[quote user=margaretcowan]Congratulations Nik!
A huge achievement!
I'm sure I'm not the only myreinspace member who'd love to know how you bought over a $1,000,000 of real estate in just over a year.
Would you share with us how you did it? What did you do right? What hurdles did you overcome?
Kudos to you,
Margaret
www.italycookingschools.com
Thanks, Margaret.
I'm not reinventing the wheel. I am applying many of the REIN principles to my investing, as well as throwing in a few from other sources and modifying it to suit my strengths. I have networked with a number of individuals here in Winnipeg that are actively investing and met with them to look at properties or bounce around ideas. I have built a team that consists of an agent with 30 years experience in our local market, a mortgage broker who can get things done, and a lawyer who is accessible and being paid to look out for my interests, and who deals primarily with real estate.
Near the beginning of this venture, my broker, his boss, my agent, and myself, went out for lunch. I typed up my 5 and 10 year plan (subject to evolution of course) and presented it to them. I told them that I wanted them to help me make it happen and they would be making commissions all along the way. From that point they knew exactly what I was out to do and could make suggestions to me that they felt were in line with my goals. At some points since, they have actually referred back to that presentation I did and questioned whether or not something I was thinking of was in line with what I had presented them. I appreciate them for that.
How have I come up with the capital to do what I am doing? There have been a couple strategies that I have implemented over the past year and a bit. I own (not free and clear yet) my personal residence as well as a cottage I built. I took some equity out of my house to build the cottage as well as to purchase my first revenue property. My first revenue property was a flip. I was able to actually make some money off of it, but it was a heck of a lot more work than I planned. In hindsight, the house was pretty rundown and I should maybe have purchased something with more going for it in the first place. That was probably the reason that I got it for so cheap in the first place though.
While I was doing that, I found a fourplex in a great area of the city that was for sale. It had been sold but the financing fell through, so I was able to swoop in and grab it from the vendors who were aging and desparate to unload it. I didn't have all the capital I needed since some was tied up in the flip house, so I managed to find a partner, my father-in-law, who was interested in going in with me on it. We split everything 50/50 and he does the property management, and I deal with the tenants. It cashflows positive but with the market the way it is, I think we can sell two of the units as condos and pay off the mortgage on the building and then hold the other two units free and clear or sell them if we want capital for something else. Buy wholesale and sell retail.
After I sold the flip, I took the profit and instead of paying off my unsecured LOC that I had been using to fund renos, I purchased two more buildings myself and use the cashflow generated from them to pay down the unsecured line. Warren Buffett buys undervalued companies. I try and buy undervalued houses. My agent and I are proving that we are pretty good at this. We use MLS and look for houses that have been on the market for a long time or were conditionally sold and the financing fell through. Both are good indicators of a motivated vendor. Sometimes there is something wrong with the house. Actually, usually there is. Sometimes the problem is easily remedied. In the two buildings I purchased, one had a wet basement, and the other was filthy. I could tell right away that the moisture in the basement was because the eavestroughs were wrecked, a pipe was leaking, the dryer was not vented outside, and the garden hose faucet was leaking. The foundation was fine. Anyways, both homes appraised out at 15 to 25% more than I paid for them. I put 25% down on each and am starting out with a good chunk of equity in each.
Call me crazy, but I'm doing another flip. Just bought a house together with a friend of mine who happens to be a designer, which I admit is handy. Pulling some equity out of one of the other buildings to pay the downpayment for this one. My broker has located a private lender who will be advancing us reno funds along the way. Once we sell this one, I will pay back the equity from my other income property and use the excess profit (God willing) to purchase another rental.
I am at over a million in about a year, and I am not including my my personal residence in that. My cottage is included in there, and there is no mortgage on it. I'm keeping it in my back pocket as a source of secured funds is something big comes along.
Oh yes, I teach junior high in a public school here in the city as well. I haven't met any other teachers doing this. There's a saying, "Those who can, do. Those who can't, teach." I'm out to disprove this stereotype. Thanks for the encouragement from forum members and friends!
Nik
