BY ANITA MURRAY, OTTAWA CITIZEN
Real estate expert and contractor Scott McGillivray expands Income Property to devote more time to helping homeowners find the right property in the first place.
Photograph by: Handout photo , HGTV
Scott McGillivray felt something was missing. The host of HGTV's popular Income Property started doing the show because he wanted to teach people about what he did for a living: buying real estate, becoming a landlord and renovating.
Until now, the series has done a good job of showing how owners can make the most of their home, transforming a portion of it into an income suite to generate extra income. But a lot of questions go unanswered in the half-hour format so McGillivray, who is also an executive producer of the show, proposed expanding it to an hour and incorporating how to find investment properties.
"It's one of those shows where people still have a lot of questions because unlike a lot of shows that maybe just renovate and then walk away, we're really helping people start a bit of a business," McGillivray, 34, says by phone while travelling back from filming an episode in Alliston, Ont., about an hour north of Toronto.
"If I can get to you before you've bought the house, I can help you tremendously, because a lot of people just buy something they feel emotionally attached to rather than examining the fundamentals. So the first half of the show will be all about looking for that right property ... It's kind of like a home inspection, a real estate agent, a contractor and a financial adviser all in one coming shopping with you."
McGillivray brings more than a decade of experience doing all that for himself to the show. He started as a university student (he has a degree in commerce), pooling his student loan money with a friend to buy a home that they then shared with other students to cover the mortgage. A year later he purchased his first home outright after figuring he could renovate the basement to live in while renting the upstairs to cover the mortgage.
He would live there for eight years, not moving until he got married and Income Property had just begun to air in 2008. In between, he amassed more and more properties. Today, he figures he owns about 100 properties, half in the United States, and is landlord to about 500 tenants.
And, yes, he's had to evict tenants, but surprisingly few. Of the roughly 15,000 tenants he's had in the past 10 years, he's had to remove maybe three. He's never had to follow through with an actual eviction notice, only getting to the point where he had to sit down and discuss an arrangement for them to leave.
"I've just worked it out, been on top of it right away ... and I usually help them find a new place that's within their price range and that usually helps move things along."
While he acknowledges the struggles, he's says being a landlord can be very rewarding.
"In the long term you'll do well if you make the right choices," says McGillivray, father to daughter Myah, who had her first birthday this week. "I used to say real estate investing is for everyone, but I now know it's not ... It takes the right type of person and the right type of attitude."
Anyone wanting to get into real estate investing needs to understand the fundamentals of home ownership, he says, and by that he means developing a business sense and looking at it by the numbers.
You need to ask: how does this house work for me? What's the price point? What's the mortgage going to be? What are the additional expenses of living in this area? How much will it cost to renovate or build an income suite or turn this house into a multi-unit property? How much rent will I collect?
"Unfortunately, a lot of the fundamentals, the necessities, (are) the boring part that people don't want to do," says the Toronto native. "You need to be realistic about how to make money in real estate. It doesn't happen instantly ... Real estate is about delayed gratification."
He believes most people are interested in owning one to three properties, have realistic expectations and figure owning a few properties can help them in their retirement. "Those are the people that I can help the most."
The main thing is having a willingness to follow through. Everybody, he says, has a "woulda, coulda, shoulda real estate story."
Even him? "Absolutely," he admits with a laugh. Sometimes he looks back and thinks he should have bought more than he did in the early years and offers up the example of a hotel he "got scared" from buying about six years ago. "But no regrets; just learn from that and move forward."
Season 7 of Income Property premieres Thursday at 9 p.m. on HGTV.
BEFORE YOU INVEST
Understand your finances. Can you afford a down payment on a property? What are your projections? What are your goals? "Do a little financial analysis of yourself," McGillivray says. "You've got to know where you are to know where you're going."
Research and education. "Don't just jump into it blind." You can read books, attend free events, watch Income Property, he says with a chuckle.
Fundamentals. Start looking at properties and analyzing them from a numbers point of view.
Follow through. "The No. 1 thing that stops people from getting into real estate investing is starting," he says.
"Most people will invest time and energy and research and then they get a little gun shy ... You need to continue your momentum and follow through. If you do all that, you should be in good shape."