How to Structure a Joint Venture Real Estate Deal

guy shaking hand

How to Structure a Joint Venture Real Estate Deal

Joint Ventures

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

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

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

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

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

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

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

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

Options for Structuring Joint Venture Real Estate Deals

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

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

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

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

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

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

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

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

Simple Structure Is Best

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

>> When to Sell a Real Estate Investment

The Questions to Ask Yourself Before Investing in Small Towns

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Nice properties in nice areas with good cash flow were getting harder and harder to find in my home town of Ottawa. Frustrated with the lack of inventory, I decided to look deeper into my native province, Saskatchewan, thousands of kilometers away.

At the time, a particular small town in Saskatchewan was hopping with work and had the highest average rent in the province. That really got my attention.

I realized years later that booming small towns can be a good place for investment, but you really need to know your market and what you are getting into.

It was 2011. I decided to invest in the small town of Estevan, Saskatchewan, two hours outside of Regina. It had a population of 11,000 people and the average house price was in the low 200,000’s. There was so much work in Estevan that housing couldn’t keep up and people were literally turning down jobs because there was no place to rent in Estevan. I was mesmerized by the inexpensive prices and the prosperity and growth of Saskatchewan. It reminded me of how Alberta started out a decade ago.

Estevan real estate was attractive because of its low vacancy and high rental rates, supported by various energy employment sectors. At that time, a two-bedroom apartment in the low $200K range could easily fetch $1800+ per month with no property taxes for five years.

The numbers were perfect and I knew the town well enough as it was close to where I grew up. Plus I really needed a turnkey investment considering I had other properties to manage, one year old twins and a career to juggle. I decided to pull the trigger and buy a brand new two-bedroom condo. It rented out immediately.

For two years, things were great. The market value of the unit increased almost immediately after I purchased it and the cash flow was excellent. The peak rent was $2400 per month and it was property tax free for five years. Even with the cost of an occasional $600 trip to visit the town, it was worth it. It still netted close to $1000 dollars in cash flow per month after all expenses.

Then things changed.

First, crude oil dropped. At first it was slow, then it fell 50% in just six months.

All other energy sectors followed and so did the housing market in Estevan.

The party had officially ended in Estevan.

The morning after a big party the last person you want to be is the one left holding the garbage bag in charge of clean up. But, that was who I was.

If you find a booming town is catching your eye like Estevan caught mine, make sure you do it with eyes WIDE open. During the oil crash, my tenants left due to changes in employment and the unit wasn’t attracting much interest in the rental market. I managed to come out losing only two two months rent to vacancy because I changed property managers and dropped rents substantially. Thankfully even dropping the rents, it still cash flowed.

It was a tough situation and not what I thought it would be, so here’s what you need to know before you invest in a small town.

The Good, the Bad, and the questions you need to ask yourself before pulling the trigger investing in small towns.

Let’s start with the ‘Good’ about Investing in Small Towns:

  • Low entry price. Properties can be significantly cheaper than in larger cities, which makes it very enticing to any investor. This can mean greater cash flow and return on investment, a win-win situation from a financial perspective.
  • Less competition. With a small town, you might not have a lot of competition with other real estate investors in town. For example, you could be one of very few rental properties that provide rental units to executives and transient workers. Additionally, you could benefit during the purchase of the property by not having to worry about multiple bids and losing deals!
  • High rental rates. Sometimes rental rates can be much greater than the average rents in bigger cities. In a booming small town, transient workers are given a lot of incentives to work there, including generous allowances for housing costs supported with high paying salaries. This drives the rental market, with incredible rents and generous cash flow in your pocket!
  • Rental property incentives. If the housing market is hot and there is a shortage of rental units, the City may be more flexible in their regulations or building permits and possibly offer tax incentives for real estate investors. For example, in some cities, property taxes are waived for five years if you commit to holding the unit for that time frame.

Sounds great, right? Be careful. Small towns can be a pain, too. So, let’s continue on with the ‘Bad’ about investing in Small Towns:

  • Slower appreciation. Property values typically don’t grow as fast in small towns as they do in larger cities, so you need to really think long term when investing in small towns, at least five years if not more!
  • Smaller employment market. When the employment sector is hot, rental demand is high; but when the employment sector is a bust, rental demand goes. All of the transient workers leave and the town becomes stagnant, which equates to higher vacancy rates and longer hold times between tenancies. This is coupled with a decrease in property resale demand, meaning you could be stuck holding a vacant and illiquid asset. This really hurts if you need your money back and that is your only exit strategy.
  • It’s a boom and bust town. Small town real estate can be quite volatile. Oil and energy rich cities are affected significantly by the volatility in commodity prices in the financial markets. Things can go south quickly with any economic change, as shown in the drop in the oil price over the last six months.
  • Limited services. There is a general lack of services in small towns. Property managers, home inspectors, lawyers, handymen, and realtors may be sparse or non-existent. If you need an appraisal to finance a property, the bank may require someone from a nearby City (that maybe a couple of hours away) because the one person in town is on vacation. This happened to me! Same goes for property insurance, home inspection and property management firms. These conditions can make upfront purchasing costs significantly higher.

Now that the Good and the Bad are out of the way, I encourage you to use your common sense filter and simply ask yourself these questions before considering investing in a small town:

  • Can this area grow in the future – adding jobs and creating demand for housing – or will it go down in value due to declining population, economic changes, and/or loss of jobs?
  • How long can these high rental rates last? Will it last for the time frame that you are looking to hold this unit?
  • What are the main employers in this area and what is the likelihood that they will increase in size or decrease in size in the future?
  • Do you have a big enough real estate portfolio to absorb any shortfalls when the market goes bust and/or do you have a generous contingency fund for this property?
  • Do you have multiple exit strategies if the market turns sour and you have trouble renting the unit out? Can you lower the rent, provide incentives like shorter term leases, furnished options, or rent-to-own options to give you an edge in a slow rental market?
  • If you are an out-of-town investor, do you have a team backing you up to make sure that your property is managed well and you can trust to do whatever they can to market your property in a downturn?

For an investor just starting out, ask yourself these questions. In fact, to make it easier for you, avoid small town investments and only buy ones that follow Rev N You’s Properties with a Cause Model.

If you are an experienced investor, it is important that you go into any investment with your eyes wide open. Investing in small towns can be attractive for cash flow, but as quick as that comes, it can go! Just be ready, and have your contingency plans in place.
Tracy Ma is a mother of twins, mentor, engineer, and real estate investor in Ottawa, Ontario. Connect with her at her website www.financialnirvanamama.com where she shares free tools, videos and articles on managing your real estate portfolio. Her mission is to empower women on investing to reach their financial nirvana.

The Ultimate Guide to Creating a Real Estate Investment Deal Summary

happy working

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

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

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

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

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

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

Clearly, Courtney is getting the money.

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

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

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

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

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

So what do you need in a deal summary?

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

Those questions are :






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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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


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

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

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


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

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

Kid with magnifying glass

I can’t analyze your deal for you.

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

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

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

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

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

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

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

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

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

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

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

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

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

What Market Should I Invest In?

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

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

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

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

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

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

How To Analyze Your Real Estate Deal:

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

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

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


An Introverts Guide to Real Estate Investing Success

girl with cards

I’d been sitting at a lively poker table at the Venetian Hotel in Las Vegas for about an hour when the guy to my right says to me, “You haven’t said much.” I had been laughing and enjoying the banter while I had also quietly raked in a couple of nice sized pots.

I smiled at him and said, “I usually am pretty quiet, but if I have something to say, I will.”

It’s not a poker strategy I’ve developed. I am an introvert. Some extroverts may mistake introversion for a lack of confidence or a dislike of people. If I didn’t like people, I wouldn’t be sitting at a poker table to play the game; I’d be online. To me, being an introvert just means that I need time alone to recharge and reflect, versus an extrovert who needs interaction with people to gain energy.

Introverts and extroverts come in all sizes and degrees so it’s not fair to say that I am like all introverts, but I did smile when I received an email from a woman named Lisa who is struggling to create the real estate portfolio she wants because she is an introvert. She basically said:

I have watched a lot of your videos and realize you’re not an introvert, but maybe you could write an article to help introverts who don’t want to deal with small talk, who get underestimated and don’t stand out in an extroverted world.

Extroversion, just like introversion has its challenges. Introversion, however, is only a weakness if you believe it is. There is a lot of power in the quiet reflection that comes with introversion.

Here’s 3 ways to use your natural tendencies as an introvert to your advantage and create massive success in business and real estate investing:

1. Listening Uncovers Opportunities

We were at an open house looking at a property that was an estate sale. The realtor mentioned that the sisters were coming into town on the weekend to “deal with” all the stuff in their brother’s home after he had passed. I tuned into this and asked a few questions of the realtor. I found out the sisters were his only family and they were just a few years younger than their brother. The house was packed with stuff and I suspected it would be overwhelming for them, so we offered with a quick close and put it in our offer than anything they didn’t want they could leave in the house and we would handle it. We got it for a great price, added a suite to this property and it’s now one of our best cash flowing properties.

It would have been easy to miss this opportunity without careful listening.

When people are selling their home they often try to hide the real reason, but good listening can pick up what people aren’t saying. It’s also ENORMOUSLY beneficial in screening out tenants who may not be telling the whole truth. And when you’re networking, there is nothing more powerful than being a good listener. You’ll build connections, people will think you’re smart (it’s a funny thing that happens when you listen more than you speak – the person you are speaking with thinks you’re smart probably because you’re listening to them), and you’ll walk away knowing more about everyone you meet.

Ask people interesting questions and you’ll find it’s way more fun to network, meet people and you will absolutely uncover opportunities in business and real estate that other people miss because they are just talking away about themselves. You’ll also be in a strong position to persuade or influence someone to your way of thinking because you’ll understand their perspective from listening to them talk so much.

2. Plan Your Networking in Advance

You DO have to get out of your house and network. When you encounter a big challenge in your investment business (And you WILL – I don’t know an investor out there who doesn’t hit some big problems here and there), who will help you if you haven’t built relationships with like minded people?

Networking events aren’t my favourite activity. They take up a lot of energy for me, but I have found ways to enjoy them more by asking people more interesting questions like ‘how did you meet?’ “what keeps you busy most days?’ ‘why did you move here/take this job/come to this event?” and “what’s gone really well for you this year / what’s been a really struggle this year?”.  I get to know some of the most interesting people asking questions like this.

To maximize your results and minimize the energy you expend to meet people, do your homework in advance. Find out who will be there (meetup.com is great because you can learn about the other people going to an event) and make note of 2 or 3 people you want to connect with. Google their names, check their Twitter feed or Facebook page to learn about them. When you see them, introduce yourself, let them know why you wanted to connect with them, and share a couple of things about yourself that will be relevant for them. If you want to make the in person connection even easier, find them online and say hello first. Let them know you’re going to be at the same event and look forward to seeing them. Most people, whether they are a speaker or an attendee, will appreciate the connection online and will remember you when you say hi at the event.

Bottom line, as an introvert, your best approach to networking is going to be to focus on making a few quality connections per event versus trying to meet everyone. And guess what? Small chat isn’t connection, so Lisa, no worries that you hate small chat, nobody remembers the person that asked them if they watched the Montreal Canadians sweep into the second round of the playoffs – but they do remember the person who shared a few personal details about themselves, asked great questions and really listened to their answers.

3. Shine in Your Own Way

Lisa said that one of her challenges is that “introverts don’t make a lasting impression. The wallflower is easy to ignore.”

We have a friend who talks to everyone he meets. He quickly becomes the center of attention in most scenarios and we love him for it. He’s entertaining and a little crazy. I sometimes feel a little envious of how easy it is for him to interact with everyone he meets (and make many of them laugh!). I don’t stand out in a crowd like he does. While I am envious, the real truth is I actually don’t want to stand out like that. I am far more comfortable to chat with someone one on one than I am to have all eyes on me.

Here’s the cool thing about this … everyone can stand out in their own way.

If you believe you will be underestimated or you’ll go unnoticed then you probably will, but not because you’re quiet – because you don’t believe in your value. Back to my poker example, I’ve only really just started to play poker in the last year. I win more than I lose, but I have a long way to go before I would call myself good. Interestingly though, I have found that my abilities get overestimated. Shortly after I sat down at the table, one of the guys looked at me and said “You make me nervous.” Another man, an older gentleman stopped calling me when I raised a bet because he said “I’m not going to give you the pay day you’re looking for”. I was totally bluffing when he said that. I am certain he had me beat so I was pretty happy when he folded.

I’ve done a lot of work on myself over the years and feel pretty confident and comfortable in my skin most days. I don’t need to be the center of attention to have that shine through. In fact, I have actually been told by a few coworkers, clients, and colleagues that I can be rather intimidating when you don’t know me. Imagine that – an introvert that tends to the quiet side – being intimidating?!

People will sense your power and ability regardless of whether you’re speaking or not. If you don’t believe in yourself, it doesn’t matter if you’re outgoing or reserved, your abilities will be overlooked and you won’t be as memorable.

The only thing that won’t work is trying to be something you’re not. Be who you are and find ways to accomplish your goals in a way that works for you. Many of the world’s great leaders (and real estate investors) are introverts. It’s only a handicap if you think it is. Great things only come when you step outside your comfort zone – it doesn’t matter where that zone is for you. Embrace your introversion and be your fabulous self! People will want to hear you when you speak and you’ll absolutely be memorable.


Someone You Must Add to Your Real Estate Power Team

Most people, when directly confronted with proof that they are wrong, do not change their point of view or course of action but justify it even more tenaciously.” ~ Carol Travis & Elliot Aronson, Mistakes were Made (But Not By Me).

Real Estate Power TeamMy Mom used to joke that she had a third child named “Not me”. Growing up “Not me” was responsible for a lot of mischief. My brother and I didn’t agree on many things but we could almost always agree that “Not me” did the thing that one of us was about to get in trouble for doing. Thankfully, when I was a teenager my parents took in another kid so that there was now a third party to blame things on … making “not me” even more difficult to identify. 🙂

Now, as kids most of the time we knew we had done something wrong and just didn’t want to admit it. As we get older we still do things wrong but often convince ourselves it’s not wrong.

I’ve often wondered how seemingly good people turn into dishonest and self serving politicians. The book I am reading right now holds an answer to that. Mistakes Were Made (But Not By Me) covers a lot of experiments and examples that show how little by little, small acts of dishonesty, eventually lead to the justification of big acts of dishonesty. You get a man to lose his ethical compass one step at a time.

Self justification is a scary thing we do to preserve our ego and even ourselves. It’s more powerful than a lie and it is absolutely more dangerous than a lie because we’re not conscious that we’re doing it.

One study by a Yale Professor named Edwin Borchard reviewed 65 errors in criminal justice. 8 involved people convicted of murder where the victim actually turned up alive. Police and prosecutors refused to admit they did something wrong even though they convicted someone of murdering someone that was still alive.

Interesting, but how is this relevant to real estate investing?

The bigger the investment of time, money and energy into something you’ve voluntarily chosen to pursue, the more attractive that something becomes to you. In other words, the more effort you put into finding and negotiating a deal, securing the funding, or presenting to that potential investor, the less likely you are to process future information pertaining to that person/opportunity accurately.

How Smart People Get Involved with Bad Real Estate Deals

You wonder how smart people can get involved in bad deals? How great investors raise money from troublesome partners? Or even how you can end up spending a lot of money on something you never needed or wanted in the first place? It happens gradually … one step at a time. And the more time, effort and money you put into something the more critical it is to have a trusted third party who can look over your decision before you’re locked in; Someone who has no vested interest in your outcome. This means it can’t be your realtor, mortgage broker, business partner, spouse or child.

You need people in your life who aren’t afraid to tell you when something doesn’t sound good even though you’re super excited. As Travis & Aronson say “We need a few trusted naysayers in our lives. Critics who are willing to puncture our protective bubble of self-justification and yank us back to reality if we veer too far off.

Who You Need on Your Real Estate Power Team

Most people focus on getting a great real estate agent, mortgage broker, lawyer and accountant. These folks are important. You also will want some other folks as well like a great maintenance guy, a property manager, and probably a bookkeeper. But today I want to add someone to your real estate power team list that few people talk about – a trusted naysayer. For us, it’s almost always been a paid mentor or coach. For you, it could be a long time friend who is wise to the ways of the real estate world or someone in a mastermind group that you respect. It’s not that you’re looking for someone to criticize you or be a negative nelly – you want someone who can be a guardian over you, watching out for your self-justifications that one step at a time will sabotage you eventually, if they haven’t already begun!

More Than Cashflow BookWe’ve been guilty of self-justifcation many times. If you haven’t read More than Cashflow yet, you should grab a copy as reading about the many mistakes we’ve made at the hands of self-justification just might stop you. Plus, a reviewer from Texas posted this review on Amazon:

 “Hearing personal experience applied to a principle always makes information easier to understand and retain. This book reads as if you are having coffee with a friend. A gifted tested writer who keeps one engaged fully. This is one to come back to often for that help of a mentor.

How awesome is that?! Thanks Shelb!


The Neighbourhood Price Ceiling and Why It’s Critical to Understand

Beware Price Ceiling When RenovatingOne of the biggest reasons people lose money on renovation projects … especially flips … has almost nothing to do with the actual renovation process at all. It has everything to do with the selection of property and it’s location.

If you’re going to tackle a major renovation – whether it’s on your rental property or even your own home – you should understand this one concept. Missing this step and getting it wrong, almost guarantees you’re going to have to hold onto the property a long time to ensure you can recover your costs.

What is the money losing issues? It’s poor neighbourhood research. You see, you can buy a home for cheap and turn it into the most luxurious and beautiful home, and still not make money because you bought in the wrong area for what you were going to do. Every neighbourhood has a price ceiling and while the occasional home does burst through the ceiling, it’s rare. You need to know what you’re up against.

Here’s a video to explain what I am talking about when I say beware the neighbourhood price ceiling.

This really goes back to one of our fundamental investment principles – becoming an area expert. Part of your area expert research is to understand what your neighbourhood price ceiling is, and what factors may elevate a property above it.

Here’s some other real estate related articles that will help you save tens of thousands of dollars on your home buying and renovation projects:

>>Top 5 Real Estate Investing Books of 2013 – including 2 to help you plan those renovations

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

>> How to Choose a Great Real Estate Investment Market

Image Credit: © Christine Langer-püschel | Dreamstime.com

Are You Chasing Someone Else’s Real Estate Investing Goals?

Rev N You's Aweomse ClientsWe always ask our potential coaching clients to complete an application form. Working with people who are the right fit for what we offer is important to us. We only coach a small number of people each year, so we want to work with people that we can help in a massive way.

When we first started asking people to complete the forms, I was absolutely baffled by the numbers people had set for themselves as their real estate investing goals. We would ask questions like: What do you want to accomplish in the next 12 months? We had so many people responding that they wanted to buy eight properties or 17 in the next year. Those numbers were so strange. How did people come up with them? And why did so many people think eight or 17 was the magic number for the next year?

Eventually I realized it was because they were looking to earn recognition from a club they belonged to, and those were the levels at which you could earn recognition.

I loved that these folks were keen to take action, and that looking forward to earning a reward had them excited about making things happen, but my concern was that someone else had given them a goal. Even more concerning was that the goal was based on the number of properties and nothing else. “Seventeen properties” is not such a good thing if it doesn’t move you closer to living the life you want to live. And it’s definitely not a good thing if you’re buying any property just to get your recognition and reward.

In 2005, we woke up to the realization that the dozen properties we owned had taken us in exactly the opposite direction to what we actually wanted to create in our lives. We had set out in pursuit of wealth, yes; but more specifically we wanted to make enough money so that we had control over our time.

Instead of creating freedom, we had effectively created total chaos, stress and financial strain in our lives. We owned properties in four different cities at that time, worked with four different property managers, and were experiencing serious problems that ranged from bad tenants to fire code violations to shady property managers.

Yes, for a while we were actually making really good money. In fact, most of the properties we’ve owned have had positive cash flow. One of our properties produced $1200/month positive cash flow.

For us, it wasn’t that we had tried to squeeze ourselves with deals where the numbers didn’t work (which is a very common problem with investors who are pursuing a certain number of deals). Our problem was that we were too spread out and not involved enough with our properties. How can you be involved when your properties are all over Canada?

The Problem with Our Real Estate Investing Goals Back Then

Chasing Real Estate Investing GoalsWe realized we weren’t clear on why we were investing. We were pursuing no-money-down deals and riches. We’d allowed a real estate course to tell us the deals we should do, and we ended up with a giant mess of a portfolio that took years to clean up. We made decisions based on where we thought the most money was to be made and we ended up very unhappy.

Owning properties in different cities sounds sexy but the reality is: it’s chaotic. You can’t rely on your local team to solve problems because your rock star plumber in Nanaimo, BC can’t help you in Niagara Falls, Ontario. And your fabulous handyman in Toronto isn’t going to commute to Niagara Falls to fix your units.

Five properties that are paid off will do a lot more for you than 17 that are leveraged as much as possible. Three great deals will do more for you than eight bad ones.

Numbers aren’t the most important consideration as a real estate investor – despite what most investors will tell you. What’s important is whether each deal you do moves you closer or further away from the life you want to live. Make sure you’re setting real estate investing goals for yourself, based on what you are trying to create for you and your family.

When we got clear on what we wanted real estate to do for us, and what we wanted our typical day to look like, we sold all our Ontario properties, and kept only our properties in BC. We eventually moved to Nanaimo, where 80% of our holdings are, and we focused on building a team to help us. Now everything is much simpler and we continue to look for ways to make things even simpler.

We didn’t get into real estate to complicate things, but that is exactly what we did until we got clear on why we wanted to be in real estate.

Image Credit 1: Julie Broad (our Client Mingler in Toronto, ON)
 Image Credit 2: © Thevegetable | Dreamstime.com


More Than Cashflow BookLike this article? You’ll LOVE More Than Cashflow: The Real Risks & Rewards of Profitable Real Estate Investing. This is just a tiny excerpt from the Amazon #1 Best Selling Book.

“I have read many different Real Estate related books over the years from many different authors across Canada and the US, but this book was one of the best that I have read in a very long time. If there is one real estate book that you should read this year, it is this one!” ~ From qmanrei on Amazon.ca


Real Estate Investing Costs You’ve Never Considered

It was a Saturday night. We were at a local pizza place with a handful of our real estate investing coaching clients after a long day in the field looking at properties, discussing office systems and evaluating neighbourhoods. We were laughing, telling stories and bonding. It was a good time, but one of our clients was missing.Hidden Costs of Real Estate Investing

He invests in the area and a tenant had called about a leaky shower. After the tour, he rushed over to the property, skipping dinner, to fix the leak.

In his mind, he was saving the cost of calling a handyman and since he was in town for the training anyway, he thought it was the perfect opportunity to get the job done.

All he saw was the money he was saving. But there were a lot of costs to his decision. He missed out on a lot of fun and informative conversation. He didn’t get a chance to bond with all of us in a relaxed setting. He also had to eat the few pieces of cold pizza that were left when he finally arrived.

It’s probably not surprising to find out that he feels a lot of stress from his real estate portfolio. I’m not judging this guy – not at all. I can identify what is happening because I’ve been doing things like this for decades. We still do. But here’s the thing – I am now very conscious of the choice to spend time to save money and what it really costs to do that.

I’ve realized something kind of shocking recently:

I can’t think of a decision I have made driven by money that has brought me much happiness or created better relationships.

As real estate investors, most of us are highly driven by money. Real estate education is totally financially focused. Success is measured by profit.

It’s not that money is a bad thing. Listen, we all need cash. The problem is the power we give to money and the price we pay for doing that. And this price is one that very few investors ever think about. 

When you take the power away from money, every decision in your business gets easier. You’ll gain confidence. You’ll choose better deals for you, you’ll find partners that are a great fit and even fun, you’ll work with tenants that take care of the home and stay for a long time, and you’ll find money comes to you for your deals instead of you chasing it! It all happens when money is no longer in charge of your choices.

Very few investors stop and look at their real estate business from the point of view of what will take the least amount of time, create the least amount of stress, or what will be the most fun to do. Most investors analyze the numbers, chase money from city to city, and focus solely on profit to drive investment decisions. The result? Investors get stuck or stressed or both!

Let’s look at five areas of real estate investing costs you’ve likely not considered:

1. Who to Invest With:

It’s so easy to get hung up on needing money for your deals that you don’t think about the emotional costs that you could pay when you invest with the wrong person.

We have one partner who asked dozens of nit picky questions in the beginning when he was evaluating the investment. We had a feeling he would be challenging but chose to ignore that feeling because he had the financial capacity to do multiple deals with us and he was friends with a group of successful business owners with cash for investments as well. Today, the mere mention of his name in our office fills us with stress. Even after several years of earning him a double digit return on his investment, he questions everything we do, right down the model of dishwasher we selected when the old one needed replacing. He’s never grateful for the work we do and it always feels like he is disappointed. It feels horrible. If he was our only partner we’d have zero confidence and damaged self esteem.

Ignoring potential issues gets even worse when it’s with a close friend or a family member. It also changes the relationship (Read More on That: The High Cost of Raising Money from Friends and Family). Friends and family are the most expensive place to raise money – it’s just that it’s an emotional price you’ll pay – not a financial one.

Today, we turn friends and family away and instead ask them for referrals. We also look for a fit. If someone isn’t going to be fun to work with, appreciate our value and be interested in a long term hold, then we’re moving on to a new conversation. Interestingly, ever since we started turning people away we’ve had people coming to us. Finding money has never been so easy.

2. What deals to invest in:

Where to InvestWhen you don’t have much money to invest, the choice of what deals you’ll do tends to be based on the resources you have. My husband Dave and I have done this many times in our twelve years of investing together. We’ve bought properties in areas where I felt unsafe parking my car, because we could do a deal with no money down. We’ve bought properties that didn’t have a foundation and were barely standing on their own just because a seller would give us a VTB. The reality is that those deals may not cost money at the start but they usually cost you cash before too long – sometimes a lot of cash. But, again, the price is far greater than just dollars and cents. Owning properties in rough neighbourhoods does not offer you much peace of mind. It also means you’ll get the most unsettling of calls (drug deals, tenant fights, and noise issues to name a few). You also could find yourself with a property in such a state of disrepair the fire department ends up being called in resulting in a long list of fire code violations that are very costly to repair (or you could end up in court pleading guilty to fire code violations as happened to us).

Instead of worrying about how you can do a deal without any money or banks, find deals you’re happy owning and raise the money you need to make it happen. Or, don’t invest while you save up. Either way you’ll be much happier than if you just do the only deals you think you can do when you’re lacking the resources to start.

3. Where to Invest:

Everyone talks about investing in a city with great economic fundamentals. It sounds great, but do you really want to travel to find properties, set up a team, oversee your business, and grow your portfolio? Are you REALLY excited about hanging out in Edmonton, Hamilton, St. John’s or wherever that newest hot spot is? (Watch the video on this: How to Choose Your Investment Market – Two Things Nobody Considers)

I’m not suggesting you invest in a town that is shrinking or where everyone is unemployed, but when you choose your market, realize economic fundamentals aren’t as important as making sure it’s a fit with your life.

4. Why You’re Investing:

Are you trying to create a full time job or are you creating a business to build wealth and give you freedom?

We wanted freedom yet we were so focused on making money that we bought properties in bad areas, that attracted hard to deal with tenants, and were spread out all over Ontario and BC.

Being driven by the numbers not only led us to do the wrong deals, it also led us to take the wrong tenants. When you’re driven by an ROI (return on investment) you will feel a tremendous amount of anxiety over a vacant property. One time we were about to have a vacancy and we were so worried about cash that we took the only tenant that applied even though there were a few red flags. Within a month she had pulled a knife on her roommate and had stopped paying rent. It took us three months to evict her – we lost out on three months rent, court filing fees and unit clean up costs all because we rushed to avoid a month of vacancy.

Today, our business is set up to support us, NOT the other way around. We focus on what our ideal day looks like and weigh each investment decision against whether it supports us or not. That means we do fewer deals than we have the capacity to do, we stick to a proven model, and we are very picky about our tenants even if it means losing a month of income. Ultimately, it’s a business and it has to be profitable but the most important thing to us is whether it’s supporting the life we want to live.

5. When to Spend Your Time or Spend Your Money:

Spend Time or Money in Real EstateYou can save time or you can save money. Usually you can’t save both. You can hire a property manager and save time, but it costs you money. They won’t love your property like you will. You have to pay them to oversee it, and they will charge you for handling issues like renovation and tenant placement. You can find an investor to fund your deal so you can grow your portfolio but you will have to spend a lot of time finding them, building a relationship and overseeing the deal. Another person adds complexity. You can potentially make some cash by buying, renovating and flipping a property but you can also expect to spend a ton of time and energy to make that happen. You have to choose what is important to you and be ok with it. In order to do that, you need to be aware that the costs extend far beyond a spreadsheet.

Our client chose spending time over money but he was also feeling frazzled and frustrated. He made a choice but didn’t realize the price he still paid. You need to take a hard look at what you really are willing to spend and be comfortable with it, or try a different investment strategy. Real estate investing isn’t for everyone!

Doing high quality deals with great people makes real estate investing fun. But it’s really easy to get side tracked from that, thinking you have to do more deals to make more money. If you’re too hung up on money then you’ll lose site of what real estate investing can do for your life and the importance of your relationships in your life – not the deals.

And the funny part is that when you change your focus – your business changes.


Other Articles You Might Enjoy:

>> The Neighbourhood Price Ceiling

>> The Passive Income Myth

>> The Time Management Secret Nobody Else is Talking About


Image 1 Credit: © Ambro10 | Dreamstime.com
 Image 2 Credit: Julie Broad
 Image 3 Credit: © Vasilii Shestakov | Dreamstime.com



When Bad Body Language Kills Your Real Estate Deal

Bad Body LanguageOne lovely morning last week when we didn’t have any early meetings, we strolled along the seawall towards Starbucks. As we were attaching the leashes to the fence outside the shop another fellow walked up with a dog. We smiled, motioned to our pups and suggested he tie his dog up on the other side of the outdoor sitting area to keep things calm while we all went inside to enjoy a coffee.

He nodded and stopped where he could tie up his dog at a nice distance from ours. All was well.

Inside, as we were waiting for our drinks to come up on the bar he commented on what good dogs we have. I smiled and gave a silent thanks that they were in fact being good at that moment.

I commented on how good looking his dog was and he started telling us the story of how he came to have his dog as part of his family. It was a good story. He’d rescued his dog from a bad situation in the middle of the winter. I was smiling and nodding – encouraging him to go on – until he took a step towards me.

He’d moved into my space and had made me completely uneasy. I couldn’t end that conversation fast enough.

He probably had no idea what happened. I was totally into it one second and running away the next.

Unfortunately the same thing happens to so many people when they are raising money, presenting offers or even showing properties to tenants. When you are trying to build rapport, engage someone in a conversation and ultimately influence their action you need to be aware – very aware – of what you say and do and how it impacts other people.

The words you use are important but your message is impacted DRAMATICALLY by the things you do more than anything else. Where are your hands? What are they doing when you speak? Where are your feet pointing? What is your posture like?

Your Body Language Can Kill Your Real Estate Deal

I have spent a lot of time observing and thinking about body language in real estate. I’ve had the pleasure of meeting and learning from someone who is a worldwide known expert on body language, influence and persuasion (more on him in a minute). And, after hosting 10 different live workshops across Canada on raising money for your real estate deals, I’ve seen a lot of bad body language in action. When someone tells me they have been struggling to raise money, a quick look at what they do when they are talking about their deals can reveal a lot.

Here’s three of the most common things I’ve seen that kill deals (and while these things are most obviously going to impact your attempt to raise money it absolutely will impact your conversations with tenants, sellers, buyers and anybody else in your life that you’re trying to influence in any way!). Check to see if you’re guilty of any of them.

Body Language in Real Estate Tip One: Ignore that itch – scratching makes you look nervous!

In our workshops, when I walk up to a pair who are practicing their money raising conversations I can usually tell within 5 seconds who is the one presenting a deal and who is the one listening. The person presenting is often scratching or rubbing something.

We rub our arms to self soothe which means you’re uncomfortable. Itching anything makes you look nervous.

Get control of those hands. You’ll look and feel a lot more confident.

In Kevin Hogan’s newest book Invisible Influence  he pointedly says NEVER touch your face. “Do not touch your face. It is never perceived as professional or attractive and can indicate deception.” (Kevin is the influence and persuasion expert I mentioned above. This is his 22nd or 23rd book on influence, persuasion and body language. You’ll find that gem on page 163 along with six other body language tips. This book is an excellent read by the way! I highly recommend it)

Body Language in Real Estate Tip Two: Where are your feet pointing?

Influence is about engaging and understanding the other person’s point of view. Most of us struggle with that because we are very focused on ourselves and the message we have to communicate. The most important person to focus on when you’re influencing someone is that person. Listen to them. Your entire body – right down to your feet – needs to show them that you’re engaged and really listening.

We first learned this one from Elliot Hoppe (links to a video) at a body language course we took. Where your feet are pointing is a good indicator of where you want to be. If you’re engaged in a conversation you’ll usually find your feet are naturally pointing to the person you’re speaking with. If you’re bored or annoyed or just ready to go, your feet will naturally point to the door or an exit.

You may think that it doesn’t matter because most people don’t know about this but the reality is that a lot of cues are processed subconsciously and the other person may not know precisely how they know you are (or are not!) listening to them, but they will just know you are.

Body Language in Real Estate Tip Three: Sit Still – Especially When Someone Asks You a Question

Bad Body Language for Real Estate InvestorsI had a boss that used to lean back and then cross his ankle over his knee when I asked him a question that made him uncomfortable. It happened every single time.

I didn’t know anything about body language at the time, but I knew enough to realize that I was about to get a story when he did that. It was a defensive reaction. He didn’t want to answer my question so he’d tell me a story. He had great stories but most of the time the story didn’t answer what I was asking.

The point is that I knew it was coming. I also knew that he wasn’t being open and honest. He was hiding things from me.

I would walk out of the meetings where this happened irritated. I was getting a line and I knew it. He would probably feel good that he handled the situation well and told me a motivational story in the process.

When someone asks you a question that makes you uncomfortable pay attention to what you do in reaction. In our workshops the most common reaction is what I call a human pretzel move. Most people cross their arms or legs or both! And they do it without realizing they are doing it … and it’s almost always in immediate response to a question that makes them uncomfortable.

Think about what you are telling the other person when you do this. You are sending their unconscious mind signals that you want to hide the truth, you’re uncomfortable with the question and you’re not confident.

Not being confident is a deal killer every time.

Just like the man at Starbucks who stepped into my space, every single one of these things can kill rapport in a second. Once rapport is gone it’s hard to get back. You may wonder why your tenant never complies or why you can’t raise money … so take a look in the mirror, ask a friend and start paying attention to the little things you’re DOING that are making your influence attempts difficult. You just might find that you’re saying the right things but not following them with congruent actions that DO the right things.
First Image Credit: Julie Broad
Second Image Credit: © Odua | Dreamstime.com

How to Find Great Real Estate Investing Deals

One of the questions that we get most often around the Rev N You office is “How do I find a great real estate investing deals?”

Often the question is followed by a lengthy explanation including comments like:

  • >> I’ve searched on MLS for hours and there is never anything that cash flows,
  • >> All the homes I’ve looked at seem to be overpriced,
  • >> I’ve been focusing on For Sale By Owner deals but everyone seems to think their house is made of gold,
  • >> I live in Toronto (or Vancouver) and there’s nothing here that I can afford.

Find Great Real Estate Investing Deals


My answer to every single person is usually the same … you aren’t going to find a great deal no matter where you are. You are going to have to create a deal. The first step to creating a great deal is to become a market area expert. You have to get off your computer and hit the streets to check things out, meet people, look at houses and find out what’s happening. That is the only way to truly become an expert.

Once you’ve got that part figured out (and yes, it takes work and it absolutely requires you to get out and put some miles on your car and your sneakers – there’s no getting around that if you’re serious about getting good deals done), the next step is to start looking for opportunities.

That’s what I’m talking about in today’s video – finding great real estate investing deals in any market:

Great real estate deals aren’t found  – they are created. The key to finding great real estate investing deals, as discussed in the video, is to figure out what kind of solution you can offer that gets you a great deal and solves a problem for the seller.

Hopefully you caught the MASSIVE tip about how we saved $10,000 on a deal and all it cost us was about 30 minutes of our time.

By the way – isn’t the artwork behind me cool? It’s mostly done on a sewing machine with thread!! Janet Cameron on Salt Spring Island is the artist of all the pieces I’m standing in front of … very creative stuff.

The Perfect Script for Raising Money for Real Estate Deals

Script for Raising MoneyImagine, after weeks of hard work you finally have a meeting with a prospective investor who is interested in one of your real estate opportunities. You have the perfect presentation prepared. You’ve rehearsed your lines and you’ve dressed the part. You walk into the meeting confident and excited. You walk up and shake hands with the person and sit down across from them. You’re ready to take control and get started when the other person abruptly says “So what have you got? Tell me about the property.”

“Crap!” you think … I didn’t prepare for that. You try to recover and say something like “I’m so glad you asked – I am excited to tell you about that. First let me tell you a bit about what we do and who we are.”

Now firmly back in control you launch into your presentation and because you’ve stayed on the script you think you did a good job. The person, however, says “Sounds interesting. I’ve got a coworker who invests in real estate so I am going to run it by her. I’ll get back to you.”

Weeks go by. You’ve lost the deal and you’ve never heard from the other person again despite emailing, texting and calling them. What happened?

Only about 100 things went wrong here but there are three key things that could have changed the entire scenario.

#1 – Thinking you can follow a script to raise money is an enormous mistake.

That doesn’t mean you should not prepare but following a script only works for actors who are in a production together with other actors working off the same script. There is no magic script that raises money – there are things you should say and should not say to increase your chances of getting a positive result – but it’s absolutely not a script.

#2 – The more you talk the less likely you are to get the money.

When I was a young sales rep working for Kimberly Clark Canada selling diapers, tissues and towels, I didn’t know much about the businesses I was selling to and I barely knew anything about my own products, yet I won sales contest after sales contest. My secret was simply that I didn’t do much talking at all. My Dad always used to joke that it was better to keep your mouth shut and have people wonder if you knew what you were doing than it was to open your mouth and remove all doubt. People tend to think they have to talk a lot to get the deals when in fact the absolute best thing you can do is engage the other person and learn all about them. Ask great questions, be interested in the answers and let that lead the conversation, not your script.

#3 – A focus on the information versus the relationship.

I could interchange a lot of words with information … money, deal, script. The point is that the person was not focused on the most important thing and that is developing a relationship and figuring out if there is a fit to work together. That’s the most important step for you creating a business you like AND in paving the way to many more “yes” responses than “I’ll get back to you’s”.

The good news is that it’s actually pretty simple to raise money if you like to talk with people and get to know them. The bad news is that it’s a lot more complicated that preparing and executing a perfect presentation.

Fear Factor: 4 Steps for Overcoming Fear in Real Estate Investing

Fear of Real Estate InvestingI’ve been in real estate for over 11 years and done dozens and dozens of deals, but time and experience doesn’t totally get rid of my fears. How I look at my fear is different but I think I will always be scared that people won’t like what I have to say. I’m sure I will always worry a little bit that something could go wrong with a deal. But those fears serve an important purpose in my life – they always make me stop and double check what I am saying and doing in my business. The key is that it doesn’t freeze me in place – it just serves as a good double check.

Fear is an emotional response to perceived dangers. Trying to ignore or suppress fear doesn’t work. I also don’t think you should try. It’s our ability to recognize potential danger so we can choose whether to confront it or run away.

Fear in real estate investing is common. It can be scary at times. There’s a big fear of losing money. There’s concern over the stress that you can feel if something goes wrong with a tenant or a partner or a deal.

Running from what scares you, doesn’t work though. Doing nothing doesn’t change anything either.

I think the best thing you can do is acknowledge you’re afraid of something, understand it, and then decide if you need to run from it or confront it. When you do it this way you’ll be able to recognize the fear that is protecting you and move past the fear that is holding you back for no reason. Specifically, here’s how I overcome my fears and how you can too:When you do it this way you’ll be able to recognize the fear that is protecting you and move past the fear that is holding you back for no reason. Specifically, here’s how I overcome my fears and how you can too:

1. What are you really afraid of?

I’ve met hundreds of investors that are stuck – they want to do deals but aren’t. Sometimes they have been stuck for years and years!

When I ask what’s holding them back the answer is almost always because they can’t find good deals in their area or they don’t think their market is a good one to invest in, but they don’t know where else to invest. Sometimes they don’t have investment capital and feel stuck without money to put into the deals.

It’s possible these issues are actually the issue, and in hot real estate markets with bidding wars and limited supply, lack of good deals is quite possibly true. However, in most phases of the real estate cycle, there are always plenty of deals out there for investors willing to work hard to find and create them. And there is definitely money.

Rarely are these actually the obstacles holding you back. More likely, it’s something deeper like a fear of making a mistake that leads to you being judged poorly by someone you love. In other words, you’re likely not just afraid you will do a bad deal and lose money. You’re afraid that if you do a bad deal and your Dad finds out he’ll say “I told real estate was a bad idea – now quit trying to make money in real estate and get a real job like I taught you.”

You have to look at WHY you’re afraid of losing money. What is it that you are really afraid of?

Until you get into it and actually uncover that real fear, it’s hard to move past it. But once you realize that you are afraid your husband or wife will think less of you if you do a deal that doesn’t make money, you have something you can tangibly deal with.

2. Get Comfortable with that Fear

Again, I am not a big believer that you’re going to get rid of the fear so the better plan is to acknowledge it’s there, figure out what is driving it, and then do what you need to do to feel more comfortable with it’s presence.

Let’s just say you’re biggest fear is that your husband or wife will be upset with you for a deal that isn’t that good. What can you do to get more comfortable with that fear? My suggestion would be to sit down and have an open conversation with your spouse.

Listen honey – you know I’ve been wanting to get into real estate for awhile. I really believe it’s the best way for me to ensure we’re all taken care of in our retirement and to hopefully have some additional money to pay for our kids to go through University if they want to do that. I just feel a bit stuck. I’ve done my homework. I have taken some courses and done lots of reading as you know, but I am not able to move forward. I think it’s because I am really scared that if I make a mistake it will change how you feel about me.”

Maybe that’s not a conversation you’d normally have but if you’re married it’s probably time you opened up and started to talk openly about your fears around your investments. What you’ll probably find out is that your spouse appreciates your concern but supports you. He may even offer support, suggestions or other ideas to help you achieve your goals.

It’s unlikely you’ll erase the fear but now you’ll feel more comfortable to move forward.

If your fear doesn’t involve a desire to be liked or a fear of being judged then a conversation might not solve it. If, instead, you’re lacking confidence in yourself and feeling terrified you’ll pick an awful tenant you still have to get comfortable with it. My suggestion? Think about the absolute worst thing that can happen to you if you pick the world’s worst tenant. Now, think about what you will do to resolve it. In most scenarios I can think of, it’s a pain in the ass to deal with but insurance will cover me or I have to spend several thousand dollars handling the issue. I can almost always come up with half a dozen ways to find the money to pay for that kind of damage and I am sure you can too if you really think about it. After you’ve done that, you have to remember that your absolute worst case scenario is very unlikely to ever happen but if it does, are you going to survive it?

3. Plan For Success

When my husband Dave and I are preparing to present an investment opportunity to one of our money partners we always plan for them to say yes. We prepare and practice what we’re going to say so that we can deliver the message clearly, concisely and with confidence. Sometimes they say no. Once in awhile we turn them away because we don’t want to work with them. Usually they say yes because we’re ready for it.

You might feel like there is no point lining up your mortgage broker, lawyer and property manager until you’ve found a good deal. The reality is that you’ll probably never find a good deal until you’ve planned for your success. Your own self doubts are holding you back from doing what you’re going to need to do once you find that great property. And you know what? Once you are ready for that deal it will probably be right there under your nose!

4. When All Else Fails, Take Action

There’s almost no fear that can’t be overcome by simply taking action that moves you squarely towards what you’re afraid of. If you’re afraid of rejection from a potential money partner, nothing else will help you truly become more comfortable with that fear than sitting across from someone and risking that NO.

The objective here is not to eradicate fear. Fear is important. The day you stop fearing you could make a mistake is almost always the day you screw up big time. Fear will keep you checking in to make sure you’re taking precautions. Let fear do it’s job to keep you safe but do not let it anchor you.

Get to know it so you can recognize when it’s protecting you from something real versus scaring you from becoming as great as you can be. Once you feel better that it’s a fear of something that won’t kill you or damage your life forever, you can move forward to planning and taking action.

Want more articles on this subject?

>> How to Use Fear to Your Advantage in Real Estate Investing

>> Goal Setting For Real Estate Investors


Image Credit: © Francesco83 | Dreamstime.com

Increase Your Rental Income: All About Adding a Suite to a House

If you’re struggling to find a deal that will cash flow in your area then it might be time that we let you in on one of the biggest secrets in real estate investing:

You don’t FIND great real estate deals – you CREATE them.

There are plenty of ways to create value and put together a great deal. We do it by mixing a variety of strategies from finding a motivated seller and solving their biggest problem to renovating right through to adding a legal suite to the property.

One of the biggest questions that we get is WHAT IS A LEGAL SUITE and WHY PUT IN A LEGAL SUITE vs an ILLEGAL SUITE.

A legal suite is when you add a rental unit to a property following the building codes of the city you’re in and doing everything from electrical to plumbing to framing with a permit. As each step in the process gets complete an inspection will be completed to make sure that it all meets the building codes for your area. An illegal suite is when you put in the rental unit without the permits.

If you aren’t sure what is involved pop into your city building permits office. In Nanaimo the city office has friendly and helpful staff who are ready to explain what is involved and what you need to do to get your permit.

It is definitely more cost and more hassle to put in a legal suite but there are a lot of reasons to do it. In the latest video from my series on adding a suite to a property I explain why we prefer to add a legal suite (and what all the other other suite types are form authorized to illegal).

Why We Add Legal vs Illegal Suites in Rental Properties

As I discussed in the video there are some really important reasons why we prefer to add legal suites to our rental properties. From risk reduction right through to better tenant relationships – we find it’s worth the extra expense. Another thing that is usually worth the extra expense when adding suites to properties is creating laundry facilities for each suite. Knowing that it’s the best situation to have in-suite laundry for each unit is simple but figuring out where to put it can be a little more complicated. I shot a different video in week 3 of our project to discuss how we solved the problem for both units in the house.

 Where to Put Laundry in Rental Units

Every week I’m shooting a new video as we work on the suite. If you want to make sure you catch all the videos make sure you’re signed up for our Real Estate Investment Newsletter.

What’s Better for Rent to Own Real Estate Investing?

Rent to own is when a tenant rents your property with the option to purchase it. They move in with the intention buy it from you in the future. You set their purchase price at the beginning, they pay a fee for the option to purchase it in the future, and a portion of their rent is a credit which builds up over time towards their purchase.

As I discussed in How to Make More Cash from Real Estate, Rent to Own real estate investing generates more cash flow because the tenants are paying a higher than market rent for their property and they are responsible for basic maintenance. You also don’t typically need property management because of the quality of tenants that move in and because they are responsible for taking care of repairs up to a certain dollar amount ($300 in our case but many other investors have their tenants handle up to $500).

We’re also helping fill a gap in the market and our tenants are grateful for it. Our rent to own tenants give us big warm hugs, invite us for dinner, make us handmade thank you cards and invest in fixing up the homes. One of our tenants painted the interior and exterior, built a garage and fenced the back yard of his home.

Typical rent to own tenants are folks who are new to Canada and haven’t established credit, they are going through a divorce and their assets are tied up, they’ve beat up their credit because of a health reason, they haven’t saved enough for a full downpayment to qualify for financing or just one set back has kicked their credit down to a point where the banks aren’t interested. They need a helping hand because the banks won’t help them and the other options available don’t make financial sense for them.

Most investors agree that rent to own real estate investing a great to create more cash flow but where the debate does arise around rent to own is what comes first: the tenant or the property?

No matter which approach you do, screening your tenants is critical. Beyond the usual tenant screening of reference checks, employment verification and credit score review, you must make sure the tenants have income levels that will allow them to qualify for financing in the future. You must review their debt load to make sure a bank is likely to work with them in the future. You also need to review their plan to correct whatever issue they have, to make sure they know what steps they have to take to qualify for financing in the future. Honesty from a prospective rent to own tenant is imperative.

Where rent to own can get a bad reputation is when it’s abused by investors who skip this step. Some are lazy, some don’t understand how it works but some actually do it intentionally. They put a tenant in a home knowing the tenant will never be able to buy from them. They take the deposit and the elevated rent and when the tenant eventually cannot buy they just rent it out again – keeping all the deposits as extra profit. That’s unethical and is not how rent to own should work.

What is property first and tenant first?

Tenant first is when you have pre-screened your tenant. They have passed your rigorous screening process, have the income and the deposit and are ready to go house shopping. You, typically, send them out with your realtor to look for a house that they want you to buy. Your realtor has your criteria of where and what you’ll buy. They find their dream home that meets your criteria and you buy it for them. The theory is that they will be more committed to the home because they picked it. Generally a lot of investors also charge a lot more to the tenant directly such as inspection because the home was picked by them.

Property first is when you find and buy a property and THEN find a tenant who wants to rent to own that specific property from you.

The challenge with property first is that sometimes you don’t find a tenant quickly. The reality is that the pool of people who are suited for rent to own is only a very small percentage of the rental pool. That means sometimes it can take a month or two to fill a rent to own property, and every once in awhile you may find yourself turning it into a regular rental just because it wasn’t attracting a tenant buyer (tenant buyer is what a rent to own tenant is often called).

We have had to turn a couple of rent to own properties into rentals in the last three years because they didn’t fill as fast as we’d hoped, so it happens, but we have decided not to do tenant first.

Why We Generally Do Not Like Tenant First Rent to Owns

We tried to do a few Tenant First deals but we found it hard to do good deals with the tenants and their emotions involved. They fall in love with a house and don’t care that it’s $15,000 over market price. They want that house. You can explain to them all day long that that house is a little over priced and how about this one instead, but they don’t care. You can only say “no” to somebody a few times before they get irritated and move on. But the reality is that if you buy a home that is overpriced at the start you’re setting your tenant up for failure!

In order for rent to own to work if you buy a home for over market you need to set a starting price that is above today’s value.

Right now we’re generally appreciating our properties from today’s value by about 3% and no more than 4% each year.

If we pay market value (And when the tenant and their emotions are involved we find you almost ALWAYS pay at least market value), do we then add closing costs and any improvements to that value? If we don’t, we won’t make a strong return. If we do, the price we set for our tenants to buy from us at may not be feasible and the bank will not loan to that value.

To maximize the likelihood our tenant will succeed AND we will make a great return we need to buy properties for LESS than their market value. We can’t do that when a tenant is involved.

Besides – I am a real estate investor. I love helping people but I make money when I create a great deal. Everything unwinds from there if the tenant is the one in charge.

I am not going to buy a house that doesn’t set my tenants up for success. I am also not going to buy a house that doesn’t have other exit strategies or options for alternative plans.

There are risks and rewards and pros and cons to both approaches but we love to invest in real estate because of the CONTROL we have. Relying on someone else (the tenant) to pick the property is like giving my money to an advisor and just trusting that they’re going to invest it as well as me. I’ve learned that nobody loves my money like I do. My tenant certainly doesn’t. When I pick the property based on location, characteristics, and only buy the types of homes that are much more in-demand by the masses (the starter family home for instance), I set myself and my tenant up for much higher chance of success.

Here’s a video Dave created on the same subject:



How to Double Your Money With Real Estate

Double Your Money with Real EstateWe double our money in real estate almost every year.

That’s not really a fair statement though. MOST of our direct financial investment in our deals is limited. What we invest in our deals is our expertise, time, tons of time actually, and my team which has taken me years and years to build. The value I bring to the deals isn’t financial. We typically put in less than $5,000 on each deal and in most cases I get that back in the first year, if not double it. Our Joint Venture Partners, however, will have to wait about 5 years for their money to double but they are doubling a $70,000 investment not a $5,000 and, more importantly, their return on their time is infinite (as they only have a few hours of due diligence and writing the cheque).

So, when a writer for Canadian Real Estate Magazine interviewed me looking for my tips on how other readers could double their money in three to five years I found the question tough to answer. It really depends on what ROLE YOU WANT TO PLAY.

And, to be really frank with you, Julie and I invest $30,000 to $40,000 a year into coaches, courses, networking and mentoring and have done that consistently for several years now. We also have costs like our office space, our office manager, office materials, websites, marketing materials, parties and other expenses that aren’t directly applicable to a specific deal but are all business expenses we incur as part of generating the income we do with our real estate. So we don’t REALLY double our money every year (although it is growing beautifully!).

Assuming you do want to be the active investor like we are, here’s our formula to finding the deals that are going to be most likely to double the initial investment required in 3 to 5 years – whether you’re doing this with a partner or on your own. Our model for buying rental properties is simple. We only buy properties with a CAUSE:

Convenience: Is the property near schools, hospitals, shopping, public transportation, a university – the more convenient the location, generally the more in demand it will be both for renting and for selling in the future. It also increases the potential rent rate and the quality of the rental pool we’ll draw from.

Attracts families: Areas that attracts families and that fit all the other CAUSE categories tend to be the easiest to rent, with less turnover, and lower maintenance and lower risk.

Under the average price: We focus on buying homes that are 10% below the average price in our chosen market. Why only 10% below? Because if you go much below that you tend to get into tougher neighbourhoods and rougher houses – and just because we buy in areas that are 10% below the average house price for our city doesn’t mean the houses we buy are only 10% under – we’re bargain hunting!!

Starter home: Determine what type of home in your chosen city/market is a starter home (single family detached house, townhouse, condominium) and then buy those types of homes. This is the entry level home and tends to be the most liquid, most price stable and generally the easiest to rent out too. People move up from them and down into them.

Economic fundamentals: Find a city that you are near and that has good market fundamentals (people are moving there, more jobs are coming, amenities and infrastructure are growing, government is pro-business, rent rates are stable or increasing).

Once a property meets all the criteria above, we do the following:

  • Find someone looking to make a great return in real estate without having to invest the thousands of hours we’ve invested to become experts, and use their money and finance-ability to close on the property.
  • Find great tenants, manage the property and enjoy the benefits of mortgage pay down, cash flow, and appreciation.

The big thing I want to point out is the fact that so many people get hung up on finding the perfect investment market. The market we’re investing in does not have perfect fundamentals but no market ever does (even the coveted Edmonton market which so many investors run to does not have perfect fundamentals). We’d rather become area experts and stay focused where we are and know that we can control our investments because we’re nearby.

By doing deals just like the two we show below, even if you put in all the capital yourself you will double your money over 5 years, easily. But, you have to focus on buying properties with a CAUSE, otherwise you might end up going through the pain we went through as early “quick cash” investors!

Two recent deals we have done:

Property A:
Purchase Price: $321,000
Cash required from us: $10,000
Cash required from JV: $75,000
Rental Income (Rent To Own): $2,750
All Expenses: $1,300
Net Cashflow: $1,450 split between us and JV Partner
When Tenant purchases in two years, total cash return will be: $50,000 split between us and JV Partner
ROI on our $10,000 = 250%($25,000 / $10,000) over 2 years

Property B:
Purchase Price $303,000
Appraised Value: $330,000
Cash required from us: $4,000
Cash required from JV: $70,000
Rental Income (Buy and Hold Rental): $1,650
All Expenses: $1,300
Net Cashflow: $350 split between us and JV Partner
If property appreciates, on average only 3% per year for next 5 years, total cash return will be: $110,000 split between us and JV Partner
ROI on our $4,000 = 1,375%($55,000 / $4,000) over 5 years

 Other Articles You Might Enjoy:

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

>> The 3 Fatal Flaws with Rent to Own Investing

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

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

My Secret Weapon for Real Estate Investing Success

Real Estate Investing Success

We are just about to lift conditions on a beautiful 4 bedroom 2 bathroom home sitting on a quarter acre lot in Nanaimo. The home has nice high end finishings throughout including heated floors in the main bathroom and kitchen, beautiful hardwood floors and crown mouldings. It’s lovely. It’s so nice, in fact, that our home inspector said “You paid WHAT for this place??”

He was shocked at the price we purchased this home!

In the past we were able to find deals that cash flowed. We even picked up properties for under market value. But I would not say that we were identifying and negotiating deals that were significantly under their market value like this one. And the reason we’re able to find smoking deals like this one is because of my new secret success weapon. It’s a weapon we’ve deployed in the last 18 months and it’s resulted in an enormous change in our business.

The weapon is so deceptively simply I hesitate to even share it with you …

The weapon is focus! Or as our 12 Months to $1 Million club members hear us prattle on about week after week, it’s about BEING AN AREA EXPERT.

It’s not about chasing deals all over the countryside –it’s about finding an area that has good market fundamentals and that you can spend time and energy getting to know fairly easily.

When we share this with people at club meetings, in group coaching calls or even with friends they exclaim how much work that is. And I am certainly not going to try and convince you that it’s not work because it is. It takes a few hours invested weekly over at least three or four months before you can really begin to call yourself an area expert. It takes market watching, researching the sales stats, open house visiting, viewings, conversations and drive by’s. And most of all it takes some patience.

Here’s the thing that I think most people are missing though … and that is the fact that the deals you’ll find in Arizona, Florida or the East Coast of Canada might be cheaper and have slightly better cash flow than the deals you’ll find closer to home … but the question I ask you is: WILL YOU FIND THE BEST DEALS?

I can say with 100% confidence we’re finding deals that fit perfectly within our investment plan – they deliver us monthly cash flow, our partners 15% – 20% annual ROI on their money, and they build our wealth. I can also say that we are finding the absolute best deals in our market area given the strategies we use.

Are there other deals? Yes. Are the deals we find the only deals? Heck no!

But when we can buy a large home in great condition, on a large lot, and have real estate professionals telling us how impressed they are with our purchases (and the prices we get them for!), we know our secret weapon has been launched and is hitting it’s target.

So –what can you do  to launch your own secret weapon? Ditch the deal chasing … settle into shopping in an area nearby where there are jobs, schools, transportation options, recreational amenities and more people moving in than are moving out. With that selected, get even more specific and:

  1. Pick a property type. For example, we focus on homes that are a minimum of 3 bedroom and 2 bathroom. We do not deal in ranchers unless they are over 1500 square feet. Homes must have a usable back yard. Ideally not older than 1970 although we will make exceptions for homes in great condition. Depending on where you want to invest you may want to focus on condos, townhouses or smaller homes. The safest property type to go with are homes that fall into the starter homes category. Every area has a home type that is considered a starter family home – find that home type and price range and focus on it. There is always a market for starter homes – in good times and bad. They are the most liquid homes in any area.
  2. Pick a smaller area or two within your city of focus. This is the game changer. It’s pretty difficult to become an expert in an entire city very quickly. Different pockets of a city attract different people for different reasons. With different features, amenities and home owners you find the price points are different. Thus, to truly be able to spot a smoking deal you have to be intimate with a smaller area. You want to spend time focused on a pocket or two of a city that amounts to about 12 – 20 blocks max. That is it. It seems like you’re limiting yourself but really you are simplifying. When you cut out the clutter you can spot the really good deals and act quickly before everyone else wakes up to the price point (which is what happened to this home we’re about to get firm on … Julie saw the price drop and said it’s time to move on that one. Sure enough we saw it, put in our offer, and all of a sudden it’s getting shown like crazy but we had moved quickly to lock it up before anyone else did).
  3. Spend time getting to know the properties that fit your criteria in your sub market. We probably went overboard as we physically viewed nearly 100 properties in the last six months. Online we probably looked at 5x’s that number. But we know the market very well now. There are very few real estate agents that know the market as well as we do now. And that is how we can spot deals that are on MLS and worth $40,000 more than we’re buying them for – without putting any money into them. Instant equity thanks to this secret weapon.
  4. The final ingredient isknowing which strategy to use in your target area. Some areas that we focus on won’t cashflow well as a regular Buy N Hold but they will work beautifully as Rent to Own’s. And in another area, a Buy N Hold strategy is perfect because the prices are 10-20% lower but rents are only 5-10% lower than higher end areas. So when you are picking 2 or 3 locations within your target city/market to specialize in, know what strategy will work there. And how do you know what strategy will work in your chosen area(s)? Well, that’s a whole other article, but simply said, you’ll know because you’ll have done your research on rent rates in that area, how many For Rent signs you see there, the type of people that live in the area (are they blue collar, white collar, immigrants, students, etc.), and the property types in the area (multi-units, single family homes, starter homes, luxury homes). Knowing the answers to all of those categories/questions will help to define which strategy is best used there.

This weapon is simple but it’s deceptive in it’s simplicity. The hard part is not getting distracted when someone starts telling you about a hot deal they found in another market or the deals you’re hearing about in US sunny states. The really hard part is staying focused. Trust me – I know! But now that I know how powerful my secret weapon is I am finding it so much easier to turn away from the juicy sounding commercial deal someone sends me or the fix and flip potential of a deal in a different market. I remind myself that I can work less and make more just sticking to what I know and know very well. Plus my wife not so gently tells me to stay focused … that helps too.

Published November 18th, 2010

Screening Joint Venture Partners

Joint Venture Partners

This week a woman other than my wife, Mom or sister told me she loved me.

I had just called our partner to let her know that everything is lining up nicely for our tenants to buy the home that my partner and I own. I told her that when they do that she will have earned about 18% on her investment in 13 months.

She exclaimed “Dave, I love you!” And when I asked her if she had any plans for the money she quickly said, “Let’s do it again.”

She’s obviously happy with the results and with the partnership. And that is because she chose her partners carefully. In her case, she focused on the people she was investing with not the deal. She didn’t do much due diligence on either of the deals she has done with us (and we doubt she’ll do much on the next one we’re doing together either), but she did do her due diligence on us. She told us right from the start that she was giving us her money because she trusted us, felt confident in our expertise and liked our rent to own program. And for her, a return was important, but it was just as important that she not have to do anything at all to earn that return. She wasn’t interested in throwing her money into a mutual fund and hoping for the best but she’s a busy business owner and triathlete and she doesn’t want to worry about her investments (nor about tenants and toilets!).

And, honestly, the most important thing you can do is find good, experienced and trustworthy people to invest with. I, personally, suggest that you check into every deal you’re investing in as well, but at the end of the day it’s the people you have to trust and believe in because they are the ones that will make the decisions that will either make or break the investment.

Where to Find Joint Venture Partners

These days the easiest way to find prospective joint venture partners is to do a search online. Most of the folks running an investment business like we do have a website or blog dedicated to explaining the types of deals they do and providing some sort of education and information. You could do a search for real estate investment opportunities and your area to find someone local.

But, personally, I think the best way to find someone to invest with is to drop into a couple of your local real estate investing club meetings and ask your friends and family if they know of anybody successfully investing in real estate.

Once you find a few different people meet with each of them. You’re investing as much in the person as you are in a specific deal so you want to make sure the person you’re investing your money with checks out.

What to Ask Your Prospective Partner (& yourself!)

  • Does this investment fit my goals? In the case of our partner, the most important thing to her was to get a good return without having to do any work once the papers were signed. We offered that solution for her so it was a perfect fit. If you want to learn about real estate along the way you might want to find a partner that is willing and able to teach you as well as invest your money. If you really want to be hands on with your deals then you will be looking for somebody that will work with a hands on partner and perhaps give you a greater share of the deal in exchange for your efforts. You have to know what is most important for you – and then check whether this prospective partner and the deals they are doing will fit with your goals.
  • What is your track record? Past performance doesn’t always indicate future success but how this question is answered can tell you a lot about someone. We’ve earned one of our partners over 700% return on his investment in six years. We also earned the same partner 110% on another investment in five years. When I am speaking with joint venture partners I rarely mention either of these examples because I don’t want to set expectations that high when much of that return was thanks to a rapidly increasing market. Sure – I did the research to know those areas were poised for growth but I had no idea they would sky rocket in value! Instead I will tell prospective joint venture partners that I have never earned a partner less than 15% per year. I will tell them that there are no guarantees in anything, let alone real estate but because of x, y and z I feel pretty comfortable suggesting a 15% – 20% return on most of the investments we do is very likely. Listen carefully to how someone answers this question. If they tell you about their best deals and don’t mention the worst, dig into the bad deals they’ve done to get a sense of how they have learned from their past experiences. And to get a sense of how honest and upfront they are. Look for a decision making process and an ability to take responsibility for the bad deals. That’s far more important than finding someone who made a 700% return on someone’s money one time.
  • What is your credit like? Can I get a copy of your credit report? We’ve said this repeatedly at Rev N You – if you can’t manage your own finances then how can a partner trust you to manage theirs. So if you’re someone looking to turn your money over to someone else I think you have every right to understand how your prospective partner is managing their own money. We no longer qualify for bank financing but it has nothing to do with our credit scores. Both Julie and I have excellent credit scores and would proudly show any partner our credit report if they asked – but nobody ever has. But personally I would never trust someone else with my money if they can’t even manage their own. Nobody loves MY MONEY as much as I do so if somebody else isn’t loving their own money how can I feel comfortable they will give mine the attention and care it deserves?
  • Do you have references? Ask to speak with one or two of the people they’ve partnered with before. If they’ve never partnered with anyone you could speak to present or past coworkers. I believe a good indication of how someone will handle themselves in their investments is how they handle themselves at work. If they were good decision makers and got along well with others at the office then there is a very good chance they will get along well and make good decisions on your deals.

What to Find Out About the Deal

Joint Venture Partners Screening Process

The majority of our partners get high level details about the deal(s) we are investing their money in, but most of them never go out to see the property. As their partner, I am fine with that, but as your investing coach I highly recommend you ALWAYS go and check out the deal yourself. It’s not about second guessing the expertise and experience of the person you’re working with, it’s about covering your butt. Remember – nobody is going to love your money as much as you do – so make sure that what you’re investing in is exactly what you think it is.

Look at the property to identify work that might be required in the near future. Walk the neighbourhood to make sure it’s a good market to invest in (does it meet the Market Research Checklist items?). And ask any questions you might want to know about how the property will be filled with tenants (who is doing that, how do they screen tenants, what do they look for in tenants).

Finally – determine if there are alternate exit strategies for the property.

Right now we’re focused on rent to own deals but all of the deals we’re doing will be at least neutral cashflow even as a regular rental if it comes to that, and many of them can be sold at a break even point as well (because we bought them under market value and have done a bit of work to increase the value). So we have other ways out of the property if, for whatever reason, our original strategy for the place doesn’t work. Make sure there are options for your deals too.

Other Details to Consider

We’re creating an entire program on partnering for profits because there are so many items to consider when you’re doing joint ventures but in addition to everything above here are few things I think MUST be in place on every joint venture agreement:

  • A written joint venture agreement prepared by a reputable and real estate specializing lawyer,
  • An agreement as to how long (approximately) everyone commits to be in this deal – with the understanding that things do change and some sort of clause in the agreement explaining how an unplanned exit from the partnership is to be handled,
  • Clear expectations of roles and responsibilities for the partnership,
  • How often and what will be communicated – because everyone’s idea of good communication is different.

If you want to invest in real estate and want to get your money working for you while you learn, finding someone with experience to partner with might be the perfect solution. However, you have to make sure you’re getting what you need from the partnership. Joint venture partnerships work best when everyone brings something to the table. Whether you’re bringing money, expertise or some other important resource to the table, it’s important to understand what you want from the deal and what the other person is going to provide. And do your due diligence. Because nobody loves your money like you do!!

Published August 11th, 2010

First image credit: ©Viorel Sima |Dreamstime.com

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


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