Life`s crossroads

BenSanderson · May 11, 2009

Hi everyone,

My life is at a turning point. My current business (self-employed graphic designer) has been dwindling steadily over the past year and I find myself in desperate need of a change. There is very little work coming in these days and I feel compelled to spend my new-found free time developing a new work strategy as opposed to propping up what I consider to be a dead-end for me in graphic design.

I`m brand new to the concept of Real Estate Investment and have been trying to learn as much as I can about the subject. I`ve been VERY impressed with Don Campbell`s books, talks and what I`ve been learning about REIN through the website and these forums. It is wonderful to see so many dedicated, caring and knowledgeable people active in helping others grab hold of their futures in such a positive way! My enthusiasm for REIN seems to be growing daily and I`m starting to seriously consider this path as a new direction for me and my family.

As much as it pains me to see my current business dry up, my stress is minimized because of the very fortunate relationship I have with my wife – a hard-working teacher with 10 years behind her, making about $90K/year. We have very modest mortgage and living expenses (as well as no children), and we have calculated that her income alone can support us (with a few non-essential sacrifices being made). Better still than her salary is her support; she is in my corner 100% and stands behind (beside?) me in whatever I now decide to do with my life.

This leaves me in a very unique position – I have a great deal of time that I can now focus in a new direction. I am, however, unsure as to where this time would be best spent. Currently I am reading as much as I can on Real Estate Investment (Don`s books), but I want to make a stronger effort and start taking action.

I guess what it boils down to is this: With the financial resources we have now (only one income, but a $90,000 HELOC and <$10K in personal debt), is it possible for me to pursue Real Estate Investment as a full-time occupation? Or should I focus instead on finding a steady job somewhere else and use that income to fund a part-time Real Estate Investing strategy. Quite honestly, my excitement level is prompting me to push for a dedicated career in RE, but maybe this is not realistic for a guy like me fresh out of the gate.

I would really appreciate any advice regarding the pros and cons of this career (and life) choice.

Thanks very much for any and all replies!

Ben

invst4profit · May 11, 2009

If it were me I would find another job maybe part time, preferably of interest to me, and start slow with the real estate side. Even if you buy 3 properties in your first year once they are up and running there is not a high demand for your time unless you buy properties cheap that need work.
Are you a handy person with tools that has a hands on side or are you planning on buying and farming out the daily operations to a management company.
With only a few buildings self management is easy while working a job but if your aim is more than 30 doors you could be working 3 or 4 hrs a day self managing. This depends of course on the quality of property you buy.
Lower income neighborhoods have higher profit margins but require more hand holding.
The fact is unless you have very deep pockets to jump in BIG time the growth will be slow enough that you will probably find yourself with too much free time if you do not have a job on the side.

Keep in mind you may hate being a landlord.
What province are you in?

Dan_Eisenhauer · May 11, 2009

Hi Ben;

welcome to the world of real estate investing, and congratulations on having the support of your wife. That is paramount in taking your plans to the next level.

I see you are not yet a REIN member. My first recommendation is that you join REIN. I have had a 30+ year career in this industry, and have never come across a group or training that is as comprehensive to so many experience levels as REIN. Even with my experience, I attend every REIN event because I know I will come away with a nugget each and every time I go to one. Yet, the information is baisc enough that even those with no knowledge can walk away with tools to help them develop their own real estate portfolio... of whatever size they want.

Next I suggest you begin to attend the meetings in your area, although I can`t tell where you are. Attend the next ACRE weekend in your area.

Get to know a mortgage broker familiar with the REIN system, so that they can help you plan a strategy to begin to build your portfolio. Peter Kinch is a member here, and is highly regarded by many REIN members. He is also building a group of mortgage brokers across Canada who are capable to helping you. You can probably find Peter`s contact info by searching for Canadian Mortgage Team.

I think, based on the limited information you have provided, that your wife`s income will be sufficient to begin to develop your own portfolio. But, you may run into the "lack of cash wall" fairly soon, thus needing JV partners to continue to grow. Buy REIN`s "Joint Venture Secrets" to learn more about this process.

Your portfolio will probably not produce enough cash for a few years for you to live on, unless you learn some other strategies to supplement that rental income, such as assignment or finders` fees added into your deals. Being a REIN member will help you learn more about those.

In short, you are in the right place at the right time. Keep going, and don`t look back.

Good luck!

BenSanderson · May 11, 2009

Hi Greg and Dan,

Thanks for the helpful advice!

To clarify a bit further...

I`m in Cambridge, Ontario (which I now understand is a great place to invest!)

I am a fairly handy person and can work on small to medium renovations myself. Honestly, I have no idea how I am going to like `landlording`, so I have yet to decide on whether Property Management would be good for me or not.

I ABSOLUTELY DO WANT TO JOIN REIN! However, my wonderful wife has seen me get very excited about a variety of things in the past that have fizzled, so she is a bit skeptical still. She is starting to read Don`s first book, Real Estate Investing in Canada, so we`re off to a good start!

I hope, soon enough, she can see the value of a REIN membership and will allow me sign up. I know how easily it will pay for itself, but my wife is wise to investigate these things fully before making a decision - she`s a lot more level-headed than I am. I am also considering just picking up the ACRE Home Study package, but I would rather bite the bullet, dive in and get involved with real live people who are on the same path as I want to be.

By the sounds of it, it might be a good idea for me to consider picking up part time work to pull in a bit of "investing money". I guess it can`t hurt either way...

Thanks again for the great advice!

Ben

invst4profit · May 11, 2009

Since you are in Ontario I strongly suggest you study up on the Ontario RTA (Residential Tenancy Act) and the info on the LTB (landlord tenant board) web sites. Learn everything you can before ever buying your first rental property.
Learn everything you can about tenant screening and never skip a step regardless of how genuine the applicant may be.
The pro tenant language in the act in Ontario will eat new LLs alive if they are not fully educated and prepared to deal with tenant issues.
Often for new LLs everything will go smoothly until they get there first Tenant from h**l and they find out they have no way to get rid of them.

Read through the posts on these sites which have more Ontario specific info:

http://forums.canadianbusiness.com/forum.j...=16&start=0
http://members7.boardhost.com/Landlordonta...html?1236648478

Forewarned is forearmed.

BenSanderson · May 11, 2009

Thanks Greg, for the valuable heads-up. I`ll start investigating!

Ben

Thomas Beyer · May 11, 2009

QUOTE (invst4profit @ May 11 2009, 01:06 PM) If it were me I would find another job maybe part time, preferably of interest to me, and start slow with the real estate side.
...
Even if you buy 3 properties in your first year once they are up and running there is not a high demand for your time unless you buy properties cheap that need work.
...
Are you a handy person with tools that has a hands on side or are you planning on buying and farming out the daily operations to a management company.
...
With only a few buildings self management is easy while working a job ..
...
Keep in mind you may hate being a landlord.
I`d agree with that 100% .. I ran a software consulting firm almost full-time and ramped up the real estate from 0 in 1997 to well over 120 doors .. with $2M raised and 6 buildings P/T .. only then did I go into real estate full time in late 2004 / early 2005 .. and ramped it up to 20 buildings worth $90M and 400 investors from there ..

don`t think "job" .. think "portfolio" .. i.e. portfolio of activities and assets ..

Thomas Beyer · May 11, 2009

QUOTE (BenSanderson @ May 11 2009, 01:45 PM) ...

I am a fairly handy person and can work on small to medium renovations myself. ...
then buying old, ugly BUT WELL LOCATED assets may make the most sense right now .. buy one or 2 .. fix them up .. sell them .. see how you can clone this process by yourself or with a small team in a year !!

I do not have these skills .. but it is a great way to make $200,000/year by fixing 3-4 properties and make 50K each net !! Keep some for long term income .. and flip most for instant CASH !!

Persue what you LOVE to do .. and if you LOVE fixing things .. then this is a great business !!

Mr. Holmes Junior ??

Conrad5 · May 11, 2009

QUOTE (BenSanderson @ May 11 2009, 01:45 PM) Hi Greg and Dan,

Thanks for the helpful advice!

To clarify a bit further...

I`m in Cambridge, Ontario (which I now understand is a great place to invest!)

I am a fairly handy person and can work on small to medium renovations myself. Honestly, I have no idea how I am going to like `landlording`, so I have yet to decide on whether Property Management would be good for me or not.

I ABSOLUTELY DO WANT TO JOIN REIN! However, my wonderful wife has seen me get very excited about a variety of things in the past that have fizzled, so she is a bit skeptical still. She is starting to read Don`s first book, Real Estate Investing in Canada, so we`re off to a good start!

I hope, soon enough, she can see the value of a REIN membership and will allow me sign up. I know how easily it will pay for itself, but my wife is wise to investigate these things fully before making a decision - she`s a lot more level-headed than I am. I am also considering just picking up the ACRE Home Study package, but I would rather bite the bullet, dive in and get involved with real live people who are on the same path as I want to be.

By the sounds of it, it might be a good idea for me to consider picking up part time work to pull in a bit of "investing money". I guess it can`t hurt either way...

Thanks again for the great advice!

Ben

Why dont you register and invite your wife to the ACRE weekend program? That would quicken things for you and get her on your side earlier. The Home Study book is good but you need to experience the atmosphere to really understand what you are about.
Conrad.

BenSanderson · May 12, 2009

QUOTE (caglah @ May 11 2009, 07:15 PM) Why dont you register and invite your wife to the ACRE weekend program? That would quicken things for you and get her on your side earlier. The Home Study book is good but you need to experience the atmosphere to really understand what you are about.
Conrad.

I agree with you 100%, however the Toronto ACRE weekend was in April, the weekend before I discovered REIN altogether! I don`t want to wait a year for the next one and really can`t afford to fly both of us out west to an upcoming ACRE meeting, so I`m kind of limited in my options. (Unless, of course I`m missing something...)

Ben

BenSanderson · May 12, 2009

QUOTE (thomasbeyer2000 @ May 11 2009, 06:05 PM) then buying old, ugly BUT WELL LOCATED assets may make the most sense right now .. buy one or 2 .. fix them up .. sell them .. see how you can clone this process by yourself or with a small team in a year !!

I do not have these skills .. but it is a great way to make $200,000/year by fixing 3-4 properties and make 50K each net !! Keep some for long term income .. and flip most for instant CASH !!

Persue what you LOVE to do .. and if you LOVE fixing things .. then this is a great business !!

Mr. Holmes Junior ??

Thanks for the great ideas, Thomas!

The whole `flipping` concept has rolled around in the back of my mind for a while now and may end up being something I seriously consider as a primary source of income to fund further investments. The beauty of this business is that the skills I learn through renovation and resale will undoubtedly help me in other aspects of RE Investing.

I know that flipping isn`t the core focus of REIN, but I suppose there are plenty of members who do have useful information regarding the subject.

I just have to become a REIN member!

Ben

vandriani · May 12, 2009

I agree with most here that you should persue a part time job. Ultimately, a job that will help you develop skills and/or contacts towards R/E investing. At the end of the day, it is you that has to decide if you are prepared to jump in with both feet as a full time R/E investor or to keep it as a part time business. Both strategies work and there are many REIN members that follow one of these paths. Methodically follow a system and do not get caught up in a race mentally. Go as fast as you are comfortable.

RedlineBrett · May 12, 2009

I would advise against flipping in this economic climate. At least do NOT get into something that you can`t rent for cash flow in the event you cannot sell for the price you need!

My advice:

1. Get a part time / full time job that allows you to work flexible hours for the best wage possible
2. Plan to use the 90k that you have to buy two SOLID cashflowing rental properties
3. Since you are handy, plan to spend some hours fixing them up and managing them yourselves
4. TIGHTEN up these two properties. Learn the income property business from them. Run them through a new set of tenants.
5. Look to back out your 90k by selling off shares of the two properties. You will be talking about them non stop to family and friends and your passion for the business will shine through. Sell them as turn key investments with firm numbers and safer and less speculative than whatever they are investing in now.

6. Lather, rinse repeat until you have enough cash flow to quit your job!

In my opinion this strategy is the best mix of cost, risk, reward and experience and training. All skills you will need as a full time real estate investor.

Also, don`t expect to be able to go full time inside a year. Take a job you can do for at least a year without banging your head against a wall. Your business will be tighter and you will be happier this way.

Good luck!

QUOTE (vandriani @ May 12 2009, 08:37 AM) I agree with most here that you should persue a part time job. Ultimately, a job that will help you develop skills and/or contacts towards R/E investing. At the end of the day, it is you that has to decide if you are prepared to jump in with both feet as a full time R/E investor or to keep it as a part time business. Both strategies work and there are many REIN members that follow one of these paths. Methodically follow a system and do not get caught up in a race mentally. Go as fast as you are comfortable.

manojsingh · May 12, 2009

Hi Ben,
Welcome to real estate investing. My suggestion please join our hamilton mastermind group. 90% of the members are REIN members. You will get tons of experience and motivation to start. We meet once a month for coffee and our next meeting will be on 17th. This will initiate you to REIN education. Thanks

BenSanderson · May 13, 2009

QUOTE (manojsingh @ May 12 2009, 01:03 PM) Hi Ben,
Welcome to real estate investing. My suggestion please join our hamilton mastermind group. 90% of the members are REIN members. You will get tons of experience and motivation to start. We meet once a month for coffee and our next meeting will be on 17th. This will initiate you to REIN education. Thanks

Hi Manoj,

I really appreciate the invite - thanks!

Although I`m away this Sunday, I`m definitely up for attending future meetings. If you could send me an email with any additional details, that would be great!

Ben

P.S. Do you need me to post my address, or can you send me a message through this site?

BenSanderson · May 13, 2009

To Vince and Brett,

I think the idea of getting a full or part-time job related to the RE industry would make the most sense. I really want to immerse myself in everything and anything related to this business. Having an unrelated job would only divide my brainpower, and would compromise my RE education.

The question is: In what kind of job could I involve myself that would be flexible enough to allow me time to learn and pursue the investment side of things? And also, who would hire a guy with a design/computer background?

Brett, interesting ideas for a minimal but progressive way to get up and running. I think a plan like this would sit well with my wife, who wants to minimize risk wherever possible.

Ben

invst4profit · May 13, 2009

You could try to get a job with a property management company in your area. They seem to be popping up everywhere.
This would give you the real inside track to the investment/rental property world as well as possibly get you first shot at buying from burned out/frustrated landlords that are looking to get out of the business.

vandriani · May 13, 2009

QUOTE (invst4profit @ May 13 2009, 05:52 AM) You could try to get a job with a property management company in your area. They seem to be popping up everywhere.
This would give you the real inside track to the investment/rental property world as well as possibly get you first shot at buying from burned out/frustrated landlords that are looking to get out of the business.

Gregg has provided you with a great idea. Find a PM company looking for an employees, immerse yourself in as many aspects of the business as possible, find the person that most closely resembles an exemplary mentor within the company and be the best darn employee. If you can achieve this, your education time line would be accelerated more quickly. And who knows, you may like being a PM and open your own company at some point.

BenSanderson · May 13, 2009

QUOTE (vandriani @ May 13 2009, 10:04 AM) Gregg has provided you with a great idea. Find a PM company looking for an employees, immerse yourself in as many aspects of the business as possible, find the person that most closely resembles an exemplary mentor within the company and be the best darn employee. If you can achieve this, your education time line would be accelerated more quickly. And who knows, you may like being a PM and open your own company at some point.

That is a great idea - thanks Greg and Vince!

Ben

housingrental · May 13, 2009

Ben email me if interested in examining that - rent at hoffaco . com
Vince - No one likes being a pm

Life`s crossroads

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