating these regions and individual properties than you typically have when investing in stocks and bonds. ?
– Mitch Collins

Learn-able. Do-able.

?Another great aspect of real estate investing is that it rewards knowledge. One has to look at an area and learn everything he or she can about the area?s past, present, and future. Many other investment vehicles reward risk tolerance and risk management. Instead of concentrating on one thing in an effort to acquire useful knowledge, one needs to diversify in order to minimize risk.

Gaining knowledge is more noble and effective than increasing one?s risk tolerance.?
– Sam Hosseini

?Because you can. No matter age, health, income, credit . . . you can.?
– Corey Young

?First things that come to mind: versatility, time and tangibility. I have various investments in my portfolio and watch the performance of each. What I love about real estate is having a property and watching the equity grow. Buy and hold. The more the mortgage is paid off? and rental rates increase?more cash flow for me.

Time is precious as we all know. Watching stock, financial reports seems like a gamble and is time consuming. While I?m retired, sitting on a beach, I?m making money.
Tangible – being kind of a control freak, it?s nice to be able to see it and touch it. [I like being] in control of what I buy and doing my own analysis. ?
– Shannon P. Murree

Real Estate – The Ultimate 3-course Meal

To cap off this discussion, I leave it to Thomas Beyer and his food analogy of real estate.

If this doesn?t increase your appetite for real estate investment with a proven system, I don?t know what will! According to Thomas:

Real estate is like a three course meal.

1. The Appetizer is the positive cash flow, always appreciated but not required, as break-even is okay, too.
2. The Main Course is the mortgage pay down and it must be there?month after month after month. You will get rich and fat just on the main course.
3. The Dessert is the equity appreciation. Like an appetizer, it?s always appreciated but not required for a meal or wealth creation.

Unfortunately beginning and inexperienced investors focus only on the dessert?and just like in real life, if that is all you eat?you die soon.

To see how this works in real life, do the math. Add a house for $250,000 with $50,000 (or 20%) down. Assume no cash flow after rent, minus all operating expenses and no equity upside. In ten years the mortgage has been paid down (by the tenants) from $200,000 to about $155,000 or by $45,000 (depending on interest rates and amortization slightly more or less, of course). By that calculation, you made 90% on the $50,000 invested in ten years, with zero cash flow and zero appreciation. It?s better, of course, with dessert and appetizer, but not bad? 9% a year on average in a flat market.

Add a modest 2% appreciation per year or only 20% over ten years to this example and you?ve got another $50,000. That equals another 100% on the cash invested. Some dessert, eh??

Make 2014 YOUR Year

With that I bid you a wonderful end to 2013 and may 2014 provide you the opportunities you seek, the happiness you deserve and the perspective on life we all need.

began his investing career in 1985 with a house purchased in Mission, BC. He is Founding Partner and Senior Analyst at The Real Estate Investment Network and currently owns nearly 200 doors in BC and Alberta. A seven-time best-selling author, Don?s expertise and passion for teaching Canadians how to create wealth through real estate are far-reaching and have made an impact on the lives of thousands.