REAL ESTATE INVESTING IN CANADA

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3 THE LITTLE BOOK OF REAL ESTATE INVESTING IN CANADA

4 Little Book Big Profits Series In the Little Book Big Profits series, the brightest icons in the financial world write on topics that range from tried-and-true investment strategies to tomorrow s new trends. Each book offers a unique perspective on investing, allowing the reader to pick and choose from the very best in investment advice today. Books in the Little Book Big Profits series include: The Little Book That Still Beats the Market by Joel Greenblatt The Little Book of Value Investing by Christopher Browne The Little Book of Common Sense Investing by John C. Bogle The Little Book That Makes You Rich by Louis Navellier The Little Book That Builds Wealth by Pat Dorsey The Little Book That Saves Your Assets by David M. Darst The Little Book of Bull Moves by Peter D. Schiff The Little Book of Main Street Money by Jonathan Clements The Little Book of Safe Money by Jason Zweig The Little Book of Behavioral Investing by James Montier The Little Book of Big Dividends by Charles B. Carlson The Little Book of Bulletproof Investing by Ben Stein and Phil DeMuth The Little Book of Commodity Investing by John R. Stephenson The Little Book of Economics by Greg Ip The Little Book of Sideways Markets by Vitaliy N. Katsenelson The Little Book of Currency Trading by Kathy Lien The Little Book of Stock Market Profits by Mitch Zacks The Little Book of Big Profits from Small Stocks by Hilary Kramer The Little Book of Trading by Michael W. Covel The Little Book of Alternative Investments by Ben Stein and Phil DeMuth The Little Book of Valuation by Aswath Damodaran The Little Book of Bull s Eye Investing by John Mauldin The Little Book of Emerging Markets by Mark Mobius The Little Book of Hedge Funds by Anthony Scaramucci The Little Book of the Shrinking Dollar by Addison Wiggin The Little Book of Bull s Eye Investing by John Mauldin

5 THE LITTLE BOOK OF REAL ESTATE INVESTING IN CANADA DON R. CAMPBELL

6 Copyright 2013 Don R. Campbell Published by John Wiley & Sons Canada, Ltd. All rights reserved. No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Canadian Copyright Licensing Agency (Access Copyright). For an Access Copyright license, visit or call toll free Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons Canada, Ltd., 6045 Freemont Boulevard, Mississauga, Ontario, L5R 4J3, or online at While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom. For general information about our other products and services, please contact our Customer Care Department within Canada at , outside Canada at (416) or fax (416) Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at For more information about Wiley products, visit Library and Archives Canada Cataloguing in Publication Data: Campbell, Don R. The little book of real estate investing in Canada / Don R. Campbell. Issued also in electronic formats. ISBN Real estate investment Canada. I. Title. HD316.5.C C ISBN (ebk); (ebk); (ebk) Printed in the United States of America DP

7 Contents Foreword Acknowledgements Introduction vii xiii xvii Chapter One Why Invest in Real Estate? 1 Chapter Two My Early Years as an Investor 45 Chapter Three Design a Portfolio to Weather the Inevitable Storms 71

8 [vi] Contents Chapter Four Building the Team 103 Chapter Five The Investor Mentality 131 Chapter Six Riding the Cycle to Long-Term Sustainable Wealth 157 Chapter Seven Why Do You Really and Truly Want to Invest in Real Estate? 185 Chapter Eight Is Real Estate Investing Part of Your Journey? 201 About the Author 223

9 Foreword By Patrick Francey Sept It is often only in hindsight that we are able to understand the true impact of a single decision. This is certainly true in my case, as there was no way I could have known the chain of events my seemingly simple decision to invest in real estate would set in motion. It is only now, more than ten years later, that I can see the obvious significance of that decision on me, my business, and ultimately my family s lives. In late 1999, after 15 years as a small business owner, my wife Steffany and I decided it was time to expand our strategy for building our long-term financial foundation. Guided

10 [viii] Foreword By Patrick Francey by the success and advice of friends and business associates, we chose to include real estate as part of our strategy. After coming across a small ad buried at the back of our local newspaper inviting us to learn about Alberta real estate, we registered for our first-ever real estate investing presentation. It was being hosted by an organization called the Real Estate Investment Network (REIN ). We had no idea what to expect, but were intrigued when speakers began to talk about the philosophy of investing in real estate. They outlined a straightforward, common-sense framework for using proven and key economic fundamentals that drive real estate prices to determine where to purchase investment properties. We were shown how, by considering and analyzing specific economic indicators, we could open a window to the future of specific geographic regions and neighborhoods, and see which ones made sense to invest in. The good news was that the research and analysis clearly showed that at least 10 cities and towns in Alberta had economic fundamentals that supported a decision for investing in real estate. The even better news was that Edmonton was at, or very near the top of the list, and that is where we were living. It was just a few weeks later that we attended a second REIN event, currently referred to as the Authentic Canadian Real Estate (ACRE) workshop. Over the course of two very content-rich days, a quirky, intellectual, and very passionate guy by the name of Don R. Campbell commanded the stage

11 Foreword By Patrick Francey [ix] as he led the audience of over four hundred individuals step-by-step through a set of common-sense strategies and systems for successfully building a portfolio of buy and hold, positive cash flow, real estate. What Steffany and I observed throughout the two-day event was that the foundation of Don s message was crystal clear: Treat real estate investing like a business, purchase property in areas where the economic fundamentals support the greatest possibility for equity appreciation, and only buy properties that produce monthly net cash flow. Attending the ACRE weekend in 2001 turned out to be a milestone event in our lives as it was at that event we decided to step outside our comfort zone, become members of the REIN community, and begin to invest in real estate. It was during our first few years as members, through interesting coincidences and combined with fortunate timing, that Steffany and I got to know Don and his wife Connie and we became good friends. During that same period of time, my other business interests had developed to a point where I was not required as part of the day-to-day operations of them, and so amongst the four of us the idea was born for me to join the REIN senior management team, which I did in January With strategies and philosophies proven over 25 years of building his personal real estate portfolio and immersing himself in the experiences of a national community of other investors, Don R. Campbell continues to challenge us to view

12 [x] Foreword By Patrick Francey the world of real estate investing through the lens of creating long-term sustainable wealth. He stands out as a pioneer in providing real estate investors world-class research, education, analysis and leadership. Whether it s through the books he has written, REIN s monthly workshops and keynotes, or the many radio, TV, or newspaper interviews he does every year, Don continues to share his message, methodology, and strategies for others to successfully invest, not speculate, in real estate. As REIN now celebrates its 20 th anniversary, Don and our team remain steadfast in making a difference and continuing to create the conditions for success for committed real estate investors. Over the years we have received hundreds of handwritten notes, thank you cards and s from members describing the positive impact Don and REIN have had on their lives. Being a catalyst for change in people s financial future and the success stories we receive fuel our passion to continually develop meaningful ways to improve ourselves and remain Canada s top resource centre for real estate investors. Driven by the idea of investing, not speculating, in real estate, Don continues to expand his knowledge and the brain trust of people he surrounds himself with. Supporting real estate investors in reaching their highest potentials remains a core value of Don personally and of our team as a whole. This little book is a powerful illustration of how some of our greatest successes and highest returns can be gained

13 Foreword By Patrick Francey [xi] through investing in personal knowledge and education. Like his other books, this one continues to expand upon the insightful and common sense approach to investing in real estate that Don applies and teaches. For anyone interested in building a portfolio of investment real estate, this book requires a minimal investment but offers the possibilities of an infinite return on your investment in yourself. As for Steffany and I, leveraging the education, knowledge and expertise that Don R. Campbell and a national organization of real estate investors offer changed our lives. It too may prove to be your milestone decision. Patrick Francey CEO Real Estate Investment Network

15 Acknowledgements Life, business and real estate are never as much fun or as successful unless they are shared with great people. This book is the culmination of 20-plus years of discoveries, successes, mistakes and experiences. It would be impossible to acknowledge everyone who has contributed to it without transforming The Little Book... into The Massive Book of Real Estate Investing. However, I would be remiss if I didn t mention a few key people. None of this journey would have been possible without my wife of more than 25 years, Connie J. Campbell ( She is the solid foundation upon which this life has been built. Her passion for life, her belief in me and her amazing business talents have helped our business grow to a world-class level. Without

P1: OTA/XYZ P2: ABC JWBT483-fm JWBT483-Mckinsey February 16, :11 Printer Name: Hamilton VALUATION WORKBOOK i

P1: OTA/XYZ P2: ABC JWBT483-fm JWBT483-Mckinsey February 16, :11 Printer Name: Hamilton VALUATION WORKBOOK i VALUATION WORKBOOK Founded in 1807, John Wiley & Sons is the oldest independent publishing company in the United States. With offices in North America, Europe, Australia and Asia, Wiley is globally committed