In this episode, Quentin talks with a member who discovered real estate investing through property management. Her goal is to grow the property management company by finding off market deals and managing those properties. We cover some sources where she can find deals and why finding the highest and best use for a property might be a better strategy
The member shares that she worked as an analyst and started in real estate investing through property management. she bought her first property in Peterborough for $630,000, and now it is worth over $880,000. The cash flow so far after all expenses are paid is $1,500. Her goal is to grow their property management business, by finding off market deals and managing those properties themselves. Currently, they are trying to do flips in the area to generate that capital for these projects.
Quentin adds that while her cash flow numbers are impressive, she should try to scale it. As for the financing, he says that you don’t always have to be the person that has money or don’t do the financing, adding “Oftentimes you bring people together who have different components or skills and also the Raising Money for Real Estate course is a good place to start.” He also recommends going through the “Off Market and Discounted Properties Course” as it will teach her everything, she needs to learn to find those properties.
Quentin also suggests contacting people behind the ‘We Buy Houses’ signs and asking them to add her to their buyer’s list. Talking about why wholesalers often have high assignment fees, Quentin says that it has mainly to do with the marketing costs. He adds that “you need to get on as many lists as you can so that if an opportunity comes up that you can take it or not take it, or you have to do the marketing yourself and pay for the market.” He further suggests that have a good relationship with realtors and show that you’re going to actually close on the property. Sometimes they may have a pocket listing that they could perhaps share with you.
Talking about the property values, he says that sometimes looking at what the potential highest and best use of the property is to add the value that you want. You have to find something and see something in the property that other people don’t see, or you have to solve a problem that other people aren’t willing to solve. if you can solve those problems, then you can buy something with some value to it. As long as you know what the cost is to solve that problem, you can take advantage of the value.
Quentin adds that some people have a mental blockage, and it just depends on the person that has nothing to do and somebody who gives you a limit is because they’re limited. He continues by adding that everybody’s different and you have to find out and figure out what do you really want, what works best for you, and what the reason is that you’re investing in real estate. If it’s to replace your income, it’s going to be different than somebody who perhaps is using it to like to retire from in 10 years.
On the subject of whether $10,000 a month is a realistic goal, he says that it is doable. He suggests listening to people who you resonate with and who resonate with you and ignoring all the noise. If you find somebody who was already doing what you want to do, then you should be listening to them. He says that by adding a few more properties to her portfolio, she can achieve this goal in the next three years or even sooner.
Furthermore, there’ll be ancillary benefits that come from investing in real estate that allow you to scale your income in different ways. In conclusion, he says that “just be careful that you don’t get too transactional because what happens if you get too transactional is that you’re always depending on the next transaction to eat.”
Quentin D’Souza is the Chief Education Officer of the Durham Real Estate Investor Club. Author of The Action Taker's Real Estate Investing Planner, The Property Management Toolbox: A How-To Guide for Ontario Real Estate Investors and Landlords, The Filling Vacancies Toolbox: A Step-By-Step Guide for Ontario Real Estate Investors and Landlords for Renting Out Residential Real Estate, and The Ultimate Wealth Strategy: Your Complete Guide to Buying, Fixing, Refinancing, and Renting Real Estate.