“We got to move some refrigerators we gotta move these colour TV’s” ( Money for Nothing) – Dire Straits
As a teenager, my friends and I used to help one of my buddy’s with moving second hand fridges and stoves in and out of several Toronto rental properties that his parents owned.
These calls for free back breaking labour (back then these things weighed a ton, literally!) occurred about once every 6 months or so.
One day in my late teens I had the opportunity to chat with my buddy’s parents and asked why they decided to get involved in something that brought them all these headaches (broken appliances, chasing tenants for past due rent, etc.) and all this while they were still working 60+ hours per week?
They were kind enough to let me in on their little secret. What I learned from them was never taught to me in school. It was truly life changing.
You see, not only were their tenants paying all the costs associated with their rental properties, but by renting the basement of their own personal home they were able to live in their large home, in a great area for nearly half of what they were previously paying to rent out a 3 bedroom apartment in a not so hot area!
Both our families immigrated to Canada in 1980 from the former USSR. Both our families were hard working and with similar income levels.
However, I found that my friend’s family was focused more on building long term wealth instead of trying to simply make ends meet, as my own family was doing.
Needless to say I was very intrigued by this concept and was motivated in getting started with real estate investing well before I even completed my formal business education.
Unfortunately, having experienced more than a few real estate and stock market booms and & busts since the early 1980’s, I was more than a little bit nervous, had very little in the way real estate investment experience and even less in the way of a down payment required to purchase a property. But that did not deter me.
In addition to personally paying for my university education in business and accounting by working 20-70 hour work weeks, I was able to save up $10,000 which I could have used to pay off all my student loans. Instead I used it as a down payment to buy my first home in the mid 1990’s and never looked back!
To be clear, my decision to become a real estate investor was not viewed by my family and most of my friends as being a very smart one. Not surprising since the 1980’s real estate bubble and subsequent crash was still fresh on everyone’s mind and prices of homes in the GTA were still nowhere near the highs seen during the late 1980’s boom.
Instead of listening to all the naysayers, I studied the real estate market and as a newly minted accountant I ran the numbers and realized that by committing to a little extra work and effort, I could live in my own home practically for free. I could easily rent out the 3 bedrooms in the basement of my home and have my tenants pay for 100% of my mortgage and nearly all of my utilities as well. What’s not to love?
Amusingly, many of those same naysayers decided to do exactly what I was doing a short 3-4 years later.
What’s more, over 20 years later I have come to realize that my real estate investments consistently outperformed any and all of my other investments in any market, period!
Unlike any of my stock or mutual fund investment, real estate has enabled me to personally take charge of my investment dollars and empowered me to achieve results in all aspects of both my personal and professional life.
At times it has been stressful and frustrating. However, over time I have come to realize that the vast majority of that so-called stress and frustration, was based on fear. Fear that at times found me laying awake at night in a cold anxious sweat.
Looking back now, those experiences were actually the best education I had ever received both personally and professionally. Needless to say, whenever a challenge comes up today I no longer feel stressed. Instead I simply take care of it, confidently knowing that each and everyone of my investment properties is a business.
As I write this, one of my properties in Hamilton is undergoing some major basement waterproofing, after being notified by my tenant that water was leaking into the basement from somewhere. This work required getting a city permit to do the work, tearing out the entire backyard deck, getting an excavator into the backyard by taking down a section of my neighbours fence and having to dig up the entire rear part of the property to have it properly waterproofed.
What you may find interesting is that I am not stressed out at all. In fact, what may surprise you is that I have yet to even step foot on the property since being notified of the issue by my tenant, yet my tenant is very happy with my response time in getting this issue resolved in a timely manner.
To me, this is simply a cost of doing business and all it took was a few phone calls.
I simply run each of my “businesses” (aka investment properties) very well and in return, I am rewarded with great tenants and enough passive income and cash flow to sustain my lifestyle without having to work for anyone and more importantly with minimal effort.
Here’s the best part.
Lets disregard the fact that my tenants are paying for nearly 80% of my properties over a number of years simply by paying their monthly rent to me.
Lets also disregard the stupendous appreciation on my properties to date.
Lets also disregard the fact that over time, the mortgages being paid down by my tenants and property appreciation, has now afforded me the option of refinancing my properties and pulling out my entire initial investment, thereby effectively enabling me to own my properties for FREE.
Lets also disregard that after a number of years, I also have the option of pulling out even more built up equity and this is addition to pulling out my initial investment.
Lets also disregard that I can now reuse both my original and now refunded initial investments PLUS the additional built up equity on my properties again and again to buy more investment properties or to make any necessary improvements and repairs to my existing properties or, better still…
To pay for my daughters university education, or to buy my dream sports car or boat or to travel the world or whatever else I choose to do.
In fact, the absolute very best part is that in addition to all of the above, my properties generate enough positive cash flow TODAY to pay for my car, my insurance, my cell phone and practically all of my regular monthly expense PLUS weekend getaways and multiple vacations per year.
This means that I do not need to wait until some mythical “retirement date” to benefit from my property investments. The reality is that my financial life begins to improve almost immediately from day 1!
Even better, is that after the mortgages on my properties are paid off my monthly cash flow will only increase exponentially since my the money for my current monthly mortgage payments will simply go into my own pocket instead and turn into my six figure retirement.
I should also mention that unlike mutual funds, stocks and bonds retirement planning options that take decades and thousands of dollars in savings , I have been able to accomplish most of this within the last 5 years with significantly lower intial investments that the “common wisdom” approaches we have all been taught in school.
Please understand that I am not listing the above to brag about my investment prowess or my accomplishments. I am only illustrating what is very possible.
Indeed, I am ecstatic to say that I am definitely not alone. Many of my clients’ and partners’ real estate investments are performing even better than even my own.
I am simply illustrating only a few very realistic, prudent and simple to understand strategies to achieving financial freedom that my clients and I have found to be highly effective and rewarding.
You can now imagine your freedom, without having to dream and hope of winning Lotto 6/49 ever again or having to wait several decades hoping and praying that you will have enough income for your retirement.
To be clear, these are not some sort of get rich quick scheme.
Do these investments come with some risk? Absolutely, but I have yet to see even one investment that is totally risk free.
More importantly, I have personally found that having the right coach who has been there and done that himself; who has already made and learned from his very own costly mistakes that you can now learn from and avoid making yourself; who knows what areas and properties work and which you absolutely need to steer way clear off; who will be there every step of the way to guide you on your path to financial freedom to ensure your success, substantially mitigates many of the actual and perceived risk.
Indeed, these are the core principles I personally employ myself as both an active real estate investor myself and as a coach to my clients.
Do these investments require some effort and education on your end? Absolutely! I say these strategies are simple but understand that they do require some effort. Yes, taking control of your financial destiny or running your investment property business does require some work.
Fortunately, as I explain to my clients options do exist and are available to enable you to be totally hands off if you so wish.
On the other hand, you can choose to keep on doing what you have always done.
You can always continue with the “common wisdom” that we have all been taught in school. Simply hand over all our hard earned savings to a financial advisor or a mutual fund manager you may or may not even know, who will then be happy to invest your money in stocks, mutual funds and bonds run by executives you are unlikely to ever meet and most of whom are looking after their own best interest, not yours!
Then all you have to do is hope and pray for your financial and retirement goals to be met.
Honestly ask yourself:
How has that been working out for you so far?
Is it not time you stop hoping and praying your way to financial freedom? Is it not time you take back control of your hard earned savings and investments?
Is it not time for you to finally live the life you have always dreamt of and truly deserve to live?
Until next time…
Felix
Your Chief Millionaire Maker & Real Estate CFO