Buying your first income property, for some, is a bit like going parachuting. The challenge excites us, but the fall makes us fear the worst.
First of all, there's the goal, the dream.
We think about it, we do the math, we imagine ourselves flying, and we imagine ourselves as real estate owners. It all seems very easy, as easy as a free fall, and despite this feeling of lightness, many will not take action. Fear, doubt, lack of self-confidence and lack of resources paralyze them and above all, the fear that the parachute will not open.
How can you hope your parachute opens if you never jump? When you think about it, it really makes sense. A parachute will never open if you aren't in a free fall. For it to open, you'll have to jump right? So, it's not necessarily the parachute itself that paralyzes, but the act of launching into the void without any reference point.
In real estate, it's the same thing. We cherish the dream of owning our first-income property. We attend all kinds of training, and networking evenings and meet experienced, inspiring people. Several will remain blocked at this stage. Indeed, knowing how to calculate an economic value, know the best Commercial Mortgage Broker, frequent the best Real Estate Broker, or consult the best internet blog in the field is not all, something important is always missing, the courage to jump.
What is keeping you from jumping? The fear of not having the financial means? Future problems with the management of the building? The renovations you will need to plan? Don't have enough knowledge? Haven't you read all the books on the subject? Believe me, the skydiver has no idea what the "feeling" of jumping is even if he takes the time to read everything out there. His first sensations will take his breath away on the first jump, he will experience them during the jump. The cold and dampness gave off by the clouds, he will experience during the jump.
Just like your first skydive, you should never be alone in real estate. You should jump in tandem. This doesn't necessarily mean jumping with a partner but jumping with other professionals who will know how to guide you. Who are the "coaches" with whom you should surround yourself? They're many, varied and will all have a significant amount of experience that they can share with you. These very important people are the following:
- "Experienced" Mortgage Broker at Multi-Prêts Commercial
- Commercial Real Estate Broker
- Notary
- Accountant, Tax expert
- Other real estate investors with relevant experience
- Property Manager
- Chartered appraiser
- Environmental assessor
- Building inspector
Of course, you won't need all these specialists at the same time, but at the time of your transaction, you will definitely need them. Have you noticed that I have never mentioned your account manager at your favourite bank? The reason is very simple. Most account managers are young and inexperienced. Their knowledge isn't developed around real estate investing, but more importantly around the mortgage product that they absolutely want to sell you in order to help them achieve their goals and get their annual bonus. We are far from "advice" mode here, are we? If you hope for more from your banker, you will be disappointed with the results.
Therefore, the first person to guide you through your buying experience will be your Commercial Mortgage Broker.
Although there appear to be several on the market, few will have demonstrated any real real estate experience. Before doing business with a mortgage broker, educate yourself on several important aspects such as:
- Does he hold a mortgage brokerage permit issued by the AMF?
- Number of years of experience in the field;
- His knowledge of the economy and his vision of the real estate market;
- The number of annual transactions and the business volume it manages;
- Does he act alone? Is he surrounded by a strong team?
- Is he CMHC correspondent?
- Does he do business with several lenders?
- How will he be remunerated?
Why is the Commercial Mortgage Broker the first person to consult? Simply because he's the only one who can determine your buying power and allow you to target your searches. How can you buy a building if you don't even know what you can afford? Many buyers will make a promise to purchase only then realizing that they'll be refused at their bank. In addition to the promise to purchase, they will have had time to tour the building, pay for an inspection report and maybe even an appraisal report and then boom… refusal for financial incapacity. A bit like jumping in a parachute, but without a parachute or a backup solution, the investor will have wasted his time, the seller's time and the time of several other professionals around him.
The secret to your successful real estate experience is the same as all the greatest business leaders. First, you must surround yourself well. You can read everything that exists, take all the training offered and introduce yourself to everyone 5 to 7 across Quebec, if you are not well surrounded, your parachute jump may become a disastrous experience.
So, dear real estate investors, don't wait any longer and jump. I guarantee that your parachute will open if you jump in tandem with the best coaches and most importantly, during your jump, don't make the mistake of closing your eyes ... enjoy the scenery!
Peter Quinn
Commercial Mortgage Broker
[email protected]