Five Pearls of Wisdom for Canadian Real Estate Investing
Anyone that invests in Real Estate wants to do it successfully. Many books have been written on the subject. The newsstands are filled with magazines with hot tips on how to become wealthy in Real Estate, however, the process of successful Real Estate investing really isn’t that hard if you keep in mind five simple concepts of investing in real estate.
Once you have established a rainy day fund for emergencies, start to invest for the long-term. This means starting with your principal residence. You can start building equity early by investing in your principal residence. When you rent you do not build equity.
Let us look at three real estate investors in the same age group in hypothetical situations. Each was paying $1,000 dollars a month towards accommodation until their retirement at the age of 65. Patrina starts at the age of 25 and bought her first house for $100,000.00 in 1985 which was financed 100%. After 25 years, her house is paid off in full for the rest of her life and she does not have to pay any rent or mortgage. This is very common among a lot of Canadians. The house value would have tripled by the time she had paid it off, and she would have a principle residence by the age of 50.
On the other hand, Bob buys his first house at the age of 35 in 1995, and Jon, 45, buys his first home in 2005. Both Bob and Jon have been saving for a down payment since they were 25 years old and have been paying rent in the mean time. Bob may have bought the same house for $200,000.00, while Jon in 2005 may have bought the same house for $300,000.00 as a result of appreciation. It will take 25 years to pay it off, but the cost of borrowing is astronomical, double or triple the amount compared to Patrina’s case. The moral of the story is to start investing in real estate at the earliest age as you can and always avoid paying the rent.
Select the right mix of investments
The key component of investing in Canadian real estate is three-fold. Always obtain an asset that will most likely appreciate over time. Secondly, it should save taxes. Third, it offers you passive income for life. Leverage is the name of the game. We always borrow 100%, plus all the associated costs to obtain an asset which others will pay off in the form of rent. These investments require in depth knowledge of investing in Canadian real estate. A professional real estate investor does not use money from their personal bank account!
On the other hand, an educated Real Estate investor will be taking advantage of all the forgivable grants, bailouts, and handouts from all different levels of the government, as well as other agencies. This is free money which is non-taxable. You will never have to return it nor do you have to pay any interest on it. The question is what kind of properties should you have in your portfolio? The correct answer is based upon the sophistication of your education, information, time, and money. By attending Real Estate Millionaire Strategy Apprenticeship, one may realize the hundreds of different ways that are non-conventional but creative. The grants can be piggy banked one after a second, after a third, and they can be huge passive income for life. All you need is a proper system which takes care of management, appreciation, cash flow, and the tax benefits.
Invest systematically and automatically
Majority of the people intend to invest only with three factors which are fear, speculation, and gambling. By doing so, they are at the mercy of the volatility of interest rates, economy, and employment. A sophisticated professional real estate investor would have none of these three factors in his equation of investing in Canadian real estate. Remembering to regularly invest can be difficult since life can be complex and busy. Setting up auto deductions from your paycheck or bank account that is invested automatically in a predetermined fashion can help.
Investing within a retirement account can have a tax benefit and in some cases the employer might contribute an additional amount as well. By investing a set amount each month either directly out of your paycheck or out of your bank account, you’ll save time and won’t forget to invest in your future.
There is no reason to have negative cash flow in any investment property when there are so many excellent investments, but you want to take advantage of hand outs and bail outs from all levels of government. The key of investing successfully in Canadian real estate is to always have huge positive cash flow without any liability. To learn more of the secrets, techniques, and strategies, we recommend that you must attend the Real Estate Millionaire Strategy Apprenticeship.
Pay Less Taxes Legally
Are you aware of the fact that the majority of the wealthy people pay less than 5% in taxes of their gross income? The average person will start paying taxes the day they were born until the day they die. There is very little education and information available which is a privilege to super wealthy millionaires. Again, we insist that one should invest in the proper education instead of paying 30-50% of taxes of their income. Making sure you are invested for tax efficiency can save hundreds or thousands of dollars every year, which allows your investments to continue to compound for use in the future.
While these five concepts may be easy to outline, it can be hard to implement without, mentoring, and apprenticeship. To learn more one should embark on the journey to learn at the Real Estate Millionaire Strategy Apprenticeship.
Navtaj Chandhoke is a Canadian-based real estate investor, speaker, author, educator, entrepreneur extraordinaire and the founder of World Wealth Builders, a leading Canadian Real Estate investors education, mentoring center serving Canadian Real Estate investors since 1993.