Retiring early with real estate

Let your portfolio work for you: One investor gives his tips to become completely financially independent at any age.

By Sve Pavic, fulltime investor

Millennials have it tough financially- we’ve been told if we go to a respected University, study hard and get good grades we will land a great paying job. The reality? You graduate with loads of debt with no assistance or prospects of getting a great job and you return for more schooling thinking it will solve the problem. To add salt to the wound, house prices and rent keep increasing beyond reasonable affordability. As a millennial, I’m here to tell you that you can create your own financial freedom and you don’t need to settle and live in your parent’s basement into your 30s. In fact, I’m here to show you how we purchased our first house at 24, live for free by “house-hacking” and create passive cash flow for life.

What is house-hacking? The concept is simple yet powerful: purchase a house, create an income suite (e.g. basement apartment) and rent it out for passive income. The rental income from the apartment can either pay for the majority of your mortgage and living expenses, or you could even get paid to live for free. If you live in the main/ upstairs unit and rent out the basement, you can have the majority of your mortgage covered. If you go one step further and live in the basement/lower unit, you could not only live mortgage free but you could also have profit leftover in your pocket.

The first hurdle millennials and most people have to overcome is coming up with the downpayment. In our case, we lived below our means in order to save for a 5% downpayment. Another strategy is to borrow money from family, friends or private lenders. If required for financing, you could also ask them to act as a guarantor / co-signer.

Once we had the downpayment and financing confirmed, we purchased a detached fixer upper bungalow in the GTA which met all of the requirements for a potential basement apartment (e.g. ceiling height, separate entrance, zoning, parking, etc.). The house walkouts to a large backyard and backs on to ravine which is a major selling point for tenants. We built an open-concept legal 2 bedroom basement apartment with high-end looking finishes. We ensured we made the space look modern, bright and open so that it didn’t feel like a typical, dungy basement apartment. We started off by charging $1,250/mo (non-inclusive) with many applicants. Now we rent the unit for $1,450/mo (non-inclusive) and live mortgage-free.

Since then, we have refinanced the house based on the built-in equity and purchased another property which will be converted into a duplex. We are using this same strategy, except creating a 3-bedroom basement apartment and renting both units individually by room. The property is expected to cash flow more than $1,000/mo after all expenses. Once this duplex is complete, we will be refinancing and finding another property to expand our portfolio.

Rinse and Repeat until you reach your goals of financial freedom.

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Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

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Community trust bullish on Kamloops

One community trust is establishing a neighbourhood in British Columbia it believes offers great value and the potential for major growth.

“We’re attracting the development community to partner with us on the build, but our pre-approved zoning for up to 7500-8000 residents, 3500 units, and just under 200,000 square feet of commercial,” Finlay Sinclair, president and CEO of TRU Community Trust, told Canadian Real Estate Wealth. “We’re attracting both developers to come and partner with us but also the community to come live here. We think there’s a good local, regional, and provincial opportunity for people to make this the place they want to live.”

TRU Community Trust is trying to establish Kamloops’ newest neighbourhood around Thompson Rivers University.
We asked Sinclair why investing in Kamloops is an attractive option for investors.

“It’s a stable economy, it’s a growing economy, and it’s an affordable real estate opportunity for anybody in this country at any income level,” he said. “We are right on the leading edge of all the service, commercialized land that anybody living in the future on the property is ever going to need.”

And the area is attracting investors from across the country. Many of whom have been priced out of province’s expensive lower mainland markets.

“Absolutely, we’re the affordable alternative. I think it’s pretty clear to people across the country that Vancouver has exceeded any normal, reasonable threshold of affordability for younger families that don’t have an equity position in the market already,” Sinclair said. “You can get in and have a wonderful lifestyle either in our development … but Kamloops as a whole has very affordable housing comparable to Vancouver, Victoria, Kelowna, Calgary. We have weather that unmatched in Canada. We have hot, hot dry summers and short, short winters.”

And the market is expected to experience continued growth.

“We see the real market opportunity is the fact that Kamloops is constantly increasingly land value and an increasing real estate market,” Sinclair said. “It doesn’t spike and go up and down irrationally in ways the larger market does. It’s constantly going up and is a stable environment.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Flin Flon, Huron East, Bulyea, Saint-Casimir, West Quoddy

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Proposed tax targets investors

Leading economists have proposed a unique tactic for reining in one of the country’s hottest housing markets.

Economists at UBC’s Sauder Business School and Vancouver School of Economics, as well as economists at Simon Fraser University have banded to together in a bid to encourage B.C. government to tax foreign investors in a bid to cool the hot housing market.

The group is suggesting the government create the B.C. Housing Affordability fund, which would provide a payout to local residents from funds charged to foreign owners.

“The goal is to support those living in parts of the province that have seen skyrocketing real estate prices, while also making our local markets less attractive to investors who wish to avoid taxation or park cash,” Thomas Davidoff, a real estate economist and part of the group, said in a release.

The proposal is to charge a 1.5% surcharge to foreign owners of vacant properties.

“We are certain the sum would actually be much higher as current systems for data collection don’t provide a full picture of vacancy rates,” Davidoff said. “An added bonus of the BCHAF reporting process is that it will help us gain a much more accurate picture of the problems of homes left vacant and property owners who do not or have not paid their share of Canadian taxes.”

According to the release: “most homeowners and landlords would be exempt from the surcharge. As an incentive to move unoccupied suites into the rental market, the policy also allows for owners to receive exemptions for rental income they receive from non-family members reported to the Canada Revenue Agency.”

The economists estimate the fund would raise over $90 million per year in Vancouver alone.

“We are certain the sum would actually be much higher as current systems for data collection don’t provide a full picture of vacancy rates,” Davidoff said. “An added bonus of the BCHAF reporting process is that it will help us gain a much more accurate picture of the problems of homes left vacant and property owners who do not or have not paid their share of Canadian taxes.”

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Loyalist, Pinette, Fort Augustus, Gods Lake Narrows, Bear River

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The unexpected city that should be on every investor’s radar

For over 90% of real estate investors, the focus of their portfolio is the market they live in. As Toronto-based real estate investors with almost two decades of rising prices, this has worked out very well.

At the same time, Connect Asset Management noticed yields in other Canadian markets were higher, while appreciation is typically lower. Having traveled both the country and internationally over the past few years, we began to develop a strategy for determining the best places to invest as a Canadian regardless of where we lived.

While “location, location, location” is the key to real estate, the most important determinant of long term real estate appreciation is city selection. Buy in a city with a declining economy, your returns will suffer no matter how good the “location” is. While an A site might be easier to sell than a B or C location, property rarely makes money when real estate prices drop in a city.

A COMPETITIVE ADVANTAGE

That is the bottom line for why we chose Waterloo (often referred to as Silicon Valley North) over any other city was that no other market we looked at a significant competitive advantage in any industry the way Waterloo does with technology and the sciences. To quote Dave Caputo, CEO and co-founder of Sandvine Inc, “Waterloo right now, I have to believe, is one of the best places in the world to build a technology company”

This is confirmed by major international companies like Microsoft and Google setting up head offices here, as well as major Canadian technology companies like Shopify that recently opened a 40,000 sq ft office to take advantage of the engineering talent.

The foundation for all this is the University of Waterloo and Wilfrid Laurier two of Canada’s top universities with strong international reputations as well as an industry leading co-op programs. Around these organizations, major research institutions have developed as well as, incubators, angel investor and venture capital networks linked directly to Bay Street and Silicon Valley.

In addition, our research indicates that while Waterloo still has commercial vacancy, the residential market is much tighter with vacancy rates sub 2%. New condos projects targeting students and young professionals which sold out during their pre-construction launches have rented very well with ICON 330 renting over 1500 beds in under two months.

Essentially, in Waterloo, the market for prime student housing has been waitlisted. The shortage in luxury furnished rentals to us seems like one of the greatest opportunities for investors with a strong growth from both student and young professionals. Office space also presents tremendous opportunities but those risks are more significant with there being a significant vacancy backlog.

With Waterloo commercial real estate renting for less than a third of what these companies would be paying in major centres, and the low Canadian dollar, established international companies will continue to establish offices in the region. To use Google as an example, in Mountain View, California where they are headquartered, the average rents are $97 US per square foot in Waterloo they are less than $15 CDN.

This doesn’t even begin to describe the difference in salaries vs Silicon Valley. Even Toronto based companies are looking at a 1/3 of the cost for even B office space.

Combine this with the different tax incentives from various levels of government and the business case for Waterloo will continue to be very compelling for years to come. That, combined with the talent from the education system and the start-up funding ecosystem, will drive the growth of Waterloo for years to come.

Are you looking to invest in property? If you like, we can get one of our mortgage experts to tell you exactly how much you can afford to borrow, which is the best mortgage for you or how much they could save you right now if you have an existing mortgage. Click here to get help choosing the best mortgage rate

Investment Hot Spots:
Edson, Bonnington, Kelvin Grove, Stanchel, Low

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Furnished bedroom 5 ½ logement in NDG – Near loyola campus

A furnished bedroom is available for rent near Concordia University Loyola campus. Our place is a medium size 5 ½ logement in NDG. It is close to plenty of grocery stores, banks, couple of restaurants, and of course Benny’s FREE public swimming pool. It is also close to the bus line 51-102-105, and the most convenient metro station is Snowdon.
The building is the medium aged duplex in a quit area. We live in the ground floor, then we have a nice porch to do BBQ, beside a big back yard for gardening or partying during the summer. A garage is also available to keep your bike inside during the winter. The house is fully equipped with every single thing that anybody needs to live!
The house is a convenient place to live for student of Concordia, Ecole polytechnique, or University of Montreal. The room is equipped with a king size bed, 3 drawers and 2 built in closets. So, you would have plenty of room to leave your stuff in. Washer and dryer are both in the basement. By the way, there is a lazy cat who also lives with us..!
About me:
I am a graduate student, studying at Concordia University. I usually cook for myself and get out of town on weekends. I am mostly into sport, and if I find any free time at home, I enjoy watching movies.
If you are interested, please send me a message.
PS: I can speak some basic French, too.

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Luxury condo all equipped/services/subway/p.parking/ short term

Moderm luxury condo for short term rental
2 min. walk to Cremazie metro station
1 min. by car to autoroute 40 ramp (metropolitain)
perfect for couple or single person

FLEXIBLE DATES between January and beginning of May 2016.

700 sf, 1 large closed bedroom, facing interior courtyard
amazing soundproofing, very quiet
quality furniture, quartz countertops
totally furnished and fully equipped, dishes, linen, etc
5 upscale appliances

services included: indoor pool, private gym, sauna and hot tub, heating, electricity, hot water, Hi speed/ Wifi Internet and free streaming on TV.

indoor parking available. Suppl. 185$

easy acces: Cegep Grasset (5 min walk), Cegep Ahuntsic (7 min. walk), University (ies), Downtown (10 min. subway ride, Old Montreal(11 min. subway ride), excellent restaurants and commerces, Jean-Talon Market. Safe and trendy Villeray neighbourhood.

514-762-0624 after 3pm.

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luxurious condo in heart of downtown(pool+sauna+gym+play room)

Heart of Montreal downtown (between shopping centre The Bay and Place des Arts)

Fully furnished loft on a quiet street
Includes furniture
air-conditioning, fridge,
microwave, dishwasher,
TV, Internet,
washer and dryer
coffee maker, toaster
linens, towels.

Also includes access to the building’s
play room, gym, sauna,
salt water pool(winter close),
and rooftop BBQ.

2-minute by walking
to metro McGill,
The Bay,
Place des Arts,

and 5-minute to
old Montreal,
China Town,
Square Victoria,
Palais des Congrès,
Complexe Desjardins,
Bonaventure (train),
McGill University.

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