FRESH PERSPECTIVE
Shoshin means “beginner’s mind” in Zen Buddhism, according to a Wikipedia definition. It refers to having an attitude of openness, eagerness, and lack of preconceptions when studying a subject, even when studying at an advanced level, just as a beginner would.
Well isn’t that a perfect mindset for today’s real estate investor?
Why? For quite a few years interest rates were stable, property values were rising (for some cities), we knew approximate rental rates in our chosen areas, getting insurance was just a matter of getting competing quotes, etc….
Now is different. And what if we look at that as if it’s a good thing?
With interest rates rising and inflation still at a dramatic level, more and more people are choosing to rent, or are forced to rent. This means more customers for real estate investors. Any business that is rapidly gaining a customer base is in a good position.
Property values are going up, and down, depending on where we live or invest. But the uncertainty surrounding property values throughout this winter is also driving more potential buyers to … wait. And that means, to continue renting. No one wants to “get burned” on their first home, or their next home. Again more customers for real estate investors.
How about those rental rates? Everyone has their stats, but for simplicity we’ll refer to https://rentals.ca/blog/rentals-ca-july-2021-rent-report. Check out the dramatic increase in Calgary rents from 2020 to 2021 over all property types: rents rose 13%, then from 2021 to 2022, rents rose again 18%. Now compare that to property prices: https://www.creb.com/Housing_Statistics/documents/07_2022_Calgary_Monthly_Stats_Package.pdf. The overall benchmark price was up 12.3% year over year.
And for all our friends who do proformas or property calculators of some kind, have you noticed the significant – and sometimes unpredictable – changes to our monthly insurance rates? We have also heard many stories of insurance being denied by one or more companies.
So what? Well, as a real estate investor, if we specialized in a property type, or a specific neighbourhood, or even a particular strategy – all of our “old” numbers need to be completely revamped. That street just might be cashflowing today. That favourite strategy might not be the first choice for your exit plan any more. And dare I even say it might be time to look into condo’s again? Well, that’s not our thing, but the numbers sure are showing differently in TODAY’s market than they were in 2016, 2019, or even last year.
For those who follow us regularly, you may have noticed some reflective thoughts in our summer posts. We’re crunching numbers on new properties, new locations, and even bigger projects. We’ve paused most of our social media interactions this summer, to avoid getting caught up in the latest drama or negativity regarding real estate investing. And so our Shoshin has been allowed to flourish.
Many of our thoughts about real estate investing have been adapting to the new reality. We are making every effort to look into what will work best today, and into the foreseeable future. Ok, the crystal ball is pretty murky, but you get the idea. No more catching the doom-and-gloom-and-pessimism bug. We are entering a fabulous season of opportunites, and we are excited to move forward – just differently.
