We are fresh off the heels of our first two events, which were a huge success. For two guys who are used to investing in real estate, we get the most joy out of talking to investors and helping them take the next step on their journey. In helping others for less than 2 years, we already have a client that has quit their full-time job to devote to being an entrepreneur and real estate investor… this is pretty exciting for us as we only quit our jobs a few years back!
We used to be pretty big into the stock market. We had some wins, but also many losses. As we took the time to learn more about the markets and investing over many years, a few things came to light. First and foremost, the stock market and other financial markets are based off consumer confidence rather than company performance. For example, Apple could have a fantastic quarter or year, and their stock price could still tumble. Yes, company performance does not always mean the stock price will go up. This should rectify itself in the long term, but given that consumer confidence dictates the price in the short term, things can change daily and this is why we see so much volatility (and speculation) in the financial markets. The other thing with owning stocks or mutual funds is that the only way you profit is through appreciation. This means that the only way you will make money and your only exit strategy is to ultimately sell the property. There are some stocks that are dividend producing, but they typically are on stocks that do not have much appreciation associated. This is why on average many of the financial markets will only provide roughly a 7% annual return on average (if you are lucky). The last piece, which is probably the most important is the risk associated. Given that markets are based off consumer confidence (at least in the short term), there is little control we would have in owning the asset. Having said all of that, to us investing in the financial markets is speculative in nature, and does not provide as much consistent upside as other options.
Now let’s look at Real Estate Investment. Real Estate investment provides multiple ways to generate revenue, and multiple ways to profit. Look at the chart below, We see many ways that Real Estate can provide profit. For this post we will focus on Mitigating Risk (while still being able to profit). As this is a lot of information, we will follow up with future blogs about how real estate can accelerate wealth building and also have other benefits that we don’t account for, but if they do happen, then it just adds to the many advantages. As we always say about real estate, it never started out as our #1 passion or desire. We have had our own businesses, invested in stocks and many other opportunities, but have just not been able to find a more secure investment that allows us to build long term wealth.
When you purchase a rental property correctly, you mitigate most of the risk associated and should not be concerned through fluctuations in the market (Yes, a market correction should not scare a real estate investor!). When a property performs and profits monthly, you are putting yourself in a position to not be forced to sell when there is a correction as you are still profiting during the downturn. Also, by having a property that is profitable each and every month, you are less immune to changes in the interest rate or even any repairs/maintenance needed on the property as you have purchased with a sufficient buffer. This is all done by having a property that has its mortgage paid down by tenants, and also ensuring there is a positive cash flow each month after ALL expenses are taken into account (we typically look for $300-$500 on a typical starter home).
The financials on a property are only half of the scenario however, the economics are just as vital. Here is just one of the indicators we look at. The vacancy rate across southern Ontario is typically around 3%, this stat alone is only getting smaller with our immigration rate, thus the demand for rental housing is here and likely here for decades to come (we will cover this and more economic indicators in more detail through future posts). Even during a downturn in the market, the rental market usually stays flat or even increases. Having said all of that, we look to have our assets at least match stock market returns of +6-8% annually without even looking at appreciation in the housing market. We will see through our future posts how taking into account the other ways real estate lets you profit can boost your expected return to well over +20% consistently.
The great things with all that was said above is that you can mitigate your risk prior to even purchasing the property! Before you even put an offer in, we would help ensure the financials make sense in that there would be positive cash flow for the property and the long term economics of the city and location are set up for growth. Our ultimate goal with any property is to buy for cash flow and hold until you want to sell for your desired profit. With this strategy in mind, and ensuring you are profiting each and every month, you can position your investments to still profit in downturns and not be forced to sell during a low cycle, but wait until the upward momentum comes again.
For those that have met us to begin working together, or are current/past clients of ours, then we invite you to become members FREE of charge for life. Simply click here to learn about our membership and sign up, and we will get you all set up to have instant access to the backend of our website.
Visit us at www.VenturePropertyInvestments.com and our pages on facebook or LinkedIn to learn more about how we invest in real estate to profit in both an increasing or decreasing housing market. Or contact us if you would like to learn how we are providing double digit returns for our partner’s and clients year over year.
Until Next Time,
Build Wealth. Live Life
Martin Kuev & Chris Shebib are full time Real Estate Investors, Realtors and Wealth Coaches who have over 20 years experience in Real Estate. With multi-million-dollar real estate portfolios and a team built over the past decade, they left the corporate world to have the flexibility to spend time with family, continue their own real estate investments and help others build long-term wealth.
Both Chris & Martin are first and foremost Husbands, and Fathers. Both are actively involved with their families and each have 3 daughters keeping home life full of surprises.