Hello Hamilton Real Estate Investors!!
A couple weeks ago, James Maggs and I (Erwin) were guests of the Everyday Investors show with my old friend Rav Toor. Rav is a very interesting guy. A long time REIN member, Real Estate Broker, a minister, and he sold all his investment properties and his home so he and his family could travel a lot, unattached. He invested all the proceeds into real estate developments like I did recently with a chunk of my registered retirement savings plan money (RRSP).
The topic of the hour long show was rent-to-own real estate investing specific to Hamilton. You will note I’m not wearing my usual Tiger Cats jersey as the producers wanted me looking professional. However, if you look very closely, I’m wearing a Tiger Cats pin on my lapel. :p Back to the show, I was asked to explain the rent-to-own strategy followed by deal analysis as presented by James and our good friend Ryan Hindmarsh. Both James and Ryan shared how their annual average returns are over 40% and Rav was genuinely surprised how investors can make a great return AND help tenants get the home they want faster. Win-Win!!
I haven’t watched the episode, but if you have please let me know what you think as I’m a bit nutty in that I’ve never listened to my recorded talks. I’m that critical of myself that I can’t do it. :p
Do Realtors Make Too Much?
Last week I was doing another interview, this time for Real Estate Professionals Magazine and the journalist Jennifer asked me the same question: Do Realtors make too much?
The answer? That depends. Just like real estate, the market determines incomes and the market will pay you based on the value of the services you provide. Medical doctors earn $300-500k because they have specialized training few can provide. The person serving you burgers and fries makes minimum wage because after an hour or two of training, pretty much any able bodied person can do the same job. The latter is partly true for people like me who hold a real estate license. After 6-8 months of studying, three exams, and a bunch of fees later, anyone with a high school education can be licensed.
Negotiating my Realtor’s commission is something I’ve admittedly done when purchasing homes before I was licensed. With the broker I used, my experience left a lot to be desired. My broker felt more like someone who only opened doors – literally. I mean he had lock box codes and he only showed us properties we asked to see. He didn’t understand or ever provide guidance of what a good property was or not. It was always the novice investor’s job to decide! If we had better coaching back then (quality coaching that didn’t exist back then), we would be worth several hundred thousand more today…. When we did buy, we never heard from our broker again after the sale. One time, we received a thank-you gift basket and several of the contents had passed their expiry date, LOL :p
Training wise, James and I have not undergone traditional Realtor training and there is no such training for investor-specialists Realtors. We are not only your Realtor, we are your coach to assist you in executing your investment strategy. How much does coaching cost? Usually around $10,000 per year and you still need to hire an investor savvy Realtor to help you. I know this because we receive referrals from several of Canada’s best real estate coaches and the Real Estate Investment Network.
In the financial planning market of mutual funds, money managers are always charging fees no matter how they perform in the 2-5% range annually. Realtor commissions are a one time charge with no hidden charges – and there are hidden fees when owning a traditional mutual fund.
From a value standpoint, if you’ve met our clients or heard their interviews, you will know we have several clients whose net worth has increased $300,000-$500,000 since they started working with us. If a professional investor could help your net worth improve by hundreds of thousands while earning tens of thousands in commissions that the seller is paying and you are financing, would you hire them? If you have the time and resources to invest and become an expert, maybe not. But if you want to shorten your learning curve, maybe hiring someone like us would be best. The same reason someone would want to invest 100% of the capital in joint venture on an investment property with an experienced real estate investor.
Thanks for reading and happy Hamilton real estate investing everyone!
Erwin | MrHamilton.ca
PS: If you are just starting out investing, start by spending more time with like minded people and take guided tour of Hamilton by joining us for the next Mr. Hamilton Inner Circle by clicking here!!!