How to Become a Real Estate Investor

Becoming a Real Estate Investor

Real Estate InvestorI was your typical casual investor in 2008 with a natural interest in real estate and some money to invest but no real experience as a handyman, and a full time job as a computer engineer that left me no time to dabble in real estate investment.

However, I knew that real estate was a natural complement to one's investment portfolio given its low correlation to the stock market and inflation hedge. I also knew that the tech region in Kitchener-Waterloo was booming and that demand for housing would likely be on the rise.

Looking for a place to start, I asked a close friend who was a real estate agent to find me some real estate investment opportunities. He just happened to be working with three fellow University of Waterloo engineering graduates who were busy buying single family homes in Kitchener-Waterloo and converting them into duplex and triplexes.

My partner and I eventually purchased a property through an estate sale for $120,000. We gutted the home and I invested $30,000 to convert it into an upscale duplex. We refinanced the property at a newly appraised value of $220,000 (a development profit of $60,000 after financing fees) and began searching for our next opportunity.

I was hooked on real estate investment.

We continue to own the property today, with it positively cashflowing while also paying down the mortgage. I often think about had it not been for a chance introduction through our personal networks, I would never had the ability to invest in a great real estate investment opportunity and would be left wondering how to get in the real estate game with a full time job and no direct experience in managing properties.

Weber Real Estate Investment

First real estate investment in Kitchener, ON

Finding hidden development potential

Soon afterwards we did some detective work to find an unlisted old house near Rockway Gardens in Kitchener that the owner was selling privately. It turned out that the house had been vacant for 20 years and Gerry, the executor of his family’s estate, was looking for a quick sale. We purchased the property for $223,000 and quickly went to work on the designs to turn it into a four-plex.

Given the location across the street from Rockway Gardens and close proximity to the express-way, we figured that this property was an ideal opportunity to invest in and turn into a young professional’s ideal living space. Each unit was decked out with stainless steel appliances, in-suite laundry and hardwood flooring. It was a hit with renters and when all was said and done it was re-appraised for $525,000 for a development profit of $125,000 after all expenses were paid. We continue to own the property and it cashflows over $1,000 per month while paying down the mortgage and building equity.

King Real Estate Investment

Single family home converted to four-plex in Kitchener

Our next project was an infill construction opportunity at 689 Doon Village Dr. near Conestoga College. There was an existing single family home on a very large corner lot that was ripe for a brownstone stacked townhouse design that Stephen was perfecting with his design team. We purchased the property for $240,000 and leased up the existing house to Conestoga students while we began the process of getting the approvals and permits for the 17-unit new construction.

Concurrent with the purchase at Doon Village Road, we continued our focus on developing many core properties in the Cedar Hill neighbourhood of Downtown Kitchener. This location was close to all the vibrant development going on in downtown Kitchener and a stone's throw away from the proposed Light Rail Transit line currently under development throughout Kitchener-Waterloo. We purchased many distressed multi-family buildings and pursued the typical strategy of overhauling them into shiny new real estate properties.

One of our Cedar Hill properties was a 5-plex located on the highest point of elevation overlooking the city. With continued growth in Kitchener and a demand for affordable luxury units in downtown Kitchener, Stephen and his team saw the opportunity for the Revel brownstone stacked townhouse design if we could tie up the adjacent triplex property next door. Stephen went to work and privately acquired the property to put our development plans into place.

After spending some time with the city to get the development approvals in place, concurrent construction of our brand new 17-unit and 36-unit townhouse designs at our Doon Village and Cedar Hill locations. Construction was completed in 2013 with appraised values of $6.4M and $3.6M respectively.

Real Estate Investment Canada Property

Cedar Brownstones in Cedar Hill, Downtown Kitchener

Connecting the crowd to real estate investment

I had achieved tremendous success investing in real estate and it naturally begged the question of why this simple real estate investment opportunity that I was afforded early on wasn't readily available to others interested in real estate. We were achieving considerable success in turning distressed properties into vibrant living communities and realizing significant investment gains. It was clear that there was an opportunity to connect investors to the various projects that Stephen had in the pipeline.

It was on the summer patios of Beertown in Waterloo Town Square that the idea for Open Avenue was born. Being a University of Waterloo engineer naturally interested in technology and innovation, it was easy to see the need for an online real estate investment platform that would enable all types of investors to participate in new real estate investment opportunities, bringing real estate investing into the digital age.

Own real estate. No headaches.

Our mission with Open Avenue is to eliminate the roadblocks to investing in real estate. Everyone should have the opportunity to invest in community real estate projects without having to fund entire projects on their own or being willing to plunge toilets, take out trash or deal with midnight phone calls. And it should be done on a very transparent basis so that each investor feels comfortable and secure in knowing what they're investing in, who they're investing with and how their investment returns are being generated. Open Avenue brings real estate investment into the digital world by providing real-time reports and insight into property income and expenses, valuations and operations.

We're super excited to unveil Open Avenue to the crowd and build our community together.

 

 

Posted on February 12, 2014 in Investing, Real Estate Education

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About the Author

Tim McKillican is the Founder of Open Avenue and has a number of successful start-ups under his name, including Level Social Inc., a social media company. Tim is a University of Waterloo graduate in Computer Engineering and has been a lead investor in over $30M of commercial real estate. Tim has a passion for disruptive technologies and is excited to bring new real estate investment opportunities to the mass market.

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