There are many different trains of thought when it comes to life as a real estate investor – some are true, some are false and some are downright hilarious. The truth, as is often the case, lies somewhere in the middle. Below are 10 (out of about a million) things, in no particular order, to bear in mind when considering life as a real estate investor.
1. Yes, landlords make money in their sleep – but they also get calls about leaking toilets and broken furnaces while sleeping as well – be prepared for both.
2. Having good contacts is going to be a lifesaver – creating a great relationship with these people. Create a list of tradespeople to help when things break – because they will. Hire a good accountant, partner with a great real estate agent and mortgage broker who knows your long-term real estate goals and can continue to work with you through this process.
3. There is dirty work to be done – so be prepared to get your hands dirty. Hiring all of these jobs out is possible but will also eat into your profit margin. Figure out what you’re able/willing to do and be prepared to pay for the rest to be completed by the pros. Life is about balance – so is the workload and expenses.
4. Maintenance is very important. If you keep up on things (ie cleaning eaves, maintaining sump pumps, etc), you could save yourself thousands of dollars and many hours. Keep up on the keep up.
5. Are you a people person? You need to have the right personality to screen, chose, and maintain relationships with tenants. Not everyone is comfortable or interested in this. If you’re not one of them perhaps a partner is a good idea, or a property management company, or a goldfish. Knowing your strengths and weaknesses going in is important.
6. The cheapest property on the market is not always the best one. The area and type of property are going to attract that type of tenant. It is better to work backward and decide on the type of tenant you would like and then search for properties in the area and condition that these people would live in. A+ buildings in A+ areas = A+ rents with A+ tenants. Decide which grade fits your portfolio.
7. You are never too young or too old to begin building your real estate portfolio. My youngest client bought his first investment property at 19 years old. I am also currently working with a 58-year-old client who is purchasing his first. There is no age limit – upper or lower, just get started.
8. You need your tenant just as much as they need you (likely more since you’re handing over keys to a huge investment). Getting off your high horse as an all-mighty landlord before you get started is an investment in your journey. Be kind and courteous; you’re truly in this together and a good relationship with your tenants can make the world of difference. Respect breeds respect.
9. If you don’t have a down payment to build your portfolio, get creative. Maybe it’s time to partner up, maybe you hit up a family member for a loan, maybe you leverage your home. Arming yourself with the right team of professionals (real estate agents, mortgage brokers, accountants, etc) who are adept in this arena could be the difference between getting started now or sitting on the sidelines while you stash away every penny (not that this is a bad idea, but there are other and typically faster ways!)
10. Knowledge is power and in the wild and crazy world of a real estate investment, this couldn’t be truer. Learn everything you possibly can – about your rights and responsibilities as a landlord, about (typically) higher mortgage rates for rental properties, about simple maintenance repairs, about local bylaw rules and regulations. The more you know, the fewer rules YOU ARE GOING to break and the more you’ll be protected – AGAINST yourself!
For a more in-depth conversation about any or all of these points, don’t hesitate to reach out!
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