Real Estate Weekly has some great advice, and today I'd like to share something on Real Estate Investing:

 

 

Are you looking for a great real estate investment deal but struggling to find one? Don’t dismiss options that don’t seem particularly promising at first. A skilled investor can turn even a mediocre deal into a money maker.

 

Take our example. We bought a Nanaimo property in September 2005 and sold it in June 2011. We bought it in a hot market and sold it in a soft market. That’s not the recipe for success, but we made it work.

 

By drawing on some equity in another property and getting bank financing, we were able to buy this property with only $10,000 out of our pocket.

 

From 2005 to 2010, it basically broke even each year. For most of those years, we didn’t worry about the fact that it wasn’t a super-duper cash-flowing property because we both had jobs that paid us enough so we didn’t worry about it.

 

When I left my job in 2008, we couldn’t afford to have any of our properties underperforming. We needed cash coming in to pay our bills. So we listed the property for sale in 2009 but it didn’t sell; we had very few showings and we didn’t get a single offer. To make matters worse, it was vacant and our property manager wasn’t very proactive in helping us fill it.

 

Stuck with a property that was starting to cost us money, wasn’t selling and didn’t have great management, we decided to fix it up a bit more and try to turn it into a rent to own.

 

Unexpectedly we discovered a tremendous demand for rent-to-own properties in that area. The property filled instantly, and because it was now a rent to own, we:

 

  • received a $10,000 option fee, which paid for all the upgrades and repairs we had to do;
  • no longer had a property management expense because the tenant handled most maintenance issues;
  • received slightly higher rent because some of the rent went towards a credit they would receive when they bought; and
  • created an exit strategy for the property that didn’t require a realtor and made it easier to sell an investment property in a soft market.

Thirteen months later, the tenant successfully closed on the property and he is now a happy home owner. In the end, this mediocre property made us $118,000 after six years of owning it.

 

The best part is that even if the property had not gone up in value, we still would have made a pretty awesome return on it.

 

Here’s how it looked:

 

  • Our purchase price: $274,000
  • Our sale price: $344,000
  • Appreciation: $70,000
  • Mortgage pay down: $33,000
  • Cash flow: $15,000

Total cash return over six years: $118,000


Even cooler than the money we made was that we helped a young guy who was struggling to qualify for bank financing to become a home owner. Without this program, he would still be a few years away from home ownership.

 

The bottom line is that there are a lot of ways to make money from a rental property. A good understanding of what is possible can really change your perspective. Plus it’s nice to see that even a mediocre deal in an average Canadian market can make really solid money in times like these.

 

Forget about the things you think are holding you back. Instead, think about what’s possible.

 

This is an edited excerpt from the Amazon #1 bestselling book More than Cashflow by Julie Broad. You can get your copy and get more valuable investing advice from Julie at revnyou.com.


Because YOU Deserve the Best ...


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I found an interesting article in CanadianRealEstateMagazine.ca that I'd like to share with you.  Of course being in Real Estate I'm always reading and researching about real estate investing also, and found this to be very interesting.  It's all about investing in Canada!  We, according to this write, are a safe haven, a fool proof bet, on investing your money wisely.

 

 

Read on ...

 

"As the world goes through its continuing economic turmoil, Canada has quietly become one of the world's economic safe havens. A haven where international money is being parked for safety and ROI, a haven that is poised to provide the world what it needs for at least the next decade and probably a lot longer.


However, most Canadians are the last to truly believe what we are sitting on. We have been so programmed over our history to look elsewhere for opportunity - always playing small. Well, 2011 - 2020 will be the exact wrong time to be doing so, in fact, we are in the first year of what will prove to be Canada's Economic Decade - one of the best times in history to invest in this country.

Unfortunately, due to a misdirected attitude that cheap equals good when investing in real estate, many Canadian investors have turned their eyes south as real estate prices in the United States continue to plummet.

Investors with their eyes solely on the cheap price of U.S. real estate have flooded Canadian media with their tales of deals and steals. One can only hope that these investors understand the real life metrics involved in analyzing a market's potential (currency risk, taxation, record jobless numbers, massive debt, property supply and demand) and have decided to take the 'buy cheap' risk anyway despite the reality.

This is the equivalent of buying a $1,000 suit for $500 and ignoring the fact that the pants are torn in nine places."

 

If you are interesting in investing in Canada, right here at home, give me a call (604-832-8229) or get in touch with me here and we can set up an appointment.

 

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The following article is from Canadian Real Estate Wealth Magazine.

 

Fraud and investment scams abound at all levels of the real estate market – whether it be a contractor who charges hundreds of dollars for work not done to an “investment agent” who embezzles hundreds of millions – protecting yourself can require a measure of vigilance and legwork, but it can also come down to exercising skepticism and common sense.

 

1. Title fraud.
Although relatively rare, one of the most devastating frauds for property owners is title fraud. This type of fraud starts with identity theft. The scammer will use false documents to pose as the property owner, registers forged documents transferring a property to his or her name, and then gets a new mortgage against the property. After securing a mortgage or line of credit, the criminal takes the cash and leaves the owner on the hook for future payments.

 

While an identity thief may get a forced discharge of an existing mortgage, it is generally held that fraudsters are more likely to go after homes that are free and clear of mortgages: these have fewer complications and they tend to be held by older people who may be less aware about how to guard against identity theft. Criminal Services Intelligence Canada notes that homeowners who rent out their homes or who have no existing mortgages on high-value properties are more vulnerable to being targeted in title-fraud schemes as a large mortgage can be secured with the property.

 

Sale of a fraudulently held property may also occur, but it is much rarer as potential buyers are unlikely to consider a purchase without inspecting a property.

 

“Title insurance” is the best protection against this type of fraud. As well as protecting against title fraud, it also guards a new owner from against existing liens against a property’s title (such as unpaid debts from utilities, mortgages and unpaid property taxes), encroachment issues (a structure on a property needs to be removed because it is on your neighbour’s property) and errors in surveys and public records.

 

The other key to prevent being a victim is to engage in protection of personal data (see box). Taking precautions can also mitigate against more common types of identity theft –related losses (such as credit card fraud. As well as protecting their own information, investors and homeowners should ensure that trusted parties are taking proper security measures.

 

Canada’s Office of the Privacy Commissioner of Canada (OPC) launched a probe in 2009 after mortgage brokerages reported 14 data breaches in the space of a few months. Among the OPC’s findings: some brokers stacked files containing personal information on the floor or on desks within accessible offices; brokers lacked shredders capable of securely destroying documents; credit reports were sometimes obtained prior to consent from a client being recorded and there was no ability for clients to opt out of secondary uses of their personal information, such as marketing; there was a lack of training about privacy responsibilities.

 

In addition to title fraud by strangers, there have been cases where fraud has been perpetrated by spouses and business partners. For instance, one spouse may mortgage a property for their own benefit by using an accomplice to impersonate their spouse. Fraud can also occur through breach of an undertaking, where the lawyer or notary fails to pay off and obtain a discharge of a mortgage, instead absconding with the funds that had been intended to be used to pay an existing mortgage.

 

2. Foreclosure and home-equity fraud.
Criminals and criminal enterprises can take advantage of property owners who find themselves in a cash crunch, being short on funds for liabilities such as mortgage payments or other purposes. Two common scams that exploit a victim’s need for cash are foreclosure fraud and home-equity fraud.

 

The Financial Consumer Agency of Canada (FCAC) warns that foreclosure fraud occurs when a property owner who is having difficulty making mortgage payments is approached by a criminal offering a loan to cover expenses and consolidate loans, in exchange for upfront fees and an agreement to transfer the property title. However, in contrast to real debt consolidation programs, the FCAC says, the criminal will keep all the payments made by the owner and ignore bills and taxes. The criminal then remortgages the property and absconds with the money, leaving the former property owner without the home but still in debt.

 

Cash-crunched property owners or investors seeking can be vulnerable to other scams or unscrupulous behaviour to tap equity. There is always risk when leveraging properties, but a legitimate bank, broker or private lender should be forthright when explaining risks. However, those looking to borrow on equity should be alert for less scrupulous lenders, such as those who invite owners to embellish their application by exaggerating income, down payment or property assessment value sources in order to secure a larger loan.

 

CSIC has noted that organized crime groups often pretend they are buying or selling properties that are much larger, newer or more recently renovated than other homes in the area. These properties receive fraudulently inflated values through illicit property flipping from which a large mortgage is obtained. When the criminals deliberately default on the mortgage, financial institutions and end buyers are left with an overvalued mortgage (or worse, former property owners are without holdings, in debt and possibly implicated in the fraud).

 

Criminal activity can also be in the form of money laundering, a process where dirty money from criminal activity is transformed into “clean” assets. Financial Transactions and Reports Analysis Centre of Canada (FINTRACT), the agency responsible for tracking money laundering, warns that criminal or terrorist groups will purchase big-ticket items such as real estate for laundering purposes. FINTRACT requires that real estate brokers, Realtors, developers and others involved in suspicious transactions (such as large all-cash purchases or “buyer unseen” transactions).

 

3. Online rental/sale scams.
In these scams, rental property is advertised (usually at low costs) on online classified sites like Craigslist or Kijiji. The ads use information and photos describing the property that has been “scraped” from legitimate ads, such as those on the MLS. A scammer will impersonate the landlord, property manager or estate agent and will respond to emails and calls from prospective tenants. The scammer indicates he or she is unable to meet a prospective renter at the property, and instead proposes a meeting off site to exchange keys, sign a tenancy agreement and collect rental deposits. Victims may only learn they’ve been duped when they show up at a property to discover that it is already occupied.

 

Provincial and regional Realtor and real estate associations have warned members to be alert for this type of fraud, which has been common in major markets, but there is little a property owner can do to prevent image or data scraping. Property owners can search for the addresses of their units on search engines and they can use services like Google Image Search to help discover if a scraped picture from MLS or another online source is being used illicitly. Property owners should also digitally watermark any photos they use in rental ads, including business contact details and website.

 

While rental scams are common, online classified advertising and social media have also been used for investment scams and property fraud. Things to be alert for in such listings include claims of urgency, such as “must sell now,” promises of high returns or “low-cost/no-cost” financing. These sort of claims are usually too good to be true, and they also can be prevalent in off-line scams.

 

4. Property investment seminars and courses.
Educating yourself about property investment can be essential for success, but prospective investors should be alert and do their research on seminar providers. There are legitimate speakers and seminars that provide beneficial information, others exist primarily to take money from the credulous … and there are some that are in between.

 

Prospective investors should be cautious when it comes to seminars or courses that offer investor education. The value of the information provided can vary wildly, as can the costs. Some may be free, with sponsorship by a company or association, others will charge money, ranging from nominal amounts to upwards of tens of thousands of dollars. Still, even if someone pays for a course that provides basic information that could be found through a simple Internet search, it does not mean that the seminar was a scam. A rip-off may charge excessive prices but be completely illegal, but a scam typically involves legal wrongdoing, misrepresentation or fraud.

One common type of seminar is designed to hook buyers into “sure-fire” investments that are promoted by the seminar hosts. Potential investors may be invited to these seminars through an ad in a newspaper or magazine, a phone call, an email or other method. These seminars may include a motivational speaker, an “investment expert” or a “self-made millionaire.”

 

Some seminars may make money by charging attendance fees, selling highly priced reports or books and selling property and investments through high-pressure sales tactics. Real estate investment companies holding the seminars may suggest attendees follow high-risk investment strategies, such as borrowing huge sums of money, to buy into an investment offered by the seminar hosts.

 

Some companies have been known to fly prospective investors to view real estate developments. This could be a tactic to pressure commitment to a deal without time to obtain independent information or advice. Investors sometimes end up having to pay for their travel and accommodation if no investment is made.

 

The relatively booming market in Alberta has been a hotspot for these scams, and the Alberta Security Commission has issued a list of “red flags” to look out for when approaching a property investment seminar (see box). The basic advice, be skeptical of claims and do your due diligence before committing any money to an expensive course or investment.

 

5. Home Improvement scams.
As well as being cautious about big investments, property owners should be alert to smaller-level scams. The Canadian Council of Better Business Bureaus listed “rogue door-to-door contractors” as among their top 10 scams of 2013.

 

These operators may come with unsolicited offers and deals that are too good to be true. Typical approaches include: offers to seal or repave a driveway, or a roofer who can work cheaply using leftover material from a previous job. BBB warns that fraudulent “contractors” will use high pressure sales tactics and offers of a one-time deal to entice consumers.

 

The BBB advises that property owners take the time to do due diligence. Property owners should get the company, name, address and ensure that all verbal promises are backed by a written contract. A scammer may ask for pay in cash or via a cheque and offer to come back at another time to finish the job. After cash changes hands, the BBB says, “you will probably never see them or your money again.”

 

Generally, for the hiring of any contractor, it is advisable for a property owner to check references and ensure that the company or person has a reputation for fair dealing and quality work. This can be good sense when dealing with legitimate contractors, ensuring that you are likely to receive such as on-time and on-budget estimates.


6. “It could never happen to me”

Perhaps the biggest mistake people make when it comes to scams is to think “it could never happen to me.” It’s a common perception that investment scams are fly-by-night operations that prey on the gullible and operate in dark, unmonitored corners of the economy. That may be often true, but some of the most outrageous scams have operated openly, under regulatory supervision and have swindled the best and brightest.

 

Bernard L. Madoff Investment Securities, for instance, ran a Ponzi scheme that was regulated by the U.S. Securities and Exchange Commission and swindled corporate luminaries such as DreamWorks’ CEO Jeffrey Katzenberg, New York property developer Larry Silverstein, director Stephen Spielberg as well as global banks and hedge funds. This was a high-profile entity, watched by regulators (though poorly watched) and many of the investors were highly successful and brilliant people.

 

Closer to home, in 2011-12 there have been more than 20 Alberta-focused property investment firms that have folded or been shuttered resulting in shareholder losses of up to C$20-billion. Many of these firms advertised openly, were licensed by regulators such as the Alberta Securities Commission (ASC) and they offered RRSP-eligible investments. Dozens of lawsuits have been filed against and shareholder groups have formed to seek compensation. It’s up to the courts and regulators to decide on the finer details of each case: some were high-risk ventures that went bust, while others may have used misleading practices, and the ASC has fined others for outright fraud.

 

What to do if scammed
Federal and provincial law can provide some recourse to Canadians who are victims of a fraud or scam, although losses are almost never made whole and the recovery process can be long and burdensome. For scams involving out-of-country or overseas investments, the recovery of losses may be impossible… and the perpetrators may not be prosecuted.

 

From Canadian Real Estate Wealth Magazine, a monthly publication focused on building value through property investment, covering topics such as values and trends, mortgages, investment strategies, surveys of regional markets and general tips for buyers and sellers.


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