New to real estate: where does your real estate knowledge come from?

kreezo

New Forum Member
Registered
Hi,

I am new to the real estate investing realm and I am very excited to learn more about the topic however I am struggling with where to start. To the experienced investors and other newbie investors out there, what are some good resources or knowledge databases that you have come across that has really helped you in your investing endeavors? I have read a lot of "mindset" related books (i.e. the secret, think and grow rich, richest man in babylon etc) so I am looking for something thats more from a practical that is from "how to" perspective (i.e. how to asses a location, how do different mortgages work, rules and guidelines for the number crunching).

So far my limited repertoire includes -

Books:
- Don Campbell`s books
- Rich Dad Poor Dad books
- Robert Allen

Websites:
- REIN Forum

Games:
- Cash Flow Game 101/202

Audio:

- None so far.

Workshops/Local Groups (in Toronto area)

- Rich Dad Poor Dad Cash Flow Game
- RE Club.ca
- Remax home purchase academy

It would be great if people can shed some light into what resources people have used to build their "financial [real estate] literacy".

Many thanks,

Chris
 

navaz

Inspired Forum Member
Registered
That is great education-but it does not make up for experience-they only way to get it is to write offers, close on a deal, become an owner and learn the ups and down! Dont become a professional student- be an investor
 

housingrental

Frequent Forum Member
Registered
Get setup with a mortgage broker the specializes in investment properties. Figure out when you can afford.

Choose your a location you want to invest in

The smaller the location the better - think in terms of blocks / 2 km radius NOT Toronto but maybe bathurst and finch to yonge and sheppard...

See every place for sale that you can afford

Go through in detail the rent rolls for each building and length of tenancy

Go through sold data to figure out historical valuations

Do this over a long period of time until you can walk into a location and have a pretty good idea of:

A) What the market price is as is
B) How you can add value to the property - (ie I can chop up these two three bedroom units and create four two bedroom smaller units and this will cost me $X and the property will be worth $Y after) - If I put in new kitchens $Y extra / month .. etc..
C) What the units could rent for
D) What your tenant profile will be - turnover, occupancy, and collection rates....
E) What your financial statements will look like... so if you were looking at a vacant triplex being sold with no info you should be able to build the approximate info for all line items..


Other members will disagree with me but try to stop wasting your time on "mindset" products... I`ve seen lots of successful real estate investors... never seen one of them talk about the power of being positive... seen lots of people who get no where that do though...
Persistent hard work and time help to get you where you want to go.
 

Nir

New Forum Member
REIN Member
Chris,

It surprises me that you read the same books and more but still do not feel ready to start analyzing properties and putting offers. but.. I know you are not the only one.

In my case reading "Rich Dad Poor Dad" by Robert Kiyosaki and "Real Estate Investing in Canada" by Don Campbell is all I needed to be SUPER motivated and ready to start purchasing. After reading Don`s book all I wanted to do is analyze properties and put offers. It motivated me to much that I am tempted to say you know what if Don`s book doesn`t give you that push, maybe nothing will and buying RE is just not the right thing for you to do (now). and that`s fine - I think 96% of the world`s population do not own a rental property.

Also, sorry I don`t get it - Don`s book is super practical! How come you are looking for something "more practical"? what`s more practical than explaining to you clearly, step by step, what you need to do to buy real estate!?


Good luck,
Neil
 

kreezo

New Forum Member
Registered
Thanks for the response guys. So basically, stop reading and just start "doing" and take action. Apply the Don`s principles and just go with that. Its a common mistake that I make that I try to know everything first before I make the first move. Call it fear or procrastination:p
 

Dan_Eisenhauer

New Forum Member
Registered
Another way to put it is: Paralysis by Analysis.

The best way is to get in there and start doing the grunt work on your own. If you are too nervous about making a mistake, find a mentor who will give you help and guidance for the first few deals.
 

RobMacdonald

New Forum Member
Registered
Arrange for a consultation with a mortgage broker familiar with investing. Among other, financing will generally be one of the biggest hurdles you poetentially could come across. Getting bad information out of the gate can severely affect your long term success.
 

kreezo

New Forum Member
Registered
Hi - Thanks for the advice!

Annually I earn around $55-60K in a steady financial institutions job. Despite the turns of the economy, luckily, I still have my job. I have around $20K in savings for a downpayment and can raise another $20K from parents. I currently rent a downtown condo at $900/month and I have a good credit rating (around 600-650).

Is this enough capital to begin with to purchase a first property? Or given unexpected costs/repairs should I wait to have a larger reserve first?
Should I JV with another partner so my carrying costs will be less?

I just set up a meeting with a mortgage broker to have a consultation so I can figure out what my bottom line is that I can leverage.

QUOTE (RobMacdonaldCMT @ Apr 21 2009, 03:13 PM) Arrange for a consultation with a mortgage broker familiar with investing. Among other, financing will generally be one of the biggest hurdles you poetentially could come across. Getting bad information out of the gate can severely affect your long term success.
 

invst4profit

New Forum Member
Registered
Talk to as many brokers and real estate agents as you can find.
It will take some time to find the right personality fit with people that truly understand investment property buying.
Ask potential agents if they personally own rental properties, this is a starting point, then ask them to define positive cash flow.
 

JoefromTO

Inspired Forum Member
REIN Member
QUOTE (kreezo @ Apr 21 2009, 01:53 PM) Thanks for the response guys. So basically, stop reading and just start "doing" and take action. Apply the Don`s principles and just go with that. Its a common mistake that I make that I try to know everything first before I make the first move. Call it fear or procrastination:p


Good day. I`m very much like you...have to know everything before...yada yada. The truth is, your probably going to be very nervous even if you think you know everything there is to know. It`s my opinion that there is just so much to learn that if you wait until your ready, you probably never will.

So here`s my 2cents.

What you need to do is understand a few of the basics. The property at the very least needs to be able to carry itself. Too many so called investors have speculated that a property will be a great investment because they buy it thinking it will be worth X in Y amount of time. DONT buy with that thought in mind because there is no guarantee on that. A recession will kill alot of speculators.

But based on cashflow. Your probably not going to consider Joint ventures for a while. So rely on yourself. If you don`t want to freak yourself and get comfortable with this business, buy what you can afford and put a respectable amount of equity into it at first...lets say 20%.

Go for a conventional mortgage, which requires you to put more money in rather than less, ie 20%, or whatever the lender says. That will leave you with 80% from the lendor. Do the math now. If you didn`t go and buy a $400,000.00 property even though the lender said that was your max, then you probably bought something no greater than $250,000.00. Just looking at your finances, I suspect that`s what you will qualify for, provided you don`t have any dark secrets


Now here`s the important part, if you have calculated ALL of your costs to run the business, including property taxes, gas, hydro, water, etc...then you should at the very least be able to carry that cost. But the thing is its not YOU who is covering that cost, its your tenant and if you invested wisely, you SHOULD have positive cashflow...meaning that your banking some money every month.

If you bought a place that has 2 rentable areas, you could move into one of those areas and stop renting the condo that is going to someone else, but you would have to run the numbers to see if its actually better.

Overtime, your debt starts to get paid off, your cash reserve in the bank is growing and the value of the property is going up over time.

All this idea serves is an idea of what you could do to get into the real estate investing business in a more comfortable way.

Remember, your probably completely new to dealing with tenants as well and IMO the biggest component to any realestate investment, is managing the tenants. That comes with practice. You probably won`t know how to best screen your tenants. Take some time to educate yourself.

But in the end, all investors will tell you the same thing, you learn best from experience. That means you will have to buy and manage your first property and know what its like.

You will probably have the odd problem tenant, and you may make a mistake and some decisions here and there.

If you didn`t go overboard on your purchase and can carry the expense yourself, it will allow you to relax more.
 

invst4profit

New Forum Member
Registered
"But in the end, all investors will tell you the same thing, you learn best from experience. That means you will have to buy and manage your first property and know what its like."

Bad experiences are best learned from others.

There are two more areas of study you need to concentrate on.
I do not know what province you are in but you need to memorize
the provincial Landlord/Tenant regulations before you become a landlord.
Second you need to learn everything you can about screening tenants. Check there credit, criminal and personal background.
When you are done you should know more about them than they know about themselves. Most importantly never take anything they tell you at face value. Learn how to decipher there lies, they all lie about something.
 

kreezo

New Forum Member
Registered
Invst4profit,Thanks for your tips! I agree with all the things you`ve said. Its something thats easier learned through doing rather than reading. An analogy that a friend once told me is that you can never become the best golfer by reading about it. you can read all there is about it, watch all the videos out there but if you`ve never swung a club before - chances are - you`ll probably miss it the first time you do.

In terms of the tenant act, I`m in Toronto Ontario. From what I`ve heard, the tenant act here tends to be more pro-tenant and I`ve heard some pretty bad experiences with tenants (I think there was a post on this forum).

In your experience, what have been things that you have learned in the past that makes you good at screening tenants (other than the credit, criminal and personal background checks - those are pretty standard right?). Whenever someone meets a landlord, they`re usually very nice, polite, somewhat well dressed - so how do you tell the "lies" from this one encounter? This is something I wish they had taught in school!

Thanks!

Chris

QUOTE (invst4profit @ Apr 21 2009, 04:40 PM) "But in the end, all investors will tell you the same thing, you learn best from experience
. That means you will have to buy and manage your first property and know what its like."

Bad experiences are best learned from others.

There are two more areas of study you need to concentrate on.
I do not know what province you are in but you need to memorize
the provincial Landlord/Tenant regulations before you become a landlord.
Second you need to learn everything you can about screening tenants. Check there credit, criminal and personal background.
When you are done you should know more about them than they know about themselves. Most importantly never take anything they tell you at face value. Learn how to decipher there lies, they all lie about something.
 

Thomas Beyer

Senior Forum Member
REIN Member
QUOTE (kreezo @ Apr 21 2009, 12:53 PM) Thanks for the response guys. So basically, stop reading and just start "doing" and take action. Apply the Don`s principles and just go with that. Its a common mistake that I make that I try to know everything first before I make the first move. Call it fear or procrastination:p

no need in the current flat to down market to move too fast !!

reading, then courses, then in-depth research on property type and small area (6 by 8 blocks maybe), then doing, then more reading, more courses, more research on property type and small area (16 by 8 blocks maybe), then doing, ..

doing = writing offers ! Of 10 written, accept 7-8 with no response .. and 2-3 with a counter at best .. otherwise you`ve written too few offers or too high !!

more here: http://myreinspace.com/public_forums/General_Discussion/61-4391-How_to_get_started_.html
 

invst4profit

New Forum Member
Registered
Your screening process should reveal inconsistencies. There landlord reference may not answer your questions without hesitating, there employer reference may be confused with detailed questions. They are both probably friends of the applicant. When calling employers confirm in the phone book that the number is correct, call the company number not the number the applicant gave if they are different.

The appearance of the applicant may be revealing, tattoos, piercings, baggy pants are obvious signs. Dealer or addict in training but these are the easy ones.
The most difficult to detect are the ones that appear to be super polite, clean cut and forthcoming, beware they may be professional tenants.

You need to be a detective and seek out where they live, drive by, drop in unexpectedly with paper work you forgot to give them.
Make eye contact. People tend to glance away and avoid eye contact when lying.
If an applicant omits info on the application form or gives any excuses for lack of info---REJECT
Do not be afraid to lose a months rent by rejecting a applicant.

Do not risk taking tenants recently separated, new to the area, newly employed or self employed. They may all be good people but are a higher risk.

In Ontario assume every applicant is a low life bottom feeder trying to steel your property, you can not be too careful. Once they are in you may never be able to get rid of them.

Ontario is a very difficult place to be a landlord especially for those inexperienced people that are generally trusting of others.

Go here:

http://members7.boardhost.com/Landlordonta...html?1236648478
 

JoefromTO

Inspired Forum Member
REIN Member
QUOTE (invst4profit @ Apr 21 2009, 04:40 PM) "But in the end, all investors will tell you the same thing, you learn best from experience. That means you will have to buy and manage your first property and know what its like."

Bad experiences are best learned from others.

There are two more areas of study you need to concentrate on.
I do not know what province you are in but you need to memorize
the provincial Landlord/Tenant regulations before you become a landlord.
Second you need to learn everything you can about screening tenants. Check there credit, criminal and personal background.
When you are done you should know more about them than they know about themselves. Most importantly never take anything they tell you at face value. Learn how to decipher there lies, they all lie about something.


Hehe, I agree with the memorizing the landlord/tenant act. Infact, I took the course at Humber college a few years ago and got 98.7%. But I don`t have 100+units where I am constantly screening tenants, so I`ve forgotten some stuff for sure.

The thing is, your title to this post is "Where does your real estate knowledge come from". Experience will engrain some very important lessons. Bad experience is best avoided, its could cost you thousands. However, you can`t expect to always have good experiences. You have to be predudent and thorough in everything you do, but over time, like everything else, it starts to become more 2nd nature and that`s where the confidence comes from.

The fact that your asking on a website where alot of veteran landlords frequent, provides access to alot of useful information. But if you want specific info, you have to have a more specific question to whats concerning you. Other than that, you WILL learn alot by buying a rental property and managing it.

Take your time, you`ll know when your ready. Then once you start and gain experience and confidence, and you start to see your investment reward you for your efforts, you will become eager for your next investment.
 

terri

Inspired Forum Member
Registered
hi Chris,

I`m in the downtown Toronto area, if you plan on investing in TO, I can chat with you about my experiences and you can see the property that I`m just about to finish and rent out. I can give you an idea of rents/expenses, etc

feel free to pm me here or email me at info@queenwestrentals.com

Terri
www.queenwestrentals.com
 

housingrental

Frequent Forum Member
Registered
This post contains some fantastic posts and brought a smile to my face
Thank you invst4profit
"In Ontario assume every applicant is a low life bottom feeder trying to steel your property, you can not be too careful. "

QUOTE (invst4profit @ Apr 21 2009, 05:21 PM) Your screening process should reveal inconsistencies. There landlord reference may not answer your questions without hesitating, there employer reference may be confused with detailed questions. They are both probably friends of the applicant. When calling employers confirm in the phone book that the number is correct, call the company number not the number the applicant gave if they are different.

The appearance of the applicant may be revealing, tattoos, piercings, baggy pants are obvious signs. Dealer or addict in training but these are the easy ones.
The most difficult to detect are the ones that appear to be super polite, clean cut and forthcoming, beware they may be professional tenants.

You need to be a detective and seek out where they live, drive by, drop in unexpectedly with paper work you forgot to give them.
Make eye contact. People tend to glance away and avoid eye contact when lying.
If an applicant omits info on the application form or gives any excuses for lack of info---REJECT
Do not be afraid to lose a months rent by rejecting a applicant.

Do not risk taking tenants recently separated, new to the area, newly employed or self employed. They may all be good people but are a higher risk.

In Ontario assume every applicant is a low life bottom feeder trying to steel your property, you can not be too careful. Once they are in you may never be able to get rid of them.

Ontario is a very difficult place to be a landlord especially for those inexperienced people that are generally trusting of others.

Go here:

http://members7.boardhost.com/Landlordonta...html?1236648478
 

surfermoe

New Forum Member
Registered
Most of what I`ve learned has come from having a friend who`s an experienced investor, and from buying my first rental property.

You`ll inevitably make mistakes with your first purchase, but it`s the best way to learn (just make sure to learn as much as you can from this forum before buying, so you can avoid making COSTLY mistakes).

Moe
 

DragonflyProperties

New Forum Member
Registered
I agree with all of the "analysis paralysis" and "professional student" comments. You can`t, never will and don`t have to know everything. And, by the way, knowledge isn`t power, applied knowledge is power. I like Thomas`s advice - identify your niche`s (property type and area) and then combine learning with action. By being associated with REIN, you are hanging around with (for the most part) positive, supportive and knowledgeable individuals. If you haven`t already done so, prepare your "why" (Personal Belize), build your team, start taking small action steps, learn from your mistakes (REIN should help you avoid the "disatrous" ones), try not to make the same mistake twice and have fun as you go. Ready, Aim, Aim, Aim, Aim ..... doesn`t get you anywhere. Try the Ready, Fire, Aim, Fire, Aim ... approach and you will see results. Don`t let fear hold you back. I used to be an "analysis by paralysis" type and it didn`t get me very far in real estate or anywhere else.

Keith
 
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