Investment Real Estate: Become An Expert and Become Rich

Written by Posted On Tuesday, 24 April 2007 17:00

As a sophisticated real estate investor I spend hundreds of hours analyzing markets to determine if it is a hot market for our investors, almost as much time as I study the actual properties. Invariably my analysis leads me away from my own real estate market; in fact, the market we choose may be thousands of miles from our office.

As a real estate agent in a booming market the thought of a single client with great foresight wanting to buy 30 properties and then telling his friends who will in turn buy 30 more will make you have thoughts of early retirement. Do you think the real estate investor market is one that you should target? Hopefully for you it is. The kicker -- unlike first time homebuyers, real estate investors are not gun shy. Sophisticated Investors act fast when you give them what they want.

Now I have worked with many agents in my life, and most just don't seem to get it. They send me listings of properties with nice closets, decks and gardens, but I would lose $300 a month and the neighborhood has no fundamentals for growth. Now if you want your piece of the investment real estate pie you're going to have to do that extra 10 percent, which will make all the difference in the world.

Property Goldmines: Is your area one of them?

Following the lead real estate investment experts like Don Campbell, author of the best seller, Real Estate Investing in Canada, I do a tremendous amount of research into a market before we invest. I look at changes in average income, population growth rate, job creation stats and labour market diversity. Digging deeper, I also look for announcements of new infrastructure projects, such as school expansions, hospitals, new industrial and commercial land becoming available, and new transportation projects like roads and rail.

Knowledge on these economic fundamentals goes a long way in building relationships with investors who buy multiple properties.

In the case of Fort Saskatchewan, a small town outside Edmonton Alberta that has the fundamentals for extreme continued growth in real estate, I contacted the economic development officer to attain statistics on the town before investing. After she gave me the information I needed, she referred us to an agent who understands what sophisticated investors need. From the level of knowledge the agent had it was clear he understood the economic fundamentals of his market and I have no doubt this agent was working closely with the city.

Along with letting me know which neighborhoods had nice schools and were close by to certain major roadways, he was giving me the inside information on the neighborhoods that are attracting higher income renters, letting me know the neighborhood that would be perfect for the typical Fort Saskatchewan tenant. Do you think I was comfortable with his recommendations on particular properties? You better believe it, and right now we are closing on 10 condos that he was both the buying and selling agent for. Can you say CHA CHING?

Become a Real Estate Expert

As a real estate investor, my number one fear is if prices are going to tank. Ease the fear by finding out the Don Campbell factors:

  • Is the area's average income increasing faster than the region's average?

  • Is the area's population growing faster than the region's average?

  • Is the job creation in the area growing faster than the region's average?

  • Is the area's infrastructure being built to handle more demand? (sewage, power, hospitals, schools)

  • Are transportation improvements being built? (airports, train stations, new roads and highways)

Offer Deals That Cash Flow or Break Even

Don't send us deals that we'll have to put in more than a $200/month with the real local rental rates. Negative cash flow is bad for investors.

Package the Deal

Real estate investors are sometimes scared of committing, if you us it's easy then we'll act.

Understand the rules for obtaining financing legally for rental properties; introduce your clients to mortgage brokers who can help them get the best terms. Understand the tax implications for potential sales, you may be able to roll over the cash into another property you happen to know of.

Have rental leases and rental applications ready on hand to give to the clients. Show your clients how to do credit and background checks for potential tenants. Introduce your clients to property managers.

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