Get started in investing, whoever you are and wherever you are and whatever age you are.
Today, in 2022, times feel different, but in most places across the globe, the real estate sector hasn’t missed a beat. At some point in the near future, the total and complete reopening of economies will hit our society, and at some point after that, the groundswell of growth will begin to normalize. We’ve seen it from every economic downturn. There’ll be peaks and valleys, and eventually, the growth curve that would’ve been occurring occurs.
As we navigate the next 12 to 24 months, and if we assume that not much will change too drastically (at least not with the information we have now), we should see massive levels of support for the economy and its markets from policymakers. This will allow for most markets, including overall GDP, manufacturing and real estate, to continue to grow at incredible levels, according to historic precedent.
Below is my advice and strategy on how to get started in investing in real estate. In short, get started in investing, buy and hold. Then prosper. Period.
Before we talk about the keys to getting started in real estate investing, one thing that is important to note about investing, in general, is that trading isn’t investing. Neither is a savings account.
Adjust Your Mindset
Keeping your money in a checking account or savings account from a bank or other institution and not using that money to properly invest has most likely already cost you hundreds of thousands of dollars, possibly more.
There’s no reason to think that, for example, Canadians can rely on their CPP to cover expenses at retirement. That’s irrational thinking and must change for you to experience the freedom you crave at retirement (and prior to). There’s enough evidence that we’re trending, as an economy, toward further erosion of the middle class, and the end result is going to be that you need to protect yourself and create wealth on your own.
These are the kinds of mindsets that are keeping most people from building the wealth that they want and that they crave through real estate. A small change in your mindset could significantly change your family’s future.
Buy Slow And Steady
This will surprise, hopefully, nobody: Investing for the long-term has been less risky for your financial standing, historically speaking — likely even less risky than you think. And having your money in a bank account has likely been riskier (it’s safe but has little growth).
Let’s circle back to the fact that trading isn’t investing. Generally, the people who trade a lot tend to do worse compared with people who don’t trade as often. The magic sauce of most investments is time. Buy and hold; let the investments grow until you need them.
I’ve talked to many clients, friends and those looking for financial and real estate advice over the course of this pandemic, and although everyone’s situation is different, the conversation is usually quite similar. During periods of uncertainty and volatility, continue with business as usual. Let the money or the asset sit and ride out the wave. Just to give you a very tangible example of being consistent and steady and not knee-jerk, anyone who sold real estate during the pandemic was giving away value.
Examples Of My Strategy
When I started out, like most people, I didn’t have piles of cash to begin investing with, and with a career ahead of me, there’s always uncertainty about future earnings that can cause you to navigate the investment waters inefficiently. The advice to buy and not sell is even more important when starting out.
For example, to get started with real estate investing, I purchased my first investment property 25 years ago for $150,000 and invested only the down payment amount (typically about 20%) of $30,000.
Today that $30,000 investment would likely be worth $800,000 of real estate. That’s wealth creation and effective freedom building. While I can certainly be labeled biased as the founder and CEO of a real estate company, real estate keeps proving to be one of the safest and most reliable investments you can make, as well as incredibly profitable.
So, where does the trepidation lie, and why doesn’t everyone do this because the reality is almost all don’t? Most people think it will be a hassle and too much effort, but with the right knowledge, it can be a seamless and efficient process.
You don’t have to have special skills, training or even piles of cash; it’s about mindset and beliefs. When I talk to clients or colleagues in the industry that have been investing in real estate, I don’t see stress, anxiety or worrying about tenants or mortgage payments. What I see is people with freedom, the freedom to travel the world, the freedom to make choices for their family, where they want to live and how they want to spend their time.
Generally, the first few years of investing will be the hardest. You’re working on your tolerances, creating the necessary relationships and figuring out your own preferences and what works for your lifestyle. A few years in, perhaps five or six years after you jumped into the market, you’ll start to see results (for example, I’ve been seeing an average of 43% annual return). Your ability to do more will increase exponentially when you start to enter the world of leverage.