An original by Dr. Andrew Stotz, My Worst Investment Ever features investors and financial titans from around the world to share their heartbreaking tales of investment misfortune.
Listen and discover the best practices for risk management that will keep you in the game.
In This Episode…
Sarah Larbi specializes in helping take the mystery out of homeownership for Canadians who thought real estate investing was out of reach. She has earned their trust and respect by having the drive and focus to embark, build and grow a seven-figure, 10 property investment portfolio by her early 30’s.
Her results-oriented approach has been featured in The Toronto Star, 1010 News Talk Radio, and Canadian Real Estate Wealth Magazine as well as numerous online media. She is an invited speaker at the Canadian Real Estate Wealth Investor Forum and is often a guest on numerous North American finance-focused podcasts. Sarah is also the co-host of two podcasts related to the Canadian real estate market.
My Worst Invesment Ever
Desire To Be Wealthy
Sarah had a great desire to be wealthy and she wanted to find out how she could retire at 40 while still enjoying financial freedom. She did some research and real estate investing kept coming back over and over and over.
While she came across other ways of creating wealth, she was drawn to real estate. She managed to convince her boyfriend to join her and buy real estate property.
She took a second job and cashed in some of her vacation money to be able to have enough down payment to buy the cheapest house that they could afford.
Mistake No.1: Letting Family Sway Decisions
During the time Sarah and her boyfriend were looking to buy their first rental property, her sister needed a place so as to live closer to her daughter’s school.
Hence, they decided to look for property in that area with plans to rent out the house to her sister.
They didn’t do any kind of research and simply asked the sister what kind of house she wanted and could afford.
That’s the only information they worked with to buy their first rental property. They didn’t research the location or make any price and property comparisons.
Mistake No.2: Not Using a Local Realtor
Sarah used the realtor that was about an hour away to find their rental property. Not only did they have to keep going back and forth, the realtor didn’t know the market and neither did they.
Mistake No.3: Borrowing from the Bank Instead
Once they got a property they went to their bank for financing. The bank wanted 35% down payment, which forced her to look for a mortgage broker.
However, at this point, she had wasted a lot of time trying to negotiate with the bank.
Making The Math Work
Luckily, Sarah happened to listen to several real estate investing podcasts and she learned that she needed to figure out how to at least break even or make some cash flow from her real estate property.
She worked out that she needed to collect $800 in rent per month to break even. What she didn’t know, because she had done zero market research, was that the actual market rent was about $1100.
While they didn’t lose any money from buying the property, it remains her worst investment because they didn’t make the money that they should have been making had they looked and seen the comparable of what the rent go for in the first place.
Lessons Learned
Use Local Agents
Sarah has learned to only use realtors that are localized in the areas she’s looking to invest in because the local realtors know where the best deals are.
They’re also likely to have a team of electricians, plumbers, paralegals, etc. so that you don’t have to go and source from scratch.
Don’t Be Too Analytical
Be careful that you don’t spend all your time doing research. Do your research but make sure that you’re not sitting on your butt five years from now, still doing research. Do enough research, feel comfortable, get the right help, get your right team and then just go ahead and do it and trust that you’ve done enough research.
There are lots of people complaining that they should have done something 10 years ago, but they’ve just been reading and analyzing nonstop but never dared to do anything.
For the full podcast and other key takeaways, listen below:
