So here are five things real estate has made me thankful for
Real estate investing got me out of the rat race
No I am not sitting on a beach in Panama (yet) running my business over the internet. But I was able to quit the 9 to 5 job. No more commutes, no more bosses, no more stuff like this. I now have more time for things I like to do, such as running, spending time with my wife and of course investing in real estate.
Real estate investing taught me many new skills
I can install a kitchen sink and fix minor plumbing. I can hang a door and do minor carpentry. Sure I hire many of these things out now, but it is nice to have these skills. Having these skills has provided me with a confidence (especially when deal with contractors) I did not have before.
Real estate investing has introduced me to many, many new friends and colleagues
From bankers and lawyers to wholesalers and contractors and even other investors, I have met and worked with a lot of great people that I otherwise would have likely never met, and if I had, would only have been in passing.
Real estate investing has broadened my scope of knowledge
Throughout my real estate career I have invested in and read many books and courses which opened my brain to ideas I had never thought of before. My interaction with the folks listed above has taught me about accounting and taxes, law, markets and banking, housing and construction and a host of other things. These are things I would have never had the time or inclination to learn in my 9 to 5 job.
Finally, I am thankful to real estate investing because it has, I believe, made me a better person
My perspective and life has been greatly broadened because of the four items listed above. Real estate investing forces me to get outside of my comfort zone and try things I would never have thought of trying before such as marketing, blogging and writing and just plain talking to people to see if I can help them out or work a deal.
Looking back over these five items, I guess I can say that I am just thankful I got into this business. Sure it has its ups and downs, but overall life is just better and for that I am truly thankful.
We receive phone calls regularly from people who want to sell their investment property and, of course, they want to fetch market value for it. These phone calls become heightened after we disclose a record breaking sale such as our most recent one at 233 Wychwood Avenue listed at $989,000 which sold for $1,208,500. Of course every caller insists that their investment property is also worth the same or more than 233 Wychwood Avenue because the market is “very hot”.
It is true that the investment property market is very strong but unlike single family homes whose ultimate high sold price can reflect an element of emotion, investment property sold prices are influenced more by an investment return. A huge factor that will determine market value for your property will be the income it generates.
During these conversations we probe deeper and ask many questions about the condition of the property and especially about the income it generates before we voice our opinion on value. The caller usually answers “well the rent is low but I like my tenant” or “the rent is low but my tenant has been here for a long time” or “I have a really good tenant who takes care of the property so I have given him/her a reduced rent”.
So then we respond “that’s really nice that you have a good tenant, but an investor who will pay you market value for your property also expects market value rents”. They respond “well they can always ask the tenant to leave”.
In reality a new owner cannot ask the tenant to leave and being a landlord you should know this. A tenant can only be asked to vacate, if they do not have a lease, and under these circumstances:
As you can see a new buyer cannot arbitrarily “get rid of a tenant”. Then these callers keep insisting that their property generating a cap rate of 2% to 3% is worth the same as one that generates a 5% cap rate simply because the market is hot. Unfortunately that is not the case. In reality if you have two identical properties in the exact same location in similar condition with one generating an annual net income of $50,000 while the other an annual net income of $40,000, the property generating the higher net income will sell for a much higher price.
So what can you do to ensure that your investment property will increase in value according to the market?
Time and time again we list tenanted properties and of course they require tenant co-operation for viewing times and presentation of the property. Many sellers will say “oh my tenant will be very co-operative and flexible because I’ve been so good to them over the years by keeping their rent low etc” only to witness, after the landlord tells the tenant they are selling, an overly uncooperative tenant or one that insists you abide by the letter of the law. Most tenants do not appreciate the possibility of being displaced whether you have been good to them or not so treat it like a business because most tenants assuredly will. Furthermore align yourself with a trustworthy real estate agent who will advice you properly on how to go about maximizing the resale value of your investment.