Recipe For Early Retirement

Van Tran and Quan Doan, who’ve been married for 7 years, had a common goal. They wanted to be able to retire comfortably, and provide for their children. This is what has driven them to persevere and invest in real estate.

“We were hoping to generate a passive income while still working,” says Doan.

It was Tran who initially came up with the idea. Financial stability was a must, and he realized that purchasing and investing in real estate was a great option. It would allow the two to continue working fulltime, while acquiring additional rental income on the side.

In December 2003, Tran and Doan purchased their first property, a triplex in Ottawa, Ontario for $138,000.

“Our first rental property purchase was obtained from using the equity on our primary resident home,” says Doan.

The unit of choice was in great need of a makeover. “We prefer to purchase properties that are in distress so that we can fix them up and increase the value,” she says.

Winning properties
Being bitten by the real estate bug, Tran and Doan looked forward to adding more properties to their portfolio. They purchased two properties simultaneously, a semi-detached, and a duplex semi-detached in October 2004, each for $80,000.

Though each property was a great bargain, they both required a few repairs. They spent $5,000 per property to fix them up, and did all of the work themselves. “What we put into the property was lots of sweat equity but we save on gym memberships,” jokes Tran.

The hard work has paid off since each property has doubled in value. With the success of these buys, they invested in a triplex in July 2006 for $120,000.

Tran and Doan saw this property as a challenge since it had been on the market for quite some time and required extensive renovations. “We were able to see through the condition of the rental property and see a vision of how we could make the property valuable and desirable for rental.”

Now, a few years later that property is their most valuable at $275,000.

But selling is not their aim. Instead, Doan and Tran prefer to have a solid monthly rental income. When combining all of their properties, they have a 19 per cent return on rental income for a total of $81,000 per year. The majority of their tenants are university students, or couples without children since the properties are better suited for these individuals.

The formula for their success is that they always use the equity from their previous investment as a down payment for their next purchase. Tran notes that they never put anything down, and collect the rent from their tenant to pay for the mortgage and expenses.

Team work
The couple uses their unique expertise when investing in properties. While Doan handles the business aspects and maintains tenant relations, Tran takes care of renovations.

A background in engineering gives Tran the necessary credibility to tackle the technical renovations, such as heating, wiring, and electrical repairs. He performs all renovations himself except for paving and landscaping. Typically he replaces existing items on the property, therefore he doesn’t need a permit. But if he were to add something new, then he would have to get a licensed contractor, obtain a permit and get the job done.

“We always try to conserve costs, and the best investment that greatly increases the value is simply cleaning out the unit, painting it and adding new flooring,” says Tran.

The couple suggests that if you’re new to the real estate game, or don’t have the qualifications to do-it-yourself, then you should hire a professional. Though it might be tempting to save that extra dollar, you could damage the property and end up paying much more in the long run.

Bumps in the road
The experience hasn’t been without obstacles. Doan notes that they have had their fair share of problems, especially when they first began investing.

“Most of the issues have been tenant related,” she says. “In one situation the tenant didn’t pay their rent. Another one was more serious because the tenant didn’t care for the property.”

Doan recalls the latter situation because they had to take the tenant to court in order to pay for the damages that occurred. Since it is clearly stated under the Residential Tenancies Act for Ontario that the tenant is responsible for the repair or damage of a rental unit when it is caused willfully or by neglect, Doan and Tran won the case and the tenant was eventually evicted.

Now the couple always performs thorough background checks before accepting a tenant. They use a standard application form from Canada Mortgage and Housing Corporation (CMHC). The “Application to Rent” requires the applicant to fill out information including employer, banking institutions and references, and can be found on the CMHC website. Once the prospective tenant signs the application form, Tran and Doan complete a background check.

The biggest difficulty renovation wise came with the purchase of their latest property, a triplex on the outskirts of Ottawa. The basement was particularly problematic due to plumbing and wiring issues, and a cracked sewer line, which caused a flood.

“It wasn’t just cosmetic concerns, and instead there was a lot of skeletal work to be done,” says Tran.

He spent almost a year repairing the basement, and though the job didn’t cost much, it was extremely time consuming. Now, Tran hires local students to help him with the grunt work so that he can concentrate on the plumbing and electrical issues. Tran states that he keeps a close eye on these students by periodically checking their work, and never allows them to perform difficult tasks, or more than one task at a time.

Lessons learned
Tran and Doan rely on their gut instincts whenever they invest in a property. The two don’t believe that any property is unprofitable, and that sometimes the simplest renovations can bring about maximum returns.

“We purchased a property once for $80,000 and people told us not to purchase it because it would take $25,000 to fix,” says Tran. “I spent only $5,000, and now it’s been rented for three years and we’ve made $30,000 on it through rental income so far.”

At present, the couple is expecting their second child, and Tran is proud that they have the financial stability that allows his wife to take time off.

“It’s a really nice feeling,” he says. “Most people dream of retiring early. We’re still young, and we actually have the opportunity to retire in the next 3 years as long as we live within our means and have monthly income from our rentals.”

From the July/August 2008 issue of Canadian Real Estate

Don R. Campbell on CBC’s The Hour

Last week, Don Campbell was on CBC’s The Hour with George Stroumboulopoulos (say that 5 times…).  Don is the President of The Real Estate Investment Network, who walks investors through what is happening in the market place along with how to professionally purchase investment properties.

If you missed the show, below is a link to the 10 min video of Don and George.

—Don R. Campbell On CBC’s The Hour—

Don touches on some hot spots in Canada, how the US will effect Canada and other great subjects.  At the end of his time in this clip, he does talk about investing is a thing for the future, and not an immediate cha-ching cash in.  Flippers in the market are not flipping…

Time Seems Right to Buy…

Shaken consumer confidence due to the world economic crisis has clouded the fact that it’s a great time to buy, says a leading real estate investor.

“People need to be telescopic in their thinking, not microscopic,” says Don Campbell, president of the Real Estate Investment Network, which has more than 3,400 members across Canada.

“Look five to seven years from now. Eventually, oil is going to come back, albeit not super hot, but between $70 and $80 a barrel, which will do super well here and create jobs.”

TFSA – Tax Free Savings Account

I’ve been looking into the TFSA a little bit, and it seems like a great idea. In fact it appears at first that you can invest this money into whatever RRSP’s can invest into. For those of you that don’t know what this is, this is a new account that you can put up to $5,000 personally each year, per person. So if it is you and a spouse, you can put in $10,000 a year and invest that money, and any gain in the account you can take out tax free.

If you are interested in this, and would like more info, please let me know and I’ll do a larger article on the new TFSA.

The Basics Of Real Estate Investing

Real estate investments may not be everyone’s cup of tea, but some people who have already tried investing in real estate know that it can be profitable. Real estate investment experts say there are several keys to making significant profits in real estate investment deals. And when the deals are profitable, you will certainly be well on your way to success.

For real estate investment neophytes, don’t be afraid of the challenges and pitfalls you may encounter along the way. There is definitely a lot to learn, but in the long run after you have gained some experience, you’ll hopefully become a master at closing profitable real estate deals.

There are 5 core skills that are necessary for building a real estate investment business. These will be the key factors in creating a profitable real estate investment portfolio.

These are the 5 core skills of real estate investment:

1. You must learn when and where to find the right kind of sellers.
2. You must learn the art of being a master negotiator when it comes to closing your real estate investment deals.
3. You must be able to quickly and accurately analyze each real estate investment deal so you’ll know exactly when to proceed and when to pull the plug.
4. You must become an expert in all areas of real estate investment and understand such terms as lease options, cash sales, short sales and other terminology common in the real estate investment trade.
5. You should totally understand the meaning and concept of investing in real estate, including all of the financial risks and benefits.

Now is a great time to consider investing in real estate.  Like Warren Buffet says… “When the masses are greedy is a time to be fearful, and when they are fearful is a time to be greedy” There are great potential rewards and the effort you put forth can yield enormous monetary returns on your investment.

Your confidence level will grow when you’ve gained some experience and closed on your first few real estate deals. But, don’t stop there…

Continue to learn about real estate investing and to develop your investment skills. In a short time you may find yourself managing a profitable and growing portfolio of investment properties.

Continue to follow your real estate investment “game plan” and always keep an eye out for the hidden investment opportunities. The opportunities are definitely out there and with a little knowledge and desire can be yours for the taking. So, why not get started in what might be a new and exciting (and profitable) career today? For more information please visit The Chamberlain Group today… and we can help you achieve what you want in life through investing in real estate.

Oil Country Boom Ain’t Over…

Jeff Rubin has a simple message for Albertans worried about plunging oil prices: CHILL OUT!

This was the opening line of a great newspaper article posted in Vancouer Sun on Sept. 20, 2008.  The odd thing about this, is that the articles that talk about the positive things this economy are brining are found tucked away in papers… prime example, this was on page I6 !

Here is what it had to say…

But for Canadians, the key tidbits are that the U.S., our primary export market, is going to become even more dependent on us. Not only is their ability to supply their own demands diminishing as well-known basins such as the Gulf Coast begin to show diminishing returns, but projected replacement supplies from places such as the Arctic National Wildlife Reserve are decades away from becoming a reality.
At the same time, other key U.S. suppliers such as Mexico and Venezuela have, to put it politely,
issues. Within the next four or five years, for example, Rubin predicts Mexico “will no longer be exporting oil to the United States.” As for America’s relationship with Venezuela, suffice to say it’s not likely to improve so long as strongman Hugo Chavez is calling the shots — and there is no reason to believe that is about to change anytime soon. What does it all mean? Good things for the oilpatch by and large. Without a doubt, demand for production from the oilsands will continue to grow in the United States and elsewhere — even if, as a result of the credit crunch that is sure to follow this week’s machinations in the investment-banking world, some projects are temporarily shelved.
And in triple-digit prices, conventional explorers will also be chomping at bit, so to speak, to find more oil. Which is why – as difficult as it may be – we need to be sanguine about what lies ahead for the oilpatch.

BOTTOM LINE . . .

We Canada, provide USA our southern friends, SECURITY in the future…

Calgary Prices Past vs. Present

We have had some incredible growth in our prices in Calgary, and Alberta in general.  At some points we were making money without even doing anything to our houses, and some months we were getting upwards of $5,000 per month “in our pocket equity”.  Times have changed… we are now seeing prices relax, and decline.  Now, don’t take me wrong, I’m not saying that the increase in Calgary and area is over, by no means, but the market is resting right now… Below is a great graph that puts it all into perspective of how well we have done with the prices in Calgary.

Would love to hear your feedback!

i-Finance: Using Your RRSPs To Invest

Have you been looking to use your RRSP’s or LIRA’s to invest with but don’t want to pull them out?  This is an amazing product that we have come across that could work for you!

i-Finance is a great product that allows you to pull out the amount of your RRSP’s or LIRA’s into a Line Of Credit that you in turn can use to invest, or spend how you would like to.

If this is something that you are interested in, please drop me a line at RealEstateBlogger@me.com, and I can forward the company that deals in i-finance in Calgary and area.