SEARCHING FOR THE HOME RUN
Any other Jays’ fans out there? Or do you have kids who love to watch Guerroro, Bichette, Gurriel and Springer? Those boys have mastered the art of work-hard-play-hard, and have a little fun!
They are passionately searching for the home run in every at-bat. They literally approach home plate every single time with focus and determination. Each swing is an opportunity to put a home run on the board.
Real estate investors can learn a thing or two from professional athletes. These boys don’t “skip a turn” just because that pitcher is really good. Generally, they don’t fake an injury just to get an easy walk to first (don’t get me started about some of the drama queens in the soccer world!). And they all understand that playing in the majors is a privilege—one that could disappear at a moment’s notice–so they play full out. Are they perfect? Absolutely not. Is it easy? Ya, NO. But they’re working together as a team for as many wins as possible.
As real estate investors, we know that there is already a housing shortage in Canada. With hundreds of thousands of immigrants flowing into this country, the rental housing demand is only poised to increase—dramatically! It’s like knowing the pitcher is going to pitch you an ideal ball – all you have to do is hit it well, and you’re clearing the fences.
Lately, it seems that we hear a lot of stories from other investors who are reluctant to approach the plate. Rising interest rates, high cost of renovations/materials and tight banking/insurance policies are the top obstacles we hear about in today’s investor’s path.
Keeping it positive and keeping it real? YES, it’s harder to invest in real estate in 2022 than it was in 2019. But playing professional baseball, with all the other hot-shots out there, must be quite hard too.
Real estate investing is about the numbers. And many investors became conditioned to believe that massive appreciation was part of the game. Um, nope. It is part of the boom cycle phase, but it isn’t normal. We’ve had conversations with people who literally tell us that they don’t invest for anything less than 30% ROI each year, minimum. Huh. Well, if you have other investors promising you that kind of return – run away! No one can guarantee that.
Just a reminder for our frequent readers, real estate moves in a cycle: slump, recovery, boom, slump, …. It is very possible to make a profit in each phase of the cycle. Is Ontario transitioning out of the boom phase? Time will tell. Is Alberta transitioning into the recovery phase – we believe so. But we also believe that the best return on investment often comes through years, if not decades, of investing.
And another reminder from our colleagues who have been in the game much longer than us – you don’t always KNOW which deal might be a home run. The best looking deals might suffer from a hail storm with huge expenses –right Calgary? And some of the more humble deals might suddenly benefit from new transportation, new employers, or a change in market conditions. Just like the baseball player, we know that the pitcher is going to keep switching things up. Our goal is to adapt, and swing at the best pitches.
Living in Alberta for a while, means investors like us have no delusions that real estate will always go up in value. Passive appreciation is not a sure and bankable thing. This perspective is such a gift. Cashflow, mortgage paydown and appreciation are all factored into our deals. We run our numbers, plan our investments, work out a back-up plan or two, then swing for the fences! And yes, we are adapting and pivoting with each change in lending, insurance, inflation and political mayhem. We hope to share some of our latest strategy with our close friends and colleagues very soon. Connect with us at anytime to learn more.
