"About Real Estate Investing In Canada"
The other day, I was speaking to my father about his journey to Canada. He explained things to me that I cannot truly understand no matter how hard I try. He told me of his adventure to a border town with a friend (sitting separately on the bus so authorities wouldn’t be suspicious of two young friends travelling to the outskirts of the country), and his hike through the hills of the former Yugoslavia that took him into Austria. Then he explained what it was like arriving in Canada in his early twenties, not knowing the language, and with only $20 in his pocket. WOW! What an eye opener.
It made any stories of hardship during my youth look like a childhood in Disney’s Magic Kingdom. It also got me thinking about how much you can take for granted when you get used to things being a certain way, especially an easier way. In this sense, we can think about real estate investing. We all face challenges with our investment properties, it seems nothing ever goes exactly as planned. But overall we have nothing to moan or complain about. Let’s look at a couple of examples:
1) - Advertising—It is quite easy to see how enormous the changes have been here. Just think of all the online classified sites that you can advertise your property on today. You can put all of the information about your real estate investing property with complete ease. None of these options existed about 15 years ago. In the past, you would have to work much harder for leads. It may have been distributing flyers, posting notices on community billboards, or other more labor-intensive tasks. Now you can take a couple of pictures and have an ad up for FREE in less than five minutes, with leads shortly after.
2) - Repairs—21 years ago, Home Depot didn’t exist in Canada. We had a mixture of Beaver Lumber, and local hardware stores. The material needed for a repair would have most likely taken at least two stops; often more because many local hardware stores didn’t carry the same inventory so the tool you were looking for may have required a bit of a search.
3) Building Supplies—I dread to think of the limited options 15—20 years ago. With the increase in global trade, we have a much larger selection of building materials, plus most are at a fraction of the price you would expect to pay in the past. A perfect example is laminate flooring. It looks good, last for a long time, is easy to install, and can be purchased for $0.79 if not lower. This is the great part about real estate investing NOW. Alternatives like this would be things investors would dream of at night in the past.
4) Contractors—With the larger barriers that existed with advertising in the past, it was also harder to find a selection of contractors to do the work for you. The days of logging onto Craigslist or Kijiji had not arrived yet. You may have pulled out the Yellow Pages to try and get a couple estimates for the work you wanted done. But the accessibility to single person operations, that typically have lower prices (and maybe even lower for cash payment :-) ), was not available. Plus, with the increase in global immigrants coming to Canada, many labour rates have fallen. Hardwood flooring installation rates are a great example of this. I recently paid $1.30 per square foot.
5) Financing Options—In the past, just purchasing an investment property was much more difficult. It was only a couple of years ago that CMHC decided to insure investment property mortgages. This was the key factor in banks lending more money to investors. Most investors starting out would be severely limited by having to put a 25% down payment on any property they purchase. People never thought it would be possible to make positive cash flow from a property with only a 5% down payment, or less. Plus some smart guys started getting the sellers to pay for the buyers closing costs which was another big bump in affordability. Any guesses who they were? (sometimes you can pat yourself on the back!)
We have covered 5 big ways that investing is easier in today’s world, and there are more. Don’t let non-investors skew your perception on reality when they are asking you about real estate investing properties. The next time you are thinking about the work involved in your investments take a moment to understand how easy you have it. The investors of the past that have healthy portfolios now had a lot more work to do. They look at times like this while salivating at how much more real estate they could have acquired if all the luxuries of today were available only 10-15 years ago.