Are all these Real Estate Investment Seminars Legit?

You know what I'm talking about. There is an abundance of companies/individuals now that are promoting themselves as Real Estate investment guru's. This is obviously profitable for them as they can spend thousands on advertising their "free" events. I know your mama told you this..."If it looks too good to be true it probably is." This still stands to reason even as adults.

I get calls, periodically, from people asking me questions about Real Estate that are clearly canned questions they learned in the latest seminar. Now don't misunderstand, there are some excellent Real Estate investment organizations out there. I have clients who are members of these organizations and enjoy the networking and idea sharing. Of all of the seasoned and successful investors I have ever dealt with none of them have been products of the get rich quick seminars, none of them!

Don't become the unsecured money source for someone's get rich quick scheme, we have seen in recent months more than a few of these companies/individuals leaving their investors out in the cold! GET EDUCATED AND TAKE CONTROL OF YOUR MONEY!

Here are a few things to watch out for:

1) Many of these programs are built out of an American Real Estate model... Canada is VERY VERY different and in fact each province has different legislation so make sure you are talking to a local expert, ask them where they invest, why and how and who finances them.

2) My favorite "Buy real estate with no money down"... Let's think about that for a minute. Is it possible, YEP... Does it happen very often? NOPE! It used to be quite easy to do this, however, it is much more complicated now. In Alberta, as an example, you could at one time assume mortgages without qualifying, that is no longer the case and in fact, even if you qualify to assume many of the lenders are still stipulating a down payment aspect as a component of that qualification. Can you buy property using someone else's money...YEP and that would mean no money down for you RIGHT... but honestly if you are a rookie you will likely find it difficult to find backers who are willing to invest in your Real Estate ideas. There is also the vendor take back (or seller financing option)... However this may influence the financing decisions of your other lender(s). Lending is about security, and if you fail to disclose vendor financing in your application you are committing fraud and assume HUGE liability...

3) Foreclosures... This is a big one. Here are a couple of myths. Foreclosures are sold for the mortgage amount only (WRONG), Foreclosures are always a great deal (WRONG), People facing foreclosure will be happy to sell their home to me for below market value and I can make a quick profit (GENERALLY WRONG).

- Once the bank has the property for sale it is required to have a professional appraisal and a Current Market Evaluation, the mortgage amount outstanding is not considered by either of these professionals. In fact think about a bank owned property more like a relocations firm owning a property. It is a similar process, Appraisal, Market Evaluation and Pricing all go together and can be re-evaluated after a period of time but in general are not a FIRE SALE!

- Sometimes Foreclosures are sold for below market value however consider that the bank owned property generally comes with NO warranty, NO representation, NO real property report and in many many cases is marginally/VERY distressed. In many cases offers are only accepted when unconditional, you have to be prepared to shoulder a burden of risk in order to save the money.

- Sellers /owners who are facing foreclosure are likely in a serious level of financial distress and as such my observation has been that when they attempt to sell their property prior to the bank taking ownership they often price it in an unrealistic fashion because they have other financial obligation to cover as well.

All that being said is it possible to make money investing in Real Estate? Absolutely... Real Estate is an excellent investment, but it comes with risk and your best protection, especially when you are getting started, is to find a professional Real Estate Agent and ask a lot of questions. Don't assume that you will get a better deal going it alone.

So my tips to starting out investing in Real Estate.

1) Go and get an idea of what your financing options are. Do you want to do an equity take out of your home to use to purchase something else? How much of a down payment will the lender require, how much will you qualify for? Ask a few lenders or mortgage brokers for their opinions and experiences with investors.

2) Once you know what you can afford decide where you want to buy and for what purpose. Do you want a rental or a flip and where in terms of geographic location or community, you might want it to be quite close for the first one so you can keep an eye on it.

3) Get professionals involved. Real Estate Agent, Mortgage Broker, Home Inspector, Lawyer, renovator etc... Find professionals that you trust so you can work quickly and efficiently to get a good deal.

4) Be realistic and anticipate risk. Can you afford to be without a tenant for a few months, how much will the flip cost and what is the upside potential?

If you want to start out investing and want some solid information please don't hesitate to call me!

Cheers

Gemma