Buying a house – The realistic approachThis article is not about the secrets of buying a rental property for no money down and half the price of the market value of the house. I am not Tom Vu or Don Lapre and I am not in jail.In Canada, the no money down home did use to exist, but not anymore. Some banks and/or lenders were willing to lend you the 5% down payment so that you don’t have to pay a dime out of your own pockets to purchase a home. However, given the current financial situation with tighter lending restrictions, there will be no bank or lenders who can do that in Canada.The buying home for half price did use to exist as well. At one point, foreclosures in Canada would allow foreclosed homes to be sold at rock bottom prices. The new law, which has been in placed for many years now require the homes be sold at the highest possible price for foreclosed homes or else the lenders could be sued. Hence, sometimes foreclosed homes sell higher because Canadians have the misconception that foreclosed homes are a really good deal causing it to have a reverse affect. There have been many people buying foreclosed homes believing they got a good deal and not doing a thorough check as to the actual value of the home.Now, clearing out the quick money maker myths of buying homes, there are still many things you need to be aware of before starting.If there exist ever an industry with more sneaky sales tactics and money motivated people, it has got to the Real Estate industry. As a buyer, you could be dishing out $350 000 and everyone wants a piece. The Real Estate Agents want a piece. The lenders want a piece. The lawyers want a piece and the sellers want piece. No wonder there are so many scams in this industry.The first thing to be aware of is the Real Estate Agent. A Real Estate Agent is suppose to act on your behalf to buy or sell the home. Both the buyer of the home and seller of the home will have their own Real Estate Agent called a Buyer’s Real Estate Agent and a Seller’s Real Estate Agent.In Canada, each Real Estate Agent gets an average of 2.5% and sometimes 2% for the commission of selling the home. Some Real Estate Agents provide cash back rewards. Canadian Real Estate Agents gets higher commission than anywhere else. In United States, their Real Estate Agents only get 1% of the commission and their homes are actually much cheaper. Even though Real Estate Agents are the least educated of the parties involved in the buying home transaction, they seem to be getting the biggest piece of the pie.Do not listen to their gimmicks on Real Estate Agents are ethical. (http://www.howrealtorshelp.ca) Where do they get the idea any Real Estate Agent off the street is ethical. Their claim is based on these tests that they pass to become a Real Estate Agent. Agents passing a test does not meant hey are ethical. It only means they can remember enough to pass the test.One would believe it should be the Real Estate Agent’s job to help the buyer ensure the home is of value. Rightly so, many buyers depend on the Real Estate Agent to protect them and provide them advice and in my opinion, the ethical Real Estate Agent should do that. However, the true reality is that Real Estate Agents do not make money unless if the home is purchased. The reality is that the Real Estate Agent’s salary is not truly dependent on giving you advice. The Real Estate Agent’s job is to get the buyer to buy a home through them so they can get paid!As a result of this, what ends up happening, are two types of Real Estate Agents with variations in between. The first type is the honest agent with the belief “If I work hard and treat my buyer right, the buyer will come back to buy more homes from me. The second type is the “I need to get the buyer to buy a house quickly so that I can move on to the next buyer (sucker) so that I can maximize my time for profit.” The bottom line is that you are looking for the first type and you want to avoid the second type.We’ll call the first type, the Bad Real Estate Agent. We’ll call the second type, the Good Real Estate Agent.So what kind of characteristics does the Good Real Estate Agent have that the Good Real Estate Agent does not have?1. The first characteristic is Patience. Bad Real Estate Agents will attempt to sell you a home quickly to get the money quickly. Do not buy a house without spending a lot of time looking at several different homes. Be careful of tactics such as Real Estate Agents claiming it is the perfect and acting like a salesman rather than providing you information.2. The second characteristic is information. A good Real Estate Agent needs to provide you all the information to let you make the informed decision and we are not talking about their opinion. Real Estate’s opinion does not matter. Real Estate Agents have data such as the history of the house being sold at, homes being sold near the area and type. A Real Estate Agent should be able to provide you with a compilation of official documents that tells you these kinds of data to let YOU make an informed decision.3. The third characteristic is care. You will know this during the actual signing of the contract to purchase the home at a certain price. Once you become interested in a property and want to buy the property at a certain price set by YOU, you have to write up a contract. The contract consist at least three conditions that will null the sale of the home and a security deposit.The common three conditions are, buyer can get financing, the home passes inspection and the appraisal value of the home is above the price to be purchased. Generally, you will want the lenders to appraise the home so that you know the fair value of the home and the lenders would only lend of you are buying the home at fair market value.The security deposit is an amount you will provide to lock the home from being sold to other buyers while you perform to checks to see whether these conditions have been met. If these conditions are not met, then you SHOULD get your security deposit back.The Bad Real Estate Agents will want to you provide very few conditions and a big security deposit. Doing so ensure the home is more likely to be sold.Do NOT go through the internet and pick the first agent you see or the agent that has the most advertisements. They are just spending marketing money which they intend to recover from you. I especially find the ones that are top ranked search engines to be the most conniving, especially the Mississauga location!More to Come!
Are you ready to get started in real estate investing,but not sure where to begin?Afraid to make a HUGE Mistake??Stuck with the Paralysis of Analysis???You are not alone! Almost all real estate investors had to spend countless hours at the beginning of their investing careers researching the various strategies trying to figure out where they should begin.
While there is no single right answer for everyone, there are three key questions every potential investor needs to ask:1. How much TIME do I have to invest?2. How much MONEY do I have to invest?3. How BIG and FAST do I want my business to ultimately grow??A Great way to start any venture is by having an END Goal in mind, then laying out a plan to go get it! Even if you have to make changes along the way – which you will, the “getting there” is a great part of the fun.Real estate investing can do anything from learning how to put a quick (in 30 days, or less) EXTRA $5,000 in your pocket every month, to making all your financial dreams come true with an annual after-tax income in Millions of Dollars. You really do need to decide upfront, if you are looking for the multi-millionaire status, or just to put some quick cash in your pocket to pay bills.Regardless of your dreams and desires how you will use real estate investing to get where you want to go in life, we believe that there are three critical rules you must follow, if you are going to be successful. Here they are:RULE NUMBER ONE IS: FOCUS-FOCUS-FOCUSIf you are looking for a long-term commitment to this business, then you need to establish up-front that you will need to set-aside some money from each of your transactions/deals to re-invest in your education, AND it is probably in your best interest to start with one strategy and be prepared to switch to a different strategy once these goals are met.As an example, let’s say you ultimately want to be a developer (like Donald Trump, or Sam Zell, or Trammell Crow), but today you have a job and are $50,000 in debt. Your first step might be to generate quick cash over the next year to pay off the debt, then half way through making this happen (say in month six) begin the process of implementing a strategy to generate enough income from your real estate investing to leave your job, then after you have created a stable base (enough to pay bills and then some) from your investing activity, to start a plan to become a developer. All together, this may require three different strategies.A “Classic” mistake that many novice investors would make is to attempt all three strategies AT THE SAME TIME – DO NOT DO THIS!!! Better to learn a strategy for quick cash, master it, then move on, then to attempt to learn three strategies at the same time.OLD AFRICAN PROVERB: “He Who Chases Two Tigers Ultimately Gets None”
Regardless of the Strategy to start with, history has shown that people who FOCUS their time, energy and money, are more likely to succeed than those who do not.Be Patient – Be Focused – Start Small, Grow Big.RECAP: Rule Number One is: FOCUS-FOCUS-FOCUSRULE NUMBER TWO: YOU LEARN BY DOING!The second important thing to know about real estate investing is that you learn by doing! We know that there are a lot of late-night infomercials which say “Come to our FREE seminar, spend $5,000, and tomorrow you will wake up a Millionaire – but the problem is we have never found anyone who will admit that this really worked. Also, there are people who spend good money going to college, or graduate school and study how to “succeed in real estate”, and by and large, this can work, if you then go on to commit to 25-40 years working as an employee of a real estate firm, making someone else rich – if you are fortunate enough, you may learn, enough (over time) and then go out on your own.And yes, we all know of people who buy every book, every tape, and go to every seminar, and become walking real estate investing “Encyclopedia’s” – BUT NEVER DO ANYTHING WITH IT – BAD IDEA! Why, because if you never put into practice what you read, or hear, you will ultimately convince yourself that “this real estate thing” does not work – UNFORTUNATELY, both history and Forbes Magazine would prove you wrong.Ever since John Jacob Astor became America’s First Millionaire in the 1800′s by buying what would ultimately become Manhattan, more American’s have become wealthy through investing in real estate, than by any other means. And those who have made their fortunes in other areas (like operating businesses) have reinvested their profits into real estate than any other asset class.THE BEST WAY TO LEARN TO BE AN INVESTOR IS TO BE AN INVESTOR.RECAP: Rule Number Two: YOU LEARN BY DOING!RULE NUMBER THREE: START TODAY – RIGHT WHERE YOU ARE.Final Key Thought – many new investors kid themselves by saying thing like “When I get enough money…”, or “When I get enough time…”, or “When I can get some other things out of the way…” Then I will get started – BALONY!! What they are really saying is “I am Scared to Death of Failing at this Real Estate Thing”, and the sooner they stop lying to themselves the sooner something really great will happen in their lives. The truth is almost every successful real estate investor out there (including Donald Trump, and Sam Zell, and Ron LeGrand, and Robyn Thompson, and (Place Millionaire’s Name Here), was scared to death when putting their first deal together. What made the difference is that they moved forward and did something.Sir Isaac Newton said it best in his first Law of Motion: “An object at rest tends to stay at rest and an object in motion tends to stay in motion…” In other words – if you keep on doing what you have been doing, you should expect to get the same results. But if you want something different for your life, you will have to go “in Motion”. You learn the Real Estate Business by DOING, so the sooner you DO, the Sooner you GET. Today is the day to stop making excuses and to “Go In Motion”. And as you Go In Motion, make a commitment to continue to learn, so you “Stay In Motion”RECAP: Rule Number Three: START TODAY – RIGHT WHERE YOU ARE.So with these three rules in mind, we hope that RealInvestors(TM) will become a key partner in your success and we want to hear about your success, no matter how small, or how great. Most importantly, we want to help you “Go in Motion” and “Stay In Motion”…
So, Let’s Get Started…Choose ONE strategy to get started. Please Take to Heart Rule Number One: FOCUS-FOCUS-FOCUS… DO NOT TRY TO BECOME AN EXPERT ON EVERY STRATEGY BEFORE EVER GETTING STARTED! If you do, we can almost guarantee you that will become confused from information overload, and you will never begin! Decide on a single strategy that is right for you, learn about it, and go out there and DO IT!Make a commitment (let’s say 6 months) where you are completely focused on that strategy. Network with other investor’s who are working that particular strategy and do not quit until one of two things has happened: either 6 months has gone by with no results, or you get your first deal done using that strategy and decide you want to try your hand at something else. But do not allow yourself to be taken off course. It was o.k. in elementary and middle school to try out for every team sport, but when Spring came, you had to make a choice; it was either going to be track, or baseball/softball, or lacrosse, or crew, or tennis – but you could not play two sports at the same time.Each sport had its own rules, and each one required a slightly different mental “game”. If you had come to the baseball field with a lacrosse stick and shoulder pads, someone would have asked you to “go home” and come back when you were “ready to play this sport” – same is true with investing – ESPECIALLY WHEN YOU ARE JUST GETTING GOING. Now, one day you will be able to “Play Like Mike”, but as a new investor, let’s keep it simple: One strategy, complete focus until you have proven to yourself that it will work, for you, or it won’t, and for most people this will mean at least a 6-month commitment.NEXT STEPS: Once you have familiarized yourself with this Getting Started section of the website, we recommend that you take the following steps:• Read and post regularly in the Real Investors Forums to gain exposure to the issues facing other real estate investors. Chances are, those same issues will face you in the near future.• Real all the Real Investor Articles. This will help to build your knowledge base about real estate investing in general.• Visit the Real Investor Bookstore and pick out courses that focus on the ONE strategy you have chosen to use to get started. Do not purchase courses on a myriad of strategies before you ever do your first deal!• Join your local REIA. You will meet many other investors… some seasoned, some just getting started. You will have an opportunity to network with other professionals that may be able to provide you with services you will need as anew investor… a contractor, a real estate agent, a mortgage broker, a hard money lender… etc. You may even find a really great mentor!• Invest in your education! Attend any and all opportunities to learn more about real estate investing, such as The National Real Estate Investor’s Conference. These events are invaluable opportunities to learn from, network amongst, and make deals with other more seasoned real estate investors and scholars. Look for online class offerings, such as Real Investor’s University (REIU) to fill the times in between live events• Most importantly… go out there and take action – GO IN MOTION!!!• Get your first deal done – Your 1st deal will be the hardest – we promise!!!• Repeat, Repeat, Repeat!• Then, when you’re ready, come back and add another strategy to your portfolio… and continue the process….