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Preparation for RE portfolio

KarlR

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May 11, 2013
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Hi all,

Been lurking on the forum for a while and following some threads,but this is my first time posting one.i am really liking this forum and finding it a goldmine of information,so thank you all for that!

Anyways,let me start off by explaining where I'm at right now and what this thread is about.
I have wanted to buy some real estate for years and hopefully one day have a decent portfolio of rentals built up.my dream is to one day be able to live off the income produced by rentals I own..Hey,it might never happen and I could end up getting myself Into a huge mess and regret it,but I have to try!

So,here's my situation.
I know where I will hopefully buy my first property,which is in a town In BC,Canada where I will be returning to live in with my girlfriend this December (we have lived there before,so I know the areas..plus I have a few friends in the town who could be helpful as they are contractors etc.)
I have regularly been checking out properties for sale there and have seen a few I like,one apartment in particular that is very cheap and I know I could get good return on (provided there's no hidden problems when I check it out in person).
I've emailed a couple of accountants in the town enquiring about the costs of setting up a company with which to purchase properties through and the costs of keeping the books etc and found a guy I think ill use.
I have been saving for the past few years and have enough money for a down payment.that one apartment I've mentioned,I could pay for in cash if I wanted (although I'd rather get a mortgage as I don't want to put all off my money into it and would like to build a good rep with the bank etc,plus I'd like to keep some money free for any other projects/deals if they come up.


So why havnt I got off my a$$ and done anything yet?...

Well I'll explain my situation further and what's holding me back.
I moved to Canada from Ireland back in 2009 when I was 20.I moved there on a one year work permit untill it expired and have been back and forth since,working there again in 2011 on another one year work visa untill that expired.since I was only on temporary visas,I was unable to purchase property(without 50% down!) or set up a company.
But that will all hopefully change soon!my girlfriend(canadian) is sponsoring me to become a permanent resident and we will be flying back to canada to live there for good in December...just praying my Permanent residency is approved by then!(if not,I will just have to enter canada as a tourist and will have to put my plans on hold untill it is approved......fingers crossed!)

We've been tracking the progress of the visa office,and it looks like hopefully I might have it soon...


So aaaaaaanyways,to finally get to the point of the thread!
I was just wondering what is the best way for me to prepare and spend my time from now until we get back to Canada in December?
In particular,are there any real estate books you guys would recommend I should read?ive found tones on amazon that I want to get,but it's hard to know which ones are any good.
Other than reading and keeping an eye on property for sale online and what properties are renting for,is there anything else I could be doing to prepare for this project?what would you guys do if you were in my position?

Also...for all you guys who are involved in RE,if you could go back,what advice would you give yourself when you started out?

Thanks so much in advance for all of your help guys!i just want to use this time wisely,I want to feel I am making the most of this time to prepare,instead of just itching to get started.
Thanks again,it's really appreciated.


-Karl
 
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lleone

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Hi Karl,

Good first time post. Most people who eventually get involved in real estate seem to all say the same thing.
I wished I had started earlier!

Real estate is an amazing vehicle to build wealth, however it normally takes time to do it, so the sooner you start the better.
There are many areas in real estate to focus on (e.g. wholesaling, rehabs, buy and hold, commercial and so on). As you start to learn more and more, try to pick an area and focus on it. Get very specific (e.g. I want to buy a duplex within the next 2 months), especially when you talk to people. People will know you are serious. Picking one type of investment type will also help you become an expert in that type of investing.

In addition, seek out a mentor that is well accomplished in your area and try to learn from them (you will save a lot of money by avoiding mistakes that he/she will warn you of). Many times there will also be local real estate clubs that you can join. In the US, we have a national real estate investors association that identifies local real estate clubs in your area. Maybe Canada has the same. Also, be professional and treat it like a business. Many people don't and they are not taken seriously.

As for books and information:
One of my favorite sites is (BiggerPockets.com). There is a lot of great information there and it's all for free. Digest as much as you can and you will learn a lot. I'm working on site that will provide interviews of top real estate investors (also free), but it's still a couple weeks away (REALIntell.com). You can signup there to get an email when ready.

Lastly, some good books: Depending on what you focus on, there are different titles, but here are some good ones to start with: Millionaire Real Estate Investor by Gary Keller; The ABCs of Real Estate Investing by Ken McElroy; What Every Real Estate Investor Needs to Know about Cash Flow by Frank Gallinelli and Buying and Selling Apartment Buildings by Steve Berges.

Good luck and keep us updated.

CAUTION: As you start investigating real estate, without a doubt you will come across numerous seminars, mentoring programs, systems, etc..
Most of these are total rip-offs and scams. If you are going to a weekend seminar that costs $50 you can be sure they are going to try to upsell you to a multi-thousand dollar program. Avoid these like the plague or you will spend all your money before you even start!
 

SteveO

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All that @lleone says.

Also become very familiar with the location that you are interested in. Learn all the details of what people like about living in the area.

It seems that you are planning to invest in single family and rent them out. Make sure that you understand cap rates, cash on cash (COC), cash on equity, and return on investment (ROI). These are the very basics to get started from. The numbers are different if you are doing fix and flips where you are looking primarily at ROI.

Make sure that you understand the financials behind your investments. I would not pay someone to keep my books initially. It would teach you a lot and keep you much more in tune to what is going on if you did them yourself.

You may make mistakes along the way. Work through those. Learn the process that works for you and stick with it. Don't listen to the nay-sayers.
 

CashFlowDepot

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My advice is to learn how to do wholesale flips. get options, and do Highest Bidder Sales. With these techniques, you do not need to buy the house or fix it up yet you will generate a lot of cash quickly.

For each rental/investment property you buy, put it on a rapid pay off plan using the proceeds from wholesale flips/options/HighestBidderSale to pay off the houses in 2-5 years.

It is hard to get excited about a $250 a month cash flow on a property that has a mortgage. So get the house paid off faster to get to the $1000+ cash flow.

This will also get you to financial freedom and indepencence faster.

BEWARE of biggerpockets. There is some good information there but there is even MORE bad information. There are a lot of people on there giving out advice like they are an expert but they have never done a deal. They are also heaving in to doing rehabs (which they call flips) and getting bank financing which are both VERY RISKY.

Avoid risks.

Learn to negotiate and learn to buy with seller financing. There is no need to use bank financing.

Negotiating is the highest paid skill you can learn.
 
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KarlR

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May 11, 2013
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Hey all,

Thanks so much for the replys!am wishing I had started this thread sooner!
Sorry it has taken me so long to reply,have been very busy lately with boring stuff such as my job,selling my car,getting ready to leave my job and planning where to go to live (untill our flights back to Canada in December) when my job ends in a couple off weeks.

But all of that's not important.in other news though,I was contacted by Canada immigration requesting some more documents (australian police check and drivers license check) which in a way sucks because it means my application will be put on hold untill I get them to them,but realistically I think it's good news because it means they are at least looking at my application and it's not just sitting at the bottom of pile of visa applications not to be touched for months!



Hi Karl,

Good first time post. Most people who eventually get involved in real estate seem to all say the same thing.
I wished I had started earlier!

Real estate is an amazing vehicle to build wealth, however it normally takes time to do it, so the sooner you start the better.
There are many areas in real estate to focus on (e.g. wholesaling, rehabs, buy and hold, commercial and so on). As you start to learn more and more, try to pick an area and focus on it. Get very specific (e.g. I want to buy a duplex within the next 2 months), especially when you talk to people. People will know you are serious. Picking one type of investment type will also help you become an expert in that type of investing.

In addition, seek out a mentor that is well accomplished in your area and try to learn from them (you will save a lot of money by avoiding mistakes that he/she will warn you of). Many times there will also be local real estate clubs that you can join. In the US, we have a national real estate investors association that identifies local real estate clubs in your area. Maybe Canada has the same. Also, be professional and treat it like a business. Many people don't and they are not taken seriously.

As for books and information:
One of my favorite sites is (BiggerPockets.com). There is a lot of great information there and it's all for free. Digest as much as you can and you will learn a lot. I'm working on site that will provide interviews of top real estate investors (also free), but it's still a couple weeks away (REALIntell.com). You can signup there to get an email when ready.

Lastly, some good books: Depending on what you focus on, there are different titles, but here are some good ones to start with: Millionaire Real Estate Investor by Gary Keller; The ABCs of Real Estate Investing by Ken McElroy; What Every Real Estate Investor Needs to Know about Cash Flow by Frank Gallinelli and Buying and Selling Apartment Buildings by Steve Berges.

Good luck and keep us updated.

CAUTION: As you start investigating real estate, without a doubt you will come across numerous seminars, mentoring programs, systems, etc..
Most of these are total rip-offs and scams. If you are going to a weekend seminar that costs $50 you can be sure they are going to try to upsell you to a multi-thousand dollar program. Avoid these like the plague or you will spend all your money before you even start!

Thanks lleone!
I know exactly what you mean!i really wish I had got interested in this a lot earlier in my life.oh well,better late than never I guess!
Thanks for the advice on specifying in one area.really don't know what I would best be suited at,so will have to get some experience and see what I'm good at!i have a little bit of experience working with renovating houses when I worked for a guy back in Canada,so maybe something Involving fixing up houses?

I have been thinking about trying to buy houses with a basement where I can split the house into two seperate rental units?
Also,playing around with the idea of purchasing land,then buying cheap mobile homes that must be moved,and moving them onto the land,renting them out as a way to pay off the land...but unsure if that's a realistic idea..the numbers might not add up and make it worthwhile..
Anyways that's just a couple of extra ideas I've been playing around with.

I would love to find a mentor who would help me out and have looked into it.the town I'll be in is small though (about 30,000 people) so it seems it might be hard to find someone...although I am hoping if maybe Ichat to real estate agents they could know of people in the area who are doing what I hope to be doing,and might put in contact with them.then perhaps we could work out a deal whereby they mentor me in exchange for me doing some work on their properties or shovelling snow etc. I will have to look into that when I get back!

I have checked out biggerpockets and will set up an account there soon,looks like a good place to learn!thanks for the tip :)
Awesome!i will sign up to your website right after I post this.
Thanks for the book recommendations.i ordered "what every real estate investor needs to know about cashflow",will hopefully have that in the mail soon.i will order the others shortly after.

Thanks for the advice,I will avoid seminars and the like,I have always been cautious of that kind of stuff.i am by nature a very cautious person with stuff like that...which can kind of be a downfall..as I tend to see places for sale online that already have tenants in place and when I do the numbers and they have a positive cashflow,I can't help but think "why are they selling it if it's making money?something must be up here...."

Thanks a lot for the info lleone!will get the rest of the books you recommended soon!
Thanks again!
 

KarlR

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May 11, 2013
20
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Hey all,

Thanks so much for the replys!am wishing I had started this thread sooner!
Sorry it has taken me so long to reply,have been very busy lately with boring stuff such as my job,selling my car,getting ready to leave my job and planning where to go to live (untill our flights back to Canada in December) when my job ends in a couple off weeks.

But all of that's not important.in other news though,I was contacted by Canada immigration requesting some more documents (australian police check and drivers license check) which in a way sucks because it means my application will be put on hold untill I get them to them,but realistically I think it's good news because it means they are at least looking at my application and it's not just sitting at the bottom of pile of visa applications not to be touched for months!





Thanks lleone!
I know exactly what you mean!i really wish I had got interested in this a lot earlier in my life.oh well,better late than never I guess!
Thanks for the advice on specifying in one area.really don't know what I would best be suited at,so will have to get some experience and see what I'm good at!i have a little bit of experience working with renovating houses when I worked for a guy back in Canada,so maybe something Involving fixing up houses?

I have been thinking about trying to buy houses with a basement where I can split the house into two seperate rental units?
Also,playing around with the idea of purchasing land,then buying cheap mobile homes that must be moved,and moving them onto the land,renting them out as a way to pay off the land...but unsure if that's a realistic idea..the numbers might not add up and make it worthwhile..
Anyways that's just a couple of extra ideas I've been playing around with.

I would love to find a mentor who would help me out and have looked into it.the town I'll be in is small though (about 30,000 people) so it seems it might be hard to find someone...although I am hoping if maybe Ichat to real estate agents they could know of people in the area who are doing what I hope to be doing,and might put in contact with them.then perhaps we could work out a deal whereby they mentor me in exchange for me doing some work on their properties or shovelling snow etc. I will have to look into that when I get back!

I have checked out biggerpockets and will set up an account there soon,looks like a good place to learn!thanks for the tip :)
Awesome!i will sign up to your website right after I post this.
Thanks for the book recommendations.i ordered "what every real estate investor needs to know about cashflow",will hopefully have that in the mail soon.i will order the others shortly after.

Thanks for the advice,I will avoid seminars and the like,I have always been cautious of that kind of stuff.i am by nature a very cautious person with stuff like that...which can kind of be a downfall..as I tend to see places for sale online that already have tenants in place and when I do the numbers and they have a positive cashflow,I can't help but think "why are they selling it if it's making money?something must be up here...."

Thanks a lot for the info lleone!will get the rest of the books you recommended soon!
Thanks again!
 

KarlR

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May 11, 2013
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All that @lleone says.

Also become very familiar with the location that you are interested in. Learn all the details of what people like about living in the area.

It seems that you are planning to invest in single family and rent them out. Make sure that you understand cap rates, cash on cash (COC), cash on equity, and return on investment (ROI). These are the very basics to get started from. The numbers are different if you are doing fix and flips where you are looking primarily at ROI.

Make sure that you understand the financials behind your investments. I would not pay someone to keep my books initially. It would teach you a lot and keep you much more in tune to what is going on if you did them yourself.

You may make mistakes along the way. Work through those. Learn the process that works for you and stick with it. Don't listen to the nay-sayers.

Hi Steve,thanks for the reply!

Yes,I do need to learn those basics a lot better.i do know them,but I need to get a lot more familiar with them and to the point where I can calculate them comfortably in my head and get used to using them all the time.
Right now,I am just looking at what a property could rent for monthly minus mortgage/additional costs to see what it would make.but yes,I have to get a lot more familiar with those formulas!

Yes I agree with you on not paying someone else to keep the books.i thought about this and eventually plan on doing it myself,I just dnot want to take on too much in the beginning and be overwhelmed and start to make mistakes..once I get things off the ground i plan on maybe taking a course or something to learn bookkeeping,as I know it would make a big difference to keeping costs down,not to mention help me understand a lot more.

Thanks Steve!
Do you mind me asking,what troubles did you have when you started out?like what were your biggest obstacles?
Thanks again for all the info!
 
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KarlR

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May 11, 2013
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My advice is to learn how to do wholesale flips. get options, and do Highest Bidder Sales. With these techniques, you do not need to buy the house or fix it up yet you will generate a lot of cash quickly.

For each rental/investment property you buy, put it on a rapid pay off plan using the proceeds from wholesale flips/options/HighestBidderSale to pay off the houses in 2-5 years.

It is hard to get excited about a $250 a month cash flow on a property that has a mortgage. So get the house paid off faster to get to the $1000+ cash flow.

This will also get you to financial freedom and indepencence faster.

BEWARE of biggerpockets. There is some good information there but there is even MORE bad information. There are a lot of people on there giving out advice like they are an expert but they have never done a deal. They are also heaving in to doing rehabs (which they call flips) and getting bank financing which are both VERY RISKY.

Avoid risks.

Learn to negotiate and learn to buy with seller financing. There is no need to use bank financing.

Negotiating is the highest paid skill you can learn.


Hey cashflowdepot,thanks for the advice!

That's all very interesting!i have read your other threads and will look into that a lot more.being able to pay off properties in 5 years would be amazing.will go back over your threads again and get more info.

Thanks for the advice on biggerpockets,unfortunatly that seems to be the case with all websites,there's always a handfull of people who have to spout out information even thought they don't know anything!will just have to be cautious I guess!

Thanks again for all the info!
 

SteveO

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Do you mind me asking,what troubles did you have when you started out?like what were your biggest obstacles?
My wife...

I did not have any obstacles to start. It would have been nice if I had more money available but that was not a problem.
 

MattCour

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I am not a real estate expert, but the blog on Biggerpockets has a lot of info for a ton of different topics. Let's say you wanted to learn more about Seller Financing, if you search that topic there are a ton of different posts. That's how I use it to sort through the BS. Or you can read one contributors posts just like here.
 
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CashFlowDepot

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MattCour. You're right there is a lot of discussion on bigger pockets about a variety of topics including seller financing. Did you know that some of what is recommend at bigger pockets is a Dodd-Frank violation? SEC (securities and exchange commission) violations? SAFE Act Violations?

If you don't follow the Dodd-Frank rules for selling with seller financing, you could be forced to give back all the money your buyer has paid you for the past 3-4 years. At $1000 a month x 12 months x 3 years that's $36,000 plus attorney fees. That's a hefty price to pay for getting bad advice
 

MattCour

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I'm aware of Dodd-Frank, I was specifically referring to buying with seller finance in my case. I've also read through your blog extensively as well. :)
I still think there is some solid advice, maybe not all though.
 

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