Archives for July 2021

Lessons to Learn from a 1.7B business failure

I have read the gory greek tragedy that became of quibi which was an app that raised troves of silicon valley cash before going under. The idea could have had legs, but it all came down to operations and lack of business systems that caused a lot of the grief. The team has to work together as is very well detailed in the book good to great by Jim Collins, not only do you need to get the right people on the bus but make sure they are all in the right seats – which in turn creates a cohesive team that will work together toward the common goal or vision for the company.

The lack of business systems and how important they are you can read more about in the article that inspired this post by rich dad Robert Kioysaki original via this link

What business systems in real estate do you feel are the most important or you might need help with? Contact us today to book a discovery call and let’s chat real estate.

To you success

Tim Reid

-Respect The Hustle.

Real Estate Market stats and trends

Many people have asked where the Calgary real estate market is heading, which is a common question – now not having a crystal ball in my back pocket using data of the past can help with the outlook moving forward.

It is helpful here to state that the age old “past performance is not an indication of future performance” however history tends to repeat itself and real estate goes in cycles. The cycle has been shifted, compressed, and disrupted from the norms the last year due to COVID-19 for sure and what comes next is volatile to say the least.

This article was helpful to average out the stats for canada, here are some highlights

Prices Paid

  • 31% of buyers were involved in a bidding war during their home purchase
  • 66% believe that the bidding process should be more transparent and that all parties should be privy to the bids submitted
  • 45% said if the bidding process was transparent, they’d be less inclined to use a real estate agent
  • 32% of buyers incurred unexpected housing costs, including:
    • moving expenses (32%)
    • land transfer tax (25%)
    • home inspections (24%)
    • mortgage application fees (14%)
    • mortgage-default insurance (13%)

Down payments

  • 37% of respondents put down more than 20% of their home value
    • Of those, 28% wanted to avoid paying mortgage default insurance
    • 26% wanted to pay down their mortgage as fast as possible
  • Of those who put down less than 20%, the top reasons were:
    • lack of funds (47%)
    • wanting to keep money for other expenses (33%)
    • comfortable with their current debt obligations (15%)
  • Top sources for down payments included:
    • savings outside of an RRSP (38%)
    • equity from a previous home (25%)
    • RRSP savings (11%) – have rrps started to die?
    • gift from a family member (8%)
    • a new loan (5%)
    • a HELOC (4%)

One shocker I was not expecting as a “industry investor” is that 61% of people went to their existing financial institution to get their financing. WOW! The banks may give you the best rates, but there are many more features of a mortgage which is a 5 year deal (in most cases) and a 25-30 year commitment with the bank and let’s face it the banks interest is in making the most money not giving the best deal to the client.

Use a mortgage broker, at least to get a second opinion – they can also explain why there is more to a mortgage than the interest rate: fees, portability, fixed VS variable, blended mortgages and more.

Original article here:

The Value of Real Estate & Business Coaching

Firstly I recently had a few interesting conversations with clients both coaching and other areas about value. The first point that I want everyone to internalize is that price is only a concern in the absence of VALUE.

Now customers may not fully understand the components that go into any given job, this is very accurately portrayed in the trades professions when some customers feel they could do the job themselves for much less….but can they? My fellow real estate investors are thinking right now that they have seen the horrific results of some real winning DIY renovation jobs.

This story has been around social for a while so I thought it really illustrates this point in business, and serves as a great reminder to respect your value in business and ensure that you convey that value well to your prospects and you will increase your sales, plus convert more A+ customers.

A customer asked me how much it cost to do this job….
I answered him: $ 1500
He said: So expensive for this job?
I asked: How much do you think it would cost you?
He answers me: $ 800 maximum… That’s a pretty simple job right? !”
– For $ 800 I invite you to do it yourself.
– But…. I don’t know how to.
– For $800 I’ll teach you how to. So besides saving you $700, you’ll get the knowledge for the next time you want
– It seemed right to him and he agreed.
– But to get started: you need tools: A welder, grinder, chop saw, drill press, welding hood, gloves etc…
– But I don’t have all these equipment and I can’t buy all of these for one job.
– Well then for another $300 more I’ll rent my stuff to you so you can do it.
– Okay, he says.
– Okay! Tuesday I’m waiting for you to start doing this work
– But I can’t on Tuesday I only have time today.
– I’m sorry, but I’m only available Tuesday to teach you and lend you my stuff. Other days are busy with other customers.
– Okay! That means I’m going to have to sacrifice my Tuesday, give up my tasks.
– I forgot. To do your job yourself, you also have to pay for the nonproductive factors.
– That is? What is this?”
– Bureaucratic, tax, vat, security, insurance, fuel etc.
– Oh no!… But to accomplish these tasks, I’m going to spend more money and waste a lot of time!
– Do you have them? You can do it to me before?”
– Okay!
– I’ll make you all the material you need. Truck loading is done Monday evening or Tuesday morning you’ll have to come by 6 loading the truck. Don’t forget to be on time to avoid traffic jams and be on time
– At 6??? Nope! Too early for me! I used to getting up later.

– You know, I’ve been thinking. Y ‘ all better get the job done. I’d rather pay you the $1500. If I had to, it wouldn’t be perfect and it would cost me a lot more.

When you pay for a job, especially handcrafted, you pay not only for the material used, but also:
– Knowledge
– Experience
– Study
– Tools
– Services
– Time to go
– punctuality
– Accountability
– Professionalism
– Accuracy
– Guaranteed
– Patents
– Sacrifices
– Safety and security
– Payment of tax obligations

No one can denigrate other people’s work by judging prices. My prices to do this would be much higher than it says here for that job but its the point not the amount.
Only by knowing all the elements necessary for the production of a certain work can you estimate the actual cost.

When you hire a coach (which gets paid for their experience) you get focused attention, custom guidance, access to their networks, experience and a third party unbiased perspective so that you can get the feedback you need to get results in a fraction of the time.

What about mentoring? Mentoring is fantastic and I have had many over the years which have helped a lot, but the coaches I have invested in (they are an investment not a cost) have drastically moved the needle for my business. Mentors will be there to help but they have their own businesses to run as well so they can’t always be there when that critical deal hits your desk and you need fast targeted advice.

If you have every considered building a real estate BUSINESS, which is different that flipping a house per year as a side hustle contact us today for a discovery call to explore some options.

PS: We help those who want to build that side hustle as well, there are options for that!

To you success,

Tim Reid

-Respect The Hustle

Post Covid-19 What Comes Next?

Calgary and most other areas of North America are starting to open up an restrictions are lifting. There has been a unprecedented uptick in sales in Calgary real estate as well as many other markets across the country – many have asked us…why is that?

I have seen recently a number of articles starting to catch up on the trends that industry veterans like us have known for months. The primary reasons this happened in Calgary/Alberta at large was the following

  1. Low supply – builders stopped building due to lock downs and shut downs mandated by the public health orders.
  2. Never before seen Savings in Canadian bank accounts. Without spending money on entertainment, eating out, and frankly just about everything for a year in many cases caused an flood of cash into savings accounts and into the equities markets.
  3. Low interest rates – the central banks across the world dropped interest rates to keep businesses afloat and keep credit accessible to keep the economy moving as much as possible when so much was locked down for many months.

Now, that is what caused the market to move in ways not supported by fundamentals. Let’s face it if you ask anyone in Calgary or Alberta at large if the economy is doing well….you will not get very positive answers. Is it in-migration from other parts of Canada or the US? NOPE We have seen the lowest numbers of net in-migration in years to Alberta.

So I think any industry person would agree that the current state of affairs in real estate would be artificial, (at least in Alberta for certain) some supply and demand factor at play but the above three reasons are the cause.

Now that the world is opening up I have to wonder…what comes next? Will we have a repeat of the roaring 20’s like some have predicted? Which would include a large number of people going back to their old habits, OR will we have a cross section of the population choose to form new habits with a percentage of those savings and INVEST them?

I am not suggesting that anyone not live life and go on vacations (we need those!) or even eat out again and stay cooking at home. What I would suggest is that the families that are eagerly awaiting borders to open up and theme parks to come back online, and all the other discretionary spending that was waiting for the pandemic to end – consider taking a percentage of those funds and invest them using diversification to create wealth.

Creating wealth is a system, and one that the longer you work that system the better the results will be. Real Estate is the most reliable way to create wealth (that is why we love it), but you need diversity in that sector as well as into other sectors such as the equities markets, and business investments that pay you dividend income as well. We have done, and still do, all 3 which is what I like to lovingly call the “3 pillars of wealth”.

Which set of habits will you keep after the world goes back closer to “normal” whatever that means, my hope is that we take the lessons learned during this global event into the future and things are never the same again, in a good way.

Contact us today and let’s book a discovery call to answer any questions you have about real estate, business, or wealth creation – we are here to help.

To your success,

Tim Reid

-Respect The Hustle