Offered and Accepted

I started this blog to chart my progress and to hopefully fill in the information gap between real estate investing books and actually buying a property. And here I am posting that I have an accepted offer on a property just months after I posted about my complete confusion!!

That's right you read that right, we found a property, put in an offer, and now I'm working on removing the conditions! REIN definitely made a huge difference. I can see why there are so many gaps because once you start taking action things can happen very quickly. 

I'm flying out to Edmonton tonight to do the inspection and hopefully all will go as planned. Looks great on paper though ;)

So, what did I learn so far? Well the first big lesson was overlooking what should have been obvious. When the contract says the property will be inspected and financed in 8 days, that means 8 days. So I probably should have made sure my partners and team would be ready to act in that time frame? Turns out my Realtor is travelling for most of those 8 days, my partners are leaving for a few, I can't get time off at the drop of a hat, etc. This Saturday worked for everyone thankfully, but that was more stress than I needed and could have been a lot worse. Good lesson for next time. 

The biggest change from my original decision was to buy a property without a suite and then hire a contractor to do the work. Several people told me I was crazy to do the work from a distance. However, isn't it just as crazy to buy from a distance and trust my property manager to manage the property, Realtor to find the property, painters, cleaners, etc. it means we need to finance the construction ourselves and carry the shortfall while the suite is being built, but once complete we should have more equity, and much more cashflow than originally planned. I feel a lot better at the options in this price range and look forward to seeing the transformation. 

I know this is going to work and that we made the right decision. I can't wait to partner with someone else on property number two, so that I can help them take their steps closer to their dreams!

The Right Mind Frame

The best thing to happen to my real estate investment business occurred last month. I have been following a group called the Real Estate Investment Network (REIN) for about three years now. Over that time I have read every book that Don R. Campbell put out, as well as his blogs, tweets, etc.  However, I was always hesitant to join the actual network. After all a get rich slowly scheme talking about $100/door cash flow gets slower when you pay $200/month to a network.

Well last month as I was contemplating buying a property in Calgary I ended up feeling like I was in way over my head. I felt like I would never feel prepared enough to make the leap. Real estate is my whole plan. A plan I still strongly believed in, but started to feel like it was slipping out of my fingers. So I made the plunge and paid $97 for a chance to attend ONE real estate workshop. 

My secret plan was to pick a few brains and get the answers I wanted for free and get away without signing up to join the network. That plan failed. Maybe if hadn't let my fear of networking get the best of me, it might have worked. I must say that I am not sad it failed though. 

Everyone I spoke to was happy they joined. Whether it was a year ago or ten! The commitment required is only 17 months, yet most members I spoke to had been members for a number of years. I talked to people with no doors, people with 8 or 9, or upwards of 40 doors! Every single person I spoke to was glad that they had become a member. That sold me on the group more than anything else.

Well to make a long story shorter I joined that night! I'm sure many of you will think I am foolish for parting with the money, but so much has improved already. The people I'm introduced to to be a part of my power team are head and shoulders above everyone I've worked with before. They understand my business because they do it as well. Plus the information I get at each workshop is amazing! And how can you doubt yourself about making money in real estate when you are surrounded by people that are making it happen?

At the last meeting I learned about electrical issues in older homes and how to manage the eviction process. However the best thing I learned that night (or for that matter ever before) was that it is OK to be successful. It is OK to believe that I am worthy enough for someone else to entrust their hard earned money with me. It sounds so simple yet I was blown away! If I don't believe I am worthy and I add value to the deal, then how can I expect anyone else to believe in me?

I still have a long road to go, and I still have a lot to learn, but I do believe I add a lot of value to the partnership. Years of research, I am a part of network of other investors that want to see each other succeed, and I have an amazing team of professionals that I include as part of the deal. I follow the market to see when and where to buy and when it's time to get out. Plus of course, dealing with all the paperwork, advertising, etc. The list goes on and on. After all the work I have already been through just trying to buy my first property, I can now definitely see the value I bring to the table.

I now feel confident that I can reach my goals and help others fulfil their dreams as well. Once this first deal is complete I am eager to get onto the next deal and make someone else's dream a reality!

Avoiding Analysis Paralysis

I have read that I should specialize on a type of property, a city, a neighbourhood, a renter profile, etc. At the same time I am suppose to avoid being paralyzed by the analysis stage. I think that is much easier said than done. This is where I have found the largest gap to date with the real estate investing books.

I quite easily narrowed it down to Alberta. That wasn't hard as cash flowing in the lower mainland of BC is virtually impossible and I think anyone interested in real estate has seen the amazing headlines coming out of Alberta. That is where easy ends though. Calgary or Edmonton? Which neighbourhood? This area has a higher than average crime rate, should I be concerned? What sort of area will draw my target clientele? What if I can only afford this neighbourhood? Detached, half-duplex, or condo? Do I let my funds dictate the the type of house or the city? If so, which is more important? Should I be concerned about the flooding in Calgary or take it as an opportunity?

I thought I had it all figured out by starting off with a plan. The goal was to find a detached house in Calgary in the low 300 thousands, with a basement suite and a detached garage, in an area where transportation was currently being expanded to (started but not complete). In realty this left only one area of town that was completely out of our price range (detached or not). So we dropped the detached garage requirement, settled for near already completed transit, and settled for a half-duplex. Good news is we can cash flow nicely with this formula.

Then someone suggested Edmonton. Sure why not? After all my original research showed Edmonton and Calgary to both be great options. I originally chose Calgary solely to avoid being paralyzed by choices. Especially when we're talking about good vs great choices with no real downside.

A detached house is now back on the table, as is the detached garage. There is a transit expansion under way and we can actually afford to buy in that area. Sounds great, except my Realtor continues to tell me that transit doesn't add a lot of value in Edmonton, and the new station will be a destination for school, not a starting point. Also, the surrounding area has a much higher crime rate than the cities average. Finally the houses are all built prior to 1960s, where things like fridges were an afterthought.

If we drop transit from the equation, I feel like I've lost my anchor. We just decide that Edmonton is a great place to invest and buy based solely on budget. Or maybe we buy in the best neighbourhood, but then we give up on the detached house. Once we give up on the detached house I'm left wondering why we didn't just stick to Calgary.

If you feel dizzy from reading this I think you have a taste of how I have felt over the last few weeks. If you have any suggestions on how to come to a decision I would love to hear them. When I do finally come to a decision I will make sure I explain my rationale and hopefully help you avoid a similar pitfall.

The People Challenge

I have decided that this is the year I start putting into action my dream of being financially independent. I know I have a long road ahead of me as this is certainly no get-rich-quick-scheme. I am hoping I can use this blog to chart my journey, share my experiences, and possibly inspire others to live the dreams they want to live. Having started this process I have found a big gap in the books between the theory and the reality. By blogging about my experiences I am hoping to finally close that gap.

At this point I am still in the information gathering stage and determined not to get caught up in the dreaded analysis paralysis. I knew there would be challenges in this process, but so far they have not been the ones that I anticipated at all. I now have two of the three money partners I need to make a deal happen, and finding a cash flow positive property has been relatively easy.

Surprisingly, my biggest challenge to date has had to do with the more human interactions. Trying to find a solid team with a strong work ethic and similar morals has been challenging. So far I have dealt with one mortgage broker that didn't really see bank fraud as an issue, and another, while holding the moral high ground, managed to make me feel like an idiot every time I asked a question. One Realtor who thinks sending me weekly MLS listings is the way to earn a big commission, while another thought sending me 140 properties in one e-mail was a much better approach. I imagine they get a lot of tire kicking investors, but is it too much to ask for a Realtor to actually work a little for the money?

I have researched real estate investing for years now, and I'm finally ready to put the theory into action. Everything I have read and studied about real estate investing makes sense to me and I have even already seen evidence that I have the right information. However, I still find myself doubting the theories when someone (especially someone with supposed knowledge) questions my premise. One Realtor in Edmonton, who specializes in investment properties (the one that sent me 140 properties to look at on day 1), has taken an educate first approach. It has been a challenge to listen to his advice without completely losing confidence in the knowledge I have obtained. I have that same challenge when one of my partners suggests an alternative investing method or location. They have every right to do so, yet it is a struggle to maintain any confidence having never actually invested in real estate before.

I recognize that my confidence issues is an internal problem that I will need to continue to work at. I think the confidence will come with time as I see the system working. When I do step back and reevaluate I find that the facts haven't changed. Calgary and Edmonton are still one of the better areas to invest in. Properties near transit hold there value longer despite what the 140 listing Edmonton Realtor suggests. I did very well buying our first home in a transitioning area using this system and have already seen the Calgary market explode in the last 3 months. I would have bought there a year ago if I had the money then. So I need to keep telling myself, that while I have a lot to learn, I am not completely clueless.

I still anticipate that finding a master mind team I can trust is going to be a difficult task. Finding one in a distant province is not going to make matters any easier. I am still dedicated to buying our first place this year though, so I will continue the search and I am sure the right people are out there. I believe I have found an amazing Realtor at last in Calgary, but I may have found her just as my partners push me to look in Edmonton. Sometimes I wonder though if a great team is much more valuable than the perfect place.

If only I could get some numbers out of Edmonton, I might actually be able to compare the two cities and be able to make a decision!

Now... on to the next challenge.