About Real Estate Investing

Real Estate

Shiny Object Syndrome

   
I'm writing this because I have heard and read it over and over; real estate investing is one of the ways people build wealth. To be perfectly honest, I myself have benefitted financially from a real estate investment I've made many years ago. The difference is that this investment was never meant to be just that.

Working as a handyman, real estate investors are some of my clients.  The ones I tend to meet typically own older buildings that serve as rental property. Where I come in is when things get run down, worn out or just plain broken. Even without gaining first hand experience with this particular type of investing, I've learned a few things that might be of value to those who are considering it.
    

Wouldn't it be nice to own an apartment building, collect roughly $ 20,000 in rent each month and pay only $ 15,000 of that back to a mortgage lender?
In theory this looks like the perfect retirement plan. I must admit that I've pulled those numbers out of thin air (kind of like your bank does when they lend you money). I would bet that a lot of would be real estate investors go into a venture with similar expectations. As a matter of fact, I've been in on those types of conversations.

Here is the reality: Buildings require constant maintenance. The older the building, the more it will cost. If you are borrowing large sums of money to acquire a rental property that will "carry itself" through the monthly rents, you are mostly investing for long-term appreciation of the property value. Your money will be tied up in a business venture. The commitment does not stop after you purchase the property.
    

Maintenance Issues
   
The problems with deferred maintenance tend to show up during an economic downturn. When the rental market cools off and more vacancies pop up, as is the case in Alberta currently, renters have the upper hand. They can afford to be picky.
 Guess what! The maintenance you may have postponed a year or two ago, when it seemed that it would have been just a drain on your profits, will now cost you a lot more. Not only will the required repairs be more extensive, you are also likely to loose rental income due to a more competitive market.
    

   
Real estate investing is no magic recipe to wealth. It is a business like any other, which requires careful budgeting at all times, the good and the not so great. During an economic downturn those with solid plans and a good maintenance program will prevail. A good relationship with a professional handyman can help with maximizing your profits. A well-maintained building can be someone's home for decades. If your tenants like where they live, they're less likely to move somewhere else. If vacancies occur they are much easier to fill.

    

The Truth About Investing

   
If you are a real estate investor, or you are thinking about becoming one, think long term! You will not get rich over night, but a long-term commitment to your business will translate into success. Remember that purchasing real estate is not the only investment you'll be making. Ongoing maintenance does not come cheap, but it always insures a steady return.
    

   
Want a less troublesome investment?
    

   
 Here is an idea: Think about who else is investing in your property with you! The bank that lends you money to finance your venture is likely among the most profitable corporations. If you don't have a basic understanding and a passion for buildings and quality maintenance, save yourself and your potential tenants a lot of trouble and buy bank shares! You can bank on a solid return without the headaches of leaking faucets and and ongoing renovations. 
    

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About tiny Homes

   
Why are there no tiny homes being built in Edmonton?
    

... because shelter is a basic need, not a luxury!
 

   
Despite a strong demand for tiny houses, the zoning bylaws in our city currently make no provision for tiny homes under 500 square feet. Even a garden suite needs to be bigger than that to get approved by the city. Some are finding ways around this, by living in camping trailers or building small homes on wheels. Those solutions don't work for everyone who wants to live in a tiny home. The only choices are living in "grey area" (illegally parked somewhere) or outside city limits, in trailer parks or on land where it is tolerated.
 
Tiny homes need to become legal in Edmonton. Let's unite to make it happen!
 
As a professional handyman I generally focus on home repairs. However, I have built many utility buildings over the years. It's one of the things I do best. I would like to put my skills to work for those who are in need of basic shelter. For a short period some years ago, I have lived in a building I created. It remains one of the best memories I have today. The freedom was incredible. With some upgrading, a simple utility shed could serve as shelter and provide privacy, for someone who has no home. Those two basic needs are not being met for many today, while others occupy 2,500 square foot mansions by themselves.
Let's contribute to the creation of more affordable housing! Tiny homes are a perfect way to do that. Shelter is not a luxury; it is a basic need.
 
We can work together to change the bylaws of this city, so tiny homes become a reality!
 
If that sounds like something of interest to you, please wait no more! We need you. Join YEG tiny Homes today! Together we can accomplish great things. Let's get busy!
    
   
According to an article in the Globe and Mail by Preet Banerjee (2015); "In 1975, the average size of a house in Canada was 1,050 square feet. Fast forward to 2010 and new homes being built almost doubled to an average of 1,950 square feet. This increase in house size is accompanied by a decrease in the average number of people living in a household. In 1971, it was 3.5; by 2006, that number fell by a full person to 2.5."
 
Why is that?
 
Has owning a mansion with lots of extra space ever been a Canadian value? Can we all afford those half million dollar mansions? What about homelessness; have we succeeded to eliminate it?
Could it be that homebuilders are focusing solely on the most profitable ways to develop new subdivisions, thereby neglecting to service a large segment of the population?
Many people in Edmonton think that enough is enough. YEG tiny Homes grew from a regular coffee meet-up between the three founders, to over 100 strong in just a few short months and the trend is continuing. Members come from all walks of life, but generally share a desire for more affordable housing. The one thing they are willing to sacrifice is size.
 
Tiny homes make sense.
 
Living in a smaller home may not be the right choice for everyone, but for many it is a good choice. It naturally shifts focus away from material possessions and encourages a more intentional lifestyle.
 
What really matters to you?
 
Tiny homes are environmentally friendly. They consume less energy to keep comfortable, which can be enhanced more by building to the latest standards at relatively low cost, when compared to larger buildings. Tiny homes can be every bit as comfortable as large ones and they satisfy our basic need of shelter while providing privacy.
 
    

Home Sweet Home
 

   
Home Sweet Home
 
Would you like to own your own home and have it suit your individual needs just perfectly? I'm sure most people would answer this question with a firm yes. It gets more complicated though, when it comes to buying that perfect home.
 
New homes are popping up everywhere, but most of them are huge and cost upwards of  $ 400,000.  Does that make sense, when the average family today is actually smaller than it was in the 1950' and 60's?
Part of why we need big houses is because we own more stuff that takes up space. Do we really need it?
 
Are your furniture payments keeping you from buying a house to put those furniture in? Do you see the irony in this?
 
Another reason why builders are constantly offering bigger houses is, that they sell for a lot more money. Mortgage rates are cheap and people are willing to go deep into debt for owning a big house. After all isn't a house supposed to be a once in a lifetime investment? For those of us who qualify, ownership comes at a huge price that we'll pay for decades to come.
 
Debt is slavery!
 
What about buying an older, smaller home? Getting closer to reality now, aren't we? Homes in Edmonton can still be found for under $ 200,000. But there is a trade off. Homes in this category are often called handyman specials, and for good reason. Usually they need lots of tender loving care (and a few dollars to make that happen).
 
Many people are afraid of getting into an older home.
 
As a result, developers are buying up older houses as soon as they come on the market, only to plow them down and put humongous two and three storey houses in their place, that you can then buy for closer to $ 800,000. Once again, you're out of the loop!
 
 What are regular folks supposed to do? Rent apartments, forever?
 
Not so fast. There is hope, even for those of us who do not make six figure incomes (yet). Older houses can be just perfect, even for you! Generally they are overbuilt from an engineering standpoint, which means they are most often structurally sound. Most likely they are also big enough for the average family that is used to living in a two bedroom apartment. If you have a good down payment, the monthly mortgage payment may actually be less than the rent for a typical apartment.
 
Before you jump, consider this!
 
 There will be repairs. I'm not going to lie to you here. An older house will need repairs and ongoing maintenance. But look at it this way: If you were able to save up for a down payment, you already have an edge on budgetting. Just keep it up and create a home maintenance fund (sometimes it can double as an emergency fund). Our parents and grandparents all lived in (by today's standards) smaller homes and it didn't make them any less happy, or did it? The advantage of ownership is undeniable, no matter how small the house is.
    

   
As a professional handyman I would like to help you choose and maintain the home that is right for you. Here are some important points to consider when looking at an older home:
 
Foundation
Is it concrete, blocks or brick? Any visible signs of damage? Cracks, leakage, old repairs?
 
Roof
What kind of material, are the shingles curling up around the edges? Any obvious damage or old repairs?
 
Fascia, Soffit, Eavestroughs
What condition are they in? These are important when it comes to draining your roof and ventilating your attic, as well as protecting your structure from water damage.
 
Heating System
How old is the furnace? (New furnaces are all 95% efficient or better, an old one might be less than 50% efficient. -That would mean that over half your heat escapes through the chimney.)
 
Windows, Doors
Old windows and doors are generally problem areas in older homes. Often they can be resealed for time being, but new, energy efficient windows, are always better.
 
Plumbing
Are your supply lines copper, PEX, PVC or galvanized steel? Copper or PEX are fine, they're still being used today. PVC and galvanized steel are no longer approved. Eventually they will have to be replaced.
 
Electrical
Do you have 100 amp service with circuit breakers? Is all the wiring in the house copper? Sounds good. Any aluminum wires or old style fuses? Upgrades are called for. They will make your house safer and more comfortable.
 
Insulation
Older homes tend to be lacking in that area. Insulation in the walls is often blown in and will sag over time. Is the attic sufficiently insulated? What about the basement walls?
 
Smoke, Carbon Monoxide detectors
Every house should have them. You can easily install them yourself or call your handyman ;)
 
Some of those problems can easily be solved over time, others may be more serious and you'd better hold off on buying the house, unless of course the owner agrees to give you a big discount. Always consult a home inspector before you make your final decision. Not sure who to call? I can suggest a qualified home inspector for you.