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young beginner real estate investor looking for advise

dylancaharel

dylancaharel

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May 25, 2018
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Hello, my names Dylan and just recently i attended one of REINs free presentations and was very interested in what REIN had to offer. after the seminar was over i had to make the decision whether or not to become a member of REIN. After lots of consideration i decided to join the community. now im not sure what the next move is. the advice i`m seeking is as a 20 year old with little to nothing knowledge how do i get started in creating a real estate portfolio at a young age. Thanks
 
To get started now that you are a REIN member, attend a few meetings and learn the basics. What city/area are you in?

The ACRE events are a wealth of information - many people hit the ground running after their first ACRE. I believe the next ACRE is in Edmonton in October. Being several months away, attending a few monthly meetings and networking with the group will be a good starting point. You'll gain confidence with the knowledge & investor lingo, and start formulating a plan as to what type of investor you want to be.

Many young investors start out buying a legally suited house with 5% down as a first time home buyer. Live there a year or two, gain some experience as a landlord, and then move on to the next property. The 5% down only works a couple times, assuming that the property is your primary residence.

Another popular strategy is partnering with others (Joint Venture partnership.) For a JV to work, you need to add value. Typically that means the cash to close a deal (20% down payment for most investors), the ability to get financing, you find a stellar deal/opportunity, and/or you have the real estate (or renovations) expertise.
 
Work hard and put in extra hours at work, pick up a second job at Tim’s or something alike. At 20yrs old, live with your parents for another year or 2, (even room and board is cheaper then moving out) Drive a cheap vehicle, or walk, take a bike or public transport to work. And if you have a girlfriend that is not going to be THE partner for life then don’t spend to much money on her. Or do without.
With FT employment you should be able to save 20-40K or more in a 2yr timespan.

Becoming a member of a club and attending meetings will possibly have you gain knowledge but it doesn’t make you a RE Investor.
So, SAVE SAVE SAVE SAVE SAVE!!!!!!!
Cheers and good luck.
 
As a Real Estate Invester since 2004. All the advice above is sound.

I would like to add... slow and steady wins the race. To make a solid foundation simple steps forward exicuted daily can make all the difference.

This line of thinking keeps the ego in check.....which helps over the long term. Think 20 to 30 years for solid based desions.... Not the "get rich quick ego driven" kind in 5 years.... that is the recipe for crash and burn.

It takes time to learn the lessons (some of those lessons are a "little" harsh...you don not want to dupicate them exponentially) and the big pay off on this journey is the person you become along the way.

If you do it slow and steady over the long term it can allow adjustments for some of the tougher lessons and reduce the collateral damage that a new Real Estate Invester tends to make in the beginning 10 years.

In economics there seams to be a long cycle to this arena and look for the patterns it tends to create.

Getting prepared is just as important as putting that offer on that property.... by saving money, paying down debit, working that extra job or delaying that nice "shiny bling" do-dad.....know you are in it working towards your long term Real Estate goals. It is not just putting an offer down on a home....that's just one small part of it.

The lessons will be unique to you and knowing who you are as a person will give you greater insight and how to sustain the long hall of this journey can make it easier.

This Real Estate path can and will make you very wealthy in numerous areas of you life.....if you stay the course. (Only 1% of the population does....the new shiny do - dad's tend to take over or they get tired and complacent with how they set it up....it must be sustainable for you)

If you are responsible, open and embrace these lessons as learning opportunities, you will have a life you are very proud of.

Being committed, being open to learning new things and being flexible to change and grow is the best advice I can offer. It is quite the amazing journey. I would have it no other way. [emoji5]

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My advice would be to purchase your first property as soon as you can and with any means necessary to start building equity, that you can quickly springboard into other properties. I started with a single with a basement suite in 2000 when I was 26 years old, with 5% down. I was fortunate at the time to have a high paying job and could qualify. I understand it's tough to qualify for a property for young people these days.
 
Good for you, I wish I had the resources that you have now back when I was your age. Keep following your gut but make sure to find a mentor (no need to be a paid mentor, find a win-win arrangement). For a rookie your Rule 1 - ONLY listen to people who are doing it or have done it. In real state, there is a lot of people who just talk but do not walk the talk.
 
Martin1968 said:
Work hard and put in extra hours at work, pick up a second job at Tim’s or something alike. At 20yrs old, live with your parents for another year or 2, (even room and board is cheaper then moving out) Drive a cheap vehicle, or walk, take a bike or public transport to work. And if you have a girlfriend that is not going to be THE partner for life then don’t spend to much money on her. Or do without.
With FT employment you should be able to save 20-40K or more in a 2yr timespan.

Becoming a member of a club and attending meetings will possibly have you gain knowledge but it doesn’t make you a RE Investor.
So, SAVE SAVE SAVE SAVE SAVE!!!!!!!
Cheers and good luck.
Click to expand...

This is very good advice. Do not go into debt!


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Dylan, the fact that you are: (a) thinking about real estate as an investment vehicle and (b) have joined REIN not only puts you light years ahead of your peers but suggests that you have an entrepreneurial spirit. There is a ton of good advise listed above so I won't add anything else, primarily because I don't feel I have a full enough picture of where you are financially, educationally or emotionally.

For instance, on the education side, at 20 years old I would need to ask if you are attending any post-secondary schools? If not, why not? Is so, where? This could answer some of the location challenges of where to invest. Financially, at 20 like most young persons you are not sitting on a pile of cash. If you are, then you are ahead of many. If not, do you have any access to capital for investing? If no, then take the sage advise above and do what it takes to save. If by chance you do, the type of investment property will depend on how much you have to invest. Emotionally, are you willing to do what it takes? There are different ways to go about this but none are easy and success means that sacrifice is often required. Are you willing to relocate perhaps? How flexible are you? These are just some of the questions that you need to ask yourself. The journey is worth it and I'm sure I speak for many in that I wish I had your vision and started earlier. Best of luck!


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Thank you everyone for the feedback. I’ve taken note of everything suggested. To answer a few questions asked above, I’m still living at home and I have a full time job at an oil refinery in Edmonton I’m working 60 hours a week. I’m also going to NAIT part time in the evenings taking power engineering then hopefully taking more financial themed courses after I’m done the power engineering. If anyone is able to provide any more specific advice with a little more background it’s always appreciated. As well one of my other focuses is to gain more financial intelligence so if anyone has any suggestions for books, videos, articles, courses, or mentor ships I’d be sure to have a look. Thanks for everything!


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If you plan on investing in the stock market at some point, please read John degoey’s - the professional financial advisor IV. It lays out clear expectations of financial advice. Most people have unrealistic expectations of the stock market.


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At 20, focus on education and flexibility. Real estate is not a great investment at the foundation stage unless you really want to be nailed to the ground where you live. Given that you are going to a technical school, I'm guessing the job placements are mostly close to home but make sure you manage your flexibility. Education and experience - and access to both - should be your priority.

If you put 5% down, you will pay 4% of the mortgage price in CMHC fees. So roughly if you saved $20k, it is now worth $4K, the moment you buy. Add in closing costs, initial vacancy at purchase and your $20k investment is worth $0. Realtor will ask for another 4% to sell the property. So your $20k is now worth -$12k...before you pay the mortgage interest penalties and closing costs on the back end.

So a word of caution: unless you are very confident you are buying something under value or in an appreciating market, you will be lucky to break even. Large real estate portfolio typically invest 30% down + and operate the property for a roughly 50/50 split of total return between income and property appreciation. (Source: NPI Q4 2017, page 10)

The suggested $20k investment here with next to nothing down is having -20% of return from income and 120% on appreciation... very risky, and unfortunately it is usually those with the least experience who think they should take the most risk. I've seen it many times.

Second piece of advice is on realistic expectations. The top quartile of 1,750 closed funds surveyed by Preqin earned <20% net IRR per year since 2012. So if you have $5,000 to invest, that turns into $12,442 in 2017. This isn't making millions out of a couple cents, even if you can pick the very best investments. So, be realistic with your expectations. Great funds earn 15% net IRR and good funds return are 10 - 13%.
 
dylancaharel said:
Thank you everyone for the feedback. I’ve taken note of everything suggested. To answer a few questions asked above, I’m still living at home and I have a full time job at an oil refinery in Edmonton I’m working 60 hours a week. I’m also going to NAIT part time in the evenings taking power engineering then hopefully taking more financial themed courses after I’m done the power engineering. If anyone is able to provide any more specific advice with a little more background it’s always appreciated. As well one of my other focuses is to gain more financial intelligence so if anyone has any suggestions for books, videos, articles, courses, or mentor ships I’d be sure to have a look. Thanks for everything!


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Click to expand...


Morning!

That’s fantastic. You must make more money then you can spend I’m sure, so spend it wisely. Expensive cars and other ‘wants’ will not get you were you may want to be 20 years from now. Life goes fast......if I had to do it over again I would buy RE at 20.
There is a very good post above about slow and steady winning the race and not to fall for the get rich quick scheme. Couldn’t agree more.

Forget about 5% down with CHMC added, NOT being a good investment. At 20, to get into the market, if that’s the opportunity that presents itself, what’s stopping you?
Also, anyone claiming to invest in funds that will give you great returns of 12 to 15% consistently over a 25 year period, forget about it. Doesn’t exist. If it only would be that easy.......

...... And on top of that, if you have any money saved, (let,s say 20k as a 5% DP on a 400 K house) and you would decide to invest in investments with a higher return, know that the risk spread on those invest could easily be -30 to +15. Can you stomach loosing a big part off your principal when that happens?

And don’t forget the fees that investment advisors will take on your hard earned dollars. When you even it all out the 4% CHMC fee for you to get into the real estate market doesn’t sound to bad if you ask me.

Investing in RE to me is not any different then investing and starting your own business. 100% guarantees you will never have, but your willingness to take some risks and to not be scared, will pay off over time. Im sure you will find some experienced investors in your market that would love to go for a coffee with you, sharing their experiences and helping you own your way. All the best on it!
 
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@Martin1968

We've hit those returns with our funds. We don't "give" returns. Investors take risk and if the business plan is successful, they earn a return on their capital.

Investing with 5% down wipes out 100% of your equity so unless you buy at a huge bargain or in a quickly appreciating market, what is the point?

Good article in Globe yesterday: http://business.financialpost.com/r...turns-out-its-real-and-worse-than-you-thought

Buying consumption real estate right now makes about 0 sense in Canada if you are starting out.
 
Dylan you are definitely on the right track. You are working hard, eager to learn, saving money (hopefully) and interested in financial education.

My belief is that you will never get financial and time freedom from working for someone else. Most people may need to start there, but its important to understand how real wealth is created. You have a huge advantage as you are young and have a lot of time to work on this. I started investing in real estate in my 20's and it is the single best financial decision I ever made. It wasn't easy because I was so green, didn't have much money and had no experience in real estate. I read a book that inspired me - No Money Down by Robert G Allen and it changed my life. I didn't buy any properties for no money down but the book inspired me to find a way to buy real estate.

My Tips:
- focus on personal development and make goal setting a priority (read Having it All for this)
- read at least 20 minutes a day on financial or personal development
- attend REIN and other real estate groups - surround yourself with successful people
- get mentored (you do not need to spend a fortune on this)
- avoid wasting your time in front of the TV - fill your mind with positive things instead
- do not invest in funds to begin with - you need to buy a piece of real estate

Books - most of these you can get on Audible and listen in your car while driving

Rich Dad Poor Dad by Robert Kiyosaki
Think and Grow Rich by Napoleon Hill
Real Estate Investing in Canada, and any other books by Don Campbell
The Art of Exceptional Living by Jim Rohn
High Performance Habits by Brendon Burchard
Start with Why by Simon Sinek
Having it All by John Assaraf
Relentless: From Good to Great by Tim Grover
Check out Darren Hardy on You Tube

Feel free to message me at 780-446-3814!
 
Matt Crowley said:
@Martin1968

We've hit those returns with our funds. We don't "give" returns. Investors take risk and if the business plan is successful, they earn a return on their capital.

Investing with 5% down wipes out 100% of your equity so unless you buy at a huge bargain or in a quickly appreciating market, what is the point?

Good article in Globe yesterday: http://business.financialpost.com/r...turns-out-its-real-and-worse-than-you-thought

Buying consumption real estate right now makes about 0 sense in Canada if you are starting out.
Click to expand...
This is such poor advice for someone just getting into the real estate market. I continue to buy real estate and have found MASSIVE success doing it. I have pretty much bought at least one property per year (every year!) in Edmonton, through every possible cycle since 1982. It's what you do if you want a retirement plan, if you want financial and time freedom!
 
Matt Crowley said:
@Martin1968

We've hit those returns with our funds. We don't "give" returns. Investors take risk and if the business plan is successful, they earn a return on their capital.

Investing with 5% down wipes out 100% of your equity so unless you buy at a huge bargain or in a quickly appreciating market, what is the point?

Good article in Globe yesterday: http://business.financialpost.com/r...turns-out-its-real-and-worse-than-you-thought

Buying consumption real estate right now makes about 0 sense in Canada if you are starting out.
Click to expand...

Of course you can hit those returns. You can even hit higher. Think private mortgage investing and plenty of other high paying investments. But consistently over 25 years? Nope doesn’t exist. People investing with Walton back in the days hit good returns as well.......well.....at least for a while. What’s left of that?

Yes it may seem 5% down and then adding on the cost of some items might appear to wipe out your initial investment, but most of us acknowledge RE investing is a long term game and with patience and focused effort your return will be less risky and definetly more consistent over a 25 yr period.

As for buying discounted properties or buying in an appreciating market, or buying props with consistent cashflow, of course that should be part of the plan. Almost always I would say. We would agree on that. It would just take more then the 5% in that case but if you have it, go for it. A word of warning is always appreciated, and needed in many cases, but don’t underestimate forum members entrepreneurial spirit.

About investing in financial markets, that’s how i started out. Was to busy with everyday life to be bothered with RE. And I have yet to meet an investment advisor that wouldn’t tell you about great returns and so on.
(They just fall short of promising cause they know they can’t do that) In reality tho, it’s never ever as they say and when looking at it longterm and by my calculations as well as experiences it’s RE all the way. (At least for me) Wouldn't,t want it any other way.
 
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