North Bay real estate investors share how to finalize the deal
Dave and Melanie Dupuis share tips on navigating the real estate investment world
A North Bay couple, who are real estate investors, says if you plan carefully, you can successfully purchase income properties as a source of revenue.
Dave and Melanie Dupuis recently published a book called Real Estate Investing Secrets: A No-B.S. Guide to Creating Wealth and Freedom. The idea to write and publish a book on the topic came to them after they both survived a serious motor vehicle crash.
When it comes to buying or purchasing real estate, Melanie says it's important for you to know what you want out of the deal.
"Most people think is it all comes down to money, but we've found out throughout the years that that's not always the case," she said.
"Sometimes, they don't really care as much about the listing price, but they really care which date they're going to close for capital gain purposes."
She says it's important to get to know the potential seller to figure out what's important to them, including when the deal should close and if requests will be made, such as allowing current tenants to stay for a specific amount of time.
Once those details are sorted, Melanie says the price is important to focus on. But she cautions getting stuck on a particular dollar amount. She recalls a time in the past when she and Dave couldn't close a deal over a $15,000 price gap between them and the seller.
"Looking back now, I wish we would have purchased it because that $15,000 is peanuts on a mortgage," she said.
"We would have remade that money within six to eight months and would have been cash-flowing over the last four or five years on it. And we walked away because we were so set on the price."
While it may seem tempting to put in a low offer, Melanie suggests caution when taking that approach.
"If you low-ball too much, then the seller automatically has their guard up," she said.
"They're insulted. So low-balling is not always the best strategy."
Dave says at the end of the day, everybody has to be happy with the deal.
"If it's not going to be a win-win, we don't want to be a part of the negotiations," he said.
"If someone has to lose for you to win, we've walked away from those."
Of course, with a real estate investment, the finances will be have to be finalized. Melanie says it's important to know the difference between good debt and bad debt.
She says bad debt is a purchase that doesn't make you money, such as a car, clothing or electronics. Good debt, she says, is a purchase that generates money, such as a rental property.
At the end of the day, she says people purchasing rental properties should not only make enough to pay the mortgage, but extra money for maintenance, taxes and to pay yourself.
Dave says to ensure you will have money left over, it comes down to income verses expenses.
"If the rent coming in is higher than the water, taxes, heat, hydro, mortgage, insurance, then you know you're in a cash-flow positive state," he said.
"If the in is greater than the out, then hey, you're in the green."
Melanie says once that is figured out, the next step is to ensure you have tenants to help pay the bills. She says they promoted their apartments heavily on social media.
"We have zero per cent vacancy rate," she said. "We can't keep up. We can't fill the need."
Dave says it didn't get to that point right away. He says it took time to build a good reputation as a great landlord to attract tenants.