The single biggest question people ask us – whether they are looking to us for coaching or to work with us on a joint venture deal – is something about whether now is the right time to buy real estate or not.
The media really rocks the boat when it comes to figuring this out. And, frankly, whenever you find a great deal that will cash flow I think it’s a great time to buy real estate, BUT there are better times to do different things in real estate. At our recent Joint Venture Presentation Workshop in Calgary, we had real estate cycle expert, and co-author of Secrets of the Canadian Real Estate Cycle, Greg Head out to discuss this. We grabbed him after the workshop to help you answer the question.
So we asked him:
Greg, is NOW a good time to invest in real estate?
By the way, if you haven’t picked up a copy of the book … you should! I think it’s mandatory reading for any investor in Canada. And, if you aren’t sure what else you should be saying to a prospective joint venture partner or private lender … it is time you came out to one of our workshops. We’re only holding 3 more this year … so sign up today to get your spot and start raising money for your deals while it’s a great time to buy.
Want to plant your investment flag in foreign soil? If you’re like a BIG chunk of Canadians you’re at least peeking over the border thinking about buying a property in the US. The problem for many of us is that we see the absolute GARBAGE coming over the border loosely disguised as education or AWESOME opportunities … when in fact it’s all about some US investor selling their (often crappy) deals to unsuspecting and trusting Canadians.
After watching yet another presentation that made me sick because of the LIES being told from stage (and the DOZENS of Canadians that fell for it and signed up for the offer this guy was making) I decided to help you. We teamed up with two guys who do EVERYTHING with integrity, have hundreds and hundreds of deals under their belt in California and Florida and only want to help Canadians to bring you THE BEST information on buying US real estate for Canadians.
Jim and Brian are not interested in finding more investors for their properties – they have a wait list right now and can’t keep up with demand. All they want to do is help! And we’re SO DOWN WITH THAT!
We’ve helped them bring their awesome program to Canada called Breaking Down the Borders. If you want step by step details to help you get into US real estate check that out.
And … for today … we’ve got Part 2 of the 3 part series on building your US real estate investing team.
Building Your US Real Estate Investing Team – Part 2
by Jim Sheils and Brian Scrone
In Part 1 we got into WHY you need a team and why having expectations of your team is critical. Even with the best team in the best market if you aren’t managing them and laying out your expectations you are not going to get the results you’re looking for.
Today we’re going to get into some of those team members and what expectations you should have for each of them.
Realtor/ Wholesaler
For finding good deals, we believe in building good relationship with top notch realtors and wholesalers. That’s it, simple and effective. It’s also a good match for our “anti-overhead” beliefs. (We don’t do fancy letter mail outs or expensive marketing campaigns to find deals)
Expectations for Realtor/wholesalers on our team:
-Provide us good deals at a discount within the niche type of house we buy.
If a realtor is reselling a property for us:
- Consistently resell our property to qualified buyers in the least amount of time and at the highest price.
-Take the headaches/ logistics closing details off our plate.
Contractors/Sub-contractors/ Handymen
Contractors and handymen are pinnacle to your success in real estate investing. I don’t care what the gurus say, sooner or later, in almost every investment niche, you will need to deal with them. If you have good people on your team to handle repairs and maintenance, you can make a lot of money. If you don’t have good people, this is the area where I have seen investors get absolutely slaughtered. However, if you stick to the expectations below, your odds for success will go up tremendously. No one said these expectations had to be complicated either. These are straight to the point and easy to follow. Follow them. THEY WORK!
EXPECTATIONS:
- On Time
- In budget
- Quality work
** And NEVER pay a contractor in advance more than 25% to start the job!
Property Manager
“Money follows Management!”
Property management is one of the most important elements in Real Estate investing. It can be the most painful part of the game or the least painful part of the game. That will all depend on the quality of your property management. (And before you dismiss the idea of holding rental property, you might want to be aware that its been proven time and time again that long-term buy and real estate investors make the most money.) Everyone seems to get wrapped up in the quick flips (which are good and can produce some nice cash for you) but in the long run, the profits they can produce are dwarfed by long term buy and hold profits. If you’re managing your own properties, that’s fine but you too must meet these expectations. And if you don’t….fire yourself!
Once again, the expectations are:
- Keep our properties filled to qualified tenants and any vacancies are filled in a timely manner.
- Keep our properties cash-flowing (Fair management fees, rents are collected from tenants consistently every month and any maintenance and repairs are done both professionally and economically)
- Take away the headaches of property management for us and our tenants.
Title Company
If you are going to do well in real estate, you need a solid title company handling your closings. I use a title company on EVERY single purchase or resale I do. Title companies can also do important research for you and help make sure you are getting the deal you think you are getting. Not only that, they back up every closing with title insurance which protects you from having anyone try to come and say they own your property 5-10 years after you have owned it! (Yes that can happen) Now for people just starting out, these expectations might be a little confusing but follow them!
The expectations of a good title Company:
- Investor Friendly (they work with a lot of investors, understand creative financing, hard money lending , etc) – Closings are done on time and with good service – Fair prices
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In Part 3 we’ll get into rest of your team members and the expectations you should have for them!
In the meantime if you want help crossing the border – check out this video on investing in US real estate for Canadians.
Posted in Buying Real Estate in the US by .
For over twelve months the single most read blog post on this site – month in and month out – has been a post I did awhile ago on investing in the US for Canadians.
Given that I should not have been so surprised when a survey of our newsletter readers resulted in 45% of them asking for help buying in the US …
So … your wish is my command!
We’ve teamed up with Jim Sheils and Brian Scrone to bring you the REAL DEAL when it comes to investing in US real estate as a Canadian. And today we’ve got part 1 of a 3 part series on one of the most critical pieces to the puzzle … BUILDING YOUR US REAL ESTATE TEAM.
Building Your US Real Estate Team – Part 1
by Jim Sheils & Brian Scrone
To be totally transparent, its taken us about 15 years of full-time investing to figure out the simple and clear expectations of your team we’ll share with you that will undoubtedly save you a ton of headache and money throughout your investing career. Whether you’re looking to buy your first investment property or you are already a seasoned investor, there is a clear, undeniable fact that you must accept in order to be successful: You need a team to succeed and your relationships can and will make or break your deal.
It doesn’t matter if you are buying one investment property or 100, you’ll still need the same team members to make it happen.
This fundamental of real estate investing could not be truer as it relates to Canadians coming south to invest in the US. You could have the best market with the best deals but if your team isn’t in place your investment will not be successful or sustainable.
Once you’ve identified who your team players are, it’s critical for you to set simple and clear expectations that are non-negotiable for each team member.
This is the secret to making money or losing money in this business. This principle will force you to make smarter and wiser decisions with less emotion. If you only know “who” the team players are, but you are not clear on what to expect from them….then how can you lead them???? How can you determine whether or not you have the right people on your team without clear expectations? It is nearly impossible. Not to mention, having expectations will not allow you to “settle” for less than what you need and deserve to be successful.
Clear, simple expectations will work wonders for you
The Team & Expectations
In Part 1 we are going to share with you not only “who” the members of a good real estate team are for Canadians heading south. In Part 2 and Part 3 of this series we’re also going to share the expectations you should require for each of them and make non-negotiable.
PLEASE do not underestimate the power of this simple principle. I can almost guarantee this will help new investors get a huge jump start and also help seasoned investors adjust their businesses for better success.
Again, these expectations are short, simple and easy to remember. That is what makes them so powerful! They allow you to measure your team consistently with fairness and without emotion
REMEMBER: The expectations are what really matter (Too often we focus on the garnish and not the “meat and potatoes” of what’s most important!).
If someone on your team cannot meet the expectations below, they should NOT be on your team! Don’t over think it! Don’t listen to excuses, stories, “industry standards” negative data, etc. Stop trying to fit the square peg in the round hole! If there isn’t a fit based on the expectations you’ve set…MOVE ON! And even more importantly, when you have a team member that continually meets the expectations you’ve set…TREAT THEM VERY WELL!
The main players of a successful real estate team will include:
1 – Realtor/ Wholesaler
2 – Contractors/ Subcontractors/ Handymen
3 – Property Manager
4 – Title Company
5 – Insurance Agent
6 – Mortgage Lender
7 – Bookkeeper & Accountant
8 – Tenants
In Part 2 and Part 3 (coming in the next week) we’ll reveal the expectations for each of these team members.
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Want More Help Investing in the US?
We’ve teamed up with two of our favourite guys in the US – the ONLY guys we personally would go and learn from or invest with if we were setting foot in the US – to bring you the real deal when it comes to investing in the US as a Canadian. We created a video to explain all the details to you … check out how we’ll help you break down the borders in the US investing market.
Posted in Buying Real Estate in the US by .
Some investors may try to pretend otherwise but the reality is that sometimes real estate investing sucks. It’s hard. It’s tiring and the problems always seem to crop up all at once … not nicely spaced out for ease of resolution.
We try to space things out, but inevitably something else comes up or something gets delayed … and there we are, BOOM, right in the middle of a chaotic storm of telephone calls, paperwork and property visits.
There are massive highs and there are major lows when you’re investing in real estate.
This past week is yet another perfect example of this. We closed on our second deal of 2012 (YIPPEE!!). It’s a cool deal that my brilliant husband Dave structured where we’re financing the purchase with our partner’s line of credit so we could close on it, renovate and refinance it easier and more profitably for all of us (I won’t get into too many details about this but I did just write about how to finance your renovation).
We were pretty pumped about that deal, and we’re excited to get the work started. At the same time, however, we received notice that one of our tenants is moving out, we were struggling to rent our character home (lack of a fenced yard was KILLING our tenant options so we’re building a fence now & it’s now rented yeah!!), and we made an error in the bathroom renovation on the first property we bought this year that extended the possible showings out by 10 days … meaning one more month of lost rent for the property!! 
It’s definitely been a week of highs and lows … with more lows than highs.
And that is just the way it is.
Whether you’ve done over $10,000,000 in deals like we have or you are just starting out … sometimes it’s really hard.
You’re probably not doing anything wrong. There isn’t some magic pill you’ve missed out on. It’s just how it is.
Real estate investing is not easy all the time. I want you to know that because sometimes it can start to feel like it’s only hard for you … especially if you’re on someone’s email list that only talks about the money to be made and the good to come of it, or if the people you follow on Facebook or Twitter only talk about how to make it work and how great it is when you know ‘the secret’!
Real Estate Investing does get easier with time and experience and the right coaching – absolutely. We now can spot great deals with much less effort and minimal second guessing. Most of our properties attract awesome tenants, operate fairly smoothly on a day to day basis and fill fairly quickly. We also find it easier and easier to attract the investment capital we need to get good deals done. We know that there is always private money looking to grow inside a cash flowing investment. And, we almost always know who to call when we don’t know the answer to something. Oh, and we make a very nice amount of money from our properties each month and each year. We have a lovely number of six figure pay days and many five figure ones …
But – and it’s a huge but with a capital B – it’s still really hard work finding great deals (we have looked at 15 properties recently and nothing even got us excited enough to make an offer!). The banks can be absolutely utterly impossible to deal with (refinancing the character home is almost done but man did we dance a pretty little dance to make it happen). And, we hear NO far more than we hear YES from sellers, buyers, banks, partners and tenants.
However, it always seems to happen that when I think I can’t take another tenant problem, one gives me a giant teary eyed hug and thanks them for giving them an opportunity to become a home owner. Or, just when I wonder if I can stomach another stubborn seller, we put together a deal that helps a seller out of a bind, gives us a great home for another good tenant and makes us and our partners a solid return!
It’s a wild ride …
If you’re ready for the ride of your life … hop on! The only bad move is none at all I think … yea, you might mess up, but we’ve messed up a lot and we’re doing well! Be more afraid of the life you don’t get to live because you do nothing than what happens if you try. But, trust me when I say, it’s not easy and anyone that is making it sound easy is not telling you the whole truth. They either don’t have enough experience to know OR they are lying.
In case you’re having a down week I just wanted you to know the up is around the corner AND you’re not alone!! 
Oh and if you want to vent, fill up the comments below and we’re happy to hear about what’s going on for you!
Want Support for the down times? We’re here for you! Check out our Rev N You Insider Club … action items, Q&A, support and fun!
Earlier this week we unveiled the before and after pictures of our character home renovation project. And last year we shared pictures of a major renovation project we did where we added a legal suite. One of the best things about being a real estate investor is the opportunity to add value through improvements. And, done right, renovations can add more value than you put in, increase cash flow and attract better tenants or buyers. The only problem with renovating rental property: IT COSTS MONEY!
So how do you pay for your rental property renovations?
One of the absolute best ways to add value to a property is to make improvements that make the home ‘move-in ready’. Things like flooring, kitchen upgrades, paint and landscaping can improve the value of a home by as much as twice the cost of what you put into it – if you do it right. Another way to make a huge value improvement and boost cash flow is to add a legal suite.
But it doesn’t matter if you’re adding a suite or just putting in new flooring – it all takes cash. And sometimes cash is the one resource you DON’T have as an investor.
For us, the ideal scenario for a property that needs a lot of work is to find a seller that will carry the financing (in a VTB) for as much of the purchase price as possible. We would then raise the renovation costs through a short term private money loan or a line of credit.
We would then complete all the work, place a tenant and then refinance at the bank hopefully pulling out enough money to pay out the private loan and the VTB.
That’s the ideal scenario but in many cases we aren’t able to find a seller that agrees to carry financing – even for a short period of time. No need to quit if the seller won’t give you a mortgage. There are still plenty of options if that is your situation.
Options for Financing a Renovation if the Seller Doesn’t Carry Financing
1. Bank programs that will help you out with renovation costs (talk to your mortgage broker or bank to see if you’ll be able to qualify for any of their programs to fund the renovation or at least pull out some of that cash after it’s done; there are a lot of limits on these programs but if you can make it work it will probably be the cheapest money you’ll find for doing this type of project).
2. RRSP mortgage – when you borrow funds from someone’s RRSP to do your deals you have a lot more flexibility in what you do with the money. You have a lot more control over the terms of the mortgage and can decide what sort of payment schedule you want to offer the lender. You could fund 100% of the purchase price (although I personally would never recommend a lender agree to this for their own security – you CAN do it and given that you’re planning to add value through a renovation it might be feasible).
If you have a property with a lot of equity in it, you can put a second mortgage on it using arms length RRSP funds (arms length just means that you are borrowing from someone that is not your spouse, child or parent). This is what we did for the ’70′s house renovation project we tackled last year. We negotiated a balloon payment at the end of term and the ability to repay it at any time with no penalty. This allowed us to use the funds for the renovation without the pressure of having to make monthly payments at the same time. Once we pulled the money out after refinancing we still had the funds to use so we put them into another property and eventually paid it out when we sold the home we had put the second mortgage on. We were paying 11% interest on the funds but we were easily making a 20% or higher return on the funds so it was a good use of the cash for us.
3. JV Partner – We used a combination of private money, RRSP mortgage and a JV Partner to make the 70′s house renovation happen. There are so many options for utilizing a partner for a project like this it could be an entire article on it’s own. A JV Partner could be a carpenter or a skilled trade and put in their labour in exchange for a share of the deal. They could put in a big chunk of cash to fund the renovation and the down payment or just the renovation. There are so many options, it’s really just up to you to come up with something that works for you and gets your partner a great return.
Generally we end up using a combination of options but no matter what way we tackle it, we find the best way to tackle a renovation is to buy the property without the bank to begin with, get the work done, and then refinance it afterwards at the new improved value.
There’s certainly risk involved with this because your renovation might cost more than the value you add. The market could go down in the time it takes you to complete the renovation and cause your valuation to be lower than you expect. Or, you could run into some challenges in the renovation that require more money to get through.
If you’re thinking of tackling a large renovation like the addition of a legal suite or a total makeover of a property:
- Make sure you have your bases covered and you have options for cash if you need them. Things can come up and you don’t want this to be the project that sinks you financially because you couldn’t afford the $10,000 surprise.
- Get a good grasp of the market area before you tackle a project like this. Know the rent rates. Check out what else is for sale and what has sold in the last six months. Figure out the tenant profile (learn what is going to be important to them in this home so you can plan for that in your renovation). Using this information run your numbers. Make sure the money you’re putting in will add value (for example, generally a $7,000 roof does not make the property worth $7,000 more so watch things like this! Just because you’re putting in $40,000 doesn’t mean you can assume it will be worth $40,000 more so you have to know your comparable properties). Ensure your monthly carrying costs once it’s all complete will easily be covered by the rent you’ll bring in.
- Based on the work you need to do to attract great tenants (and make it legal if you’re going that route), make a conservative budget that include your carrying costs AND the renovation costs so you know you can cover taxes, water, sewer, hydro and any financing you have in place initially. Make sure you’re going to be ok if the project takes longer than you expect. We generally add a 10% contingency fund on top of our estimates, plus we always stress test our numbers so that if an 8 week project turns into 16 weeks it won’t bankrupt us.
A little buffer is important but a big buffer will make a good project look like it’s not feasible. It’s a bit of a balancing act and the first time you do it, it will stretch you a bit mentally but it does get easier.
Renovations are a great way to add value, increase the rental income and attract better tenants to your property. They also can contribute to improving a community and creates jobs for the people in the area. And the good news is that the options to fund the purchase and the renovation are only limited by your own willingness to make it happen.
Your Opportunity is Here – Need Help Raising Money for Your Deals?
If raising funds to do renovations is an obstacle, or even raising funds to buy more investment properties is holding you back, now is the time to take action and learn from two investors that have been raising millions of dollars from Joint Venture Partners and Private Lenders for the past 8.5 years.
There is no better time than now to start learning and putting into action the secrets of raising funds. Our JV Workshops will help you learn the words, phrases, and actions to take your investing to the next level.
Why wait till next week, month or year to get your money-raising talents in action! Buy real estate and wait…don’t wait to buy real estate.
Details on the workshops are right here:
http://jointventurerealestate.ca/
First Image Credit: © Regissercom | Dreamstime.com
Posted in Flipping Joint Venture Partnerships Real Estate Investing by .
