Getting the Money for Your Real Estate Deals


Getting the Moeny for Your Real Estate Deals Even after 4 years of running our real estate investment business full time, eleven years of history of never missing a mortgage payment on any property, and a substantial net worth, we still find it challenging to finance our investments. In September we bought an beautifully cash flowing triplex. In order to finance it with the bank we had to show 3 years of mortgage and interest payments just hanging out collecting dust in a bank account. That’s on top of the 25% down payment that also has to be sitting in a bank account for 30 days before we even apply for the mortgage.

We bought it for $325,000. In order to even apply for the mortgage we have to have about $130,000 in cash just sitting around.

If you are starting to think about becoming a full time real estate investor and leaving your job, I encourage you to finance as many properties as you can while you have what the bank perceives to be a secure job. You’ll also want to start planning for your funding and financing future (one of the best ways to do that is to join us for one of our Fund Your Deals in 49 Days LIVE training events – we’ll help you build a funnel of sources for funds!).

The good news is that you do have some options when the bank says no or you don’t happen to have hundreds of thousands of dollars sitting around so the bank will say yes.

No Money Down – No Bank Needed

If you watch late night infomercials you’ll probably feel some attraction to the no money down, no qualifying at the bank strategies. We’ve been right there with you … not once but twice. We’ve invested almost $40,000 into learning “no money down” and no bank needed investment strategies.

The biggest lesson I can share with you is that just because you can do deals with no money down doesn’t mean you won’t need money.

Sandwich leases are a popular one these days for Canadians that want to do no money down and no bank needed type deals. A sandwich lease is simply where you find someone who will allow you to lease option their home from them and you turn around and offer it as a rent to own to someone else. You pocket the difference in monthly cash flow and option fee.

In theory this is a great strategy. The reality isn’t as pretty. It takes a lot of marketing effort to find the deals. It also takes a lot of effort to educate and explain what you’re doing to the seller. Finally, you’ll find the houses are generally in a state of disrepair and need some investment to improve them so you can attract good rent to own tenants. How much money do you want to put into a house you don’t own? The final issue is that it rarely works out that your lease option term aligns with the term that your rent to own tenants are able to buy within. It’s tricky. Your upside is limited in this type of deal and while you CAN do it without the bank, we find most investors get into this type of deal really excited and work hard for a year or two and then look for something new because it’s so much work for a minimal pay day.

Generally when we did creative deals – whether it was a sandwich lease, wrap mortgage or some sort of seller financed strategy – we ended up with problem properties and challenging tenants. We basically created a full time babysitting job for ourselves. That is because the kind of deals you can do creatively generally are not the great properties in good areas. They don’t attract the best caliber of tenant nor do they have minimal maintenance requirements.

The no money down and no bank needed strategies work but they didn’t work for the life and business we wanted to create.

The strategies we use to fund and finance our deals include Vendor Take Back Mortgages, Private Money, RRSP mortgages and joint venture partners. Sometimes we use a combination and other times we just use one. These strategies allow us to focus on doing great deals in areas that attract the best tenants. Our tenants typically love their homes like they were their own, apologize when they are late with rent or give us a heads up that it might happen, and rarely call us with problems. That’s because we focus on doing the deals that allow us to create a business and life we love instead of doing deals just because we can do them creatively or with little money down or no banks.

4 Great Ways for Getting the Money for Your Real Estate Deals

Vendor Take Back Mortgages

Seller financing, more commonly called a VTB or vendor take back mortgage is simply where the seller (Vendor) of a property is willing to provide some (or all) of the mortgage financing on that property.

Seller financing can take several different forms. We’ve done deals where the seller provided the entire mortgage, which amounted to 80% of the property value. We paid her 6% interest amortized over 25 years for a 3 year term with no prepayment penalties and an option to renew. She was able to sell her house in a slower market and made more money from it than she otherwise would have through three years of interest payments. We also have used seller financing to top up traditional bank financing.

Private Money

Private money is simply money from an individual. It’s different than hard money. Hard money lenders finance deals for real estate investors as a business. They are more sophisticated in their investment terms and will typically seek quick repayment at high interest rates. With private money you can have more control over the terms of the loan. You can offer terms that suit your needs and offer a good return for your private lender.

The easiest way to find private money is to call your favourite mortgage broker and ask if they have any private lenders. That money is expensive thought. The upfront fees on those funds alone are usually1-3% of your mortgage amount. On a $250,000 mortgage that means up front you can start off with a $7,500 fee plus pay at least 7% interest on the loan. That’s ok if you’re in a pinch with a strong cash flowing property, but our preferred source of private funds is to raise them ourselves.

We find that a lot of folks have paid off their homes and are willing to put a line of credit on the property and loan that money out for a premium. One of our favourite strategies is to borrow $350,000 from someone’s line of credit to buy and renovate a property. We paid them 5% + their line of credit costs. (See an example of a property we’re doing this on right now in our video series on adding a legal suite to a property).

RRSP Mortgages

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. This is probably the largest untapped source of funds available to real estate investors because very few people know this option exists.

Master this and you’ll always be able to find the funds for your deals. With no management fees or advisor commissions to pay, RRSP holders could be making a stable and predictable 6, 7, even 10% or more return on their money inside their RRSP.

There are some additional rules around using RRSP funds though. For example, you can’t borrow funds from your immediate family to fund your investments. It needs to be arms length. You also can’t use the RRSP funds for a down payment directly on a property. You’ll need to put the funds on a different property as a first or second mortgage and then use those funds on the new investment.  **We now cover using RRSP funds in our Fund Your Deals in 49 Days Live Training**

Joint Venture Partners

This is the most powerful strategy in our investment tool box. It’s the strategy that has allowed us to comfortably add a new property to our portfolio almost every month.

Our joint venture deals typically are structured so that we find the deals, oversee all work and management and split the proceeds 50% / 50% with our partner. In exchange for all experience and efforts, our partner puts in the cash required to close on the property and puts their name on title so they qualify for financing from the bank.

If anything goes wrong with the property and requires cash we are partners and split the costs 50% 50% just like we split the proceeds.

Busy people love this option. They don’t want to spend the hundreds of hours we’ve spent learning an area, building a team and digging up deals. And they definitely don’t want to take calls from tenants or handle issues around the property management. They can get into real estate without the hassles of being a landlord.

There are a lot of ways to fund your deals – even if the banks say no. The key is to know where to look, what to say, and what choices make the most sense for you and your goals.
Photo Credit: © Charles Knox Photo Inc. | Dreamstime.com

Case Study: Flipping Property for Profits

Motivated by a huge desire to create a business that would allow her husband to quit his job, Crystal decided nothing would stand in her way any more. Visions of fun family activities were dancing in her head – thinking of all the fun she would have with her husband and son once they were in control of their time and their financial situation.

When Crystal came to us in late 2011 looking for real estate coaching, the one thing that stood out for both myself and my husband Dave was her sheer belief that she was going to make it happen.

She didn’t have any real estate investing experience, she wasn’t that comfortable with computers – especially Excel Spreadsheets, and she had been looking at becoming a real estate investor for awhile without buying anything.

She was really interested in flipping property but was petrified of speaking to a contractor about doing renovation work.

“In the past I had looked at properties to invest in and if it required more than paint, I wouldn’t even consider buying it. I was truly terrified of renovations.”

Terrified? Yes! Paralyzed? Not even a bit.

Surrounded by support and people with experience and expertise, Crystal Rael, Victoria, BC real estate investor, dared to tackle her greatest fear – she took on her first fix and flip project and pocketed $45,000 in profit for her and her partner in 2012.

The money is great, but even greater than the financial pay day is the confidence she gained by diving head first into the one thing that scared her the most.

Once that project was complete she knew exactly what was next. She’s taking her investing south to Phoenix. The deal was barely closed and she was packing up her son and husband and heading to Phoenix to get to work. She sees that their money can go much further down there and getting out of the grey winters in BC is a big bonus for them too!

One month later she has lined up a few joint venture partners, set up her team and is just working through a few of the details around financing and corporate structure before she makes a move on one of the deals she has her eye on.

With her greatest fear overcome she is on fire. She now knows that she can do what she sets her mind to and is going for it.

Her first flip was a success – especially in a slowing real estate market – and she learned some important things she wanted to share with others that might be thinking of flipping.

Crystal’s 2 Big Things Learned on Flipping Property for Profits

Networking Pays Off – It Really Is About WHO You Know

“The numbers never work in Victoria” is something we often here. Yet someone Crystal met at a REAG Meeting brought her the deal.

It was a great price for the area so Crystal didn’t even hesitate. “I never thought I shouldn’t do it. I wanted to do a flip and it showed up. So I did my due diligence but never questioned it.”

But the deal never would have found her if she hadn’t been out networking and meeting other investors.

Double Check Your Budget

In her initial plan she had factored in the cost for 2 kitchens but forgot to transfer the costs for the second kitchen into the spreadsheet she was using to track the budget. She also had not planned on paying for an electrician because her husband is a ticketed electrician and was going to do the work. Unfortunately he was so busy with his own work that waiting for him was was going to throw everything off schedule (which would have messed up the drywallers and painters), so she had to hire that out which was an extra $5,000 not accounted for.

 “If we’d had these numbers in the budget we would have been right on. We had budgeted $50,000 for the renovation and spent $57,000 so not too bad for my first one.” Crystal explains.

 So what were the numbers on this property flip exactly?

Purchase Price: $372,440

Renovation Costs: $57,000

Closing costs, carrying costs and Selling Costs: $38,000

Selling Price: $512,000

Net Profit: $45,000

Not bad for 3 months of work!

Crystal says they planned for this project to take 6 months including time to sell but the renovation stayed right on schedule and the home sold fairly quickly with a fast possession so it was just over 3 months!

The worst part?

Crystal said the waiting was the most painful part of the whole process. “Once everything was done and it was listed on MLS and there was nothing left to do but wait for an offer to come in. Thankfully we priced it right and didn’t have to wait too long.


If you’re thinking of tackling a flip, Crystal has 5 big lessons on flipping property she learned from this experience to share:


1. Find the right deal. This deal worked for her because it was under it’s market value, was in a great area and where there is a demand for properties with a suite. She also had a back up plan of renting it out if it didn’t sell (and with the suite she would be able to cover all her costs as a rental).

2. Make sure you get the right mortgage so you are not paying big penalties when you sell it so quickly.

3. Leave something on the table for the buyer. They priced it aggressively for a quick sale. If they were willing to wait longer to cash out they may have made more money but instead they priced it well and buyers recognized that and grabbed it.

4. Listen to your gut. Your brain might try to talk you into or out of something but listen to what your gut says.

5. Believe you can do it – then do it!

Her biggest surprise in this adventure was that she had all the tools she needed. She is part of REAG and Rev N You’s VIP Coaching program so she’s surrounded by support and expertise. All she needed was to believe that she could do it. When she got that, she committed to doing it, had the right support and mentors around her, and everything else fell into place!

Crystal is excited for the day that her husband can quit his job and work with her full time so they have the time and financial comfort to hang out as a family more. That goal probably isn’t that far away with such a compelling motivation and the strong belief in herself that she now  in what she can accomplish. GO CRYSTAL!!

Want to make big things happen in 2013 in YOUR Real Estate Investing Business?

We can help.

Save Yourself Years of Fumbling Around & Thousands of Dollars in Mistakes – Get Support, Steps & Accountability to make 2013 Your Best Year Yet!

Our year long coaching and mastermind program is ONLY for action takers. Our clients kick butt and we won’t settle for anything less.

If you’re committed to making 2013 the best year yet let’s chat. It’s by application and invitation only.












How to Add a Suite to a House – 5 Things to Look For

One way to boost your rental income on a property is to add a suite to a house.

The cost of adding a suite is often a small investment compared to the returns it generates. When you add a legal suite you’ll often find it also adds a ton of value to the property. The hard part, we’ve discovered, is finding a house where it’s going to be relatively cost effective to add the suite.

We searched for months to find a property where it made sense for us to add a legal suite. The perfect property for suiting finally found us. Someone who had received our yellow letter several years ago had saved the letter and just contacted us now – ready to sell her property.

We thought it was PERFECT for suiting. It was in our target area, untouched since it was built in 1980, and fit our criteria for adding a suite. We closed on it last week and demolition is nearly complete.

We’re chronicling the adventure for you in a video series.

In the first video I explain the 5 things to look for when you add a suite to a house.

You’ll have to watch the video for all the details, but the 5 things we look for when we’re searching for a house to add a legal suite to are:

  1. Entrance Points: How do the tenants get into the suite and the main home?
  2. Heating Sources: Is there a furnace that has ducts that need to be closed off or is it baseboard heating?
  3. Flow of the property and how the suite can flow when added in: So many suites lack flow because it’s awkward to put it into an existing home. Considering how it’s going to flow is important which is why we are removing 3 walls in this project and adding one.
  4. Where are your plumbing and electrical systems relative to where you’re putting in the kitchen, appliances and any bathroom changes you need to make. One of the most significant costs of suiting revolves around electrical labour. The easier it is to separate the units the less you’ll pay. And can the electrical system handle the added load or does it need more?
  5. Where will the laundry be for each suite?

There is more to consider, like purchase price, rents, location and condition of the property but generally speaking if those things are great (And in this case this property is in our #1 focus area and is in great shape – just needs cosmetic love) then the other items are the important ones on our checklist for finding a property to add a legal suite to.

Want more videos in this series? Here’s how to add a suite to a house – week 3 update.


4 Must Have Business Systems for Real Estate Investors

I’ve cried over piles of paper. Probably more than once but there is one time that stands out in my mind. I had an entire year of data entry / bookkeeping in front of me for a dozen or so properties. I used to do it monthly but that particular year I’d let it slide and so had my husband Dave.

Once we missed a few months, the task seemed so much more daunting the next month so we ignored it again.

Before we knew it, over 12 months had passed. It was tax time and we couldn’t put it off any longer. It was just paper – we knew it wouldn’t kill us – but it was awful and sometimes we felt like we were being buried alive.

After that debacle we agreed that we would revise our business processes so we were never faced with that again. We also agreed there were other areas of our business that needed attention too. Chaos was costing us money, wasting our time and making us miserable.

Part of the process involved switching to a more qualified accountant (we’d been using Dave’s family small business accountant but when we added rent to own it became clear we needed a real estate investing specialist), hiring a bookkeeper and then once I was full time, focusing on every area where we could make more money and reduce expenses.

Some investors get far more sophisticated with their systems and processes. They buy software, create elaborate check lists and hire virtual assistants. You can do that and for some it’s the right thing – but we tend to lean to the simpler and often easier to control options. It does depend on your personality and what you want to spend time and money on … but for us this is working and some of these ideas just might help you too – whether you’re going full time or not.

Our 4 Must Have Business Systems for Real Estate Investors

1. Simple but effective filing system

We used to use a binder per property but found that over the years the binder started to burst. Files are simpler and easier to manage. We have an “inbox” where all mail and documents sit until they’ve been processed (scanned so our bookkeeper can enter them in). Then we have 4 file folders for each property:

  1. Legal Documents (purchase agreement, mortgage docs)
  2. Tenants (their application, lease and any communications)
  3. Important docs like warranties and insurance
  4. Income, expenses & receipts (bank statements, repairs).

At the end of each year the expense file is labeled with the year and property address and put away into our “if we are ever audited” tax box for that year. Every tenant turnover results in the creation of a new file and the filing away of that tenant file. Every document is scanned and stored online as well.

Storing the documents online and creating a “virtual office” has been a huge help to us. No matter where in the world we are, as long as we have our iPad and internet connection, we can handle anything. There are so many options now from clouds to Dropbox to back up services to store your files online– it just depends on the security features and access needs you have.

2. Hiring Help & Bringing Property Management in House

The decision to bring most of our property management in house came as the solution to two major problems.

As we started buying properties more aggressively (going from buying 2-5 per year to 10 – 12 per year) we found ourselves drowning in paper. We had a good filing system by then but it required us to actually spend time filing.

That was part one of the issue. Part two was that the more time we spent evaluating the performance of our properties and the property managers – the more areas we identified for improvement. From ads placed in the wrong places or not at all, to pictures that would scare away good tenants, to missed maintenance work– we found all kinds of opportunities to do a better job managing our properties ourselves.

The problem was we didn’t want to take all the tenant calls.

We decided to take back control of most of our properties and then hire someone into our business to help us.

The math worked. We were paying most of our property managers 10% of monthly rent plus half a month’s or a full month’s rent to fill vacancies. If we no longer used a property manager that money could be used to pay a staff member – someone that could help us with property management, handle the filing problem and take over the basic bookkeeping tasks.

This has been the single most important change to our business and while it’s not always ideal to be self managing so many of our own properties – with help and simple systems – we are able to go away and not worry about what is happening with our tenants in our absence. We also do not have any stress at tax time because everything is organized, entered into Quickbooks and ready to ship to the accountant. And if something is missing it’s not us that has to track down the document!

Maybe hiring a full time person to help you isn’t going to work for your business (and quite likely it’s unnecessary) but most investors can definitely benefit from hiring a bookkeeper – and you’ll probably be surprised at how affordable it is to have someone come in once a month or once a quarter to help you get control of the paper monster! Your time is worth money and so is your sanity.

3. A Fantastic Real Estate Investing Team

To be able to do a large volume of deals requires a strong team. Even having a smaller portfolio of properties requires a strong team. Key members of our team today are:

• Great tradespeople
• Realtor
• Property manager (while we self-manage many of our properties we do need some help with a few of them!)
• Accountant
• Lawyer and a notary
• Our office manager / assistant
• Broker and/or banker
• Home inspector
• Insurance Broker.

I chuckle at the training programs out there that basically say things like “first, you build your team.” 11 years into it, we’re still building our team. We had a reliable electrician and then he moved to Afghanistan. We had to start over. We went through seven realtors to finally find one that gave us the information we needed, returned our calls quickly, worked hard and was fun. We worked with her for a couple of years and then she became a flight attendant for West Jet. We had to start over again.

Without the right advice or the right person you’ll over pay for work, make mistakes and possibly even get into bigger issues like legal challenges. I’d much rather spend $500 on the right advice than try to do it cheap or for free and take unnecessary risks.

Here are three things to keep in mind when you are looking for a new team member:

  1. Find someone that is recommended – ideally from more than one person
  2. Create a database (we just use an Excel spreadsheet) that notes how you found out about them, what properties you worked with them on, what they charge and what type of payment they will accept (some are ok with credit card but many want cheques – you’ll often want to know this).
  3. Work on getting back ups for trades, insurance and brokers/banks. Sometimes your favourite is busy or the job is bigger and you need quotes. You need to have options so you don’t scramble in the heat of the moment and work with someone that isn’t one of your top choices.

4. Making Real Estate Marketing Magic with Marketing Systems

How many times do you start from scratch when you have to write an ad? Or worse, how many times do you just go onto Kijiji and copy some other poorly created ad to place an ad for a tenant or find a deal?

We used to be badly organized with our photos and ads so we’d always have to recreate them every time. It slows things down and often something that worked well in the past will work well again so it’s better to just use it again and again until it doesn’t work.

Have a marketing file for each property on your computer where you store GOOD pictures (free from tenants junk, clean and with good lighting), ads that worked and any of the property details you’ll need when you advertise it (size, features, heating type, rough utility cost if applicable). Keep a scanned copy of the MLS listing if you bought a listed property. The details on the listing sheet will come in handy for years to come!

I have noted 3 other marketing systems for real estate investors on our blog. Check it out and share YOUR MUST HAVE system for real estate investing.

We could have made things easier on ourselves from the beginning by implementing simple systems but the reality is that it’s so easy to not make it a priority.

I’ve also seen investors go the other way and be system crazy when they don’t need to be.

For most real estate investors, I think a balance between outsourcing as many of the tasks you despise while ensuring you can still control the process and the costs will be the best solution. And really the best way to figure out what you will and won’t put up with it is to start simple and add more systems as you go and grow. It makes sense for us to have an employee in our office now but we have a sizeable portfolio and are adding around 10 new homes a year. That won’t make sense for most investors but many could use a part time bookkeeper, a great filing system and some spreadsheets to track their team members.

Whatever you choose to implement make sure it’s helping you and may you never have to feel like you’re being buried alive by the paper.

What to Do When Your House Isn’t Selling A Guide for Real Estate Investors

What to Do When Your House Isn’t Selling

When your house isn't sellingKevin O’Leary is a money focused investor. He’s entertaining, obnoxious and single minded in his investment strategies on Shark Tank and Dragons Den. Or, at least the character he seems to play is all those things.
He acknowledged in a recent episode of Dragons Den that he considers his dollars to be soldiers. He sends them out to battle ONLY in the highest likelihood they will win and return with more soldiers. As in any battle, it’s inevitable that a few will die, but he wants to kill as few as possible. That’s murder in his mind.
Maybe he’s a little too single minded in my view but his point is clear for all investors: focus on the end when you start. What’s the likelihood that you’ll get your money back with a return at the end?
What could happen that could cause your soldiers to die at war?
As a real estate investor, one such tragedy could be a situation where you have to sell but your property is not moving. Or maybe it just won’t sell at the price you need it to sell at.
Prevention is the best remedy for this situation:

You are making an investment only if there is a reasonable probability that you will be able to make money when you sell. Buy every property with that in mind.

How to Exit Your Real Estate Deal When Selling Doesn’t Work

But, if it’s too late for prevention here are three other exit strategies to consider if selling doesn’t work for you:
1.    Rent to own
2.    Partner with someone who will take over the deal – you can structure this however you want. Some people sell off 50% of the equity to an investment partner while others might find someone to take over active management in exchange for 50% of the cash flow.
3.    Sell it unconventionally offering an investor the opportunity to do a wrap mortgage, a sandwich lease or with you carrying a VTB for a term.
The rent to own strategy is just like how it sounds, a tenant rents your property with the intention (and option) to buy the property at some point in the future (and at a pre-determined price).
To help your tenant prepare for the purchase you charge them a deposit today and a rental rate over and above the market rate with a portion of their rent building up as a rent credit. You set the sale price today that they have the option to buy the house at in a year or two.

As an exit strategy, rent to own has a few advantages including the opportunity to help someone become a home owner that might not be able to make it happen without some support right now. It also is a way to sell a property without using a realtor (saving commission) while making higher than usual cash flow each month thanks to lower maintenance costs and higher rent. The drawbacks are that you can’t exit the deal completely for a year or two (or longer depending on your term) and there is always a chance the tenant you put in the property does not buy. Here’s a quick rent to own example to show you how it works for you and your tenant. Let’s say a typical single family home (3 beds, 2 baths, 2 storeys, good neighbourhood) in your market rents for approx. $1,300 per month as a standard rental unit. In a RTO, the tenant may pay $1,700 per month and $400 of that $1,700 goes towards the purchase of the property (when and if they buy).Thus, if the renter (known as a Tenant-Buyer) elects to purchase the property after 1 year, they will have $4,800 ($400 times 12 months) towards the purchase of the property. This, coupled with an Option Fee (similar to a down payment) which the Tenant-Buyer (TB) pays to the Landlord at the beginning of the rental period, goes towards the purchase price.

Here’s a quick look:

 Purchase Price for Tenant-Buyer:
 Option Fee from the TB:
 Monthly Rental Credits from the TB:
 Net Cost to TB when they Purchase:
In essence, the TB no longer has to come up with $350,000 when they buy the property, they now have to come up with only $335,200 (plus standard closing costs). And, if the Tenant-Buyer is able to obtain good financing, they may only need to put down a few more thousand to make-up the difference between the purchase price and the mortgage amount. This effectively helps the Tenant-Buyer to get into a home and start building equity right away (it’s like forced savings) instead of having to put aside $500, $600, $700 per month into a crappy (low interest) savings account. And, it allows you to exit from a property that you’re having trouble selling.
Partner with Someone
If you have a great cash flowing property and your reason for exit is simply to pull funds out of the deal, finding a partner to buy 50% of the equity in the property might be the solution.
This type of partnership can be done with Rent to Own’s, a regular Buy and Hold, on a commercial property, or even on a flip.
For this to work, both sides of the partnership have to have to bring something of value to the table. If you have a positively performing property with good future potential, you could sell half of the deal to a more passive investor and continue to run the property. That would allow you to pull your cash out.
If you are going to approach anyone about taking over 50% of your deal – whether you’re looking for expertise or money – make sure your deal has something of value in it for them.
Sell it unconventionally
There are lots of investors out there looking for a way to get into a deal without a bank or without using a lot of their funds. Usually they are willing to pay a slight premium on a property in exchange for a creative way to purchase the property. Or, at a minimum, it will help you move a property when selling isn’t an option.
Of course, like rent to owns, the creative strategies for sale do mean a delayed exit from the deal, but it can also mean more profits.
Here’s three potential ways to sell creatively:
–       WRAP MORTGAGE which is simply selling the property with existing financing in place and “wrapping” additional financing on top of it. Essentially, the buyer would pay you 1 payment which covers your existing mortgage payment and includes additional funds to go towards a VTB. The buyer does not need to come up with new financing and they can put less money down as you are including a VTB that’s wrapped together with your current financing.
–       A SANDWICH LEASE which is where you sell to an investor on a rent to own and allow them to do a rent to own of their own (that’s what creates the sandwich).
–       VTB– offering to carry financing on the deal. Not only can this help you sell faster, and at a higher price, it can also result in a higher overall return because you’ll earn interest. For example if sale price is $300,000 but there is a two year VTB (for 100% of the price) at 6% interest-only, you’re actually getting $336,000 for the property (after 2 years of mortgage VTB payments).
There are also potential tax savings if the home was not your primary residence of the whereby you can defer some of their capital gains to future years.
The lowest risk VTB for a seller to hold is in a 1st mortgage position, but the challenge with that is you pretty much have to own the place free and clear from any current debt.
The best time to plan your exit is before you even buy. Considering who will be your buyers, what concerns they will have and what kind of supply and demand you’ll be facing for that type of property in the future are pretty important considerations when planning an exit. That, coupled with having multiple exit strategies in mind, will help you to become a more savvy investor and prevent you from buying properties that could hurt your wallet rather than filling it.

Seminar Fakes and Housing Rip Offs to Avoid

by guest author Jim Sheils

Our friend and fellow real estate investor out of Jacksonville, Florida, Jim Sheils explores the world of real estate investing as he shares tips for covering your butt and avoiding slimy gurus and foreclosure homes that are never going to give your money back.

Seminar fakes and housing rip offsThis is an important subject and no one else seems to bring it up. But it’s something you need to know about so you can stand up to the 800lb gorillas that are ruining the wealth creation industry.

I am passionate about education. I love to teach. I love to learn. I’ve spent 6 figures on my education and I’ve made 7 figures from it. So let’s make it clear right up front, I am pro-education and from my own experiences, I can honestly say that paying for specialized knowledge can be the best decision you’ll ever make. (As long as you put it into action and go to the right people to learn).

However, being around the seminar industry for several years both as a student and an educator, I have also learned there are a lot of fakes out there. Some of these “Gurus” have never actually done what they’re teaching.


1) They are arrogant and know it all.

They did it all on their own. Superior intellect and fancy techniques is all it took. No mistakes will ever be spoken about. Arrogance (not confidence) oozes off of them on stage. They speak down on their students. If you were in a normal conversation at a party with this person, you’d have no desire to hang around them, but now…. since they are on stage….and promoted as a real estate investing guru…with a large following… Now it’s OK to be rude and arrogant? I used to think so. But now I know better. If I see someone act this way on stage now, my internal alarm system automatically goes off.

If arrogance is oozing off them and they are rude to their students, it’s not OK .You should not be impressed and I encourage you not to work with them. Gurus put their pants on one leg at a time just like the rest of us. Be weary of these types of people, be VERY weary of them. These are the exact type that will take your money with no remorse and have little concern for the quality or effectiveness of the education they provide you.

2) They don’t teach anything.

They give no content! Everything is an inflated success story to support their flawless investing technique (with very little details). They’ll constantly be giving you a sales pitch to buy a bunch of bigger, more expensive programs that promise the content you’ll need to make a million dollars in 90 days or less….yeah right. If you go and see someone speak, and they give you nothing but a sales pitch with no content , expect the same thing for their next 2 programs you sign up and pay for. These are the “carrot on the stick” gurus that will stretch out and delay the real info you need to learn and they make you pay for it dearly.

3) They over complicate the business.

If a subject can be taught in 1-2 seminars…they will divide it into 10 seminars. They make you believe that real estate investing is a great abyss and without signing up for every program and product they have to offer, you will fail. They also convince you that they have some fancy “system” that is the secret way to huge profits…. GUARANTEED (there’s no such word in real estate investing!). These gurus love complexity and encourage you to take part in it. So if someone is telling you that you need a fancy phone system, software programs, massive power team of lawyers, websites, expensive marketing, huge letter campaigns, etc just to get started in foreclosures….RUN AWAY! You do not need ANY of those things to start investing in foreclosures.

The reason I talk about this is in such detail is because the foreclosure market is becoming the big buzz again in financial education. And with popularity behind it, the Fakes are entering the arena like sharks circling their prey. But that’s OK, you now have the education to identify them and most importantly avoid them!


Housing Rip OffsHousing rip offs are happening all over the US and international investors are the ultimate target for them. Most of the housing rip off companies (and their promises) look the same.

Everything in these deals will be promoted based on one main theme: THE PROPERTY IS CHEAP WITH HIGH CASH FLOW.

House for only $20k to $30K with great rent returns. Sounds great in theory but if you only scratch below the surface you see that most of the time this plan is a house of cards. Most of the homes are in cities with terrible fundamentals (population, economy, desirability, supply and demand are lacking). The only one in favor is affordability. And you know from reading Rev N You that affordability (a cheap price) does not secure a good investment especially if the other fundamentals are lacking. And especially if these homes are in terrible areas and in terrible condition. And although they talk a big game, these House buying groups usually have no real construction crews or tested and proven property management in place.

They also like to claim they are buying the ever-so-sexy “BULK DEAL” or have connections with banks to be able to get these great priced homes.

BUT… the truth is anyone could buy these homes but very few people want them.

Why? because vacancies are high, turnover is high, repairs and maintenance are through the roof, management is tough to find and resales are lacking in the area. But, of course they’ll throw out the line “it’s a great transition neighborhood”. Well, history has shown that in most cases, when economic times get worse, the quality of a bad neighborhood get even worse, not better. And the best part of it, although this group is yelling for you to put your money into these crappy houses and areas, they themselves are not! They are just collecting the money and running for the hills. Don’t be surprised that when things go wrong, no one from this Housing group will be available to take your call. You will be on your own. But in the beginning of the deal you will find them promising the sun and the moon.

Don’t believe it.

In theory, all seems full proof but when you do this system on a large scale in tough neighborhoods, the results can be horrible. And remember, the reason they sell you homes at these prices is not because they think they are good deals!!! It is because more potential investors can afford a $20K house than a $100k house. It’s also easier to market and no financing is needed because people can pay cash at such low price points. With this bigger pool of buyers they can sell more houses, which makes them more money but also usually does more damage by leaving more inexperienced investors in tough neighborhoods with homes in awful condition. We could make 10x the money with our turn key rental business (in the short term) if we followed this model and went into dangerous neighborhoods and bought cheap houses but I wouldn’t sleep at night knowing I put clients in a very risky situation with bad intentions. But be warned, a lot of people just don’t care and will not hesitate to line their pocket by putting you into a terrible property.

Sure Signs of a Housing Rip-Off

1) Cheap price is all they promote

2) High rent returns in theory but when you average in the higher vacancy rate, the higher repair averages, the higher turnover rates, higher damages, etc….you do the math ….that extra cash flow gets swallowed very quickly

3) They buy run down homes in bad neighborhoods…oh sorry…they buy “transition neighborhoods”(High crime, high vacancy, no first-time homebuyers, only investor owned property)

4) They will claim the house needs very little work to become “rent ready’

**A lot of these homes are uninsurable!!!

5) They talk big #s “We buy 20, 30, 50 houses a month (as if that’s a good thing)

***Remember, if you buy 50 a month…you need to be able to rehab 50 a month….you also need to be able to find 50 good tenants a month….see where I’m going with this, without some major traction and support systems in place, these groups doing high volume can have an ugly implosion and the investors are left holding the pieces. I’ve seen it happen and it is a terrible thing to see so many good people get burned in one big greedy move by one of these so-called “expert” house buying groups.

6) They like to tout that they are investing in several markets (as if that’s always a good thing!)

****If you are in 10 different markets, you need 10 different teams on the ground that can perform. It can be a full time job overseeing one good team in one good market!

7) They will claim they have “rent to own tenants” ready to go and a mortgage note buyer to buy you out of the property within a few years. They will also tell you “We can get a government section 8 tenant to live there”… really? That can be easier said than done. HUD tenants have a lot of choices of place to live today and they can now avoid some of the tougher areas and rent in better areas.

8) The house group that’s selling these homes to you the investor DON’T own any property in that area.

9) Everything is theory because they have no track record.

Questions to ask

  • How long have you been investing in the area?
  • Do you have rental property in the area? And how long have you owned there?
  • Property Management? Contractors? Have they been tested?
  • Testimonials? Client Reference?

Take stock in this info and be sure to understand and follow the warnings. If so, you can avoid pain and headaches suffered by many investors (like myself) who had to learn the hard way.

Jim Sheils is an active real estate investor in Jacksonville, Florida. He and his business partner and lifelong best friend Brian Scrone have done nearly 500 real estate transactions, and currently specialize in helping international investors make solid investment moves in the Florida Market. Learn more about them at: www.jacksonvillerealestatewealth.com

Published: June 27th, 2011

Image 1 Credit: ©Daniel Villeneuve |Dreamstime.com

Image 2 Credit: ©Willeecole |Dreamstime.com

Questions to Ask Before You Buy a Condo

Questions to Ask Before You Buy a Condo – as an investment or as your home

The builder decided not to look at your offers or any of the offers that came in this week,” the frustrated realtor explained to us.

Questions to Ask before you buy a condoWe tried to dig into the situation calling on people we knew who had financed some of this guy’s projects and reaching out to other people who knew the project but all we found out was that one of his other projects was not getting financed and that he is probably going to be trying to squeeze every dollar he can out of every condo in the building to pay for the other project.

If that was the case we were baffled that he wasn’t even looking at our offers. At least we were puzzled until about 10 days later we received an email with the new price list!

We had been putting an offer in on a condo and an office condo unit in the same building. After nearly a year of trying to find somewhere to live on Vancouver Island we finally decided to settle for ‘good enough for now’. The numbers worked for us on the two units and having a separate office unit in the same building kept us close to work without having it in our house (something we’re finding is necessary to give ourselves some home and work balance given that we are husband and wife running two businesses together it’s hard to tell what is marriage and what is partnership).

When the new price list rolled in and everything had gone up 10% (approx. $50,000 more!) we choked, then spit, then laughed. How obnoxious of this guy to jack the prices up so high when the units were finally selling (i.e. the prices finally made sense given current market conditions). The realtors who had been working so hard to sell his property out for nearly two years pretty much quit on the spot and we certainly weren’t ever going to buy from someone who treats his customers like that.

I’m happy because we’ve found a 2700 square foot old character home with gorgeous ocean views AND a large inspired space for an office on the main floor that we can call home and work. It gives us the professional feeling we want in the office space AND the separation from our home – without having to add a commute to our day. It’s WAY better than the condo option we were working on. But the whole process of doing due diligence on the condo units and working on buying them reminded me of just how different it is to buy a condo than it is to buy a house. I wanted to share some really important differences and considerations/questions to ask before you buy a condo – whether for you to live in or for an investment:

  1. What’s in the minutes? If you do nothing else when you are considering buying a condo but read the meeting minutes from the last few years of condo board meetings then you’ll be in good shape. The meeting minutes have so much information on current, past and potential future issues that you may have to deal with. It also will give you an indication of how the property management and condo board get along and how it’s run. This is critical because these folks make all the decisions for the condo and if you’ve got bad relationships or people who have no idea what they are doing you can end up with an expensive disaster on your hands. Couple of key things to pay attention to are complaints from residences about a nagging issue or something the property manager says needs to be addressed soon. When we bought our vacation condo in Whistler one thing that stood out in the early meeting minutes were the complaints from folks in the summer about how hot the units were. As you moved forward through the minutes you found out they resolved the issue by installing air conditioning units. This increased the fees. Watch for things that could be expensive (leak complaints, window issues, or landscaping contracts going wrong).
  2. What are the parking options? Dave used to live in a large condo down on Front Street in Toronto, ON. There were 8 visitor parking spots for 100 units and parking was really expensive around the property. It was a pain in the butt for him to have guests because he never had parking for them. He was happy he was a renter and could just move out to solve that problem. Ever since then we always find out exactly WHERE our parking spaces are for condos, if it’s registered on title with the unit (i.e. we own it), whether we can buy additional parking, and where the parking options are for guests. These are HUGE issues and I think a lot of people buy condos as an investment without concern for the location of the parking space. With the condo unit we just about bought the residential unit came with 2 spaces but the office came with none. That was a big concern for me. Where will our assistants park? Where will our visitors park? Parking is cheap in the area right now but for how many years? It was a big reason we wouldn’t pay any more for the properties because we had a big issue with this. Parking can cause significant tenant turnover on any kind of rental – condos are certainly no different! Not to mention, poor parking options can hurt your resale value as well!
  3. Storage? We wouldn’t have even made an offer on the condo building if it weren’t for the fact that we had submitted and had accepted a plan to build a large storage space at the front of our parking spaces. We wanted somewhere secure to store our sporting equipment and old files. The little cages they were providing wasn’t large enough for a bike let alone 2 bikes, skiis, hockey gear and other items. People have stuff and condos do not give them much space to store that stuff so storage is critical. Make sure the unit has adequate and secure storage.
  4. Reserve Funds, Amenities and Monthly Fees? Lots of people love the fact that their building has a pool, gym, and 24 hour security. And renters will love that too BUT these amenities (especially a pool) can get very expensive. You WILL pay for this in your monthly fees and in our experience the monthly fees tend to rise faster than your rent does so it can quickly squeeze your cashflow if you have a lot of extras you have to pay for in those fees. Take a good look around the property to understand what is covered in the fees, how quickly fees have risen in the past and what other issues (like cooling or heating problems or lack of bike storage or leaking windows) that could come up and cause special assessments or fee increases. You also need to take a good look at how much the condo corp has set aside for the reserve fund. That is intended for the maintenance items that are guaranteed to come about over time. If there is a small reserve fund, be concerned especially if your property has low maintenance fees and lots of amenities. Ask around and find out what’s normal for buildings in the area with similar amenities. Ask realtors who specialize in condos what their experiences are with turnover in the building. Learn all you can about what’s going on with the building and how it’s being run so you can minimize the surprises over time.

There’s so much to learn with buying condos but these are critical considerations and questions to ask. And if you’re looking at new construction wondering how you can mitigate these risks – you’ve got a big challenge. New and pre-construction condos don’t have any history you can review. They don’t have a few years of operation to see how they are being run and it’s sometimes questionable as to when they will be finished (depending on where they are at in the construction process when you look at buying them). The due diligience you need to do on those properties comes back to researching the people involved in the process! It’s totally different.

For now, if you’re looking at a resale condo of any kind make sure you get a giant coffee and settle in to review minutes, reserve fund details, and spend time walking the complex and asking about parking, amenities, security and what’s normal in an area for fees and issues. If you do that you’ll have a good sense of what you’re getting into – and whether you’ll be making money on the investment or living in a property that is always going to have it’s hand out for more!


by Julie Broad

Make Your Vacation a Tax Write Off

by Bill Walston

Make Your Vacation a Tax Write OffSummer’s here and everyone’s mind is on vacation! How does that fit into your “tax deductible” lifestyle?

Here’s the scoop: the IRS says that you can deduct expenses for taking a business trip. There is no reason the trip shouldn’t coincide with your next vacation. With proper planning, you can get your business to pay for your trip and make your vacation a tax write off!

For starters, the primary purpose and intent of the trip must be business. If there is no business purpose for your trip none of your expenses will be deductible. Now, as real estate investors, unless the destination is completely random, chances are you’ll find a way to do business there. Secondly, your expenses will need to be allocated between business days and vacation days. Our goal is to document as many business days as possible at our chosen destination.

Establishing a Business Day
A business day is defined as any of the following:

  1. any day you are traveling to or from a business destination
  2. a day when you have a pre-scheduled appointment (regardless of the length of time spent at that appointment), or
  3. a day when you spend at least four hours on business.

What You Can Deduct
Generally, you can deduct all of your travel expenses if your trip was entirely business related.

When you make your vacation a tax write off, travel expenses include both transportation expenses and “on the road” expenses.

Many people combine these under one set of rules. However, they are treated differently; each category has its own separate rule base. What are the differences? Transportation expenses are those costs that you incur in getting to and from your destination. So the cost of your airfare or car costs would come under that category. If the business days of your trip exceed the non-business days the assumption is that your trip is primarily for business and all of your transportation costs are deductible. If non-business days exceed business days then none of the transportation costs are deductible, even though you may be able to deduct “on the road” expenses.

Tax Write off VacationThe “on the road expenses” include all costs necessary to sustain life while on your trip. These expenses include lodging, meals, laundry, dry cleaning, and similar expenses. These expenses must be allocated between business and vacation days, if any.

How Much You Can Deduct
There are two ways of deducting your business travel, the per diem method or the actual expense method.

Per Diem Method: The IRS allows for a set deduction per day when you travel. Every year, the IRS publishes a table (IRS Publication 1542) which specifies a per diem value depending on your destination. There is an amount specified for both lodging and meals and incidentals. Even if you spend less than your per diem rate, you can still take the entire per diem deduction. What I love about this method is that it doesn’t require receipts. You only need to document where you were! Imagine the possibilities.

One caveat: Sole proprietorships are not allowed to use the per diem method for their lodging deductions. However, all other expense are fair game as far as per diems go.

Actual Expense Method:  This is pretty straightforward. Simply keep all of your receipts and add up the total amount of deductions based on what you have spent. The important thing is to make sure you keep the receipts for everything you spend your money on.

Deduct Expenses for Your Spouse or Significant Other
If you want to take trips with your spouse or significant other and deduct the travel expenses for both of you, you must have a justifiable business reason for bringing along that person. This usually occurs under three scenarios:

  1. The individual is part owner of your business.
  2. The individual is an employee of your business.
  3. The individual is a business associate with whom it is reasonable to expect that you will actively conduct business.

This means that you can take individuals with you and deduct 100% of their business travel as long as they are directly associated with your business in any one of the preceding three circumstances.

Make Weekends Deductible
Tax Write Off Your VacationHow would you like to treat Saturday and Sunday as business days without ever working on the weekend? You can – if you know what you are doing. As long as Friday and Monday are business days then Saturday and Sunday are business days as well – even if you party like a rock star on the weekend! This is a very popular strategy; however, its success rests on your ability to substantiate your claim that there was business activity on both Friday and Monday.

Records to Keep
Remember the old saying about real estate. . . Location, location, location. Well with the good old Uncle Sam the rule is. . . Documentation, documentation, documentation. Make sure that you set up a trip folder. Keep copies of e-mails setting up appointments with realtors. Take photos of properties you view. Take notes at meetings you attend. Keep copies of MLS print outs. Make sure your business appointments are recorded in your calendar. This all will establish the business intent and purpose of your travel. And remember, without business intent there is no deduction.

So, there you have it. When you are a small business owner (and as a real estate investor that includes you) the tax law turns in your favor. What were once personal non-deductible expenses have now become tax-deductible business expenses. With proper planning, you can literally make your life tax deductible.
Bill Walston is a full time real estate investor, mentor and tax strategist who supports his clients in growing, promoting and building their real estate businesses. To learn how to begin living your own tax deductible lifestyle, contact Bill by email. You can also follow Bill’s great advice on Twitter at


Investing in Mobile Homes

Why I Enjoy Mobile Home Investing

by Rachel Hernandez

Investing in Mobile HomesWhen most folks hear the word “mobile home,” images from the film “8 Mile” and negative stereotypes of mobile home dwellers enter their minds. These images can be misleading – it’s not always the case.

Just like there are different types of neighborhoods in real estate, there are different types of neighborhoods in the mobile home world. Even with the title of this article, you’re probably wondering how the word “mobile home” can even be in the same sentence as the word “enjoy?”

Hi, I’m Rachel (aka “Mobile Home Gurl“). I specialize in mobile home investing. I’m here to tell you about how I came across this small little niche of investing and why I enjoy it so much.

When I first started my real estate investing career, I thought my path to financial freedom would be by building wealth through single family homes and apartment buildings. As a landlord, I found out the hard way that I was going down a path that led me further and further away from my dream of achieving total financial freedom. How could this be?

As a property owner, I felt that I had a job. Every month, there would always be issues with tenants. And, every year it seemed like my expenses would go up (i.e. maintenance costs, property taxes, etc). Even worse, every time I added a new property to my portfolio it seemed like it would make things worse by causing more work. To me, it was just a new property to manage.

Now, most people would be ecstatic to add new properties to their portfolios. Though, I did not see it that way.

I saw it as another hassle to deal with.

It was the management of these properties that really made things difficult. Even when I got fed up with all the management hassles, I brought in property management companies. I thought they could help make things go away – I was wrong.

It only got worse because I still had a job –I still had to manage the property managers.I had to teach and direct people what I already knew. Every time my phone would ring, I would cringe as I knew there was another problem.

Don’t get me wrong, it’s nice to own properties and derive income from it. But, for me the key to achieving total financial freedom was through passive income. And, I just felt the income that I was receiving as a landlord was not passive – I still had to work for it.

There was no way I could go on vacation and leave the business – it just was not possible. I remember taking a trip one time, my phone constantly ringing as my property managers were dealing with maintenance issues. And, I was in another country. Not fun at all.

It wasn’t until I stumbled upon Lonnie Scruggs (many times referred to as the “Godfather of Mobile Home Investing”) and his book, “Deal on Wheels,”  that I truly understood the meaning of financial freedom through passive income.

You see, what I’ve learned from Lonnie is that the real key to financial freedom lies in the concept of financing – not through ownership. Now, I truly understand the saying “The rich control while the middle class own.

In a nut shell, the concept of financing through mobile home investing involves buying a mobile home at wholesale value and selling it retail through financing by offering terms. It all boils down to creating an easy way for folks to buy a home with a small down payment and small monthly payments charged with interest over a period of time.

If you think about it, this concept can be applied to anything – not just mobile homes. As consumers, we buy a lot of big ticket items on credit including cars, boats, houses, etc. This is nothing new – this has been done for centuries by banks. What Lonnie did was take this concept and apply it to mobile homes. Therefore, creating a niche – mobile home investing.

I have come to realize that it’s much better to be the bank. As a prior landlord, I know now who always gets paid – the bank. When expenses go up, who still gets paid? The bank. When vacancies arise, who still gets paid? The bank. When evictions occur, who still gets paid? The bank. Is it better to be a property owner or the bank? I’ll let you decide.

For me, I made the decision years ago that it was better to be the bank. And, that decision has paid off. Now, I can enjoy true passive income through mobile home investing. And, I can honestly say – this has been my chosen path to financial freedom.

The concept of mobile home investing is very simple. It also allows investors to get in with a very small amount of money compared to other forms of real estate investing such as single family homes and apartment buildings.

My First Mobile Home Deal

To give you an idea on the mechanics of a mobile home deal, here’s an example of my most important deal – my first deal. It was a 1984, 2 bedroom 1 bath mobile home in a family style mobile home park. I bought the home for $3600 and sold it with owner financing on terms for $10,000. The buyers paid $1000 down with payments of $250 per month for 4.5 years.

Since I received $1000 (the buyers down payment)  plus $3000 ($250 per month multiply by 12 months) to equal a total of $4000 in my first year, I received 100% of my investment in the first year. Plus, I had no maintenance issues to deal with since I sold the home on owner financing.

Not only did I receive a great return on my investment, but the payments I receive are truly passive. No longer am I the one responsible for taking care of the home. No longer do I have to deal with the constant issues of being a landlord. As the bank, my job is merely to collect payments and get paid. If you think about it, when was the last time you called your bank when the toilet went out? Never.

So, you see the reason why I enjoy mobile home investing is because it’s a vehicle for me to truly create passive income. And, that is why it  has been my chosen path to financial freedom.

If you’re interested in the concept of passive income in achieving financial freedom, you might just want to give mobile home investing a look. For those who are just getting started, I highly recommend checking out Lonnie Scruggs’ book, “Deals on Wheels” – it’s been the best investment I’ve ever made.Rachel Hernandez Investing in Mobile Homes

Happy investing!

Rachel Hernandez was a prior landlord for several years before taking the leap to specialize in mobile home investing. She writes regularly about her stories and adventures investing in mobile homes at: http://www.adventuresinmobilehomes.com.

Published on May 18th, 2010

Real Estate Investing Lessons Learned

Real Estate Investing Lessons Learned Happy BirthdayToday we simply want to say THANK YOU. Thank you for your support, for your constructive feedback, your time and your attention.

We’re sending you our thanks because without you we wouldn’t be celebrating the 4 Year Anniversary of our newsletter. On this day in 2006 we sent out our first Rev N You with Real Estate newsletter. That email went out to less than 100 family and friends. We didn’t have a website or a blog. We just wanted to share our stories to help our friends and family profit from real estate and avoid making some of the same mistakes we’d made.

Our newsletter grew slowly and steadily at first. Without a website the only way people could sign up is to email us or get the newsletter from a friend. But in late 2007 Julie took a course from Early to Rise that helped her make our Rev N You hobby our Rev N You business. With their help she set up a website and in a very short time our newsletter that was going out to only a few hundred people was now reaching thousands.

To celebrate our 4 Year Anniversary we decided to ask our 12 Months to $1 Million members to speak for us. We had a little contest where each member could submit“The Single Biggest Thing I’ve Learned From Rev N You”.

Seeing what others take away can help you learn, and, honestly, it made us feel good!! You see, some days the only emails we get are from people who are angry at the world, down on their luck or just plain frustrated. And that is ok – we want to help and people who are in a tough place are definitely in need of a helping hand – but sometimes its just really nice for us to hear how we have already helped someone! And to know that we’re benefiting others with the effort, time and money we invest into Rev N You. Actually, it’s not just nice, it’s really wonderful!! It inspires us … and we hope by sharing these stories from our members, it inspires you too!

So today … please allow your fellow Rev N You readers to share their lessons with you. And please accept our sincere thanks and appreciation for you!!

Best wishes,
Julie Broad & Dave Peniuk

The Single Biggest Thing I’ve Learned
from Rev N You

From the entries we received by midnight on April 15th we randomly selected 3 winners to receive prizes … but one of our prizes really needed to go to a US resident so we ended up selecting 4 winners. Below are the 4 winners & the prizes they will receive.

Real Estate Investing Lessons Learned by PatrickOne thing I have truly appreciated about Dave and Julie is that they do not make big promises about making you a lot of money overnight. We have all seen those infomercials that try to sell you success overnight and attended those high pressure Real Estate Investing seminars that sales gurus guilt you in to buying. Dave and Julie are nothing like them, these are down to earth people, very humble and I can tell have a true desire to share what they have learned. I have been a member of their 12 months to a Million program for only a few weeks and I must say that I have learned a lot. Their conference calls allow everyone to ask their biggest questions and if they don’t have the answer they know where to find it. They have helped me find the answers to some significant concerns I had with lease to own investments in Canada and showed us who they learned their strategies from.

REI can be tough, it’s filled with many unscrupulous people I would like to think Dave and Julie are the some of the very few that have a genuine interest in helping others succeed.
~ Patrick, Toronto, ON, Canada

Patrick was the first name out of our hat and he wins a full scholarship to our Real Estate Millionaire 52 Weeks Program! Congratulations and thank you Patrick!!

More on Rent to Own deals


Real estate investing lesson learned by Merron in CalgaryThe single biggest thing I’ve learnt from Rev N You is whenever you are getting frustrated step back, look at the fundamentals of what you are doing, and then everything else gets easier. Stick with it, do good marketing research, stay focused and you will find the awesome deals.
~ Merron, Calgary, AB, Canada

Second place was supposed to be a copy of Dustin Matthews Business Credit Infusion, however that prize is best suited to a US resident so we decided to award Merron with a full scholarship to the Real Estate Millionaire program as well. Congratulations and thank you Merron!

More on real estate market research and fundamentals


Brady Real Estate Investing Lessons LearnedThe pattern I see with Rev N You is consistency, quality, and humility. I’ve been following along with the blog for a while and treading cautiously as I’ve spent most of my savings on courses from “gurus” and utilizing a strategy taught to me through one course, I used my credit cards to purchase the courses. Whoops, should have looked deeper into the company before spending a small fortune, especially on credit. Suffice to say, in one intense year of courses and trainings, I managed to do not one single deal.

Paralyzed by too much information and totally frozen as I watched my credit card statement increase. In January 2010, I decided that it was time I did something different and rather than pay thousands of dollars for a personal mentor, as I couldn’t afford it now and my wife would never let me, I begged her for permission to subscribe to 12 Months to $1Million. She let me. I started listening to webinars, phone calls, reading blog posts, whatever I could do to support me bringing us a cheque. I’m happy to say that it paid off, I completed my first deal (Assignment) since I decided to become a real estate investor! And I credit Rev N You for pointing out that due diligence is so important because no matter how many times I heard that elsewhere, it wasn’t until Rev N You said it, and wrote about it, that I truly got it.
~Brady, Parksville, BC, Canada

Well Brady … looks like you can tell your wife you’ve got 6 months of free access to our 12 Months to $1 Million club because we selected your name for that prize! Congratulations and thank you!!

Julie’s rant about guru real estate investing courses
More on the Real Estate Investing Course You Shouldn’t Take


Real Estate Investing Lessons Learned by CraigI have learned that in this business, it does take work, diligence, and making mistakes every now and then. They have shown me that ALL deals are different, and everything can change. I have learned to look at deals from all angles and situations, and know that I have different approaches to ANY deal, and to see what will work, and what WILL work another way, And, when to walk away from the not so good ones. With all that said, I think the Single Biggest Thing that I have Learned from working with Rev N You, is to get educated on your area where you are, and ALWAYS do your homework as to what is going on around you in the neighborhood, ask questions, talk to neighbors, and not to get emotional over a property and, You will succeed in this business, as long as you keep moving forward and educating yourself … I guess that is a FEW different things, but, I have learned SO much from Julie and Dave, I could go on and on !!!

Even in Sunny Florida, where I am !!!
~ Craig, Palm Harbor, FL, USA

We had this prize just for a US resident so we put our US entries into a hat and selected a winner … Craig was the lucky winner of Dustin Matthew’s Business Credit Infusion… a system to help entrepreneurs get business lines of credit and expand their business. There is a ton of great information in this program!! Enjoy Craig … and thank you Dustin for sending us the program to share with one of our readers.

More on getting started with real estate investing.
Published on April 17th, 2010

Real Estate Market Research in Zimbabwe

Real Estate Market Research: Dave and Julie Aren’t Right About This!

by Monica Mutuma

I have a confession to make.  In the Real Estate Millionaire Program that I am going through, Dave and Julie constantly emphasize the need to keep asking questions – doing more market research– no matter how good a property seems to be. I have sometimes thought that this might not be necessary.I figured that maybe they just weren’t right about this.

Real Estate Market ResearchOnce one has done the numbers and satisfied oneself that the property will pay for itself and provide some income for the buyer I thought that was enough.

Building societies here are currently not giving out mortgage loans.  They will resume once they have dealt with challenges that are currently affecting them.  I now realize that in a way this non- lending is good for me.  It has given me the opportunity, be it a forced one, to keep doing research.  Firstly, to dig deeper into the familiar areas which I started out with.  Secondly, to look further afield. I am almost convinced that if I had been able to access funding early on in the course I might have been too excited and been tempted to buy a property without doing extensive research.

Further digging in familiar areas has yielded yet another surprise.  Popular areas as I described last time (see Monica’s last article: Real Estate Investing is About Location) are preferred by residents for convenience, proximity to central business district and security.  I’d gathered this information from residents.

However, upon further research with local authorities I’ve discovered that a number of those areas have been zoned for commercial purposes.

This means that properties in the selected areas can also be used for commercial real estate purposes like offices.  A property in this zone has dual use and this is to the advantage of the buyer or the tenant.

Zoning is something to considerThere is a common trend here in Zimbabwe for companies to operate from the suburbia.  A lot of people who run small companies now also prefer to work from home.  If the property is in a commercial zone this will make it doubly attractive- it can rented out to a resident or to a business person. But one still has to consider if a future tenant will be comfortable staying in an area with increased volumes of traffic – both cars and pedestrians.

Some areas, especially to the south/ south west of our city are also zoned for commercial purposes, this time industrial.  What this means for the buyer is that as industry in that area expands, there will be encroachment of industrial activity on the residential properties.  Before buying in such areas, one has to ensure that the buying decision ties up with one’s goals; otherwise one might find themselves with a problem that might be costly.

Some areas are zoned for commercial purposes regarding restaurants.  Again one needs to ask oneself if their future tenant might one day wish to stay on a street where there’s a public place nearby.

So this time around I felt Julie and Dave had been vindicated.  There is more to property buying than meets the eye.  I now strongly feel that it is better to have enough information, negative and or positive, before making the purchase as there are implications which stretch far into the future.

I also made another major discovery with the issue of zoning with one of the areas to the east of the capital.  This area is about 20 km out of town.  It is fairly new and there is still some developments being carried out on some of the properties.  Land there was sold to buyers at fairly affordable prices and people have managed to put up some attractive homes.

That area is in the rural category and will be like that for more than thirty… yes, thirty years to come!  The implication is that properties in this kind of zone appreciate in value at a slower pace than an urban zone.  This has a direct bearing on the value which will be placed on a house if one decides to sell. To me this was mind boggling and when I discovered this I couldn’t stop wondering how many people knew this when they bought.

One resident also pointed out that despite the fairly large and beautiful properties that became available for rent in this area, potential tenants always pushed for low rentals – they argued that they would have to spend considerably more on transportation.

I know for certain that I would prefer the other areas close to town where even small properties fetch good rentals based on proximity and convenience.

It is not easy to obtain information for future plans for urban areas but from the brief pointers I have outlined above, it is worthwhile to continue digging.

Meanwhile, happy searching and (wise) buying.

Published on December 10th, 2009

Real Estate Investing Starts With Cash Flow

“Doing what needs to be done may not make you happy but it will make you great”~ George Bernard Shaw

by Monica Mutuma

Real Estate Investing in AfricaCash flow. Cash flow. Despite the fact that I wholeheartedly embraced the Real Estate Millionaire: The Essential Starter Course and could not wait to begin, I became apprehensive when I was confronted with this topic.

I am not a big fan of numbers and calculations.

During my school days I always hovered between average and poor in mathematics. As a result I viewed it with a mixture of dislike and trepidation and never really developed confidence with numbers. Unfortunately one cannot get away from figures as they are a part of our everyday lives.

So I took a deep breath and started to do my personal cash flow assessments, hesitantly in the first week but more confident and diligent by the third week (thank you Excel). In one of the lessons students are advised to get their personal finances in order before buying a property – this includes doing proper cash flows.

To digress a bit, with the other major topic of goal setting I want to believe I have fared fairly well. Although I’m still a bit fuzzy on some of it, I’ve got a clear idea of what I want to do, when and how. Apart from real estate investing goals I have other things going on as well but real estate investing will be the key area of focus until I purchase the first property.

Back to finances. Dave advises that the importance of doing cash flows is that one is able to see where one is spending their money and how much they are spending.

I then had to take a long and hard look at my finances. I’ve never looked at my cash flow before. This doesn’t mean to say I was a run away spender. Actually I was careful with money, never wanting to be in debt and saving for other projects. BUT I was not doing cash flows. Every month I would make all the important payments like rent, water, electricity, school/college fees, telephones, investments and savings, etc. Afterwards what I did, or rather did not do, is where I now realize I need to seriously work on if I am to make progress towards reaching my goals.

After paying bills I would relax. In the absence of cash flows (or a budget) I most likely lost money through non-critical purchases, which money could have been used to boost my savings.

So now I do my cash flows. I started on the first of August. I am using the templates which Dave thankfully provided. Since I feel I have a lot to discover about how I handle money, I have amended the cash flow calculator by adding “weekly columns” as opposed to having only one total for the month. This means I can track my expenditure on a weekly basis and I intend to study the weekly trend over a few months.

On the summary sheet I have added a column “average monthly expenditure” to help me to see average monthly trends over the next few years. These could one day help me to make investing decisions possibly with regard to timings.

I need to track my cash flows for a while before drawing a conclusion about how I’ve progressed.

The most important adjustment I have had to make in order to purposefully move towards achieving my goals has been to change the way I do things. While setting my goals it clearly occurred to me that in order to achieve success I had to change some of my habits regarding finances. I had to make sure that I saved more each month and did not lose money unnecessarily.

One of my real estate goals is to buy a property in the next 12 months. To this end I have started saving for a down payment and this has necessitated that I live below my means in order to free as much money towards the savings as I can. I do not intend to reduce myself to poverty but I will eliminate certain luxuries, gradually, so that I can make progressive steps towards my goal.

Just to share with fellow students, when in the supermarket I now avoid impulse purchases and will strictly stick to my shopping list. The supermarket is one place where some destructive behaviours take place and there are certain areas which I now avoid. This can be agony but I have to keep telling myself to keep my eyes on my goal but sometimes I feel my strength failing me!

Prioritizing purchases and tracking cash flows is not easy to do if one has habitually been allowing oneself some deviations. High levels of self discipline are required. In my first full month of behavior change I’ve sometimes felt brutalized, by myself of course, and have suffered withdrawal symptoms (emotional ones) from luxuries. The symptoms range between mild and severe. Surprisingly when I look and see that amounts saved every week are gradually increasing, I congratulate myself even for the narrowest saving, knowing that it could have been another purchase but will now move me towards my goal.

Cheers for now.


For Part One of Monica’s Post Please Visit:

What you Can Learn from a Zimbabwe Real Estate Investor

Published on September 10, 2009

Tax Advantages of Real Estate

It’s tangible, it’s solid, it’s beautiful. It’s artistic, from my standpoint, and I just love real estate.
-Donald Trump

This week we have a guest post from tax expert Tim Clay. Tim’s been an enrolled agent for over 25 years, and helps small business owners choose the right business structure, grow their business and keep the tax man at bay.This article is for our American readers. The rules are NOT the same in Canada.

Canadians, you can find our past articles on taxes and real estate here.

46 Billionaires Have Made Their Fortune in Real Estate

by Tim Clay

Tax Advantages of Real EstateThe Donald’s not alone …there are at least 45 other billionaires who think real estate is a good investment.

In an article titled The 10 Common Traits of Real Estate Billionaires, Karen Hanover says 46 of the world’s billionaires made their fortunes in real estate.

One of the beauties of real estate is that, for middle and high income individuals alike, the tax advantages can be substantial. Here are just three things to consider about real estate:

1.   Real Estate cash flows are sheltered from taxes

* Depreciation is a long term write off against cash flow

2.   Real Estate has the ability to defer profit over time with an installment sale

* Installment sales will be big in the wake of the sub-prime crisis

3.   Real Estate offers nontaxable exchanges (a.k.a. 1031 swaps) to avoid taxes altogether

* Some real estate gurus suggest a literal “swap till you drop” strategy
1.    Tax Sheltered Cash Flows

As a real estate investor, you are very familiar with the concept of cash flow: buy a property that has more money coming in on a monthly basis than what is going out.

Investing in real estate allows you to shelter that cash flow using depreciation to write off the cost of your investment over a set number of years. So even while you have money coming in, and the market value of your property is rising, the government let’s you deduct (write off or depreciate) the cost of the building as it ages.

Depreciation is writing off (expensing) a portion of your investment each year until its value reaches zero. Because of depreciation, you will show less cash flow than you actually receive. Let’s look at an example

  • You buy a residential rental property for $100,000 with a $20,000 down payment.
  • You finance the remaining balance of $80,000 at 7% for 30 years, and a monthly note of $532.
  • We’ll assume repairs are $3,500 in the first year.
  • Other expenses (taxes, insurance, cleaning, etc) are assumed as 25% of revenue.
  • The property rents for $1,100 per month.

Looking at this case on an annual basis:

  Rental Income $ 13,200 $ 13,200
  Mortgage Interest  $   5,574  $   5,574
  Remaining Expenses (25%) $   3,300  $   3,300
  Repairs $   3,500 $   3,500
  Depreciation $ 0 $   3,448
Total Expenses $ 12,374 $ 15,822
Total Income/(Loss) $      826 ($ 2,622)

This is one of the few times in life when we’re happy to lose!

Rather than pay tax on $826, depreciation gives you $2,622 to use as a write off against other income. Assuming a 25% tax bracket, this puts $656 (25% of $2,622) in your pocket.

2.    Real Estate Installment Sale
An installment sale is when the real estate owner provides the financing for the buyer to get the property. It’s also known as “seller financing” or “owner financing.”

An advantage of an installment sale is that the profit is spread out over the term of the financing. This profit is recognized as interest (ordinary income), and profit (capital gain).

Installment sales provide an advantage by lessening and deferring the tax bite over time.

As a simple example, let’s say you sell a property for $350,000. Let’s look at what happens with an outright sale.

 Property Sales Price $ 350,000
 Net Profit on Sale $   85,000
 Tax on Net Profit (25%) $   21,250

Let’s assume you provide owner financing for the sale (rather than the buyer finding financing somewhere else and cashing you out). The sales price is still $350,000. You get a 10% down payment of $35,000, and you finance the $315,000 balance at 10% for 30 years. This gives a monthly payment of $2,764. You receive 6 payments during the year.

With owner financing, the sale is broken up into three parts. The first part is return of capital (your cost of the asset). The other two parts combine to form the income received. This income is broken up into interest (your charge for financing) and profit (your capital gain on the property).

The installment sale looks like this:

 Property Sales Price $ 350,000
 Net Profit on Sale $  85,000
 Net Profit Percentage ($85,000/$350,000)  24.3%
 Total received during the year
 Down payment$ 35,000
 6 Monthly Payments ($2,764 each)$ 16,584
 Total Received$ 51,584
 Interest Income on 6 payments$ 15,732
 24.3% of principal & down payment$   8,712
 Total taxable income$ 24,444
 Tax at 25%  $  6,111

Please note that this simple example does not include depreciation recapture which would increase the taxable amount of this transaction. We will deal with depreciation recapture in a later article.

Installment sales have the benefit of stretching out the tax due over the life of the financing.

In the wake of the sub-prime crisis, many people thrown out of their homes will continue to look for creative financing to get another home. An installment sale will be one major option for savvy investors to meet this need and pocket substantial profits.

3.    Nontaxable Exchanges
A nontaxable exchange is when you exchange your property for a similar type of investment property. Nontaxable exchanges are commonly known as a 1031 swap. A gain or loss is not recognized until the property is disposed of.

You can see how 1031 swaps are a very good way to avoid tax on your real estate assets. There are, of course, a few things to keep in mind when you’re considering a 1031 exchange:

  • The properties have to be “like-kind.” This term is not as restrictive as it may seem. You could exchange a single family home for an apartment building, for example.
  • The transaction has to take place with a third party, known as a qualified intermediary. This intermediary is a specialized position, and usually has an inventory of properties available for exchange.
  • The “swap until you drop” approach involves the inheritance of 1031 property. You never dispose of real estate. You continue to do 1031 swaps until you die (“drop”). In this case, your heirs receive the property at the Fair Market Value (FMV).

As a simple example, you have a single family home worth $250,000. You have equity built into the property of $50,000. You exchange the property for a 4 unit apartment building worth $250,000. You pay zero tax on the $50,000.

The idea is to continue to swap properties to defer tax, and then pass this property on to your heirs at FMV. You heirs receive all your deferred profit (equity) tax free.

Using the same example, let’s say you hold onto the apartment building until you die. The apartment is now worth $500,000. Your profit in the property is now $300,000. Your heirs would receive the property at a FMV of $500,000, without recognizing the $300,000 gain on the transfer.

This is a brief overview and introduction to the tax advantages of investing in real estate which are:

* Protection of cash flows using depreciation
* The ability to defer profit over time with an installment sale
* The possibility of avoiding any tax using a 1031 swap
For more information, the IRS web site has a specific section on real estate tax tips.


Tim Clay has a free monthly newsletter full of useful, actionable advice – written in plain English – on real estate and other small business topics. You can sign up for his newsletter at :www.asktaxguys.com.

Posted on May 25th, 2009


Your Private Money Questions Answered

From Patrick Riddle of MustKnowInvesting.com and Private Money Blueprint

Listen as Private Money expert Patrick Riddle answers three Rev N You readers questions about private money, including:

  • “I received an email from a guru that claims he never goes to a bank and gets 0% interest loans routinely. Is this for real? How did he do that??”
  • How many private investors do you keep in the wings on a deal, in case some drop out or decide on other projects??
  • If you could take the fundamentals of getting private money and simplify them into 4 short steps what would those be?
  • I do not know people with money, and I am not comfortable talking to people I don’t know about money. How can I find private money?

For more private money tips, stories and tactics, check out Patricks blog: http://www.mustknowinvesting.com/

Posted on May 8th, 2009

The Secret to Getting Deals Financed in Today’s Market

by Patrick Riddle of Must Know Investing 

Deals Financed with Private MoneyAre you having trouble getting the cash you need for your real estate deals? Have you ever lost a great deal because you didn’t have funds to close it? Is a lack of financing killing your real estate investing dreams?

If you answered “yes,” to any of the questions above, then private money may be THE solution for you.

“Patrick, what do you mean by private money?”

Private money is investment capital from an individual. There is a limitless supply of private money lenders to finance your deals. All you have to do is educate people about your investment program and help them understand why becoming a private lender is a good alternative to traditional investments like stocks, bonds, mutual funds, and CDs.

7 “Must Know” Tips to Getting Private Money for Your Deals

1)    It’s All About Personal Relationships

Investors approach me all the time and say something like, “I’ve got this great deal under contract, and I need some private money to get it financed. What would your private investors charge to finance my deal?”

What people don’t seem to understand is that getting private money is all about personal relationships . . . relationships that YOU build with your private money prospects.

2)    3 Types of People Most Likely to Invest with You

The first type is people who know and trust you. This could be a family member, long time friend, neighbor, someone from church or school . . . really anyone that you’ve built a long term relationship with could be a good source for private money.

The second is people who know a good deal when they see one. Anyone who works in a field related to the real estate industry could fit in this category. Examples would be real estate agents, mortgage brokers, bankers, appraisers, home inspectors, attorneys, accountants, etc.

The last type of people most likely to invest with you is the best source of all . . . people that know someone who has invested in a property of yours. Or, in other words, referrals! Once you get your private investor base established, ask them who they know that would also like to make a good solid rate of return backed by real estate.

3)    Plant Seeds Voraciously

By “plant seeds,” I mean “get the word out about your investment program.” You can plant a seed by telling someone about it, handing someone a business card with details, directing traffic to a website, or any other strategy to introduce the idea that you finance deals using funds from private investors.

I found that when getting started with private money, it took between four to six months on average to get someone to invest with me after presenting my investment program to them. Sooooooo, get started planting seeds immediately!

4)    Less is More

When you are first telling someone about your investment program, less is more! All you want to do is pique their curiously and get them into a formal appointment.

Do this by saying something like, “We buy houses and use cash from investors, just everyday people like you and me, to finance our deals. Our investors are typically tired of the volatility of the stock market and frustrated with meager returns from CDs and mutual funds. Our main service is to provide good returns to investors backed by real estate. Is that something that you would like to learn more about?”

Keep in mind that the goal here is to . . .

5)    Get the Formal Appointment

This is where you will present your investment program to the private money prospect. I’ve provided a link in my bio below where you can download a free customizable PowerPoint presentation to use when meeting with prospects.

Make sure that all decision makers are present when you have your appointment.  Good meeting places would be an office (if you have one), a coffee shop, or the prospect’s home.

6)    Present Your Investment Program . . . Not a Specific Deal

It’s much easier for someone to object to a characteristic of a specific deal than to an ongoing investment program.

If you present a deal, your prospect may not have the required funds, may not like the area or the property.

Once you sell someone on your investment program and you find out exactly what range of funds they have, timeframe available, and how they would like to receive their interest payments, you would only present deals that make sense to them.

7)    Following Up is THE Key to Building Your Investor Base

The reason that I’ve been as successful as I have with getting private money is because I followed up with people that I presented to until they invested with me or told me to get lost.

I would add people’s names to my follow up list every time I had a formal appointment. Then, I followed up with them every time I had a deal that met their needs and goals.
There are three slides in the PowerPoint presentation that are titled, “Investor Evaluation.” Make sure to write down the information that you elicit from asking the questions on these slides. That’s how you will match up deals that you have on your plate with private investor prospects that you’ve met with.

Patrick Riddle has been a full time real estate investor for over six years, has done well over 100 deals, and has recruited over $6,000,000 in cash from private investors. He shares his knowledge and experience on his creative real estate investing blog. To get your free copy of the “How to Recruit Private Money Millions” eBook and PowerPoint presentation, go to http://www.mustknowinvesting.com/freestuff.html

Published March 12th, 2009

Buying Rental Property from Motivated Sellers

First motivated seller in nanaimo

We bought our very first investment property in a foreclosure deal. It was our first introduction to a motivated seller. The bank didn’t want to own residential real estate and was anxious to get rid of the property. We bought it under market value and it’s rental income and value has doubled in the last 7 years.

Our current home was just about to be listed because the owner got transferred from Vancouver to Victoria. She didn’t bother to price her home any higher than what she’d paid, as she just wanted out. We bought the property for under market value and avoided a bidding war by scooping it before it hit the market.Motivated Seller

These are just two examples of good deals we have made by finding motivated sellers. On the other hand, we’ve also found that some of the most motivated sellers were motivated because they wanted to ditch their piece of garbage property! In the same vain that we always say “No money down doesn’t mean it won’t cost you” we also say that a “motivated seller may be motivated for the wrong reason“!!

We’ll call the type of motivated seller I’m talking about a “flipper”. A flipper is someone who bought the property, fixed it up and is now selling it…and wants to get rid of it quickly. When you find a flipper that is anxious to sell you often will find someone who has cut corners on the work just to get it done, and you may just find yourself spending a lot of unexpected money on repairs and surprise problems.

We made the mistake of buying from a flipper in Toronto. It was a land mine of a property full of shoddy work and the cheapest possible materials. The worst example of this was the telephone wiring that had been used instead of electrical wiring – and yes, it melted and started to spark because it wasn’t the right grade for the electrical currents.  Thankfully the lights had stopped working, so it triggered us to get an electrician to start punching holes in the walls before any fires were started!

Buying from a flipper can be the wrong kind of motivated sellerThe property had all the signs of being a cheap fix up, but we weren’t really aware of what could go wrong at the time. We ignored the signs and bought the property from Mr. Flipper and he was so helpful that he even assisted with getting us financing.

In addition to spending $25,000 to completely rewire the house we had to redo the plumbing in the basement and totally renovate one of the three bathrooms. Shown to the left, the basement flooded thanks by tree roots dissolving the clay pipes and plugging things up. We had to dig up one of the bedrooms in the basement and the entire front yard (which we had just landscaped a month before) to get to the pipes. While the plumbing work was being completed we had to put our tenants up in a nearby hotel for $200/night each.


The first picture below shows the main floor bathroom we renovated because cracked tile and an awkward 5 inch “step up” to reach the sink and toilet were frustrating to deal with. We discovered lazy plumbing practices had created the 5 inch “step up” that the toilet and sink had been on… and the cracked tiles were as a result of tile being laid on top of tile! The next picture is of our front yard after they dug it up to get to the pipes.

Motivated Seller - redoing the bad plumbing job and tiles

Fun thanks to a property we bought from a motivated seller


The red flags were waving in our faces but we didn’t really recognize the signs and looked the other way. The property had so many good things going for it:

  • It was priced right,
  • It was located in a perfect area for a rental property near downtown Toronto and steps from the subway,
  • And, it had good rental income from it’s three units.

We were too new at the investing game to realize the trouble we were about to get in because this motivated seller was motivated to ditch his crappy property BEFORE he was responsible for cleaning up the mess.

When we tell this story so many people smugly say to us “Well, that is what you get for not having the property inspected by a professional”. The issue is: WE DID HAVE IT INSPECTED!

Wiring is BEHIND the walls. The wires aren’t visible unless you punch holes in the walls. Bad plumbing isn’t visible unless you get underneath the floors or send a camera down the pipes, and other things seemed minor on the surface but were serious once you tried to repair them.

That said, we were still at fault and could have avoided this big mess because there were warning signs and we ignored them.

So – Dave and I want you to avoid buying a disaster property from another Mr. Flipper so here’s some warning signs to be aware of:

  • An investor that wants to sell because they want to invest in something else. This is not a red flag; but it would prompt us to ask more questions. The reality is, many investors will hold onto a property forever if it’s making them money. So, if this property doesn’t fit in their portfolio anymore or isn’t making them money, try and figure out why. Is something in the area changing that you should know about? Is it a problem you can fix, like bad tenants or poor management? There are a lot of reasons why an investor might sell, and many of them are legitimate, but try and figure out if there is a reason that should concern you or if it’s an opportunity to solve a problem.
  • Someone who says they ‘have to sell’ but refuses any offers below what they paid or below what they think it’s worth.
  • Someone who bought the property, renovated it, and is anxious to sell it. There are a few reasons why this is a red flag, but the biggest one is that the reason this person bought it and renovated it, was to make a profit from the flip. This can mean they cut corners to save money and it definitely means they are going to be trying to get top dollar for the property. Trust your gut; ours was giving us warning signs on the Toronto property but we didn’t listen. We love that property, and we even lived there for a few years because its location is fantastic, but the property’s problems have cost us over $50,000 in five years. Even though it puts over $500 a month of positive cash flow in our pockets, it’s going to take us a LONG TIME before we ever make that money back. We’ve even put it on the market a couple of times to sell it, thinking that we should recover our costs, but we never ended up getting the offers we wanted so we still own it today. And, while it’s a good money maker, it still gives us problems.

We don’t have good electronic pictures of the electrical wiring that was discovered behind the walls but I think the pictures will say more about what we went through than I could ever describe!

Published February 8th, 2009

Update February 10th, 2009: We received some reader mail about this article. You can read that email and the response here:Upset about the Article:The Motivated Seller You Don’t Want to Buy From.  

Where Have the Variable Rate Mortgages Gone?

PART 1 of the Rev N You with Real Estate Series on the Mortgage Market in Canada

October 20th, 2008:6 minutes 32 seconds

The October 15, 2008 removal of insured 40 year amortization mortgages and no money down deals was announced months ago. So it came as no surprise that those deals were pulled off of the table as the market uncertainty mounted.  But,a variable rate mortgage at prime PLUS 1.5%? That was a market change that nobody expected. And, as Cindy Faulkner of Meridian Coastal Mortgages explains, it happened overnight!

Listen as Dave Peniuk (of Rev N You) discusses the current mortgage market in Canada with Cindy, and find out what mortgage Cindy recommends you get in right now if you’re an investor or someone buying your family home.

Thanks for stopping by and getting the facts on what is happening in the market today! This is the first in a series of five podcasts on the mortgage market in Canada. The next four are posted here. And if you haven’t already… please sign up for our Rev N You with Real Estate newsletter to be certain you don’t miss any of the important market updates!



Cindy Faulkner owns and runs Meridian Coastal Mortgages. An active real estate investor, with 17 years of experience in the residential real estate market, Cindy and her team are our first call when it comes to financing for our properties. They are always happy to chat about scenarios or discuss the market, so give them a call at            604-588-4466      .


Is Now a Good Time to Buy Real Estate?

PART 5 of the Rev N You with Real Estate Series on the Mortgage Market in Canada

Recorded October 18th, 2008: 4 minutes 29 seconds

Listings are climbing, sales have dropped and it’s difficult to get a mortgage. It really feels like now is NOT a good time to buy real estate. But as Cindy Faulkner of Meridian Coastal Mortgages explains to Dave Peniuk (of Rev N You), now IS a good time to buy. There are deals out there, and there will continue to be some good deals for at least the next six months.

Thanks for stopping by and getting the facts on what is happening in the market today! This is the fifth in a series of five podcasts on the mortgage market in Canada. We’ve got some big plans for more experts to join us on Rev N You, so make sure you’re signed up for our Rev N You with Real Estate newsletter to be certain you don’t miss any of the important market updates!



Cindy Faulkner owns and runs Meridian Coastal Mortgages. An active real estate investor, with 17 years of experience in the residential real estate market, Cindy and her team are our first call when it comes to financing for our properties. They are always happy to chat about scenarios or discuss the market, so give them a call at            604-588-4466      .

Financing for a Property You Buy in a Corporation

PART 3 of the Rev N You with Real Estate Series on the Mortgage Market in Canada

Recorded October 18th, 2008: 2 minutes 51 seconds

Financing real estate investments is one of the biggest challenges we’ve faced in our investment adventures. And, it’s even more difficult if you are trying to limit your liability by purchasing that property in a corporation. Since every real estate guru course we’ve attended suggests the first thing you should do before you buy a property is set up a corporation we decided to find out if anybody is actually able to make it work for a residential real estate investment.

Listen as Dave Peniuk (of Rev N You) asks Cindy Faulkner of Meridian Coastal Mortgages if anyone is able to buy residential real estate investments in a corporation… we know we haven’t been able to.

Thanks for stopping by and getting the facts on what is happening in the market today! This is the third in a series of five podcasts on the mortgage market in Canada. We’ve got some big plans for more experts to join us on Rev N You, so make sure you’re signed up for our Rev N You with Real Estate newsletter to be certain you don’t miss any of the important market updates!



Cindy Faulkner owns and runs Meridian Coastal Mortgages. An active real estate investor, with 17 years of experience in the residential real estate market, Cindy and her team are our first call when it comes to financing for our properties. They are always happy to chat about scenarios or discuss the market, so give them a call at            604-588-4466      .

Read more:https://revnyou.com/Buy_Property_in_a_Corporation.html#ixzz1qMwAL0an

Financing Real Estate Investments and 35 Year Amortization Mortgages in Canada

PART 2 of the Rev N You with Real Estate Series on the Mortgage Market in Canada

Recorded October 18th, 2008: 5 minutes 56 seconds

Financing real estate investments is one of the biggest challenges we’ve faced in our investment adventures. Sometimes it seems there is nothing we can do to please a bank and get conventional financing. So, while we were chatting with Cindy Faulkner of Meridian Coastal Mortgages, we asked her about the impact of only having 35 year amortization mortgages to work with, and what real estate investors can do to get financing for their real estate investments.

Listen as Dave Peniuk (of Rev N You) discusses the current mortgage market in Canada with Cindy, and find out what you can do to make qualifying for property #1, 2 and 3 much easier.

Thanks for stopping by and getting the facts on what is happening in the market today! This is the second in a series of five podcasts on the mortgage market in Canada. We’ve got some big plans for more experts to join us on Rev N You, so make sure you’re signed up for our Rev N You with Real Estate newsletter to be certain you don’t miss any of the important market updates!



Cindy Faulkner owns and runs Meridian Coastal Mortgages. An active real estate investor, with 17 years of experience in the residential real estate market, Cindy and her team are our first call when it comes to financing for our properties. They are always happy to chat about scenarios or discuss the market, so give them a call at            604-588-4466      .

Read more:https://revnyou.com/Financing_Real_Estate_Investments.html#ixzz1qMuzWmts

State of the Mortgage Market in Canada

Conventional financing options for getting a mortgage on a real estate investment have been drastically reduced this month. Variable mortgages are suddenly expensive, 40 year amortizations are gone, and insured no money down deals have been removed. It’s a challenging market for home buyers and real estate investors, and the headlines in the media are so confusing. We wanted to get to the bottom of the market, and get the answers to our questions.


Part 1:What is the state of the mortgage market in Canada right now?

Part 2:I’m a real estate investor, what tips can you give me for getting bank financing and what impact has the removal of insured 40 year amortization mortgages and no money deals had on the mortgage market?

Part 3:Can I get financing for a property I’ve purchased inside of a corporation?

Part 4:What are the best financing options for a Canadian buying property in the U.S.? What about an American buying property in Canada?

Part 5:Is now a good time buy a real estate investment? What does the real estate market look like right now?

Cindy Faulkner of Meridian Coastal Mortgages spent several hours with us explaining the market and what is happening. Listen as Dave Peniuk (of Rev N You) asks Cindy for her insights and find out what mortgage Cindy recommends you get in right now if you’re an investor or someone buying your family home.

Thanks for stopping by and getting the facts on what is happening in the market today! We have some great podcasts planned for the future so pleasesign up for our Rev N You with Real Estate newsletter to be certain you don’t miss any of the important market updates!

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