Happy Spring Everyone! It looks like the weather is starting to warm up, and hopefully we will be in for a great Spring and Summer! We have had great attendance at our monthly events and it’s great seeing some of our new members taking action. It’s sometimes very difficult for new (or even experienced) investors to distinguish between fear and risk. We always tell new investors that in all likelihood, their largest hurdle as they start investing will be themselves.
Fear: An unpleasant emotion caused by the belief that someone or something is dangerous, likely to cause pain, or a threat.
Fear is an emotional response and in many cases will not go away regardless of the facts presented to someone. Try telling a child that there is no monster in the closet and even showing them the empty closet, they may still whimper and be scared of that closet even when no monster has ever appeared. Or for many adults, try letting them know that the odds of dying while skydiving or bungee-jumping is far less than just buckling up and driving to work. The vast majority have no problem driving but would not even attempt a bungee jump (even if they really wanted to try it). In fact, you are 15x more likely to die driving vs skydiving, and 75x times more likely to die driving vs bungee jumping. Fear is essentially a limiting belief that unfortunately affects most of us: We make our own conclusions without knowing what the outcome will be. In essence it is very easy for us to defeat ourselves before trying or knowing the facts.
Risk: The degree of probability of loss or injury.
Risk on the other hand, could be calculated and mitigated. In all of our investments we look to profit in good times or in bad; purchasing properties that provide a steady stream of income regardless of its value. But through solid economic indicators, these properties are in areas poised for growth as well. Risk comes down to probabilities and confidence. Stocks and the financial markets have much more to do with consumer confidence rather than the actual performance of a company. This is why you could have daily fluctuations in equity markets even though there is no new information about the company. It is just one of the reasons why the stock market historically is more volatile in comparison to real estate, and typically not something you as the investor could do anything about (other than hope the share price will provide profit in the long run). By contrast, in real estate. risk can be mitigated by economic indicators and you have full control in what you can do with the asset in most cases. The two main risks we hear from new investors is:
1. What if there is a correction in the market?
2. What if we do not have tenants to rent to?
The key with the above are that they are fears for most rather than risks that could be mitigated. In fact, there is less than 10% of our population that invest in real estate, yet it consistently provides double digit returns. If you look at the wealthy and ultra wealthy, most become wealthy through real estate, and of all of their investments they hold, the most is still put toward real estate.
Now let’s share how the above risks can be mitigated. 1) Immigration is only increasing in Canada and has no plans to slow (just take a look at the billions in transportation scheduled for southern Ontario over the next decade). In addition, Canada is consistently ranked as one of the best countries to live in and viewed in high regard globally. 2) There is an extreme demand for affordable housing with vacancy rates between 2%-3% across Ontario alone. We have actually had a bidding wars for some of our rental units, which goes to show how much rentals are in demand. 3) When Real estate is invested in, it should always provide returns to cover all debts and expenses, as well as positive cash flow month-in, month-out. This ensures that you are still profiting, even if a market correction does occur.
It took us many years to distinguish between fears and risks in our journey to becoming real estate investors. Even once we had all of the information and agreed it was a good investment, we still waited to take action. Regardless of how you invest, try to separate limiting beliefs and assumptions from risk. Educate yourself on the way something could be a good or poor investment to make your decisions.
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,
If you haven’t come out to one of our events, feel free to visit our events page on our site at https://venturepropertyinvestments.com/events/. If you are just starting out, or a seasoned pro, come out to Learn and Network with others like you.
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.