Lessons learned from the Investor Forum in Toronto

 

The ENERGY was amazingly positive. The PEOPLE were inspiring. The LESSONS learned will not be forgotten.

The other weekend we took the opportunity to attend one of the most fun events of the year for Canadian real estate investors – the Investor Forum organized by the Canadian Real Estate Wealth Magazine.

We’d like to share with you some highlights from the event and some of our BIGGEST take a ways. This is definitely not a complete list of what happened, as it is impossible to jam a two-day action packed forum into ONE post. We’ll also be expanding on some talks in up-coming blog posts – so stay tuned for more!

 

Bruce Croxon – Canadian entrepreneur from Dragon’s Den shared with us a few things he learned from his experience building LavaLife – an online dating service company that sold for $150M, and his successful co-hosts on Dragon’s Den.

Bruce says that entrepreneurs that work alone tend to be neurotic – it’s difficult to stay sane while building a business all by your-self. You often end up too busy obsessing about your brilliant idea, working 12-hour days and forget about your family and social life. Having partners when building a business keeps you sane. First, you share the risk. Second, you have an accountability partner (just in case you start getting lazy). Third, a partner gives you opportunities to take time off and actually enjoy life in the process. Most importantly, it is much more fun celebrating business successes with someone else. One of our favourite results of working hard to buy all this real estate is that glass of wine on the evening of Closing Day – celebrating each success.

 

Rock Advisors – an Ontario-based commercial real estate firm with an exclusive focus on apartment brokerage services discussed investing in Student Housing. They mostly focused on purpose-built student housing projects, but the lessons learned also apply to you if you are renting a regular house to students.  Student housing can offer 10-30% higher returns than regular rents, since students often rent by room and a typical room rents from $400 to $600 depending on amenities and location.  However, as many of us have experienced, students can be more management intense. Here are some tips on managing students we learned form Rock and also from personal experience with renting to students in Ottawa:

  • Always sign a 1-year lease – September to August, and if you fall from the student year cycle, find someone short-term until September and get back on it.
  • Get the parents on the lease – students often don’t work and rent is not guaranteed, and plus, parents often pay for all their school expenses anyways.
  • It’s always better to sign one lease, instead of 3 for the same unit, even if they don’t know each other – this will save you a headache if one student decides to leave earlier and when applying for financing.
  • Providing furnished rooms is not always better – sure you can charge more rent, at least $50 more than market rents – but the turn-over may be higher. When someone is moving in bringing all their furniture with them, it’s more complicated for them to move as compared to someone who is more mobile.
  • When investing in student housing as a hands-off investor, always make sure the property manager or your managing partner has had previous experience with students – other wise, the learning curve may be a painful one.

 

Mark Weisleder – a Toronto-based lawyer, speaker and author who provided us with insightful tips on how to deal with tenants. His number one rule is to treat your tenants as gold, and they will take care of your property. Tenants are your clients in this real estate business, without tenants you have no business – so it’s important to take care of those who are paying your mortgage for you. One of the ways to do that, is to give them gift cards, says Mark. For their birthdays, or as a welcome gift, or if they pay rent on time for 12 consecutive months – buy them a $10 Tim Hortons gift card, and they will love you! It’s a business expense anyways. More tips:

  • Always try to separate the meters – it’s better for your bottom line if your tenants are responsible for their own hydro.
  • Rent review rules only applies to buildings built before 1991 – so if your unit is newer, you can increase the rent as you wish.
  • Google your tenant as part of your screening process – you never know what you may find!
  • If you built a basement suite, always tell your insurance company.
  • Screen, screen, screen! Always do your homework on a potential tenant before you hand over the keys. Our screening process includes: rental application, credit report, reference check, employment check, previous previous landlord check, google check, and gut check – yes, it is a lot of work, but you’ll be thankful later!

 

US is on sale! Sooo much talk about investing in US. Not only at the forum, but also all over the news – Canadians seem to be jumping on cheap US properties! Apparently, 1 in 5 Canadians are eyeing the US market, says BMO. Some people claim that the prices hit bottom. Others predict a double dip effect –have you heard about the shadow foreclosure inventory that will overflow the market with cheap properties? Whatever your view is, always do your homework! We’ve heard of people making good profit in US, but others have been scammed and lost a lot of money. Just because it’s cheap, does not make it a good investment. Some things to consider when buying in US:

  • You may have to buy a property all cash – if you don’t have a credit history in US, lenders may not be so willing to give you a mortgage.
  • Seek a lawyer that does cross-border business and knows the tax laws specific to the state you are shopping in.
  • Pick your location very carefully – are people moving there? Is the economy getting better? Real estate is a local business – get to know your location intimately.
  • Have a local representative you can trust on your team – that may mean that you spend some time across the border building relationships and your team before you buy.
  • Always do your due diligence – trust but verify!
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