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Shopping for a New Construction Home? Market Research Just Got a Little Easier

May 2, 2014May 2, 2014 by Julie Broad

We get the short end of the data stick in Canada when it comes to residential real estate information. I’ve spent many hours drooling over the information you can gather on Zillow, Trulia and other US real estate sites. And, with the recent announcement out of Seattle of Flipt, the options just got even cooler in the US. Flipt intends to use an algorithm to predict the best places to buy based on their future value. It’s a very cool idea. Not knowing the Seattle market very well I can’t judge whether it’s working well but I like the concept.

But asking for a website in Canada to predict future values when you can’t even figure out what all the listings are, and what has sold for what price without a realtor, is asking a lot. Even when you do have access to the same data that a realtor does, you still don’t have a full picture of the market because it doesn’t include private sales or new homes that don’t get listed on MLS.

We still don’t have options as robust as the US folks, but there are some resources popping up in Canada you might want to know about. One of them is a new Market Snapshot from BuzzBuzzHome, intended to help homebuyers track real estate market trends specific to new construction. As a real estate investor becoming an area expert (you are doing this right?!), this is absolutely data you’ll want. We wander into all the sales offices in the areas we buy in and collect the data ourselves … but if all we had to do was run a quick report that would save time and we’d be able to look at the trends much easier. That’s what this is all about! And if you’re in an area where there’s a lot of new construction activity, I think you’re really going to appreciate this.

Here’s what it looks like if you check out downtown Victoria, BC.

You can see median list price and size broken down by different unit types and well as the distribution of available units across all unit types.

As North America’s largest listing of new construction homes, BuzzBuzzHome collects a vast amount of data about housing markets across Canada and the United States. Market Snapshot allows users to create on-demand market reports for neighbourhoods and cities. Users can see important information like the average price per square foot in cities and neighbourhoods, the median list price and unit size for new condos, townhomes and houses, and a detailed breakdown of the unit mix within many geographical areas.

In the Greater Toronto Area this type of data has been available through RealNet Canada for years but only through a subscription service or, again, through your realtor who, had to subscribe. I worked there for five years (2003 – 2008) and know the enormous amount of work that went into quality data collection each and every month. It was excellent information but expensive to collect … and therefore not something you would see for free. Times are changing though and you’re starting to see some of this great information at your fingertips for no cost!

This report shows you data on units currently under construction and estimated completions in Toronto’s Entertainment District. You can easily navigate from the Listings section to Market Snapshot’s various tabs to get a more information on the neighbourhood.

Matthew Slutsky, the co-founder of BuzzBuzzHome said that: “The aim is to mine our database of over 11,000 new construction communities to give home buyers a better understanding how the type of home they’re searching for fits into the market they want to buy in.”

Market Snapshot is unique, Slutsky says, because no other company collects information that is this detailed and makes it freely available to homebuyers, investors, brokers and market researchers alike.

“BuzzBuzzHome’s mission is to help new homebuyers and investors make the best purchasing decisions and making this wealth of data available free for anyone to access furthers this goal.”

Market Snapshot is available for every neighbourhood in Vancouver, Calgary, Toronto and Montreal. You’ll also find information for the cities of Victoria, Burnaby, Surrey, Kelowna, Nanaimo and many other smaller towns and suburban areas where new homes are being built.

Nothing replaces getting your own boots on the ground to do your market research, but the more information you can collect from home the easier it will be to spend your time on the ground looking for WHY a house sold for more or less and what makes one area more desirable than another.

Go ahead … type in your city or neighbourhood and check it out: http://buzzbuzzhome.com/

Simple Model for Buying Rental Properties

May 8, 2013 by Julie Broad

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

But do you know what makes a great potential rental property? It is certainly not a sign on the listing that says “Investor Alert”, nor is it’s income only.

Our model for buying rental properties is to only buy ones with a CAUSE.

But what does that mean? Dave’s going to explain it to you:

Knowing exactly what you’re looking for when you pick an area and choose a property is key. You may want to target students or seniors so your criteria will be different – but getting clear on your model and focusing will make every deal you do better, more profitable and probably easier too!

By the way, if you liked this video you’ll love these posts:

>> How to Double Your Money in Real Estate (and the Properties with a CAUSE Model in action)

>> Four Ways to Check Reality Before Buying a Rental Property

>> How to Find Great Real Estate Deals

Hope is NOT a Real Estate Investment Strategy

October 25, 2012April 12, 2010 by Julie Broad

Sitting across the table from our friend and real estate investing partner of nearly a decade I nearly choked on the won ton I was eating when he said “I’m going to buy a property in California to use as a vacation property and hope it goes up in value.”

This guy is smart and it won’t be his first property. He’s bought several with us, a couple on his own and at least one with his relatives. And he’s been successful with his investments – especially the ones he made with us. 😉

So I was absolutely shocked when he told me that hope was in fact his strategy for his next investment. And not to worry, I gave him a good lecture over lunch about why it wasn’t the way to go about making a real estate purchase.

I told him: HOPE IS NOT A STRATEGY.

Yes, I think properties in many markets in the US are undervalued. And I definitely believe there are opportunities for the smart buyer to make some big profits in real estate in just about every market if they buy in good areas and can hold on for at least 5 years.

The last I heard the place he was trying to buy sounded gorgeous, undervalued and likely to rebound quickly. And for him, I think this property is more of a lifestyle choice than an investment – he wants a fun vacation home and a place he can potentially retire to.

I think our friend is going to do ok in the long term with his purchase in California. As long as he can afford to hold onto that property for awhile, his hopes and dreams of making a great profit on that property are pretty darn likely to come true. And I know he’ll have a lot of fun owning it in the meantime. And as long as he remembers that this purchase is a lifestyle choice, and with that choice will come greater costs, then that’s okay. But it should never be considered just an investment – especially based on hope!

And most of us can’t afford to use HOPE as a strategy.

Buying undervalued properties and waiting for them to rebound in price, or appreciate to new highs is a scary and high risk strategy. I think it was in the book Rich Dad Poor Dad where the question was asked “How many houses can you afford to buy if they are all costing you $100 per month?”.

The answer for some is probably quite a few … as long as you have your job!

But we have structured our entire lives around creating freedom. And freedom for us means that we don’t want to buy investments that enslave us to our jobs or put us in dire need to make money. We want our investments to free us not trap us.

For that reason alone we’re not VALUE investors. We’re CASHFLOW investors.

Buying properties in anticipation of value increases is how so many people got burned in the past 5 years. They bought properties with little regard for their cashflow … believing that the value increase would happen so swiftly their monthly revenue losses would be more than made up for. And besides, losing money every month is ok because it’s a tax write off, right?!

I can’t tell you how many times I have heard that piece of flawed logic. And you know why it’s flawed? Because your mortgage principal pay down expense each month … the biggest expense you have as a real estate investor … is NOT A TAX WRITE OFF. Only the interest you pay on that mortgage is. So… sadly … even though you are paying $300 a month out of your pocket to subsidize that property filled with hope … the government actually thinks you’re making money so you’ll get to pay tax on the income you generated even if it never hit your own jeans!!

Sucks doesn’t it?! So wouldn’t it be better to actually BE making money from that property while you ‘hope’ it goes up in value?

That way, if something happens and the market shifts downwards, you are still making money from that property and you can afford to hang onto it for years and years to come. And you’ll be making money from it even if it’s worth less because you have positive cash flow AND your mortgage is being paid down by your tenant therefore building your wealth.

For that reason we don’t buy properties with the anticipation that the value will increase. We buy properties that:

Are in areas that will attract agood pool of quality tenants,
Put money in our pockets each and every month,
Have more than one exit strategy,
Are in market areas that have really strong fundamentals for growth and stability,
Primarily have risks we can control.

This is more work. It takes market research, it takes patience and it takes a lot of effort to find the properties that will actually generate a positive cash flow. But it’s also the only strategy we’d advise any real estate investor use.

If you’re not sure how to figure out if a property will generate a positive cashflow here’s a few resources and tools you can use:

Article: How to Evaluate a Property in 60 seconds
Video: How to Calculate Cashflow
Free Trial of a Real Estate Analysis Software: Call them for your free 30 day trial. If you buy use the code: revnyou10 for a 10% discount.

Published on April 12th, 2010

What I Learned from Claude Hopkins

December 10, 2012August 22, 2009 by Julie Broad

“Every great move I have made in life has been ridiculed and opposed by my friends. The greatest winnings I have made, in happiness, in money or in content, have been accomplished amid almost universal scorn. But I have reasoned in this way: The average man is not successful. We meet few who attain their goal, few who are really happy or content. Then why should we let the majority rule in matters affecting our lives?” (p. 94 – My Life in Advertising and Scientific Advertising by Claude C. Hopkins)

It was a glorious accident that I found this book. I’d been helping my Mom and Dad clear out their recycling and reusable goods. Mom sent me into the book exchange to drop off a bunch of old books she was giving away and as I was sorting the books onto their proper shelves I found this gem of a book. I’d looked for a copy in the past but without much success … and here it was … FREE!

This book was a fascinating look at the life of a man who devoted his life to advertising. His accounts of turning money losing products into household names were brilliant and inspirational. His life lessons shared were priceless. And, I found many of his lessons applied to real estate just as much as advertising.

The easy application of his advertising lessons to real estate was delightful but not surprising. I spend quite a bit of time in our Real Estate Millionaire: The Essential Starter Course explaining the fundamentals of marketing and sales strategy because I believe that a good marketer WILL make an exceptional real estate investor.

A marketer must understand it’s audience in order to be able to entice them to take action. This means a good marketer will:

Determine what the market wants through careful market research,
Understand what needs to be said and what mediums should be used to deliver that message,
Be able to appeal to the underlying emotions that motivate the prospect,
Measure the results of their actions carefully in order to fully understand what messages, mediums and methods are providing the best ‘bang for their buck’,
Be good communicators, both in spoken and written words.

I believe the exact same skills are critical to success as a real estate investor! Before we buy a property we spend at least a few months researching the market area. We typically narrow our focus down to an area as small as 4 or 5 square blocks. We find an area that has potential for growth due to increasing employment, improving infrastructure and desirable amenities. Then we learn what the tenants in that area want. Once we understand what area is poised for growth and what properties the tenants of that city are attracted to we go out and find it.

And, because we’ve spent so much time researching the market we already know what are the features to focus on when we advertise to a tenant. We already know what attracts people to the area – whether it’s a short commute to downtown, an award winning school, trendy shops and restaurants or access to the beach. We also know what features of the property are most important to our prospects. If very few places in that area have a large back yard or air conditioning but those are the most desired features we will be sure to emphasize them.

Understanding the market area and the tenants in the area right through to knowing how to market your property to attract the best tenants are critical skills. And, of course, you have to be able to communicate with people if you’re going to negotiate real estate deals and be a landlord!

Claude Hopkins would have made an exceptional real estate investor because he was a master marketer.

Here’s a few additional things Claude writes about that you might want to consider as you think about your next (or first) real estate purchase:

Always try to get immediate action from your prospect. Tell them what delaying will cost them. In other words, get them to fill out a rental application on the spot because if they don’t the property could be gone before they even have a chance to submit it!
Do nothing to merely interest, amuse or attract. Do what you have to do to win over your prospect in the cheapest possible way.
Answer any questions you have with a test campaign. In our case, we will use Craigslist or Kijiji to advertise a property we’re considering buying for rent (or rent to own). When people contact us we just explain that we don’t yet have access to the property but will take their name and number and will call them when we have it. We don’t share the address but will explain the features and the area of the property. Within a few days we know whether there is demand for that property or not.

And… one final piece of advice … if you’ve read my short article called “Before you Buy that Rental Property” you’ll know that I almost passed on a very lucrative deal because I couldn’t imagine ever living in that house. Well Claude Hopkins has some wise words on the subject of confusing your wants and needs as those of everyone else:

“We must never judge humanity by ourselves. The things we want, the things we like, may appeal to a small minority.” (p. 24).