Suppose your vehicle needs some transmission work which cannot be put off any longer. Would you take it to a general mechanic or a transmission specialist? Although the mechanic would know a great deal about how vehicles work and their associated repair, my guess would be that you take it to the specialist.

The same type of reasoning applies to real estate investing. Your team needs to be full of specialists in real estate investing and not standard home buyers. Whether it is realtors, mortgage brokers or property managers, they need to be investors first and foremost. That is why one of the questions you must ask all these people is how properties they currently own. You should also ask them for references from other investors who have used their services in the past.

Do not use a realtor because they happen to be a friend or someone who lives close to you. Likewise, the mortgage agent at your corner bank probably does not deal with investors full time and would not be an ideal choice.

Also ensure that everyone you deal with is a full time registered professional and not a part time realtor, appraiser etc. Your money will be working full time and so should these people.

One of the most important parts of any landlord/tenant agreement is how much and when the rent is due. The amount due is generally set by market conditions but can be lower or higher depending on what unique attributes your property has to offer such as a convenient location to transportation and/or amenities.

The time of month the rent is due is another matter altogether. Generally speaking, rent is due on the first of the month but this is not always the case. The due date is an arbitrary number that the landlord/tenant agree upon which is consistent throughout the term of the lease. I have seen some landlords have the rent due on the 25th so that the tenant pays this expense before all their other monthly bills and therefore is less likely to miss a payment. Others choose sometime after the 1st such as the 5th of because their mortgage payments are not due until later in the month and they do not need the funds at that time.

Whatever date you choose, ensure that the payments are current as this is a win/win for everyone involved in the business transaction.

As stated before, taking possession of your first or any property is one of the best parts of the deal. Although any time of the month which works for both the buyer and seller is acceptable, you should consider certain repeating factors in your decision. Choose a date which is not in the first 3 business days of the month. These are usually the busiest for renters, movers, accountants, property managers and other professionals in the industry. You may also wish to avoid the last 3 days of the month for the above mentioned reasons. I like to choose between the 10th and 20th if at all possible as it is right in the middle and should cause the least amount of interruptions for everyone.

Taking possession of a property is one of the most exciting parts of real estate investing.  All your efforts have now produced something tangible.

Here are some tips I have found to be useful on that day which can alleviate some aggravations. Not all of these will apply if the property currently has a tenant.

1) Have a fully charged mobile device. This is more precautionary than anything else because you never know when you need it.

2) Arrange for someone to perform a maintenance call on the heating/cooling system on that day. Since you are already at the property, it makes sense to save yourself a trip.

3) If you have a property manager, have them meet you at the place about an hour after you take possession. They can then perform a walkthrough and inform you of any deficiencies which need to be addressed. .

4) Have a light snack with you in case you get hungry. Nothing can take your attention away from investing more than hunger pangs.

5) Bring a few rolls of toilet paper, towels and some soap for at least two bathrooms. Even if you do not use them, someone else such as a contractor or tenant will certainly appreciate the fact that you looked after this.

6) Ensure that all of your utilities are starting on possession day. With all the other details, it is easy to forget that you or someone else needs water, electricity and gas.

7) If you have the opportunity, meet the neighbors and start a relationship with them. You never know when you may need their help especially if you are managing your own property. This is doubly important for condominiums.

8) Ensure that all lightbulbs are in proper working condition. This is especially true for the outside lights as they convey a message of safety before a potential tenant even walks through the door.

9) If there is any landscaping that needs to be done, arrange for it to be done at this time unless it is the middle of winter in which case the sidewalks may need to be shoveled.

In a previous commentary, we mentioned that the tenants should be responsible for their own utilities. There are some important points to follow up on this important topic.

1) If you are purchasing a property which is empty on your possession date, ensure that the heating/cooling utilities, water and electricity will all commence at that time. All too often, investors have their attention on many other details including dealing with realtors and lawyers that they forget about this important step. As soon as a tenant moves in, stop paying for the utilities.

2) If a tenant moves out, arrange for the utilities to immediately revert back to your name for as long as the property is empty. This can be easily setup with a simple phone call to each utility provider. It can be a valuable time saver and potentially ensure you do not have burst pipes in the middle of winter! In the event a property manager is overseeing your property, have them pay all the bills while it is vacant and you can then reimburse them upon successful placement of a tenant.

3) Utilities providers sometimes entice customers into signing longer term contracts using the sales pitch “saving you money”. There are no hard and fast rules in this area because every contract is different and situation unique. However, you must recall that before they ever approach you, they have done very extensive due diligence as to what is in their best financial interests and not necessarily yours.  The rates they offer for utilities are designed to maximize their profits.

Purchasing a positive cash flow property and having the market drive equity prices higher is the most common method real estate investors use to increase their net worth. It is important to note that this is not the only method of doing so.

One approach is to renovate an existing property and have it appraised after the work has been accomplished. There are many types of renovations one can follow through on but they do create equal return on investment dollars so it is necessary to be choosy as to what one undertakes.

A simple approach to this is to do some painting on the inside and/or outside. The time and cost required to do this is minimal compared to say putting in a new kitchen although both go a long way to improving the value of one’s property.

Some common renovations which are not recommended are to furnish the basement in a home or install a swimming pool. These generally require a large capital investment and do not produce a large return.

If the newest trends in home improvements motivates you to renovate, then go and visit the showhomes in your area. This is a simple but very effective way to discover what the developers in your area are doing to attract buyers and may give you a few ideas as to what is trending in the marketplace.

For more tips on renovations, please visit: http://tinyurl.com/mph6435 

No matter who you are or where you are investing, an offer to purchase property or land is essential to your success. It does not matter how much research, due diligence and discussions one has, an offer must be written and accepted at some point. It separates those who take action from those who watch on the sidelines.

In order to stand out from the crowd, you must be memorable. That is why the real estate cover letter will go a long way to ensuring your success.  After all, this is a sales pitch you are presenting. For more details on writing a cover letter visit: http://tinyurl.com/l2bqyz3

As for the actual offer, it is a legal document and if you are unsure of any aspect, investigate before you sign and not after. It is null and void if there is no signature at the bottom. If is still using paper, use a blue pen and not black to distinguish it from the rest of the document.

I also like to put an expiry on the offer of anywhere from 30 minutes to 2 hours from the time it is presented. The offer then becomes an option which gives the buyer the right but not the obligation to accept it and you are leveraging your time instead of potentially wasting it. As options traders often say, you never want to be long and wrong!

For more details on writing a winning offer, please visit: http://tinyurl.com/pcyke82

The tenant (customer) is what drives your real estate investment.  For the buy and hold investor, they are your lifeblood to success. With that in mind, it is very important to find someone who can help you achieve long term success. On March 6, 2013, we gave some pointers on how to proceed on this very important subject. As a follow up to that post, we are would like to mention these as well:

1) Have the security deposit (which may equal the first month’s rent) in your bank account before the tenants move in. This is non- negotiable and is designed to protect you the investor.

2) Ensure the tenant(s) have a bank account. If they insist on paying in cash, this could be a signal that the banking system does not trust them and neither should you!  You cannot be sure that the source of funds is even legal especially if they want to prepay an entire year of rent in cash.

3) Do not rent out a property to someone you have never met. There is absolutely no substitute to meeting someone face to face and getting a first impression of who they are. If you get a funny feeling that something is not right, there is probably a reason for it and it is best to say “I have decided to rent out the property to someone else”. Even if you have not found this “someone else”, it is a way to avoid any potential legal issues down the road.

4) Do not rent out your property to a friend or a relative. This will only blur the line between your investment and your emotions. If they do not pay the rent, it could be more difficult to remove them from your property and may involve consequences for your personal relationships.

5) If the rent is not paid on the first of the month, start the eviction procedure the next day. Your property taxes, insurance and mortgage are all due at the same time of month without any extensions. Your tenant must follow the same policy.

A fully paid off property is the dream of many homeowners. The fact that one’s debt to a lending institution has been cleared and they can never take away the property can be bliss. What is not appreciated is the fact that a new type of danger has been exposed and it can have frightening consequences.

A fully paid off property is a signal to criminals that one’s mortgage free property is an easy target for identity theft!  Thieves can write phony mortgages with fraudulent signatures and result in your property having a mortgage you will be responsible for. In order to curtail this before it starts, there is a simple and effective way to deter this from ever occurring to you.

Obtain a small mortgage or secured line of credit, (say $5,000) and have this registered at all times on your property. The payments are usually less than your monthly coffee budget but the real benefit is that it deters thieves from ever wanting to steal your property because the bank is now involved. The lender would have the time and resources to pursue this type of fraud and the thieves know it!

A mortgage is really a type of insurance against identity theft and it won’t cost you any extra.

Stock markets are terrific newsmakers in that they always report how the major indices like the Dow Jones and S&P 500 have done in the past day, month or year. The ROI on your investment is the same regardless if you live in one part of the country or another.

In the United States, there is a popular metric called the S & P Case Schiller home Price Index. This essentially tells you whether the average price of residential homes are going up or down. I do not pay much attention to it for the following reason.

Generally speaking, real estate is a local phenomenon and it does not necessarily correlate across an entire region or country. Even in the same city, certain communities will outperform or underperform others. One cannot extrapolate a national average to be an accurate indicator as to what is occurring in one particular region. For the most part, the trends to watch are in the area you are investing in. For example, Toronto’s expansion of the 401 highway should not grab your attention if you are focused on Edmonton. There are some variables that would defy this rule such as interest rates and oil prices which have a national or global impact.