Does anyone remember the real estate euphoria from a few years back? While people are still trying to pick up the pieces down south, the euphoria hasn’t really gone away up here in Canada, though the dimmer switch has perhaps been turned down somewhat.
In The Skinny on Real Estate Investing: An Introduction to the Subject, Jim Randel covers the basics of the real investing game. Through the story of Billy and Beth, he teaches us to avoid “get rich quick” scams, as they often lead to heartbreak, tears, and bankruptcies.
Jim teaches us to instead look at some basic fundamentals when considering any property as an investment: What’s the cash flow? He introduces rates of return as well as risk, and he also mentions adding value to the property as a way to increase returns. Jim also reminds us that buying real estate isn’t like buying a mutual fund through your bank, and there is a lot more legwork involved in not only the buying and selling, but also in dealing with tenants and in ongoing maintenance.
What I found less than relevant is the fact that he analyzed the investments using an interest-rate only mortgage. While this helps avoid any confusion between the paying down of equity and interest, I don’t find it’s very realistic to look at only interest-rate only mortgages, especially in today’s market and economy. I would have liked to see some data using more realistic mortgages. There are also a few pages devoted to syndication, which is forming an LLC with partners to develop property. This a concept that is probably too advanced to be included in a series that presents itself in a comic-book style.
I also would have liked to see more focus on the lifestyle considerations and impacts of being a real estate investor, and less focus on the numbers. The format isn’t really well-suited to so much number-crunching, and I’m not sure anyone reading a comic book-style series has the time or patience to go through all of that. 🙂
Although the belief that “prices always go up” has already been shattered in the U.S., many people unfortunately cling to this very same belief up here in the Great White North. They would do well to read The Skinny on Real Estate Investing and heed Jim Randel’s advice!
If you would like to read more, you can order the title direct from Amazon: