Breaking the ice!

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tytrischuk

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I think it would be interesting to see how everyone got into the real estate game. I put together
a couple questions that I feel would be valuable for me (as a rookie) and others like me,
to have clarity on before we make our first investment in RE.


What was your first purchase?
How did you finance it?
What were some challenges you had to overcome?
What have you learned along the way that you would advise to someone new to RE?
How has your RE empire grown since?
Anything else you`d like to share that would be valuable to a rookie investor?


Thanks in advance for your answers. I think this will help all the rookies out there
(including myself) to take action on their first RE investment.
 
T

tytrischuk

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thanks for the link!

im still hoping to have these specific questions answered though, cmon on people !
 
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ajaysritharan

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Hi there;I think its a great idea to share one`s knowledge and experience with other. Its allows one to discover what`s out there and you might even get some inspiration. So here are the details of my first deal.

Purchase Price: $88,500
Property Type: Triplex -
Financing: High Ration Mortgage - 10% down payment
Cash Flow - $600/month
Challenges. Getting the vendor to provide all the supporting documents for the financials - hydro, gas expenses, property taxes, insurance etc. Also trying to close the deal on time was a challenge. Going through this process. I learnt that you have to map out a time efficient process in terms of closing the deal. After this deal, I mapped out such a process and now my deals are closed on time. My last challenge on this deal was negotiating with the vendor - trying to get a credit for repair costs identified during the inspection.

Lessons Learned:

1. Do your homework on the area and the tenant profile. The type of tenants that you have can significantly change your profit outlook (due to eviction, late rent payments etc)
2. Have a reserve fund to cover unexpected expenses. I find that there is always something that comes up from time to time (maintenance, major repairs, vacancy etc). I budget all of these in my monthly cash flow projections in addition to having a reserve fund)
3. You need a good local property manager - very important. I think having a good and honourable property manager/real estate team makes a huge difference. You have to build a strong relationship. They know a lot more about the local market and tenants that you might
4. Be prepared for a whole bunch of paperwork and record keep. Staying organized is key.
5. Costs can creep up. You have to be on top of every expense and find ways to pre-actively reduce them.
6. Try to find tenants that will cover their own utilities. By far, this is my most variable expense and these utility bills can be huge especially during the winter.

There are many more but I won`t keep going for the sake of trying to keep this short.

How has my portfolio grown?

Since my first property, we have purchased 5 more. (duplex, triplex, fourplexes and a single family home)

Ajayan Sritharan
Professional Real Estate Investor
647-298-9449
 
jarrettvaughan

jarrettvaughan

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My first Purchase was in Red Deer, single family home in 2007. I paid for half of the down payment and my partner paid for the other half. The challenges have been that we had a one tenant that didnt pay and took off, lost $900.00 or so. Next couple tenents didnt stay for very long which caused some vacancy problems. No we have a long term tenant who has put his own money in the property and is wanting to set up a rent to own.

I am glad that I bought that property, even though i bought it at the peak of the market. I have now own 6 properties and am looking to expand. I wish that I would have done a little more reasearch on Red Deer and may have bought in a different area. I also would like to stay away from older homes as I live in BC and find it hard to deal with large scale rennos or repairs through a property manager



QUOTE (tytrischuk @ Mar 12 2010, 04:36 PM) I think it would be interesting to see how everyone got into the real estate game. I put together
a couple questions that I feel would be valuable for me (as a rookie) and others like me,
to have clarity on before we make our first investment in RE.


What was your first purchase?
How did you finance it?
What were some challenges you had to overcome?
What have you learned along the way that you would advise to someone new to RE?
How has your RE empire grown since?
Anything else you`d like to share that would be valuable to a rookie investor?


Thanks in advance for your answers. I think this will help all the rookies out there
(including myself) to take action on their first RE investment.
 
gwasser

gwasser

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QUOTE (jarrettvaughan @ Mar 16 2010, 10:55 PM) My first Purchase was in Red Deer, single family home in 2007. I paid for half of the down payment and my partner paid for the other half. The challenges have been that we had a one tenant that didnt pay and took off, lost $900.00 or so. Next couple tenents didnt stay for very long which caused some vacancy problems. No we have a long term tenant who has put his own money in the property and is wanting to set up a rent to own.

I am glad that I bought that property, even though i bought it at the peak of the market. I have now own 6 properties and am looking to expand. I wish that I would have done a little more reasearch on Red Deer and may have bought in a different area. I also would like to stay away from older homes as I live in BC and find it hard to deal with large scale rennos or repairs through a property manager

I bought my frst condo in 1979 for $40K. It nearly bankrupted me during the 1982 real estate crash after an initial marvelous start-up.
I will spare you the details. If I had hold on to it, it would have been worth $240,000 today.

Instead I ended up with a house that I bought just before the real estate crash of 1982. I bought for $93,000 it fell below the mortgage value all the way down to 75K in about 6 months. I still own this one, today it is worth around $600,000. Nice he? Especially if you forget about all the sh.t in between. Overall one of my best investments (aside of the stock market).

My lessons, everything goes up and down. Grind your teeth during bad times but buy using the cash from the good times. Don`t panic sell, sit it out. Sometimes though, there is a real reason to sell and that is fine, as long as you can replace it with a better investment. Overall, a diversified portfolio, of stocks (including gold), bonds and real estate is profitable over the long term and keeps you financially alive!

Survival of the fittests or of lucky dummies like myself.
 
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