How did you get your start

[fumbrunner]

People always have interesting stories on how they got started with REI.  What are some of your stories on how you got started?  What were some of the early lessons that have made you successful investors?  How long have you been investing?




Mine is pretty vanilla.  I was fortunate enough to have very supportive parents that supported me through university, both in terms of paying for it and allowing me to live with them.  One of the benefits of a first generation Canadian with parents who came here to give their children a better life.  This allowed me to save and save.  After getting married and living in an apartment for a year, we built our home with alot of sweat equity.  I therefore had equity right away and used it to begin purchasing properties.

I have been investing for 3 1/2 years and have 9 doors spread over 4 buildings, and loving every minute of it.  I love working with my hands, so this is the perfect hobby for me. Hopefully it will be my job full time someday, when I say goodbye to the desk job that swallows up 40 of my hours per week.

 

[Thomas Beyer]

QUOTE (fumbrunner @ Feb 6 2010, 05:49 PM)
People always have interesting stories on how they got started with REI. What are some of your stories on how you got started? What were some of the early lessons that have made you successful investors?


Love what you do.



Take calculated risks.



Have some money to start.



Go slow .. but not too slow.



Build a track record.



Know what you are doing i.e. get educated such as REIN !! .. courses / books / seminars .. and then:



TAKE ACTION.



Have a capable team: lawyer, realtor(s), accountant(s), property manager(s), handymen, assistant ..



Sell your abilities .. but don't oversell.



Delegate tasks you're not good at or don't like to do .. and on a related/growing scale: find partners that love to do what you don't and that you can work well with on a human, intellectual, social, energy and value level !

Have enough cash to live on .. and that means a JOB for many years until the portfolio is large enough. (Budget for 5-10 years minimum here .. not 2-3 years !!)



Start with a few small homes, possibly suited.



More reads here, or on my blog (see footer)



5 ways to make money http://myreinspace.com/public_forums/General_Discussion/61-3347-5_ways_to_make_money.html



How to get started http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html



How did I get started: http://myreinspace.com/public_forums/Real_Estate_Discussion/62-15422-Is_my_goal_of_200K_annual_income_feasible.html

 

[Rickson9]

I read "One Up On Wall Street" by Peter Lynch when I was 14 years old. Financial statements seemed to be important. Stocks came first because they were easy to understand - it was only numbers. Found out real estate was basically the same thing with more human interaction.

The clichee is that there are a million ways to make a million bucks. Recognizing that I was/am lazy I decided that the path for me was to:

1. be an investor as opposed to an entrepreneur (make less money, but do less work)
2. buy during decling prices/bear markets to minimize risk and maximize yields
3. invest only in momentum plays (ie. immediately cash flowing)
4. avoid investing dependents (ie. partners)

As you can see, these "rules" are limiting, but I feel that with my personality, it was the best method (for me) to build wealth without compromising my (work adverse) personality. Others who are more aggressive and proactive (ie. willing to be an entrepreneur, invest in other opportunities, take on partners, etc.) will achieve greater wealth or faster success.

I was fortune enough to have the opportunity to invest during the RE slowdown in Toronto in the 90s, the stock market crash of 2002, the stock market crash of 2008 and the U.S. RE crisis in 2007-present. Market downturns have a positive correlation with positive outcomes for me. My portfolio is a time capsule of some of the crashes we`ve had since I was able to invest.

During rising prices or bull markets I tend to do nothing, but play video games, hang out with the wife, and read financial statements while sitting on the can (not all at once). A person can end up reading a lot of financial statements while sitting on the can during a bull market (bull markets last a long time).

During declining prices or bear markets I invest whatever capital I manged to scrape together during the last bull market (when I did nothing).

In general, I`ve found that 1-2 years after the start of a nice depressing stock market decline and 2-3 years after the start of a nice depressing real estate decline is a sweet time to go shopping.

"I like to shoot fish in a barrel, but only after the water has run out."

 

[Nir]

A good childhood friend I met 5 years ago strongly recommended I read "Rich Dad Poor Dad". after that I read "Real Estate Investing in Canada".
The meeting with my friend and the 2 books are the reasons I started investing. interestingly my brother read rich dad poor dad too and it meant nothing to him.
coming from a family of employees, many are academics with Master`s and PhD`s from top universities but not necessarily "real life experiences",
this simple book was a huge eye opener. The idea of generating PASSIVE INCOME is what fascinated me and the reason I invest in RE. experience shows it`s not really passive but compared to being an employee, time spent per dollar profit is indeed like 10 times less as RE investor than average employee.
Cheers.

 

[2ndstory]

I`m not a seasoned investor by any means yet, but I`m on my way. Rich Dad, Poor Dad was definitley a motivating book to read, and I realized that I have been brought up and raised in the Poor Dad philosophy of finances. I have a great and steady career that pays the bills and was hoping to have my house paid off by the time I retire, when I started to wonder if I could do better than that.

All my research so far has been focused on Canada. I started by reading Real Estate Investing for Dummies for Canadians. I figured it was a good place to start and then I went on to read Campbell`s books and am continuing to read all of the time. Partnered up with a great agent, lawyer, and broker. All of my investing is focused in Winnipeg. I have a renovation in the Fort Rouge area that is almost finished, a 4 plex in the St. Boniface area, and am currently looking to expand my portfolio greatly over the next few years. Looking ahead and seeing that some of the challenges are going to be in securing finances with the tightening of the mortgage rules. Not discouraged though! Sometimes you win, sometimes you learn is the motto I`ve adopted.

Nik

 

[gwasser]

QUOTE (2ndstory @ Feb 18 2010, 11:21 AM) Sometimes you win, sometimes you learn is the motto I`ve adopted.

Nik
Wow that is a great slogan. I wish I thought of that one!

 

[GarretW]

We were disenchanted graduate students, and were looking for a business we could run with a cellphone and a pager. Started out thinking we could flip houses, and ended up buying one, only to find out we didn`t do our numbers right and wouldn`t have made any money!

After hard lessons learned, we bought our first rental property in 1997, used the sweat equity it in to secure a line of credit, and then used those revolving funds as down payments to buy 6 duplexes that year. Kept buying an average of 4 properties per year for the next 4 years.

Had several large cycles where we secured a large line of credit, bought disheveled properties for cash, fixed them up and placed a stable tenant in it (to look good for the banks) and then refi`d the property to pay back the LOC.

Our high point had 75 units spread out over 43 buildings, but we are currently reshuffling our portfolio somewhat to have properties with lower maintenance in better areas.

 

[fumbrunner]

QUOTE (GarretW @ May 13 2010, 05:18 AM) Our high point had 75 units spread out over 43 buildings, but we are currently reshuffling our portfolio somewhat to have properties with lower maintenance in better areas.

Hi Garret, as you probably know, I just bought one of your properties. If you have others and want to sell privately send me an email. gggmmmar(nospam)@hotmail(dot)com

 

[housingrental]

Hi Garret
Thanks for sharing
I take it from the above post you`ve run into higher than expected maintenance costs recently and tenant profile issues re uncollected rent, vacancy, or damages?
Would you be willing to let us know in more detail what hasn`t gone the way you expected and what other people looking to expand could benefit from hearing about your experience?

 

[GarretW]

QUOTE (fumbrunner @ May 13 2010, 09:14 AM) Hi Garret, as you probably know, I just bought one of your properties. If you have others and want to sell privately send me an email. gggmmmar(nospam)@hotmail(dot)com


I found out from our Realtor the other day - I recognized your name! We are always interested in dealing privately, so I`ll email you shortly.


Garret

 

[GarretW]

QUOTE (housingrental @ May 13 2010, 09:31 AM)
Hi Garret

Thanks for sharing

I take it from the above post you've run into higher than expected maintenance costs recently and tenant profile issues re uncollected rent, vacancy, or damages?

Would you be willing to let us know in more detail what hasn't gone the way you expected and what other people looking to expand could benefit from hearing about your experience?






The higher than expected maintenance costs were certainly a factor, but we are also choosing to cash in some equity to fund other business ventures.



That said, a combination of poor tenant screening and a lack of preventative maintenance definitely has contributed. We (our management company) would screen like crazy for our other owners but would sometimes "relax" our criteria for our own properties, taking the risk versus a month's vacancy. More often then not, this came back to bite us later!



The property we sold Gerry had a new roof, furnace, and many other things done to it shortly after we bought it, and we have found that putting more capital expenses into a property at the beginning (i.e. planning for it) leads to lower overall maintenance costs and better tenants. One of the tenants has been in the property for 5 years, and the other tenant (that just moved out 5 months ago because they bought a new house) was there before we bought the property 10 years ago!



If you change things like plumbing fixtures (washerless), roof, windows (lowers overall heating costs for either the owner or a tenant paying their own bills), etc. your building is worth more, you can refinance it for more money, and you attract a better quality tenant that is willing to pay maximum market rents.



We always compare an investment property to a machine - this machine is supposed to make you money...if you were to depend on a machine (let's say a semi-truck if you're a long haul trucker) would you not do regular oil changes and get the tires changed, etc?



Properties are no different. If you neglect them, they will decline in value and eventually your tenants will leave and you will only be able to attract poor tenants.







Sorry for the rant, but I'm passionate about this stuff!

 

[housingrental]

Thank you for sharing Garrett

For sure I can relate to your post and have a very similar perspective. Six years ago when purchasing a property I tried to do as little as possible in upgrades initially and extend the time frame of them to be covered from operational cash flow. Now going in life is a lot easier to address all dated items at start up - easier to rent, higher rents, less cash outlays on maintenance expense on an ongoing basis, etc..

 

[kir]

I think my rental portfolio (7 units), came as a result of me switching jobs, initially. When I sold my first home on my own, I made about 10K.
Then the next year, the market picked up. Then the light bulb went on and I said, if only I could of waited a bit longer.
Then I read books and took some training from Raymond Aaron, read a few Rich Daddy books, and was REIN member for about 3 years.
The method for expansion was basically refinancing and joint venturing with parents and sisters.

People say the 3 three is the most difficult. I think after 5-6 houses is the most difficult because this is where you really have to delegate, establish systems, and get to know a lot of people that can do JV with you...So this is my next challenge.


Kir.

 

[GarretW]

QUOTE (kir @ May 14 2010, 12:58 PM) I think my rental portfolio (7 units), came as a result of me switching jobs, initially. When I sold my first home on my own, I made about 10K.
Then the next year, the market picked up. Then the light bulb went on and I said, if only I could of waited a bit longer.
Then I read books and took some training from Raymond Aaron, read a few Rich Daddy books, and was REIN member for about 3 years.
The method for expansion was basically refinancing and joint venturing with parents and sisters.

People say the 3 three is the most difficult. I think after 5-6 houses is the most difficult because this is where you really have to delegate, establish systems, and get to know a lot of people that can do JV with you...So this is my next challenge.


Kir.

What you are referring to we`ve called "critical mass" and we`ve struggled with it for years....each expansion seems to lead to further crossroads.

It`s always a balance to have enough units to be able to afford one or two employees....and most small business owners know that the work they do needs 2 or 3 people to replace them! And therefore there goes your cashflow...