Category: News

The 32-year old man makes $431,000 per year from real estate investments, while he travels and lives in a converted van.

05/24/22 6:38 PM

Real estate is a great investment. This is what I tell everyone. It can be difficult to get started.

Eight years as a real-estate investor, I have learned that small steps are the best way to go. At 23 years old, I started investing to earn a little extra money in addition to my engineering salary. I had one or two rental properties.

Today, I have 61 rental units which last year brought in $431,000 in rental income. Roofstock Academy is also my real estate coaching. My wife and I reside in a converted van, which I use as my office. We live in our California duplex when we aren’t traveling the U.S. with our van.

After I pay my mortgages, property taxes and property management fees, I make about $6,000 per monthly in passive income from my real-estate portfolio.

Since 2019, I have been investing the money in a redevelopment project, converting eight units into 17 and living off my full time coaching salary.

How I bought my first property in real estate

2013 was my first year of college. I worked as a fire prevention engineer, earning $73,000 per annum.

My goal was to save money for investment properties. I lived very low. To rent an apartment with my roommates, I paid $800 per monthly. My employer paid for essential expenses such as my car and cell phone bills. This allowed me to save even more each month.

2014 was my first real estate purchase. I used $40,000 of cash I had saved and sold $20,000 of stocks to buy a $295,000 single family home in Southern California. To cover the rest of the cost, I borrowed from the bank but I was able to get a loan from a relative.

It was vacant for two months until I rented it. However, it did not need any renovations. My monthly rent of $1,810 from my tenant enabled me to pay the monthly loan payments and manage the property.

My real estate portfolio is growing
In 2016, I owned three houses. My second purchase was financed by a traditional bank loan. The third house I purchased was purchased with a $250,000 loan from my family member at a fixed rate of 4% for 30 years.

In total, I earned $51,404 in rental income from all three properties that year. While most of it went to mortgage, maintenance, and property management costs, I also took home $1,800 per monthly.

2017 was a year that I increased my savings in order to buy more real estate. I found a cheaper apartment to share with my roommates and I invested the savings and the money I made from real estate in the stock market as well as my investment accounts.

I began to look outside of California after I realized how far each dollar could go in the right markets, where cash flow was high but buying prices were low. I purchased the best multi-unit properties in the Midwest (mainly Ohio and Kentucky) and then fixed them up.

To make this happen from afar I established relationships with agents and property managers in these markets so that I would have a team to help me find the best properties and take care my tenants.

My fees average 7% of my gross rental income per property, but can go up to 20% if I’m working with family-owned management companies.

How to get started in real estate investing
I am very fortunate to be able to travel the country as a coach and work a regular 9-to-5 job. I also earn passive income from my real estate investments.

If you have enough money to save and are willing to look around, investing in real estate can give you a competitive edge — even in this era of high home prices.

Here is my top tip:

1. Start small with a well-researched strategy
My investment strategy is “BRRRRR”: Buy, Rehab, Rent, Refinance, Repeat.

I purchase homes in areas where units rent for more than their monthly mortgage payments. They are then renovated and rented out to pay the mortgage payment or to invest in other properties.

It is important to understand the basics of each strategy in order to determine which one works for you. There are many resources, including podcasts, such as my podcast, The Remote Real Estate Investor, and online courses.

To learn more about the strategies of other investors, you can reach out on forums such as BiggerPockets.

Many people wonder about their return on investment goals. People should compare the total returns they get from real estate (calculate it by adding cash flow and appreciation, loan payments, tax benefits, and tax benefits) with the returns they could be receiving in other investment vehicles.

Choose a number that is most comfortable for you. Don’t compare yourself with anyone else.

2. My method is designed to make it as easy as possible for you to accomplish your goals.
I feel comfortable buying something if it is easy to do and that the property won’t require too much management.

Even though this may mean lower profit margins upfront, it allows me to simplify my lifestyle and use most of my real estate portfolio for a passive income stream. Once you have completed the purchase and fixed the property, you will reap the benefits for as long as the property is yours.

My main goal with my real estate portfolio, is to be financially independent at 100%, or to pay all of my expenses, even future expenses.

3. To increase property value, you don’t necessarily need to do a complete renovation
You have two options to increase the value of your property: Maximize profits or maximize returns, or minimize expenses.

My portfolio has seen me spend approximately $2.5 million on renovations so far. I have tried to maximize every dollar. A few simple upgrades, such as stainless steel appliances and laundry rooms, can increase the rental value.

You can increase the value of your property by buying in favorable markets.

4. Local property professionals are available
In the markets that I invest, I work with mom-and-pop local property management businesses.

I was able to build a portfolio of properties in the Midwest, while still living in California. Now, I can travel and generate income from my properties. My agent can let me view houses via FaceTime and I can rely on trusted contractors for renovations. It is up to my property manager to find responsible tenants.

You can connect with experts in your market using online platforms such as All Property Management and get recommendations from your network and peers.

Michael Albaum is a real estate investor and Head Coach of Roofstock Academy. Follow him on Twitter @MichaelAlbaum.

(Source)

Blackstone Betting Big on Canadian Real Estate with New Toronto Office

05/10/22 1:27 PM

Blackstone has opened a Canadian branch in Toronto which they are using to expand their company into new markets such as commercial and residential properties.

Blackstone is one of the most highly regarded firms for investments in various sectors including real estate, private equity, hedge fund solutions, credit and many others. They are known for their connections to startups but also offer capital markets services.

“I look forward strengthening Blackstone’s strong presence in Canada, and supporting businesses across many different sectors,” Ms. Lin said in a press release. “Canada’s population growth rate is the highest of all G7 countries and is almost double that of the U.S. I believe this will continue to create exciting opportunities on the market.”

Blackstone currently has approximately 450 properties in Canada and is valued at $14-billion. Blackstone’s portfolio focuses mainly on logistics such as warehouses. Blackstone teamed with Ivanhoe Cambridge Inc. (a subsidiary of Caisse de depot et placement du Quebec) to acquire Pure Industrial REIT at a price of $3.8 billion, including debt. Pure also acquired 190 additional industrial properties last year as part of its Cominar REIT acquisition.

Blackstone has also expanded its Canadian residential and commercial holdings. In 2019, the fund asset manager bought Vancouver’s Bentall Centre for $1-billion. It purchased three downtown Toronto office buildings, known as the Atlantic complex, in 2021 for $240 million.

Blackstone and a partner purchased a 12-property Quebec senior home chain last year. The asset manager bought Montreal’s Air Canada Alttoria Tower for $230 million. This building combines offices with condominiums.

Nadeem Meghji is Blackstone’s New York-based head for real estate Americas. He said that the fund manager invests in major themes such as industrial properties that are to E-Commerce, rental housing, life sciences offices, and film studios that are benefiting from an increase in streaming service production.

In a press release, Mr. Meghji, who is a Vancouver native, stated that “we are long-term believer in the strength of Canada’s economy.”

Blackstone is one the largest property investors in the world, managing assets of US$880-billion and real estate worth US$298-billion. Brookfield Asset Management Inc. is one of its main competitors.

Blackstone is expanding as institutional investors increase their capital allocations for real estate. Preqin, a British-based investment data company, conducted a survey of pension plans and insurers. It found that 26% of investors intend to allocate US$300 million or more for real estate this year. Only 9% of those surveyed did so a year ago.

According to industry surveys, approximately US$4.1 trillion is invested by fund managers worldwide in this sector.

Property’s perceived value as an inflation hedge is part of its appeal. Avison Young, a commercial real estate firm, recently published a study that found “the relationship between realty and inflation is more nuanced then conventional wisdom would have you believe.”

Avison Young examined major Canadian, U.S., and British markets. They found that property markets are not very protective against inflation spikes over the short-term – less than five-years. The sector performs well if the investment horizon is extended to five years or longer. According to the study, “realty’s inflation-protecting abilities are best suited for long-term owners who are willing to endure fluctuations in multiyear economic and realty cycles.”

(Source)

Canada’s warehouse space is expected to run out by the end of the year.

01/25/22 3:51 PM

According to a study provided by commercial real estate firm CBRE Ltd, a near-record 26.1 million square feet (2.4 million square meters) of logistics real estate is under development, with much of it already leased. And, with existing warehouse vacancy rates at historic lows, it may soon be practically difficult for firms to find storage space.

“A large amount of industrial space is required merely to keep up with the shift in consumer behavior toward e-commerce,” says one expert. “By the end of the year, we won’t have enough room for anyone to come in.”

According to JPMorgan Chase & Co. experts, Canada trailed behind other industrialized countries in e-commerce adoption before to the pandemic, but online sales have expanded faster than in other Western countries in recent years. According to the bank, the percentage of buyers who made at least 40% of their transactions online had more than quadrupled by April 2020 compared to the rate before the epidemic.

With the country currently dealing with a fresh round of COVID-19 cases and regulations, the conditions that have made e-commerce such a big part of Canadians’ lives appear to be sticking around for a while.

Businesses have been snapping up industrial real estate at an unprecedented rate as a result of the trend. According to the CBRE research, almost 10.4 million square feet of warehouse space was leased throughout Canada in the first three months of this year. The major cities in North America, Toronto, Vancouver, and Montreal, have the lowest vacancy rates in the world.

According to Hanna, landlords may have to consider transforming retail and office buildings that were mainly underused during the epidemic into logistics centers since new construction is coming up too slowly to fill the void in those locations.

According to statistics from data source Altus Group, Amazon Canada Fulfillment Services spent $40 million (US$32 million) last month to acquire 40 acres (16 hectares) in the Toronto suburb of Pickering that had previously been home to a local flea market.

“Industrial tenants and developers are having to be inventive to free up some space,” according to the article. “This is a very lean year, making it difficult for tenants.”

(Source)

The usage of HELOCs is growing at an even faster rate – the Bank of Canada.

12/30/21 4:04 PM

According to the Bank of Canada statistics, Canada’s entire HELOC debt load continued to increase in September 2016, reaching $270.2 billion.
According to Better Dwelling’s analysis of the BoC statistics, the growth rate in October was the highest since May 2019, up 4.4 percent ($11.4 billion) from September 2020.
According to Better Dwelling, the market for HELOC debt has also expanded at a greater rate than GDP.
“The monthly expansion for September has surpassed the country’s flash projections. HELOC debt is now equivalent to 14 percent of GDP, a figure that was just 11.9 percent five years ago,” Better Dwelling added. “We’re seeing a lot of people taking equity out of their homes, which is becoming an increasingly substantial economic force… The borrowing has been used to compensate for sluggish wage growth.”
HELOCs might make it more difficult for regulators to properly assess consumer credit situations, which might pose significant dangers to both the consumer population and the market as a whole, according to Peter Routledge, Canada’s superintendent of financial institutions.
“HELOCs and non-traditional housing backed securities can result in larger and more persistent outstanding principal balances, raising the risk of a loss to lenders.,” Routledge told BNN Bloomberg. “Furthermore, borrowers may be better equipped to handle financial strain if they utilize their lines of credit to make mortgage payments.”

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