Tuesday, April 30, 2013

Tools Of The Trade: Scanner

In real estate investing, if you are finding your own deals, you will be sending out offers. Many, many offers; hundreds. If you invest like I do; most of those offers will not be face to face with a realtor in your home town. So these offers will be done over e-mail.

Most of the time, offers gets sent, then the other party will change something and send it back. Then you will initial the changes and send it back. Over a fax machine, the final copy of the purchase contract is almost unable to be read. I much prefer the use of a scanner, not only can you read the document clearly  but it looks a lot more professional.

When I was selecting my scanner; one of the feature I really wanted was that it could scan multiple paged into one document. I have had a realtor that must be using a printer top scanner. He would send me the copy of the purchase contract one page at a time. There would be eight documents for the eight pages he sent me. It was king of annoying having to deal with all the different documents to go over the contract, even more when one was out a sequence.

The scanner can be of more use in your real estate business. When preparing your bookkeeping you can scan all your receipts and send them to your accountant over email avoiding having to schedule a meeting just for droping those off. If you take the time to sort them before scanning them as well, your accountant will be very grateful, making his work load lower and diminishing your accounting fees.

Also in the event of a joint venture, you would be able to provide all partners with copies of leases, contracts, statements and bills as well as any other pertinent documentations that may be relevant to your combined business.

The first deal I closed on was in Nova Scotia. I live in Alberta. It wasn't possible for me to sign off on all the documents face to face with my lawyer who was in Nova Scotia. What he did was email me the paperwork. I printed everything off and met with a local lawyer to notarise them. My local lawyer warned me this deal would not close on time with all the paperwork being in Alberta. So, I scanned every documents, signed and notarised and sent them the PDF copy. I shipped the paperwork express post and scanned and emailed them the copy of the shipping confirmation. I closed on time at the agreed date.

Maybe more so then my printer, my scanner as become the most important tools in my office. I'm not telling you to run off and get a scanner right now. But if your budget permits, I think it is a sound investment.

Monday, April 29, 2013

Step On It: Find A Mentor

Last week, if you have been reading this blog and following my advice, you have set up your goals. If you haven't, no problem, do it now. Dreams will only ever be a dream unless you take action. If you find yourself making excuses, that if your fears and doubts interfering. We will not all attain our dreams and some of us will take longer then others but the secret is to take action. Even if it's just a small act to start. Take action.

Now that you have set your goals, you know what you want and what you need to do to accomplish it. I am using real estate to take me to my dream and if you are reading this the chance is that you are too. If not, simply apply the concepts to your situation.

Sometimes the steps you need to accomplish are not always clear, or they may be clear but the process is not or you may be on a road where you know what to do and how to do it but it could always be tweaked to be improved and more effective. You can make it work by trial and error. Try something and see if it works. Buy a house and find renters; and VOILA you are a real estate investor. Not so hard is it? But are you a good real estate investor? If you do not keep track of your records, first of all, you may not know. You may find that the property you've bought once all the expenses are taken into consideration does not have a positive cash flow. That's ok, live and learn, next property you run some numbers. You may end up with tenants that pays their rent late if at all or that they trash your property. Next time, you'll know to screen them more closely. You will eventually learn lots of lessons, making you a better investor and may actually start making good money on your real estate investments.

If you are in your early twenties, you may actually also have the time to do all that and be successful by retirement. Or you may be lucky and get a decent return on your investment from the get go. But if you could, from the get go, be making sound successful investments with minimal head aches if any; wouldn't you want to? Wouldn't you want to compress the years of learning by trial and error into a few months and start being successful now? Of course you do, we all do, but how do we do that? That is where a mentor comes in.


A mentor should be actively doing what you are aspiring to do. That is why your goal needs to be clear. You won't get much help getting ahead in real estate if you are taking advice and guidance from, let say a dentist. Unless that dentist is investing in real estate and doing so successfully. But he's a dentist and a very successful man. Yes, he's successful at doing dentistry. I know this seems very obvious but it's amazing how we seem to put successful people all in one basket and by doing so actually overlooking completely the successful real estate investor.

In fact, I remember a conversation with a pharmacist once, when I was talking to her about our real estate investing. She said: "I have a friend, a doctor, he is very smart. He's a doctor. He did real estate for  a while and it didn't work like he hoped it would. And he's smart! He's a doctor". She made it quite clear that in her mind only successful people could get success, and if they where successful in their career they should be able to show success in all other fields. When her successful friend the doctor couldn't make it work with real estate. It was because real estate didn't work. Not the fact that this successful doctor didn't learn how to make real estate work.

So when looking for a mentor, do not go looking only for successful people. Look for someone who as had success in real estate investing. Make sure they are doing it in a way that would suit you. It would probably not do me a whole lot of good in my mentor is successful at real estate investing by putting in millions of his own money when my available capital is slightly (maybe more then slightly) lower then his. His techniques would probably not work in my situation.

So how do we find these mentors. Look no further, I'm already here! Just kidding, well kind of. Unfortunately people don't go around with a sign around their neck advertising their line of work and investments. But like minded people have a tendency of finding each other. Look for investors groups, or cash flow events. Attend those events and talk with people, explain your situation with investing where you are and what you want to accomplish. People who are passionate about what they do love to talk about it.

There will have to be a certain level of give an take. In the case of my courses, my mentor was compensated for showing me what I needed to know. In some events, partnership are created. If you partner with someone on a real estate deal, it is reasonable to expect to be able to learn from that deal. You don't have to. Many people like to finance a real estate investment that is set up and manage by their partner and not trouble themselves by the details and simply enjoy the money coming in. That is perfectly okay. Sometimes it will be a mutual mentorship. You will connect with people and share information and details of each your experiences and learn and grow from each other.

However not everyone is in a position to finance a deal, or have knowledge and experience in real estate, or willing and able to obtain that knowledge through professional investors in real estate courses. I don't think it would be reasonable to expect for someone to teach you all they know with nothing in return, but here is what I would recommend. Ask to be added to their contact list so that you will receive the information of any real estate investment they come across. When you received those details, pass them along. Start creating a contact list of your own. If you arrange for them to be connected with an investor, their in your debt. I normally offer a finders fee, but you can bet that if someone connects me with an investor for my deals and they express to me they wish to learn more that I would take them under my wing.

So, get out there. Meet people doing what you wish to do and find a mentor or two.

Sunday, April 28, 2013

What A Life: Mutton Busting

Every year, Didsbury host a local rodeo. Last year my boys asked me to do the mutton busting. I was very surprised they wanted to participate. I asked a few times if they where sure, but they said yes every time. Alright then.

So when the time came, I got them signed up and ready for the mutton busting. I was very proud because when I came to it and they are in line waiting for their turn, watching kids ahead of them falling off the sheeps, nerve where running high. It would have been a lot easier to change their minds and walk away, but they controlled their fears and took action.

This was Jerome's ride:


And now Patrick's ride:

I told Patrick to hold on good and not let go. He did just that. They both received a trophy. Fun times.

Saturday, April 27, 2013

Rich Dad Radio: Congressmen Ron Paul

This week on Rich Dad Radio, the guest speaker was congressmen Ron Paul. He shares is view on the current economics in the United States.

I got home very late last night and tried to listen to the show and to blog about it. I would be typing and dosing off and waking up again to a combination of letters that did not form any words. So that is my reason for this post being late. If I would have done it on time, you wouldn't have understood anything anyways.

I found this week's radio show to be of great interest. Congressmen Paul discussed a few key points. Why the USA left the gold standards and go to fiat or paper money in order to support a big government. He also discuss whether politician can improve the economic recession, they sure can make it worst. Robert ask congressmen Paul why money is not taught in school, his answer is because the school are controlled by the government. He is a big advocate of home schooling and to keep the government out of our children's education.

As he often does on this radio show, Ben Bernarke, who is the current chairman of the Federal Reserve, took a bit of a beating. Why didn't he see, in his position, the development of the mortgage crash of 2008? He is a graduate of Harvard and MIT, shouldn't he be smart enough to have seen this coming, when others prophesied it? And why is the country looking to Bernarke and the government for a solutions when they missed seeing the arrival of the problem.

The radio show also discussed the drop in the gold price, and the reason behind it. Did you know the Feb as been shorting gold? If you are unfamiliar with the concept of shorting, it is when you sell a stock (in most cases it is stocks) that you do not currently own in the hopes of buying it at a later time to close your position at a lower price.

So to sum it up, great show this weeks, lots on interesting information. In fact if you would like to quickly learn more of the mortgage crash of 2008 I would recommend the movie Too Big To Fail.


Friday, April 26, 2013

Inspirational Corner: The Power Of WHY

The first time Adam read Rich Dad Poor Dad, he was really excited and handed it to me so I could read it. I read a few chapter's and put it aside. It was an okay book but it wasn't the fiction novels I had been reading and didn't have much interest.

Years later, he heard on the radio of a Rich Dad basic stock courses coming to Calgary and he signed us up. We had received some books and material at the registration event, and he had read it all. he was starting to get frustrated with me because I hadn't even looked at them. "You're not putting any effort into this" he would say. And, he was right. I wasn't, I had no interest, but to appease him, I glanced at a few pages. I was content with our situation and didn't feel the need to reach for something different.

At the course, I found the information interesting enough and I could see the potential so when he said he wanted to sign up. I agreed. I pictured myself as a very supporting wife, although at the time my intention was probably going to support him by letting him take the courses. I don't know that I had the intention of spending all that much time on them. But I was willing to let him try. I'm sure I would have set limits. I would still have expected for the same amount of his time to be spent with our boys and myself. Looking back now, I can see that I probably wouldn't have been really all that supportive, I would have being just barely enabling.

But at the end of the three day, the presenter asked that everyone described their WHY. The WHY is the reason we want to do this. The purpose that will keep us motivated and moving forward when we are experiencing a low.

I figured my why could be so that I am the one raising my kids instead of the day care. It's a decent why, it's fine really. But deep down, I know I didn't need stocks or real estate so reach that goal. I could work from home or we could live on one income.

Before my turn came to describe my why, it was Adam's turn. He explained how his parents had been hard working farmers their whole life, working 24/7 to maintain it. He explained their love and passion for their horses, and how if they could retire, they would be able to spend more time doing that. He explained how his parents where at a time when they should retire but they did not feel they could support it. He said "I want to be in a position, where I can buy their retirement"

Then it was my turn to speak, and I couldn't. Adam's response took me by surprise. I guess I expected his reason for wanting to do all this to be for more money so he could have more stuff. The presenter was waiting for me, and the other students. But I was crying, not just crying, but bawling! Snot running for the nose, unable to speak bawling. The fact that his reason was so pure; became my why. I had his back.

Then I was really on board, I even read all the books. It became all we talked about because it was all we wanted to talk about.

Two months later, Adam broke both his wrists in a motocross accident. Did I mention he was a motorcycle mechanic? Both his wrists, where in screws and external fixators for four months before they could cast it. That was four months of him not working and since he couldn't even scratch his nose, four months of me not working.

Think about it, if you take the income from your work away, will you last four months? We also had two young boys to support, they where 2 and 3 at that time. We probably wouldn't have if it wasn't for the amazing people in our life that helped. My boss at the time, paid me full wages, even though I was previously only working part-time, and that I was no longer working at all. The community organised a fund raiser. My in-law's kept our boys but brought them home for every meal so that we could still have family meals until Adam's pain and discomfort where under enough control.

It should have been the scariest part of our life. The doctor was clear Adam should not plan to go back to mechanic work. But we felt a lot of peace in the fact that we had a Plan B already in the works with our courses.

Since Adam couldn't do almost anything. We dedicated the time to learning our courses. Once we got our life back under a regular routine. We added more course at the end of 2011 to add real estate.

It's been an amazing journey with lots of ups and lots of downs. But if we knew then, what we know now. We would have taken the very same decisions.

Many people asks if we have accomplished our dream of the WHY. Well, my father in law, was diagnosed with cancer, and within a month, we lost him.

People pay attention! It is not enough to have a dream, you also have to go after them because you never know how much time you and the people around you have left.

We miss you Mike.

Thursday, April 25, 2013

Good To Know: Is It a Good Deal?

Last week on Good To Know, we discussed why invest in real estate, the pro's and con's. It will come to no surprise to find out, I'm in favour of investing in real estate; but only if the deal is good.

Duh! No rocket science there.

But how can you tell if it's a good deal or not. If you've ever played Cashflow 101 or 202, you will have practice analysing deals. I play both those games very often. When it's with someone who as never played before this is where they struggle the most with the game. They draw a card, read it over and although the words are clear, the concept isn't... yet. Is this a good deal?

I've pulled two Small Deals card from the Cashflow 101 game of a similar property. So which is the better deal? It as been my experience that someone who never played the game with no real estate investing background will automatically go for the bottom deal. Why? More cash flow! They will make more money. No brainer!

However, there are a few things to consider here that could affect the value of the deal. First thing I will look at is the ROI. ROI stands for Return On Investment. What is the return relative to the investment put into the deal.

To calculate the ROI you would take the income less the expenses and divide it by your contribution to the investment. On those sample card, the ROI is already provided, but lets go through the calculation just to make this a little more clear. The income and expenses is not provided on these sample, but we know the cash flow  which is the total of the income less expenses. The ROI is calculated on an annually basis so we will need to multiply the cash flow by twelve.

Example 1:   200 x 12 = 2,400      2,400 / 4,000 = 0.6 or 60%
Example 2:   400 x 12 = 4,800     4,800 / 12,000 = 0.4 or 40%
So the top deal has a higher ROI but the bottom deal still has a better monthly cash flow; why does ROI matter? Let's say you have $24,000 to invest and you could buy as many of these two deals. You could get two of the bottom deal cash flowing a grand total of $800 a month. If you invested instead on the top deal with the lower cash flow, you could purchase six of those properties for a cash flow grand total of $1,200.

Another thing I will look at is the resale value of the property, in these examples these two houses are worth the same, between $65,000 to $135,000 depending on the market. It is true that if you are purchasing this property with the intention of adding it to your portfolio as a long term investment, it may not be of crucial importance; but why not be in an advantageous position should the need to sell arise or if you wish to refinance at a later date in order to get equity out of the property?

Example 1: Resale profit potential is $19,000 to $89,000 (sale price - mortgage)
Example 2: Resale profit potential is $10,000 to $80,000 (sale price - mortgage)
Now if you have taken the same real estate courses as I have with Rich Dad Education, you know this like the back of you hand, but a refresher never hurts.

If you have not taken real estate investing courses, this information will be of great value so that when you have an investment opportunity presented to you, you will be able to determine whether or not it is a good deal. I will go into greater details on evaluating a deal on a later post. So follow this blog if you wish to know more.

In the mean time, practice evaluating deals. Play Cashflow, if you do not own the game and are not within driving distance so that you may come and play it with me; look for a Cashflow Club in your area. Yes, those exist. If that does not work, play the online version, Cashflow The Web Game.


Have fun!


Wednesday, April 24, 2013

What Are You Reading?: Rich Dad's Cashflow Quadrant

In his book, Rich Dad's Cashflow Quadrant, Robert Kiyosaki describes the four different people that creates the world of business.

1. E (employee) - These people believe strongly in getting good grades in school so that they can get a good job. They are looking for a safe secure job with benefits.

2. S (small business owners/self-employed) - These people will be of the belief that if you want something done right you do it your self. Most of the time they will work by themselves.

3. B (Business Owners) - These people own big businesses of 500 or more employees. These people look for good systems, good networks and the smartest people they know to run their business.

4. I (Investors) - These people have their money work hard for them.

The poor will be on the left side of the quadrant under the E and S quadrants. They believe in working hard for your money. They work for security. If these people can not work, they get  no pay. They work for active income.

The Rich will be on the right side of the quadrant. They seek freedom, they do not want to be dependant of a job. They have people or money working for them to create money.


Robert is a very passionate man with a crystal clear vision. However, earlier this week I have found an artist sharing the same message as Robert, in his own style. Very powerful video title "The American't Dream". A must watch!!

Tuesday, April 23, 2013

Tools Of The Trade: CardMunch

To a real estate investor, networking is a very important part of our business. You will be handing out your card a lot, and you will be  getting many business cards as well. If not, start to do so now.

We have meetings and get together's in many different settings. Conference rooms, at classes, at coffee shops, at the bar, etc. You never know where you will meet a potential real estate investor, or prospective tenant.

Sometimes you will end up with a pocket full of cards, sometimes in more hectic settings you will run the change to misplace and loose the contacts information you've work so hard to get. Or you will end up at home after such an event with a fistful of cards that will need to be entered into your contact database before they can be of any use to you.

This is where the app CardMunch comes in. It is a free app available on iTunes (not sure about android and blackberry). Once you receive a new business card, you simply take a picture of it from the app with your phone. Then place the phone back into your pocket and continue to network.

That is when the magic happens. The picture of that card gets submitted, and is available for viewing until it is processed. Once processed, the image of the card is still available but now all the information from that card is entered into the appropriate slot. Phone numbers, email, website, etc. and if they are a member of LinkedIn, that information will be made available as well. Their picture and details of what they do.

WOW! How powerful is that? But it doesn't end there. With a click of a button, you can save all that information directly into you phone's contact list. This is technology at it's best, working for us.

If you are not yet using this app yet, I strongly recommend you get it.

For the Android's and Blackberry users; can you leave me a comment and let me know if a similar app is available on your device.


Monday, April 22, 2013

Step On It: What's In A Goal

We all have goals, but are they clearly identified? Will they help us succeed? How many goals do you have? You should have more then one, in fact you should have many goals. They should be clear, detailed and very specific.

So what's your goal?

To be financially independent.

No I said be specific. It should also have a time frame.

OK, I want to be financial independent through real estate by 2015.

Better, but it has to be detailed, and very specific.

I want to be financially independent using multi-unit rental property, having a total positive cash flow of $5000/month before the end of 2015.

 It's important that your goal can be measurable so that you know exactly what you are reaching for. The more detail the goal is, the easier it will be to recognise if you've reached it or not.

Good goal! So what are your other goals?

What do you mean? I just gave you my goal. That's what I want to do.

What are the shorter term goals? The end of 2015 is in about 3 years, so what are your goals for this year?

It's good to have a goal, but to make sure you stay on track you'll need to have shorter term goals along the way to lead you to your greater goal. This is setting the map, figuring out what will need to be done.

OK let's see, I aim for about $75 - $100 positive cash flow per door a month for rental properties. Therefore $5000 divided by $75 is about 66 doors. In 3 years that would be 22 doors a year. 

So that could be 6 four-plexes, or 4 six-plexes and so on. Of course it can be a combination of different size properties.

At this point I would evaluate your goal. You want your goal to be challenging but if you have a family, the time you will need to dedicate to your goal may not be feasible. Don't loose focus on what is truly important in life.

You're right, I don't think with my work and family commitment that this goal will be feasible. What do I do.

Make adjustments. Either to the length of time you are giving yourself, or the measurable amount you have set up.

So if I lower my goal to $4000 per month and give myself until 2016. Then, I would need 53 doors by 2016. That would be 13 doors a year; 3 four-plexes, or 2 six-plexes.

Perfect! You have your long term goal for 2016 and your yearly goal. What other goals do you have?

More goals?? OK, I will purchase a six-plex in the next three to four months.

Remember, we are trying to set a road map to reach our goals. We need to have a clear vision of how we will accomplish this.

Wonderful! So what are your immediate task?


We now have our short term, clear, measurable goal. Now, how do we attain it. Make a list of the task you will need to accomplish to reach that short term goal.

Locate a cash flowing property, find investors, purchase said property, collect rent.

How? Don't forget to give yourself a time frame.

Locate Cash flowing Property:
Every week, look through MLS listing and request income and expenses information for rental properties.
Daily, look for responding email and run numbers. If they work, send an offer.
Do the due diligence (property management will be established by now)

Find Investors:
Every week, attend an event with networking potential. Hand out business cards to prospective investors and collect business cards from prospective investors.
As soon as possible, post an add on kijiji or craig's list advertising investment opportunities.
Build a contact list.
Send out an investment summary to your contact list.
Arrange a meeting or presentation to interested parties.

Purchase Said Properties:
As soon as possible, start contacting mortgage brokers, insurance companies, lawyer, and property management.
Send pertinent information and applications.

Collect Rent:
Set up payment arrangement with property management. (Deposit only debit card, e-transfer, direct deposit)
If there is any repairs that need to be done prior to renting, have property management make such arrangements.
If there are any vacancies, have the property management advertise and fill unit.

Do you see it? The map, the road ahead? By following these steps to set up our goals, you know exactly what you need to do. Make sure those goals are written down, and visible. You want them to be on your mind. I have my longest term goal written on my bathroom mirror. Every time I brush my teeth it's there. Reminding me what I am trying to accomplish. Above my work station, I have a white board with my immediate tasks, I cross them off as I accomplish them and I rewrite the whiteboard at least monthly. It also has my deadlines, such as financing clause date, closing date, ect. It's a big whiteboard.

It is important to stay accountable. To re-evaluate when closer goals come to terms. If you have reached them, great for you, you may be on the right track. You may want to make sure your goals are challenging enough.

 If you haven't reached them, write down what was accomplished then either re-evaluate and reset your goals to be more manageable or see which task should be done differently in the future. If you failed reaching your goal, don't despair. You want to stay accountable but don't be so hard on yourself that you will make yourself quit.

So tell me, do you have goals?


Sunday, April 21, 2013

What A Life: Adam vs Baby Bull

We where vaccinating our calves last fall, so we round them all up and run them through the chute one by one. This little red guy was missed being castrated so he is on his way of being a bull. As you can see, he had the attitude to go with it.

Saturday, April 20, 2013

Rich Dad Radio: Taxes

It's tax season! Not my favourite season I must admit. On the Rich Dad Radio that aired April 13, 2013; Tom Wheelwright, tax expert and rich dad adviser was the guest speaker. They talked about "Tax time and how to pay less taxes legally"

I really enjoy how refreshing Robert Kiyosaki is. He is very blunt with his opinion, and he doesn't seem concern with whose feathers get ruffled in the process. This particular radio show is about how to pay less taxes legally. Robert's mention that if you would rather learn about how to donate more of your money to taxes to go listen to Suze Orman. Funny stuff.

Now this radio show is American base, but the basic principal still apply to us Canadians. I enjoyed the show and found it entertaining and informative.

"Tax is an incentive if you are an investor or business owner. It's a punishment if you are an employee."

"Debt and taxes makes the rich, richer. Debt and taxes makes the poor, poorer"
One of the things that stood out the most to me was regarding home office deduction. If you own a home base business, and I think a lot of us women have at one point in our lives be it Avon, Pampered Chef or Mary Kay, you can claim home office deductions to your taxes. If your office space is say 20% of your home (for example you run your business out of your kitchen, or home office, or garage) you can claim that percentage of your home expenses as a business expense. That would be 20% of you heating bills, electricity, etc.

Of course, I am not an accountant, and I would recommend you consult one prior to making major changes to you tax application.

Rich Dad Radio as a new segment where Robert Kiyosaki answers questions that was sent in from listeners. If your question is selected to be answered in one of his radio show, you will win a free signed copy of a book written by Robert Kiyosaki of your choice. How cool is that? Be sure to submit your questions to Rich Dad Radio.

Leave me a comment, let me know what you thought of this week's show.


Friday, April 19, 2013

Inspirational Corner: Life Is What You Make Of It

Last weekend, I visited my mother in Calgary.When it was time to leave, I packed my stuff and the boys toys and went to make their beds. I bent down to pick up a pillow that was on the floor, on my way up, I caught the metal bracket that was holding a shelf up with my head. It hurt! And I also managed to split my head open a little.

My step-dad took me to the clinic where I got my cut glued. Glue stitches is very strong glue. So strong in fact that it also glued the doctor's glove to my head. In the process of removing the piece of glove, it also removed a chunk of my hair. That also hurts! So now I have a bald spot on the top of my head.

Naturally I took a picture and posted it on facebook to share my ordeal with family and friends because the humour of the situation had not escape my attention. One of my friend commented on the picture saying "Oh Melanie, I'm so sorry this happened to you. You are having such bad luck lately"

Really? I am? That comment took me by surprise. I didn't think I was having bad luck. Things happens as they always do, some good, some less good, most of them funny in the end but I didn't think I was plagued with a string of bad luck.

It occurred to me, the more I thought about it that. Same event, in someone else's life could have been seen as a string of bad luck. I reacted to the situation with humour and tried to spread the laugh. I displayed my bald spot with some kind of sick pride, because I viewed it as a joke. I mean really how many people get a rubber glove glued to their head? This is how I view most events in my life. So looking back, I see a pretty good life.

Now if on the other hand I viewed it in a more negative way. Get upset over the fact that my accident delayed my return home, changing my schedule all around. And wouldn't it just my luck to get a glove glued to my head. Is the universe after me? I mean really how many people get a rubber glove glued to their head? And to top it off in the process of removing said glove I loose a portion of my hair leaving me self-conscious and ashamed. Well ya, if I viewed life that way, when looking back I would think: Oh what bad luck I have.

Our minds are powerful and it can change the aspect of any situation. Events and situations are just what they are. They are not necessarily good or bad. Our mind will make it one or the other. But here is the best part. We control our mind! If we follow the path of negative thoughts, we can give ourselves a mental shake and say: Oh come on! It's not so bad. It's just a habit, one we can control.

So this week, lets all look at the humorous and positive things of side.

Melanie Barr

Thursday, April 18, 2013

Good To Know: Why Real Estate?

For the first post of the Good To Know segment I figured we should cover why invest in real estate in the first place. When starting to investment to obtain financial freedom, it only make sense to get your advice from the people who are living your dream. If you ask "How do you become wealthy?" you may get very different answers, but in the end the right answer will come from someone who as become wealthy.

So, what do the wealthy invest in? There are three answers to that question.

  1. Paper Assets (Stocks): Stocks holds a special place in my heart. That is where we started. But, having done both stocks and real estate; I have to admit there are some cons to stocks. There is a big learning curve, mostly because we learnt technical trading, not fundamentals. We learnt to read charts, what each individual candles are called, what patterns they form to recognise the trend, the support and points of resistance. To make decisions on the fly. Although I love stocks, based on what I've learnt; I'd have to say real estate is easier to start. (please take notes, I am talking of stocks, wealthy people do not invest in mutual funds or GICs)
  2. Business: The wealthy will own multiple business. It's a good investment. The difference is what a lot of us will view as a business is in fact being self-employed. If you are currently a business owner, ask yourself this; "How long can you leave you business without it been affected?" A business, in an investment term, should be able to run itself.
  3. Real Estate: If you've come to my blog, chances are you know real estate can be a good source of investment opportunity. The wealthy know this as well.

So lets discuss real estate. Why should you invest in real estate? Let's look at the PRO's and CON's.

  • Appreciation: In general, the value of a property goes up with time, this is called appreciation. With almost any other purchase the truth is the opposite, the minute you drive your new vehicle off the parking lot, the value of that car as taken quite a blow. But with real estate, well, land is the only thing we can't make anymore of. Now, we know better then to assume appreciation is guaranteed with the history in the US or even Calgary in the last few years. The real estate market will have it's up and downs, but in general, in the long term, the value will go up.
  • Forced Appreciation: Stocks will be worth what it is worth. They go up and down, and there is nothing we can do to control that. In real estate however, you can purchase a property, give it a new coat of paint, update a kitchen or bathroom, or maybe a little landscape and you can force its value to go up. You'll have to be very careful in taking into account the cost involved into such renovation but it's nice to know you can have some influence on the value of your property.
  • A Strategy For Any Market: The housing market will go up, will peak, and will fall just to start all over again. It is what it is. A four-plex in one province could cost less then a $100K while around here, in Alberta, that might not even get you a condo. The price to rent ratio may vary a lot from place to place. Property values are high here, and so is the rent, but on average the price to rent ratio as been better in the eastern provinces. It may be very hard to find a house to purchase so that it can be rented and make money after all the expenses are paid. This is how most may look at real estate investment. Buy a property, rent the property, and hopefully make money. Good idea, may not work everywhere. But there are other strategies. No matter where you are, you can make money in real estate in your area, all you have to do is use the right strategy whether it be Buy/Rent/Hold, Lease/Option, Wholesale, etc.
  • Cashflow: Real estate can put money in your pocket each and every month. It's amazing to realise that you can create a source of income aside from your job. People!! That is security. Peace of mind. Could be your retirement. Your financial FREEDOM!
  • Mortgage Paydown: So you purchase a property, and you rent it. Your tenant pays for the mortgage and expenses. This property can bring you money every month and eventualy your mortgage could be paid off completely and you didn't pay any of it. This is powerful stuff!! Does your mutual funds do this for you? No?!? Huh!
  • Leverage: Sometime you will come across comparison that will should what, on average, different investment will bring you over the course of a few years. Mutual funds will be compared to real estate and show that it is in the lead. $100K in mutual funds on average may make more then $100K in real estate. Well there is a few things to point out. First to obtain $100K in real estate you probably will only have to come up with 20%. They don't give you mortgages to get stocks or mutual funds. Also an average return on mutual funds can be very deceiving in how it's presented. Let's say the first year your $100K investment when up 100%; that would mean you would now have $200K. Great for you!! The next year it goes down 50%. Well take away half and you have and you are left with $100K. The average annual return in this case would be +100, -50 = 50 divided by 2 years and it's 25. On average, this stock as performed at a 25% gain annually. Well then how come after two years, you are back to square one?
  • Accessible To Everyone: Everyone, if they so choose, could invest in real estate. If you are a retired couple that live off the sale of your house by holding the mortgage since the house is paid for anyways. If you are a house owner who as lowered the mortgage payment by renting out the downstairs apartment. If you are an individual who is teaming up in joint ventures with other real estate investor to purchase multi-unit residential properties. Or if you are slightly down on your luck, with no money for investing and a bad credit, you could still wholesale properties without ever having purchased or qualify for a mortgage. Isn't it amazing that real estate can cather to everyone. If they so choose!
  • Refinancing: Let's say you have purchase an income property at a deal and you put down 20%. In the first term of your mortgage, you where able to spruce it up a little. Now it was already a deal when you purchased it, then you forced it's appreciation with some minor renos and the regular appreciation. It is time to renew your mortgage and you can take the appreciation out of your property and pay yourself that initial investment back. You are now making money on a real estate investment that as none of your own money tied up into it. Huh! What should you do with that returned deposit? Well gee I don't know?... Maybe do it AGAIN, and AGAIN.
  • Power Team: In real estate you surround yourself with your power team. These can be your lawyers, accountant, mortgage broker, realtor, property manager, etc. You do not have to understand and know every aspect involve in real estate financing; your power team can take that burden for you.
  • Emotion Interference: When trading stocks, one of the hardest thing we had to learn was to control our emotions. You place a trade, you have the target profit area where you want the stock to go and you also have your protective stop where win or lose you get out of the trade. So the plan is set. But now however, you are going to watch that candle move, in the wrong direction, possibly becoming a loosing trade. The temptation to adjust that trade is HUGE! Well in fact, at first, we did interfere and tweaked the trade to minimise our loss. In the end causing more loosing trades. Even when all we were risking was $5. The prospect of having a loosing trade was too great, and there was only so much time to react. With real estate, although emotions can get involved. There isn't that ticking clock demanding an immediate answer. You can step back, re-evaluate if needed, or contact your mentor who as more experience and get his or hers opinion.
  • Bad Tenant: There are bad tenants out there, I've had them, other real estate investor as had them and although they make for an interesting discussion topic when getting together with fellow real estate investors; they can be a big source of stress. This stress can be minimised! We describe lease-option or rent-to-own also as the perfect tenant program. Think about it, if you rent a house to someone who intends to purchase it, and they put a substantial deposit on this arrangement upfront; the chances of them becoming bad damaging tenants are low. These are future home owners, tenant-buyers. Also I minimise that stress by not dealing with the tenant at all. Property managers are always part of my power team when I purchase a new property. That's what they do for a living, they are good at screening to get good tenants into the rental units, they handle the calls or complaint and running after the rent money.
  • Work Of A Landlord: Want to go fix a broken sink at midnight on a weekday? Being a landlord can be a lot of work. It could easily become a full time job. And if it does become a job, guess what, that is no longer financial freedom. That is why, as I already mentioned I employ a property manager. Because honestly the chances of me hearing the phone at midnight are quite slim, and I know nothing about plumbing, and I live in the country on a farm; my rental properties are nowhere near me.
  • Limited Access To Mortgages: There will come a time, when investing in real estate, that the bank will feel you have enough mortgages. Trust me on that. Unfortunately your credit score, and debt to income ratio can only support so many mortgages. And after your personal home mortgage, your rental mortgages and your farm mortgages they may be reluctant to give you anymore money :) Doesn't mean you have to stop there. If that was the case, some of us would never even get to start. That is where joint venture partnership comes in. Team up with someone who as the money and the credit to obtain a mortgage. You bring in your skills and get  the deal together and they show up and sign the papers and can now share and profit from a rental property without having to put any work into it.
  • Power Team: Wait a minute!!! This one was in the PRO's now I'm putting it in the CON's? Well, yes. You see, everyone is different. For me, the power team is a PRO's, their combined skills and knowledge is definitely an asset. But for my husband, it can be more of a CON, because he hates talking on the phone, or making small talk with strangers. And until they are establish, your power team members will be strangers to you. In stocks, you are the only person involved whether you make money or not. You are fully accountable. In real estate, you have to rely on people, make sure they are as skilled and knowledgeable as they need to be.
There are many PROs and CONs, but in the end I feel the PRO's outweighs the other, but we all have different comfort levels. Where do you stand? What is your favourite PRO?

This video is a great interview discussing why we should invest in real estate.


Wednesday, April 17, 2013

What Are You Reading?: Rich Dad Poor Dad

For many, this is the book that starts it all. It certainly was for my husband, Adam. In 2004, Adam handed me the book and said "You have got to read this!" I did, the first two chapters. It was cute.

It certainly didn't have the same affect on me as it did on Adam. I was just not in the right mind frame to absorb what Robert was presenting in this book. I was content with my life. People don't just change their life around or way of thinking without having some discomfort forcing them to do it. When you are content with your life, why in the world would you change it?

Lucky for us, I was able to change my outlook on life in 2009, and just to make sure I didn't go back to my old ways; life threw us a curve ball and broke both of Adam's wrists. But that is a different story for an other time.

A year or so ago, I picked up the book Rich Dad Poor Dad again. It was a total different book to me. Now that I was open to change and aiming for financial freedom, I was able to appreciate the pure genius of this book.

Robert describes his childhood and how he came to learn about money. How he got Rich Dad's advice and Poor Dad's advice and how he sifted through them. He talks about the different methods he used to attempt to obtain financial freedom. Although real estate was a part of it, it definitely wasn't the only method he used.

When he was at is poorest, he still employed an accountant. Most of us wouldn't want to know how much money we don't have. The majority would employ the ostrich way and stick our head in the sand. It take bravery to be in such a situation, to maintain your financial statement and stay accountable.

Have you read this book? What did you think of it and what was your favourite part? Leave a comment to let us know.

Tuesday, April 16, 2013


My husband and I took our first course with Rich Dad Education in 2009. We started with stock trading, then real estate investing. When we took our first course we were so excited, it's all we wanted to do. We spoke of nothing else. Lucky for us, we both took the classes together and could discuss the stocks and real estate with each other. Among our friends and family it was a different matter. With stocks, it was worst, nobody understood if we talked about shorting or options. Real estate was a little better and easier to understand but still there was no interest and the conversation dwindled very quickly.

We have since made new connections in the real estate circle. It as been a great benefit to be able to talk and bounce ideas off like-minded people. When we get together with our new friends we often end up discussing real estate or motivational books we are reading. We motivate each other to stay on the right track and to keep the momentum. Things we have learnt while working on a real estate deal. This is what I will base this blog on. I will have seven main topics I will post on.

  1. Rich Dad Radio: Robert Kiyosaki and his wife Kim are people I look up to. They have accomplished so much and have made the path to do the same clear and visible through their books and education system. I make an attempt to surround myself with their vision as much as possible. One way I do that is by listening to their weekly radio show Rich Dad Radio. I invite you to listen in with me.
  2. What Are You Reading?: Knowledge is power. If you say I already know what I need to know, you have stopped growing. The truth is there is always more to know. In this section I'll be discussing books, blogs and articles I am reading.
  3. Good To Know: This one will be dedicated to information, tid bits and tips I've come across about investing in general.
  4. Inspirational Corner: Let's face it, it's a lot easier to find people that will point out why you shouldn't do things then to find people who will push you to succeed. What's worse is that every once in a while, you will be the person slowing you down. It's important to keep the right frame of mind. This section will be dedicated to staying motivated.
  5. Step On It: Being motivated and positive is very important, but that said, it is not enough. You also need to get and maintain the momentum. I will dedicate this section to strategies for keeping the momentum going.
  6. Tools Of The Trade: Investing is not like construction, I don't make a daily trip to the hardware store and I don't get excited over drills and saws. But, I have come across "tools" that have made the processes of investing so much easier, such as computer programs, apps, and organisation tools.
  7. What A Life: Get to know us. This will just be keeping track of what the Barr Family is up to. Life on the farm, life with two busy active boys, and the situation we sometime find ourselves in.

I'm excited about this blog and I hope you are too.

Melanie Barr