First Rental Property

When you read the title of this post, did you think I was talking about you?

Are you someone that is interested in investing in real estate but has not done so yet?

Have you been considering investing in real estate for years, but have not taken the plunge?

Do you want to buy your first rental property but have no idea where to start?

Do you sometimes consider yourself as indecisive?

Do you slowly talk yourself out of taking action right when you think that you are ready to make a move?

If you answered yes to any of the above questions, you are not alone.

You my friend need some help.

You need to surround yourself with the right people.

How Does Someone Become A Seminar Junkie?

1) Enthusiasm

Most people that I know that go from seminar to seminar are generally very energetic and outgoing people.  I mean, you would have to be pretty energetic after all, sitting through hours upon hours if not days upon days of real estate ‘Ra-Ra-Ra’!  The longest seminar I ever attended was 4 days…

2) Ambition

If you are attending seminar after seminar, you are an ambitious person, generally speaking.  I have noticed that people that take the time to research and attend workshops or seminars are looking to achieve something more than what they are currently doing.  They are not satisfied with the status quo.

3) Disposable Income

Let’s face it.  Some of these seminars are not cheap.  Especially if you get up sold some of the products at these seminars.  It is not out of the question to sometimes be up sold products that cost thousands upon thousands of dollars.

I once attended a seminar that was on the topic of investing in Canadian real estate.  The seminar itself cost about $1,000 Canadian dollars.  At the end of the seminar, the organizers were up selling a product that cost $25,000.

Ridiculous, I know.

But what was even more ridiculous was that approximately 20% of the participants purchased this product.

The sad part is that I have no doubt that only a small fraction of the people who bought that expensive product even ended up using it, and benefiting from it.

You must be thinking…

“Why the heck would anyone ever purchase a $25,000 product, geared towards helping them, yet never end up using it?

The answer my friend is simple.

It is because seminar junkies lack confidence.

I will say it again:

Seminar Junkies Lack Confidence

I do not intend on offending you, if you have attended many seminars in the past…

It is my intent to hopefully open your eyes as to what changes you need to make in order to break out of this terrible cycle.

If you do consider yourself a seminar junkie, the most important thing you need to do NOW is…

Increase your confidence

There are a number of important things that you need to do in order to break out of your cycle and increase your confidence.

1)  You need to CONTINUOUSLY surround yourself with experienced real estate investors.

Real estate investing can no longer be a casual interest for you.  You need to immediately become committed to surrounding yourself with experienced real estate investors.

One of the major reasons why you have been going from seminar to seminar is because you don’t have a network of action takers that you can go to for help, and to ask questions of.

3 of the best people that you can have within your sphere of influence that can help you finally take the leap of faith and become a real estate investor are:

1) A Real Estate Agent with experience working with investors

2) A Mortgage Professional with experience working with investors

3) A Real Estate Lawyer with experience working with investors

With these 3 people in your corner, all the questions you could every have regarding real estate investing can be answered.

Knowing these people will help to increase your confidence, as you will know that you can ask questions of these people at any time regarding real estate and they will provide you with accurate answers.

So my friend, the answer is simple for you.

If you are a seminar junkie, acknowledge it.  That is step number one.

Step number 2 is to reach out to experienced real estate investors, and keep in continuous contact with them.

A Real Estate Agent, Mortgage Professional or Real Estate Lawyer with experience working with investors would all be more than happy to help you become a real estate investor, once and for all!

Best Regards,

Neil Uttamsingh

ps: First Rental Property will be making it’s HUGE announcement within the next few days.  Stay tuned for the GROUND BREAKING news…

Hi Folks,

I hope that all is well with you.

The reality is that many new real estate investors know absolutely nothing about business.

This can be a great disadvantage to newbie investors.

Knowing how businesses operate is very important information to know when you are entering into the real estate investing arena.

If you do not know how businesses operate, there is a good chance that you will fail as a real estate investor.

After all, real estate investing is just like running a business.

A fundamental component of any successful business is the…

‘Operating Line’

I have talked about the operating line before in previous posts, however, this is such an important concept that I feel that it needs to be talked about again!

What is an Operating Line?

In simple terms, an operating line is almost like a Line of Credit.  It is a revolving credit facility.  For example, a business could have an operating line in the amount of $100,000.  If a business uses $20,000 of their operating line, they will then have $80,000 still available to use.  However, the moment the business pays off the $20,000 that they owe, they will immediately have a full $100,000 available to use again.

Why are Operating Lines Important for Businesses?

Operating Lines are very important for businesses because they allow businesses to pay for things.  The cash flow of a business may be such that they do not have the necessary funds available to pay for items at a given time.  The purchase of these items may be crucial for the business to have.  Since the items are crucial for the business to have, they must purchase them.  If the business does not have sufficient funds on hand required to purchase the items, they have to then use their Operating Line in order to make the purchase!

What are the rules for using an operating line?

The rules for using an operating line are important to know.  In Canada, where I am located, major Canadian banks lend to businesses between 10 to 15% of their gross annual sales for their operating lines.

Using this percentage, if a business does $1 million dollars in gross annual sales per year, the amount that a (Canadian) bank will lend the business will be between $100,000 and $150,000.

How do I implement this information into my real estate business?

With this knowledge of how Operating Lines work, we can now begin to figure out how much of an operating line someone should use for their real estate investing business.

Let’s say that someone owns 2 rental properties.  The rent that they obtain on a monthly basis is $1,500 per property.  Therefore, they are receiving $3000 ($1,500 * 2) in monthly rent.

We now have to multiply $3000 by 12 months of the year in order to give us the gross annual rent collected.

$3000 * 12 = $36,000.

Therefore, as you can see from above, $36,000 is the gross annual rent collected.

If we take this number ($36,000) and multiply it by 10 or 15% as mentioned above, we get…

$3,600 to $5,400

This means that the recommended operating line amount (as per Canadian banks) is between $3,600 to $5,400.

Let’s look at a real life example…

OH Boy!!!  You just bought your first rental property and….your Air Conditioner just broke down.  It is the middle of the summer and it is HOT outside.  You need to replace the air conditioner ASAP for your tenants!  What do you do???

You get a bunch of different quotes to repair the air conditioner. You find out that it is going to cost you $2,500.

You don’t have the money saved up in order to pay for this repair.  What do you do??

You use your operating line

In this scenario, the max amount that you can spend on your operating line is $5,400.

The expense for the air conditioner is $2,500, so it is well within the budget of what you can spend.

Is using an operating line this easy?

For the most part yes. However there are some complications that can arise when you use an operating line.

I will address those complications in Part II of this post.

Stay tuned!

Best Regards,

Neil Uttamsingh

ps: First Rental Property will be making a HUGE announcement later this month.  Check back in frequently to the blog.  You will not want to miss this news!!!!

Hi Everyone,

Hope all is well on your end.

All new real estate investors want to figure out what type of property they should buy as their first rental property.

Over the years, I have seen people buy as their first rental property:

• single family homes
• duplexes
• triplexes
• multi-unit buildings
• condos

If you are an eager new real estate investor, you are probably ‘dying’ for me to tell you what the answer is.

The answer is….
…there is no right answer!

If you as a new investor posses the necessary motivation and skill, you can successfully own and manage any type of rental property.

Which is the easiest to own?

In my opinion, the easiest property to buy and manage as your first rental property is a single family home.  By definition, a single family home is any type of dwelling in which one and only one family is residing in.

Why are single family homes the easiest?

Once again in my opinion, single family homes are the easiest to purchase and manage based on 2 major factors.

1) Cost

The cost to purchase a single family home as a rental property is generally cheaper than it is to purchase a multi-unit building.  Due to the fact that a multi unit building contains multiple units, the price to purchase the building is often higher than the price to purchase a simple single family home.

Because the price to purchase a single family home is cheaper, the barrier of entry is lower. Therefore, more people are able to get started in real estate investing by purchasing their first rental property.

2) Management

Generally, single family homes are easier to manage than multi-unit buildings.  It is easier to manage one set of tenants, as opposed to a large number of tenants.  This is especially true for new real estate investors.  When you are new and just starting out, you won’t know how to manage tenants very well.  Managing tenants is something that you become better at with the more experience you have as a landlord.

So there you have it!

Single family homes are the easier option for new real estate investors when compared to multi-unit buildings.  However, as mentioned above, if you have the necessary skill, desire and FUNDING not to mention, you can successfully purchase and manage even multi-unit buildings.

Best Regards,

Neil Uttamsingh

ps: First Rental Property will be making a HUGE announcement later this month.  Check back in often for the announcement!

Hello Everyone,

I hope that all is well on your end.

Today, I have a very short post for you.  There is no educational content for today…for a change  :).  Rather, this post is to inform you of an upcoming announcement that First Rental Property will be making in the month of September!  (this month)

Please check back in regularly to the blog as you definitely do not want to miss this news.

This is especially true if you are a new real estate investor who is looking to buy your first rental property!

Stay tuned for the big news!

Regards,

Neil Uttamsingh

Hi Everyone,

I hope you are doing well.

Resourcefulness is an important skill to have if you are considering buying your first rental property.

If you take a look at the general population, there is a very small percentage of people who own investment real estate.  Due to the fact that there are very few people that own investment real estate, very often, it is difficult to obtain information on the topic of real estate investing.  Especially when it comes down to finding out information on the legal side of things.

For example…

…If a tenant decides to not pay rent on the day that it is due….what do you do?  If you are a new real estate investor and you are dealing with this particular situation, you may have no idea what to do, or who to go to, to ask for help.

Fortunately in most places, there is a set of rules in which Landlords and Tenants need to abide by.  Where I am from (Ontario, Canada) this set of rules is called the, Residential Tenancies Act, 2006

The reality for most real estate investors is that when you first start out and when you first buy a rental property, you have no knowledge of the Landlord and Tenant rules. You will have no knowledge of the rules because you will have no need to at this point in time..

There are lots of blogs that tell you that you need to understand the Residential Tenancies Act relevant for the area that you live in.  In theory this is true.  However, in reality, 99% of new real estate investors do not do this… They do not do this (take time to understand the Landlord and Tenant rules) because at the beginning, nothing may be going wrong with your rental property and with your tenant.

The Moment Things Change…

The moment that things change for real estate investors is the second something starts to go wrong with you rental property, or with your tenant.

When this occurs, the Residential Tenancies Act for the city that you live in becomes extremely valuable to you.  It becomes valuable to you because it is the ‘rule book’ of the do’s and dont’s of Landlords and Tenants.  When things are going wrong with your rental property, you as an investor have to follow all of the rules in order to ensure that you are doing everything by the book, and that you are not ‘breaking the law’.

For example, if a tenant decides not to pay rent, there are many uneducated landlords out there that think they can take this matter into their own hands and ‘ask the tenant to leave’.  Unfortunately in many cities, it is not this easy.  In situations like this, there is a long, drawn out process that you need to follow step by step in order to collect the rent that is owned to you…

There is a reason why there is a rule book in place.  It is there to ensure that people behave themselves and don’t take extreme measures when trying to rectify a problem.

Best Regards,

Neil Uttamsingh

ps: First Rental Property will be making a HUGE announcement later on this month.  Stay tuned!

Hi Everyone,

Hope you are all doing great.

One of the most important things you need to consider when you become a real estate investor, if not THE most important thing to consider is how you are going to pick the right tenants. (wow, that was a long sentence!)

When most people first begin investing in real estate, they have no idea what to look for in a tenant and how to select the right tenant.

There are 2 simple rules that you MUST follow when you are selecting tenants for your rental property.  If you fail to obey these rules, you could end up in big trouble. When I say big trouble, you name it…

If you chose the wrong tenants you could have:

• Vandalism to your property
• Drug use in your property
• Non payment of rent
• Loud parties held at your property
• Random people moving into your rental property without your permission
• Failure to move out upon eviction
• The list goes on…

That is a scary list, isn’t it!?

Well you know what?

You don’t need to be scared if you do things the right way.

The following 2 rules that you will obey EVERY TIME you are selecting tenants will help you in selecting the right tenants.  The rules are…

1) Do Not Settle

Do not settle for the first prospective tenant that comes along.  Just because your rental property is vacant does not mean that the first people that come along are the right choice.  Don’t feel rushed.  It is truly better to have your rental property sit vacant for a few more months than to pick the wrong tenants.  If you pick the wrong tenants, because you want to fill your unit, this move will surely cost you more in the long run than if the property was vacant.  For example, if you rush the process and pick the wrong tenants, they could move into the house and immediately stop paying your rent.  You would then have to go through the eviction process with your local Landlord and Tenant Board.  Save yourself this aggravation.  Don’t rush the process.  Pick the right tenants from the very beginning.

2) Meet your prospective tenants in person before they move in

I cannot stress this point enough.  This is an absolute MUST!  You need to meet with your prospective tenants in order to see how they are in person.  If you cannot do this yourself, you can have a trusted thrid party do this for you.  I caution you here, as it is very difficult to find someone who can do this as well as you would.  The bottom line is that if you don’t meet your tenants in person, and you end up not getting along with them, of if they turn out to be a poor choice, you have NO ONE to blame buy yourself.

The biggest mistake I have ever made as a real estate investor was when I did not meet a prospective tenant in person.  I outsourced this job to a property manager.  The tenant moved in and it was a disaster.  Obviously, those are all the details I can give you due to privacy.  However, in this scenario, I did not blame anybody but myself.  I was the one that was supposed to screen the tenants. The buck stopped with me…and the buck will stop with you!

In summary, these are 2 very simple rules that you must obey when selecting tenants for your rental property. By following these rules you will ensure that you are doing everything in your power so that you can have the right tenants for your rental property!

Best Regards,

Neil Uttamsingh

ps: First Rental Property is going to be making a HUGE announcement in September. Check back in September for details!