In 1999, Wendy Cheung was on the verge of wrapping up her bachelor\u2019s degree in music at the University of British Columbia. A gifted pianist and songwriter, Cheung envisioned a future woven from melody. Prior to graduating, she opened the Mozart School of Music, offering classical training for children and adults. She had no idea that in a few short years, the school would be operating out of a building she herself owned.<\/p>\n
The Mozart School was both a passion project and Cheung\u2019s first foray into entrepreneurism. As a struggling student, she remembers having to deposit $3 into her bank account just to withdraw the $7 balance she had. It was that moment when she realized that working for others was not the song she wanted to sing.<\/p>\n
\u201cThat was a pivotal point for me,\u201d Cheung says. \u201cI didn\u2019t want that anymore. I decided that being an entrepreneur and being in business was the only way I wouldn\u2019t have to trade my time for money. I had to be able to think smarter and have a vehicle where I could grow a company, have flexible time and leverage other people\u2019s time to make money on behalf of the company.\u201d<\/p>\n
She found all of that at the Mozart School, but the returns weren\u2019t what she had in mind. \u201cI wasn\u2019t able to make it as big as I wanted,\u201d she says. In 2005, having just given birth to her son, Avery, Cheung relinquished day-to-day control of the school and turned her attention to a pursuit that had taken BC\u2019s Lower Mainland by storm: real estate.<\/p>\n
BC\u2019s most recent boom hit the province like an earthquake, the aftershocks of which\u00a0are still being felt. The previous one, between 2005 and 2008, was more like a flood \u2013 of cash \u2013 and everyone was getting soaked.<\/p>\n
\u201cYou just fell into the lap of real estate,\u201d Cheung recalls. \u201cYou\u2019d buy something, you\u2019d sell something, you\u2019d make money, and you\u2019d roll that money over to buy something bigger.\u201d<\/p>\n
Banks were much looser with the purse strings, too; \u201czero down\u201d was the call of the day. Up until 2012, Cheung remembers financing being a breeze. \u201cI\u2019d get preapproved prior to even looking at a property. The bank would just say, \u2018Go ahead and shop. You have the credit. You have the money. Go do your thing.\u2019\u201d<\/p>\n
Aside from paying off the townhouse she owned with her husband, Peter, Cheung had no experience with real estate. But with\u00a0no debt, she had access to a generous line of credit, which she used to purchase her first several properties \u2013 a duplex, a single-family home and a few acreages \u2013 at random.<\/p>\n
\u201cI didn\u2019t have a metric,\u201d she says. \u201cI just thought that if the numbers worked, or I liked the location, or it served my purpose at the time, I went ahead and bought it. I would not try to think it through really hard. I was just better off owning something that has value. I was acting like I knew what I was doing when really I didn\u2019t.\u201d\u00a0<\/p>\n
Cheung\u2019s willingness to take risks comes from her belief that real estate is \u201cforgiving\u201d \u2013 that if a property is well cared for and in a good location, its inevitable appreciation will make the setbacks (also inevitable) worthwhile. That faith has fuelled her courage; her courage has fuelled her wealth.<\/p>\n
\u201cI didn\u2019t have any fear,\u201d she says. \u201cI have not looked back and said I regretted buying anything.\u201d<\/p>\n
Tuning up<\/strong> The eviction went smoothly enough, but it wasn\u2019t something Cheung wanted to go through again. Her screening process intensified to include references from multiple landlords and employers, in addition to income and credit checks.<\/p>\n Cheung is open about her past missteps and the lessons they\u2019ve imparted. She says one bad habit \u2013 still hard to break after all these years \u2013 is being too enthusiastic and paying too much for properties. She once paid $150,000 over asking for a piece of land in Langley, actually going to the seller\u2019s house to interrupt his dinner and put in her offer. (Ten years later, the property sold for half a million more than she paid \u2013 a decent return, but less than she had hoped.)<\/p>\n \u201cI look back and I start to think, \u2018What was I thinking?\u2019\u201d Cheung says, advising other investors not to rush into deals because \u201cthere\u2019s always another deal around the corner.\u201d<\/p>\n One area where Cheung has shown particular savvy is in assessing deals. As a beginner, she would buy \u201c99 per cent\u201d of the deals she came across, dabbling in a variety of property types until she discovered her comfort zone. But now, armed with the knowledge that an investor\u2019s specific goals often require a certain property type, Cheung is far more strategic in her purchases.<\/p>\n \u201cMaybe somebody wants to have the dividends on a monthly basis \u2013 they\u2019re going to go with high cash flow,\u201d she explains. \u201cSomeone who doesn\u2019t need the cash flow but wants a bigger return on a project, they can subdivide land and then sell off the pieces, or they can build and have a better value at the end to sell to the consumer.\u201d\u00a0<\/p>\n But without experience, Cheung says investors can lack the insight required to accurately assess deals on their own. \u201cThey may be looking into one dimension and end up biting off more than they can chew.\u201d The most important assessment, she says, is of your own skills and shortcomings. \u201cHow much time are you willing to put in? What are your strengths? What can you delegate? Do you require a partner? You need to know yourself really well.\u201d<\/p>\n The next movement<\/strong>
\nInvestors who start off lucky typically learn the hard way that they aren\u2019t as prepared as\u00a0they think. For Cheung, that lesson arrived early on, when she rented the basement of her duplex to a tenant willing to pay abovemarket rent and pay it in cash. She soon realized she was renting to a drug dealer.<\/p>\n
\nFrom 2005 to 2010, Cheung, along with her husband, brother and a coterie of jointventure partners, acquired 150 cash-flowing units spread across northern BC, Edmonton,\u00a0Calgary, Surrey and Langley. But as one JV partner after another began hitting the financing wall, it was time for the group to shift their approach.<\/p>\n