CCOEHECCEOSTSCEESDOOCOCOTSEORSEESOCO TODS SODEOS EOE EOSED OE ODEOCO ES OOOO DS OEOHO DOE deDeE eR ECeLeLE® I’M sure you’ve seen infomercials touting real -estate investing, which screen umpteen testimo- nials of people who actually have made tens of thousands of dollars, "very quickly, Are these people iving No. What these people say they have done can be done. ample the Real estate investing has many sub components such as raw land development, new construction, strip mall devel- opment and management, Property management, resort and vacation property, com- mercial development and so + on, T know comparatively fitre about diese areas as inv ments. Normally, these types of real estate investments require investors with substan- tial net worth and deep pack- ets to cover unforeseen prob- fers. It is not the a for us “common” folk and industry mainly worl highly competent and protes- sional commercial realtors. You do not fe cials promoting the “nothing down” acquisition of shop- ping centres and office build- ings.” -. [have spent the bulk of the past 25 years specializing in residential, income produc- ing, property investments. This is the arena where most of us “common” folk tend to invest, for it is the area requir- ing the least amount of capital and knowledge, with a lot of potential product for investors to acquire, plus it continues to be a market segment where “big” money can be carned. It is this area where the infomer- cials focus and an area, unfor- tunately, filed with cunning ‘sharks eager to feed on unwary investors. The following examples come trom nw dircet pi experience within the residen- tial income property side of the real estate investment industry. The examples are not flattering | ny partot this industr expose of the greed, Fraud and nusrepresentations that take place within this segment, of what in most other areas, bas become a very repucable indusiry. » unde stand “the we need to under- stand what they feed an and the bait they use to entice the * T estate inv ing. So, a large percentage of resting public is vulnera- ble to the “sharks.” The ques- tion the sharks must resolve is how do they attract their food? Before detailing their tech- niques let us understand the unbelievable profit potential the “sharks” are looking at. I'm sure you have noticed ads in the paper saying: ctention investors, once ina litetime investment opportuni- ty to buy real estate in North America’s fastest growing region. One- and nvo-bed- room strata titled properties now available. Just $2,500 down payment with positive cash tlow starting from day one.” Recognize the ad? In the vast majority of these cases, a developer has tied up a build- ing that, for example, contains 100 one- and nvo-bedroom . The developer's plan is to do some minor improve: ments (it’s called applying lip- stick) then sell these units to individual investors. The pro- jected “net” profit for cach sale of such a unit can be as high as $10,000, Multiply that by the 100 units and what the “shark” sees is a mil- lion dollar profit tor 6 months work, Not bac. Yer to realize this nest attract the How ule they do 2 A number of ways, The most obvious way is to run ads in the paper as per the above example or hold minute seminary. Want-ro-be investors reply, are enticed to visit the office and when they do are shown how easy itis to be small down p. bank financing ail pre- arranged, appraisal reports that show you are buying below appraised value. onomic and demographic statistics that demonstrate the of investing in thar area are powertilly presented. Even such items as past sale individual property and rental management complere with monthly reperis are presented to ensure the potential investor of a complete “hassle- tree” and astute we sis termed “the packaging” of the investment. Given a professional salesper- son, armed with this packag- ing material, the want-to-be investor is a sitting duck. How do I know all this? Unfortunately, E created thi ultimate “fed” crap for numerous companies within this industry, My premise in creating this process was based on good business sense. Find our, in detail, what the con- sumer wants, then go out and find a property that fits all the requirements of a sound investment chen package IC in nner that T term “investor fricadly.” Untortunately, F was very naive in my thinking. Without question, there is enough immediate profit potential to more than satisfy any develop: er with cnough Jett on the table to amply reward the investor. In its purest form, and a process P had used with ny individual clients, areal “win-win” sitaition was pre- sent. What [was too simple: minded to comprehend was the greed and immorality of estat the developers wark- ing this market scxanen. They want all the protit, will distort the trath ta make the process work, totally disregard the statute Laws of our Province and wring every penny they ean trom the transaction, Fairness, knowledge, hon- esty, playing by che rules set our by law and se on is not the way they play. The pur- chase contracts they usc to get the “investor” to sign are sa aughably one- -sided that any professional realtor would never allow a client co sign, tor if they did they would tose their licen Appraisals, all too often, are totally misleading and in some cases even fraudulent. There is also a good chance that the “professional expert investment salesperson” you deal with was probably selling © games the week before — and ves, this happens all too often. [ve personally seen it as recently as last summer. The real estate company selling the erties, that by Jaw must use licensed real- tors, does not do so and knowingly breaks the law. Management contracts are insultingly put together and so on and so forth. This entire ing pre-packaged investments in strata titled investment BE AOR TE properties, is riddled with what Pil call crooks — as defined by Webster's dictio- nary: “person(s) nto fraudulent practices — that which is not what itscems or a strony accusation, tit Es what Phave ally witnessed and is pre- sent in the Vancouver marker- Place today, How do they get awa with this? Simply because 90 one is watching. The goverr ment department that moni- tors this area simply does not have the budget to hire peo- ple to “police” what is going, on, Upstortunazely. they can only respond atter a Fcomplaint has been made er a wrongde- ina ts brought to their atten tion, By this time the damage is usually done, the investar is in deep trouble and the devel- oper is gone, Does this mean that all reat : investment companies ne “packaged invest- ments In strata citied proper- tv" are cranks? Absolutely not. There are companies who are ethical to the extreme. These companies bend over backwards to ensure that their clients needs come first and offer great opportunities for the “want to-be” real estate investor. Unfortunately, they are in tl small minority How does one avoid the bottom feeders and still invest in real estate? I strongly suggest you employ a realtor, fully know!- ble about real estate ng. You may have to do ching, for this person as the real estate indu offers no in-depth training in this area, but T strongly sug- gest you do because of the legal liability the courts have * placed on what a realtor says and doe: A récent court ruling held realtors to be thoroughly Ry en eee © knowledgeable about what they know or “should have perts in this Ss court ruling is a real landmark. [t means that a realtor cannot rely on others (a developer) tor the intorma- tion they pass out, Realtors miuist do their own “due gence™ to ensure chat thing they say and present to you wa ) potential investor are the true facts. This is a tremendous responsibility now placed Gn realtors as it gives the investor real assurance as to the integrity of the infor: mation they are given. If the information, advice ete. is not accurate, the investor naz only has Ril legal recourse against the realtor but abso against the real estate company that employs him or her, Pre- packaged investments in real estate can be excellent long-tenn investments, They should not however, be looked upon as quick speculs tive ventures. Strata properti s are the first to lose value ina recessional real estate period and the Jast to re-gain their value as the real estate evele improves, However, whe among, us would not love to own a two-bedroom town: house, with no mortgage, inhabited by a reliable tenant ides a solid net sidential income proper- is a real “golden goase” investment. Properly acquired and nurtured it will fay pler of monthly golden eggs — fe you and your children. there are sharks in the vet that face should not prevent us from enjoying fab- ulous days of snorkeling in warm tropical waters ... should it? -— Michavl Dowry is an investment realtor with Century 21 Prudential Estates Ltd. and a real estate invest- ment teacher. You can reach him at 925-6453. Feature Listing 399 inglewood Place ~ Cedardale cul- le-sac Beautifully finished traditional home with fou bedrooms plus playroom upstairs. Formal 19° entry with dramatic. circular staircase. Vaulted ceilings in the livingroom, large kitchen/family room with hardwood floors, centre island, gas fireplace & _Sliding doors to the level yard. Full. basement with finished rec room (800 sq. ft. unfinished) and three car garage - a beauty!! LOT SIZE: 13,670 SQ. FT. a ceccereccoece doe eseovorese INTERIOR SIZE: 3900 SQ. FT. Pewee eesrereer eee eaeeerenenenseeeesens ‘ NUMBER OF BEDROOMS: 4 NUMBER OF FLOORS: 3 ASKING PRICE: $749,900 OPEN HOUSE: Sunday 2-4 eeeervevecceser LISTING AGENT: Ray & Lynda Proc, 925-2911 oenvecssocs eeoeesccnces woccecs SPECIAL FEATURES: Vaulted ceilings, playroom over garage.