Friday, November 30, 2012

Edmonton Market Trends 2012

Overview of market trends in Edmonton:

Spring: March-May. Not many houses on the market yet, but many buyers = high selling prices.

Early Summer: May-July. Many more houses come on the market, as a result house prices drop slightly, though buyership remains strong and many properties have multiple offers, giving sellers their asking price. Not much negotiation room. Days on Market still competitive: 10-30 days.

Fall/Early Winter: November- December. Few buyers, though the buyers out there are usually serious. House prices dropped $10-$20k from Early Summer prices. Days on market seem like infinity.

*These trends are per my experience as an active buyer in the market from March-July, and as a seller in the fall/winter.  Individual experiences may vary.

If you're in the market for buying a house to renovate and resell, don't buy in late summer! Turn around time should be 3 months or less, so the perfect time to buy is in the winter when house prices are low, and competition is low so you have more ability to negotiate your terms. Also, buying in the winter should put you ready to sell at the best possible time: Spring!
-buy in the winter, sell early spring

Buyers Market: Fall and Winter. Sellers are a bit more desperate, though your choice of homes will be fewer.
Sellers Market: Spring and Summer. Lots of buyers keep prices competitive.

Multiple Offers: this is the best thing for a seller, and the worst thing for a buyer.

Thursday, November 15, 2012

My Yellow Brick Road

I want to give a brief overview of the education and experiences we've had thus far in our Real Estate career, in effect our "Yellow Brick Road." Once done with this, I can get to blogging about specific issues, like how to buy a house? and, what to look for in order to create a basement suite in a home, etc.

*BRIEF* Overview:
Rich Dad evening Seminar
Rich Dad 3-day event
Family Home Helpers
Steve Martel evening Seminar
Rich Dad Advanced Training
Buying a Foreclosure
Steve Martel 3-day event
Buying our own home, Looking for Secondary Suite Potential

*Not so BRIEF* Overview:
Easter 2012 was my very first Real Estate Seminar. It was with Rich Dad/Poor Dad, and it was an evening, about 2 hours long. I was skeptical going in. I hadn't read anything by Robert Kiyosaki at that point, but my husband had and I know I was curious. I AM the one who signed up for the seminar, after all! By the end of the seminar, they were offering a three-day course on Real Estate Investing for about $200. We signed up. (I was to discover that three-day weekend courses are very common in the Real Estate world).

We came home with a few books, and one by Robert Kiyosaki titled "Unfair Advantage." I recommend the book. It is all about financial education-- education that is completely lacking in our public education system. This was around the same time that I was voraciously reading "The Big Short" and "Boomerang" by Michael Lewis about the state of finances in 1st world countries, and what crookery was behind the economic crash of 2006-8 in the USA.  I was totally fascinated, and reminded of how messed up our financial system is. The stock market is worse off than gambling. Anyhow, I recommend those books as well, but back to the Yellow Brick Road...

We went to the three day Rich Dad training in May. It was awesome. We met many other investors, received very good information, and all in all it was worth the $200. Then they tried to sell Advanced Training. Of course we wanted to sign up. The only problem was the cost. To the tune of tens of thousands of dollars. GAG. Ya, we were still recovering from being poor college students. This was way out of our league. But we negotiated a deal with them, signed up for one course, and thereby had access to a community of other investors. I think that community was the most beneficial part of the deal. We started having Cash-flow parties (playing a board game about financial success  called Cash-flow).  We were invited to dinners and other networking events. I hesitate to say networking, as that word has always had a bad flavor for me, but really what these events did and are doing for me are being a continual source of information. I can ask questions, hear others' stories, get ideas and names of contractors or whoever I many be needing to get a-hold of.

At the Rich Dad 3-day event we met a man who already owned a Real Estate business. He had previously done a lot of flipping- buy, renovate, resell. At the time of the Rich Dad conference he was acting more as a quazi-Real Estate Agent, but for people selling without an agent. He had creative ideas about financing and helping people get into a home with bad credit, ect. There is a very real market for this kind of a job. I decided to team up with this guy and give it a shot. The company, Family Home Helpers, was a good one, but I had no success  and after about 4 months I threw in the towel. What it taught me, however, was important. I got a lot of experience making cold calls, talking to people about their homes, home values, and Real Estate in general.

My husband had heard some things about a guy named Steve Martel, a Canadian Real Estate Investor. This was special. Rich Dad basically dominates the Real Estate Education industry, and they, along with most of the other companies are American-based. Many of the Real Estate ideas are relevant in Canada, but most of the policies and implementation plans are somewhat different in Canada, as there are different laws. So when we heard Steve Martel was coming to town for an evening seminar, we signed up. They gave some awesome information on analyzing properties that we hadn't been able to get even in the 3-day Rich Dad event, and we were very pleased. We also went to the seminar expecting to be sold something. We were right. Another 3-day event. This one was more like $500, but we were very impressed with the detail and information we got that night, and wanted more. We signed up.

About this time we heard about a house down the street going into foreclosure. Everything we'd been taught so far said to JUMP! I got a hold of the owner right away to find out the bank and lawyer's information. We used the information learned from Steve Martel on analyzing properties to see if it would be a good deal. It definitely appeared to be a money-making prospect, with several ways to go about it. We of course had no way to buy the house ourselves, but planed to wholesale it to another investor who could then renovate it and sell, or put a renter in it. The trick is to get it under contract with some exit strategies in case it doesn't work out, and then figure out what to do with it. I had no idea how to put a house under contract. I had to ask lots of questions and do a ton of research, and I'll definitely be writing a post about what I learned!

Next step on our Yellow Brick Road was the Advanced Training we purchased through Rich Dad. We chose to do an online version first, with the option to go to the 3-day course live as a refresher later on. This was July. The course we chose to take was all about Rent-to-own, or Lease-options. Lots of great info, and we got way more up close and personal with contracts and paperwork. Being familiar with the required paperwork is a huge part of Real Estate, and one that was previously totally foreign to me. The courses were one or two evenings a week, broadcast live over the internet.

Towards the end of this course, we got the Foreclosure down the street under contract, and went about trying to wholesale it. It was fun! Unfortunately we didn't get the offer we'd hoped for (I think I needed a bigger pool of investors to contact about it). However, a family member stepped forward as interested investors, and so we decided to buy it together with them, and do the renovations-reselling ourselves! Thus began our first investment property adventure.  We were really investors now!

July was a busy month for us!! As mentioned, we had the evening classes with Rich Dad. We also went to the 3-day Steve Martel event, mid-July. I spent most of July negotiating the contract to buy the foreclosure (I was AMAZED at how slowly the process went). We had also been going out with a realtor to find a home to buy for ourselves, and actually left the Steve Martel event one evening to sign the contract to buy the place we were hoping for. So it was, that by August, we were in the process of buying two houses at once, and 'swimming' in Real Estate education.  We made sure, with the property we bought for ourselves, that there would be the potential to create a rental suite in the basement, keeping an 'investor mindset', even when buying our own home.

We got possession of the foreclosure mid-August, and began screening contractors to get the renovations done. We moved into our own home the end of August, and that weekend also put in a kitchen in the basement, in order to create the rental suite. (I was vacuuming and wiping down construction dust for weeks afterwards...) September and October were somewhat painful for us, as reality and our own inexperience caught up to us. We had high hopes of getting the foreclosure back on the market mid-September, but everything seemed to take longer than projected. But by the beginning of November we had both the basement suite and the foreclosure ready to rent/sell, and began a whole new side of Real Estate: Marketing.

The 3-day Steve Martel event was fantastic. Steve Martel himself was there, as the main educator. (I have yet to meet Robert Kiyosaki, though I do hope to one day). Steve's dynamic presentations, as well as frank sharing of experiences that got him going in Real Estate were great.  Again, we knew to be prepared for the sales-pitch that would inevitably happen. Steve Martel had a different edge, though. He was selling a coaching program. 12 months of coaching, and all the "Advanced training" would be available through a website, rather than having to travel to events (though there are events, as well, if you want to go). What really sold us on the program is that he has a system in place to get coaching students set up with the needed companies, asset protection, with accounting and legal support already in place, all included in the fee. All the legalities are quite a hurdle for newbies, and many Real Estate Babies never get past the beginning steps of setting up a company.

I didn't really consider the coaching program a possibility, as it was, again, tens of thousands of dollars that we just didn't have. Even less so now that we just bought our own home. My husband, however, was convinced we could make back the the coaching program fee within about a year. We borrowed the money. I intend to be very honest on this blog about our story. So, honestly, I still sometimes have mental breakdowns and brain twitches about how far into debt we went for this business venture/education program. The only other time I ever had to borrow money in my life, it was $800. Pennies compared to this. I made it through University without student loans, something I was quite proud of. But now, no more touting my debt-free self, I am shackled. All the more motivation to make Real Estate start making us money! Not morally the best motivation, but powerful motivation nonetheless.

That's about  caught us up to current events as of this writing, so now I turn myself to item-specific blog posts, because even if we are still babies in the Real Estate world, statistics say that babies learn and grow faster than adults do!

Wednesday, November 14, 2012

Why Real Estate?

Why get involved in Real Estate?

I'll tell you my reasons.

Ever since I met my spouse, he has talked about early retirement and financial freedom. Freedom 45. Time. Time and financial means to visit family, travel the world, and endorse humanitarian and charity programs. Not that he had a plan figured out (that involved me, anyways), but that has always been the goal. That is still our goal.

So we set about trying to figure out how to get there. He once told me that if he never got married and remained living a 'university student lifestyle' with roomates at a rental house of $300/mo/per person, he could have saved up enough cash by age 35 to retire and live off the interest. He even has a spreadsheet detailing the numbers. But we got married, and I guess that sort of ruined that plan. :D  I've looked into countless work-from-home opportunities to try to find a side job that would get us ahead, and keep us ahead while I become a stay-at-home mom with our future kids.  We actually consented to meet with people from a few different network marketing companies, thinking that might be my side-job. He has researched endless investment potentials, including stocks, bonds, ETF's, REITs, investments with dividends or not, etc etc. We dabbled in some mutual funds, some ETFs, but never quite felt like we were going anywhere fast. Turtle speed would have been faster.
When we went to our first Real Estate evening seminar, the idea just made a lot of sense. The speaker was talking about better returns than any other investments we had researched thus far. He explained how Real Estate can be recession-proof (another post, stay tuned :). He talked about systemizing the process so that owning real estate could be done on the side, we didn't have to quit our jobs to be successful at it. He talked about early retirement and living off Real Estate income. He talked about passive, or residual, income. It all seemed to fit. And all these reasons have yet to be proved wrong for me, a real estate baby though I may be. Real Estate just makes sense! It may take a few years to build up our capital enough to have income from rental properties paying our bills, but to us that is a few years well worth the effort. So in we dove!

In the Beginning

Easter, 2012

My first ever Real Estate seminar.

I saw the add on facebook (I think that to date it is the only fb add I have ever used). I signed up for myself and my spouse and away we went to hear Chef Shamy talk about investing in rental houses as a retirement plan. What a new idea for me! It was convincing, too. The stock market was a continual mess with effectively flat returns for the last decade. People have started calling it "The Lost Decade." He was selling, and we signed up for, a three-day event with Rich Dad Education the following month. That cost some money, but we were pretty excited about it.

The main idea I remember from this first seminar is that you get rental properties that pay for themselves over their 20 year amortization  and then when they are paid off and you are retiring, you either live off the rental income or sell them. Pretty good idea, hmm?

And that is where all things Real Estate began for me, with a facebook add and Chef Shamy.