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Invest passively, or with guidance

by Neil Sharma on 16 Feb 2018

Investing professionally isn’t for the faint of heart, but the founders and managing directors of Venture Property Investments have a few tips about how to do it while avoiding common pitfalls.

Martin Kuev and Chris Shebib will be speaking at this year’s Investor Forum about, among other things, guided and passive investing. The former pertains to the expertise Venture provides its professional investor clients every step of the way, while the latter is a model suitable for those with little time on their hands.

“Guided investing is for that real estate investor who understands how great of an investment real estate can be and who has time to do something within it, so we provide everything for that investor, from finding the property to guiding them along the way,” said Kuev. “They’ll never have to ask, ‘Who do I call?’ or ‘Where do I have to turn?’ They do all the work but we guide them throughout the process.”

Shebib and Kuev explained that a passive real estate investor treats their venture much like a stock market investor would treat theirs, however, Venture provides the wherewithal.

“Chris and I come from a corporate background, and at the end of the day real estate is not rocket science; you just need a good system in place,” continued Kuev. “For that person who has a busy life and no flexibility to do it on their own, we provide an alternative to the stock market or other traditional investments. That’s the passive side of the joint investing model—if they made upwards of 10% on their traditional investment, they’ll make a higher double-digit return on real estate while still treating it like a stock.”

Venture Property Investment’s third tenet—which both men said cannot be understated—is training and education. A common error real estate investors make is being too proactive without enough education—essentially diving headlong into a ruinous investment and subsequently swearing off real estate as a means to grow their wealth—or, conversely, knowing too much but doing too little.

“It’s analysis paralysis,” said Shebib. “You need the right amount of education combined with the right amount of action and we facilitate these things for our guided investors. We strike the right balance with an informed action-taking technique.”

Speculation, both men state emphatically, is a potentially disastrous investing strategy because too many variables are beyond an investor’s control. Kuev says you cannot time appreciation, but you can mitigate risk by investing in reputable neighbourhoods and selecting good tenants through sound screening, as well as optimizing cash flow.

“When we teach our classes, there’s a lot to be said around markets and strategies, but you ultimately want to invest in an area where macroeconomics are favourable—cities in the Golden Horseshoe where the ratios work well,” said Kuev. “Buy something renovated, or renovate it yourself and force appreciation yourself.

“Cash flow couldn’t be more important because that’s what inflates you against market and interest rate changes. Stress test your properties and know what’s going to happen when interest rates go up. The reason we target specific areas within the Golden Horseshoe around Hamilton, Niagara, Durham, and Oshawa is because they have these ratios.”

Shebib and Kuev will be at the Investor Forum on April 7 to share some of Venture Property Investments’ tips.

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