15 Most Critical Things I Learned About Real Estate Investing

It's not how much you make that's important. It's what you do with it. 

1. My number one learning: the concept of forced savings. How much you make is not as important as what you do with what you make (Investment properties. Why bother?).
   Forced savings is the most powerful concept in investing. You won’t get far on your income, nor will you be able to reach financial freedom regardless of how much you make. In close to 90% of all cases, there isn’t much left at the end of the year. It took me years to discover that for myself. I met many people and clients who for years earned from 500k to well over a mil and did not have much to show for. Yet others, earning a lot less, but who invested, ended up so far ahead in the long term. You must understand the concept of forced savings and investing.

2. A journey of personal self-discovery: I learned a lot about myself through real estate investing: What motivated me to start and stay the course was a sense of desire, a need, an urge for independence and freedom: living my life on my own terms. I also learned what qualities and mindset one must possess to be a successful investor. Mindset is the greatest determinant of your success or failure. I wasn’t conscious of mine when I got started, (I simply didn’t have the skills or point of reference for self evaluation). But later, I could not move forward without a conscious understanding of my personal “make up”. Find out what drives and motivates you in your life.

3. I have been poor and I have been rich…Rich is better.

4. Real estate is the best investment there is: Investing in income properties was the quickest, safest, most profitable…. and legal way to reach my financial goals, not to mention the great satisfaction I derived from building it.

5. Anything worth having is worth maintaining: Looking after properties is not any different from looking after your health, relationships, finances, dentals or your car. Looking after your investment and appreciating asset that is building your freedom is not that big a deal. I actually enjoy it, mainly because of the mindset I have developed.

6. It is tangible. I can control it. I can feel it, touch it. It is solid and concrete. I can run it, change it, and preserve it. I am as risk free as I can get in any form of investment.

7. It is almost free. It generates rental income that covers its operating expenses. All I have to do is look after it and maintain it. The rest (like the financial rewards and experiences it brings) will take care of itself, I don’t even need to think or worry about it.

8. I can grow it. I can increase its value through improvements, patience and good management. I can increase the value of my investment actively while at the same time, passively waiting for markets to do its thing.

9. I discovered leveraging. Some debt, like HDL cholesterol, is actually very good for you. Leveraging goes a long way. $100,000 buys me $600,000 worth of an asset. If the market appreciates by 5%, it is not my initial 100K that grows but 600K, while the debt I incurred to acquire the investment is totally covered by its rental income.

10. Never overextend. Calculate your carrying costs based on higher rates in case they move up. Allow proper allocations for unexpected expenses. Don't finance your investment 120%.

11. There are a lot of myths and misconceptions about how difficult it is to get started, to get the capital, to manage. But it does not require a PhD in quantum physics to do. Real estate investing is not really that complicated.

12. Tax advantages. The government "subsidizes" your investment by giving you tax breaks. You have a choice: you can pay more in personal taxes or you can take your money and invest it and get a tax break. Not doing so is not taking advantage of the very few gifts you get from the tax man.

13. Your home base, your castle, your principal residence, your main investment. Don't be stingy with your principal residence. It just doesn't make any personal, financial or investment sense. This is your most important asset and investment. As a matter of fact, it is the best investment there is if you understand exactly what it does and how to use it.

14. If I were to start over today, I would act more and hesitate less. I never regretted what I bought, but I regretted many times what I “could've -should've but didn't".

15. Opportunities exist equally for everyone.  Those who don't see them or use them are held back by nothing more than one thing: their mindset, the way they view their past, present and future.

Tagged as: buyers, Buying an investment property, Real Estate, Toronto Real Estate