Friday, Aug 25, 2023
Imagine yourself at a picturesque marina, ready to embark on a thrilling sailing adventure across the vast ocean. As you meet your appointed sailing guide, you engage in conversation over coffee on the deck of a sailboat. Curious about his sailing experience, you inquire about his past voyages. You are stunned to learn his confession that he has never sailed across such challenging waters before, having only taken short day trips on calmer seas. Despite his limited experience navigating the unpredictable tides and fierce winds, he is now set to lead you on a 40-day journey across the open ocean.
Would you still entrust him to captain the ship and lead you safely to your destination and back? Likely not. Why? You need someone who has gone before you: who knows what to expect and what to do when things go sideways.
It’s incredible how many people choose captains like the one described above when handling their largest financial asset: real estate. How many people get a referral from someone they know without finding out if the REALTOR® has purchased their own home? Or, when buying rental properties, take advice from someone who has never successfully rented properties of their own.
My question for you today is: Who are you getting your advice from?
At one time, I felt inspired to design a piece of jewelry that had special meaning to Ken and me. We wanted to market it, feeling the message of the pendant would encourage others in times of hardship. I wanted to go to the people I love most, who care about my success and will be on the journey emotionally with me. So I did what was comfortable: I went to a close friend I knew was in my corner. I was devastated by the result. Her response was, “Why bother?” She didn’t think the jewelry seemed nice or would have any impact.
Ken empathized with me when I shared my disappointment with him. He asked me an interesting question. “Yetta, does this person like jewelry? Does she wear jewelry?”
I realized that outside of a wedding ring, this person didn’t. Jewelry isn’t something that resonates with her. Suddenly it made sense why she wasn’t excited or becoming emotionally invested for me. It wasn’t in her passion zone or line of experience.
When investing in real estate, we must ensure that we look to both people who have our back AND have the experience and passion. If you expect your parents to be excited for you when you buy your first investment property – and your parents have tried to invest and been burned in the process, don’t be surprised if they aren’t excited for you. We all come with unique experiences and backgrounds that impact how we view concepts and situations.
Similarly, if you go to your financial planner, they will recommend you invest in what they know and have done themselves. Their schooling taught them about stocks, bonds, and RRSPs. If they have gotten 6% return on investment in stocks and bonds, and stocks and bonds are what they know, they aren’t going to recommend real estate investing. It’s just outside their zone.
What if I want an 8% rate of return? Or 15%? Or even 50%? Who should I go to when I want to invest in the lucrative option of a rental property? Find someone you can trust who has done it many times and has been successful.
You need someone who understands what you’re up to and shares similar values and goals. To invest in real estate beyond your residence, you’ll need the help of different experts in several fields. You need a REALTOR® who has invested themselves, hopefully, multiple times. They must be well versed in how it’s different from investing in a primary residence. They need to know each stage of the game, obstacles you might come up against, and how to run the numbers on whether a property can make what you want it to.
You’ll also want a particular type of lawyer: a real estate lawyer. Someone who specializes in helping people do exactly what they are trying to do. You want to select a building inspector who understands the style of investment property you’re looking at. Why? Maintenance is a different conversation if you are going to be living there vs. if you are renting the property out. So is safety and fire separation if you’re dealing with a multifamily residential. Aesthetics is also a different conversation. If they’ve never invested themselves, they won’t intrinsically know what you need to know to serve you best.
It is the same thing if you are making a commercial purchase. You’ll want a real estate lawyer who specializes in commercial real estate. They’ll understand the HST implications, just like the real estate insurance broker who can insure you if you plan to get 8 properties vs. 1.
How do I find these people?
Find someone else who is successfully doing what you want to do and ask who you need to know. Please only look into highly recommended referrals. Not like, “Yeah, you can call Pete, my broker. He did an okay job.” No, you need a, “You’re nuts if you don’t use my broker,” kind of referral.
After that, you need to interview the professional with questions like:
- What have you personally invested in?
- What is the variety of investments you’ve had?
- How many properties have you owned?
- What happened as a result?
- How have your investments worked out?
- What successes have you had?
- What failures have you had to overcome?
- What went wrong? How did you handle it?
Why ask all this? Because experience leads to expertise.
It’s important to note that we are not looking for a perfect track record here because failure is part of the learning process. We’ve had some unsuccessful experiences, and we share these openly because we know learning comes from hardships and success. If you find someone who has never had any bumps or bruises along the way, they may have missed out on some of the experiences you need to reach your goal. They need to have a level of personal engagement with it.
If you want a guide to help you on your real estate investment journey, email us at together@dekkerteam.com. You can join our community, and we’ll start the conversation together. If you’re looking for an expert in a particular area, call us. We know many excellent professionals across Canada who we can vet for you, so you have a larger pool of people to interview.
Similarly, if you’d like a copy of our personal interview questions that we ask the professionals we work with, we’d love to share them with you! We’d love to help you start down your path. After all, who you know is more important than what you know!
