MasterWealth Graduate today, and I thought it was worth posting a response on here since it is a question a lot of people are asking right now.
The advice you gave us at the canadian training event was to look at investing in USA in 1-3 years from now [because it is going to get worse before it gets better]. But the advice my partner Sterling remembers from the USA training, seemed to be yes go ahead and invest in USA. We’re not sure what to believe? Thank you! SallyWhat Sally is referring to is the two major real estate training events that we held in February and March of this year (our 5 Day Experience). I run different programs for Canadian and U.S. investors, because there a lot of differences in the markets and investing details. She attended the Canadian event, and heard me say to wait to invest in the U.S. Whereas, her partner attended the U.S. event, where I told the U.S. investors they should be looking at investing now. Why would I give different advice like this? The answer is simple — it depends on where you’re located as an investor. As a general comment, the Canadian real estate market is much more solid and stable right now than the U.S. market is. That means if you’re in Canada now, then it makes more sense for you to invest in Canada. This is not only because the market is more stable, but I continue to believe the Canadian dollar will retain its strength, and the U.S. dollar will continue to decline against the Canadian dollar. Therefore, if you’re a Canadian, and I’m right, it wouldn’t make sense to invest in the U.S. because you’d lose value in your investment due to the currency decline. But if you’re in the U.S. already, then my position is that it makes sense to look at the markets where you are, and determine if there are opportunities there. Would you be better off as a U.S. investor bringing your money to Canada and investing here? The answer is, probably yes.. but that’s not practical for most U.S. investors. I am a big believer that if you’re going to be an active investor, that you should start close to home. Doing so removes a number of moving parts and complications for you. So if you’re in a U.S. market right now, I think it makes more sense to start there instead of trying to find the ‘best’ market where you have to get on a plane to visit. The other problem is that you have to be careful constantly chasing the “hot” market. Just because it’s probably better to invest in Canada right now than the U.S., doesn’t mean it’s going to be that way forever. I believe there are going to be MASSIVE opportunities in the U.S., so if that’s where you are now, then learning your market and being in a position to take advantage of the current crash could be an excellent strategy. If you are a U.S. investor and decide you’re going to try and invest in a Canadian city on your own, by the time you learn the market, figure out the financing, find the deals, determine your management strategy, etc .. you probably would have been better just staying in the U.S. to begin with. I also think it would be dangerous for most Canadians to go into the U.S. markets now and try to make a lot of money. I believe the U.S. market is going to decline further from where it is right now. So why would I tell anyone to invest in the U.S.? Well, if you’re already there, and you apply some of my strategies in trying to buy at way below market value, you are still going to make money. Let me illustrate with an example: Let’s assume you’re in a U.S. city where prices are going to drop another 20% (which would be a significant drop). Yet, you’re able to purchase properties right now at 65% of the current market value. Even if the market dropped 20%, you’re still making money because you bought well. The whole point here is there is NO perfect answer in real estate. That’s why on the surface, it seems like I am giving conflicting advice, but I’m really not. The bottom line is, if you’re in Canada, keep your money out of the U.S. dollar and inside Canada, because there is less risk for you. If you’re in the U.S. right now, consider focusing on markets around where you live and paying attention to the fundamentals. Seek out markets that have motivated sellers and good fundamdentals. NEVER pay market value, and build in lots of equity to reduce your risk. As an example, I think Las Vegas is going to be a prime buying market .. eventually. But it is NOT right now. It’s going to get worse there before it gets better. If I lived in Las Vegas right now, I’d be making low ball offers and trying to find seriously motivated sellers. I would work to buy properties at 75% of market value or less, and be ABSOLUTELY sure that they generate positive cash flow, after ALL of my (real) expenses. Even if the market corrects another 20%, I still have equity I got for free, PLUS I have a property that is generating positive cash flow. And of course, if the market doesn’t correct that badly, then I make even more because I keep more of the equity. Hopefully that answers your question Sally, and I hope it also shows everyone that it is possible to make money in any real estate market, as long as you have a good knowledge base, understand the fundamentals, and apply the strategy that makes sense in that market! ]]>