Enough Already!!!....and Thanks Rock Star

Lately I have been sick and tired of the negativity that has surrounded me.  It seems as though I cannot escape the people bitching, complaining and telling stories of hard times and how “tough it is out there”.  These have been typically people in their 40s and 50s who are well into their working lives and still several years from “retirement”. 

I have one request of these people…..Please keep the negativity to yourselves. 



photo credit: http://www.daimanuel.com/



Why?  Negativity breeds negativity….and I have had just about all I can handle recently.  Everyone is dealt a different deck of cards and some have got the short end of the stick…..but there are people out there who have been wildly successful having been dealt a very poor hand (think Robert Herjavec).

Lucky for me, I recently read an inspiring blog post on the Rock Star Real Estate Blog entitled “Two Monks Lost in Corporate Communist Canada”.

Basically the jist of this story is that…..as Rolf Potts puts it…. “We end up spending (as Thoreau put it) “the best part of one’s life earning money in order to enjoy a questionable liberty during the least valuable part of it.”

However, the guys at Rock Star do a good job of motivating people who follow their blog.

Their response to this?

“Keep reading, keep saving, keep investing, keep building.

It may seem like slow progress at first but each little step you take towards personal independence will pay off.

Stay focused.  Stay disciplined.  Don’t get frustrated and give up – it’s too easy to do that.

Find people that are doing what you want to be doing.  Go and hang out with them.  Listen to their language, watch their actions, examine their results.

And one day you’ll wake up realizing that all those little steps have taken you to an entirely new world.  One where you’re the boss.”

Thanks for the much needed motivation Rock Star Team.  I needed that one.

Bathroom Reno Pics

Hi All,

I finally got around to painting the trim and getting some pictures taken so I would like to share the before and after pics of the new bathroom!  Here are the before and after shots:

A ton of work went into this reno and I am very happy with the results!  I'm not sure I ever want to do it again though! :)

Comments?

Fixed vs Variable (And Why I Now appreciate my Economics Professor)

I always cringe when I see this heading in an article.  “Here we go….another article about fixed vs variable…..”  What else could they say this time that hasn’t been said a thousand times before?

Until recently, I was quite content going with a fixed mortgage as I told myself that I wanted to sleep at night, knowing my rates were not going through the roof.  I got my first mortgage in 2009 and second in 2010, so needless to say, there was some serious turmoil in the markets and people had begun to look at the low variable rates as something that simply could not go on much longer.

Well here we are in 2011, and the most recent news is that the US has promised to keep interest rates at their current levels until at least 2013.  Suddenly my fixed rates that I took out in 2009 and 2010 are costing me money…..and lots of it.  Had I gone with variable for both, I would have close to $300 in extra cash flow per month.  For arguments sake, I will say that I will have lost out on 36 months of this cash flow….which comes to over $10,000 that I will have left on the table.

Stupid right?  Well, hindsight is 20/20…..and at the time, I thought I was making a smart decision…..and part of me still thinks this was the right decision as I was a new investor and the thought of vacancy loss, repairs and management of my first properties was stressful enough, let alone if I had to watch the ticker everyday looking for signs that interest rates were on the rise.

Overall, I am happy with the returns I have seen over the last couple of years, but with more experience comes the appetite for more risk….

My most recent lease –to-own deal which closed in August, is a variable mortgage at prime – 0.65, which works out to 2.35%.  Because this is a relatively short term, 3 year, investment, I thought I would give it a shot.  I could have gone with a 3.35 fixed, however the cash flow would have been $100 less per month. 

My rational for this choice was as follows:

-         US recent announcement that interest rates would be held until 2013

-         Fact that Canada mirrors the US very closely…whether we like to or not

-         If Canada raises rates, we risk inflating our dollar even further as new foreign investment comes to Canada

-         My cash flow on my three properties combined is very strong and so a fluctuation in rates on one of the mortgages will not land me in the poor house

-         I remember Garth Turner’s book Greater Fool when he said….”If you are going to borrow……borrow like a man”…(funny how these types of comments resonate in your brain….I read this book almost 4 years ago)

You know, I never thought my university economics classes would ever be beneficial.   Who cares what happens to the dollar or interest rates?  What does it matter that foreign investment is coming to Canada?.......well now it matters to me…..in a BIG WAY. 

When you run a real estate business……and it IS a business no matter what anyone tells you…..you have to be conscious of all market factors, both MACRO and MICRO.  Just be sure you are getting the best information you can from the most reputable sources.

Hire a Contractor or DIY??

This is an age old debate with property owners and investors alike. Do I leave it to the pros? Do I try to save some $$ and do it myself?  Unfortunately, I am here to tell you that I don’t have the answer….because it is different for everyone. 

Fortunately, I have a few key points in my decisions making process that will hopefully help guide you in the right direction!

In no particular order, here is what you have to ask yourself.

Am I reasonably handy?

Can you turn a screwdriver? If not, then stop reading this post and call a contractor….but seriously, you will need to have some basic skills.  The ability to use a power drill, hammer, tape measure, mitre saw, level come to mind.  These are some of the bare minimum required to attempt a repair. 

How can I learn?

Even if you have not done any repairs/renovations in your life, doesn’t mean you should give up.  Don’t laugh, but I find the most useful resource out there is…….YouTube……yes, you read that correctly.  I find that this saves a whack of time versus flipping through books and manuals.  Just type in what you want to do, ex. “How to change a faucet”, and you will have hundreds of options to choose from.  DISCLAIMER  Many of the people in the videos are NOT pros and you may have to sort through some junk videos to find what you are looking for.

Is there a chance that I may be injured?

If there is even a remote chance that you could be injured, please think twice before attempting the job.  If you electrocute yourself or fall off the roof, it’s your own fault for not hiring a pro.

Do I have the necessary tools or are they available to rent at a low cost?

If you plan on doing your own repairs in the future, buy some good tools and the right tool for the job.  I only had to battle through one day of cutting baseboard with a hand saw and mitre box before I bought a power mitre saw.  It was $150 and WELL worth the time that I will save in the future.

Are permits necessary to complete the work?

If so, I would recommend consulting a professional or at least look into getting the permit on your own.  It is usually inexpensive, but somewhat of a headache.

How much time do I have?

If you work 80 hrs per week, hire a pro!  Maybe I should have put this one at the top so you people who work 80 hrs per week would stop wasting time reading this….

Is it worth my time to attempt the repair?

OK, so you don’t work 80hrs per week, but do you want to give up a Saturday morning….which may turn into an all day adventure…..to save a few bucks?

What are the contractor rates for this particular item?

Get at least 3 quotes for any job that is over $200.  You will likely find a HUGE range to do the job.  During my basement leak last year (old post) I inquired about some drywalling and received quotes ranging from $280 - $800!!!!  And this was for a relatively east job.   BUYER BEWARE on this one….cheaper is not always better. However you will have to judge the job.  Is it an easy job like drywalling?  OK, cheaper is likely fine.  Is it a specialized job like electrical?  Better look into the contractor who gave the lowest price. Is he licensed?

Will my personal life suffer if I decide to take on these small jobs, which may turn into big jobs?!

My last post touched on my bathroom reno, which took WAY longer than expected.  Try to get a good understanding of the time involved in these projects before going ahead.  Believe me, everything always takes MUCH longer than you think.  Make sure you let your significant other know what you are getting into so they don’t expect you home for supper….and you show up at 2am.

My opinion:

As my rental business is expanding, I am still trying to do most of the work on my own, however I am starting to see the benefit of just having a contractor do the work.  If you have one or two rental properties and a job that is not too demanding, go ahead and do the work yourself.  You will learn skills that you can use the rest of your life (which I have!) However, I can see how my time may be better spent on projects of greater value.  Ie, do I save myself $500 this weekend by drywalling myself?  Or do I spend the time researching new deals that may make me $$thousands the future?  The choice is up to you.

Anyone else have other ideas about this?

First off, my apologies (again) for not keeping up to date with my blog.  The last 3-4 weeks have been a whirlwind for me which includes the following:

1. full scale bathroom reno at my property in Guelph (more details in a later post)
2. landing a new position with an up-and-coming REIT (very excited)
3. aquiring another rental property in the GTA (more details in a later post)
4. moving from my temporary Toronto situation, back to Guelph (also very exciting)

Now I don’t want to complain, because I know that there are many people out there with much more going on (think a wife, four kids, a dog and a cat….plus all 4 points above).  So thankfully I am still young enough to tackle everything now….while I don’t have too much “real life” responsibility.

My original intention for this post was to be about my recent bathroom reno, which I did mostly myself (thank you very much)…, however as I type this I think I need to post something along the lines of “life/work balance”.

So here it goes…

I have always been the type to keep busy.  I’m not really the type to “put things off” or “do it tomorrow”.  That’s not to say that I can’t procrastinate with the best of them….it just bothers me when I do this.

So needless to say, all four of the things I listed above happened at the same time and I most certaintly did not plan it this way.  #2 and #4 are related, however the other items just sort of happened…partial out of coincidence and partially out of my own stupidity.

As I was entering the due diligence phase of #3 (I apparently forgot how time consuming it is to acquire a property), I decided that the next weekend would be a good weekend to start a full scale bathroom reno….because I could “finish it in three days for sure”.  Turns out it took myself and another guy 6 days….with one tiling day going until 3:30am…..up at 6:30 for work = terrible.   And after the 6 days of work, I am still doing finishing touches every night…..a little paint here, some grout there, and all of the accessories that a bathroom seems to need (think vanity, storage cabinet, mirror, towel racks, TP holder, storage shelves for the shower, shower curtains, towels, etc).

At the same time, I was in the process of switching jobs, which meant travel to and from Guelph/Toronto, tough decision making, and having to move my belongings from Toronto to Guelph, which I still have not 100% completed yet.

All of  this has resulted in some serious stress over the past month.  Stress on my physical health (no gym…although working on the bathroom each night helps), stress on my mental health, and stress on my relationship.  Believe me, getting home at 5:30pm, saying “hi hunnie, how was your day?” and then going straight to work until 10:30pm on the bathroom, is not the greatest relationship builder.

So what has all this taught me? 

1. Things ALWAYS take longer than expected……as I mentioned in a previous post….stupid me.
2. Try not to do items #1-#4 all at the same time.  Sometimes unavoidable, but sometimes not.
3. You cannot always predict when an opportunity comes along, but you have to jump at the chance.  “I’m too busy right now” is not a good excuse.
4. Getting ahead, means you have to work…HARD.  And this means sacrifice, so make sure your significant other is on board with your plans.  Thankfully, my girl is the greatest in the world and has been super supportive through the past month. ;-)
5. Although you must work hard, there needs to be some time off, even during these processes.  Setting aside at least one or two nights per week to do nothing, or at least a fun activity, goes a long way in pacing yourself….and not making yourself, and others around you, go crazy.

Anyone else have some stories of crazy busy months?

Befriend the Neighbours

First off, I apologize for no post last week.  I was in Winnipeg on holidays....and after my first day back to work....I need another holiday!

The reason I am sharing this story with you is to prove that befriending the neighbours has fairly significant benefits.  If you show some kindness and maybe give them a bottle of wine, they will have no problem being your eyes and ears when you are not around.  However, this all revolves around taking care of the property. (See previous post entitled "Student Rentals - Don't Make it so Obvious!").

This past summer, right after I had completed my landscaping, I knocked on the doors of the neighbours on both sides of my property to introduce myself.

It went something like this:

“Hi my name is Andrew and I own the house next door……yes, the one with the gorgeous landscaping”.

OK, so it wasn’t exactly like that, but something close.  I went on to say that I had purchased the property last year and that I was interested in keeping it as clean and tidy as possible.  I gave them my phone number and made sure they understood they could call me at any hour of any day if there was a problem with the house.

Why would I do this?

-         I will be the first to know if there are loud parties, thus avoiding bylaw enforcement and fines

-         If the power goes out and the tenants are not home, the neighbours will let me know

-         They may offer to help out with grass cutting, etc if you are not around

-         If someone suspicious is around the house, they will call me

-         If the delivery boy keeps shoving flyers in mail box until it overflows, I will find out how to stop it!

All great things if you ask me!  So remember, befriend the neighbours and it will make your life that much easier!

Book Review!

Lately I have been on the hunt for good reading material that can expand my knowledge while still being easy to read.  I don’t want to read a 400 page novel and I need it to be short enough to finish in two or three sittings, while still providing great information.  Sounds simple enough right?

  The book that I read this week after a recommendation from Rock Star Real Estate was “The Top 10 Distinctions Between Millionaires and the Middle Class” by Keith Cameron Smith.

Smith has several other books that are similarly laid out and easy to get through quickly, while still providing great information!

To sum up, here are the Top 10 distinctions that he lists:

1.     Millionaires think long-term. The middle class thinks short-term.

2.     Millionaires talk about ideas. The middle class talks about things and other people.

3.     Millionaires embrace change. The middle class is threatened by change.

4.     Millionaires take calculated risks. The middle class is afraid to take risks.

5.     Millionaires continually learn and grow. The middle class thinks learning ended with school.

6.     Millionaires work for profits. The middle class works for wages.

7.     Millionaires believe they must be generous. The middle class believes it can’t afford to give.

8.     Millionaires have multiple sources of income. The middle class has only one or two.

9.     Millionaires focus on increasing their net worth. The middle class focuses on increasing their paychecks.

10.    Millionaires ask themselves empowering questions. The middle class asks themselves dis-empowering questions.

I was going to elaborate on each one separately, however I found a blog that already did it for me….thanks Leroy! J

L.A.'s blog - book review