This video belongs to KenMcElroy - so please visit his YouTube channel - but it is such a good 101 primer on real estate investing, it deserves a repeat here. Ken markets this video as how to make money in real estate in 2024 and 2025 because of an expected liquidation of multifamily properties by owners who can't afford their interest payments.

But it's really a basic illustration of how to buy real estate successfully.

1. Buy low. In this case Ken says lots of distressed properties will hit the U.S. market in the next 24 months as high interest rates bite. Same goes for Canada. Owners will be forced to sell - or go bankrupt. People bought properties at large premiums during the COVID go-go years when governments were shovelling stimulus money out the door, artificially juicing every kind of market: cars, hard goods, housing, electronics, shipping, labour, construction supplies. Real estate looked like a great bet. Prices were flying, but loans from banks were available for next to nothing, so real estate still seemed 'cheap'.

Real estate is a great store of value. But overpaying - for anything - is how you lose money, not make it, because loans must ALWAYS be paid back.

2. Make sure your income exceeds your expenses: Sounds pretty basic, right? Create positive cash flow on your buy-and-hold real estate by getting more rent than you spend on the loan, insurance, utilities, and so on.

BUT...when planning an investment property purchase, net cash flow calculations also require a set of what-if scenarios in the form of a sensitivity analysis. A sensitivity analysis creates new financial models in the event X happens. In this case, X is higher interest rates. For example, when modelling out the purchase of a new property in Excel, create five columns with a range of interest rates from best to worst in them, and model out future returns.

If you don't build in margins of safety in the event of interest rate increases, you are exposing yourself  to errors through ignorance. We all knew interest rates could not stay near zero. We all knew inflation would rise - at least anyone with business sense and a basic understanding of economics did. The law of supply and demand may get suspended during bouts of irrational market exuberance, but foundational market principles never go away.  Effectively managed markets always self-correct. Prices rebalance themselves, cheap cash goes away as banks tighten their loan books, and for those still able to refinance, the cost of money rises.

Those who bought property wisely will get bruised, but they will survive. Those who didn't include X in their planning will get burned. Then, those with cash who were waiting patiently on the sidelines for naive/inept investors to self-immolate, will scoop up all the discarded housing that the burned investors are forced to sell at bargain basement prices.

Such is capitalism.

​That man, Ramone Simone, became her paramour and business partner. He convinced her to leave her family, home, and her job at the Fort Lee Diner, recommending she head to New York City.  He paid for her to stay for one week at the Barbizon Hotel for Women, which was the only hotel left in New York City at the time that rented rooms only to women. 

​​Barbara’s first commission check was $340, which she spent on a new coat. She had a bouncy, playful personality that made her stand out in a very male industry. On one occasion, she was contacted out of the blue by a wealthy patron who sent her an endless stream of young Citibank recruits, all of ehom needed a home in New York. 
 
It was such easy money, Corcoran described it as like flipping pancakes. The number of young men parading in and out of her apartment was not lost on the building’s super though, who reported her to the building’s owner for being a prostitute. The super even stuck a bright red notice on her door: Eviction Notice for Prostitution.
 
Embarrassed, Corcoran had to once again deny she was a prostitute. But she was such a sales hot-rod, not only did she convince the building’s owner she wasn’t a hooker, she turned the office visit into a marketing pitch convincing him to make her his exclusive listing agent. Instead of being evicted, she signed up to show all his vacant apartments, ironically boosting the number of young men visiting her home/office.

Barbara Corcoran is dynamite when it comes to marketing and self-promotion.
 
When hiring new sales agents, she never wrote boring ads like, “Position Open, salespeople wanted. Make high commissions”.
 
Instead, she wrote, “One Empty Desk” in a double-sized heading. “Join a company that’s a lot of fun, cleaning up and having a blast.”
 
And as for being a woman in a very male and very sexist New York City real estate industry?
 
“[Being a woman…] was an advantage. It was an advantage, because I could then walk into the rooms and I always wore short, red skirts with my jackets, and I had great legs, and I knew it. And everybody would turn to look at — because a girl stood out. You didn’t even have to be special. You just had to be a girl, and you were different. 
 
“But as competing with them, I never saw myself as a woman. I never saw it as a disadvantage or a real advantage. I saw myself as a competitor, just a competitor. And boy, if they treated me badly, or spoke down to me, or didn’t give me any credence that I could possibly make it in their world — they thought I was a passerby. I would say to myself, “You just wait, I’m going to become your biggest rival.”

​Barbara Corcoran is dyslexic. She was bullied at school for this and always felt stigmatized and ‘less-than’ because of it. School was an unpleasant chore.
 
As a business woman, she overcame her dyslexia through clever workarounds. The files in her office were organized by colour instead of having written labels. One bedroom apartments were given one colour and two bedroom ones a different colour, and so on. She structured her business visually. When sending thank you notes, instead of writing, she pasted together images to express herself. Colour-coding and photos were just one of many systems she put in place to scale her business.
 
On a single day in the late 1970’s, Corcoran made a cool $1.225 million USD. And she did this at a time when interest rates were 18% and no one was buying real estate. New York City’s real estate market was dead!
 
The kicker is that she made that money in only three and a half hours selling apartments that were acknowledged as duds – apartments that the owners had given up on because no other realtor could sell them, they were that bad: no views, no kitchens, back walls, different locations across the city. Awful!
 
So, what did she do?
 
Corcoran leveraged the scarcity heuristic. When people think the supply of something is running low, they are deeply psychologically motivated to buy some of that thing before it is gone forever.
 
This was the plan:  all 88 dud apartments were priced exactly the same: $59,900. Corcoran told her realty sales agents they could notify only their best two customers of the sale. No more! This was an exclusive offering. She had 300 sales people so that generated 150 leads. Corcoran leased a bus, decked it out with signs that said Wheels and Deels, and drove the buyers to all of her locations. 
 
At each stop, she had a stack of sales contract, each one with her signature on it, giving the impression that these were for completed sales. More scarcity.
 
It worked. Buyers were lined up out the door. Every dud unit sold, and Corcoran earned $1.225 million in three and a half hours. She never advertised during her early career. All her listings and business success came via word of mouth.

In 1994, Barbara Corcoran took on Donald Trump because Trump had failed to pay her millions of dollars in owed commissions. Looking back, Corcoran describes Trump as, “an intimidating man, a real-life bully in every way.” And that’s what made her take him on.
 
“I’m not a fighter… I don’t like to fight. I’ll walk a mile to avoid a fight. But when someone insults me, it brings out the fight in me. I don’t know where that comes from. 
 
“It was the first year I made a real profit in Corcoran Group, because I never made money, because I was always throwing my money back in and living so cheap so that I could afford to open offices. Always, the money went to the business, the money went to the business, never came to me. And that year, I had more money than I could spend. I had over a million dollars in profit. The year before, the many years before that I either had losses, or 100,000, but it cost me $500,000 to sue.
But I had the cash, think about that. So, I felt powerful, and I got the money to fight it, and I’m certainly not going to walk away. Because you know what my thinking is? I’m walking away from a well-fought fight. You resent it and regret it for the rest of your life. I didn’t want to be that girl who said, “Son of a bitch, how did he get away with…” You really, you regret when you don’t confront things, I think in anything, but particularly with a moral fight. And in my mind, that was morals, it’s all about morals. I earned the money, “You signed you’d give it to me and you’re not giving it to me? You’re suing me instead? Oh, no, I don’t think so.”
Corcoran won the case, but it took her five years to get the money. Trump was close to bankruptcy at the time, so the judged ordered him to pay $55,555 a month for five years.
 
After accepting the first instalment in a hand-delivered check, Corcoran told the messenger to wait a moment. She dashed inside and hand wrote a note that said, “Thank you Donald. I really appreciate the check.” 
 
In return, Trump scrawled on the note card in thick marker “Rejected” and sent the flowers back to Corcoran. So, each time Corcoran received a Trump check over the next five years, she bought herself a bouquet of flowers – choosing blooms that she personally loved - and sent them to Donald Trump, knowing that he would send them back and she would get a lovely bunch of flowers for her home or office.
 
 
The quotations in this blog post were taken directly from Barbara Corcoran’s interview with Tim Ferris. A copy of this interview is included below. Please watch it and support Tim Ferris’s eponymous podcast. It is brilliant!

Did you know that in Australia you buy residential homes via auction, not through competing back and forth offers via realtors? People stand on the street in front of the house for sale, an auctioneer kicks things off, and people in the crowd call out bids. Just like on Storage Wars.
​
https://www.abc.net.au/news/2023-07-08/property-prices-auction-sales-australia-melbourne-sydney/102549152

Did you also know that Australia is one of the least affordable places to own a home? Melbourne, a major city of five million people, is similar to Vancouver in terms of the tremendous demand for homes and rentals, but a limited housing supply.
 
There is one major difference between the Canadian and Australian housing markets, though. In Australia, investors can offset negative cash flow on an investment property. If your property’s expenses are greater than your rent, the negative balance can be claimed as a deduction on your personal tax return. This is called negative gearing and is perfectly legal. In fact, it’s a real estate investing strategy.
 
Negative gearing is especially appealing for people with high personal incomes. They can deliberately buy investment properties which lose money, creating negative cash flow from day one, and then make profits on the back end by claiming that loss on their personal tax return.
 
Some investors are losing thousands each month. More than $40,000 per year. And yes, these suburbs are nice places to live. But they're not Bel Air, wealthy, mansion territory. We're talking leafy bungalow- lined streets

I’m unsure of the rationale behind this policy, because to me it seems like a surefire way to overheat the property market because prices will be pushed ever higher. There are no consequences for buying a bad asset and overpaying. Negative gearing is not new tax policy, and the Australian government must have it reasons for allowing it, but perhaps it’s also playing a role in the country’s out of control real estate prices because it encourages speculation.
 
The one negative consequence for investors is that they still need to cover their mortgage payments each month which can sometimes be thousands of dollars less than their rental income. But I guess if your personal income is large enough, offsetting such large losses must still work for them .

As an example, the chart below shows suburbs in Melbourne where investors are bleeding cash i.e. have seriously negative monthly cash flow, but the owners don’t sell because they must have high personal incomes and the tax offset makes it worthwhile to hang on. In situations like this, the only profits investors can make is through capital gains.

I like small footprint homes.
​
Not to live  in, per se. I have a normal-sized home for that. Instead, my business partners and I buy campgrounds in central and eastern Canada and then offer tiny homes to buyers who want to make our campgrounds their full-time home.

​Here’s how it works:

• We purchase a campground/RV park which secures for us 10 to 15 acres of quality, scenic land.
• We then take the  best waterfront lots and convert them into five-year leasehold properties.
• We pour a concrete pad on each site and offer for purchase a luxury tiny home for around $235,000. The home is custom built and will include whatever upgrades buyers wish to order. The house is then trucked to the site, which can be anywhere in Canada. 
• This turns a seasonal RV site into a 365 day a year rented property. Buyers get to live in a gorgeous natural setting, close to a body of water, in a newbuild home big enough to hold a king-sized bed. And, the all-in price that is much less than what they would have paid if they had bought a local condo.
• This tenancy model appeals to downsizing retirees and digital nomads who realize they no longer need to live in a pricey, cramped apartment in Toronto, Ottawa, or Montreal when they could live in their very own tiny home amid nature.
• We even have a solar option that clients can buy, which can take the tiny home completely off-grid. The financial payback period for installing the panels is measured in years, but once you hit it, you’re living utility bill free.
• The advantage for investors is that we get all the advantages of having rental accommodation, but tenants own and look after their own homes, whether they be the tiny houses or RVs. And we have our own full time, professional property management company that looks after tenant needs.

Our U.S. manufacturer uses builds both American and Canadian-specced homes. And the options buyers can choose are endless.

All of our small footprint homes will blow your mind away when you see what 538 square feet of floor space can become: