Some simple investment considerations for purchasing investment properties in Edmonton or just about anywhere else.
Recently a young sponge for everything real estate told me a story about an investment seminar he attended. He said he didn’t really learn much because it was the free one, but they pushed another seminar saying you’ll learn more. So he paid for the next one and sure enough the wizard peeled more away secrets away, apparently giving more information but still selling more seminars saying “we’ve given you just enough information to be dangerous.”
Lol. Sounds like a typical seminar sales.
There are a lot of places you can find information on investing in real estate. In some cases you might even be asked to get on a bus and tour some properties, or spend whopping sums of money monthly. One of our regular blog readers (Laura or LP) recently suggested another blog on one of our threads saying they’re more respectful to investors. LMAO. It’s funny to even think she’s serious.
I respect investing, fundamentals and research. However selling their own properties by providing "advice" and "insider tips" for a fee is a great racket, and buyers who get sucked in by these "investment gurus" aren’t doing their due diligence properly, in my opinion.
Although I have worked extensively with investors in the past, selling entire projects, retailing projects out (in what seems like a life time ago) and even the odd office building, the majority of my business now is working with people buying and selling their primary residence. I just prefer working with people on something more personal. In fact, in the past two years I’ve only helped one buyer acquire two investment properties (unless you count parents who rent properties to their prodigies then I’ve sold considerably more investment properties in the Edmonton area). At the same time I have sold numerous properties for investor clients. It’s not that I couldn’t have sold more properties to investors, it’s not that it was too easy either. It simply comes down to working with people that we fit with.
The buyer investor I did work with is one that I’m obligated to as he’s been a very good client and said he really wanted my help. I agreed since the investments were going to be for a long term hold and were based on solid fundamentals and good value.
So it’s not that I don’t respect investing in real estate, I respect it enough to not treat it lightly. It’s not something that someone can just decide to do one day and then change their mind three months after the fact when it’s not working out. In Edmonton it seems that everyone forgot the risks that come with investing in real estate. Alright, enough yada yada yada. When I do talk to people about investing in real estate here are a few things I tell them to consider.
So without further adieu here are a few things to consider when investing in Real Estate in Edmonton or anywhere else:
- Don’t fall in love with your real estate investment. This doesn’t mean be a slum land lord. It does mean that you shouldn’t get so attached to it that you won’t be able to make rational decisions.
- Know your investment characteristics. Liquidity, marketability, leverage, manageability, taxation, risk, yield, cash flow and required capital, etc. Books have been written on almost all of them but you need to know what characteristics your investment has and which ones are going to make your investment successful.
- Understand your measurement for a successful investment. Most amateur investors will talk about cap rates, and rates of return. While these measurements are important towards measuring your investments, they can be overly simplistic and they may not take into account such things as taxation, appreciation, costs and so on. .
Now, I would be negligent if I didn’t discuss a simple thing like basic economic laws. Like the law of supply and demand. This much debated economic law is the basis for 3 appraisal approaches to value: market, income and cost.
One other thing you should understand is the relationship between time, value and money. This can help you can compare any investment to another investment.
Last but not least: work with experts, especially if you don’t know what I’ve been talking about in the preceding paragraphs.
And by the way, the above is my opinion only, and if you’re lucky you’ll see it republished on some other blogs word for word (except for my name of course). No shit. The other day I found one of my articles copied and republished word for word in another blog by a C21 agent in Ontario. He didn’t change a thing. (It was my article on walk throughs).
So just in case you didn’t already know this…We write our own stuff here or we reference the source. Maybe some other bloggers should try that (sorry for the end of blog rant).
