Couple not sure how to get started Tim and Joleen, a couple in their mid thirties with 2 young children were realizing the high cost of raising a family. The thought of enjoying a lifestyle full of family vacations, time off and a balanced life while saving for the college fund, RRSP’s and of course planning for their own retirement was overwhelming. How would they do it all.

They knew that real estate could be the solution but weren’t sure how to get started. After talking with friends and family and getting the same vague advice and recommendations, they realized they needed better answers.

Investment Consultant and best selling Author of Everyday Real Estate Millionaires, Paul M. Hecht worked with Tim and Joleen to help them get started in the right direction.

“Tim has a great job as a pharmacist and by todays’ standards it’s considered a luxury that Joleen is able to stay home and raise their kids. However, even a great income and RRSP’s are not enough to count on for retirement, college funds, or the lifestyle they want.”

With some equity in their home, RRSP’s, good credit and a good job, they were in the perfect position to get started. We made the following recommendations to put them on the right track to achieve their goals and objectives.
   
   
   Couple, married, 2 children, raising a family.
   
   
  Growing cost of raising a family, saving for a college fund and their own retirement RRSP’s while living a balanced lifestyle
   
   
  Examine their current situation, skills, resources, investment objectives and personalities, and evaluate the best investment strategy to meet their needs.
   
   
  Control their own retirement plan, have enough for college funds, family vacations and not worry about the costs of their growing family.
   
   
  Household income $92K/yr, $80K in RRSP’s, $24K in savings, $200K Equity, $0K credit card debt.
   
   
  Principal Residence: $450K value w/ $250K mrtg, cashflow = (-$1,500)/mo PIT RRSP Investments $80K = 0.2% Average return per year for past 6 years
   
   
  They are in a great position to start investing and wise to get advice before they jump in headfirst only to end up making a costly mistake. Mistakes in real estate can take years to recover from.

After evaluating their situation, we realized that Tim was not in a position to take time off, nor was he the handy-man type. Joleen on the other hand had some painting experience, but her real skills were coordinating and managing people. They also weren’t looking for a quick flip although it was not out of their parameters.

There were plenty of rentals in the small town they lived in. However, “old school landlording” with white walls, lino floors and run down properties were commonplace. Yet tenants in the area said they were willing to pay more for better quality housing.

After showing Tim and Joleen how to run the numbers properly, what to look for in an investment property and how to manage tenants, they were ready to make the next step. They refinanced their home and used $110K in equity for down payments on new rental property purchases.

They got right to work and ran a few small classified ads in their local paper looking to buy a rental property. After several attempts, they finally got their first good lead and negotiated partial seller financing on the first duplex. The seller financing allowed them to purchase with 10% down payment (not the typical 20%) so they would have enough for another purchase.

After some TLC that Joleen coordinated, they rented it to some great tenants with a positive cashflow of $250/mo. With above average rents, they had proved their model for higher quality rentals in the area.

They continued running small classified ads and were able to purchase two duplexes and 1 triplex within six months. On purchase two and three, their friend lent them money from his RRSP and registered a 2nd mortgage on the new property. Again, allowing Tim and Joleen to purchase more with less down payment. Now they have seven lucky tenants paying off their mortgages.

Tim and Joleen did the same thing with their own RRSP’s. They lent their RRSP’s out as 2nd mortgages on two different properties in their area, earning 8% interest.

They also came across a single family home and with Joleen’s trade connections and confidence rising, they flipped a single family home and made a $26K profit within a four-month window. They had found their style or investing which suited their skills, personalities and met their long and short-term objectives.

In summary, their long-term rental properties when paid off will be worth $1.8M (assuming 0% appreciation) and provide enough income to fund their retirement. The profits from their flips will provide the extra cash required for college funds, family vacations and extra living expenses.

Plus, Tim is no longer contributing to their RRSP’s as their long-term rentals have replaced their RRSP retirement plan. Instead of contributing to their RRSP, Tim is making extra monthly mortgage payments on their primary residence. This will allow Tim and Joleen to be mortgage free seven years sooner, save over $50,000.00 in interest and retire earlier.

In the meantime, they plan on continuing to acquire at least one rental property and flip one property per year. This will still provide enough time to enjoy those cherished family vacations.
   
 
   
 
 
 

 
 
 
 
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