A few weeks ago I had the opportunity to speak with a favorite real estate guru of mine the famous Ron LeGrand. And what a great weekend it was sharing the stage with mentors old & new along with a few other successful R.E.I.N. members including Greg Habstritt, Julie Hoffman, Tony Peters, & Owen Shaw.

The living legend, Ron LeGrande, has probably influenced my style or approach to real estate more than any one person. Ron, who specials in quick turn real estate and cash flow systems, has been at this game for so long he is known as the original real estate guru who taught practically everybody whose anybody…. and probably did everything before most other gurus did anything, and he’s coming to town Oct 15-18, hosted by R.E.I.N.

I have been a member of R.E.I.N (Real Estate Investment Network) for almost 15 years and I acknowledge the contributions they have made to my success. R.E.I.N. has taught me the fundamentals to be aware of if I’m planning to hold property for a long term but Ron has taught me more in the way of creativity when it comes to finding motivated sellers, creative financing, and most importantly how to sell creatively to create long term income streams.

One simple technique to create a long term income stream is seller financing. Sell a property you purchased for less than the market value, at a price higher than the market value.  Then you charge  an interest rate higher than what you’re paying, and hopefully collect a down payment from your buyer that is larger than what you put down to buy the property.

You profit from the difference in what you paid & then what you sold you it for and also from the spread between what you pay monthly and from what you collect. It’s similar to the rental game but you have a much larger deposit, more commitment from the occupant, and a lot more guaranteed cash flow.  I know it sounds a little complicated, but it’s not once you get your head around it.

This is a technique I used a lot in the beginning of my career when I really needed to re-circulate my working capital and needed to create cash flow.  It’s a technique I’m now going back to, in order to eliminate some of the tenant issue hassles.  I’ll still keep some rental properties but I’m going to turn some into seller-financing deals.

I’ve said it before & I’ll say it again. If you ever have a chance to see this guy – take it.

You’ll be amazed at what you don’t know.

To Your Success,

Wade

Investing in Multifamily & Commercial

Huge opportunities are everywhere if you know how to find them.  The tough economic times aren’t just affecting owners of single family homes anymore.  More and more often I’m coming across other investors who have over extended themselves with commitments on larger projects such as apartment buildings and commercial properties such as office, retail, warehouse, and land developments.

For years I watched the sale price of multifamily rental buildings go through the roof.  These huge increases were primarily due to the prices being paid by condo converters who could pay more than what the building was worth because they were making huge profits selling individual units off as condos.

Now, with the abundance of new condos on the market & the slowdown in the real estate re-sale market

I’m finally seeing prices of whole buildings get back to a range where they make
financial sense as a rental property to be held as a medium to long term investment.

The drop in sale prices combined with strict lending policies & over exuberance on the part of some owners has caused some investors to get in way over their heads creating an abundance of great buying opportunities for the savvy investor with deeper pockets.

In 2006 & 2007 I was starting to get pretty serious about buying larger buildings vs single family homes but the crazy spike in prices and the lack of positive cash flow caused me to hesitate but I feel

NOW is the perfect buying time!

Buying opportunities can’t get any better than right now with the current mix of low prices & good rents matched with extremely low interest rates and the high levels of seller motivation I’m finding in the market place.

Most asset classes have dropped significantly in the last two years but multi-family seems to have been affected the least and would be my first choice for a major investment especially under the current economic conditions.  This is not to say I wouldn’t consider looking at other forms of commercial property right now as I am.  I’m just doing a lot more due diligence on the property, the asset class, the existing tenant and lease renewal opportunities.  I’m considering office, warehouse, and retail etc. but with a little more caution because I think there is room for current owners to feel a little more pain & get a little more motivated to sell.

Yes prices in the multi-family asset class have dropped from their crazy high but only the high based on the prices condo converters were willing to pay…… not what “buy & hold” investors were paying with the idea of keeping the building for the long term.  If you investigate a little deeper you’ll find that the “buy & hold” guys weren’t paying the ridiculous prices that the condo converters were paying.  Well some were but they are getting their asses handed to them now as are the condo converters who are still sitting on inventory.  Just the type of situation I’m looking for… a larger purchase with a highly motivated owner.  When sellers lose a little optimism prices come down creating the perfect buying opportunity.

Right now I feel apartment buildings are the best choice as a medium term investment (4-8 years) for the following reasons:

• When the general population is insecure about their employment future they will resort to renting vs purchasing a home creating a higher demand and a lower vacancy potential.

• When employment potential improves so do wages, consumer optimism, and rental increases while the investor is protected by being locked in a low interest rate mortgage.

• Apartment units as rental housing are the most affordable compared to single family dwellings (townhouses & houses).

• Interest rates are at their lowest in 30 years.

• The possible use of CMHC insurance for borrowing purposes equates to a higher ratio mortgage/less down payment something which is not possible with commercial property.

• Apartment buildings have already proved themselves to be more resilient in the current market & economic conditions (Residential vacancy rates & rents haven’t dropped by much compared to all other forms of commercial real estate).

• The ease at which value can be added by improving management, cash flow, and cosmetic upgrades.

As an investor my major interest has been in the single family market but after the individual purchase of 110 single family homes and my success with foreclosures I am currently more interested in purchasing larger investment properties.

Even though I started with only a cash advance on two credit cards, a cell phone and a bicycle I feel my greatest investment accomplishments are still ahead of me.  My interest & experience in locating undervalued properties will serve us well and the cross over to larger buildings will be an easy one due to my high-rise construction experience.

Like Nike says “Just Do It”

One of the things I’ve always wanted was a way of staying in touch with clients just let them know what I’ve been up personally and professionally. Newsletters are good but I have typically found them to be too “marketing” specific and more like the classified section of a newspaper and I wanted something more personal.

Recently a friend of mine suggested I consider Social Media as a means of communicating with clients specifically “Blogging” and so on his advice I looked into it and I liked what I saw. I had heard about “Blogs” before but never really researched them as I’m more of live media type than one to spend hours getting lost on the internet.

Blogging, if used right, offers a way of communicating with like-minded individuals about items related to their industry which may be of interest to them. I’ve learnt the important benefits of blogging as a tool or and a way of sharing important information without selling. Since I started investigating social media I’ve found quite a few blogs written by friends of mine and I even signed up to a few of them.

In a day or two I’m going to send out my first blog and I hope you enjoy it.

To Your Success,

Wade.