Real Estate Investing is Simple But It’s Not Always Easy

I watched my husband sprint off as if he were a contestant on The Amazing Race, only this was the real estate version.

We’d spent months touring different properties, conducting market comparisons and studies; finally we’d found two properties that met our objectives. Each property was in decent condition and priced to sell. We were excited to find two good potential deals.

Our plan was to purchase both of them (one single family home and a duplex). The plan ran smoothly at first, until a problem arose with our investment partner.

In the beginning we thought we could quickly sidestep this glitch by simply acquiring new partners. The dilemma: any potential partners would have to decide right away since there was only 48 hours left. It may be easy to decide to invest $500 in a weekend, but $50,000 takes a lot more finagling to make happen. My husband I decided to attempt to make it happen because we believed wholeheartedly in the potential of the investment.

For two days straight we made phone call after phone call looking for someone with the interest and the means to go in with us on these deals. At the end of the 48 hours we were ecstatic…we’d found two new investors willing to join us.

Next step: put together the financing.

Along with my husband and I, we had found a medical doctor and a veterinarian to partner with us; with some high income and high net worth individuals on our team we assumed securing financing would be a piece of cake – we were very wrong

I started out by saying it, and now I’ll say it again:

Investing in Real estate may be simple, but the process is not always easy.

I always get disturbed at these infomercials which promise people “instant riches” through real estate investment. These unsuspecting individuals buy videos and books and attend seminars thinking that with little effort they’ll be able to become a millionaire real estate tycoon- this is far from being true.

So back to our story: Dave, my husband, was in a race against time trying to get to his destination. See, when we got our partners was when the real problems began. Neither of them qualified for loans to purchase the properties. At this point the only thing left to do was ask for an extension, which we received (only 4 days), and set out on our next quest: we needed to secure private financing – so we headed back to the phones!

For 4 straight days we called everyone we knew looking for the necessary funds. When it was over we had what we needed, except there was still one problem. The cheques needed by over 7000 kilometers away in Kelowna, BC. Unfortunately we were in St. John’s, Newfoundland; we had 48 hours to get the cheques there in time.

After doing a lot of checking we realized that our options were limited. In the end we decided see if we could take the cheques to the Post Office in order to get them delivered the next day, which was our deadline day.

It turns out that we had less than 30 minutes to get to the Post Office before the courier departed for the evening. Seeing as this was our only option, we thought we may have to say goodbye to the overnight shipment option.

This is where we pick up the story with Dave making the mad dash to the post office. Thankfully, he made it in just the nick of time.

I will admit that every deal is not filled with so much suspense and drama. However, the lending landscape has changed dramatically in recent months and financing your investments is going to be very challenging. Those looking to invest in real estate will find the many of the financing programs which used to be available have gone away. Both conventional and private lenders can be really strict when it comes to protecting their investment capital.

Disappointment and let downs are a natural part of the real estate investment game; if you are easily discouraged, pick a career with less risk. You have to be persistent to succeed in real estate investing.

The reality is that both the veteran and inexperienced investor make the mistake of thinking real estate is the way to ‘get rich quick’. The truth is that real estate investing is a great way to get rich, but there’s work involved!

Real estate investing is quite simple. By following certain tried and true strategies you will certainly experience success, if you don’t give up. But, it’s not easy. Anything that sounds too good to be true probably is.

Effortless Real Estate Investing in Six Easy Steps

New to real estate investing? Or have you been playing the game for awhile now? Either way, it’s never a bad idea to regroup every now and then to re-identify just why you wanted to get into the game itself in the first place!

Investing in real estate has many “moving parts,” if you will. It’s not just about price or location or rentability. It’s less about granite countertops and more about cash flow. After all, most people don’t set out to buy a new family car and come home with a front loader! The following six steps are sound advice for anyone interested in real estate investment, new or seasoned. After all, a little reminder never hurt anyone…

Step 1: Determine Your Needs

Your needs aren’t your neighbors, your brother’s or your spouse’s. They’re your and yours alone. Before you being investigating potential investment properties, you’ll want to be clear on exactly what your needs are. How many properties do you wish to hold? Must the all cash flow positive? Where are you willing to own property? Will you own out-of-state property? What is your budget for acquisition and monthly/annual maintenance per property? Can you afford to hold a property in a down market?

As you go through this tick list, it’s likely you’ll realize some other questions are out there that need answering before you start your shopping.

Step 2: Work With a Real Estate Professional Specializing in Investment Buyers

I simply can’t stress this enough. Working with a real estate professional who specializes in investment property buyers brings a much-needed skill set to the table. They understand that there’s a delicate balance between all of the elements in an investment or rental property purchase: finances, aesthetics, geography, holding period, current portfolio holdings, historical rental data, walkability, rentability, vacancy rates, available buyer liquidity…the list goes on. Not only that, but there’s a high likelihood that the professional just might be an investor themselves and constantly on the lookout for property that fits an investor’s bill. They’ll also probably have a reliable list of complimentary professionals such as property management firms and insurance agents who can move you from the role of “involuntary landlord” into that of “real estate investor.”

Step 3: Be Ready to Walk Away

Real estate investment is a business. Nothing more, nothing less. Therefore, in every business situation, you have to be prepared to walk away from the table. If negotiations on price and seller concessions go south, if an inspection report comes back unfavorable – be ready to walk away and onward and upward. There’s another deal down the road and if there are obstacles preventing your desired property from being a simple to acquire portfolio holding, you’re probably better off looking at other options.

Step 4: Run the Numbers

Very few people just stumble into owning profitable investment property. When it comes to finding appropriate rental/income properties, there’s definitely a little math involved. You’re going to want to take into account HOA fees, insurance costs, property management fees, maintenance, property taxes…the whole shebang. Make sure that a good deal on the surface doesn’t turn into a cash flow nightmare by running the numbers first. Your real estate professional who’s experienced with investment properties can assist and sites like have on-board financial calculators attached to every property on their site so you can run the numbers right then and there.

Step 5: Understand your Financial Situation

How much are you prepared to spend? What’s the potential vacancy rate? Will the rent-to-purchase price ratio make sense if property prices decrease? Can your liquidity support another holding in your portfolio? All questions you’ll want to answer.

Step 6: Property Management – Your Key to Living (instead of landlording)

While there do exist the certain few who truly enjoy and revel in the task of being a landlord (can I get a show of hands?), most real estate investors do not. If you’re going to be in the real estate investment game and be a long-term player, a quality property manager can mean the difference between living and landlording full-time. Interview several, ask for references. The assistance a property manager can give you – when you choose the right one – can mean lower vacancy rates, better tenants and on occasion, a nice tax write-off for professional services (ask your CPA).