 Investing in Your Alberta Backyard - March 2004 BUSINESS IN
CALGARY
Investing in Your Alberta Backyard
All his life, Don Campbell has been investing in real estate.
Ten years ago he started telling other people how to do it.
March 2004
By Connie Van Der Byl
Business in Calgary magazine
There is good news and there is bad news. The bad news is that your RRSP is not exactly where you want it to be. But the good news is your property value seems to increase annually. According to the Calgary Real Estate Board, prices for residential properties in the city have been rising an average of about 8% per annum since 1996.
This performance may leave Calgarians wondering whether real estate is the better investment. But, even if higher returns in residential real estate were assured, many of us might feel ill-equipped to venture down this alternate investment path.
A Calgary company may have the answers. The Real Estate Investment Network is advising investors on real estate investment opportunities right here in Alberta. Through extensive research and by focusing on market fundamentals, the Real Estate Investment Network has determined that Alberta is the best place in Canada to invest in real estate until at least 2010.
To the end, the company has published a report entitled, “The Top 10 Alberta Towns to Invest In,” which has been updated for 2003-2004. The ranking for top investment communities in Alberta include, Edmonton, Devon, Sylvan Lake, Calgary, Rd Deer, Okotoks, Lacombe, High River, Cochrane, Grande Prairie, St. Albert and Fort McMurray.
Don R. Campbell, founder and president of the Real Estate Investment Network, explains that, “the economics of the province are very strong, with $80.8 billion of major project investment pouring into the province, coupled with massive inter-provincial in-migration, low tax regime, low unemployment, age of population, demographic trends, a strong housing market and positive cash-flow opportunities – all of these are better than any other province in the country, both looking back as well as looking forward.”
Company Background
Don Campbell began his career in aviation making real state deals on the side. He completed his first foray into residential real state when he was only 22 years old. In the early 1990’s, Campbell quit his job in Edmonton and returned to his hometown of Vancouver to establish a consulting practice that offered real estate investment and business management workshops, plus one-on-one entrepreneurial counselling.
Campbell worked with a partner to develop a comprehensive real state investment teaching program that, by 1992, had evolved into the Real Estate Investment Network. The organization and its forty-year old entrepreneur have since relocated back to Alberta.
According to the company’s own description, Real Estate Investment Network is an exclusive membership program which is dedicated to educating its members about how, where and when to buy Alberta real estate for maximum profit. From networking with other active investors, to having direct access to leading-edge experts and exclusive research, it is one of the most complete programs of its kind anywhere in North America.
Essentially, members pay a monthly fee and receive knowledge and training via workshops, and information packages. As part of the network, members have the opportunity to make valuable contacts and access professionals in the real estate field. Members are taught a system for investment that has proven successful for many people including its developers.
The Real Estate Investment Network takes emotion out of the equation and instead focuses on over twenty real estate fundamentals that affect the market. Research is completed on all the key real estate markets across Canada. Finding properties with positive cash flow, in a market with strong economic fundamentals is the goal.
Campbell assures prospective members, “We do all of our own research; we have a designated staff for that. We use our research system and access facts and figures from CMHC, the specific towns, leading economist as well as political insiders. Because we are investors ourselves we want to ensure that our research is detailed and accurate, with no hype just fundamentals so we dig deep.”
Membership
The Calgary-based organization has grown to over 900 members from across Canada, with the majority in Alberta. Members own over 8200 properties with a combined value of more than $760 million. They pay a monthly fee of $199 for a 17-month commitment.
At a recent annual awards evening, all members updated their holdings. Several have been part of the Real Estate Investment Network for more than nine years. Members are encouraged to acquire at least three investment properties in the first year of joining. Campbell says, “We find that three properties in the first year is a good guideline, it allows a beginning investor to get their feet wet slowly and to not get them selves in too deep, too fast.”
Members of the Real Estate Investment Network attend three-hour evening workshops once a month, plus all-day workshops every three months. Sessions provide members with economic analysis, strategies for applying this analysis to investments, practical real state skills, sharing of information among members and the opportunity to network with other members. Membership also brings with it, among other things, access to the expertise of lawyers, accountants, and other professional as well as discounts with suppliers.
Most Real Estate Investment Network members invest in residential real estate for investment purposes. “Because our clients are investors who own anywhere from one to 250 units each, we focus completely on the residential marketplace. Our research has shown that for the small investor (under 300 units), residential real estate provides them with less highs and lows when compared to the commercial marketplace,” says Campbell.
This means purchasing properties that are then rented out to tenants to achieve a positive cash flow for the investor. “We have a philosophy that our tenants are actually the most important piece of the residential real estate equation. We show our clients how, by treating their tenants in unique ways, we have consistently lower vacancy rates, consistently less turn-over (move-outs) and substantially less tenant problems than the average investor.”
Campbell suggests, “An investor’s time is best spent on negotiating and buying properties – not managing properties . . . Then if you are buying right, it makes sense to contract out the management to a professional management firm allowing the investor to focus on locating their next property.”
Calgary homeowners who are not interested in real estate as an investment would not be excluded from membership.
Campbell comments, “We have many investors who use our research to tell them how, where and when to buy their principle residence. The facts are the same except one major thing – when buying a place to live it is important to include emotion in the decision, not just cold hard facts. This is the only time I recommend an investor uses their emotions to make a decision.”
Keys to Success
According to the Real Estate Investment Network, success in real estate is based on three key factors:
On a personal note, Campbell describes himself as a careful investor who follows the exact real state investment system that is taught to clients. That approach has brought him success and, in his estimation, has helped him to avoid investment horror stories. Campbell acknowledges that he has had some surprises, as when a purchased property had seven (out of twenty) vacancies rather than the one promised by the vendor. Campbell surmised that his vendor was not focusing on relationships and limited his selling potential with Campbell and his associates as a result. The Calgary Real Estate Market
The Real Estate Investment Network uses the analogy of the four seasons as applies to farming to illustrate cycles of real state investing. The real state seasons are: real state winter, real state spring, real state summer and real state fall. Campbell explains, “We developed this after analyzing real state cycles right back to the 40’s.” Like farmers, real state investors are successful when purchasing properties in real state spring and selling or harvesting them in real state fall. “Real state winter is when values are dropping substantially or sitting at the bottom with not a lot of economic fundamentals driving the marketplace. It is the time to be planning, not a time for investing,” says Campbell. Real state seasons are much longer than farm seasons. Often real state spring can last three to five years or more followed by real state summer, where you increase your values substantially, which lasts another four to five years. The Network’s research indicates the Alberta real state market is currently in real state spring. Calgary’s market is about two and a half years ahead of the Edmonton marketplace, so although it is still real state spring in Calgary, it is a bit later in spring than it is in Edmonton. In “The Top 10 Alberta Towns to Invest In” report, Calgary is characterized as “exiting its first plateau – where values and rents did not keep pace and vacancies blipped up.” Campbell explains further, “A real state market is a living breathing entity. What inevitably happens in any boom cycle is that a market will take two breaths or breaks on its way up. These breaks, we call plateau one and plateau two are areas where rents do not increase as quickly as values (on a percentage basis) therefore making it tougher for the investor to find properties that fit the system. These plateaus also are marked by increases in rental vacancies. Then as a market leaves the plateau we see vacancy rates begin to drop coupled with an increase in rents and property values.” It is commonly held that many millionaires have been made in the real estate game. If you have the capital and/or the time and are contemplating real state investment, then you may want to investigate the Real Estate Investment Network in more depth at www.albertarein.com. Don R. Campbell, Alberta based real estate investor, consultant and director of the Real Estate Investment Network, asserts that, “we only teach what we do, and we only do what we do because it works. The research and investment systems that we share with our clients are exactly what we use when we invest.” And for Calgarians looking to purchase residential real state for their primary residence Campbell advises, “do not consider it an investment decision. Choose a place you will be proud to live in, proud to call your own. And because it is in Alberta, you will do very well over the next 10 years.” Posted March 01, 2004 |
