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Expert Advice

I recently read a great book, The Wealthy Barber Returns, by the legendary David Chilton. I really loved this following passage. “Each year, the Washington Post runs its Mensa Invitational contest where readers are asked to add, subtract, or change one letter of a word to give it a new meaning. One year’s winner was cashtration. The act of buying a home, which renders the subject financially impotent for an indefinite period of time.”

I am a huge supporter of adding assets into my wealth portfolio. The mistake that most people make is they simply don’t know what an asset really is. Most people believe that an asset is stuff they own. The more sophisticated say that it is stuff that appreciates over time.

I tend to feel that a true asset is something that generates enough cash flow to (at minimum) sustain itself, and ideally creates cash flow that will support your personal expenses. An asset will not only cover its pure expenses, but also its debt servicing.

These are the following assets that can lead to personal “cashtration.”

1.    Cottage. It is no surprise to most that a cottage is an expense. Yes, over time it may appreciate but you can never completely bet on appreciating values. When you consider property taxes, utility expenses, insurance, occasional repairs and debt servicing, this is a true expense.

2.    Personal Residence. This one might generate a few arguments. How many times do we hear parents say that their house was the best investment ever owned? This could be because they never owned any other investments. I agree that you need to live somewhere, however, as long as you contend that it is a needed expense, we can all agree.

3.    Downtown Condo Rental. The rental income in this case needs to generate more than the carrying costs.

How can you avoid cashtration? Simple. Make sure that any asset you own carries itself and actually contributes to your income.

We have all heard the expression “two-income household”. That typically refers to a household where both spouses bring an income that contributes to the household expenses. Why can’t you have the goal of having a 10 income household? Some might think that this means having some harem of women all working towards the household income.

But what if you add assets that pay you money on a regular basis? For me personally, I have my own realtor income. My wife’s salary. Our RRSP’s and other paper investment’s dividends. Finally, each property I purchase must contribute to the family income.

Not quite the harem of women solution, however, I’m pretty sure that option would have its own host of challenges too.

This way if one of the incomes dry up, like my wife’s job ending or one of my properties unable to rent for six months, then we have alternative sources of income.

Investor and Realtor focused on cash flow generating properties in southern Ontario. Besides adding properties for his own portfolio within Oshawa, Cobourg and Orillia, Michael is building a joint venture team for these markets. As a realtor, with ReMax Jazz Brokerage, he uses those investor mindset skills to make a valued member of his clients' power teams. You can reach Michael at This email address is being protected from spambots. You need JavaScript enabled to view it. and follow him on twitter @durhamhome or on his website

When it comes to property investment, timing is everything. Ultimately, choosing the right time to enter the market will have a significant impact on the long-term success of your investment.

But how can you as an investor know whether the timing is right? Global property portal Lamudi has compiled a list of 10 tell-tale signs that now is the time to start building your investment portfolio.

1. You are financially ready. You have saved enough for the downpayment and you have also established your emergency fund. You have taken into account home maintenance expenses. Your credit history is good and you are able to meet all the financial obligations.

2. You have set your long-term goals. You have a clear picture in your mind of the purpose of your investment and you are flexible enough to adjust to changing circumstances. You are not hesitant and when the timing is right, you are able to adapt to the market needs and the development of technologies.

3. You have done your research. You know the neighborhood of your future property well enough to foresee the coming trends and the possible changes in the community. You have researched all the schools in the area as well as the best commuting means and you are able to predict the next homebuyers needs.

4. You have chosen a stable economy. The area is financially stable, economic trends are promising and equities are surging. No demographic fluctuation or no irregular variation of population have been recorded in the area.

5. You understand the country’s policies regarding real estate. The policies of the region promote and encourage a positive, innovative environment as well as drive further economic growth. The tax policy in the country is positive for homeowners. Global innovation index is rising in the area.

6. Infrastructure projects are underway and likely to lead to an increase in property values. The infrastructure of the area is being developed with a focus on: transport, energy, solid waste and water management developments.

7. The region is moving toward sustainable development. The region’s awareness of global and local environmental issues is increasing, the demand for eco-friendly homes as well as for sustainable rural and urban development is rising. As more and more people head toward sustainable living, investing in sustainable property will increase its value in the future.

8. The location draws a lot of interest. Whether it is the best travel destination or the hot jobs spot, the location is always on the top of the search engine. It has become a successful startup hub already or is planning to do so in the coming years, driving a lot of job seekers into the area. The number of enrolled students is increasing every year, the area draws interest of international students.

9. You have found a reliable real estate agent. If you are an overseas buyer, it is particularly crucial to make sure you have a good representative on the ground. Your real estate agent is trustworthy and knows the local market well enough to be able to help you make the choice.

10. You have researched local differences in the property market. Whether you plan to invest in a residential property and turn it into a rental or an office space, you are fully aware of all cultural differences that might occur when you deal with a property seller.

According to a TD Bank report from 2009, and accounting for inflation, education costs per child could range from $37,000 (for a live at home student) to $137,000 (for a live away student) when he/she turns 18 years old.  

Investors already know that buying real estate is a solution to paying for a child’s education however, this may not be the right solution.  In fact, it could be detrimental to a child’s performance, according to a paper published by University of California, “More is More or More is Less? Parent Financial Investments During College.” It suggests that there is a direct relationship between parents who pay the bills and lower academic performance by their children. 

Rather than let your children party at school while you are stuck with the bills, why not get them to pay the bills. Tracy Ma from Financial Nirvana Mama outlines four key strategies for getting your kids to pay for their own education and at the same time, teach them real estate investing skills.

1.    Teach them property management
If your properties are less than five years old (i.e. low maintenance) and your child goes to a school near your properties, why not have them manage the properties as their part-time job?  Better yet, have them live in a unit as their principle place of residence and rent out the extra rooms to friends.  Teach them how to manage the properties like a pro, with the right agreements, contracts, and templates.  And don’t forget to teach them about all the applicable rental regulations.  Now, they can use the cash
flow from the properties to help pay for their own tuition and books.

2.    Teach them to profit from a real estate portfolio
If you have a couple of properties that you have held for more than ten years, you probably have a nice nest egg for your child’s education.  Rather than selling the properties when your children are ready to go to post-secondary school, hold the properties a little bit longer until they graduate.  Have them take out an interest-free student loan to pay for their education.  Then, transfer the assets to your kids after they graduate from post-secondary education and have them sell it, or borrow against it, to pay for their loans.  Any remaining profits from a sale, or available room in a home equity line-of-credit, can jumpstart your child’s purchase of their own real estate.

3.    Have them manage a real estate portfolio
If the properties are held more than 15 years and your children decide to the leave the city, why not refinance the balance of the mortgage, and have them retain a team to manage these properties?  Teach them to oversee the properties and monitor the expenses and payments.  The cash flow can be used to offset their tuition fees and books.  Once school is finished, they can liquidate, or borrow against, a property and pay off their loans.

4.    Teach them hard money lending
If the properties no longer have any mortgages and your kids are off to medical school or they are too busy to manage real estate, teach them to sell the properties, contribute a portion to their tax free savings account, and lend out their money to other real estate investors as a mortgage-backed loan.  Now your kids have mortgage payments coming into their bank accounts to help offset their living expenses and tuition costs.  And after they have finished their education, they can recall the loans that they have issued to pay off their own student loan.

Be creative and financially savvy with these exit strategies to not only make your money work smarter, but teach your kids life skills. Using the strategies described, your kids will be on their way to paying off their education (and becoming real estate investors) in no time.

Tracy Ma is a mother of twins, mentor, engineer, real estate investor in Ottawa, Ontario.  Connect with her at her website where she shares free tools, videos, and articles to empower women on investing.

The promise of low cost properties down south continues to lure Canadian investors. But Madeline Ficaccio and Patrick Gregan from American Multifamily Alliance Group share their secrets to ‘right’ investing in the U.S.

Investors must be aware that just because a property seems “too good to be true” with respect to price, this does not mean that it is a good deal within that particular market. It’s important to deal with someone who has experience in the particular market you are buying.

Secondly, investors must know enough about what they are considering purchasing. Investors have to have the ability to do independent research without wholeheartedly trusting the appraisal or comparable provided.  Just because someone with a license places a value on a house, it doesn’t mean it’s worth that price

From our experience, one of the difficulties that we have found purchasing houses in the U.S. is that we are have to landlord from a distance. When purchasing only a house or two, there is not the cash flow to be able to fly out to check on your property every so often. Therefore, you have to place your trust in management and “hope” that they are taking good care of your property.  We all know, as real estate investors, that our biggest challenge is always management, so be sure of what management company you are using. Investors should still expect and include in your costs the need to fly out and be checking on your houses as well.

This is a large part of the reason why we started purchasing multifamily properties.  It afforded us the opportunity to self-manage (although we realize this is not everyone’s cup of tea) and to be able to fly often to keep a close eye on our properties and not leaving it up to anyone else. All 818 units are located within 10 minutes of each other and therefore, we know the areas inside and out and do not compromise by going into areas we are not familiar with. It is important to be an expert in your area and not be purchasing all types of properties in all different markets.

Investors that live in the East of Canada are investing in Florida and those who live in the West are investing in Arizona and Nevada, partially for retirement purposes and the fact that they can catch a direct flight to those markets.  However, we have targeted an amazing market in Dallas, Texas. The Texas market is very strong, has strong consistent population growth, has employment from many different sectors and is in our opinion, much less risky that most markets in the U.S.

The opportunities are that properties purchased in the right market can significantly cash flow compared to many Canadian markets because purchase price can be lower with little difference in rental rates. There is also much room for appreciation as markets increase and recover from the recession.

Foreign investors need to take the time to learn different markets and decide where is the best place to invest.  It is important to note that in large centers in the U.S., where one street is a nice neighborhood, three blocks over could be a very rough area.  Therefore, research is imperative or invest with someone that you trust who knows the market well and is looking out for your better interest.

Real estate investor Oliver Limcangco is finally living the dream after achieving financial freedom through his property portfolio. In a new regular posting, the 31-year old shares his insights into how he acquired 26 doors and manages it all while travelling abroad.

As I write this, I am staring at the bustling Shanghai downtown in plus 35 conditions, with an ice cold drink in my hand. I've been on the road for the past four months, and in a couple of days, I fly to Poland for a week and then train all the way to Prague.

With 26 suites and more on the way, people always ask me how I can travel the world and manage our portfolio at the same time when most people struggle in managing one.  I'm here to tell you how to do this whether you have one or 26.

In order to manage your portfolio properly, you need to know exactly what you are managing. I have a tracker that has the following information which I update monthly:
•    Property address (per suite)
•    All monthly expenses (mortgage, taxes, insurance, etc.)
•    All income (suites, garage, etc.)
•    Mortgage details (mortgage number, lender, payment frequency, expiry, etc.)
•    Tenant details (term, lease expiries)

It's great to have all the information but it won’t be any good if you forget any of it. Get an online calendar to keep up with the expiration of everything from leases to utility contracts. In addition, put a reminder one month before these expiries as well to give you enough time to deal with them.

If you have more than five units, you probably have a property manager, and for good reason. You need to make sure you are fully connected with your PM on all aspects of your portfolio. You need weekly status reports with your PM - make sure you carefully analyze all your statements every month and discuss any discrepancies / unexpected expenses. When your reminders for expiring leases come up, make sure you follow up weekly to check the status. Your PM has hundreds of doors to manage, it is your job to make sure your issues are solved first.

You also need to understand that if you are on top of your portfolio, you are probably in the top 10 per cent of investors who are proactive about it.  This means that you will be asking your team to work harder on your properties - don't cheap out on gifts, lunches, and affirmative praise to their bosses.  You may think it is small stuff but when it comes to people, a little pat on the back goes a long way.

Remember, the harsh truth is that no one will care about your portfolio the way you do, and it is your responsibility to make sure you know what is happening in all your suites at any given time. Set it up properly, track your issues and risks relentlessly, and follow up constantly.  It may seem like a lot of work (and it is!) but with this, I am able to travel the world, manage my properties, and buy more properties through my cellphone and laptop – and there’s no reason why you can’t do it either!

The student market can be a lucrative business but landlords need to do their homeowork when selecting tenants as Tim Collins from Student Rental Investing explains.

When renting to a ‘typical’ tenant, the normal checks that I undertook were references, job credentials and a credit check. I could then take all that information and make an educated decision on whether to rent out to that particular individual.  I'm also a big believer in trusting your gut so if your intuition is screaming something’s not right, well then it's probably worth listening to. 

When it comes to students, things can be a bit trickier. Credit checks are irrelevant as students often have not had time to build credit check. As such, it may be necessary to do a credit check on the guarantor. 

By having a fabulous advertisement with great pictures and offering utilities for a nice affordable monthly price, you're likely to attract more than just students. It's not good practise to mix students with non-students and so you need to be explicit that it's a student only house. Ideally, you will attract a group of students that already know each other, and they will all be sharing common areas and bathrooms so this makes things much easier.  

7 tips for selecting great student tenants:
1. Ask for proof that they are a student - acceptance letter or student card.
2. Ask for a guarantor to sign the application form establishing that they have some financial backing.
3. Ask for a deposit before holding a room, many show interest but change their mind.
4. Establish start date and term of lease that they are looking for.
5. Get job and personal references.
6. Get details of most recent addresses for last three years.
7. Set expectations - No parties will be tolerated at this house.

The number one complaint I hear about managers isn’t that they do a bad job. It’s that they seem to cost to much.

Clients seem to begrudge their managers when a property has great tenants and is ticking along with no major repairs. There’s no real expenses. $1,000 worth of rent comes in and the only deduction is the management fee. Usually I’m seeing 10 to 14 per cent for decent single-family property management.

Sure, it sucks when there’s no visible costs and you’re paying $100-140/month for the pleasure. But when the property goes vacant, think of how much time goes into getting the property re-rented.

1. Receive notice
2. Confirm vacating date

3. Schedule out inspection

4. Conduct out inspection
5. Arrange repairs/renovations
6. Supervise repairs/renovations
7. Bill/invoice for repairs/renovations
8. Arrange cleaning
9. Supervise cleaning
10. Bill/invoice for cleaning
11. Generate/mail statement and cheque for tenant’s deposit
12. Advertise rental (1-2 newspapers and 3-7 websites)
13. Screen calls
14. Arrange showings
15. Evaluate applications
16. Conduct credit checks and background checks
17. Do move in
18. Process damage deposit and first month’s rent
19. Generate and provide statement to owner

 Every time a tenant turns over, it’s a cost of about $2,000. That’s both the costs above and the lost rent while it’s vacant. In the $1,000/month rental scenario, that suite has to keep running for over a year to make back what they just spent in time and hard costs.

Compare that to your lawyer who makes $800-1000 for a week’s work (most of which is done by assistants), or your Realtor who makes $5,000-10,000 per deal.

Property management is a nickel and dime business. It’s a hard industry to make money in and harder to do an exceptional job. You should hire the best people possible, overpay them and cut them some slack.

Chris Davies is a Realtor and investor in Edmonton, Alberta. Check out


With an increasing number of ‘professional’ tenants only willing to take advantage of busy and trusting landlords, investors need to be extra vigilant. Kayla Adrade from Ontario Landlords Watch provides some helpful tips on how to secure the best tenant.

Landlords are always on the hunt to find the best tenant. To achieve that, they need to ensure their rental units are well maintained, clean and in a good location. Unfortunately, such properties also attract the professional (bad) tenants so landlords need to interview each with caution.

Landlords should not only require credit checks and personal references, they should also personally (or others) interview the tenant. Find out who they are , where they are from , what are their hobbies , who are their friends , what do they do for work and do they like it etc. These are simple friendly questions that can tell a landlord what that potential tenant is capable of.
Keep the unit empty for a few months until the right tenant comes along because it can cost landlords a lot more time and money if they make a rushed decision and accept the first person that comes to view the unit.

Follow these four steps :      

1. Phone interview (ask as many questions as possible
2. Interview them at the rental property  (ask more questions )
3. Have the potential tenant meet with your (partner or consultant)
4. Meet the potential tenant at their current property to sign the lease

Is your tenant not paying rent? Do not fall prey to the sad story, not everyone tells the truth. Give the N4 notice on the second of the month even though the tenant agrees to pay a week later. The landlord and tenant board eviction process is long, costly and tenant friendly which means the tenants already have a head start.

Kayla Andrade is from Ontario Landlords Watch. Call or text for further information at 226-972-0563

One of the biggest obstacles investors face is finding properties that cash flow.  The solution is not to buy cheap properties or put more money down.  There are better ways to create cash flow. Rich Danby from Rich Ottawa Investments Inc. outlines his five key strategies...

1.    Start with you…
Before you buy more properties review your existing portfolio.  There are likely many things you can do to save money and increase cash flow.
A.    Clean house… Tenants will pay more for cleanliness.
B.    Be aware of current market rents in the area and what other landlords are writing in their ads to attract tenants (
C.    Review your bills to see if there are any spikes or patterns.  Compare against other properties in your portfolio.
D.    Visit the property at least twice a year and do a thorough walk around with notepad in hand.
E.    Maintenance today saves money tomorrow.  Cash flow will suffer in the short-term, but real estate investing is a marathon, not a sprint.
F.    Shop for better mortgage and insurance rates a few months before renewal.
G.    Talk to experienced investors for advice and referrals to help you build your team and learn from their experiences.

2.    Buy more units
Just like shopping at Bulk Barn buying properties with more units lowers the cost, compared to buying individually. Typically the more units you have the higher the potential for cash flow.  Having only one roof, one furnace and one property to manage significantly decreases your expenses and lowers your risk.  If you own a fourplex and one unit is vacant, you’re still collecting 75 per cent of the rent. If you’re not financially in a position to buy multiple units on your own you may want to consider finding an investment partner to help you fund the deal.

3.    Create more units
Another popular strategy to create cash flow is adding secondary suites in single- family homes. For example, if an entire house rents for $1,600/month and you’re able to divide it into two apartments renting for $1,200 (upper unit) + $1,000 (lower unit) you’re now cash flowing an extra $600/month.  I highly recommend working with the city to ensure you’re renovating the property legally.  All it takes to get shut down is one complaint from a neighbour. Also keep in mind that every city has different rules. Make sure to obtain a professional opinion on the subject property prior to waiving conditions to ensure you can legally add a secondary suite.  

4.    Pick a different city
Would you continue to eat at the same restaurant if the prices were always going up?  Some would if they really loved the food; while others would try the new place their friends have been raving about.  The grass isn’t always greener on the other side, but it could be depending on where you live.  If your monthly rental income isn’t enough to cover the expenses and you have to manage the property yourself, it may be time to consider a different city.  Most people invest where they live because it’s familiar and they want to be able to get there quickly if there’s an issue.  That’s totally understandable, but could be extremely limiting depending on market conditions in your area.  There are many real estate professionals that can help you manage an out-of-town investment.  In fact, with the right property you’ll have enough money to pay a property manager and still have cash flow left over for you.

5.    Change strategies

If you’re not willing to change cities maybe it’s time to change strategies?  A traditional rental may not be producing enough income to cash flow.  Student rentals is a great way to increase monthly cash flow because you can charge more per room, although it’s still recommended to have everybody on the same lease.   Adding Mom and Dad as guarantors is a great way to ensure the rent is paid every month, but expect a little extra wear and tear.  Rent-to-Own (RTO) is another fantastic strategy to increase cash flow and help others live in their dream home today.  It’s designed for people who are unable to secure a mortgage, but will be able to in the near future, typically one to three years.  RTO is similar to leasing a car.  You put down some money up front and have the “option” to buy the car in the future.  The tenant pays market rent, but the cash flow is higher because the tenant is also saving additional money for the future down payment.  That money goes directly to you to ensure the tenant will have enough money to buy the house at the end of the term.  Basically, you’re collecting some of the profits along the way in the form of an “option credit” in the event that the tenant decides to buy the property.

Many investors are unsure of the real numbers are they should be calculating.  To find out if your property is truly cash flowing send an email to This email address is being protected from spambots. You need JavaScript enabled to view it. for a free property analyzer.

Let’s face it. Buying your first investment property is often an exciting experience.

In between property inspections and speaking with real estate agents, it’s easy to get caught up in the moment and overlook the financial aspects of their purchase. Luckily, some financial consideration is a good way to temper the impulse when buying an investment property. After all, a financial misstep could set you back for years.

Consider the following tips before you sign the contract to buy an investment property:

1. While the real estate agent may recommend that you to put down the ‘standard’ deposit of 10% of the value of the property upon signing the contract, this is not absolutely necessary and you should try and negotiate a lower amount to free up your cash flow.

2. Even if you do not need it, always include a ‘subject to finance’ condition in your offer, which will allow you to secure finance that is most suitable to your needs and circumstances.

3. Do not sign the contract until you have made the decision on the ownership structure of the property, eg, you may want your discretionary trust to buy the property instead of owning the property in your own name.

4. Upon signing the contract, speak with your insurer and take out insurance on the property.

5. If you are selling a property and need the proceeds to buy another property, never commit yourself to a purchase contract until your sale contract has gone unconditional and the cooling off period, if applicable, has expired. Otherwise, you might find yourself painted into a corner if something goes wrong with the sale contract!

6. For commercial properties, make sure that you check the GST clauses and determine if the contract price is GST-inclusive or GST-exclusive. Ask your accountant to review the contract because the purchase may be GST-free under a specific exemption in some circumstances.

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