With all the stress and anxiety life can throw at us it is important to stay grounded and weed through the crap to be sure and make the proper decisions to protect our livelihood and that of our loved ones. For this purpose we must understand the importance of making a healthy diet of Insurance, Home Savings and most importantly our Real Estate Investments.

People always ask me what they should invest in first. This is a difficult question as everyone is different in respect to their financial and retirement goals, their risk tolerance and life expectancy not to mention the security of their loved ones.
For me as a family man I must say that what comes first is protecting the interest of our family home, secondary to this would be to have a whole life insurance plan that would be sufficient to take care of the immediate needs of my loved ones should I pass away. However, I cannot express the importance of having a balanced portfolio of Real Estate Investments, and this is the difficulty because if we don’t manage our investments properly, we will find ourselves falling behind and not keeping up to “The Joneses” , or “The Chans”.

Inflation can become your worst enemy. While our younger generation care more about today and have more difficulty understanding the importance of insuring themselves for their future family or worrying about the increasing costs of living as their incomes are rising with it, it is the early generation understanding the importance of investing as they near retirement. They have seen the Baby Boomer Bank accounts dwindle at the hands of small groups and individual industry authorities.

It no longer becomes an issue or a question as to whether one should invest in Real Estate, more so how much can I afford, how many units I can buy and what is my return. The answers, affordability Step 1 – Take your gross monthly income divide this by the cost of the mortgage based on a three year term plus tax plus maintenance, if the percentage is below 35% you pass on your first step which is called GDSR or Gross Debt Service Ratio. Step 2, take the same amount of your costs and add all of your extra debt, car payment, credit card payment, any other fixed payments and do the division again, now we are looking for 45% or less, this is called your TDSR or Total Debt Service Ratio. Now we know that you qualify for this particular property, understand that the bank will consider the potential rental income up to 80% to help you with your qualification. How many units can I buy? Most of us think that by giving more business to one institution or by explaining how many properties we own and the equity in these properties along with our long past track history with this institution is the way to go. Wrong.

Today most bank institutions see you as a number. This number is called your bank account number. When times are good they ask you to borrow more and give them more interest. During times of instability they get confused and hide behind new policies and procedures and the ignorance of their first line of defence the employees. Some banks will assist in your portfolio up to $1,000,000 of financing with good credit and income. Most of us need to blend our mortgages with several banks to keep their risk tolerance of us in check. It is best to work closely with someone whom has an understanding of what the banks are looking for and represent your best interest, this by the way is not your present Bank Mortgage Officer; they work for the bank and the best interest of the bank. You need to work with a Broker of Mortgages or Real Estate; they get paid if you get the mortgage and therefore work for you!

Buying multiple properties is the way to go and I will explain this in a future segment titled “Expanding Your Real Estate Portfolio.”
To sum up, you need a balanced portfolio of investments. We need to address our concerns with insurance, the only two things guaranteed in life, Death and Taxes. Whole life is the way to go, term life is good for the gambler but not for the future. Our own homes and business, the best investment we can make in life is into ourselves, we don’t have to worry about trusting ourselves and we have our best interest at heart. Finally, Real Estate. Realizing that it is difficult to come up with the down payment, carrying the costs during vacancy and managing the day to day operation this still becomes one of the best Investment Opportunities you can make in life next to investing into yourself. Our tenant is kind enough to pay off our debt at the same time we should be enjoying a continued increase in the value of our property. One would be hard pressed to find a better investment than this.

Other investments, RRSP- you’re just delaying the tax that you will be paying anyway along with the compound interest of this investment, Stocks – are you an owner in this company? Do you think that you might have more insight than the brokers whom trade this on an hourly basis? How about the millions of others whom have the same access to the information as you? If you crunch the numbers you might find that lotto 649 might give you very similar results. Mutual funds – I have been playing with these for decades, again same as a stock but you cover your losses and gains by spreading your investments to several stocks of which you probably have no ownership in the company nor do you have any say. These funds are usually managed by individuals whom see growth based on their ability to buy and sell them not because of their actual performance. This is a great investment to the uneducated and unmotivated consumer and should result in growth in the long term. Finally for the brain dead investor we have the old savings account or GIC or Bonds. With extreme luck you will have a break even in the short term and will most likely be out performed by inflation in the long term. My suggestion to these investors is to just spend your money while you can, if you have no intention to work hard on your investment, don’t pretend that you have one, just go out and have a good time. The government may be there to help subsidize your mistakes and allow you to live a meagre existence in the future but at least you should have the privilege to have some fun now while the Jonese and Chans enjoy a healthy retirement living of travel and enjoyment and no stress.

When we decide to have Real Estate Investments, we become the decision maker, the CEO, The President and the trader with full decision making ability. Your competition, same people as you, not employed individuals or groups of individuals whom make decisions on investments based on their personal bottom line or that of the company they work for. We are a different breed of investor. Our investment is tangible, as the world population continues to grow it also becomes more and more in demand. Our competition, real people making real decisions.

I work closely with serious investors whom are not looking for short term risk, nor are the interested in living a meagre lifestyle. These are educated and motivated individuals whom have taken the time to understand that nothing comes easy. There are three factors to success, 1) Capital Investment 2) Time and 3) Effort. Manage these three applications into your portfolio and you have in essence built your own business.
Take all investment advice with a grain of salt, a slice of lime and a Tequila Shooter. Be patient and take the time to analyse what is best for you. Look into your future, predict it, set your goals and achieve them. I’m sure that if I was a Stock Broker that I would be giving you different advice and I understand this. However, I’m a Real Estate Broker. My biggest selling pitch is bricks and mortar. Nobody can have the power or make the mistake of pushing the wrong button to ruin your investment. An investment that you can see and touch, and happens to be to most popular, required and in demand commodity next to food and water.

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