Stop Waiting for a Good Time to Invest in Real Estate

Following my previous post about Julie Broad (Stop Waiting for a Good Time to Invest in Real Estate) ,  I am glad to say we now have her Guest article below.  She is an accomplished rental property entrepreneur,  and I leave you in her capable hands .. enjoy the read!

Canada is a conservative country. And while conservative moves aren’t always the source of strength – especially as information and the economy moves and changes so rapidly now – conservative banking has been the backbone of the economic health of Canada’s economy in 2009.

It’s not to say that we didn’t feel any economic pain in 2008 or 2009. We felt the ripple in Canada. But, we didn’t feel a crash of epic proportions like our neighbors to the south and many friends around the world did.

Yet, many Canadians are still sitting on the sidelines waiting for things to get better.

That’s where I think a lot of people in Canada, and around the world, are missing out on big opportunities.

There really isn’t a good time or a bad time to invest IF you focus on finding a good deal.

In fact, in 2001 when we began real estate investing, we bought two properties. In hindsight, 2001 actually was THE perfect time to buy. Of course, nobody actually knew it at the time. Many markets had been depressed for years and the dot com bomb had really smothered many real estate markets in North America.

One of those two properties doubled in value and put $300 – $500/month of positive cash flow in our pockets right up until we sold it a few months ago.

The other property barely changed in value, and in the end actually cost us more than we made from it.

So what went wrong? Both properties were really good quality properties. They were both relatively new and in areas that are desirable to live in. And, in theory we timed the market perfectly.

The issue is that you can’t focus on the timing of the investment. You have to focus on the deal. Really, there are no good or bad markets to buy in. You can always find a good deal in a bad market and a bad deal in a good market. We know that first hand.

What you have to focus on is finding a good deal.

So what is a good deal? Here are 5 things to look for:

1. You have to make enough monthly cash flow from the property so that you can service the debt, cover your expenses and put some money in your pocket. Any property that does not make enough money to pay the bills and give you some profit is not a good deal.
2. Your money is going to earn a return that makes this deal the most appealing use for your cash. In other words, if there is another investment opportunity that will make you more money for the same amount of risk then that is where your money should go, not in this deal.
3. You can buy the property for not a penny more than it’s worth and preferably you are buying it for under market value. Paying more than market value for a property is not a good deal. It also makes it more difficult to earn a good return from your investment.
4. Think about reselling the property before you buy it. If there are plenty of reasons why this property will be easy to resell then you likely have found a good deal. If the property is located in a town where more people are leaving than moving in, and you aren’t sure where people will be working in 5 years then you have to think about whether you will ever be able to sell it at a price that will allow you to recoup your costs. Likely you haven’t got a good deal if that is the case.
5. Does this property fit within your goals? Take a look at what you want to achieve. Then take a look at the resources you have to invest to get there. And when you think about resources think about the time, relationships, and knowledge you have to bring to the table as much as the cash you have. What you need to do is make a plan to get to where you want to go given the resources you have. Deals you can do that align with your resource strengths will be the best deals for you. Someone that has a full time job and a family might not be suited to buy a property for flipping but somebody who has worked in construction and has a few friends with some cash to invest in the deal might be perfectly suited.

The best thing you can do is stop waiting for the market to be good. Start looking for deals. As you start to look for deals ask yourself:

1. • What makes this a good deal? List all the reasons why you should buy the property.
   • What makes this a bad deal? List all the reasons why you should not buy the property.

After you do this for 20 or more potential deals you will quickly begin to see properties that have potential to be really good deals. And, as you find good and even great deals, you’ll stop wondering whether your timing is perfect.

Real Estate Investing is simple but it’s not always easy. Sign up for Julie Broad’s free real estate investing newsletter to get tips, tools and resources to make it much easier.

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If you have enjoyed reading this excellent Guest blog from Julie,  and you have got your creative juices in full flow,  why not jot down your thoughts and submit your own article to this blog!

Full details can be obtained by clicking here …