Building Wealth through Real estate
A long time ago, my mom pushed me to buy my first home.
I was definitely NOT ready.
But God bless for my mom for pushing me in the real estate direction cause now I own a real estate empire!
I could not have done it unless she pushed me.
When I bought my first place, I didn’t have my down payment, and I had $50k in student loans.
But three years later, I sold that place and paid off my student loan and then bought a detached home.
I still have that detached house and have been renting it out ever since.
Starting a real estate empire takes dedication and perseverance and proper guidance.
This is what I did...
10 Essentials to Real Estate Investing
- I was super aggressive at paying down my mortgage on my principal residence. I took advantage of the prepayment privileges. I made regular lump sum payments up and above my regular payment.
- Once you have paid off your mortgage, we will set up a line of credit on the house. This is also commonly known as a home equity line of credit.
- Research the area you are interested in. Start in your own neighbourhood first as you know the good and bad areas. Go to CMHC.ca as there is lots of research information. You can get info on the average rent or bachelors to 3 bedroom condos to detached homes. Know the demographics of the rental area.
- Hire a good real estate agent. Ask the agent if they themselves have rentals and why did they pick the area they did. Ask questions. Ask lots of questions.
- Work with a mortgage agent that understands the mentality of a landlord. Work with me!
- Know your numbers. Are you looking for a milk cow or a meat cow? A milk cow is a property that will give you positive cash flow. Each month, you “cash” in the milk. A meat cow is a property that you keep long term, allow the equity to build up and then sell it. So, in essence, you “fatten” up the cow and then “kill” it.
- Make sure you have a contingency plan in place for repairs and vacancies. Make sure you have a buffer for these hidden expenses.
- Be in this long term! Real estate is a long term investment. I find timing the market to buy and sell is beyond my scope of expertise. If I can predict the market, I would rather predict the lotto 649 numbers.
- Know your exit plan! Make sure you understand the costs to get out of being a landlord. Make sure you are in a mortgage product that has a low penalty. Personally, I like a variable for my rentals, but again, it all depends. Variable-rate mortgages have three months interest penalty. Fixed-rate mortgages are three months of interest or IRD (interest rate differential). Make sure you know the numbers to EXIT out!
- Know the Landlord Tenant Act! Hire a paralegal to fight for you. They are the experts. Don’t try and do it yourself.
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