A Winning Formula For Success

September 15, 2012 - Updated: September 15, 2012

Lynn Tribbling believes investors who plan to quit their day job and replicate their income through property investing are definitely on the right path.

And she should know: by day, Lynn Tribbling is a sales representative from Coldwell Banker Terrequity Realty, but by night she’s a successful property investor.

“It is a realistic strategy, and I know because I’ve done it – and so have many other professional Canadian women I’ve bought property with,” Tribbling says.

“Dozens of women I personally know have quit their jobs to make real estate investment their career, and left my own job as psychotherapist and teacher to focus on this full time.

“They achieved this through a womenonly real estate investment syndicate, where each participant jointly buys residential property.

“It started out with a group of five women who wanted to invest in real estate. No one had enough capital to doit on our own, so we created the Women’s Investment Network Inc,” she explains.

Before long, their core group grew to 20 women as new participants joined by word of mouth. “Now, we have 500 women across Canada working in small investor cells of about five people per property,” Tribbling says, “and I still work with a couple of women from that original team. In the years since we started, I have personally owned interests in 55 properties.”

The group includes women who were teachers, health care professionals, social service workers and nurses – people from all walks of life, with all kinds of goals. They kicked things off in the 1990s, “when the Canadian real estate market was in the doldrums”, and although Tribbling admits they made some mistakes early on, they have gone on to develop a profitable formula for real estate investing.

So what exact steps did Lynn and her fellow investors take to achieve success?

1. Establish a solid system

“Our buying syndicate is made up of cells, each consisting of five investors,” she explains. “Each investment property is always split into equal shares, although some people may want to purchase more than one share.”

For instance, a property may be split into 15 shares, with each investor buying into as few as one or as many as 10 shares each:
 

Share 1  Share 2 Share 3 Share 4 Share 5
share 6 Share 7 Share 8 Share 9 Share 10
Share 11 Share 12 Share 13 Share 14 Share 15


2. Ensure every investor has legal ownership

This syndicate is not like owning stock: in the Women’s Investment Network Inc, everyone involved in a particular sale is on the title, either directly or through a trust, and all investors are named on the mortgage documentation. “Investors must remember that their name is on title, and it’s difficult to get it removed, so if they decide to liquidate their share at some point, they may need to keep their name
on the title until the property is sold.”

3. Stick with one core investment strategy

Although the group has no set rule in place, they tend to specialize in condos, for several reasons. “They are easier to
manage, rents are higher, and they provide concierge assistance with moving and maintenance,” Tribbling says. “Since the property management is covered, condos represent more of an ‘armchair’ investment for our groups, with minimal time invested in maintaining the property.”

4. Develop a focused investment strategy

It’s important to develop a very strict formula not only for how investors participate, but also for what kind of
property the group invests in. “We have very conservative guidelines, and we call our formula for selecting property BIG DEAL,” Tribbling says. “If a property doesn’t meet all of our BIG DEAL guidelines, we just move on to the next.”

B = Below market value.
I = Income producing (carrying costs must
break even on rental).
G = Good financing available (no co-ops,
commercial properties, all members must
be qualified for financing and named on
mortgages).


D = Down payment must be 25% (plus
$5–$10k contingency fund).
E = Excellent structural condition (only
cosmetic work needed – passes home
inspections using an outside professional)
A = Add value potential (we prefer
properties where we see a shortcoming
we can improve upon, e.g. terrible décor,
original kitchen.
L = Location – Located in a high demand
area, preferably either near the subway or
waterfront.


5. Delegate tasks effectively

“You can also reduce your financial risk by reducing your overheads, which means that each investor cell is a working group,
not just a collection of silent partners,” Tribbling confirms.

“Each member of the group has a function and all the co-owners draw on their personal skill sets to determine who will be responsible for which function. For example, one might be responsible for marketing, another for maintenance, and another reporting and organizing
meetings. Everyone contributes and offers hands-on involvement.”

Published in Canadian Real Estate Magazine August 2012
 


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