How to get the information I need from Real Estate Agents or Real Estate Brokers without bothering them?

XavierCP

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#1
Hi REIN members and followers,

First, I analyzed few macro economics factors (average incomes, housing affordability index, in-migration and demand, transportation expansion etc.) and came to the conclusion that the city of Montreal is a good area to invest in real estate.

Like taught in the book written by Don R. Campbell (Real Estate Investing in Canada), instead of spending hours and hours to calculate the total projected income and total debt service (Property Analyzer), for each property I am interested in, I started to use a coarse filter to discard the majority of properties quickly and effectively and keep only the ones with good chance of giving positive cash flow.

To explain the coarse filter I am referring, here's a short explanation from Don R. Campbell from his book (Real Estate Investing in Canada):

This filter is a simple yet powerful mathematical formula that has been refined from a much larger and more complex analysis tool. It is your safety mechanism designed to keep you away from properties that will eat up your investment capital and give you nothing in return.

The complex formula took lots of time for an investor to work through, as it had many components such as interest rates, expense ratios, property price, property taxes, down payment, market demand and other factors. Then one day we analyzed the results of all these calculations, and a very clear mathematical pattern became obvious. Every time a property worked under this formula, there was a direct correlation between the amount of rent it generated and the purchase price.

So rather than completing a complex, detailed analysis right away on every property, you can now use the following formula as your first step in determining the potential of an investment property.

(Gross Annual Rent / Purchase Price) × 100 = Cash Flow Zone %

The key number is 10 percent. If the gross annual rent is 10 percent or more, you have a very good chance that the property will provide you with good positive cash flow. As that percentage increases, your cash flow will increase. As it decreases from 10 percent, your chance of that property providing you with positive cash flow decreases. If the gross annual rent of the property is 8 percent or more of the purchase price, then the property is still worth further investigation as it sits within the Cash Flow Zone.
So the challenge I am facing here is the difficulty to get the Gross Annual Rent from the online websites displaying properties for sale.

I understand that only Real Estate Agents and Real Estate Brokers have access to the MLS (Multiple Listing Service) which would give the Gross Annual Rent when the property has been previously rented.

As an investor, I do not have access to the MLS database so to get that information I have to contact the real estate agents and brokers which I started to do. My concern is that I don't want to bother them and send them tons of emails or call them regularly to ask for the Gross Annual Rent. Is there someone who has a better way to proceed to apply the Authentic Canadian Real Estate (ACRE) system from the REIN network?

I am also planning to walk in the neighbourhood of my potential area to collect phone numbers of owners who are looking to sale their properties to ask them for the Gross Annual Rent and the Purchase Price to calculate the Cash Flow Zone % to then move to the next step of the analysis (Property Analyzer calculation).

Thank you and looking forward to hearing from you.
 
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Devin Roberts

Devin Roberts - Brent Roberts Realty
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Nov 17, 2015
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#2
Hi REIN members and followers,

First, I analyzed few macro economics factors (average incomes, housing affordability index, in-migration and demand, transportation expansion etc.) and came to the conclusion that the city of Montreal is a good area to invest in real estate.

Like taught in the book written by Don R. Campbell (Real Estate Investing in Canada), instead of spending hours and hours to calculate the total projected income and total debt service (Property Analyzer), for each property I am interested in, I started to use a coarse filter to discard the majority of properties quickly and effectively and keep only the ones with good chance of giving positive cash flow.

To explain the coarse filter I am referring, here's a short explanation from Don R. Campbell from his book (Real Estate Investing in Canada):

This filter is a simple yet powerful mathematical formula that has been refined from a much larger and more complex analysis tool. It is your safety mechanism designed to keep you away from properties that will eat up your investment capital and give you nothing in return.

The complex formula took lots of time for an investor to work through, as it had many components such as interest rates, expense ratios, property price, property taxes, down payment, market demand and other factors. Then one day we analyzed the results of all these calculations, and a very clear mathematical pattern became obvious. Every time a property worked under this formula, there was a direct correlation between the amount of rent it generated and the purchase price.

So rather than completing a complex, detailed analysis right away on every property, you can now use the following formula as your first step in determining the potential of an investment property.

(Gross Annual Rent / Purchase Price) × 100 = Cash Flow Zone %

The key number is 10 percent. If the gross annual rent is 10 percent or more, you have a very good chance that the property will provide you with good positive cash flow. As that percentage increases, your cash flow will increase. As it decreases from 10 percent, your chance of that property providing you with positive cash flow decreases. If the gross annual rent of the property is 8 percent or more of the purchase price, then the property is still worth further investigation as it sits within the Cash Flow Zone.
So the challenge I am facing here is the difficulty to get the Gross Annual Rent from the online websites displaying properties for sale.

I understand that only Real Estate Agents and Real Estate Brokers have access to the MLS (Multiple Listing Service) which would give the Gross Annual Rent when the property has been previously rented.

As an investor, I do not have access to the MLS database so to get that information I have to contact the real estate agents and brokers which I started to do. My concern is that I don't want to bother them and send them tons of emails or call them regularly to ask for the Gross Annual Rent. Is there someone who has a better way to proceed to apply the Authentic Canadian Real Estate (ACRE) system from the REIN network?

I am also planning to walk in the neighbourhood of my potential area to collect phone numbers of owners who are looking to sale their properties to ask them for the Gross Annual Rent and the Purchase Price to calculate the Cash Flow Zone % to then move to the next step of the analysis (Property Analyzer calculation).

Thank you and looking forward to hearing from you.
Hi,

One way would be to calculate what rents would be necessary for calculations to work out. If the rents need to be higher than market rents than it is impossible (other than possibly furnished rentals or air bnb, etc.).

For the properties that match your criteria with rents at or below market, I would look into further.

This is also dependant on your plan with the property. If you are looking for a turnkey property, the current rents are more important. However, if your plan is to renovate and kick out the tenants to increase rent, the market rents are more important.


Devin Roberts — Brent Roberts Realty
Vancouver REIN Member
Cell: 604-354-7160
Email: Devin@DevinRoberts.ca
 

CorySperle

Senior Forum Member
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#3
If it was me I would find a realtor who is also an investor in the location you are looking at who is willing to work for you. I would exercise caution in Montreal right now as vacancy rates are abnormally low <2%. Rents will be artificially high and will likely drop when rates return to a normal 5%. A similar situation in Kelowna right now, rents up 30% in the past couple of years, and will likely correct soon. Investing in a high vacancy location >10% with good fundamentals like Saskatoon will do very well if you can survive in this market. Also transition locations will give you a big lift as well.
 

XavierCP

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#4
Hi,

One way would be to calculate what rents would be necessary for calculations to work out. If the rents need to be higher than market rents than it is impossible (other than possibly furnished rentals or air bnb, etc.).

For the properties that match your criteria with rents at or below market, I would look into further.

This is also dependant on your plan with the property. If you are looking for a turnkey property, the current rents are more important. However, if your plan is to renovate and kick out the tenants to increase rent, the market rents are more important.


Devin Roberts — Brent Roberts Realty
Vancouver REIN Member
Cell: 604-354-7160
Email: Devin@DevinRoberts.ca
Thank you Devin,

So in other words, if I can find the average rent for a specific borough in Montreal (and for a specific type of property) then I can simply start to use that average rent in my calculation and if it works out then I can investigate further!
 
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XavierCP

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#5
If it was me I would find a realtor who is also an investor in the location you are looking at who is willing to work for you. I would exercise caution in Montreal right now as vacancy rates are abnormally low <2%. Rents will be artificially high and will likely drop when rates return to a normal 5%. A similar situation in Kelowna right now, rents up 30% in the past couple of years, and will likely correct soon. Investing in a high vacancy location >10% with good fundamentals like Saskatoon will do very well if you can survive in this market. Also transition locations will give you a big lift as well.
Hi Cory,

Thank you for your answer.

You're totally right, I need to find a realtor for my system who understands the type of properties and target geographic area I am looking for.

It's really a good advice you are giving me here about the vacancy rates and rents. :)

When you mentioned that "Rents will be artificially high and will likely drop when rates return to a normal 5%.".
I must admit you made me the think about it. In Quebec, it's only during the lease renewal that a landlord is free to ask a rent increase or the tenants can negotiate a lower rent. Plus the lease can be for more than 1 year so it secures the upcoming rents from market fluctuations.

But you have a point, prices might be artificially high (speculative market) in Montreal. If we analyze the Housing Affordability Index, like Don R. Campbell explains in his book (Real Estate Investing in Canada):

...a well-balanced market for investors is a market that has a Housing Affordability Index of about 33 percent. That means it takes 33 percent of pre-tax income to pay for a median piece of property. Cities and towns that are above this rate are often overpriced for investors. Even though prices may be skyrocketing, if the city’s index is 6 percent or more above this mark, it is an indicator that the market is turning speculative and the fundamentals are getting out of balance from an investor’s point of view.
From the latest RBC Housing Affordability Report of March 2019, Montreal has presently a Housing Affordability Index of 44.5%.

Vancouver 84.7%
Toronto 66.1%
Canada 51.9%
Source: http://www.rbc.com/economics/economic-reports/pdf/canadian-housing/house-mar2019.pdf

But if we compare with the national Housing Affordability Index (Canada has 51.9%), Montreal is still under at 44.5%.

I contacted Don R. Campbell to ask him if his benchmarks of 33 percent and 6 percent above are still accurate because his book has been published March 8 2010. 9 years later are these benchmarks still good to evaluate a real estate market prices?
He didn't answer me yet.

So should I look instead for other cities (other than Montreal) in the Montreal Metropolitan Area to find a city with a higher vacancy rate and a lower Housing Affordability Index (and analyzing other macro economics factors)?

Another macro economics data that I gathered myself from Statistics Canada is the increase in average household income for the city of Montreal which is 19.63%.

the increase in average household income for the province of Quebec is 16.77%
the increase in average household income for the province of Canada is 17,27%

*data from Statistics Canada, Canadian Census comparisons from 2011 and 2016. I had to contact Statistics Canada few times to find some average household incomes to calculate the increase. I can provide you the links from the reports if you want.

Normally, if a city's average income is increasing faster than the provincial average and its national average, real estate prices will do the same.

Thank you and looking forward to hearing from you.
 

CorySperle

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#6
I wouldn't major in minors. Stats are great but I would leave them to analysts who do this for a living. Come up with some basic analysis filters and locations you wish to work on, build a team and start acquiring assets! The best and safest bet is always always start out close to home with as much control of the property as possible, management, etc. until you get your feet wet. The quickest way to crash and burn is to venture outside your jurisdiction, USA, etc. where you depend too much on others.
 

Rickson9

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#7
I agree with Cory that that information is useless entertainment. If you have time to waste, then it’s something to read

But I disagree not to venture outside your local area. I started investing in Phoenix, AZ and had such a great time making buckets of money that I went on to invest in real estate in other states

Canadians Snap Up U.S. Properties
http://myreinspace.com/index.php?threads/Canadians-Snap-Up-U.S.-Properties.17393/
 
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ThomasBeyer

Senior Forum Member
REIN Member
#8
If it was me I would find a realtor who is also an investor in the location you are looking at who is willing to work for you. I would exercise caution in Montreal right now as vacancy rates are abnormally low 10% with good fundamentals like Saskatoon will do very well if you can survive in this market. Also transition locations will give you a big lift as well.
Bigger cities (like Montreal) have lower risk than smaller cities like Saskatoon or Kelowna.

Saskatoon, like Alberta, very high risk until CPC is elected with a majority this fall as Liberals, with NDP and Green support, if elected, will throw AB and SK under the bus as a sacrificial lamb for the Climate God !!

BC always desirable due to next mildest weather in Canada ie retirement destinations for millions of Canadians east of the Rockies.


Thomas Beyer, Asset Manager, Investor, Author, Father, Mentor www.prestprop.com
 

XavierCP

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#9
I wouldn't major in minors. Stats are great but I would leave them to analysts who do this for a living. Come up with some basic analysis filters and locations you wish to work on, build a team and start acquiring assets! The best and safest bet is always always start out close to home with as much control of the property as possible, management, etc. until you get your feet wet. The quickest way to crash and burn is to venture outside your jurisdiction, USA, etc. where you depend too much on others.
Hi Cory,

I agree and disagree with you :)

Yea I guess I should follow the local news to get my stats because, it took me like 5 hours to compile the increase average income for the city of Montreal vs Quebec vs Canada and bottom line it's a gross signal and already outdated because the last census was in 2016 so since then, the economy has moved a lot.

Here's a basic macro economic analysis, the new transportation expansion in the West of the island of Montreal https://rem.info/en

I agree that I am looking to invest in a property close to my house.

I am presently living in Bali, Indonesia (foreigners cannot own a property in Indonesia) and I was exciting with the idea of coming back in Canada and applying the ACRE system to search for a property throughout Canada but I realized that if I have to move often (bus, flight, etc) and pay for extra accommodations to investigate different cities in Canada then my savings will melt fast.

I disagree with you about controlling the management of your property. Like Don. R. Campbell wrote:

As an investor you make most of your money buying properties, not managing them. If you insist on managing the properties yourself, you’ll soon discover that you can own only a limited number before all of your time is used up in management. Which means you’ll have no time to do the thing that makes you money—finding and buying good properties. “That’s when you’ll realize that it’s time to hand your properties over to a qualified property management company,” I continued. “It’s false economy if you believe you’re saving money by managing your properties yourself. The 4 to 10 percent of your monthly rent you pay to a management company will soon seem cheap by any measure. In this case, even if you have to pay 8 percent of the rent for someone to baby sit your property, it’s only $68 per month.

Campbell, Don R.. Real Estate Investing in Canada (p. 106). Wiley. Kindle Edition.
 
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Martin1968

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#11
Don’t disagree just because of what is said in a book. Disagree because you have experienced things differently.
Really try to listen to what is said on this forum and the advice given. When it is said to invest close to home, keep a close eye on things and manage the property yourself, really take that to heart, as you are a beginning investor. The lessons learned will be very valuable and will make or break in how successful you will be in the RE investing game.

Furthermore, not sure how old the book is you are reading, but proffesional prop management runs at a minimum of 10%, but realistically at years end, including all the upcharges, showing fees, move in and out inspection fees etc, you will find its more like 15%. Everyone wants to take a piece of your cake, and preferably as large of a piece as possible.

Anyone that’s has been succefull in any kind of business came up with an idea, worked their business, learn through trial and error, improve and make bizz more profitable and eventually build a good life for themselves. Thats how it is in the RE game.

One other thing I would like to point out, it seems you want to become a real estate investor first and foremost, (correct me if I wrong) but you will find most investors on this forum started elsewhere, making money in bizz, or having very good jobs with good pay, or people that are and have been very good with their own financial resources. From there on they moved into real estate and to find an in general safe way to park their hard earned money.

I understand the life style you are leading on Bali can be very intoxicating, lots of sunshine and time to read books at the pool with a cocktail on the side, everything looks good (easy) when the sun shines, but can you also weather the storm when the thunder rolls in?

Keep asking the question, don’t over analyze, take practical advice to heart, work hard in your everyday life and move forward with purchasing your first prop. cheers!
 

Rickson9

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#12
I disagree with investing close to home and I disagree with managing property myself

I’ve done neither

And I would definitely not want to manage property myself. Finding more investments or not, I have better things to do with my time

I would argue that wanting to manage your own property is actually a terrible idea. Why? People start thinking that they can make an investment “work” because they’ll be doing all the management themselves and they get lazy with valuation. Wanting to manage your own property gives people a reason to rationalize bad investment decisions

What’s the benefit of managing my own properties? Nothing
 
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kfort

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#14
I would argue that wanting to manage your own property is actually a terrible idea. Why? People start thinking that they can make an investment “work” because they’ll be doing all the management themselves and they get lazy with valuation. Wanting to manage your own property gives people a reason to rationalize bad investment decisions
Very common it seems with sfh’s especially for those who get over eager after drinking the koolAid. Pricing yourself into managing something is generally counter to the goal of investment real estate. Although not always, some people are actually wanting a part time job.

Doesn’t help that everybody and their dog is now pitching properties with $65 monthly cash flow using no charge for property management, 2% repairs/ maintenance, 2% vacancy, & last years property taxes $ etc etc and people are taking this as ~ normal. When you see people presenting on the stage with “deals” like this on their company webpages it becomes even more normalized.


Sent from my iPhone using myREINspace
 

ThomasBeyer

Senior Forum Member
REIN Member
#15
Bigger cities (like Montreal) have lower risk than smaller cities like Saskatoon or Kelowna.
Hi Thomas Beyer,

Can you elaborate on that point? Why are you claiming that "Bigger cities (like Montreal) have lower risk than smaller cities like Saskatoon or Kelowna"?

Thank you in advance.
Because there’s more jobs and a more diversified economy usually.

SK and AB high risk places until at least fall 2019 (and maybe then 4 more years as these provinces will be sacrificed on the altar of the Climate God) and Kelowna a retirement town. Montreal appeals to young upwardly mobile professionals. A hip city.


Thomas Beyer, Asset Manager, Investor, Author, Father, Mentor

Check our latest RRSP & TFSA eligible investment option at www.investoliver.ca
 
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CorySperle

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#16
I agree with Cory that that information is useless entertainment. If you have time to waste, then it’s something to read

But I disagree not to venture outside your local area. I started investing in Phoenix, AZ and had such a great time making buckets of money that I went on to invest in real estate in other states

Canadians Snap Up U.S. Properties
http://myreinspace.com/index.php?threads/Canadians-Snap-Up-U.S.-Properties.17393/
Well done! Hardly a junior strategy or recommendation to a newbie just starting out. Not to mention simultaneously becoming a currency speculator, hence your return is very much dependent on the (massively) fluctuating exchange rate of more than 25% in the past decade. This may make sense to a very select few sophisticated investors, but too much complexity and risk for a beginner strategy in my opinion.

On to the management portion, I did not say to manage your own properties, just manage your first one to get your feet wet and decide if real estate is what you want to do. I don't manage my own properties either but understand how they are running my properties based on personal experiences that you can only get from doing it yourself. This is the path of most successful investors I know today, but of course there are many ways and this is only one of them, but least risky in my opinion.
 

Martin1968

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#17
Well done! Hardly a junior strategy or recommendation to a newbie just starting out. Not to mention simultaneously becoming a currency speculator, hence your return is very much dependent on the (massively) fluctuating exchange rate of more than 25% in the past decade. This may make sense to a very select few sophisticated investors, but too much complexity and risk for a beginner strategy in my opinion.

On to the management portion, I did not say to manage your own properties, just manage your first one to get your feet wet and decide if real estate is what you want to do. I don't manage my own properties either but understand how they are running my properties based on personal experiences that you can only get from doing it yourself. This is the path of most successful investors I know today, but of course there are many ways and this is only one of them, but least risky in my opinion.

Exactly! it’s about giving advice to a newbie investor.
Without making this thread into a property management versus self management discussion, the notion that there is no benefit to self managing is just as ridiculous as me declaring there are no benefits using property management companies. Of course there are benefits to both. And if the latter works for you that’s great. Convenience comes with a price but if you are prepared to pay for worry free investing then that’s great.

But for a beginning investor, many benefits to self managing your first few props.
 
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CorySperle

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#18
Because there’s more jobs and a more diversified economy usually.

SK and AB high risk places until at least fall 2019 (and maybe then 4 more years as these provinces will be sacrificed on the altar of the Climate God) and Kelowna a retirement town. Montreal appeals to young upwardly mobile professionals. A hip city.


Thomas Beyer, Asset Manager, Investor, Author, Father, Mentor

Check our latest RRSP & TFSA eligible investment option at www.investoliver.ca
High Risk still after 5 strait years of getting the crap kicked out of them? It could take a bit more time, but also could end up being an entire lost decade like the 90s. I would say the riskiest RE play is in BC right now with tweedle dee and tweedle dumber running the ship, and openly declaring war on the housing sector.
 

XavierCP

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#20
Because there’s more jobs and a more diversified economy usually.

SK and AB high risk places until at least fall 2019 (and maybe then 4 more years as these provinces will be sacrificed on the altar of the Climate God) and Kelowna a retirement town. Montreal appeals to young upwardly mobile professionals. A hip city.


Thomas Beyer, Asset Manager, Investor, Author, Father, Mentor

Check our latest RRSP & TFSA eligible investment option at www.investoliver.ca
Thank you Thomas, your opinion are always welcome!