Let’s face it, there’s no such thing as a guarantee when it comes to investing your money. That’s why most people simply set aside a small amount of their income every month to put into conservative RSP vehicles earning relatively modest interest rates. In order to make greater financial gains for your retirement, and frankly to improve your quality of life now, takes a little more risk taking.
But where to invest? Stock market? Real estate? Or elsewhere?
By most accounts, real estate investing has proven to be a successful model for wealth creation. So, why don’t more people get involved in real estate investing? Simple answer for many is fear. Fear of the unknown. Fear of not knowing where to invest. Fear of not knowing how to manage a real estate investment project. Fear of not knowing how to deal with financial institutions. Fear of not knowing how to deal with contractors. And more.
If you are one of those people who is really interested in investing in real estate, but are too afraid to pull the trigger? Fear not. You’re not alone. There is a pathway to overcoming the fear and taking advantage of the possibilities in real estate investing. Here’s a couple of thoughts about how to get started.
Real Estate Investing Groups
In most communities there are groups and organizations of people who share common interests in real estate investing. Often these groups are comprised of people with years of experience in real estate who are anxious to share their stories with newcomers to real estate investing. Usually, you are not required to actually have any real estate holdings to be a member. After all, most of the time the whole point is to provide education to potential investors.
There are lots of books about real estate investing. These are great sources of basic to advanced information about real estate. Take time to read up as much as you can. Learn the jargon, like what is a CAP rate? That way when you move forward on your journey and meet other investors and experts in the field you will already have a grasp of the key lingo and concepts.
Real Estate Agents
Get to know a few real estate agents in various communities you might want to invest in. Treat your meetings like an interview. Some questions you might ask include:
- How long have you been in the business?
- How many real estate investing deals v. home purchase deals have you done?
- Do you invest in real estate personally?
- Do you invest in real estate in the same community you are interested in investing?
Developing a strong relationship with your real estate agent will help give you comfort that the deals your are investing are good deals.
Just like your real estate agent, real estate lawyers are a key component to your real estate investing team. Take some time to get to know your potential. You want to know the same types of issues. How long has he or she been practicing real estate? Does he or she invest in real estate him or herself? Will he or she be available to answer your questions about potential deals.
In addition to real estate lawyers, you’ll want to make sure you spend some time getting to know your business lawyer. Your business lawyer will help you make decisions about how to structure your real estate investing venture or ventures to best protect your interests.
Having strong legal counsel will provide you with additional comfort knowing that your venture is structured to protect your interests.
A good mortgage broker can also been a key component to overcoming your fear of real estate investing. A good broker will help you identify the appropriate financing structure to maximize your profits.
Your accountant is also a pivotal part of your real estate team. Again, get to know a good accountant. These are the people who will help identify tax issues that can have negative consequences to your wealth goals. As with everyone else, make sure your accountant has experience dealing with real estate investors. Perhaps, like us, you are interested in investing in foreign jurisdictions. Does your accountant have experience and knowledge in dealing with cross-border accounting issues?
OK, so you’ve met all of the real estate agents you can possibly imagine, you have strong legal and financial counsel at your fingertips and access to money. But, there’s still more isn’t there? There’s the intangibles that you only get from years of practical experience on the ground in real estate. Experience is looking at a deal that most would walk away from, but recognizing how it could become an incredible success. Experience is also seeing through the deal to recognize potential significant obstacles.
This is probably the greatest piece of advice that we can share with you as you start your real estate journey. Seek partnerships with others who have experience in real estate investing. Those people will bring to any deal those intangibles that will bring your wealth creating project to the next level. Experienced real estate investors will help you structure the deal, work with lenders, as some examples. Experienced real estate investors will help you work with contractors to ensure your deals are completed on time and within budget.
Investing in real estate with partners, not only brings that intangible experience to the table, but also, frankly, is just more fun. True, real estate investing can be stressful, but what better than to have someone or some people to share that stress with? What better than to have a think tank of experienced investors to run ideas by to ensure your success.
We are big believers of sharing our knowledge and partnering with like-minded investors to help each other achieve our wealth goals.
Mathieu Laquerre and David Capra