6 Reasons You’re not an Investor | VREP #96

It can be painful looking backwards to think “what if” or “if only” when it comes to investing in Vancouver real estate. Matt and Adam sit down with top-producing Realtor Jon Lumer to break down the 6 most common reasons stopping would-be investors from pulling the trigger.

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Episode Summary

Myth #1: Investing in real estate is too complicated.

This depends on your expectations and how you look at it, much like other things. Big return = big risk. It can get complicated, but more conservative returns are not so much. Investing in real estate can be straightforward as long as you get good advice. Property is pretty safe if you don’t need a return in the next 12 months.  If you’re in it for the long term, it’s hard to mess this up.

Myth #2: Investing is far too risky; I’ll lose all my money.

When you’re putting up the kind of money required in Vancouver, this will cross anyone’s mind. It’s necessary to put your money into some kind of investment vehicle. Property is one of the soundest and least risky investments. People know that leaving money in a bank account is not even necessarily keeping up with inflation. Property is an appreciating asset and rises with inflation. If you don’t bite off more than you can chew and can keep the property for years while the market does what it wants, meanwhile, you’re paying down 50% of the principal every month.

Have a plan A, plan B, and plan C. You need an exit strategy: when you buy a property, understand what you want to do with it, for example, can you rent it out? Then get your best case, mid-range, and least-great scenarios. It will be a more structured and successful approach if you do this before buying.

Myth #3: Successful investors are able to time the market.

Nobody can time the market. People may appear to do this, but it’s a lot of dumb luck. There is only so far that being strategic can take you. It depends on your time frame. “Looking backwards is paralysis” – if everyone thinks this way, nobody will buy anything. Everyone wants to get rich quick. When you look at when you’re trying to buy, do it based on your goals. If you plan to live in a property for 10 years, you’ll analyze it much differently than if you’re going to sell in six months.

Myth #4: All good investments are taken.

Everyone looks back at the last three years. If you bought anything in this period, you look like a genius. There’s a feeling now that there’s nothing left. Most people who buy think they’re buying at the peak of the market. Historically, we see newspaper articles about what people paid 60 years ago, and they thought this too. But now, these people look so smart.

Vancouver is a very dynamic city. There is always opportunity in this city. New neighbourhoods pop up; the city is under-developed in so many areas. There is no reason for this if people want to be here.

Myth #5: The best investors need information that regular people don’t have.

This is about access to information. There’s a feeling that a small group of people have access to information that the rest of us don’t, but actually it is available to those who want to seek it out. Some people can obtain information that’s difficult to get or that others may not know about, which can open doors to good investments; however, by and large the information to enter the market or to make a new acquisition is there.

It depends what you’re looking to do; for example, information to assemble and re-zone land may not be readily available. We’ve talked about a lot of things that are useful to make educated investment choices. It may take energy and effort, but it won’t take years and the dividends will pay off.

Myth #6: I don’t have any money.

Sometimes this is true. Some people simply cannot afford the Vancouver market, but they can afford other markets. However, Michael Geller encourages anybody to get into the market, even if by different or unconventional arrangements. For example, buy with a friend who is in a similar situation; get an income property with other people that you can rent out. To buy in Vancouver, it will take creative arrangements. Other markets are good to look into as well, for example, the interior or Squamish. It’s baby steps.

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