Ask An Expert: Real Estate Investing With Shelley Hagen
“You never know from one day to the next in this business what that is gonna be. And that’s what I find so exciting about this business, is there’s always something new, and I’m always learning something new. Because you can’t possibly know everything there is to know about real estate investing. There’s just too much to learn!”
For our most recent ‘Ask An Expert’ Facebook Live, we invited Shelley Hagen to share her real estate investment story. Shelley started her real estate investing adventure back in 2001. At the time, she had been working for the phone company, back in Regina, Saskatchewan, and at the time, they were doing a downsizing, offering a voluntary severance package. She decided it was time for to go and do something different.
Her and a friend decided to take a look at options that were available to them; both had an interest in real estate investing but didn’t know how to get started. So they looked for some training and education, to help themselves along. They began building a network of people that could help them grow their business. Thy got their start in Regina where they bought 48 units, most of which were single family homes. And then they ventured into the Gatineau, Quebec market, and bought another 48 units there. So within the first year, they had about 96 units.
Since then they’ve bought properties, and owned commercial properties in Manitoba, properties in Saskatchewan, Alberta, now looking to do some land development in British Columbia. Shelley has also done some investing in Phoenix, Arizona, as well as Vegas. Beyond investing, Shelley does training, she’s been a mortgage broker and has helped people get funding.
Here are some questions Shawna asked Shelley:
What are your thoughts on investing in the US?
Shelley: Well we’ve been investing in the US since 2003, Carol and I. We were down there before the market went crazy. Back in 2003 the market was priced right, there was good activity going on down there. We started in Dallas Fort Worth, Texas, and then we moved into the Phoenix market. And we had done a variety of different things while we were down there, wholesaling, fix and flip. Then we got into rentals and rent-to-own in the markets, mostly in the Phoenix market. We were there when the market went crazy, within 3 months, the market in the Phoenix area went up over $100,000, which is a real red flag when you’re in real estate. Whenever you see that happen, you know something’s gonna happen behind it. It can’t be sustainable to keep growing like that. And so, of course, then along came the global financial crisis in 2008 that really tanked the market there. And we started investing heavily then, during those years when the market was down, 2008 to 2010. And we were able to pick up properties for a really good price at that particular point.
Prices have gone up substantially. The markets that we were in were some of the ones that were hardest hits, and they responded fairly quickly as a result. And so at the time as well, when we were going down there, the Canadian dollar versus the US was at par. So we could take our Canadian dollars down and buy. Now you have a different situation. Now you’ve got 20, 30 cents difference on the dollar.
Are there still real estate investing opportunities in the US?
Shelley Hagen: Absolutely. There’s 360 million people live there, there’s millions of properties, there’s always opportunity. It doesn’t matter what market you’re in. But you really need to keep in mind a couple of things. First of all, what is the exchange on your dollar? Are you making enough money down there to make it worth your while to take your Canadian money down there and have it parked in a property? It’s very difficult to get financing on a single family home, and so if you’re gonna be going up market into commercial properties, a little bit easier, but the price points have gone up. The prices are not anywhere near what they were after the crash. The prices are, in most markets, back to where they were before the crash happened. In some cases, even higher than what they were before.
So you’ve got to work your numbers, make sure it makes sense, and find a good team, just like any other place. Doesn’t matter if you’re going to invest in Winnipeg or Toronto or wherever, you need to have a good power team that can help you find those good deals, and you need to have things set up so that you have the right people working with you. And it’s all about finding the deal. It’s gotta make sense, you know, gotta make sense. Cash flow, does it make sense for me with tying up my money for that long, and paying the extra exchange?
And just picking a market. Some of the markets are pretty hot right now, and so it’s a numbers game. You gotta put in lots of offers before you get the right deal, but you just gotta be patient and just keep doing it. So there is opportunities.
Are there considerations when it comes to managing real estate investments from afar?
Shelley Hagen: Typically, most people buy and they don’t go live in Dallas or Phoenix or wherever you’re looking to buy. Or you might go down there on a winter vacation to get away for a couple of weeks from the winter, but during the rest of the year someone has to maintain that. And the costs can add up real quick if you’re not managing that well, and if you don’t have the right management team to manage that property. So all of those things come into play. Keep those things in mind.
It can be very lucrative. It can be very lucrative, just like here. You know, you can go invest though in Canada as well, and still make money as well.
You’ve invested in so many different strategies. Is there one strategy you prefer over another?
Shelley Hagen: That’s always a good question, people ask me that all the time. So from a single family home perspective, I like the rent-to-own program, which I know you and Bernie are also focused on doing, too. I call it my worry-free rental program. I just find I tend to get better tenants in most cases in those situations. I also do fix and flip, but the market has to be right to do fix and flip. You know, you just need to assess where you’re at with market and get it for the right price. I do like commercial property. Bigger properties if I’m gonna hold for rental, I would prefer to get into something a little bit bigger, wherever possible.
Tell us about Fix and Flips?
Shelley Hagen: Fix and flips are a lot of fun because you get in, you get the whole creative outlet, pick the paint, and the flooring, and you see what it looks like, a sow’s ear when you start out and a silk purse at the end. It’s very gratifying, and it doesn’t take that long usually to do them. Four to six weeks on average. And so you’re in and out, and you see your end result real quick, and it makes you feel good, going through it.
I always say when I teach people about rehab, I always say, “I guarantee you, the very first one, you’re gonna spend too much money. Just guarantee it. Because you’re gonna go in and you’re gonna do things that you wouldn’t, shouldn’t do. Or that you are not gonna make any money, and you’re gonna, at the end you’re gonna go ‘Oh, I just wasted so much time doing this, and effort. And I really didn’t need to do it, it didn’t make a big deal.'” But it comes through time and experience.
What challenges do you see for new real estate investors that they’re facing in today’s market, if any at all?
Shelley Hagen: Well certainly, depending where you’re at, if you’re in Canada, some markets are very high priced. And some of the lending criteria’s gotten much tougher than it had been when I got started in this business. So it is, it can have some challenges for you getting going. But again, we do want to work out with other people wherever we can and bring in joint venture partners to help you grow your business, which will help offset some of those other factors going forward.
So that’s probably the biggest thing right now, is price and financing. The financing is the bane of my existence as a real estate investor. The banks will give you all kinds of money, and then they don’t wanna give out money. And then they’ll give all kinds of money, and then they pull back. And it’s just the way it is.
Goes in cycles, all the time. And we’re going through one of those changes right now.
If you can give any advice, what kind of advice would you give a new investor getting started today?
Shelley Hagen: If you’re just getting started, and you’re still working, the advice would be to really get focused and spend some time at it. You can do this with a couple hours a week to get things started, and you really need to be marketing, marketing, marketing. And to be networking. Meeting as many people as you possibly can, which I’m sure you can relate to people as well, Shawna, is getting that whole presence, right? People need to know who you are, to get out there. And you’ll find, the more people you meet, the more deals you’re gonna do, and the more money you’re gonna make. And so you gotta get started and you gotta build a brand. Build so people know who you are.
And to focus on a database of people who can come in as joint venture partners and help you. Friends, family, close business associates, who can help you build your business, and you give them a good return on their investment as a result of them helping you, you’ll help them. Make it a mutually beneficial to everybody going forward.