First Rental Property

What’s up Everybody,

Do you ever wonder how some people become super successful investing in real estate?

I had always wondered this before I purchased my first rental property back in May 2005.

I was under the impression that in order to become successful in real estate investing, all I had to do was buy one rental property a year.  That was the extent of my plan.  I thought that if I did this, I would instantly become successful in real estate investing.

Although I had the right idea, I was missing a key component in my strategy.  This was a key component that I did not realize until some years later.

This key component that I was missing was: Geographic Specialization.

For those that do not know, geographic specialization with regards to real estate investing means that you grow your real estate portfolio by purchasing the same property type in a defined geographical area.

For example, over the years as I have become a better real estate investor, I have chosen to invest in condominium townhouses (property type) on The Mountain (geographical area) in Hamilton, Ontario Canada with joint venture partners.

Personally, I have come to realize the importance of geographic specialization with respect to real estate investment.  This however, did not happen overnight for me.  This realization came from a few years of studying strategies being taken by successful real estate investors such as Don R. Campbell.

In an effort to help those of you new to real estate investing, I have provided a list below of the steps one needs to take in order to become a geographical specialist.

Here they are in no particular order:

1) Research your area

If you are going to purchase multiple rental properties in a given area, make sure that it is a good area to invest in not only today, but tomorrow as well.  You want to make sure that the area that you have chosen to invest in will also be a good area to invest in, in the future.  You will want to ask yourself questions such as:

1. Are people going to be moving into this area in the future?
2. Is the municipal government promoting the area as a good place for businesses to relocate to?
3. At what level are businesses being taxed?
4. What industries are going to fuel the growth in this area, in the future?

*what other question do you think you should ask yourself?  Leave your comments in the section below*

2) Once you have chosen your area, don’t buy anything outside of it

Most experienced real estate investors will admit that this point is easier said than done.

The purpose of picking a geographical area and sticking to it, is to become an expert in that given area.  The more knowledge you have of that particular geographical area, the better you will become as a real estate investor.

Here is an example to demonstrate my point.

This morning I traveled to my geographical area of ‘The Mountain’ in Hamilton, Ontario, Canada.  I was there to visit one of my properties and speak to my tenants who had just moved in.  Before I headed out to Hamilton in my car, I checked some of the recent listings for condominium townhouses for sale on ‘The Mountain’.  As I was driving through the area, I noticed the for sale signs on the properties that I had reviewed earlier, in addition, I also saw a few more for sale signs on other properties.

The cool thing about this is that because I know so much about this geographical area, I know exactly how much these properties  should sell for, and I know exactly how much rent can be charged for each of these properties.

Because I have such specialized knowledge in this area, there is no chance that I will every overpay for a property there.  In fact, because I know the area so well, there is always an opportunity to purchase a property slightly under market value.

Purchasing a property slightly under market value is always a good thing to do if you can, because you are able to create built in equity from the moment you purchase the property.

So there you have it…a short list with only 2 items!

It is a short list, however, it is a super important list.  There is no question, that if you specialize in a specific geographical area, you chances of success with real estate investing will increase.

What do you think?  In order to become a geographic specialist, what other things do you have to take into consideration?

Leave you comments in the comments section below.

Also, I forgot to tell you that all the cool kids are keeping up to date with my blog.

To be cool like them, enter your e-mail address on the left hand side of the blog.  Or, you can click on the orange RSS button on the top right hand corner of the blog.  🙂

[youtube]http://www.youtube.com/watch?v=GkIO6ra-xDE[/youtube]

What’s up Everybody?

How scary was today, if you are investing in the financial markets?

If you missed all of the fun today…here is what happened…

Dow Jones

As many of you know by now, today the major averages including the Dow Jones saw saw the biggest one day drop since 1987.

The averages have since rebounded, however remain lower by approximately 5%. (As of today’s date — May 6th 2010.)

At today’s low the Dow was down approximately 1000 points as low as 9869, representing a 9.2% decline.

That’s right… a 9.2% decline.

It has since rebounded approximately 600 points to 10,492.

The S&P

The S&P was down approximately 100 points, and eventually rebounded to cut the loss in half at -40 pts at 1121.

After the markets closed today, news stories have been coming out, that have been trying to explain what caused the markets to drop like a stone in water.

Evidence now suggests that a bad trade might be behind the market drop.

Bad trade or not, as real estate investors and as potential real estate investors, we have to learn from this event.

Today’s event shows us how extremely volatile the financial markets can be.

Depending on where in the world you are, you are either still feeling the effects of the Global Economic Crisis that began in late 2008, or you are slowly on the road to recovery.

For the Canadians, we have been fortunate in that we are on the road to recovery from the recent recession.  Our financial markets were battered, just like the rest of the world however, for many (not all) of us real estate investors, our real estate holdings did not experience any decline over the recession.

In fact, through all of the economic turmoil, many rental properties located in strong economic cities and towns in Canada experienced good appreciation over this time period.  A lot of credit needs to be given to Don R. Campbell, President of The Real Estate Investment Network for his education on the economic fundamentals of strong investment cities and towns in Canada.

Personally, I have been very fortunate in that all of my real estate holdings have gone up in value during the unpredictable economic time. In addition, many of my friends who are also fellow real estate investors have done well with their real estate holdings throughout this period of time.

I cannot say the same for many people that I know who are invested in the financial markets.  Many people over this same period of time had lost 30%, 40%, and even up to 50% of the value of their investments.

It has been an observation of mine that the more experienced one becomes with real estate investing, generally speaking, the less they start to believe in the financial markets as a vehicle to create wealth.

Please stop right now. Re-read the statement above.  Let it sink in….

On that note, leave me a comment in the comment section below and let me know what you think of the financial markets.  Do you believe in them?  Why or why not?

If you are not keeping up to date with my blog, please do so by entering your e-mail address on the left hand side of the blog.  Or you can click on the orange RSS button at the top right hand corner of the blog.

In conclusion, I would like to highlight a recent article written by fellow blogger and real estate investor Dineen Jogola. Dineen, a young up and coming real estate entrepreneur published a recent article titled 10+1 Core Success Principles.

I thought that Dineen’s article was a very well thought out and an authentic article worth sharing.

Don’t forget to check out the new video content on my YouTube Chanel.

[youtube]http://www.youtube.com/watch?v=0T2GuSqu3F4[/youtube]