It was way back in 2002 that I found became interested in Real Estate as an investment opportunity. The trigger for this was the book Rich Dad, Poor Dad, by Robert Kiyosaki, that I read over the Christmas holidays and then forced my wife to read.
She managed to zip through it in less than two days and that started us on a huge search for knowledge about Real Estate. I was already a pretty voracious reader at the time, trying to mix a couple of non-fiction self improvement style books in and then throwing in a fiction book to mix it up, but now, I started to focus on only Real Estate books.
I was going through three or four books a month and continually filling my mind with new information on everything from flipping properties to rent to own to tax liens and foreclosures. It was mind numbing how much knowledge I was gaining.
Then finally, my wife and I signed up for a $5,000 full weekend training seminar in Edmonton with a Real Estate Guru from the US who was coming to Canada to talk Real Estate! It would be investment strategies and how to make money in Real Estate all weekend long! For a knowledge junkie like me, this was going to be the ultimate weekend and with all this incredible knowledge we would be out and making money in no time!
Well, in less than two months after the course (which pumped us up with confidence like you wouldn’t believe), we bought our first flip property for a couple thousand dollars. We were off to the races, or so we thought.
You see, I had spent almost eight months learning tactics that worked great in the US, but our rules are slightly different here in Canada and these rules even differ from province to province. At that time, it was incredibly easy to assume mortgages without having to qualify for them, at least in Alberta, which is what we did with this property and many more over the following years.
We just didn’t realize we couldn’t assume the second mortgage which had been glossed over in all of our training! So after quickly running up our credit line to pay off the second mortgage out, we started to learn even more lessons about US versus Canadian Real Estate investing. Fortunately, we had been referred to a great Real Estate lawyer and he was able to guide us, correct us and point us in the right direction quite quickly.
The lesson from this is twofold. First, if you are intending on learning about buying property to flip, as a long term rental or for other Real Estate strategies, make sure the knowledge you learn is applicable to your region. There are literally hundreds of Real Estate books out there (and I own a bunch of them), but there are relatively few that are Canadian based or even apply to Canada.
Second, as our economy makes more headlines across Canada and the US as the bright spot in North America, gurus will start to appear everywhere talking about their systems and the opportunity Real Estate presents. If you buy into any of these events, make sure they have Canadian content and are reputable organizations.
In the big picture, I don’t regret the learning curve we personally went through, although I wished it wouldn’t have been such an expensive curve. We ended up losing over $7,000 on that first property due to lack of applicable knowledge. However, if we hadn’t have made those mistakes early, we would never have moved forward and ended up buying as many properties as we did. Not all of those ended up being profitable (you cannot win them all!), but we definitely ended up much further ahead than if we took no action.