Updated: Dec 20, 2019
For some reason this list of 5 things I did right was much harder to come up with than the list of 5 things I did wrong. I guess that’s because our mistakes stick with us longer than our small victories we have along the way. But as long as you learn from your mistakes, hopefully this ratio of things gone wrong to things gone right leans more in favour of right as your real estate investing journey progresses.
So let’s get into it! Things I have done right:
1. Knew my market before jumping in
I’m the type of person that gets an idea and jumps two-feet first before necessarily thinking it through entirely. Which is likely part of the reason why I’ve invested in 3 different provinces in Canada right now. However, I will say that before I go through with a deal, I make sure I know my market. For example, Victoria, BC is a much different buyer’s market than Saint John, NB. It’s also a much different rental market. Buying in Victoria, you have to be quick, sometimes little to no conditions with your offers, and aggressive price points. Saint John however, you can wait houses out for months, draw out the closing period, and re-negotiate the price. But then the rental market in Victoria is also higher priced and much less inventory, so I know I will have little trouble finding a long-term tenant there. In Saint John, my units might go empty for a month or two, and if I’m lucky I’ll get someone to sign a 6-month lease. But I knew all of this before going in and was ready to move fast (or slow) to adapt to my current market.
So how can you get to know your market?
You live there
If you’re currently living in the city you’re investing in, you’re most likely already familiar with it. Maybe you’ve rented there for the last couple of years and experienced first-hand how easy (or difficult) it was to find a rental apartment. You probably also have a good idea of the price of renting a 1 or 2 bedroom apartment. If you don’t, this is where Kijiji, Rentometer, and PadMapper become your new best friends. You’ll need to do a little research to find average rents in the area you want to buy in.
If you aren’t familiar with how much houses are selling for in your area, get your butt on realtor.ca. ASAP.
I’m on this site every single day. Good bye social media, hello real estate websites! Start to look at properties you’d be interested in purchasing and come up with an average purchase price to work from. Once you know approximately how much you’ll have to spend to purchase a property, as well as how much you’ll receive in rent, you can move forward to run the numbers, like I’ve displayed in a previous post.
Talk to people!
I know it’s cliché, but networking really is everything. When I started thinking about investing in Saint John, I reached out to people I knew who were either also investing in Saint John, or friends I knew that lived there and could give me some insight into the city.
Don’t have friends in Saint John?
Not to worry, reach out to a local Realtor! They should be happy to share their knowledge of the local market with you. Realistically, they should be an expert in their own market. Through the conversations I’ve had with people, I’ve realized that there is a particular spot in Saint John where I want to invest, one that will give me the highest rate of return. I wouldn’t have known this without talking to locals and researching online.
2. Sourced out resources (blogs, podcasts, and books)
I get it, in this day and age, everywhere you look someone’s recommending you to read this self-help book, listen to this lifestyle podcast, or read this person’s blog (my blog, right? ;) But honestly, if you’re actually interested in learning about real estate investing, this is one avenue to take advantage of. It can seem overwhelming when you first start digging into all of the information, but it’s true what they say, knowledge really is power (throwing out ALL of the cliché’s today). Maybe commit to one podcast a week to start off with, just to get your feet wet. I’ll once again recommend Bigger Pockets, as they’ve taught me a lot thus far.
There is also a plethora of real estate books to read. If you’ve never read Rich Dad Poor Dad, that was one book that really started my interest into real estate investing 8+ years ago. Whatever your poison (book, podcast, blog), just ease yourself into it, see if you like it, and then ramp up (or down) your intake as you see fit.
3. Partnered with good people
Even though I’ve just finished saying to learn from books, podcasts, and blogs, I think the number one way to learn is partnering with the right people. I was lucky that my first partner, even though the relationship didn’t end well, I learned a lot from him. We definitely had different strengths and going through the buying and renovation process together for the first time was a great way to learn. It’s also a great way to experience the highs and lows, late nights and extreme frustrations that come with owning and renovating a property together. But I wouldn’t change what I learned for the world. Under the umbrella of ‘partnering with good people’, I would also include finding yourself a good real estate agent that you trust (Hi :), a mortgage broker that is responsive and works hard on your behalf, and contractors/labourers that you trust as well.
4. Used Kijiji for second hand renovation materials
When I bought my first house, I essentially spent every single penny on my down-payment. In fact, I actually borrowed money from my line of credit to pay a small portion of my down payment. Which isn’t technically allowed, but anyway.
Needless to say I had a big fat $0 to spend on the renovation. But we NEEDED to renovate our basement suite in the first month we bought the house so that we could get tenants in as soon as possible.
So what did we do? Hit up Kijiji!
Kijiji (and similar sites) have been my best friend along my entire investment journey. In fact, after MLS, it’s probably my top most visited site. You can find anything here. So we found cheap materials! We got a whole set of used, great condition maple kitchen cabinets to rebuild an entire kitchen. At two different points there were ads up for free flooring as long as we did the work to tear it out. Which we did. One lady was selling an old, beautiful clawfoot tub for $200. She invited us in for hot dogs and we got to play with her dogs, so that was a big win. In fact, I could write an entire blog series on the interesting and kind people I have met on Kijiji in the past. The real key for finding great renovation materials was to watch the ‘rich’ neighbourhoods, and when they would post something for free/cheap, it was generally pretty much brand new anyway. One bit of flooring we got was only 2 years old, they just decided they wanted to upgrade to a new colour. What a win! If you look hard enough (and often enough), you can find SO MUCH free stuff. I think we spent less than $5,000 renovating two separate suites, and accumulating materials for a 3rd suite. So this was definitely one thing we did right, and I highly recommend to people who don’t have the money to buy new, to get creative to find ‘almost new’ materials. You’ll be really surprised what you can get.
5. Trusting the numbers (and getting comfortable with the offering process).
This one took me awhile to get used to. I’ve mentioned running the numbers in previous posts, and about taking that ‘leap’ and moving forward with a deal even when your gut tells you not to.
But that’s easier said than done.
And there have been plenty of times when I’ve fallen in love with a house but had to let it go because the numbers just didn’t make sense. In fact, this exact scenario happened recently. We’ve been looking HARD for another property in Halifax and I thought I had found ‘the one’, but no matter how many different ways I ran the numbers, it just didn’t make financial sense.
So, I had to say goodbye.
And trust me, it hurts every time. You invest so much effort and time into finding the property and gathering all the information to a point where you feel “bought in” to it. But what would hurt more (and I have to keep telling myself this), is to own something that costs you money each month. No amount of cuteness or curb appeal is worth losing money on. And once you start making offers on properties, losing properties, walking away from properties, getting properties, that emotion starts to fade.
It all becomes very… routine.
Which is honestly what you want. It’s a business deal, and you’re not going to (knowingly) make a bad business deal. But houses have that way of bringing emotion into them, and that’s a very tough thing to separate (at least for me). But the more deals you make, the less that emotion comes into it. So keep running those numbers, making those offers, and knowing when to walk away.