Think about your future. Imagine you’re reading the real estate classified ads 10 years from today. What do these ads of tomorrow say?
Are property prices higher or lower than they are today? Are rent levels higher or lower than they are today? If you believe in the continuing growth of our country (and Canada’s economy in the face of a global credit crunch has proven our ability to manage our finances), you must believe that just as with every past decade, today’s property prices and rent levels will look cheap relative to where they will stand 10
years from now.
A new survey suggests almost half of Canadians near retirement feel they are not financially prepared to live comfortably after they leave the workforce.
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Cash Cow Properties by Sunil Tulsiani A poll of people over age 45 done for the Canadian Institute of Actuaries found that 42 per cent of respondents indicated they were unprepared for retirement.
Federal minister Jim Flaherty has proposed modest increases in Canada Pension Plan payroll premiums that would be phased in over time, while the Canadian Labour Congress is pushing for a doubling of benefits.
When I read the results of surveys such as this, two thoughts come to mind:
1
Why didn’t more of these now-disappointed workers invest more money in real estate instead of whatever else they are investing in?
2
And more important, why don’t they at least invest in one cash-flowing property?
Some people are now rushing into many, probably questionable and definitely not high-paying forms of investment, instead of looking to invest in real estate, only serves to reinforce my message here. They’re putting thousands of dollars into savings accounts, GICs and other low-earning investments. Some people believe that real estate investing is a risky and complicated business. Some even believe that you need a lot of money to make money. Yet, nothing could be further from the truth.
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Cash Cow Properties by Sunil Tulsiani Two False Beliefs on real estate investing: In his popular book The Four Pillars of Investing (McGraw-Hill, 2003), William Bernstein repeats two widely held myths of modern investing. You may have heard them before. But let’s look at them again here: 1. “No guts, no glory.” Bernstein claims that if you want to increase your potential rewards from investing, you must learn to accept more risk.
Bernstein writes, “Whether you invest in stocks, bonds, or for that matter real estate, you are rewarded mainly for your exposure to one thing—risk.”
2. “The market is smarter than you are.” Here, Bernstein merely repeats the “efficient market” theory of modern finance. In an efficient market, all asset prices supposedly reflect their true market value.
According to Bernstein, you can never find bargain-priced investments.
I can personally tell you that , both of Bernstein’s so-called pillars of investing are not accurate. When you invest in real estate, you gain these two profit-generating benefits:
1
In real estate, you are not merely being rewarded for taking risk. You are rewarded for getting the right property at below market value. Then you just need to attract the right tenants who will pay your mortgage and other costs. Is there a risk involved?
Absolutely! But in real estate you can minimize the 13
Cash Cow Properties by Sunil Tulsiani risk by doing your due diligence prior to going ‘firm’
with your offer.
2
You can beat the market. There are a lot of books, courses and seminars which sell you a
‘system’. Some work and some are very complicated.
If you are intent on beating the market however here is how: Get to know the unemployment figures, mortgage rates, how many days it takes to rent or sell a property in your market and their potential growth rates. There are many properties you can research on the web or through a local real estate agent. Make sure you get all the figures you need and then, make sure that what you have makes sense in terms of the deal you are thinking of putting together.
I often stress that it is very difficult to make money by doing what everybody else is doing in exactly the same way. In order to make money it is important to do things differently and stand out from the crowd.
Summing up, no doubt, today’s real estate market will challenge you. But if you really know how to find money making opportunities in the Greater Toronto area or anywhere in North American you will be on your way to making lots of money for you and your family.
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Cash Cow Properties by Sunil Tulsiani Your step by step plan
Write down your goals. When I started I actually took a piece of paper and wrote down: “I will invest in one property per month.” I was a dreamer and I hope you are too!
The first thing you need to do is write down your goals. Not just think about them but actually take that first, concrete step of writing them down. Those who do not write down their goals almost never realize them.
Set goals now. If you want to get rich you need to write down your goals. I know this sound simple and even ridiculous because it is such an obvious thing to do. But it is going to be the central point of your success.
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Write down five simple goals which you want to reach in the immediate future. Use simple, direct language and make sure that what you write provides you with a clear guide to where you want to be a short time from now. Be concrete in what you write. For example: “I will invest in two properties in the next six months.”
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Write a list of affirmations which reflect the aims of your goals. For example: “I am financially free.”, “I am wealthy.” Say these affirmations to 15
Cash Cow Properties by Sunil Tulsiani yourself at least twice daily. Reinforce them in your mind.
3 Get your credit report and monitor it. I recommend you go to www.equifax.com/home/en_ca.
Do not opt to get the free report. Rather choose to get the one you pay for as it is available almost instantly and it is the one the lenders get to see anyway. Once you do get it, go through it carefully and make sure there are no errors.
3
Read the real estate section in your local paper (in order to begin to get some knowledge). The Toronto Star or the Globe and Mail are perfect for this. Alternatively your local paper is a good place to start.
4
Join a real estate investment club (and I hope you will think about joining us here at Private Investment Club: www.privateinvestmentclub.ca).
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Read at least one more book on real estate investing within the next three months. Also read at least one book by “personal coaches” such as Tony Robbins, Wayne Dyer, Robert Kiyasaki, Robin Sharma, and Napoleon Hill.
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Commit to making your first real estate investment within the next three months. Now, this is a scary thought! I am asking you to show commitment (a word which is scary in its own right) but think that in my example, when I decided to take 16
Cash Cow Properties by Sunil Tulsiani the plunge I committed myself to buying one property per month. That’s twelve properties a year! I am not asking you to copy this. I am asking you to commit to making one purchase in the next three months, but unless you decide to take this action and commit yourself nothing will happen.
8
Get a mentor. Most successful people in the world get a mentor or a coach. They could be an investor who is successful already. They could be anyone who has done this and you have access to them. It is really important that you have someone to talk to who will help you stay on the path you have chosen until you reach your goal of financial freedom.
Secrets of getting money to invest in real estate
Now, if you have money to invest by all means go ahead and invest in Cash Cow real estate properties.
But if you don’t let’s see how you can make lots of money even if you think you have no access to money. Remember, these are the methods I followed and now you can too!
1.
The first may be an obvious one but it is really important. If you are renting, stop!
You need to find a way to own your own property. How, I can almost hear you ask.
The first step is finding a good mortgage 17
Cash Cow Properties by Sunil Tulsiani broker for you area. If you have not got one then feel free to send us an email at:
service@privateinvestmentclub.ca and we will be only too happy to help you. Banks will lend you with as little as a 5% down payment for your personal or secondary property and 20% for an investment property.
In some cases they have been able to lend with 10% down payment and the rest coming from Vendor Take Back (VTB). In some instances money can be gifted to you or you may even be able to borrow from someone you know. You could even get yourself a line of credit to be used against your 5% down payment and closing costs. You may want to get yourself a property anywhere you can, rent the basement and get yourself a monthly cash flow. This is particularly good when you can get yourself a variable mortgage as low as 2%.
2.
Save money. When it comes to
saving money you really need to be inventive.
In my workshops and training sessions I point out that you are directly responsible for what will happen to you. So, grab the bull by the horns and work out where you are wasting money every month. How about, for example, negotiating a better insurance rate for your car, house, or indeed any other insurance you may be paying for? You will also need to work out ways to economize at a personal level: fewer trips to Starbucks, for instance, 18
Cash Cow Properties by Sunil Tulsiani and their $4-$5 coffees, packing your own lunch and reducing pizza take outs. This is also a good time to look at subscriptions such as long-distance travel plans, Cable TV
subscriptions, phone bills which inflate your costs without need. The trick is to become cost-effective and save money without becoming cheap by working out where you can reduce waste rather than cut back on essentials.
3.
Don’t Put the Car before the
Investment Property. If you own a car that’s worth nearly as much as a down payment on an investment property, sell that car. Get rid of those big cash-draining car payments. If your car is mostly paid for, there’s a good part of the money you need to move up to investment property. If you’re thinking about buying a more expensive car, stop! Until you can afford to pay cash for a car, drive the least expensive, dependable pre-owned car you can find. For too many investors, their car is the enemy of their investment program.
If you ask me, today, I do not buy a new car even though I can afford it. I would rather invest that money into a Cash Cow property.
4.
Use the equity in your house. One of the best ways to raise money for Cash Cow properties is to use the equity of your house.
Let’s say, by way of example, that your property is now worth $300,000 and you have a mortgage of $200,000. Your equity in this 19
Cash Cow Properties by Sunil Tulsiani case would be $100,000. You simply go to your bank and refinance your mortgage to cash out the equity. Let’s say your bank agrees to give you $75,000. You now have $75K to finance your Cash Cow property.
5.
I will be writing another book on this subject alone but for now see if your close friends, neighbors or family members would like to earn 10-12% on your investment. They will simply lend you the down payment and you will borrow the rest from the bank.
Remember that you will only invest in properties which make sense numbers wise. If you do not have close friends or relatives then the best way to raise money is through a real estate club. There you will meet people with money to invest who are sick and tired of settling for 2% - 3% returns on their money.
There are some good real estate clubs in most large cities like Toronto, Vancouver or Montreal. Before joining a real estate investment club carry out the following checks:
a. Do the organizers of the club invest, themselves, in today’s market?
b. Is the guru teaching himself/herself or is the presentation farmed out to a marketing company to simply sell
you courses, DVDs and books?
c. Is the head of the club successful?
d. Does the club meet monthly or at least quarterly?
20
Cash Cow Properties by Sunil Tulsiani e. Is the leader of the club successful investing in the same type of
properties you are being asked to invest in?
f. Are the meetings intended to sell you extra courses, books, DVDs and
share theory or are the intended to help the members of the club actually invest?
g. Are you able to network and get advice?
h. Are you able to get access to money for your Cash Cow property?
i. Are you able to get access to inner circle properties which are not
available to the general public?
It is important that when you do join a real estate investment club the meetings (ideally every three months) should inspire you to take positive action and invest in property.
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Cash Cow Properties by Sunil Tulsiani
#2 – Why Invest in
Real Estate
Now you’re going to see why real estate investing offers you greater opportunities to build wealth than any other type of investment. With real estate, you can make money in dozens of different ways. For starters, here are four potential paths to profit: 1.
Appreciation
2.
Positive cash flow
3.
Mortgage paydown
4.
Instant equity