How to Structure a Joint Venture Real Estate Deal

guy shaking hand

How to Structure a Joint Venture Real Estate Deal

Joint Ventures

Our first joint venture real estate deal was the very first property Dave and I bought together in 2001. We were dating at the time and pooled our resources to do the first two deals. I had excellent credit, $16,000 in savings and zero debt. Dave didn’t have any savings but he did have money in RRSP’s, which he cashed out to invest in our properties. We both had good jobs at that time, although I was leaving mine to do my MBA.

We moved into one of the properties so we could put less money down and still qualify for good financing.

After that, we were out of cash and I was now a student in Toronto so we had to find other ways to get deals done that didn’t require cash or bank financing.

Despite the cash challenge, we still managed to add another four properties to our portfolio in 2002 and 2003. Two of those properties were our first external from us and we did a joint venture with a friend. Dave also made some money off an assignment deal – finding a great deal and assigning it to someone else for a fee (also called wholesaling).

Since then we’ve largely relied on other people’s money to fund our deals.

During 2010 – 2012 when we were aggressively growing our portfolio and averaging one new house almost every month, the majority of our purchases were joint ventures.

The majority of these deals were structured so that we were the managing partners (finding the deals, negotiating them, hiring the teams and overseeing the renovations and overseeing management) and our money partners came to the table with financing capability and the initial investment capital required (e.g. down payment, closing costs, 2 month reserve fund).

It was a fabulous way to grow our portfolio quickly and reduce some of our future costs because our partners will split any future costs (and profits) with us 50% / 50%, but partners also can be limiting and always bring additional stress to handle when there are issues (more on that in a minute).

Options for Structuring Joint Venture Real Estate Deals

Structure JVs There isn’t one right way to structure a JV. Over time you’ll discover the way that is the most fair for you and your partners given what each party is bringing to the table (Also see – Real Estate Investors Checklist for Working with JVs).

We look to our partners to put in 100% of the initial investment capital (typically the down payment, closing costs, 2 months of a reserve fund and minor renovations) in exchange for 50% ownership in the property. When we sell the property, their initial investment is repaid first, then any capital we have invested, and then we split the proceeds 50% / 50% as per the ownership.

As long as we can reasonably suggest our partner is going to get 10-15% per year return on their capital and they don’t have to put in any effort, we believe it’s a fair exchange for them and for us. Those are our measurements, by the way, they don’t have to be yours.

It’s about the return and the limited amount of involvement they have in the deal – not the share of the deal they own. These folks are busy – usually successful businesses or careers, families and hobbies they want to focus on. They want to be in real estate but they don’t have the time or inclination to become experts. That’s where we come in. We’ve spent thousands and thousands of hours becoming experts. While we may only put 40 hours into getting a deal done for our partner, that doesn’t account for the $100,000 in education and 10,000+ hours we’ve put into learning what to do to minimize risks and maximize returns.

Remember all you bring to the table in your own business – whether it’s your first deal, or fifteenth. If you don’t feel you bring enough to the table then you need to build on what you have – take more courses, improve the quality of your team, get to know your area more by touring more properties and walking around. One of the most critical things you can do is become an area expert.

We prefer the traditional 50% / 50% structure, but that is far from the only option. You can create whatever structure you feel is fair given what you’re bringing to the table. For example, if you are new to the game, and are not bringing a ton of experience, perhaps a 30% / 70% structure is fair with you getting 30%. This is of course if your investor is putting in all the capital and qualifying for financing. If you both are splitting the capital contribution and qualifying for financing, then a 50% / 50% deal is more fair (again if your experience is limited).

There are endless options for how you can structure a Joint Venture Real Estate Deal but here are a few others we’ve done:

• 30% / 30% / 40% – if there are two cash partners and one managing partner or maybe one person is going to be a tradesperson offering their skills to renovate in exchange for a share of the property (essentially they are putting in sweat equity while someone else funds it and someone else is the managing partner). It’s always critical to lay out roles and responsibilities in your agreement but it’s even more important in an arrangement like this.
• 60% / 40% – we’ve done this two ways. Once, when we have had to put in some money and do all the work – we took 60% of the deal. Two, when we felt that someone was bringing more to the table than our usual arrangements we would offer them more equity. Perhaps they are funding a large renovation and leaving that cash in there and we need to increase their equity to ensure they get a great return, or maybe they are offering some skill in addition to the cash or if we were new, it could be how we get the deal done if we aren’t putting any cash into the deal.
• 75% / 25% – We’ve done this when we put the down payment in but couldn’t quality for financing. We gave someone 25% in exchange for their name on title and finance-ability. It would not be our first choice in an arrangement but we were in a pinch and had already lifted conditions. We needed to close on the deal and this got it done.
• 50% / 50% – Someone already owns the property and is unable to sell. They don’t want to hire a property manager for whatever reason. You can step in and offer to oversee everything in exchange for 50% ownership in the property. Their ‘initial capital contribution’ can simply be the equity they have in the property as of that date (get a property appraisal to determine this value relative to the mortgage owing). We did this when someone we met at a club meeting wanted to turn their property into a rent to own to sell it but didn’t know how. They also wanted to go away traveling and didn’t want any hassles.

Simple Structure Is Best

The most complicated structure we did almost completely bit us in the butt because one of the partners got divorced (the 30, 30, 40 split).

We brought two partners into one deal. We all brought money to the table but in different amounts. One couple put less in as they went on title and qualified for financing. Between us and our other partner we covered the remainder of cash. We split the deal with them 30% 30% and we got 40%.

A few years later the couple got divorced. Thankfully they were able to settle things amicably and were able to agree to keep the property. Had their divorce gone the ugly way of many, the property would have gone on the chopping block and we would have been put in the awkward position of either selling it prematurely to get them out, or having to buy them out, switch title and find our own financing. Not always an easy thing at the best of times, but we would have had the added pressure of making it fair given our other partner as well…

Thankfully it didn’t come to that and we all still own this property together but it was a good reminder that it’s best to keep your smaller deals one partner to one property. Every partner brings their own set of complications so why make it harder on yourself than you need to by mixing and matching?

Word of Warning: JV’s are Limiting and add stress – Use with Caution

One of our rent to own properties failed. The tenant buyers chose not to buy the property from us, as per their option, and rather than selling it in a slower market, we chose to convert it to a regular buy and hold rental property.

The property barely cash flows as a regular rental, but it’s a perfect property to add a legal suite to. It would potentially be one of the easiest places we’ve tackled to add a legal suite to because of the location of plumbing, electrical and the heating source. We approached our partners with the proposal to add a suite. We were going to split the cost of renovation with them, as per our 50% / 50% ownership with them because we have already owned it for several years. We would charge a small general contractor fee just to cover some of our costs of overseeing the work, but otherwise we were agreeing to take on a ton of work and time to improve the overall performance of the property. This move would have turned a neutral cash flowing property into one that is giving us at least $600 a month. Despite all the effort required to do this, it made perfect sense to us. If we owned this property on our own that is what we would do.

Our partners said no. Not because they didn’t like the idea, it was because they didn’t want to invest anymore cash into the deal.

They want to wait until the market is good enough to sell and then they want out. Getting them out now to make the change ourselves is more complicated and cost ridden than it is worth to us. It’s frustrating as we would much prefer it to be a solid holding property with strong cashflow, but it’s one of the limitations and issues with partners.

Joint venture real estate deals are a great way to grow your portfolio when you’re short of cash resources for down payments, struggle to qualify for financing, or want to work with other people who bring something to the table that you don’t have. They are long term business relationships, however, and need to be carefully considered to make sure it’s a fit and that the structure you select makes sense given what you are all bringing to the table. Hope this gives you a few new ideas.

Other Articles on Joint Ventures & Using Other People’s Money:

>> How to Write a Comprehensive Real Estate Investment Deal Summary (Business Plan for Real Estate Investors)

>> 5 Things Every Real Estate Investor Should Know about Money & Credit

>> How to Use RRSP’s to Fund Your Real Estate Deals

>> 5 Tips to Create Credibility as a Real Estate Investor

>> When to Sell a Real Estate Investment

Can You Use Your Intuition as an Investor?

guy blind folded with tie

After a handful of years real estate investing, I reached a point where I could walk into a property and know whether it was a good investment within 60 seconds. No spreadsheets required. Does that mean that I am only using intuition to guide my investing? And, how can I be sure that a deal is a good one? What if you are someone who HAS TO run the numbers to know if it’s a good deal?

Using intuition effectively as an investor was just one of many subjects I discussed with multi-family expert Rod Khleif on his podast, Lifetime Cashflow through Real Estate Investing.

Rod is an interesting and energetic guy. He’s personally managed and owned more than 2,000 units as a multi-family investor, started a $10,000,000 company out of frustration with a lack of solutions to a problem he faced, and currently spends a lot of time (and money) supporting charities and worthwhile causes around his community. When I heard about all that he does, I was pretty excited to get on his podcast show and chat with him.

He had a lot of great questions for me too. In this episode we cover a wide variety of topics … grab your pen and paper to take some notes because you’ll learn: Rod Khleif Podcast

  • How to “build your brand” to attract partners, potential investors, and deals … including specific actions to take to put yourself out there so people call you with deals, money and opportunities.
  • How to use YouTube videos to attract money and deals.
  • Who is your ideal investor, and why it matters.
  • Building trust and authority as a professional real estate investor.
  • Finding the best mentors and using mastermind groups to accelerate your growth and success.
  • The things to know when partnering with family, and
  • What my best piece of advice for creating success in your life is.

Have a listen! It’s episode 46.



Topics we discussed in the episode are also covered here:

Image Credit: ID 47871823 © Vlue | Dreamstime.com

It Was Mostly Fun Until They Called the Police (Our Yellow Letter Marketing Campaign)

yellow marketing letter by julie broad

This is an excerpt from More than Cashflow: The Real Risks and Rewards of Profitable Real Estate Investing.

Chasing Real Estate DealsAs I watched Dave race up one of the many hills in St. John’s, Newfoundland en route to Ryan Mansion where we were staying, I wished I had our Flip camera handy. It felt like we were on our very own episode of Amazing Race: The Real Estate Investing version.

After months of research, property tours, and more research, we had uncovered two real estate gems. One was a duplex and the other a single family home. Neither property was distressed but they were both very solid deals.

So … we decided to buy them both. Everything was going along just fine until we encountered a little glitch with our partner. We had closed on a deal with him a few months earlier so we didn’t think there would be any problems getting a mortgage for the property with him on title. Unfortunately the entire lending landscape changed that year (it was 2009), and the main program that had been in place, the one that had worked to qualify him for deals, was no longer available.

No problem – we figured we’d just find a couple of new partners. Except the people we were contacting had less than 48 hours to make their decision before we took off on vacation. When you’re asking people for $50,000 out of the blue, they generally want more than 48 hours to think about it … even when the deals are compelling – which they were!

We worked the phones for two solid days, determined to find people to join us on these two deals. And … with only a few days to spare before we had to remove any conditions, we found two new partners with the cash to do the deals. But we were still hitting issues with the banks. We had to extend the conditions on the deals for four business days and keep working the deals. That meant we were running around St. John’s trying to get things signed, faxed and couriered to the appropriate people.

We were in St. John’s for our friends’ wedding and unfortunately didn’t really get to enjoy most of our vacation because we spent the better part of our 10-day vacation glued to the phone trying to save the two deals.

What had been working well for us in the past for many of our deals didn’t work anymore and we felt so frustrated. We decided to change our investing strategies so we didn’t have to rely on banks and other people’s money all the time.

We started to focus our attention on attracting motivated sellers. The idea was that we would find people who were willing to sell us their house creatively, using options that do not require a bank to finance the deal – options such as:

  • Wrap-around mortgages
  • Agreements for sale
  • Lease options
  • Seller financing.

Right around the same time, a U.S. investment guru was coming to Edmonton to share his expertise. His entire program was about finding motivated sellers so you could put together creative deals, and this was exactly what we were looking for.

yellow letter marketingAfter his three-day course in Edmonton, we set to work. The plan we chose focused on covering a couple of select areas in Nanaimo, BC with bright orange business cards, orange and black magnets, online ads, and flyers in newspapers. The foundation of our campaign, however, was the Yellow Letter Marketing.

The only snag in our plan was cost. We were looking at a $10,000 investment to produce everything, not even counting the fact that we had to have someone to answer our phone once all the leads started coming in. We were willing to invest that kind of capital into growing our business, but our concern was how much the call costs could run us.

My Dad, an active commercial real estate investor for over 30 years, went to the course with Dave. He was pretty excited about our plans to market to Nanaimo home owners, and he offered to partner with us. Instead of us paying a company that specializes in handling these types of calls at $1 per call, plus $1 per minute to take messages; Dad offered to handle the calls on the spot and become our partner in all the deals.

Setting Up Our Yellow Letter Marketing Campaign

Once Dad agreed to be our answering service, Mom offered to coordinate the creation of the letters. Next:

  • We found a list company from which to purchase our mailing list. We paid $1,500 for a list of approximately 6,800 names in specific postal codes in the city of Nanaimo.
  • We photocopied our handwritten letter that basically said, “Hi, my name is Rick. My wife Ruth-Anne and I are interested in buying your house at 123 Lovely Street. Please call us at 250-555-5555.”
  • We hired a handful of people to assist with writing the home owner’s first name and their home address on the letters, hand writing the addresses on the envelopes, and sticking on stamps. We paid 20 cents for each letter and 30 cents for each completed envelope, plus the 52 cents for the stamp.
  • We set up a separate phone line at Mom and Dad’s house so the calls would be separate from their personal and business line.
  • We prepared my Dad with plenty of lead sheets to complete while chatting with the people who called in. Each sheet had a list of questions he would need to ask so that he could get the important information about their houses for us to decide if we wanted to buy them. We also set up a tracking system so we could track who responded and who didn’t, who asked not to be contacted again, and who would need to be followed up with at a later date.
  • Starting in early November 2009, we began mailing the letters out at a rate of 250 per week.

The Immediate Results of the Campaign

Yellow Letter CampaignWe ran bus bench ads, placed newspaper ads, ran online promos, distributed flyers through newspapers, put magnets on mail boxes, and handed out hundreds of ‘we buy houses’ business cards in a 12-month period. No other marketing method we tested came close to the response we received from the Yellow Letters. Within 48 hours of the first batch of letters hitting the post office, Dad’s phone was ringing off the hook. He walked around with a headset on and chatted happily to the curious, confused, angry or scared folks that called in. [We shot a few videos at the time – please keep in mind this was six years ago – but you can check them out here.]

From the first 2,000 letters we mailed out, we had a 30-40% response rate. That is, for every 10 people that received a letter, we were getting 3 to 4 calls!

A lot of callers were on guard when they first called. They were defensive and wanted to know how he got their name. They were scared that it was a scam. They were curious but concerned.

My Dad was brilliant at disarming folks and making them comfortable. [This video covers some of the strategies Dad used to disarm people.]

When someone would skeptically ask him, “What are you up to?” he would say, “I’m up to about 5’9″ and 185 pounds, but I am trying to lose some weight!” With Dad’s humour, people generally relaxed, and then he was able to find out whether they had a house they were interested in selling or not. He had some wonderful conversations with people and thoroughly enjoyed himself most of the time. He even had an invitation to come out and see a guy’s race cars, invitations to come and see homes even though they weren’t for sale, and dozens and dozens of people who said they would hang on to the letter and call us first when they were ready to sell.

It Was Mostly Fun Until the Police Were Called

Not everyone was comfortable with what we were doing. A small percentage of the calls my Dad received were from very hostile people who felt we were targeting elderly people or the families of someone who had just passed away. We began to receive the odd letter from someone’s lawyer asking us to cease and desist contact with their client. At least a dozen people called the local police. That resulted in one call from the police to investigate what we were doing and another call a month or so later acknowledging that while we weren’t doing anything wrong, they would appreciate it if we stopped because they were still getting complaints.

Of course it didn’t take long before the local newspaper got wind of what we were doing and ran a story on it as well. It was full of negative commentary about what we were doing, but it did include a statement from the police that we were not doing anything illegal.

For the most part, it was entertaining; but there were days where it was emotionally draining for my Dad. Especially when two months into it, and nearly 500 calls later, we hadn’t found a single person willing to sell their home creatively. In fact, we actually uncovered a lot of people who had paid off their home fully and weren’t moving until nature made them.

Eventually we started to speak with some folks that were very interested and willing to sell creatively. When a lead like this came in, Dave and I would head out to view the home and meet with the seller. What we discovered in each of these cases was that:

  • The house was in a terrible area; and/or
  • The home needed way too much work and wasn’t worth what they were asking, given the work required; and/or
  • The seller wanted at least 20% more than the home was actually worth.

In every case where we found someone willing to be creative with their deal, that person wanted a grotesque amount of money for their property or the property was one we didn’ want to deal with. We began to think we were doing something wrong! We figured we must be missing something important, so we went back over all the leads that had come in (nearly 1,000 by this time) and followed up on some of them to make sure we hadn’t missed an opportunity. If we had, we were still missing it. There were deals in that pile for the person with the right expertise and resources to handle bad areas and ugly properties, but that was not us.

It took almost four months before we found a deal we wanted to do – and even then it was not a creative deal. It was simply an awesome house in a great area that we could buy with $30,000 of equity in it. If we wanted to finance it without a bank, it was going to be through private money – not through creative techniques like an agreement for sale or a VTB (vendor take back) mortgage. But for a house that didn’t need any work, in a great and centrally located area of town, we grabbed the deal and worried about the money afterwards.

The second deal that came through our yellow letter campaign was a deal similar to the first – in that it was a good house, in a good area, and we could buy it with about $30,000 in equity in the home. We grabbed it too. We solved our financing challenges by finding joint venture partners that could qualify for financing and provide the capital.

The Return on Investment

Sticking to the initial campaign, which cost us about $12,000, and hundreds of hours of my Dad’s time, and dozens of hours of our time, our return on investment was definitely low. We didn’t do any creative deals – which is what we set out to do in the first place. But we did manage to pick up two great properties in six months with $60,000 in equity and a combined total of $900 per month in positive cash flow. Not a bad result, but not the result we were going for.

In 2012 we closed on a property assessed at $400,000. We paid $320,000 for it. The owner had received our letter and held onto it for two years until she was ready to sell. The house was in our favorite neighbourhood and was perfect for putting in suites – so that is what we’ve done. [We put a legal suite in this property, and I filmed that process. You can find that playlist right here.

The yellow letters were the only marketing we did that gave us a return on our investment. (We did receive a few calls from our bus bench ads, online ads and flyers, but the response was very small and none of those calls resulted in leads we were interested in).

Because there was so much negativity around the letters, in a later mailing that we did in mid-2010, we tried to change the wording a bit to make it clear that we were investors interested in buying their home. (Before that, the letter had only given our name and said that we were interested in buying their house at 123 Street). We also sat down and went through our list line by line and hand-picked very specific houses to send the letters to. It took dramatically more work to put together the list for mailing, and our response rate dropped to under 10%. We did not do any deals from those letters.

Lessons for Yellow Letter Campaigns

Yellow letters are a great tool to generate targeted leads and also learn a whole lot about the community you are investing in; but, as described, there are big challenges. I do not think this strategy is right for very many investors, but if you decide to tackle creating a yellow letter campaign, here are a few suggestions:

  • Mailing lists are expensive and they go stale fast, so get yourself organized and ready before you order the list.
  • Figure out how you’ll handle the calls. If you are going to take the calls yourself, set up a separate phone line that you can turn off. Some people called my dad in the middle of the night! Another option is to just set up a voicemail account like evoice.com. All the calls will go to voicemail and you may lose some leads; but if someone really wants to sell, they will leave you a message.
  • Also, you may want to consider outsourcing this to a country with good English and low wage costs, like the Philippines. We work with high quality folks from the Philippines in our business and this is how we would handle a campaign like this if we were to do it today. Successful wholesalers we know in Alberta use a team from the Philippines that they have trained to screen the leads. It took them time to find good people and train them, but at least they don’t waste time on possible deals that don’t meet their specific criteria. [Here’s how to hire a great virtual assistant.]
  • Know what types of deals you are willing to do. Just because a house is cheap or a seller will work with you on a creative deal does not make it a good opportunity.
  • Prepare yourself for all kinds of responses. Some people will be furious with you. My Dad was caught off guard because some people were very angry. We did not expect that kind of response and at times it was draining. Expect it, and get ready to brush it off and move on.
  • Be polite and friendly to everyone – some of our best leads from that campaign came via people who gave our name to a friend or family member that was selling.
  • Be patient. It is not overnight. Nothing in life, or real estate, is.

This is an excerpt from the International Book Award Winner and Amazon #1 Bestselling Book, More than Cashflow. You can find copies on Amazon or in Chapters Bookstores across Canada.

Image Credit:
1st Image: D 37652408 &  Diana Eller | Dreamstime.com
2nd & 3rd Image: Julie Broad

7 Steps to Invest Your RRSP in Real Estate

Guy thinking

RRSP in Real Estate The banks know how to make money. Even in the low interest rate environment we’re enjoying at the moment, banks are still making money! Wouldn’t it be nice to make money like a bank?

If you have money that’s sitting in an under performing RRSP this could be a great solution for you. If you have more than $50,000 sitting there, this is a really good opportunity for you.

Mutual funds and stocks are not the only investments that are RRSP eligible.

A mortgage can be held in a self-directed RRSP (or RESP, LIRA, or RRIF) account. And, there are many real estate investors that struggle to access the capital from the banks because they don’t fit the banks really strict lending criteria, or they haven’t matched their investment strategy to their financing well, and now they need other options. So, there are plenty of potential investors that would be happy to make use of your RRSP funds AND give you a much better return than you’re making right now, backed by a cashflowing asset.

This is one of the largest untapped sources of almost guaranteed returns where you can make 5, 7, 10 or even 12% on your money, tax free, on cash you put in a self-directed RRSP.

And, unlike when your stock drops or your mutual funds do poorly, you have recourse if your borrower stops making you payments.

When holding a debt obligation in your RRSP; you have a lot more control over the risk, you have a say in the return you get, and you actually have recourse if you aren’t making the return you were promised.

There are a few rules around using RRSP funds that you should be aware of, but for now I thought I would cover the most important steps to follow to lend out your RRSP funds to a real estate investor:

1. Find a Borrower
The easiest place to find someone looking to borrow RRSP funds for an investment property is to head on out to a local real estate investors meeting. At the meeting if there is an opportunity to stand up and introduce yourself, do that and let folks know that you’re an RRSP lender looking for borrower(s).

2. Choose a Trustee like Olympia Trust. There are other trustee’s but that’s the one we’ve worked with and they are excellent.

3. Open a Self-Directed RSP Account: Can be RRSP, RESP, RRIF, LIRA, TFSA
You aren’t cashing out the funds you currently hold in that account, you are simply transferring it to you a self directed fund.

4. Fund the account with the amount you want to have in the self directed fund.

5. Complete the Due Diligence. There is a lot to cover in this but basically you want to do some research on the person who will be borrowing from you. Personally I would want to see a credit report for the borrower, a recent property appraisal and I would go and view the property. If I didn’t know the market area I would want some research and information on the market area to understand it’s economics (population growth, employment situation, vacancy rates, housing market condition).

6. Complete the Paperwork. This step isn’t as bad as it seems. The borrower, a lawyer and your trustee should be able to walk you through this.

7. Watch your wealth and retirement funds grow tax free until you need to use them.

Again, there is a lot more to RRSP lending than this. Your trustee will walk you through the steps.

The hardest part is going to be when you go to your current financial adviser and let them know you want to move your money into a self-directed account. You might find that there is some resistance to your move to self directed because commission advisers will no longer make money off your investments if you’re managing them in the self-directed account.

For now, I just wanted you to know it’s an option. It’s a heck of a lot better return than a GIC, it is backed by a cashflowing asset that you have recourse on, and once your money is in your self directed account, it’s actually fairly straightforward way to utilize those RRSP funds effectively.

If you are thinking of investing your RRSPs in real estate you may also like these articles:


Six Ways to Increase the Cashflow on a Rental Property

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You have found a GREAT property in your target market area. It fits all of your criteria but the cashflow numbers are tight … should you walk away? Or, is there something you can do to increase the cashflow and make the property work for you?

While we would never recommend you buy any property without positive cashflow, there are times when you may want to buy a property that is tight.

For us, we have a couple of properties that we bought for such a great price, knowing that they’d be high value properties in the future, that we were ok with the fact that the cashflow was tight. We also have one property that we bought with plans to develop it in the future. It barely cashflows but we have future plans for it that would boost it’s value and it’s income.

It’s not ideal to have an entire portfolio of properties that are like that because it guarantees you’ll be pulling money out of your pocket to pay for repairs and upgrades in the future. Certainly for us, it really only works because it is just a few properties in our portfolio that are like that. But, you might be in a market where tight cashflow is the norm and you’re just finding ways to make it work … or you might be faced with opportunities to buy massively under market value or hold for development like we have found in the past.

Whatever the reason you’re considering a tight cashflow property, you do have a few options to improve your situation and increase the cashflow right from the start. (And if you’re not sure how to calculate your cashflow … start here and then come back to this).

Here are six suggestions to increase the cashflow on a rental property:

1. Increasing Rents

It might seem obvious but a lot of times tenants haven’t had an increase in their rent in quite awhile. If the tenants are paying under market rents, you might have the option of raising their rents. Of course, if you’re in a province with rent controls, or the rent has already been increased recently, this might not be an option.

Even if you can do it, keep in mind that a large increase may cause them to move out, or just be unhappy tenants that damage your property.

2. Add Income from Other Sources

Things like adding storage, parking and even selling advertising space can be used to increase rents, add a new rental stream or just reduce expenses. We have a few coaching clients who put solar panels on the home for an additional income source as well. Sometimes a little creativity goes a long way.

3. Pay Less for the Property

One of the conditions we put on every offer is that the deal is subject to an inspection. This means the vendor has to give us access to the property within a reasonable amount of time to complete an inspection.

What that inspection reveals can be used as leverage to reduce the purchase price. Basically, if the inspector comes back and tells you that the roof needs replacing or that the wiring is outdated, you can go back to the vendor and ask for a price reduction because of the work you are going to have to do. Sometimes the vendor will offer to get the work done, but our preference would ALWAYS be to get it done ourselves.

Think about it—the vendor could hire their Uncle Joe to do the roof. If it starts leaking in six months, they aren’t living there anymore. But, if you get the roof replaced and it starts leaking you can chase down the company that did it and get it fixed.

As long as what comes back from the inspector is not something that makes you want to walk away from the deal, then you can use it to reduce the purchase price. Of course, if you’re in a hot market, opening the deal back up because of something that came up on the inspection may not be a wise move. You could lose the deal to someone who is happy to pay what you’re paying, even with the issues.

4. Reduce Other Expenses

Your biggest cost relates to your financing. Spend the time to research your options and find the best financing options available to you. Lower rate and longer amortization periods will increase the cashflow. Beyond that, simple things that reduce maintenance costs or energy costs if you pay them will all save you money over the long term. While you likely won’t be able to charge the utilities to your tenants if they are not currently paying for them (as per their Lease), when their lease comes due or you place new tenants, put in your Lease Agreement that the tenant(s) is responsible for heat and hydro/electricity. You may have to drop your rent a tiny bit to do this, but then you no longer have to worry about expensive heating costs in the winter as your tenants will have to pay!

5. Put Up a Larger Down Payment

It’s not always an easy solution for many investors, but one of the options to boost your cashflow is to increase the amount of money you put down because it reduces your financing costs. High ratio mortgages also have a lot of additional fees associated with them, so getting out of that category saves a lot of money each month right from the start.

6. Allow Pets

I know I know, pets can cause damage and problems and pee on your new carpet. Yes, it can cost you. I discussed my take on whether you should make your rental pet friendly right here. But, if you are very selective about who your tenants are and you include in your Lease Agreement that they are responsible for keeping the premises inside and outside of your rental unit in good condition, then this is a great way to increase rent and/or cashflow.

MOST apartment buildings don’t allow pets (or they restrict the size of pet) and only a small percentage of Landlord’s out there allow pets. So, how does that help you increase your cashflow? Because you are providing a service (allowing pets) that is in great demand and tenants with pets are generally willing to pay more to keep their loyal companions with them!

It’s easy to let fear or excitement guide you when you’re investing. This list is not to suggest that you should buy very many properties where cashflow is negative or even tight. That’s a losing strategy over time because the fact is, even cashflow positive properties sometimes need you to spend money on them. As I wrote about in More than Cashflow, all houses will need work … and the longer you hold them, the more work they need. Single family homes are a great investment because of the liquidity, the mortgage pay down which builds your wealth and, over time, the appreciation. However, you will eventually need to put money into them so you don’t want to buy one that needs feeding right from the start. But, at least with this list, you have a few more options to make it cashflow from the first day you own it.

Not sure where to start to find or analyze your deals? Summer School – taking you from Rookie to Rock Solid Real Estate Investor in 7 Weeks Flat is a great way to get started as a real estate investor.


Should You Allow Pets in Your Rental Property?

Julie broad and dog

“It should be illegal to turn away someone because they have a pet”

It was the start of a hot headed debate in a local rental Facebook group I use for promotional purposes when we have a vacancy.

Landlords chimed in with horror stories of damage while tenants shared their tragic stories of having to give up their beloved four legged family member because there was nowhere to live that would accept the animal.

Personally I am not a fan of the government telling me what I can do in my rental business so I would MUCH prefer the choice. And, my advice to the tenants on the forum was to make themselves the best possible applicant for a property and they will find that there are more opportunities to live with your pet than you think there are. The problem isn’t always the pet – it’s the tenant’s application.

My experience is that a great tenant is a great tenant … if they have a pet it just means they will probably stay longer and pay me a little more rent.

But there is a lot to consider when you make this decision, including whether you are even allowed to say ‘No Pet’s’ in your state or province (sorry Ontario landlords – you can’t actually say no pets!).

Here are my thoughts on whether you should allow pets in your rentals (thanks for the great question Christine).

If you do decide to make your rental pet friendly, you’ll definitely want to write a great rental ad that sells that benefit. You’ll also want to focus on ensuring you screen your tenant and ask great questions to ensure get the best one.


How to Stay Happily Married While You Invest in Real Estate Together

Happy Married couple

Standing at the front of the room of the workshop I was teaching for Canadian Real Estate Wealth’s Investor Forum, I jokingly said “Dave’s not here so I can totally blame this one on him …

Everyone laughed as I shared a quick snippet from More than Cashflow about our two lemon properties we owned in Niagara Falls. I was making a joke, but it wasn’t even a little funny at the time. Those lemons were one of several major issues that we’ve faced together that nearly tore us apart.

Investing together as a couple has tremendous rewards.  You can accomplish far more together than you can apart. It’s not just that there are two people so you can do twice as much work (although that really helps too!). It’s that most couples are made up of two people with very different skills and approaches. That’s a big advantage. It’s also an enormous challenge.

Dave is highly analytical. When he has a problem to solve he busts out the Excel spreadsheets and runs numbers for hours. He’s naturally driven to understand all the finer details. I’ve never had to understand weird mortgage clauses or all the ridiculous insurance requirements because Dave painstakingly goes through them all. Give him a problem to solve and a good reason to solve it, and he will get the job done. Period. In coaching our clients he methodically goes through their issues – especially if there are numbers involved – and gives very thoughtful and detailed advice. He wants to run the numbers himself to make sure something wasn’t missed.

I’m a bigger picture person. I quickly get bogged down in details. When Dave tells me about all his analysis I can quickly lose patience. I am organized. I’m also a fast decision maker. I see bottlenecks and potential pitfalls quickly. I am not always right, but most of the time my sixty second decision is the same conclusion as Dave’s four hour analytical session. I know what’s most important to do and will just go do it. I understand people. I’m highly focused on communication so I am fairly particular about marketing, negotiation and anything that we do where we have to influence others. I’m also a stickler for rules. Oddly, despite a propensity for details, Dave hates rules. When I coach our clients I am focused on the overall picture – where does this person need to go and what do they have to do next?

Together we’re a pretty incredible team. We have all the major skill sets covered when it comes to investing in real estate successfully. We also tackle challenges in totally different ways and think different parts of the problem are the most important.

After coaching many real estate couples over the years I know we’re not alone. Opposites tend to attract … which is kind of cool but also kind of challenging. Not properly understood or appreciated these differences can lead to fights and massive frustration, but it doesn’t have to be like that. If you’ve ever had a fight over something only to realize you were fighting for the same result… just going at it in totally different ways, this is for you!

Real Estate Investing as a Couple: 7 Tips to Stay Happily Married While You Build Your Wealth With Real Estate Together

Tip 1: Share a Common Goal

Sit down and talk about what your ideal typical day looks like. It won’t be identical, but you probably have a lot of common ground to work from.

If at first it seems totally out of alignment, your goal is to understand and appreciate what the other person wants. You’re not going to convince your spouse of anything they don’t already believe, so there’s no point trying to sell them on having the same ideal typical day. Instead, find common ground and create a shared vision of what you want your life to look like together. With that vision firmly in place, you can then figure out how you can get there together.

For example, maybe your wife wants to spend most of her day painting pictures and you want to be negotiating deals and renovating rentals. You don’t need to do the same things. Find where you do want the same thing, like having a schedule you control where both parents can pick up the kids from school or where you take advantage of a last minute vacation deal without counting vacation days. Then, talk about what you can do to create that. The cool thing is that a lot of dreams can be reached with real estate investments, but you need to understand what you’re creating together and why.

With that shared vision, you now must stay focused on it. Every major decision you make comes back to ‘does this move us closer to that shared vision or not?

Tip 2: Make Each Other Feel Important

It’s easy to take other people for granted and for some reason it’s even easier when you are married to each other. One of the easiest ways to keep your relationship strong as partners and as spouses is to really appreciate each other and make each other feel important.

Recognize and acknowledge all you’ve got in your partner.

Sure, there are times where you may have handled something differently, but because you have that person on your team you didn’t HAVE to handle it at all. They did. Thank them for it.

Tip 3: Use Your Differences To Make You Stronger

When I walk into a property, I know within two minutes if it’s one I want to own or not. It helps that we buy in the same neighbourhoods, but I’m still a fast decision maker.  There’s still due diligence required to ensure it’s a good deal, but I won’t buy anything I don’t get a good feeling about.

That’s not a solid investment strategy though. Imagine telling your private lender, JV partner or mortgage broker “It’s going to be a great deal because my wife thinks it ‘feels good‘”?

That’s where Dave comes in. He’s got the details covered. He makes sure dozens of potential scenarios are accounted for and that we haven’t missed a surprise expense or some other issue with the financial aspect of the home.

The trick is to understand and trust in the strengths of your partner.

Some couples end up with one person on the gas pedal and the other firmly on the brake. That’s not going to get you to your ideal typical day. That’s just going to make you spin in circles.

Acknowledge and appreciate what the other person is bringing to the table and know you are stronger because of it. Listen to what they say with an open mind to make the best decision for you – as a couple. You each have to lift your foot off the pedal a little to get where you want to go … a little less gas and a little less brake and you’ll move forward! If you trust in your partner’s strengths this will be much easier to do (and your approach will probably be pretty rock solid because all angles are covered).

Tip 4: Divide & Conquer – Roles & Responsibilities

If I read every email Dave sent to tenants and partners I would lose my mind. “Why in the world would you say that? Wording it that way can result in them doing this …

I also get annoyed when Dave doesn’t follow landlord tenant rules to the letter.

I mentioned I am intensely focused on how things get communicated and I am a rule follower, didn’t I?

Those things aren’t my job though. I would do it differently, but I can’t do it all. And, I don’t want to.

To make it work, we have split up who is in charge of what. We have regular meetings to discuss the things that the other person needs to be up to speed on. And, by the way, dinner time is not when you discuss these things if you want to have a strong, loving and long lasting relationship. Set a REAL meeting. I’ll talk about this in a second. First, let’s finish with the roles and responsibilities.

Tasks to consider assigning to one person or the other? Financing, insurance, partners, marketing, renovation project management, deal finding, tenant placement, property purchase, property sale, property management and bookkeeping. And if nobody is good at it (in our case – bookkeeping) for the sake of everyone, hire someone to do it for you. Then, choose who is in charge of communication with that hired professional.

If you’re fighting about something neither of you wants to do (especially when nobody is very good at it) ask yourself when is saving money more important than your relationship? I hope the answer is never.

Those large roles break down into smaller tasks. Some tasks can wait. Some need to be handled in a timely manner. But, if I am away or Dave is unavailable, we each step in to get the job done if it can’t wait.

If you’re in charge of something – do your job. If you’re not in charge of something – let your spouse do their job.

It sounds simpler than it is. There’s a bit of control freak in most of us. But, if you can’t count on your spouse to do what they say they are going to do, you have bigger problems to discuss.

Tip 5: The Dinner Table is Not the Boardroom Table – Set Business Meetings

Real estate investing over dinnerWhen you work full time, the only time you sit down with your spouse may be dinner. That doesn’t mean it’s the best time to talk about your real estate portfolio. There’s little point in working so hard to create your ideal day together if your relationship doesn’t survive to enjoy it.

There ARE times where you have to talk about something urgently but most things can wait until you have a designated meeting. That meeting might be over dinner but plan it in advance. Have an agenda. Come prepared to discuss the problems with potential solutions. Planning ensures it’s one dinner in the week that becomes a real estate dinner. For us, we usually book a lunch meeting and go out somewhere for the meeting. That way our kitchen table does not become our meeting space. Plus, lunch out is a business expense so we can get our sushi fix and write off 50% of it.

If you find yourself turning your couple time into business time, help each other by gently saying “I can’t wait to hear about that at our next meeting. Are we still meeting tomorrow?”

Other things you may want to consider:
• No real estate talk after 8pm,
• Phones off at meal times unless there’s something important going on that has to be dealt with immediately,
• No real estate talk with friends or family when you’re socializing as a couple unless they start and keep the conversation going on real estate, and
• Designate real estate free days.

If you’re new to investing, new to each other, or both – it all feels exciting and you may not feel it’s having a negative impact on your relationship. However, over time, the lines blur and you may not see where you stop being business partners and start being loving and supportive spouses. Plus, you may find, over time that your interests and priorities shift. It could be really hard to talk about or even see it, if you’re not used to separating your business relationship from your marital relationship.

You never know … there could come a time when your spouse wants to pursue a totally different career, like being an actor in film & TV.  There’s really nothing cooler than watching someone doing something they absolutely LOVE doing. And, that’s a discussion that can’t happen unless you’re supporting each other as a husband and wife team first.

For me, the most important things in my life are my health and my family. I can’t enjoy anything if I am not healthy and I will enjoy things much less without the people I love around me. Put things into perspective once in awhile and you’ll appreciate having a few ground rules to help you be husband and wife first and business partners second.

Tip 6: Renovations and Relationships – Making it or Breaking It

Couple RenovatingThe single greatest endurance test for every relationship is how you manage a major renovation.

The surprises – there are always surprises (see Adding a Legal Suite to a Rental Property) will test you like few other real estate problems will. There’s a tight time frame, money (often a lot of it), pride and your investment goals all on the line. It’s not a small thing.

Good planning goes a long way. Plan that things will take longer and cost more than you think they will. Build in buffer time and buffer budget.

Put one person in charge of handling contractors. That person should also be good with the big picture and know the overall plan for the project – understanding where the bottlenecks are – because when the electrician doesn’t show up your entire project could get sidelined and someone needs to understand what other tasks must be delayed and if anything else can get done in the meantime.

Someone has to be in charge of shopping for the materials – the person who can figure out if the paint and flooring will look good together. Someone has to be in charge of the plans, the budget and paying the bills.

There’s a lot going on. You might make a mistake. Your spouse might make a mistake. The person who makes a mistake will feel bad enough about it without you adding to it or saying ‘I told you’. It’s a lot of pressure and there’s a lot to learn. Be kind and supportive to each other.

You don’t know what surprises will pop up but you can expect to be surprised. Try to laugh about it. It’s not anyone’s fault that there are three layers of flooring to get through, that the pipes weren’t where you expected them to be or that the electrical behind the walls is a mess. Nobody could have known. That’s part of the fun of renovations – you really never know what you’re dealing with until the walls come down. Deal with it and move forward.

Tip 7: You Win Together and You Lose Together

Celebrate your ‘team’ wins!!

Years ago, we coached a couple that wanted to fire their property manager and take over management of their property themselves. The biggest issue we faced in helping them was their own issues as a couple. They didn’t have established roles and responsibilities, and worse, it seemed like it was a contest regarding who was doing more work and, therefore, who should do the next task required. They were fighting about who should clean, who should show the house to tenants and who was booking the carpet cleaning. The thing they weren’t realizing is: you lose together or you win together – there is no in between.

There are times you have to pitch in and help your partner. Maybe they are away, sick or just overwhelmed. There will be times they do that for you too.

If it were a hockey game, you could put this into perspective. Sometimes there’s an injury. It’s not possible to say ‘Well, he’s out. We’ll just stop playing until they can play again.” Other people on the team have to step up. Same with a mistake. Someone on the team might lose the puck to the other team. Remember it may have been a bad pass to begin with or possibly he was tripped. It’s not always so simple as to say it’s ‘all their fault’ and it doesn’t matter anyway. The most important thing is to rally together and get back in the game.

Real estate investing is not always easy and it definitely can add stress to a relationship when something goes wrong (and something will go wrong – that’s just how it is). You’ll need the support of your spouse to get through the tough times even if they aren’t your partner. If they are your partner, you need to know how best you’ll work together to create a life AND business you love to be in together.

Other Articles You Might Like

>> 5 Things to Look for to Put in a Legal Suite

>> Investing Goals: How to Analyze Your Next Real Estate Investment Deal

>> How to Find a Great Realtor for Your Real Estate Investment Deals

Side Note: One of the greatest gifts we gave ourselves as a couple to improve how we communicated with each other and how we work together was attending a Couples Retreat run by Philip McKernan. It’s not for everyone, but it is for couples who love each other and want to be stronger together. This is not a paid endorsement … I’m just a really happy and grateful client.



Image Credits: Dreamstime.com


Are You Celebrating Your Real Estate Goals Too Soon?

victory hands up

The two most dangerous words in the English Language are ‘Good Job’” ~ Terrence Fletcher, instructor in the movie Whiplash (played by J.K. Simmons)

You’ve pushed yourself.

At some point, probably even recently, you had to work really hard to overcome an obstacle. That obstacle could have been finding an investment market area that makes sense for you and your goals. It could be building the right team to help you with a major renovation. Or, it could be finding two new joint ventures to buy four more properties this year.

Whatever it was, you moved yourself closer to creating that ideal typical day you want to live.

That’s a cool thing. You should pause and pat yourself on the back for a moment, but the work is not done.

If you are ok with where you are at – you are living your ideal typical day and you feel fulfilled – cool. But if you aren’t happy in your job, or there is more you want from your life … if there are things you need to do to still get there, your work is not done.

There’s a danger in celebrating progress that isn’t goal achievement. You can run into motivation problems if you pat yourself on the back too much for a step that moves you forward but doesn’t get the goal achieved.

Let’s take this to an example to explain. I will use a subject that I know personally – book publishing (see More than Cashflow).

Let’s say you too want to be a published author and sell your book on Amazon.

At what point do you celebrate your achievement? 

There’s a massive amount of work that goes into research and preparation before you even start writing. It’s exhausting.

Then, you start writing. Every chapter feels like an accomplishment.

If you successfully push yourself to write almost every day you might have a first draft after a few months. (Even with over ten thousand words pulled from articles I’d already written, my book still took me eight weeks to write.)

A draft is complete. Surely it must be time to celebrate?

Nope … you’re still a long way from selling that book.

You still have to go back and forth with the editor …. you have to rewrite many of the chapters. You have to read that book so many times you’ll never want to read it again. At long last, you have a final fully edited version – surely you can celebrate because you’re done writing, right?

Well, there still isn’t anything you can actually sell to other people yet. You have to get it into a layout that is Kindle and print compatible. You need an ISBN number, a cover, a way to sell it, marketing descriptions, accounts so you can have listings on sites like Amazon and then, most importantly, you still need people to sell it to.

Sure, you’ve come a long way but there is still so much work to do.

You haven’t achieved your goal until you’re receiving money in exchange for your book. That’s when you celebrate.

I’m not saying you never look at how far you have come.

In fact, when you feel discouraged and you feel you’re getting nowhere, that can be the best thing you do. Take a quick look back. And then get back to work.

We all ride a roller coaster of emotion when we’re pushing ourselves to achieve new and cool things in our lives. It’s scary. Once in awhile something really positive will happen and you will feel like you can do anything. It’s a rush! It’s confirmation that you’re on the right track. Most days you just have to keep pushing forward. You might feel tired, and you’ll probably question whether this is going to work.

You will most certainly wonder if you are doing the right things.

Then something will go wrong and you will wonder if it’s even worth it to keep pushing. In those moments, it’s helpful to give yourself credit for what you have achieved. You will gain confidence from realized the obstacles you’ve over come. But you should only pause for a moment because it’s even more important to know that there are still many more steps to take to go forward to reach your target.

We as humans have a tendency to count things as achievements when they aren’t really. Yes, it was hard work, but if it’s not the results you set out to achieve, you’re not done yet.

Add to that tendency, we are the most motivated when we start something and when we are near completion. We are not motivated in the middle.

What does that mean?

It means there’s a real danger in taking your foot off the gas for very long when you haven’t reached your destination. When you’re tired from working so hard, it’s easy to tell yourself you have worked hard and deserve a rest. Call it a rest. Call it a break. Call it whatever you want.

Your intention is that the pause is temporary. You mean to get back to it … you really do. But, you don’t.

It’s not your fault that you feel that way. It’s human nature. It is your fault if you don’t recognize it and push past it. Because now you know.

Complete the real estate goalsIf you’ve ever done a running race like a 5km road race, you know what I am talking about. When the starting gun goes off … you feel great. You leap off that starting line like you’re going to be first across the finish line. Your legs are fresh and you’re excited! It feels like all the people on the sidelines are cheering JUST FOR YOU.

2km in there isn’t anybody cheering and the effort it takes to keep running starts to weigh on you. Your legs are feeling heavy …  3km in you think about taking a walking break but you keep going. When you hit 4km … there’s only one little kilometer left. Suddenly you realize you can do it. You round a corner and see the finish line coming into site. You start to hear the people cheering. You start running faster. You forget about your legs feeling tired and you race to cross the finish line feeling exhilaration and pride.

The problem is you have to get yourself through that pesky middle. You have to push past kilometer 3 when you want to take a rest and probably quit.

People are the most motivated when they first start something or when they are almost done. What are you going to do to push through that pesky middle?

One part of the solution is in knowing what should be celebrated and what you should focus on.

I think there is a danger in telling yourself ‘good job’ for the wrong things. You can say ok cool I’ve signed up for the race. Ok cool I’ve done 30 training runs. You can congratulate yourself for showing up for the race but you MUST finish the race, or you’re not done.

So what can you do differently?

First, set your goals in terms of what will occur.

Set your goal in terms of something you have full control over.

For example, many investors will set their goal to get two deals done by June 1st. That might happen but there are so many factors that you can’t control that could prevent that from happening (the right property doesn’t come up, the seller wants to close on May 20th, you get outbid in a bidding war…). So instead think in terms of what you WILL do to move yourself toward that goal. What are things you can certainly do? You can walk around your neighbourhood every Sunday to identify new opportunities. You can make offers on every deal that fits your criteria. You can spend 15 minutes a day reviewing MLS listings and sales in your area. You can hire a new realtor. There are many things you can most certainly do to move yourself forward.

Aggressively do 3 things each week to move forward. Period. You WILL do those things. Set your goals in terms of what you CAN do.

A good goal is not to ‘find two new private lenders in the next 30 days’. A good goal is to speak to the next 10 people on my list about getting referrals, follow up with my best lender to see if he wants to do another deal, get a speaking gig at the local investment club to share tips and let folks know I am looking for investors, and submit three article proposals to local newspapers (by the way, if you’re not sure how to do any of this, the Ultimate Money Raisers Mastermind could be the perfect thing for you). You have 100% control over all those items and every single one moves you towards your goal achievement. Those are good goals.

And if you’re a full time investor you should be AGGRESSIVELY doing three things every day to move yourself towards the important goals that are going to help you create that life you want to live.

People will quit when the website is complete because it felt like so much work. They won’t do what they need to do to actually get traffic to the website and attract new investors or clients because it was so much work just to set that sucker up.

People quit after they master their ‘5 Why’s’ to raise money for their real estate deals.

The work that matters is getting people to see your website. The work that matters is ACTUALLY having those conversations with people who could be the perfect fit to invest in your deals. Everything else FEELS like work but it’s not goal progress.

And, now you know it too! See you at the finish line.




1st Image Credit: © Fuzzbones | Dreamstime.com
2nd Image Credit: © Alphaspirit | Dreamstime.com 
Credit for the concept of goal achievement goes to Kevin Hogan. I'm not sure if I read it in one of his books or heard him speak about it in one of his CD programs, or at his Influence Bootcamp, but I am certain it was him I heard first discussing it. Thanks Kevin.

How to Break Up a Real Estate Joint Venture

chain breaking

What if my investor wants out of the joint venture deal?

Our worst partnership was created when I was more focused on my new career after graduating from my MBA than I was on our real estate portfolio. It was 2004. Dave had begun to dream really big and had met someone to work with on these big plans.

This guy was a creator and innovator. He had started a company that was growing rapidly and was already winning some business awards. He was an idea man and was well connected to a lot of people with money who would be keen to put it into real estate.

The two of them thought that they could create a syndicate with this guy’s contacts and Dave’s expertise. Dave spent hours and hours meeting with him and planning the syndicate. They did a couple of deals together and planned to do a lot more.

I was busy with school and was not interested in a syndicate. I also didn’t think this was the guy to do it with. He was controlling and yet scattered. He insisted on being involved and yet was hard to get in touch with.

Dave was frustrated with the challenges he faced in working with this guy but continued to push forward as he saw the potential. When they had the first two under their belt, Dave found a couple of other ones. Dave made offers but Dave could not get him on the phone. He had to let those deals go (those deals promptly doubled in value so Dave was pretty upset he’d relied on this guy instead of doing them without him).

He couldn’t even get in touch with this guy to discuss the properties they already owned. Sometimes it would take 2 weeks before Dave would hear back from him.

Eventually Dave accepted it wasn’t working. So he needed to break up the joint venture.

This is the only time we’ve had to break up a joint venture. We quickly realized how important it was to only work with our ideal investors. So what are your options?

First, prevention is the best medicine.

You may pursue Joint Ventures (JVs) for flips, big deals like apartment buildings or commercial developments and your specifications of what you’re looking for may be different than what we do (see structuring real estate Joint Ventures). For us, we tend to look to private lenders for money for anything outside of buy and hold residential deals and rent to owns. There are a lot of reasons for that but the biggest reasons are the increased risks and the increased need that someone has to be on the same page as you for the future financial requirements of a deal (we’ll be teaching you how to find private lenders and joint ventures in April in Toronto). We prefer to handle those issues on our own and work with a joint venture for the more stable investments like small multi unit or single family buy and holds and rent to owns.

In those cases you want to make it clear that you are looking for a minimum of a five year commitment. You want this even for rent to owns because if the deal doesn’t close as expected it likely will be a property you hold for close to five years (or longer) (see why rent to own investing can stink).

In our agreement we state a minimum hold of 5 years or an increase in value of 25% before either party can exit.

Despite the prevention measures, life happens. If it’s time to exit, someone needs out or the relationship is challenging and you want out, what are your options? These need to be spelled out in your joint venture agreement, but here’s a few options for you:

Right of First Refusal – if the term has completed and one of you wants out the other partner has the right of first refusal to buy them out. This ensures that either party doesn’t turn around and try and sell the property from under the other party. It gives the other partner a chance to buy the person out before they sell it to the market (a third party).

What does that process look like? Your agreement needs to spell out how you determine fair market value. For most people you will get an appraisal done and if both parties agree with the appraisal or the value then the one party may buy it from the other for that price. We allow for the average of two appraisals to be taken to determine fair market value in the event that the parties don’t agree on the value of the first appraisal.

Splitting the Chocolate Bar – Now, if you have not reached the five year term, if that is what you agreed to, (or the value hasn’t increased by 25% as per our agreement) and one partner wants out, our approach to this is something we call “splitting the chocolate bar”. Other people might call this a shot-gun clause.

If one party wants out before the contractual time frame this is how we handle it.

Imagine you have a chocolate bar. One party breaks it in half and the other one picks which side they want first. If I am breaking it to share I am going to split it as close to the middle as I can so you don’t take a bigger piece from me.

If, however, I am a crazy person that doesn’t like chocolate, and I don’t want to end up with the chocolate bar, I should break the bar so that there’s a bigger piece for you to take so you are more likely to take it.

Taking this to the property to explain the concept: the person who chooses the value would be the one that wants to break the contract. The other person determines if they will buy the property at that price or sell it to you. If you want me to buy you out and you’re choosing the value, you would be wise to offer it to me at a slight discount so I am motivated to buy it from you (or it’s attractive for me to bring someone else in to replace you in the deal). I basically get the choice of whether I buy it from you at that price or sell it to you at that price. If you get too greedy I can tell you to buy it from me.

For example, I know the property is worth $240,000 but I want out. When I decide the value of the deal I might say $220,000 to give the other person an incentive to buy from me. If I say $240,000 there is a good chance the other party will say “Ok I’ll sell it to you for that!”

If you are in the position where it’s favourable to buy out your partner but you can’t qualify for financing or you don’t have the cash then you can consider bringing in a new person to replace your investor. If they have made the price attractive enough and it’s a good asset, you should be able to find someone to take their place. You could also look at private money if the cashflow is strong enough to cover the higher cost of a private mortgage. And, if all else fails and you can’t buy them out when they want out no matter how attractive they make it for you, you’ll have to put the property on the market.

How Do You Determine Fair Market Value?

It’s easy for us to determine fair market value for most of our properties because we are hands on and very active in the market. We know what is selling and for what price. But for the purposes of splitting off a partnership or where fair market value needs to be determined, we spell it out in our agreement how the valuation will be done.

You should include something in your agreement that spells out how fair market value is calculated. Our agreement typically states that each party hires an appraiser and take the average of the two appraisals.


We have a term in our agreement that says that the property will be held until the property appreciates by 25%, or we’ve held the property for 5 years. When one of those conditions is met, either party has the right to sell – and the other partner basically can’t refuse. This is when the right of first refusal kicks in.

If one of you wants out before either of those conditions is met, for example if your partner wants to sell after three years and the property has only gone up in value by 5% it’s probably not advisable to sell. In that situation you would use the ‘splitting the chocolate bar’ method to separate.

One of the questions most people will ask you is when they will get their money back. As we’ll discuss shortly, the most important thing for you to do is align your investments and your strategy with the right people. In our case, buy and hold real estate investing, we’re always holding for the longer term. Our ideal partnerships are those that really don’t have a need for the cash anytime soon. We want to hold for as long as possible to maximize the return and profit. That can take more than seven years depending on where you bought in the real estate cycle. We would prefer someone who is continuing to generate income and is using this as part of their overall income strategy to grow their wealth. As a result they won’t need their money out until we believe it’s the best time to exit. But regardless, everyone wants to know when they will get their money out so having something in your agreement that shows them there is, in fact, a way to end and get their money out will give them comfort.

And since we’re talking about breaking up a joint venture, let’s talk about a darker subject.

What Happens If Someone Dies? The incapacity Event

This is a subject nobody likes to consider, but it is important.

For your own comfort and that of your loved ones, you should know what is going to happen to your properties if you pass away. For your partners assurance they need to know you have a plan.

For your assurance you need to know your partner has a will so the property doesn’t get tied up in probate hell for years.

We spell this out in our agreement and you should too. It outlines what happens if someone can’t make decisions anymore or they pass away.

In our case, if Dave or myself were to be incapacitated, the other would just take over. We run our business together and while Dave handles more of the day to day operations, I am capable of running the entire business. If we both were to pass away, we have a real estate experienced lawyer who is our executor and he would take over the managing role.

We have it spelled out that he would contact the JV partners and review the options.

One of my coaching clients was concerned about what would happen if she passed away. Her husband is not involved and she fears the amount of stress it would put on him if he had to manage the properties himself. My suggestion to her was to hire a property manager for at least one of her properties so that she built a relationship with someone who could take over all of the properties if something were to happen to her. I also suggested she create a spreadsheet that outlines all the important information for each property (including bank account numbers and passwords). Keep that locked in a safe and up to date.

It’s not a foolproof plan, but it’s much better than no plan at all.

If something happens to your JV partner and they’ve qualified for financing what is going to happen to their side of the deal? Does it transfer to a spouse? Do they have insurance that will pay out the debt? Just like you have to cover your side of the deal, you also need to understand they have their side covered.

In most cases, in the event of death, you’d probably sell the asset or the surviving party would buy out the estate of the passed partner. The important thing is that there is some commentary around that. Ensure you have that conversation with your JV  and with your lawyer.

As with every legal document there are a lot of areas to cover and this is not every single detail. I am also not a lawyer nor have I had any legal training. This gives you some critical elements to discuss with your real estate specializing lawyer when you get your own document drawn up but should not replace the advice of legal counsel.

Joint ventures are a great way to grow your portfolio but it’s a business relationship. It’s important you treat it like that and consider the ways to exit the deal as well as all the ways you’re going to find people to enter a deal with.

You are about to become a compelling conversationalist that attracts money right to your door.
Eliminate the fear you have around asking for money for your deals – forever.

Natural born salespeople need not apply – this is for folks who aren’t sure how to structure their joint ventures and lending agreements. This is for people who feel uncomfortable pushing their money raising agenda in front of people. And, this is absolutely for people who want to learn how to be comfortable AND confident when they talk about their deals with other people.

There’s no fancy techniques or slick selling tactics. What we teach is what we do … We don’t teach weird sales tactics. We teach you how to have people COME TO YOU!

You don’t have to register today, but you could miss out if you don’t.

Get the details and get registered right here ===>>http://jointventurerealestate.ca/

What is a Sandwich Lease?

Julie Broad

It sounds more tasty than it is … a sandwich lease is a creative real estate investing strategy that you’ll usually hear about when someone talks about no money down and no bank required type deals.

The advantage is that you, the investor that puts the deal together, can earn a bit of upfront cash along with pocketing some monthly cashflow and profit when the final sale on the property occurs.

If you are able to pull it off, it really is a strategy where you can do real estate deals without going on title, without talking to a bank, and without having much money of your own.

Sounds pretty good … so what is it? And are they as tasty fun as they sound?

I had some fun shooting a video to give you an overview of what exactly is a Sandwich Lease and how does it work in Canada.

Bottom line – you can’t eat paper as I found out in the video – and Sandwich Leases are possible in Canada, but are they worth the work? You’ll have to decide for yourself. For us to create the life we wanted with real estate, we found that it was much better to focus on financing our deals with private money, joint ventures and vendor take backs. That allowed us to do deals where they fit our Properties with a Cause model, attracted great tenants and grow our portfolio with fewer hassles than we were finding with the creative strategies like Sandwich Leases.

If you liked this, you’ll probably enjoy the following articles and videos as well:

>> 7 Ways to Be a Mediocre Real Estate Investor

>> Someone You Must Add to Your Power Team

>> 5 Things Every Real Estate Investor Should Know About Money and Credit

>> How to Be the Smartest Real Estate Investor You Know

>> How to Use RRSP Mortgages to Finance Your Real Estate Deals

What is a Sandwich Lease?

1st Image Credit: © Kicsiicsi | Dreamstime.com - Beauty Girl And A Handsome Boy Eating Sandwich Photo

The Best Type of Home for Rent to Own Investing

house keys

The tenant ditched on me. Now I am stuck with this house 20 minutes out of town that I can’t find another tenant for. I guess I will try to sell it but the market is not very good.

Our client was pretty upset. Before working with us, he had taken some training around rent to owns. He was told that tenants who choose their house for a rent to own are more committed and more likely to buy. When this family asked him to buy this house for them, he thought it was the perfect opportunity to help someone and make some extra monthly income.

They were making a great income. Their credit was poor because a few years back one of them was injured on the job and they fell badly behind on their bills. They are all caught up now, and just need a bit of a hand to become home owners again.

So – he happily purchased this home for them and set it up as a rent to own.

Unfortunately, it’s just not true that a tenant picking their home is more committed than if you pick the home and 14 months into their contract, they decided to move out. Now our client was stuck with a house that wasn’t easy to get rid of.

Rent to own is when a tenant rents your property with the option to purchase it. They move into it with the intention that they’re going to buy it and they have a piece of paper that gives them the option – not the obligation – to purchase it. You can’t sell it to anybody else because they have the option to purchase it.

You set the future purchase price at the beginning. You charge higher than market rent with a portion of their rent building up over time towards their purchase and they give you a larger sum of money that serves as their option fee.

Rent to owns offer you a way to sell a home without paying realtor commissions. It is also easier to manage and gives you higher cashflow each month than a regular rental, but there are also some really good reasons not to make rent to own investing your entire business model.

The biggest issue, next to ensuring you have properly screened and educated your rent to own tenants, is what kind of property will work the best for rent to own investing?

If ANYTHING goes wrong with the house – you are responsible. The tenant can walk away.

If the tenant doesn’t want the house or decides the value has dropped too much, you’re stuck with a home that is worth less than you’d expected.

If the prices rise up rapidly, the tenant can buy at the predetermined price, turn around and sell the home, and keep all those extra profits for themselves.

You take on all the risks, and will not benefit if the market has a quick rise.

So – your first consideration should not be what your tenant wants – it should be what works best for a rent to own investment model.

What is the home type that is the easiest to sell, the most stable in value and generally the easiest to rent out?

In every single market in Canada, and probably in the world it is the STARTER FAMILY HOME. The home type that first time home buyers enter the market with. The only catch is that this is slightly different depending on the market. In Toronto and Vancouver, the starter family home is arguably a condo. Most people in Toronto enter the home market through a condo and later, as they can afford it, they move into a house.

In some other areas in Canada, like Surrey, BC or Brampton, ON for example, it’s a townhouse. In most average sized cities, it’s a 3 bedroom 2 bathroom house. The starter family home for your area may be different but it’s still the category that gives you the lowest risk for rent to own. (We only do rent to owns that follow the same model we use for Buy and Hold – Properties with a CAUSE).

The key to ensuring you make a great return and you set your tenant up for success is to buy a property for UNDER the average price in the area and ideally under their market value.

Why You Should Focus on Buying UNDER the Average Price for an Area:

If you stay just below that average price you’ll enjoy a greater demand for that property because it’s more affordable. If you go too much below the average, however, you’re probably just getting into rough neighbourhoods.

In Nanaimo, BC where we’ve done the majority of our rent to owns, the average price has been around $360,000. We’ll typically look at buying houses for around $280,000-$300,000 – so around 20% below the average. These homes usually need some cosmetic work which boosts their value before we find tenants for them.

By buying properties a little below the average price in a good, safe, family friendly area, we ensure that our product (the home) has more exit options for us if our tenant buyer doesn’t buy.

We know a few guys that focus on luxury homes for rent to own but when you buy an $800,000 house that will only get $3,000/month rent as a regular rental, what do you do if your tenant doesn’t buy it from you and the market is too soft to sell it without taking a loss? You can try to do another rent to own, but it’s a small percentage of the rental market that is a good fit so you might have to wait a few months while you find someone new. In the meantime, how large are the mortgage payments that you have to make?

We talk more about this as it relates to buying a home the tenant picks in What Comes First? The Tenant or the Property.

Always ensure your rent to own will at least break even as a regular rental.

A few years ago in Nanaimo the property assessments dropped across the city. Right after they were mailed out to the houses, we had several rent to own tenants say they weren’t going to buy. They were walking away. We suspect they took a look at the assessed value and thought there was no way they were going to pay the purchase price for the home. In most cases, their home was worth a lot more than the assessment reflected so this was really frustrating. Rarely does the assessed value accurately represent the market value of the home – (as I discuss in the video if you click this link). It’s in the ball park but it’s not accurate. Unfortunately our tenants made decisions without discussing with us and we received several move out notices all at once.

It was not a happy moment for us as we wanted the tenants to buy the homes from us.

We considered selling but the market was soft and after realtor commissions, we wouldn’t make our investment partners a good return. Thankfully, we had the option of renting each of the properties out as a regular rental if we wanted to. These homes, as regular rentals, are pretty close to neutral cash flow but at least they cover the costs. If you buy homes for rent to own where the numbers don’t work as a regular rental you create one less exit option for yourself.

Choose a Great Quality Property in Good Condition

You don’t have to buy it in great condition but when you offer it up to folks for rent to own it must be in good condition to get the best results.

The rent to own tenant is way pickier than your regular tenant because they plan to buy this home. It’s permanent in their mind. Tenants are often ok with not having a new roof as long as it’s not leaking or a less efficient furnace if they can use the fire place. They will put up with a lot more stuff because it’s temporary. They’re just renting and there’s an end to this situation. They also don’t have to spend money when it is time to replace the roof or put in a new furnace. A rent to own tenant looks at the house thinking that they will need to spend that money if it’s not already done (just like a potential home owner would if they were looking at buying the home).

Layout issues can really be a problem with a rent to own as well.

We bought one property for our rent to own program that rented in a split second, but we tried to fill it as a rent to own for a month without any interest. It’s in our primary neighborhood where we have had a TON of success with rent to owns and the house is adorable! We were shocked when we couldn’t find a rent to own tenant for it but it’s because the rent to own tenant is WAY pickier than a normal tenant.

The problem with this particular home, we came to realize, is that it has two bedrooms up and two bedrooms down. It also doesn’t have a garage. Tenants will put up with this layout and lack of garage if the rent rate is right, the place has charm and their kids are close to their school, but someone who is looking to buy the home, is much less keen.

We probably could have eventually filled it as a rent to own if we waited long enough, but we didn’t want to carry the costs longer than we needed to so
we turned it into a rental. As a rental it has filled and stayed full for many years. Lessons learned along the way but we share so you won’t have to learn the hard way.

There are many reasons that rent to own investing could be a good option for your next property (or as an exit out of a property you already own), but you want to make sure you’re buying homes that make great investments with multiple exit options. It doesn’t matter if you’re starting with a qualified tenant or an investment property – the most important thing to always remember is that you’re an investor and the deal has to make sense today and in the future.

Good luck!

And if you want more on rent to own investing – you should definitely check out these additional articles we have on our site:

The Ultimate Guide to Creating a Real Estate Investment Deal Summary

happy working

Are you planning on raising money in a joint venture or from a private lender? Are you ready to have conversations to get the cash? Let’s just see …

Imagine you have $100,000 to invest in a deal. Who are you going to work with?

Meek Megan, who has slouched shoulders and lowered eyes, looking away from you frequently, saying:

“I know you’re busy so I want to thank you for taking time out of your day to meet with me. I would like to talk with you about borrowing $50,000. It’s for this deal I am working on. I think it’s probably a good deal. You know my realtor said it is probably worth about $300,000 and I am buying it for $275,000. I have tried everything to come up with the money. The bank says they will finance me if I can put down 25% so I have to raise that money. I know real estate isn’t your thing but it would be such a big favor to me if you loaned me the money for the deal.”

Or, Confident Courtney, who looks you in the eye, holds her head high with her shoulders back and says:

“I am so glad I had time to meet with you today. Thanks for your interest. This deal I am working on is pretty cool. I have an accepted offer on it for $275,000 and it’s worth $300,000. After a paint job and some landscaping which will cost less than $5,000 I believe we’ll get $2,000/month rent for it. It’s in a really great area and I already have a few tenants interested in it. I’ve got a lender lined up, I just have to bring in a partner who can qualify for financing and put in the initial $60,000 required for a down payment. I can’t make any guarantees, but based on mortgage pay down and cash flow, even if the property doesn’t go up in value a cent, the person I work with to fund the deal should make at least 10% a year on the deal each year, probably more.”

Clearly, Courtney is getting the money.

But, Megan and Courtney had the same deal to offer so what was the difference?

Coming into any conversation confidently is trickier than it sounds. Few people can fake confidence, so you have to build it from within.

I’ve always found that if you’re worried that someone is going to object to something or think you’re not experienced enough, that is the VERY thing they will say or think.

You have to believe in you and what you’re offering before anyone else will.

This has next to nothing to do with having the right documentation and everything to do with you, your expertise and your ability to communicate the offering. The right paperwork and marketing materials really aren’t part of a successful conversation, except to make you feel like a prepared professional. If you’ve taken the time to develop an extensive deal summary, or business plan for your investment property, you’ll have thought through what you’re offering and will feel like you are bringing a lot of value to the table.

So what do you need in a deal summary?

The first thing to prepare for any conversation are your answers to the 5 Why’s. These are the key points you’re going to cover in your presentation. And, they are the things you’ll figure out the answers to when you create your deal summary.

Those questions are :






This video walks you through these questions and explains, briefly, what each means:

Your deal summary, which is pretty much a business plan for an investment property, addresses these questions. Creating the deal summary is less for your prospective partner than it is for you!

<NOTE: You should never SEND this deal summary to a potential investor via email before you meet with them. It’s probably more beneficial to send it to a space station than it is to send it to a potential investor in advance. Emailing a deal summary – no matter how beautiful or comprehensive it is – does not raise money or uncover partners.>

You might expect that a business plan is important as a presentation tool but the reality is that the business plan is critical for you! You should rarely, if ever, actually use it during the course of a presentation. It’s great follow up material. It’s nice to mention in the conversation, but pulling it out in the middle of a conversation, will completing change the focus of the presentation. Try it … when it doesn’t work, go back to keeping it in your bag for the end.

We no longer create a deal summary for each of our deals. We don’t need to. We know what to say and we don’t even give a copy to our investors so it’s not necessary anymore. We have past deal summaries to show them as examples and we ALWAYS prepare an executive summary (1 page document with a picture and key numbers of each deal). But, when you’re first raising money, the deal summary is a CRITICAL piece of your preparation.

Doing the work to create one forces you to spend time thinking about each of these key questions. You will have to do research for your specific market area and deal types. When you carefully think through a business plan you will identify gaps in your plan, work to correct them and this process will build your expertise and confidence. When you write the deal summary you will also be crafting the answers to questions that will come up from partners and lenders.

Well thought out answers to questions demonstrates that you are a professional and have considered all the elements.

With that in mind, here’s a quick review of all the main sections that should be in your Deal Summary:

1. Introduction:
This should be no more than 1 or 2 pages and is a quick overview of who you are, what you are trying to accomplish, and what’s in it for the Partner (quick overview of the five WHY’s).

2. The Management Team:
Who are you? Who is on your Team? Why would I want to partner with you (vs. the competition)? “Money follows Management” so if you are light on experience, you have to be very strong in at least one other area (market area expert, huge network, relevant trade expertise, etc.). Then support that with a team that you can confidently boast about. For instance when you reference your team, you could say my realtor is the #1 investment property specialist in the city, my accountant owns over 10 investment properties himself so understands our investing strategy, or my brother has been a licensed carpenter for over 10 years and specializes in low cost renovations. Your prospective Partner is always most concerned with “what’s in it for them?” They want to work with someone who is confident, capable and has a great team (WHY YOU!).

3. The Opportunity:
Where are you investing? What are you investing in? And most importantly, WHY are you investing there? This section is where it’s imperative that you have done your market research. (Please note: we do not teach you how to properly conduct your market research in this program. If you wish to learn how to do your due diligence on a market, please contact us at info@revnyou.com for a special offer on our program.). Again, your Partner will want to know the What, Where, and Why of your opportunity. This section should include enough details to give your Partner an idea of where their resource (money, time, expertise) will be going without overwhelming them with pages and pages and pages of data. (WHY NOW? WHY THIS MARKET AREA?)

We have a Properties with a Cause Model that we follow and always discuss.

4. The Investment Analysis:
The “numbers” are not as important as you might think. Most investors just want to feel confident that you’ve done them. This section ensures that you have run the numbers carefully and have thought through the strategy. (WHY THIS DEAL? WHY THIS STRATEGY?)

You might be focused on how much your investor can gain but most investors are more worried about ensuring they don’t lose their money. Most people react to fear of loss or the threat of pain more strongly than they do the potential for gain. You need to show them that you’ve thought through the risks and are taking care to mitigate them where you can.

Once a potential investor has a basic understanding of what they can gain, they typically turn their attention to all the ways they can lose their money in this deal. The “numbers” in this section will demonstrate that you have covered all the bases of this investment opportunity. Include enough detail and clarity that the person can follow along and understand “what’s in it for me” from their perspective.

Also see, how to analyze your deals, and why you’re the only one that can.

5. The Joint Venture Structure:
This part of the summary clearly identifies each persons roles and responsibilities are for the duration of the joint venture. This article discusses JV Structure.

6. Exit Strategy:
When will I get my money back? How do I know this will work? Why are you using this strategy? What happens if it doesn’t sell?….we can’t rent it?….the market crashes? This section should be focused on answering these questions. Your investor really just wants to know that they and their money/credit/resources are protected (WHY THIS DEAL? WHY THIS STRATEGY?). This section really becomes a lot of the material you’ll use when you handle objections in a conversation (although, the more confident you are with your strategy and what you offer, the fewer challenges you’ll face from potential investors).

7. Appendices:
This is the last section of the Deal Summary and is not always necessary. We use this section to demonstrate our expertise and market area knowledge. It really supports what you’ve already demonstrated in the other sections. Here’s where you can include articles you’ve been featured in, references to awards you’ve won, key references in the media to your market area or your strategy, and anything else that would be useful to reference regarding the deal. Testimonials from other happy partners or investors are also a nice touch for this section. If you’re a renovator, before and after pictures can be a great piece to add here as well.

For us, if a potential investor goes through the Appendices in detail, it’s a good sign they are probably not our ideal investor. Most people will just flip through it to see if anything catches their eye.

The Appendix, for us, is a good place to keep really important credibility boosting pieces or high value articles, that you might want to reference in the future.  can really have anything you want in it but please check out the sample deal summaries we have included to get a sense of what we use. Make it your own and of course, make it useful!

Nothing replaces the face to face part of raising money. You have to have a lot of conversations to get cash for doing multiple deals. Having a high quality and well thought out deal summary will boost your confidence and reassure an investor, so it’s important if you’re new to raising money or investing, but it’s not the most important thing you can do. The most important thing you can do is become an area expert, have a great team, master your strategy and learn how to have a compelling conversation that you control.

If you need help with any of that … April 25th & 26th, 2015 we’re holding our final workshop on Funding Your Deals in 49 Days – the ultimate workshop for learning how to have conversations that you can use to have people ASK YOU about investing in your deals. You just might want to mark your calendar and plan to be there. Details coming soon.

Does Your Real Estate Website Suck?


Have you heard this story?

The sun and the wind were hanging out watching a man working in a field. They were bored so they decided to see who could get the guy to take his jacket off first.

The wind steps up and says “I am strong … you watch this”.

He blew as hard as he could. He huffed, puffed and gusted, but the guy actually zipped up his jacket and wrapped his arms around his body to hold the jacket tighter.

The sun smiled and said “I’ve got this.

He pointed himself right on the man in the field and started shining brightly.  Within a minute, the man wiped sweat off of his forehead. Then, a few minutes later, he unzipped his jacket. Soon, the jacket came off.

The wind is like facts and figures and the sun is like a story.

When you use facts and figures to try to convince somebody to do what you want, it often causes them to cling to the very belief you wanted them to shed.

When you tell a story that offers a different context, the listener doesn’t even realize you’re persuading them to see it your way; Their defenses come down and the jacket comes off.

Humans are not rational. We want to believe we are rational, but we are emotionally driven beings.

This is where the majority of real estate investing websites fail … and fail badly.

As an investor, you probably feel like much of your decisions are rational. The result is that you believe your website needs to speak to a rational person. That makes your website incredibly boring and like all the other boring real estate investing websites out there.

The problem is you’re trying to influence others by being the wind, when you need to be more subtle and persuasive like the sun.

So what else are you doing that makes your real estate website suck – and what you can do to make it stand out in the minds of your visitors?

Real Estate Website Mistake #1: Being Everything to Everyone

Too many real estate investing websites try to cater to a ton of different target markets. Your website shouldn’t be trying to attract JV money, home sellers and tenants all on the same site. Besides the fact that your tenants are probably not going to be too thrilled to see how much money you make off of their rent, it’s not going an effective marketing strategy to be everything to everyone.

Make your website focused and specific.

Yes, this means you’ll probably have to create three different websites – one for each target market. Or, maybe you don’t need a website at all. If the choice is a confusing website that tries to cater to everyone and no website at all, choose no website.

Real Estate Website Mistake #2: I am SO Frickin’ Wonderful

Your website should be about one person … that person, however, is not you.

Too many websites seem to cater more to the ego of it’s creator than to it’s prospect. Your website should be focused on what’s in it for your website visitor and what you want them to do when they arrive – not telling the world how great you are.

Take a look at your website and see if it’s first page is all about YOUR PROSPECT or ABOUT YOU. If it’s about you, it’s time to make a change, right now! You are great – I am sure of it – but the visitor is most interested in what you can do for them. Make it clear on the first page what you are offering to them:

  • On a rent to own website, instead of saying: “We have 7 years of experience helping tenants become home owners.” say: “Bad credit? Banks said no – again!? Home ownership is still possible for you – let us help!”
  • For a property management or your rental website, instead of saying: “Two time award winner of cockroach free rentals” say “No more dirty basement suites for you – beautiful well maintained homes with landlords that care at prices that fit your budget.”
  • On a website to attract investors money, instead of saying: “We own $6 million worth of real estate, have been investing for 10 years and have a track record we’re proud of” say “Sick of stock market roller coaster returns? Want predictable double digit returns on your investment capital in an asset you can actually drive by and see?”

There is a time and a place for talking about yourself, but it’s not the front page of your website.

Figure out what is important to the ONE prospect you’re focused on with your website, and speak to the pain they are feeling and how you can help them.

Real Estate Website Mistake #3 – Bad Pictures

real estate website bad picturesThere’s nothing funnier than a picture of a house for sale or a rental ad with a living room shot showing a hairy leg hanging off the couch or dirty dishes all over the counter. But, it is only funny when it’s your competition.

If those are the pictures on your website or the only picture of you was taken at a party with a drink in your hand and your arm around someone you’ve cropped out, it is not sending a professional message about yourself or your business.

You can hire a professional to take a great headshot for less than $100 in many markets. Get a professional headshot.

For your property, you can take amazing photos with your smart phone these days … just make the effort to get the property cleaned first.

It’s not about perfection, but it is about professionalism.

There’s also a fine line between showing that you’re into your family and making your website look like a family photo album. A photo here and there of your dogs and kids is fine, but if that is all your visitor sees, they may miss out on the important message you want them to take away from your site (see Mistake #1 – the website is not about you, it’s about the person you’re trying to help!).

Mistake #4 – Having a Website Just Like Everyone Else

There are a lot of rent to own and home seller attraction websites around that all look the same.

Sometimes they have a few different colours, but even the text used is similar. The only real difference is phone number and URL address. My guess is that a bunch of people took a course that sold website templates. It’s a lucrative business opportunity for the guy or gal at the front of the room selling the website. It is, however, not the best option for you as an investor. It seems like a simple way to get a website, but it’s not effective and it’s actually expensive compared to your options.

How are you ever going to stand out and be remembered if you look like everyone else online?

Hire someone to design your website. Get it set up on WordPress with your own hosting account. Spend a day writing some content. Now, you have your own original website.

If you have to pay someone to add your blog posts or post pictures, you’re on the wrong platform. These days, most investors are wise to hire someone to set up the design and template, but from there you should be able to do the updates yourself and hosting shouldn’t be more than $12/month. You don’t need to know any code with programs like WordPress. Writing posts and adding pictures is as easy as doing it in a Word Document.

Original content goes a long way with Google and with your leads. If you’re not sure where to start check elance.com or odesk.com for some good options on the website creation side.

Mistake #5 – Who the Heck Are You?

What is with the anonymous Canadian Rent to Own websites? The website is about your potential rent to own tenant, yes, but who are you? That should be on your website somewhere (this is what the About Us page is for).

Too many real estate websites are done anonymously or are made to look like you’re this huge corporation. Most real estate investors work from home – it’s part of the appeal of what we do. I am proud of the 16 stair commute that I have. Do you think my tenants care? No. Nor do my investors. If anything, most of our investors are happy that we run a lean operation. It shows we care about the bottom line.

Personally, I don’t want to do business with a company that hides who they are.

The About Us page is your chance to talk all about your self, build credibility and make people want to work with you. It still should be focused on what is important information for your prospect to know though (our About Us page differs on every website because, for example, our JV Partners probably like to know that I have an MBA in real estate and finance and Dave used to be a mortgage broker and market researcher for Scotiabank, but our tenants could care less about those qualifications. They are more interested in the fact that we have a great reputation and our past tenants recommend us).

What you should NOT have on your About Us page is an anonymous BS statement like “Our company has been working with investors for two years and continually find great properties to invest in. We make our partners a great return on their investment and can help you too. Contact us today.” Seriously – what website couldn’t say that?! Make yourself stand out.

If you’re making any of these mistakes, today is a great day to make some website changes! Remember, your goal should be subtle persuasion like the sun.

And if you have a website and just trying to build your audience, here’s some tips you’ll be able to use:

And, if you don’t have a website, and are wondering if you need one, this video just might help you:


Second Image Credit: © Masezdromaderi | Dreamstime.com - Messy Bathroom Photo

Why You’re Not Reaching Your Goals (and the simple fix)

0% goal reached

A scientist named Roy Baumeister did a study where he had students fast for a time before they came to his lab. When they arrived, the entire lab smelled like freshly baked cookies. When they sat down, there was a a bowl of cookies and a bowl of radishes placed in front of them. One group was allowed to eat the cookies, while the other one was only allowed to eat radishes.

While none of the radish group cheated, they stared longingly at the cookies. Some even touched and smelled them.

Afterwards, the students were then brought to a different room to work on a puzzle that could not be solved.

They didn’t know the puzzle had no solution. They were told it was an IQ test.

The real test was to see how long they would try to solve the puzzle before they quit.

The results?

The cookie eaters worked for an average of 20 minutes before quitting. The radish eaters quit after an average of 8 minutes. A control group not involved in the cookie test also tried the puzzle for an average of 20 minutes.

The conclusion – the radish eaters depleted their willpower reserves resisting the cookies, leaving little left to push through the puzzle.

What’s this mean for you?

Well, let me ask you:

Have you made a list of goals? Are you easily reaching your goals on that list?

Have you boldly declared that this month (or, this year) you’re finally going to drop 20 pounds, save for your dream trip, and buy 2 investment properties?

If you have created a list of goals like that let me save you the disappointment right now. It’s like trying to resist the cookies, solve the puzzle and be friendly and kind to the cookie eaters all at the same time. You don’t have enough energy and willpower to do it all at once.

I’m not saying you can’t get all those things done but I am saying that it’s going to take an enormous amount of will power and discipline to do them all at once. Even just thinking about them all probably makes you feel overwhelmed and tired, right?

It’s not going to happen all at once so let’s not try to pretend that it will.

It’s not your fault – we all have a limited amount of willpower and need to focus it!!

It’s just like the experiment found. We have a limited amount of energy and will power reserves. You have to choose where you’re going to spend it.

The good news is that as things become habits, you don’t spend much of your energy and will power to do it. I’ve been dedicated to working out for so long, that most days I just go do it. There’s no drain on my will power because it’s a habit.

So keep your list if you want, but pick the first thing you want to tackle. Maybe you want to spend a month or two getting a new exercise and eating plan on track. Once it’s habitual, then you can start tackling what you need to do to buy two investment properties this year.

What is the ONE thing you can do next to move yourself closer to living your ideal day?

Ask yourself that and commit to it. If you commit to ONE thing you are much more likely to succeed. It’s like going straight in to solve the puzzle … you will push forward much longer and be much more likely to create the results you are working towards if you only have one primary mission in mind.

In other words if you want to become a real estate investor commit to that right now. Once you get through the learning curve and get your first deal done THEN you can work on training for the marathon or learning to play the flute.

You don’t have to believe me, but you should believe the research.

You may also like to check out:

 Image Credit: © Artofphoto | Dreamstime.com

How to Get It All Done as a Busy Real Estate Investor

julie explaining

Six years ago, on November 1st, I left my job to focus on real estate investing and building Rev N You.

It feels like a lifetime ago that I had to be at work by 8am. I don’t even use an alarm most mornings unless I am going to an early morning class at Crossfit.

But it really feels like yesterday that I was begging for extra vacation time, sneaking off to handle real estate stuff mid-day, working all weekend on a deal or a renovation, or meeting with Dave for hours at Starbucks discussing what our next move was.

I don’t remember feeling there wasn’t enough time, but I do remember feeling exhausted a lot. I was working hard – putting in a lot of hours but many of my hours were wasted.

The crazy part is that since leaving my job I actually work more hours than I did as a full time employee. There is no such thing as paid vacation time, so turning off completely is more difficult than it ever was when I was working for someone else. The big difference for me has been in understanding what takes energy, and what doesn’t. And, using the hours I am working as best as possible. I still waste time and procrastinate sometimes, but I am never just waiting for a day to end like I did when I was working for someone else. There’s too much to do and if I am not working smart, I could be doing something else!

That feeling of, if I am not using my time smartly right now, I could be visiting with friends or family, working out, or playing with my dogs keeps me focused. It’s never about putting in the hours, it’s about getting results.

And since every week someone writes us asking how to manage a full time job, a growing real estate portfolio and family obligations, I thought I would give you 4 ways to get it all done with the time you do have (And still have energy left for fun).


President Obama sits down for a family dinner at 6:30pm most nights. If the President of the United States can organize his day and his priorities so that happens, there’s no reason why you can’t create your ideal typical day using real estate while you hold down a full time job and a great family life. Yes, he has a lot more support than most of us do, but he also has a lot more obligations. It’s about priority and focus.

If you haven’t read the article on time management, you should check that out. As I mention in the video, I think time management sells a lot of courses (like the idea of passive income) but it isn’t really possible. There are, however, some things you can do to better use your time.

What’s your best tip for getting more done? Share it with us on Facebook or Twitter!


Source: http://blogs.hbr.org/2014/03/if-president-obama-can-get-home-for-dinner-why-cant-you/

My Greatest Fear Happened

hiding in fear

Very disappointed – No real practical advice“. ~ Amazon.ca reviewer of More than Cashflow.

One of my greatest fears has now happened. I received my first one star review on Amazon.

It’s ok if you’re laughing. It is silly to fear bad reviews … but, I have often felt a huge fear of judgement.

I know it’s not just me with this fear.

Public speaking is one of the greatest fears in North America. It’s not because people fear opening their mouth and letting words come out. Most of us do that quite easily; some maybe a little too easily.

A fear of public speaking is really a fear of being judged by the people in the audience.

I’m not afraid of public speaking anymore. And, now that it’s happened, I can tell you I am also not really afraid of bad reviews anymore.

The people who will judge and criticize you are NOT the ones achieving greatness, creating success and having a lasting positive impact on others.

First, those people are way to busy to criticize you and they know how hard it is to put yourself out there, so they aren’t about to judge you for doing it, even if you could do it better. Second, most people do want you to succeed and will support you. You can’t let the voice of one person who is miserable in their life ruin the more positive message from the majority.

So yes, I felt a flicker of emotion when I saw the one star amazon review. Then, I kind of laughed, and wondered what kind of book he was looking for that he felt mine was not practical.

Then, I moved on.

I still fear judgement of course. Fears like that don’t just vanish. But I also know that laying low or holding back will never get me where I want to go.

It won’t work for you either.

The solution to most challenges is almost always that you have to do the very thing you’re afraid of doing.

It’s too easy to give yourself credit for doing work that doesn’t get you where you want to go.

I get so many emails from people who spent hours on MLS and claim there just aren’t any deals that work. My suggestion is always the same – get off your couch and get your boots to the ground, talk with people in the area, and look at a lot of houses. Deals have to be uncovered and created. Eventually you’ll find them on MLS, but for now, you have to become an area expert.

I also hear from a lot of people who struggle to raise money for their real estate deals. They want credit for the work they have done even though it’s not getting them the cash. They want to hear that a tweak to their website, a different approach to their emails or a better business card is what they really need. They don’t want to hear that the reason they are struggling is because they have to do the very thing they are afraid of doing – meet people face to face and start asking for referrals, investors and finally, money!

There are external obstacles that can be holding you back. It is possible you need someone to help you overcome an obstacle, figure out what to do, or give you a system to follow. But once you have that piece, there is only one thing holding you back from the life you want to live… and it’s that person who is staring back at you in the mirror.

So face your fear … it might be as bad as you fear, but more likely it will leave you laughing that you were ever afraid of that one star review. 🙂

One Strategy to Find Tenants Faster, Negotiate Better Deals & Raise Money More Easily

light bulb brain

“Don’t play hard to get. Be hard to get.”

How do you sell a $20,000 purse? You keep it in short supply and only sell it to people who meet certain criteria. Once only a few people can have it, everyone will want it.

Of course, it is a lovely looking bag. And Grace Kelly reportedly fell in love with it when filming Alfred Hitchcock’s To Catch a Thief, eventually leading to it being named the Kelly Bag by Hermes.

There’s more to this than just being hard to get, of course. Few people can afford such a huge expenditure on an accessory which also makes it a status symbol but Hermes understands what makes people desire something to their core.

A big part of what drives our desire for something is not a rational need. Knowing other people want something, not being able to have it easily and fear of missing out, all drive us to want something more than we would otherwise. It also drives us to make decisions and take action. It’s the foundation of the simple principle of persuasion called the Law of Scarcity.

Understanding this law and putting it into practice in your real estate business can help you sign the tenants you want quickly, negotiate better deals with sellers and have your potential investors say yes to your deals faster.

Here’s how to use the Law of Scarcity in your real estate business:

The Law of Scarcity is a powerful tool to use in your real estate business. But there are many ways to do better deals and find great tenants. If you are looking for other ways to do better deals, here’s another video tip for you: https://revnyou.com/how-to-find-great-real-estate-investing-deals/. 

Have a question or a topic you want us to cover? Send us a Tweet or sign up for our newsletter and send us an email.



How to Find a Great Real Estate Agent for Your Investment Business

for sale with realtor

“It’s impossible to find a good real estate agent. Nobody wants to do any work! They just send me garbage – if they even call me back”

My new client was really frustrated. After making several phone calls and going on one property tour with an agent, she felt strongly that there just wasn’t the right agent out there.

I get it. We’ve worked with a few dozen real estate agents over the last 13 years. Sometimes it feels like agents make a lot of money for doing very little. Other times it feels like all your agent is doing is making your life difficult by not returning your calls or taking forever to set up an appointment.

Many real estate investors become realtors because of the challenges working with some agents.

But, if you have the right agent, they are an important part of your real estate investing team. They will help you understand a market area by providing comps, market information, and insights. They will send you deals you may have missed. And they will save you a lot of time setting up showings, chasing other agents for information and handling paperwork (something few investors enjoy).

If you invest in a town you don’t live in, a great agent is your eyes and your ears on the ground. They are essential.

While I do believe that some agents aren’t very good (just like not all investors are good), I also don’t believe that is the real issue facing most investors looking for this important team member.

There are a few problems that get in the way of a great agent – investor relationship.

The first is that all Real Estate Agents are not the same. Some don’t want to work with investors. They have had a bad experience or heard investors are a pain. It doesn’t matter to them that investors provide far more repeat business than home owners. For some, it’s just not a category of client they want.

Second, as an investor, you are looking at a home differently than someone who wants to live in it. A real estate agent’s training is based on working with home buyers who plan to live in the property, not based on someone that needs to generate revenue from a property.

Many realtors think a property makes a great investment just because it has a secondary suite or because it’s beat up and needs work. It’s usually just a lack of education in the investment business that leads them to believe that. It doesn’t make them a bad agent.

Real estate investors care about the numbers. If it has a big bathtub, it only matters if a big bathtub gets a higher rental rate or will attract tenants easier than a regular one. At the end of the day price matters to an investor, but things like rental income relative to the price, type of tenants, ability to qualify for financing or get other financing options, and timing of the deal are more important than just price.

If this isn’t clearly communicated and understood, the agent AND the investor will get really frustrated with the work they will try to do together.

Third, many investors do a really terrible job of communicating with their agents. They aren’t focused enough to start with which makes the agent’s job next to impossible. Or, worse, they excitedly contact agents to do deals that can’t really be done. Many real estate investing courses geared towards GET RICH QUICK have very tricky and sometimes questionable strategies that agents are right to question! Some of the techniques work on one side of the border but don’t work on the other. Others are just risky and bordering on illegal.

So, what can you do? Here’s my recommendation to find great real estate agents for your real estate investment business:

First, get clear on what you are doing as an investor.

My client who was frustrated with the lack of quality agents out there was the source of the issue, not real estate agents in general. She wasn’t clear on what her investment strategy was. She wasn’t even certain she had found a good market to invest in.

She was calling really great agents that had been referred to her, and was blowing the initial contact because she wasn’t confident, clear or concise about what she wanted.

How could she REALLY expect to get the great real estate agents to work with her when she was going to take up so much of their time just figuring out what she wants to do?

It’s easier to blame the agent than to realize you are the issue.

Before you contact a great agent, get clear on your goals, your plan and your resources.

To Do to Find a Great Real Estate AgentA good agent is busy. They will usually be happy to take on a new client, but they will be selective about who they give their time to.

It’s important to show an agent that you are going to work hard to get what you want, you know what it is you want, and you have already taken steps to collect resources to reach your goal.

If you can’t tell them about your experience because you’re new, you can show them the steps you’ve already taken and the steps you will take. This way, they know they won’t be wasting their time. Because, remember, they only make money when you buy!

Don’t worry if you are short on resources. You shouldn’t pretend to an agent that you have a bucket of cash under your porch waiting to drop it on a deal. Our agents know we don’t buy most of the properties alone (not sure how you’ll fund your deals – check out this article on the 5 Ways to Finance Your Deals).

If they don’t like your plans, you’re better off to find that out now then when you’re knee deep on a deal. But by this point you should already have some idea of where you are going to get money. Make it clear that for the right deal, a deal that meets your criteria – you will be able to get the funds to close on the deal. And commit to yourself that you will do everything it takes to do just that.

Second, start asking around. I believe that the best realtor for an investor isn’t the one who helped your best friend buy their house. It’s the realtor who is already working with other investors. Go to your local real estate investing club meetings. Ask other investors.

Do a search on Realtor.ca or Realtor.com for listings in the area you are looking to invest in. Find properties that are similar to the ones you want to be involved in and see who is actively listing the majority of them (or, even better, drive around and make note of the signs). We would probably lean towards finding someone that only has a few listings, vs the one that has every other listing. But I love to work with someone who is already active in my target neighbourhood as they will likely add a lot of value with information they learn while doing open houses, showings and comparable research.

Stop into local real estate offices. They usually have a lot of listings on the windows and you can poke your head in and ask about the different agents. Maybe you will even meet one that you hit it off with. We found the agent we work with in Whistler this way and she’s awesome.

You can also use the internet to find good agents. We’re not talking about google searches here… you are still trying to get recommendations. Look on forums or review sites.

Who Makes the Cut?

Once you have a few names of potential agents, make appointments to meet them in person (or over the phone if they are far away). You want to get to know each other. It’s not just about you finding a good agent to work with – it’s also about finding a good agent that wants to work with you. As mentioned, not every agent wants to deal with or knows how to deal with the special needs of a real estate investor.

Ask good, well informed questions. Be careful of agents that seem to commit to being able to do anything you want. Remember you’re an area expert and you want to work with agents that also are focused and specific. If you’re buying condos don’t hire a single family luxury home expert.

Here’s a few questions to ask a potential real estate agent:

  • What is their experience with real estate investing?
  • How do they know a property makes a good real estate investment? What criteria do they use to judge properties for investment purposes?

What you are looking for is someone that understands real estate investing. If they are an investor themselves that can be an asset but it’s not a requirement as long as they understand what makes a good investment.

  • How long have they been a real estate agent? Are you full time?
    Ideally you get someone that is a full time agent and has been for at least two or three years. A brand new agent will potentially lack the contacts and experience that you likely need. Someone who has been in the business 20 years should have excellent contacts but may lack flexibility. It depends what is most important to you … so you’ll have to think about who is your ideal agent and what you’re looking for. Every person is different – so don’t rule someone out just because of their length of time as an agent – but take it into consideration. My preference, however, is to only work with agents who are full time.
  • What is their specialty?

Some agents will specialize in a small market area, but will do everything in that area. Others will focus on condos, or larger single family homes in a wider area. Some agents take anything they can get. And some agents focus on working with real estate investors. Ideally find one that is a specialist in your market area and your home type. The more focused the better but it can be difficult to find someone with a serious focus.

  • Have they worked on deals that were financed by the seller?
    Some agents get skittish when you mention VTB (Vendor Take Back) financing or second mortgages. There is NOTHING shady or underhanded about VTB’s. There are a lot of advantages to VTB’s, for both the seller and the buyer. The seller’s loan is secured by the property, and you pay them interest. VTB’s just aren’t as common in residential real estate as they are in commercial transactions, so some realtors haven’t done a deal using VTB financing. Often what we aren’t familiar with scares us. Not being familiar also means they could struggle to explain them clearly to other agents they may have to work with.

Once you’ve found a great agent, the communication process really begins.

Be clear and specific about what you expect from them. Let them know your preferred mode of communication and the frequency.

Typically, most agents will work the hardest for you at the start of the relationship, and if you don’t do anything to show you are serious or to maintain that relationship, you will fade slowly onto their automated email list never to be thought of again. And if they don’t think of you, you won’t see the REALLY good deals.

Not all agents are the right ones for you. It will take some work. You probably won’t find the best one for you on the first call, but please know there are excellent agents out there. Many will work really hard for you. Many will really try to understand what you want, and bring it to you. The trick is that you have to know what you want and communicate that clearly. You have to figure out what is most important to you in an agent and a real estate deal.

If you’re finding it impossible to find a good agent, take a look at what you’re doing. It just might be fixed with a simple tweak of your own goals, plans and conversations.


5 Ways to Finance All Your Real Estate Deals

money in light bulb

Imagine your company has one week to live unless you’re able to get a huge capital infusion.

You’ve already sunk a gigantic sum of money into the company.

You have about $40 million dollars you could invest, but to do that is to put your last dollar into a company few people believe in.

Bank financing is certainly not an option. Private funds aren’t an option either. Most people really think you’re crazy for pursuing this dream. Nobody will throw money into a venture they think is going to fail.

It’s not even a choice really. Not if you’re Elon Musk.

You put every last dollar you have in to the company.

If you’re not familiar with Elon Musk and his entrepreneurial and innovative journey to creating SpaceX and Tesla, I have posted a few of my favourite interviews with him below. He’s an inspiring and interesting guy who is changing our world.

He’s also the kind of person who finds a way to get things done even when everyone says it can’t be done.

It’s unlikely though that you’ll face anything quite like taking on the big car companies or NASA, but you might need to channel a bit of Elon Musk when it comes to getting your real estate deals financed.

There will be a lot of people who will tell you NO. There will be many who don’t believe it can be done. It’s up to you to persevere and find a way.

But sometimes you don’t know where to start, which is why I have pulled together 5 ways to finance your real estate deals:

1. Traditional Bank Financing:

Your own cash for the down payment (usually 20% or 25% of the purchase price) and a bank or credit union finances the rest. This usually offers you the best possible interest rate, but it’s also the hardest to qualify for. You need to have a good and stable income, minimal debt, patience to pull together all the paperwork and a great credit score.

2. High Ratio Financing:

If you are moving into the property, this is an option. It has even more restrictions than the traditional bank financing option (because it’s insured by a company like Genworth or CMHC), but it allows you to get into the deal with as little as 5, 10 or 15% down.

This is an excellent option for a brand new investor. You can put less down on a home with a suite, move in, and get your feet wet as an investor while you rent out the suite. You also will typically get the best possible interest rate available since you’ll be living there (the banks sees that as a lower risk than if you’re buying it for an investment).

In a few years, you can move out, keep this property as an investment, and do it again for your next one (NOTE: the rules are changing a bit on this so speak with a mortgage broker if this is your plan).

3. Equity in Your Home or one of your investment properties:

You might find yourself able to qualify for financing but short of down payment funds. In that situation you just have to find the down payment money to get your deal financed.

The simplest option is to access equity in your home or property via refinancing or a home equity line of credit.

You need to have a lot of equity in your property to do that though. You’ll need to speak with the bank that holds your mortgage to see what Line of Credit or refinancing options are available to you.

Most refinancing options will not allow you to go past 80% of the value of the home. You can also encounter snags in refinancing if your property assessment is low (the assessment is what your local city assesses the value of the property to calculate the annual property tax. It’s rarely an accurate valuation of your property but the banks still use it as a measure of value for refinancing).

We tried to refinance a property this year to renovate. The assessment value of the property is $260,000 but the real value of the home is closer to $350,000. The bank will only refinance to 80% of the assessment value so we weren’t able to refinance.

Think carefully before you use your own home to fund your real estate deals. I prefer not to lever everything I own just to buy more – especially when it’s the roof that is over my own head. Also, whatever you finance, be sure the cashflow on your new property is more than enough to cover the financing costs and it’s expenses.

4. VTB, RRSP or Private Mortgage:

If you don’t have 20% down, or you can’t qualify for bank financing private money sources are a good option. Private money sources includes VTBs, RRSP mortgages and private mortgages.

A VTB (Vendor Take Back) mortgage is when the seller gives you financing. An RRSP mortgage is when someone moves their RRSP funds into a self-directed RRSP account and then loans you money just like the bank. You can learn more about RRSP mortgages here. Private mortgages are just what they sound like, money from a private individual.These options have a lot more flexibility in terms of the amount you’ll need to put down, the repayment terms and the qualification criteria. In fact, a lot of these details are up to you to negotiate and set up. One of our clients, has funded 100% of the purchase price of more than a dozen deals using private lenders who hold mortgages for up to 15 years. It’s all in finding the person who is a fit the for the deals you want to do.

You can use VTB, RRSP or Private Second Mortgage in first or second position mortgages. First and second position simply refers to the order in which a lender will be repaid in the event the property is foreclosed on. Because the first position mortgage gets paid first, the risk is lower for that mortgage holder therefore you’ll usually pay them a much lower interest rate than you will a second position mortgage holder. If you have bank financing for 65%, for example, you may want to find some secondary financing to get you up to 80%. That’s where you might be able to put a second mortgage on the property using the seller as a lender or an RRSP or private lender.

It’s important to note that most banks will not qualify you for financing if you can’t show you have the whole down payment yourself. They will not accept secondary financing as proof of your down payment. This means you will need to have the money somewhere even if you’re not using it for the down payment (if you aren’t sure what would work as proof, discuss it with your mortgage broker).

Many mortgage agreements also contain a clause saying you can’t ever put secondary financing on the property at all so read your agreement carefully before you do this to raise the funds for your down payment.

If you pursue secondary financing or a higher ratio financing option, it’s also important to stress test your portfolio to see what happens if interest rates rise quickly or values dropped overnight. Where will that leave your cashflow and your overall portfolio equity?

5. Joint Venture Deals (JVs):

When you lack the funds for a down payment and you do not qualify for financing with the bank, joint venture deals are a fabulous option. A joint venture agreement is basically where you and another party come together to pool your resources. There are many potential joint venture structures. In our case, we do the work, find the deals, and bring the expertise while our partner will bring the finance-ability and the down payment capital required.

Our first two deals in 2001 were versions of option #2 – high ratio deals on our own properties that eventually became rental properties.

In 2002 we sought out a lot of creative strategies, with a few VTBs and Private Mortgages to get the money for our deals. In 2003 we started to do Joint Venture Deals (JVs). From there, we’ve done just about every combination of the above that you can think of. The majority of the last 25 deals we’ve done, however, have been joint ventures. It was the simplest way to add great properties in good areas at the best financing rates available on the market.

There are a lot of options to fund your deals and grow your portfolio. No matter what strategies you use, there is no replacing your own hard work and diligence in saving money for down payments, taking care of your credit score and being good about the debt you take on (see 5 things every real estate investor should know about money and credit).

These steps will make you more appealing to banks, private lenders and even sellers who may give you financing.

Every choice has risks and costs to consider. Make sure every rental property you buy has strong positive cashflow, is well positioned to attract good tenants and has multiple exit options. There are also costs beyond cash flow, interest rates, repayment terms and leverage ratios to consider as well.

Elon Musk’s ‘All In’ approach to business takes guts, determination and belief. His high I.Q. and photographic memory probably don’t hurt either.

You don’t have to be just like Elon Musk to access capital for your deals. You just need to have some dedication and belief that there is a way to do what you want to do. Even when the banks are saying no – you have options. And, just because one person or bank says no, doesn’t mean someone else won’t say yes. The money is out there – now, go and get it.

Elon Musk: How I Became the Real Iron Man 

How to Analyze Your Real Estate Deal (& Why You’re the Only One that Can)

Kid with magnifying glass

I can’t analyze your deal for you.

It’s not even because it takes a ton of time to do properly (which it does, by the way!). It’s also not because you sent me absolutely no information that is useful in the analysis (although, that is often the case).

I can tell you if the numbers make sense. I can ask you if you’ve considered a few potential risks. But, ultimately there is only one person who can really figure out if the deal is good for you or not … and that is you.

Here’s an example of an email I received this week with personal details omitted:

“Hi Julie, I am 1/2-way through your wonderful book! You have such an earthy, non-slick, trustworthy personality. I have a question: We are just about to sign a commitment letter with a bank on our first investment/property in one city. We live in another. We paid $573,000 for a 3 units with 25% down. $2900/month rental income. Are we crazy?”

When you just look at the numbers on this deal, it’s not that great. These folks are likely hiring property management as they don’t live in the same city, so that will reduce their net income as well. Before you even consider maintenance, which will definitely be costly as it’s almost 100 years old, it will likely not cashflow much at all.

Does that make her crazy? Should she look for a better deal?

I have no idea. It could be the perfect deal for her or it could be a terrible idea.

To help her figure it out, I would need to know more about her goals, resources and risk tolerance. For example:

  • Why she is investing in real estate in the first place. What does she need this deal to do for her and her family?
  • Why she chose that city. If it’s because, in the future, they plan to retire or send their kids to University there, this might be perfect. If it’s because they go there on a regular basis for other reasons then it’s not a bad idea. If she chose that city because it was more profitable than the city she lives in currently, I probably would have picked a different location.
  • What resources does she have to work with? My guess is that this property is not a legal 3 unit property. At best it is probably is legally allowed 2 units. Is she financially able to handle the risks that come with an illegal suite? If it won’t kill them financially to handle this issue or maybe she has connections to a contractor who can help make it legal for a lower cost, then this might not be a big issue.
  • What other options were considered and why were they eliminated?

Then, once I had that information, we’d have to dive into all the property expenses, expected maintenance, and, of course rent and income. Even with that information I still couldn’t tell you for sure that it’s a good deal because I would need to know all about the area, the comparable deals that have been done lately, the layout of the property, the target tenant type and what options exist for different exit strategies from the property.

It’s a lot to cover … and if you haven’t already read More than Cashflow, I highly recommend you start there. It’s the absolute best real estate investing education you can get for less than $20!

But over the last six years we’ve covered a lot to help you in our Rev N You with Real Estate newsletters to help you choose where to invest and how to analyze your real estate deal. There are a lot of things to consider and I just want you to make the best decision possible for you. Below we’ve highlighted some of the most read articles on choosing a market and analyzing your real estate deal to help you.

There’s a lot more to cover but that should keep you busy for the rest of the summer and fall. 🙂 Happy analyzing. And remember, you are only doing a good deal if it moves you closer to the ideal day or ideal life you want to live. Numbers are only a small part of what you need to consider before you buy a new investment property.

What Market Should I Invest In?

One of the biggest reasons people lose money on renovation projects, especially flips has almost nothing to do with the actual renovation process at all. It has everything to do with the selection of property and it’s location. Here’s what you need to know about the price you’re paying and the cost of the renovations you’re about to do:  The Neighbourhood Price Ceiling and Why It’s Critical to Understand.

One of the biggest stumbling blocks for real estate investors (new and experienced) is where to invest. What market will be the ideal location for the next investment property purchase? Read this post to learn exactly How to Choose a Great Real Estate Investment Market.

Think location doesn’t matter in real estate investing? Location impacts the rents you can get, the tenants you attract, and the problems you can encounter. It also impacts the appreciation of your property and the opportunities you may have in the future. Real Estate Investing Is Still About Location, Location, Location.

A couple of days ago my Twitter feed was alive with talk of several real estate related subjects that caught my attention: Confirmation of Canada’s Housing Bubble. It doesn’t matter where we are in the cycle, that headline pops up so do you really know what the Driving Factors Behind the Real Estate Market?

Oh glorious summer! It has arrived early or at least a taste of it has arrived early. I’m getting out to enjoy it as much as I can. But I’m still finding time to keep an eye out for properties that fit our model. In fact, I looked at one yesterday and we’re running the numbers to see if we want to make an offer. How do I know if I want to make an offer? Here is a  Simple Model for Buying Rental Properties.

We get the short end of the data stick in Canada when it comes to residential real estate information. I’ve spent many hours drooling over the information you can gather on Zillow, Trulia and other US real estate sites. But things are improving for Canadians and here’s a few new resources you might like to check out: Shopping for a New Construction Home? Market Research Just Got a Little Easier.

How To Analyze Your Real Estate Deal:

There’s a lot involved in evaluating properties for their cashflow potential and a simple rule of thumb only gives you a way to eliminate bad deals quickly, but here’s one little rule of thumb we use. Learn how to  Evaluate Properties in 60 Seconds or Less.

You need a lot more than a computer to analyze real estate deals. Read how: How to Analyze Real Estate Deals

If you think real estate is risky or you’re worried about certain risks and how those will impact your investment, then it’s time to understand just How to Analyze Risks in  Real Estate Deals.


What Every Real Estate Investor Should Know About Being More Interesting

Imagine sitting around shooting the breeze with your University Alumni hockey team after a game. Somehow a local jail is mentioned and your goalie says “Oh no boys – you don’t want to go to that jail. It’s pretty rough.”

Do you think that this guy had the attention of the room full of MBA guys? Heck yes he did.

My friend Mike, who was telling me about this guy, said “he really could be the poster boy for Dos Equis’ most interesting man in the world”.Interesting Real Estate Investor

That got me thinking, what makes someone interesting? More importantly, are YOU interesting?

Think about the last time you were telling someone a story. Did they check their watch or glance around the room, or did they lean in and listen more carefully?

I like to blame the listener when I am not getting the attention I think I deserve, but it’s not always Dave’s fault. 🙂

This is not to absolve my husband (or anyone else) of their responsibility to actually be present and participate fully in a conversation, but it does mean that the only person you can control is you. If you want more attention, you need to be more interesting.

If you want to have any influence and impact on others in your life and business, you need to pay attention to what makes you interesting to others.

Guess who gets to be the topic of many conversations (free promotion!) and who will be remembered after a networking event? Think about who will get the phone call about the great deal or who will be called when someone meets someone who wants to invest their money in real estate without doing the work?

The person who was interesting and therefore memorable gets the attention and opportunities.

So what works? Here are 5 ideas for being more interesting:

1 – Tell Great Stories

Dad in ItalyYou probably don’t want to go to jail to get people’s attention with your next story but, maybe you’ve done something else that was pretty unique. The story of me surprising my Dad with a trip to the Ferrari Museum to drive Ferrari’s around the Italian countryside is a story people remember and always listen to.

By virtue of being a real estate investor, you will have great stories that will interest people. How many times have you witnessed something crazy at a house you own or a house you were looking to buy? When was the last negotiation that had a surprise twist? When did your tenant do or say something totally shocking? These are stories, when told concisely and pointedly, that people will pay attention to.

Just remember, it’s about quality not quantity. Tell ONE good story and you’ll be remembered for a long time. Tell many mediocre stories and you’ll lose everyone’s attention.


2 – Being Different

Last weekend when I was playing poker at the Venetian, I sat at a table where there were 3 other women. With one other seat vacant, my arrival meant the table was now evenly split between men and women. I often am the only female at my table so I asked the dealer if he’d had very many tables that were half ladies. He laughed and said “only when it’s a women only tournament”.

I played with a total of 5 women in 15 hours. 3 of them were at that one table. I remember 100% of the women I played with and could describe each of them to you but I only remember about 20% of the men. The women stand out because they were different.

Being different than the norm has challenges but it can also be an enormous advantage because you immediately stand out. While there are a growing number of women real estate investors and women real estate investing experts, being female and an investor is still unique. If you are standing out and you are a confident expert it’s likely you’ll be easier to remember than the typical male investor.

My examples are all gender based so far but that’s far from the only way to stand out. You can also be different by branding yourself consistently. From the social media world, Mari Smith always wears Turquoise when she is networking and speaking. It’s been five years since I’ve seen her speak and I still think of her when I see that colour. In the real estate world, Erwin Szeto has built himself up as Mr. Hamilton by always wearing a Hamilton Tiger-cats jersey when he networks. Despite the fact I know many people who are real estate agents and investors in Hamilton, he is ALWAYS the first person I think about when it comes to Hamilton real estate because he made himself different through branding. What can YOU do to be unique and memorable?

3 – Focus on what’s interesting to others

How do you know what is interesting to others?

Ask them.

Don’t ask and tune out though. Watch to see if they light up and want to keep talking about it, or whether they shift around and kind of look bored. Keep asking questions until you find the thing that lights them up. If it’s something you know nothing about say “Wow – really. I know nothing about playing kick ball, how’d you get into that?”

Note that the typical question everyone asks, “what do you do?”, rarely creates any engagement unless you happen to have some connection there. However, “how did you meet your friend/your wife/your business partner?” can often be a great start. Or, “what did you do that was interesting on the weekend?” or even “what brought you here?” can be a good one depending on the context.

If you don’t have crazy fun stories and you aren’t standing out from the crowd easily, being interested in others and watching for signs of true engagement will make you very interesting to talk to. Plus, now you’ll know what stories of your own to share because you’ll know what they are interested in.

talking when someone is distracted4 – Wait for the right time to tell your story

It’s easy to get mad at someone for not listening to you but when did you try to talk with them? Were they in the middle of something? Was the hockey game on? Were the kids running around the house creating a lot of distractions when you began the conversation?

If you want people’s attention you need to tell your stories when there is a lull in the conversation or when there aren’t other things going on that will take away from what you’re saying. It’s not always a good time to speak if you want to have someone’s attention.


5 – Choose Concise and Clear Language

I actually think I am pretty good at focusing and yet I’ve been using the app anti-social to stop me from randomly clicking around to some of my go-to distraction websites (Twitter, Facebook, Huffington Post, Amazon and a few others). It scares me how many times the app has stopped me from mindlessly exiting from my task at hand to click around. Our ability to focus on any one thing for a long period of time is lower than ever before. We are training ourselves to be as distracted as my dog on a walk.

You have to know that you’re up against a very short attention span when you are trying to communicate any message at all.

Keep your messages short and to the point as much as possible. But, in keeping them short, make them easy for your listener to picture and be a part of.

Think about these short sentences that began movies: “As far back as I can remember, I always wanted to be a gangster.” ~ Goodfellas

“A long time ago, in a galaxy far, far away….” ~ Star Wars

““I was 12 going on 13 the first time I saw a dead human being.” ~ Stand By Me

““Mmm. I look good. I mean, really good. Hey, everyone! Come and see how good I look!” ~ Anchorman

These starting lines make you lean in and listen. You might be ready to laugh, you might feel nervous or a little concerned but you’re into it with only a few words. You are interested.

When someone starts looking at their watch or glancing around the room while you’re telling a story, it doesn’t mean your story is bad, it might mean you need to practice telling it so people want to listen. The best stories can be ruined with unnecessary detail. A great movie can be made boring by extending the fight scenes on too long or spending too much time in any one scenario.

Practice telling your stories so can maximize your impact with the fewest number of words. The best public speakers have this mastered. You should too for a few key stories so you always have something to share to get people’s attention and help them remember you.

With a little attention to what works and taking the time to practice, you can be interesting even if you’re putting your dog to sleep when you speak right now. Take note of what makes others engage with you and what has them looking for the exit. Start testing out new ways of delivering a message and pay more attention to what the other person wants to speak about. Before you know it, you’ll be remembered as the interesting real estate investor and people will be calling you to discuss a deal or an investment opportunity.

First Image Credit: ID 42478786 © Gstockstudio1

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