Why Real Estate Investing Is Simple But Not Easy!

Our little guy is 8 months old and just started to crawl.  As first time parents, this is exciting stuff!  It is fascinating to see him with a newfound sense of freedom as he discovers every nook and cranny in our home, all the while licking, and trying to eat everything in his path!  Definitely keeping us on our toes as we begin to learn what ‘baby proofing’ means.

I am currently finalizing the permits on my most recent legal duplex in Hamilton and we were able to scoop up another one on the Hamilton Mountain a few weeks ago which will close in the spring.  It definitely is a process dealing with the City and making sure their requirements are met, but well worth it in the end to have a safe, legal unit.  I am so grateful for the team of designers and contractors I have – I wouldn’t be able to do it without them.

I will be attending the Canadian Real Estate Investor Forum this weekend.  It should be a great educational event with lots of awesome educational speakers.  I spoke at this event a few years ago on my BRRR (Buy Renovate Rent Refinance) Model.

Once I started attending educational events that were truly that, EDUCATIONAL, my real estate investing really took off.  There are so many events out there that are quite literally ‘pitch fests’ which promise you how simply you can become a millionaire by investing in real estate with no money down.  If only it was that easy.

I am a big proponent of the single family investment model. Mostly because my wife and I choose to self manage our properties and this is one of the most challenging parts of real estate investing.

But because of the recent market conditions (which I foresaw a few years ago) I began duplexing.  It is the next best thing, especially with beautifully constructed legal units whereby the home is set up for two families.  These are more difficult to manage though – you have double the tenants, hence – double the problems when they do arise.

Aside from property management, financing is also becoming a major challenge for real estate investors – especially with the constant fluctuations in lending rules.  Yesterday night, after the baby went to bed, we spent 3 hours sifting through and scanning page upon page.  My mortgage agent told us that our file is close to 400 pages – documents that we consistently have to keep updated.

Many people think that it is just a matter of having some extra cash and buying property – and it is.  The basic philosophy behind real estate investing is simple.  Buy good properties in good areas with strong economic fundamentals.  Ensure that you can cash flow and voila – you are in the game.

But as the title of my blog post says, the formula is simple but not easy.

This week I got a call about some water penetration in the lower unit of a duplex we own.  Just a few years ago, the same thing happened, although in a different area of the unit.   The photo below is what the unit looked like after we had to dig through the floors to replace the old pipes.  It looks like we may be preparing for round two.

There are so many things to think of and plan for, from how to fund our next deal, finding the next deal (bidding war frenzies),qualifying for financing, renovations, tenant placement and management and of course, the unexpected repairs and maintenance.

I do not share all this to scare you or to deter you from investing in real estate.  It is one of the most fruitful and lucrative investment models out there – if you educate yourself, surround yourself with a team and do it right.

But the purpose of my rant is simply to prepare you for the reality.  I know investors who collect rents every month, are able to pull out large amounts of equity from their properties but get very upset when the slightest issues creep up.

Nothing comes for free – and the simplicity of the model doesn’t come without its challenges.  But I would say that it is 100% worth it in the end!

 

So until next time, happy Canadian Real Estate Investing.

Jose Jafferji, REIA

Your Real Estate Investment Advisor

 

 

0 replies

Leave a Reply

Want to join the discussion?
Feel free to contribute!

Leave a Reply

Your email address will not be published.