K.M and T.R are both friends of mine that have lost over $38,500k each, investing in Calgary real estate last year.

5 Biggest reasons for their losses:

1 Buying Real Estate with a short term mentality

2 Didn't have the proper team in place (brokers, lawyers, Realtor, home inspector, etc)

3 Not having an Exit strategy

4 Getting wrapped up in media Hype

5 Buying on Emotions- Greed and Fear

When T.R bought a fixer upper on May 18, 2007 in Strathcona (SW Calgary), we went over the possibility that the market might decline a bit in the summer months (like it did in the summer of 2006). He worked out a very conservative budget (costs included- his time, materials and labor) . Once he new the costs and how much he could sell it for (at today's fixed up price) he made his offer.

I asked him to consider the possibility of the market correcting 3-5% (a worse case scenario) .

Unfortunately, his budget for time and money over shot by about 2 months and $10,500, so the completion date pushed into late September. At that time there where over 150 new listings a day, which meant there was close to 7,500 listings in September 07 (getting worse everyday) .

Buyers got scared.

They no longer were content on being happy they could buy a house- no, they wanted a good house for a good deal. They where not going to buy with no home home inspection or compete against other buyers.

Fast forward to 2008.

Still a buyer market and not getting better anytime soon. 10,785 sellers in May 27, 2008- according to my calculations collected on MLX

How could TR avoided or mitigated his losses?

In December of '07 I was selling my estate home in Cougar Ridge and dropped my price almost $62,000 to finally sell. I was able to sell in a soft market, (when only 1.55% of homes listed between $650-750k sold) because I lead the market down

When you're in a buyers market and conditions are getting worse- as a seller you need to be ahead of the competition, otherwise you are not giving a buyer a compelling reason to buy your house.

Combined with an exit strategy (look to sell at 'X dollars'), I walked away with money in my pocket and avoided a $35-50k loss, had I waited and kept my list price.

August 2007, is no different than August 2008

Actually a bit worse- more listings and values dropping every month (single family houses dropped 5.9% from July of last year).

Sellers that need to sell are getting hammered.

False demand has dried up (not as many speculators) and the supply is still increasing, all the 'wise investors' need to sell (no exist strategy).

Back to the story

TR and I went over his options; he could accept the lower priced bids , he could sell the house on terms (allow someone to assume the mortgage) and pay the difference, or refinance the house.

Refinancing meant he would have to hold the property and rent it out.

He chose the Refinancing route and here's what happened-

i) he paid back his investors (cut his carrying costs by $550/month),

ii) rented the house out to cover the mortgage, ($200/month plus before taxes, so about break even),

iii) Awesome tenant in place, looking to renew with a Rent-to Own (or lease option). T.R stands to pocket about $8,000 on the option and full market price on the house without paying Realtor Commissions (maybe nets $15,000-25,000).

What's the point of telling you this story?

My idea behind Strategic Home Buying is to help Calgary real estate investors.

It doesn't matter if your an active investor or a passive investor looking to get in the game- I'll provide you with real information on what's happening and what I think will happen in Calgary's real estate market. As I am not a fortune teller, I rely on current market data and past trends to predict what the market will do.

What's in it for you and me?

1) You and I will meet great contacts (I've already done a few deals with investors from people visiting my site).

2) You will see what deals I have on the go- If you have money and not the time to invest- I do JV deals. If you specialize in fixer uppers (which I do not)- then you'll see deals that I'm selling.

I'm privy to some very exclusive mastermind groups that include individuals in Commercial real estate, real estate investors in and around Alberta, oil and gas executives, brokers, bankers, lawyers and top Realtor's in Calgary.

Some of the views I hold are controversial and might even piss you off. I'll apologize for that now, but understand I'm here to give you the truth, even though it might not be popular among Realtor's and pie-in-the sky investors.

-I'm not a newspaper trying to sell 100,000 copies with doom & gloom headlines, or

-A Realtor who is trying to scare you into selling your house.

Feel free to email me with any suggestions or comments you have. To date, I have met many new people in Calgary because of this website and they have really opened my eyes to what might be happening in the second half of 2008.

Please take full advantage of the advice posted on this site, it only cost you a bit of time to read (and I value your time, so I do my best not to waste it with trivial crap).

Good luck!

Shane Melanson

Office # (403) 214-1884
918- 16 Ave NW
Calgary, Alberta, T2M 0K3
shane@strategic-home-buying.com

P.S Remember to check out the Strategic Home buying Blog. I try to post on it weekly, discussing everything new going on in Calgary. If you've got a question, go over to my contact page and submit your questions. I do my best to respond within 24 hours.

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