I just read an article today that stated the CMHC leader wants to raise the minimum down payment for insured mortgages to further ease the demand for homes.  I feel that this would put the dream of homeownership even further away for most families.  The tendency for people to borrow more than they can afford has been going on for hundreds of years, regulations that attempt to stop this behavior are not likely to meet with much success.  I agree with the 10% requirement for more expensive homes (500K+) which will help first-time buyers to look at more affordable homes and not bite off more than they can chew.  However, raising the bar for first time home buyers to need to save more than 5% for their first house will squeeze many young families out of the market, which MAY reduce prices but it could just as easily have NO effect on pricing – just like the most recent tax in BC on foreign buyers.  The demand for homes is not going down, we have a growing population both locally and via immigration – especially in this case being that one of the many appeals of moving to Canada is the ability to have your own home for your family.  Real estate markets can be affected by many factors, but at it’s core the issue of a home buyer taking on too much mortgage debt is a matter of financial education – someone taking on too much debt is caused by a lack of education around how debt is structured, obtained, and paid back.  I feel that more study/work effort should be spent here rather that knee-jerk reactions such as raising the down payment requirement to attempt to legislate the behavior you want.

 

To your success,

 

Tim Reid

Recently I read an article that stated some eccentric star is now renting their apartment our for 40,000-60,000 per week (not including gratuity and taxes!).  This highlights a not often mentioned real estate investment possibility that I like to call the “private time share”.  We have all heard about going to some “presentation” where you can win a trip to Vegas or some such thing to sit through a sales pitch for a new fractional-ownership development.

I know many that have been happy with these investments and just about as many who felt they wasted their money…the jury is still out on this one.  I for one would like to have full control over my investment rather than leaving those reigns in the hands of  a large faceless corporation.

If you decide to buy a luxury apartment/vacation home in a trendy vacation spot (that you also like of course!) then you can have a professional management company rent out the weeks that you don’t plan on being in the house yourself.  This will pay for the property and all it’s costs with the added bonus of giving you cash flow in between your personal vacations!  This strategy is not new, basically the old-school AirBNB for the sophisticated real estate investor.

Granted, you may not be able to get the 40,000/week that a celeb can for their property – but keeping your prices lower than a hotel in a good location you can command very lucrative rates for your property and the housekeeping/management fees/maintenance could all be deductions on your taxes – make sure you ask your tax team to confirm these details. Imagine having your annual share holders meeting for your real estate corporation at your favorite vacation spot? ( I can see you on that beach now)

To your success,

Tim Reid

– Respect the hustle

 

Great Article that lays out the basics of wholesaling in real estate source:

https://www.biggerpockets.com/renewsblog/2016/08/04/what-is-real-estate-wholesaling/

What Exactly is Real Estate Wholesaling (& What Does a Wholesaler Do Every Day)?

 

For today’s post, I want to address a topic for all the newbies out there. You know, there are a ton of resources on BiggerPockets about the “how” to do this or that strategy, but I wanted to provide the “what” today, especially when it comes to real estate wholesaling.

What exactly is a wholesale real estate business?

What exactly do wholesalers do every day?

It is these two questions that I want to address for you. So let’s do it!

Real Estate Wholesaling is…

When you look up the definition of the word “wholesale” in the dictionary, you get the following:

The sale of goods in quantity, as to retailers or jobbers, for resale (opposed to retail).

In real estate, we know that “retail” properties are those sold on the MLS through agents representing buyers and sellers. In opposition of that, we have “wholesale” properties that are typically sold off-market at a discount and “in quantity” to “retailers” or investors who use these properties to turn a profit.

In the retail market, it’s typical for a person to maybe buy one house every seven years or so, but when it comes to investors, it’s common for them to buy one or more per month.

So, a real estate wholesaler is someone who simply gets extremely cheap properties that are good investments for investors.

They sell the property slightly higher than what they purchased it for, while still leaving plenty of margin for the investors to make a great return.

Kind of cool, huh? You just get a cheap deal and then turn around and sell it for a quick profit. It’s that simple!

Now, there are three different “types” of wholesaling real estate. They are:

1. Assignments

This is the most commonly known method of wholesaling in real estate, and some even think it’s the only kind!

Essentially, when you wholesale through assignments, what you do is get a property under contract, and then you go find an investor who you can sell “the rights” of that contract to.

For example, say there is a house where the seller wants $15,000 (very common price point in Indianapolis). You run your numbers and see that the comps in the area say the property could sell retail for around $60,000 and that it’ll take a $20,000 rehab — which is a pretty good deal.

Related: The Best (And Most Honest) Way to Wholesale Properties in Any State

You write a purchase agreement with the seller at $15,000. During your “due diligence” period, you then turn to your buyer’s list and offer to assign that contract for a fee of $5,000.

So, out the door, the investor-buyer would be getting this property for $20,000, potentially put $20,000 into it, and make $20,000 when they sell it at retail.

The pros to this is that you have very little money into the deal (if any at all), and you have little risk because you can normally find a way to back out of the deal, if needed.

However, I personally don’t like this type of wholesaling for a couple of reasons:

I feel like it’s a gray area legally.

It could be argued that you’re essentially acting as a real estate agent without a license because you’re brokering a transaction between a buyer and a seller for a fee. If you’re marketing a house for sale that isn’t yours, technically, you could run into fraud. If you have your license, then it’s cleaner, but you still could run into some trouble depending on your state legislation.

I feel like it could be perceived as dishonest.

If I’m telling a motivated seller by contract that I’m going to buy their house and then I turn around and don’t buy their house but someone else does — or worse, I back out altogether — I feel as though that could easily make people angry.

Likewise, if I tell an investor-buyer that I have a property for sale and then the motivated seller decides to back out, I’ll make the buyer angry because they were interested in this deal. I would come across as a major flake.

There are ethical ways to do assignments, using full disclosure and having it clearly spelled out in the contract that your intent is to assign. However, I strongly encourage you to have a lawyer in your market write up this type of contract for you and advise you on the best way to structure your business based on this strategy. The “strictness” of assignments varies from state to state.

It can easily become complicated.

If you assign contracts, especially if you get into the whole “wholesaling a wholesale deal” — where another wholesaler has the property under contract with the seller, and then you enter into a contract with that wholesaler and go turn around and find a buyer — it can get really confusing, fast!

The name of my company is  “Simple Wholesaling” because frankly, I just like having full control of my inventory. I like to keep things as simple as possible, for myself and for my buyers. When you assign contracts, there just seems to be more hoops and hurdles involved because, frankly, there are more people to deal with!

2. The Double Close

The next type of wholesaling in real estate is called the “double close.” A double close transaction is when you purchase a property from a motivated seller, and you simultaneously sell it to another investor. At closing, you first sign all the documents with the seller and then, maybe fifteen minutes later, walk into another room and sign all the documents with the end buyer.

Related: The #1 Thing You Need to Automate Your Wholesaling Business

Sometimes the end buyer will fund the purchase of the property between you and the motivated seller, and then add your fee into the transaction between you and them. Other times, you can get “transactional lending,” where a lender will give you a loan on a one-day basis, where you can purchase the property from the seller and then turn around and in selling it, pay off your loan and make a profit with a slight increase in price.

Obviously, you really need to get your timing down in order for this to work. In the case that something goes wrong at the closing table, you can easily get in a pickle, but if done correctly, this can be a great strategy.

Again, you have very little personal investment involved in this type of wholesaling, but the risks are a little higher.

You also need to be careful how you market properties while they are still under contract. Again, marketing a property that’s not yours could potentially be considered fraud. The key is learning the most ethical way to do it for your specific market, as state laws vary.

For me, I have done quite a few double closings, but as a full-time strategy, having to plan everything just right is far too much of a headache. I’d rather just have more control of the transaction. This leads us to the third type:

3. “Traditional” Wholesaling

This is based on what’s typical across the majority of all wholesale industries. You manufacture or purchase a large quantity of product, own it as your inventory in-house, and then turn around and sell it at a “wholesale” price to retailers.

So, in like manner, as a real estate wholesaler, you purchase a property from a motivated seller for a steep discount, close on it, then market it and sell it once you fully own the property.

This is the model that I run my company on.

Now, the downside to this type of wholesaling is that it takes a lot of working capital to function at scale. (My company averages buying and selling eight to ten properties per month, and at an average of $15-35,000 a piece, you can imagine that this can get pricey!) It may take you a while to build this up.

I started with only $5,000 and within a year was operating as a full-time wholesaler, so it is definitely possible!

Why I like this type of wholesaling over the others is because I have full control of the property.

I don’t have to worry about the motivated seller backing out, the investor messing up my loan arrangements if they back out, or the law — because I’m simply selling my own houses.

Both the motivated seller and investor-buyer are treated fairly, and everything just runs so much more smoothly.

So, these are the three different types of wholesaling. Now, I want to briefly describe the different components of what you need to do every day regardless of the type that you choose.

2. All Aspects of Real Estate Wholesaling

When you are a real estate wholesaler, there are three aspects of your business:

1. Getting inventory, or “acquisitions”
2. Selling inventory, or “finding buyers”
3. Managing transactions, or “understanding purchase agreements and closing processes”

It’s really that simple!

A few pointers on these is that for acquisitions, you need to know how to run comps and determine rehab costs for your market.

The easiest way to do that is to learn the 65% rule and then hire three to five contractors to give bids on every house you look at for your first month or so. That way, you can get an average of costs for the market for different items that you run into.

You also need to learn how to find motivated sellers. The easiest way to do that is through direct mail marketing, but there are other “cheap” ways of doing it as well.

For finding buyers, the easiest way is to post all of your inventory on Craigslist and attend local investor meet ups in your market. You simply need to find a way to get the word out. This is what I do in my business, and it works great!

Finally, when it comes to understanding and managing the transactions, the best place to start is by getting a purchase agreement and reading it through. Then you can call up a title company and ask them what to expect in the closing process and what’s needed to make things run as quickly as possible.

With time, transactions will become second nature.

With that, I hope I helped clear up what’s involved in this type of real estate strategy. Every strategy has its pros and cons, but for me, wholesaling has been a true Godsend. I love my business, and if done well, it can truly provide the life of your dreams.

The mobile home business In Canada is different than in the US for sure due to lower density of parks and the pricing is a bit different but not as much as you would think in context.  These little homes are like ATM’s that you can buy at the right price and get them to spit out money for you every month.

 

Mobile homes are generally overlooked by many investors because they want the single family homes in good areas or multiple streams of income (which I am all for don’t get me wrong) however these properties are a lore more expensive and your creative finance options are a lot more limited.

This all is aside from the fact that the average price for a single family home in Canada can run from 400k-1 million plus in sectors like Toronto and Vancouver.  Mobile homes in Calgary and other areas in Alberta could be an excellent way to break into the cash flow or flipping strategies without having a large amount of investment capital to start with.

Don’t forget you can always use Joint Venture Partners for your deals on these homes as well which would reduce your money in — possibly down to $0.00 if you are willing to do all the work. Just think what your cash flow would be if you bought a mobile home for 35,000 and fixed it up for 10K and now you have a 35,000 asset that could rent out for 1500-1800/month?

Things to consider here are the following:

1. Mobile homes are depreciating assets (just like cars) so you can’t count on appreciation like single family fixed home

2. They are mobile! So you can find desperate sellers that need to move the home from it’s current location and get great deals then move it to a new park in a good location to rent it or to a property such as an acerage

3. There are many families and single folks that can’t afford the rent in a downtown apartment or a large single family house – you can still charge lower rent and get high cash flows because your purchase price was so low

4. Forced appreciation through renovations is a lot cheaper in this space because the square feet to renovate is much lower

5. You can do seller financing for the mobile home for the new owner and be like the bank and charger interest and collect a down payment

6. Financing is available for these units but the big banks will not fund them ask us if you need a great mortgage broker.

7. Extremely low competition for deals in this space due to the stigma around trailer parks

8. Comparables can be tougher to find if sales have been low in the park

9. Lots are owned by the part sometimes and sometimes you own the land with the unit – owning the land is preferred because you have less restrictions on what you can and can’t do with the sale/financing

10. These units can be a great way to make a lot of money if you are willing to step outside of the box!

To your success

Tim Reid

-Respect the hustle!

 

I just got this very amazing post in my email from a good friend of mine Marcin at gofund capital –I know I suffer from this from time to time as an entrepreneur for sure!!:

Too Much Starting. Not Enough Finishing.

A new:

• business
• product
• feature
• market
• business partner
• staff member
• marketing plan
• bell
• whistle

At any given moment there are literally 100 different projects or initiatives that you can start working on. The question is… which ones will you actually finish?

If you’re a start-up or a business experiencing exponential growth your answer better be “whatever helps generate revenue today”.

I’ve seen several brilliant “starts” die because the entrepreneurs were constantly focused on implementing “exciting” new ideas or bringing on new team members all while still figuring out the business AND expending lots of time, money, and energy along the way.

The real challenge for most growing companies is executing the “finish”.

Too many businesses recently have forgotten this simple truth. Easy money has allowed many companies to raise capital at higher and higher valuations without much regard for pesky things like profitability.

This has allowed several bad habits to multiply in the business community:

• There are too many managers and not enough people with their sleeves rolled up

• There are too much theory and discussion and not enough testing and application

• There is too much focus on branding and not enough focus on actual sales

• There are too many internal meetings and not enough client-facing interactions

 

You see…starting something new is sexy. It can be glamorous and exciting and there is almost always a “honeymoon” period where people temporarily cut some slack and suspend judgment.

Eventually, though reality sets in, the music stops, and funds dry up for the businesses that are great at “starting” as everyone involved (employees, investors, etc.) eventually expect a return on their time or money. This is why the only companies that make it over the long term need to constantly create real value and deliver products and services that people actually want.

Whether you’re running a small business of one or are managing a team of 20 and still growing the key to your continued success and growth is being very selective in what new “starts” you embark on within your business. If the new “initiative” or “partnership” doesn’t exponentially increase your existing business; it’s likely not worth doing. No amount of time or capital investment will change this. Investing money and time will only delay the inevitable and suck precious resources from what does work.

Anyone can start something. Few people finish strong.

 

To Your Success,

Marcin Drozdz is the Managing Director of GoFund Capital Partners. An entrepreneur at heart Marcin began his professional career rising through the ranks in the private capital markets in Canada. Marcin has since helped build out several companies including a limited partnership focused on commercial real estate acquisitions, a financial services firm, and an alternative business funding group. Marcin and his team now primarily work with professionals and business owners that are looking for capital or strategic solutions to fund their growth or exit.

For more content, you can follow Marcin on twitter @mdrozdz or visit www.gofundcapital.com.

I recently saw a new story that covered how coaching has recently benefited job-seekers that have currently been displaced by the massive lay-offs in Calgary/Alberta at large due to the recent collapse of the oil sector.  I thought this was a very interesting story in so far as I did not even know that there were such services.  There are coaches/mentors in just about any area of life if you really stop to think about it: fitness (personal trainers), nutrition (nutritionists), faith (religious leaders of all creeds), business and of course real estate.  The interviewees in this story all confidently stated how the services of a career coaching session had changed the trajectory of their lives and accelerated their results.  I have benefited in ways that are hard to describe in my real estate business since I hired a coach just over a year ago now – I have more than doubled the income in my business, have launched new product lines, developed higher-level contacts ad JVP’s just to name a few.  Recently over the last year I have also started coaching new investors through the launch phase in their real estate businesses and have had the privilege of  working with some amazing individuals and watched their transformations in business.  There will always be challenges in all aspects of our lives – why not leverage the expertise of those who have been where you are right now and have overcome the obstacles that you are currently facing? Why re-invent the wheel and suffer through things on your own – I say ask those questions of the experts so that you have a faster pathway to success in whatever area you are looking to improve in.  The sun is shining today in cow-town, shed some light on your results and reach out to a coach in the field you are looking to crush it in for 2016.

 

To your success.

Tim Reid.

This is the time of year where the gyms are packed with people, MLM marketers are crushing it with their health food weight loss products in a whirlwind of new year’s resolutions that are doomed for failure.  I suggest that this new year those that want to make this year different filled with more success, better relationships, and all around just more fun — to look backwards not forwards to start making a plan for better outcomes this year.  The old saying that history has a nasty tendency of repeating itself is simple a function of not learning from our mistakes and analyzing our behaviors to determine why we ended up where we are today.  This is just as true in business as it is in the rest of our lives – so why not look back on 2015 and see what went well and celebrate those successes, then more importantly look at the decisions that we made (that’s all life really is-a constant set of decisions) that did NOT get us closer to our goals.  These are the areas where we need to start doing something drastically different or we will be chained to the same lack-luster results of the past.  So I challenge everyone who is looking for some real change this year to throw our those resolutions, take a critical look at how things went last year and decide where you want to go and make some real paradigm shifts to make 2016 your best year ever! I have read over and over again from some of the most successful top performers that you first need to have a truly clear vision of what you want to achieve and the results you want to get in business and life – do you really know what you want? Can you picture what life will be like when you get there? Wanting to “make more money” or “lose weight” are not destinations or objectives -they are just wants with no plan to get there which in my books=DREAMS! Having a 20,000 square foot house locaed X designed and built by X with a view of the X ocean with X bedrooms withe the custom woodwork designed by X master craftsman and it smells like X in the flower garden at X hour in the morning is a little be more descriptive save for the variables of X! These of course would greatly vary based on what you individually want – but I think you get the difference between a weak “goal” and a true result/objective that one may want to accomplish in business or life.   I say sit down with your ipad,notepad, tablet or whatever you use to write down what really matters to you and get to it deciding on some real objective to reach for 2016 and then break these down into small enough chunks to start crossing those things off your list working toward that objective that will help your confidence and build momentum as you get closer and closer to those objectives that you really want in life.   To become truly successful, financially free, and to start playing the game of life at a high-level has nothing to do with the freaking power ball (rolls eyes) and really has to do with picking a list of things you really want in life and then running after them with a burning desire on your heart like nothing could stop you if it tried!

 

To your Success,

Tim Reid