By Michael Dominguez
Critics will argue that $1 million isn’t the same value as it used to be, but it still has a very nice ring to it. You can be a millionaire. Visions of Scrooge McDuck and the guy with the top hat in the Monopoly game come to mind.
Also note that, according to the World Wealth Report 2014
: “There are now approximately 320,000 high net-worth individuals in Canada — that’s people who have at least $1 million in financial assets, excluding their principal residence”.
But how can you be sure to get into that select company, invest in real estate and hold onto that asset?
I bet you’re thinking: it can’t be that simple. You would be right. Yes, you must select a property in an area that has the right fundamentals, you must deal with tenants and you must sacrifice a few weekends a year to deal with issues. But in the end, you WILL be a millionaire.
Let me run through some of the numbers for you. Somehow, some way, get $600,000 of real estate under your control. That could be one, two or even three properties, depending on the area of the country. Not just any property will do. Make sure the property can generate enough rental income to support the expenses and debt financing.
If you look back in Canadian real estate history, a good area has doubled in value every 15 years or so. But for this example, let’s say it takes 20 years for your well-positioned property to double in value.
Your $600,000 in assets is now worth $1.2 million. Meanwhile, your mortgage debt is almost paid off and is sitting around $200,000. That doesn’t even take into consideration $1 in total cash flow.
You, my friend, used real estate to become a millionaire. As of 2014, approximately one per cent of the Canadian population has a net worth of investable assets. Let’s say that number jumps to between three and five per cent by 2035. I’m sure you’d be okay being one of the top five per cent richest Canadians in 20 years.
The key component between winners and “also-rans” in the real estate world is that the winners take action and continue to take action. Take those weekend courses, do your research, build your power team, then TAKE ACTION.
Real estate is really not a get-rich-quick scheme, but it certainly is a get-rich-for-sure scheme.
Michael Dominguez is an investor and Realtor with RE/MAX Jazz Brokerage.
He was also the winner of Realtor of the Year at CREW’s Top Investor Awards 2014. Nominations are now open for the 2015 awards. For more information, visit http://topinvestor.ca/
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