Alternatives to REIN…Reader Question

October 4th, 2011 · 13 Comments · Educational Resources, REIN

Up to Date Digital Information Flowing about Gaddafi
Creative Commons License photo credit: ssoosay

Yesterday I got a reader question…

Good day,

I am an ambitious 23 year old working in the Alberta oil field. I have done very well for myself since I was 19, buying a house and having a handsome RRSP account. Seeing the toll this has on my body got me looking for alternatives to “working” the rest of my life. I have read lots of books about budgeting and money, most of them talk about rental properties. Knowing this is something I would be interested in I started reading books about real estate investing. Having only bought my first house a year ago I know very little but I am excited to learn! All the books that Chapters sells about this topic are Don Campbell’s work. As you say, they all point to his REIN membership and workshops. Before signing up for expensive 17 month membership I figured I would do some “googling” and see if it was worth it. After all I want to avoid the real estate scams. I read your article slamming the REIN network and Don Campbell. Being totally open minded to both sides of the story I have simply one question for you.
If you were in my shoes having no real estate investing experience (and smart enough to jump in blind). What would you do for education, is there a “better” learning system them REIN? Are there Classes I could take at NAIT or U OF A? (I ask because I don’t see any) Is there other books, systems, networks.??

What would you do, I was interested in REIN not because I think its “worth it” or a “good system” but simply because I don’t know where else I should turn!!!

Thanks for your response!
Smart Cookie

Answer To The Question

Thanks for asking, one of the problems with real estate investment in general is that it is intensely local. For instance when you read this blog, know that I am in Ontario which has very different tenancy laws than Alberta.

The Facts About Real Estate

I want to point out that in spite of the books you have read about wealth and wealth creation, if you look at Forbes list of the top 100 Wealthiest People In The World there are only a few that made their money in real estate. This also mirrors my experience dealing with hundred of landlords through the years.

Facts About Landlords

Landlords are employed, and  make their money in other fields, there are a few real estate agents who have been successful enough to transition to being investors. They do not have to rely on the income from their properties. They cash out when they sell or refinance. The bank will not lend you money if you are not employed. If you are self employed, you have to put more money down than someone who is employed.

If you don’t believe me walk into your local bank and tell them you are a self employed real estate investor and want a mortgage. Then go back with a pay stub from Joe’s Pizza. You need income to qualify.

Cash Flow Non Existent

Generally the cash flow from houses ends up being virtually non-existent. This is because of the high maintenance costs over time. Income from rental properties is taxed as passive income which is another problem.

I understand what you are saying, the job you have is physically demanding, and you would like to figure out how to retire. One of your best bets is to go get more education and get a less physically demanding job. This way you will still qualify for mortgages easily.

Books For Education

As for your question, I suggest that instead of your local Chapters, you start ordering books from Amazon and online. There are a few writers I would heartily recommend. I would read anything John T Reed writes about real estate.  You have to keep in mind, he’s from the United States so all his books will reflect that. You have to order them from his website.

What I am Currently Reading

I am currently reading Landlording: A Handymanual for Scrupulous Landlords and Landladies Who Do It Themselves by Leigh Robinson. He’s clear, he’s concise and he doesn’t waste one page blowing sunshine up your ass, discussing dreams of your personal Belize and other complete nonsense.

You Must Read The Real Estate Guru’s Bullshit Checklist

Read his list of Real Estate B.S. Artist detection checklist and see how often REIN’s activities qualify. This checklist is by far one of the best things you can read to help you steer clear of people who are dying to separate your from your hard earned money. Many guru’s don’t even own property. Their business is to tell other people how to be successful in real estate.

All Provincial Landlord & Tenant Boards

Another great source of information is your province’s tenancy board. You can read up on what you can and cannot do in your province and the rules about the business of renting. You can also probably find an Alberta paralegal handbook with the latest case law for sale at the government bookshop, and more tenancy appeals and decisions at Canlii.

Your Provincial Real Estate Board

The Alberta Real Estate Board does offer courses for real estate management, and obviously all kinds of courses to teach you how to become a real estate agent. Some of these might interest you. I’m not sure what the cost in total is but it costs less than $3400 from what I can see to become licensed to manage real estate.

Douglas Gray – Real Estate Author

Douglas Gray was a canadian real estate lawyer, and from what I can see from reading the book preview on Amazon, his book  The Canadian Landlord’s Guide: Expert Advice for the Profitable Real Estate Investor contains more info than all of the REIN books combined. That’s because he doesn’t waste time with discussing luxurious lifestyles and vacation destinations.

Other Landlords

You can learn a lot from landlords themselves probably for the price of  lunch or a cup of coffee. There are quite a few crusty old landlords with some extra time on their hands to help guide a newbie.

I have one landlord who owns a small building who comes in to help me out with “stuff” and learn about the business. You could do the same.

Small Local Real Estate Groups

Finally you can go to local real estate groups, like the Durham REI here in Durham. Guess what their membership fee is? NOTHING, it’s free. Once per month or so they have talks where they invite people. There’s other professional landlord associations as well that can be joined for a lot less than REIN and they have regular events and also paperwork and goodies for the beginning landlord.

Real Estate Institute Of Canada

The bottom line is that there’s plenty of places to learn and if you pay $3400 you really should get a certificate… you can even take the courses offered by REIC to go towards a Certified Property Management designation. These are actual courses with actual content.

In short, you’re better off getting your education anywhere but REIN, Rich Dad or any other of these organizations. But I have to tell you that after spending a couple years in school myself learning about the business, it’s probably a lot more fun to hang out at their networking events then to actually study the business. What do you all think? Any present or former members of these mentorship and “learning” groups want to chime in?

 

Tags:

Get Your Free Landlord Documents Now! 

13 Comments so far ↓

  • Chris

    I owned real estate rentals for 10 years (managed myself) and was looking for more. I happened on REIN and traveled to a convention most of the way across the country. There is a lot of hype with REIN, but they do teach a very solid system, help you figure the best investment areas and provide you with a lot of valuable contacts. They do have some valuable information and some great tips that can help beginners to start real estate investing
    I am no longer a member or REIN (was a distance member $100/month for two years) and have grown my real estate investments substantially by using the REIN system.
    Was it worth $2,000, maybe not. But, it is a well thought out system(s) o help people to be more hands on investing with their money.
    Although, nothing beats experience.

    • Rachelle

      How much did you grow your portfolio by? You had 10 properties, how many do you have now? What is solid about the investment system?

      I’m not going to buy their crap to investigate this, but honestly I have not seen or read anything at all yet that I did not already know.

      I did ask them to show me what they had… but they did not. They did invite me to their meetings to check it out, but I never made it. It was shortly after my sons started daycare and I was sick for three solid months with cold after cold.

  • Chris

    Properties went from 4 to 8. More than doubling the value. I probably could have done it on my own, but now I have a plan and better quality rentals.
    They lay things out step by step from property analysis, how to come up with the necessary money, finding a quality mortgage broker and finding the best investment location.
    I agree that they talk a lot about Belize and the freedom that comes after “only 5 years of hard work”. Just like many things, take the good with the bad.
    Just like other industries that I have been involved in, the networking can be the best place to learn. Being around like minded people can give some of the best insight.

    • Rachelle

      Maybe it’s just me, Chris, I’ve been involved in this business for a long but from a different direction. I just don’t see the value. I can’t approach this business from the perspective of someone who’s just starting, I was young when I went to property management school. And when they start with the dream and Belize and so on, they just lose me because it’s so far removed from what I see everyday with real landlords some of whom I know are REIN members.

      • Adam

        Hi Rachelle,

        Do you own any rental property yourself?

        Adam

        • Rachelle

          Hi Adam,

          My office is in the past location of my rental property. I used to rent the basement of my own home, but stopped when my son was two and I needed to get him out of my papers. Now it’s my office but it was rented for 10+years

  • Julie

    Chris,

    Just a couple of things I would like to say in response because I own real estate and have been to some REIN events and know several people in REIN but I avoid them like the plague.

    First the fact that they talk about retiring after “only 5 years of hard work”, as you say, is totally ridiculous. They sort of lose me in terms of any credibility for anything else when they say that kind of stuff. There might have been a small window of time when that was possible for investors that bought at the right time. Perhaps sometime around 2005 – 2006 in Calgary.

    I owned lots of houses then too and mine doubled in value as well. Made an amazing amount of money based on the fact that I assumed for no money down on most of them. Before that time I was glad if my properties went up by a measly $5000 per year, or 3%. I don’t own many properties now, but to be frank, for the ones I own I’m just glad if they aren’t going down in value.

    Did your properties go up more than the market? How much more. If they just rose with the market, I don’t know if I would give the credit to REIN any more then I would give the credit to my Realtor who likes to point out “All the Money He Made Me” just because he happened to sell me a house in that great crazy market we had. Funny he doesn’t make the opposite claim now when I have a few that are underwater.

    I know all the REIN financing schemes, and they all work wonderful when the market is rising, mind you even going way over budget in a fix and flip will still net you a good profit in a quickly rising market. But when the market falls and mortgage lending tightens those schemes can rip families apart and I’ve seen it too many times. Rents have gone down, sometimes properties don’t cashflow anymore and how are you going to pay back your mom that $100,000 she lent you from her RRSP’s at 8% interest when you can’t sell the house for the amount of the mortgage. Who’s going to keep shovelling money into the property. Do you know how many Rent to Own deals have fallen apart and now investors can’t find new buyers?

    One of my companies was named in a law suit that would have never happened years ago. Someone bought a house and I assumed it from her a year later, and after that another company assumed it from me. 2 yrs later that company defaulted on the mortgage and every single person/company who owned the house with the mortgage was named. To make matters worse the company who defaulted is owned by REIN members who are now fighting because all their properties have gone belly up, they were all financed with various REIN schemes and family members had invested in the various properties to the tune of 500,000 and now nothing is left.

    I tried to get this particular property back to salvage the foreclosure but because they are fighting they have put ridiculous writs on the property and won’t take them off so now it has to go through foreclosure. I know this sounds convoluted and that’s sort of the point. In a bad market these wonky deals can go really bad and a lot of people get hurt.

    To the person who wrote the question, take Rachelle’s. She names some good authors and organizations and gives other good suggestions for connecting. Along with all that, when I started out I even called Boardwalk a few times to ask them some questions and had coffee with the VP in charge of managing the tenants and he gave me invaluable advice. I also took to looking at the rental ads and calling some of the names and numbers I saw more than once and just asked questions. Most people were friendly and helpful.

    • Rachelle

      Julie,

      Thank you so much for being so frank. I myself manage a property where the owner is in deep trouble because of a REIN scheme. The previous owner took back a mortgage and also left a bad leaky illegal basement. Now the new owner is in deep trouble…no rent for the basement and no money to fix it no cash flow.

      Quite frankly anyone who has bought real estate for the last 20 years looks like a genius. When the crash comes and it’s already hit you guys in Calgary to a certain extent, all real estate investors will be trying to catch a falling knife. Traditionally real estate was a great hedge against inflation and nothing more. It scares me to see so many ordinary people thinking that buying a property is like buying a guaranteed win lottery ticket.

      In fact discussing the real estate market with some of these crusty old landlords (just try to get them to stop talking) you’ll find that many lost homes and properties in the last crash. They remember and I’ve seen many sell because they recognize the madness. They are very very careful and conservative but if they do buy something they’ll be able to keep it.

      • Chris

        Smart Cookie, Julie and Rachelle,
        All good advice. The REIN vendor take back mortgage scares me!
        For someone that is starting out like our 23 year old friend, a bit of advise is that we all started from nothing. I have been doing this for 15 years and am very much still a novice. If I was starting now, I would talk to as many people with real estate (as Julie stated) as possible. Read as many books and blogs (even the REIN and Rich Dad ones) and take everything with a grain of salt.

        The way that I got my start was owning a semi detached, renting one half and renting the other three bedrooms on my side as well. I wasn’t concentrated on CAP rates, mortgage rates, terms, vacancies %, vendor take back mortgages, RRSP mortgages or any of those things. I kept my bills paid, was very fair to my tenants and upkeep the property. I was in it to survive by having lower expenses, not make a ton of money. Start out doing everything yourself, then you can find out what you are good at and the things that you do not want to do.

        So, take in as much information as possible and go slow.

  • Chris

    Rachelle, I agree they do not talk much about the tough parts. I bought my first place at 20 and have cleaned out units that the tenant hasn’t taken out the garbage in 9 months (I am not sure how much easier it is to put it all in the corner of the basement) and had a tenant take their own life as well. No Belize there for sure!
    Just like many things their are good and bad things with RE investing. But, without it I would be much farther behind at a 2% GIC….

    PS: I enjoy your Blog and think what the “other Landlord Rescue” is doing is completely out of line and ridiculous.

    • Rachelle

      Thanks Chris.

      Well that’s just it…it isn’t a walk in the park. I live with that reality every single day, in my face. So I find that extremely irritating that it doesn’t get mentioned.

      Let’s be clear about this Chris, it’s not the other Landlord Rescue doing it, the money guy and the guy who could easily say “stop this madness it’s just wrong” is the VP of REIN, Patrick Francey…

      For a long time, I was reluctant to say anything really bad about them because lots of my clients were REIN members. Now I don’t care.

  • Douglas Thiessen

    I went to exactly one REIN meeting, in 2006. Don Campbell said two of the most irresponsible things I’ve ever heard – 1) the real estate market never goes down, it just levels of for awhile and then keeps going up. How’s that working in Las Vegas these days? and 2) the U.S. housing market is overpriced in a few locations, but any fallout will be regional and limited to a correction of excess enthusiasm. Now I’m paraphrasing, but that’s the gist of it. I’ve had quite a few people call me and complain that they’ve invested in condos that were egregiously overpriced to the market (mostly Edmonton) and that they were underwater on their mortgage. This was in the heyday of the Alberta boom (another one underway – careful!)

    I think that Don is an excellent raconteur, that he has certainly managed to disseminate the basics of investing, and that he has done an excellent job capitalizing on it. He’s an excellent speaker. But I truly wonder what kind of training he actually has in capital markets that inform him? I”m just curious, because I found nothing.

  • Rachelle

    Douglas,

    That is the million dollar question and according to my information he has no formal education at all. In fact he did not graduate high school. That isn’t the end of the world, but if we’re going to use him on BNN for telling people what a great real estate market we have, that’s crazy especially when we have people like Ben Rabidoux who are educated and know numbers who are sounding the alarm.

    For those of us that are homeowners, we need to live somewhere, but investors have no obligation to invest in houses. It’s been good but any further gains are really hard to imagine.

Leave a comment