I am a novice who would really like to have a go at real estate. I am planning to get started with investing in Multi-Families, but don't have much money. What markets would be good for my new venture, which you would suggest me look into? Please help with guidance
Thanks Carrie

Start with a condo, single family home or something that you can afford and makes financial sense. Don't rush into multi family if you don't have the money or the experience yet. Start with a single family home and when you build up some equity and experience then a move into multi family. Just my thoughts . Hope you find something that works for you.

Be very cautious going straight into multi-family, there are lots of extra hurdles to jump and unless you have the cash to handle them it could very quickly ruin your idea of the rewards.

The biggest kick start is to start where you can. Do a condo if that is where you can get in, or a single family home, or a suited home, or what ever gets you in the game.

Why real estate at all? What market do you believe is going to aggressively appreciate? Returns on real estate are in the 4.5% - 6% range. If you want more than that, you need to be excellent at forecasting aggressively appreciating markets.

Short on capital + novice is not a winning formula for multi-family. Multi-family is typically purchased with 30% down.

If you are very low on down payment and need CMHC insurance because you can only put 5% down, remember that it will take you about 5 years of principal pay down to just break even in a flat market. (after 3.6% CMHC fee, Realtor fees, closing costs)

What I'm saying is that if you can make 5% on your RRSPs and invest your gross income before the government makes deductions and then pay a lower tax rate when you retire so the net interest rate is ~7% when considering the tax shield...why bother with real estate? What return can you realistically hope to make with real estate?

carrie palmer said:

I am a novice who would really like to have a go at real estate. I am planning to get started with investing in Multi-Families, but don't have much money. What markets would be good for my new venture, which you would suggest me look into? Please help with guidance
Thanks Carrie

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Read these "how to get started" blog entries here and go from there: http://myreinspace.com/threads/educational-rein-posts-by-thomas-beyer.10663/

If you talk to anyone who has been doing this for a while, you will find that the consensus is that multi family is the way to go. Stronger cash flows, no limits on qualifications, economies of scale, and a variety of other reasons.

The best and fastest way to get into multi family with limited funds and experience is to team up with a pro who will show you the ropes in a co venture. Your returns will be much safer and predictable, and you will eliminate costly errors along the way and when the venture matures take your gains and purchase your own asset. This is what worked for me.

CorySperle said:

If you talk to anyone who has been doing this for a while, you will find that the consensus is that multi family is the way to go. Stronger cash flows, no limits on qualifications, economies of scale, and a variety of other reasons.

The best and fastest way to get into multi family with limited funds and experience is to team up with a pro who will show you the ropes in a co venture. Your returns will be much safer and predictable, and you will eliminate costly errors along the way and when the venture matures take your gains and purchase your own asset. This is what worked for me.

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Are pros looking for amateur Co ventures? If so I'd like to be first in line. Also what would I bring to the table ?

carrie palmer said:

I am a novice who would really like to have a go at real estate. I am planning to get started with investing in Multi-Families, but don't have much money. What markets would be good for my new venture, which you would suggest me look into? Please help with guidance
Thanks Carrie

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Excellent feedback from everyone and so great to have these different points of view!

I think a very good way to learn is to work for a professional PM company, land / infill developer, or investment sales. Get out of the get-rich "work for free" circuit as soon as possible. Total goofballs. You should be paid to work.

cnastase said:

Are pros looking for amateur Co ventures? If so I'd like to be first in line. Also what would I bring to the table ?

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What Cory is implying is "invest with him (or other experts like him)" , learn while doing it and then you can do your own deal with your own money next time. So, the rookie still needs to bring some significant $s to the table.

Do not assume real estate requires neither money nor expertise, please.

Successful real estate ventures, especially multi-family investments, require these FIVE ingredients, likely far:
a) cash - and for a 12-plex of say $100,000/unit or $1.2M you need 25% to 30% or $300-350,000. Otherwise: don't even think about it.
b) expertise - ideally with a few houses or condos or THs or a 4-plex or smilar deal
c) time to look for deals, write offers, drive around, talk to realtors, mortgage brokers, property managers, other expertise in the field etc.
d) good credit - i.e. the ability to get a loan
e) ability to withstand stress from vacancies, unexpected repair bills and personal guarantees on debt

and, if you wish to grow beyond your own cheque writing capability

f) JV attraction i.e. ability to persuade others to invest with you, i.e. a track record, some salesmenship, ability to write clearly and concisely, legal understanding of structuring options

REIN's education and incubation environment provides you with all of that - in time - but in the end some significant cash is required, and that usually comes from savings from a job or if you're lucky enough, from an inheritance. Then add b) to f) and you can be very successful if this is what you want.

Thomas took the words from my mouth. Think win win. A good partnership is someone with cash and little expertise / time partnering with an expert. I would not buy a business without first understanding it, and since multi family had many pitfalls that you can minimize by doing a co venture first.

It's not rocket science of course, as many buildings I have purchased were from people like doctors, lawyers, and other high net worth individuals. Some of those are not real estate experts but have hired a good team to manage their properties.

Feel free to private message me for more info. I am buying 102 suites here in the next month or so.

"Get out of the get-rich "work for free" circuit as soon as possible. Total goofballs. You should be paid to work"

What or whom are you referring to here?

@CorySperle well...predatory companies / individuals encouraging volunteers to come learn the business for free. No need to work for free. Work for a reputable company and get paid while you work. There is no secret sauce.

Real estate investing is a cash-heavy business and the pros are well funded and in need of skilled people as employees. Professional developers are basically administrators between a lot of very knowledgeable consultants. No one individual really is an expert in all things and there are a ton of skilled experts in complementary but distinct professions out there. If you can learn the system on a major scale it is a lot easier to narrow the process for a smaller scale, but with the understanding of what the large scale looks like and the experts involved.

The large developers come from a variety of backgrounds: civil engineering, advocacy, finance, planning, teaching, accounting, MBA. The common denominator is years of experience and industry knowledge. There are zero shortcuts and no secret sauce. It is just time working for a reputable company and learning all the players in the game that makes the system work.

The guys who want you to work for free are so small and cash strained you are probably going to walk out with more bad habits than good. Much smarter to work for a company who has figured out the business of real estate not the empty-promise hustlers.

By the way... the reason I talk about "developers" and not "investors" is because to become an investment company you need to have a cash supply. That means you have two choices: raise the funds internally through some retail business or raise capital from investors. The companies I have seen enormously successful at growing an investment portfolio started with a business building houses, or condos, some ventured into land. The experience of development provided the land capital for the sites to develop investment assets. As time passes, land value increases and then you have a majority of the initial equity required to construct the commercial centre, multi-family, ect. Those companies with only investor-placement capacity have a much different business model. Knowledgeable investors would never NEVER agree to give up 50% of the gains to a real estate expert. Nope. Not for a direct control asset, no way. So, companies that solely raise capital that isn't theirs to manage and increase value are in a tough spot. They need to find ways to provide 12%+ compound returns to justify very high management fees. Because if they can't beat a REIT at 7- 8%, how could they convince "rational investors" to invest in something drastically riskier?

When it comes to most direct control asset ownership, the preference is for large institutions to run the financial analysis in-house, hire competent PM and avoid exorbitant fees. The other preference for smart direct control money is to have a clear cash-out plan. "We will sell in an up market" is not reassuring to large capital.

So... a bit of a ramble but the bottom line is that I think a lot of folks interested in a career in housing would benefit most by working for a professional company. So many hustlers in real estate for some reason who are trying to sell real estate for something it really isn't or imagining they will achieve 20%+ compound annual returns.

Recently I have come across a venture started by a less than qualified, uneducated, and ultimately an incapable narcissist, Craig McMorran stands as a wielder of such a delusional reality that I'm shocked the project in Sweetwater on Lake Koocanusa is still in developemnt. DO NOT BUY HERE, a simple google search of sweetwaterBC, his dodgy alias cabindeal.ca, and a google search of Craig McMorran should be evidence enough not to trust any interaction with this man. Simply enough, purchasing a cabin on Lake Koocanusa does not guarantee any title to land and in fact may be deemed unsafe as problems with the middle terrace have forced geologists to stop construction all together due to unsafe foundation.

Do your research here. Do not deal with Craig McMorran or any of his affiliates (check his previous scam greatcarsandtrucks). BUYER BEWARE!!

Enlightening however the last two posts have nothing to do with Carrie's original post.

Small multifamily buildings are the safest path you can take to make big money in real estate. So I advise you to pay attention on duplexes, triplexes, and four-plexes.
The reason is simple when you have more than one unit and one unit goes vacant, you still have the rent from another.
You need to understand that real estate investing is a business, so you have to learn how manage it effectively. And people, who have the experience in this area will be your best teachers.

DanJonesBC said:

Recently I have come across a venture started by a less than qualified, uneducated, and ultimately an incapable narcissist, Craig McMorran stands as a wielder of such a delusional reality that I'm shocked the project in Sweetwater on Lake Koocanusa is still in developemnt. DO NOT BUY HERE, a simple google search of sweetwaterBC, his dodgy alias cabindeal.ca, and a google search of Craig McMorran should be evidence enough not to trust any interaction with this man. Simply enough, purchasing a cabin on Lake Koocanusa does not guarantee any title to land and in fact may be deemed unsafe as problems with the middle terrace have forced geologists to stop construction all together due to unsafe foundation.

Do your research here. Do not deal with Craig McMorran or any of his affiliates (check his previous scam greatcarsandtrucks). BUYER BEWARE!!

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Craig McMorran has been foreclosed on and there are many people who have lost their money. I'm one of them.
If you have purchased in the cabin lots , get a lawyer.