How we built our million-dollar portfolio from scratch

by Shane Buckingham09 Aug 2011

When the Killeen-Paynes arrived in Canada after selling their home in the United Kingdom more than four years ago, they really had all the money they needed to get started in real estate investing. They had sold their home at the height of the British housing market, and had converted their savings when the exchange rate was C$2.32 for every Pound-Sterling.

With more than $200,000 sitting in their bank account, the Killeen-Paynes knew they had two options. "We looked at that pool of money," Richard recalls, "and we said, 'OK, we can either pay off our mortgage and live mortgage-free, or we can actually choose to do something different."

Richard who still works as a chartered accountant knew he and Jane could invest a good portion of the money in stocks and bonds, but he wanted to get better returns. So they began looking into real estate investing. There was, as there is now, plenty of real estate books dealing with the U.S. market, but the Killeen-Paynes wanted to learn a truly Canadian approach.

That's when they found Douglas Gray's book How to Make Money in Real Estate and Don Campbell's book Real Estate Investing in Canada. "As soon as I read Don Campbell's book, I was in. As an accountant it was all about the numbers; it was all about economics, and that's what the book explained," he says. "So Jane and I really looked at real estate in Canada and looked at our money in the bank and said, 'Yeah, this makes sense.'"

Solid buy in Halifax

In October 2008, the couple purchased a 3,900-square-foot triplex in the Hydrostone neighbourhood of Halifax near Dalhousie University. This investment has been nothing short of stellar.

Today, their one-bedroom unit rents for $795 a month, while the other two two-bedroom units, rent for $1,700 a month each, leaving them with $1,100 a month in cash flow. This impressive income generation is supplemented nicely with the property's steady appreciation over threeanda half years, going from $475,000 at the time of purchase to $595,000 today is absolutely my best investment because it produces the best cash flow.

And if I sold it today, it would get me really good appreciation," Richard says. Owning this property has given the Killeen-Paynes even more than just money; it's taught them nearly everything they needed to know about real estate investing, especially property management. "It's a real benefit to manage your first property.

I'm a firm believer that you need to understand how to run your first property like a business. Then for all of your future properties, even though you won't necessarily have to be a property manager, you'll know all the skills you need in a property manager."

Getting connected

The couple knew it would be challenging to continue investing in Halifax since duplexes and triplexes were then selling for $500,000 to $600,000. But they also knew they would need some help to get started in a new community.

So in April 2009, Richard attended a Real Estate Investment Network (REIN) event in Toronto. Once there, he was surprised to learn that many REIN members own properties in different provinces from which they live.

"I was just blown away. I thought how on earth do you own a property in Alberta when you live in Ontario? But they told me it was really easy and it's not as hard as people think. You just need the right team." Richard was hooked. He joined REIN and began looking for properties in communities outside of Nova Scotia.

Investing in Hamilton

At the time, Hamilton wasn't REIN's top investment city, but Richard was convinced that the economic fundamentals were sound. Hamilton was creating jobs, attracting in-migrants and had plenty of renters. Undeterred by the time of year, the Killeen-Paynes in July 2009 bought a 2,000-square-foot duplex in Hamilton for $225,000. The investment paid off nicely. Today it generates $780 a month in cash flow and has appreciated $40,000 since they bought it.  

Again departing from their strategy, the Killeen-Paynes then bought a townhouse on Hamilton Mountain. "I thought we'd give it a try," Richard says. The couple didn't invest in the property, however, without doing their due diligence.

They hired a quality property manager they met at a REIN event in Toronto and scrupulously went over the condominium board's minutes. The board checked out all right and had plenty of money still in reserves. Plus, the condo fees were only about $200 a month when comparable complexes in the area were charging $400 a month.

The Killeen-Paynes now have their eye on some student-rental properties in the Westdale neighbourhood, but they're not making a move until they know what type of new rental regulations the city intends to introduce.  

Getting professional

With four properties in three cities, the Killeen-Paynes knew they'd have to take their investing to the next level. So on Dec. 3, 2009, the couple started their business, Invicta Property Investments. "The reason for the business was not only to give it a separate entity but at the same time it was to create a brand around what we were doing," Richard says. "We felt that identity as a business and the name that goes with it was important going forward."

While Richard runs the numbers and searches for new properties, Jane takes care of the marketing, the website and advertising.

The mother of three left behind a career in nursing to spend more time with her children, who are 10, eight and three years old, and to help develop Invicta Property Investments into a viable business. "She's made a dramatic leap from being a registered nurse certainly in my eyes," Richard says.

"And a lot of people give really good feedback about her blogs, articles and the marketing she does for the business. I don't know how she manages to do it all, but she does a great job."

Marketing with Jane

The company logo and name, which Richard admits were Jane's ideas, really represent the couple's business philosophy. "We had a short list of four or five names and Invicta came out on top," Jane says. "It's a Latin name that means unconquerable, undefeatable and unstoppable, and we chose it basically because it encompassed our values."

In Britain, these values guided Jane in her job as a nurse looking after people who had undergone cardiac surgery. She admits after 10 years, her job had become physically and emotionally draining.

So she decided to become a qualified home-stager and interior designer. But when she arrived in Canada in 2007, she felt she "wasn't ready to close the door on nursing." A few months after getting certified as a Canadian nurse, Jane realized her initial feeling was right: she was done with nursing. "It really worked out for the best.

Giving up the nursing really helped because it made me sit down and really focus on the business and actually learn everything I could about marketing." Jane, now a self-taught marketing expert, has established a sense of professionalism in every area of the company she operates.

Their website looks clean and modern and Jane regularly posts news articles, blogs, Facebook comments and Tweets - something Jane never thought she'd end up doing. "When I first found out about Twitter I thought it was just a complete waste of time. But you get really hooked," Jane says.

"I just think it's great for visibility. We're able to position ourselves as experts and deliver education solutions to people who post queries. So from a marketing point of view, I think it's just absolutely incredible."

Now the couple, who own all of their properties, are actively looking for joint-venture partners to expand their already impressive portfolio. The plan, Richard says, is to get up to eight properties before calling a quits on the nine-to-five work life.

"Once we get to seven or eight properties, then we'll be at a stage when we can actually take an objective view as to earned income from my job compared to the passive income from the real estate and decide. And for me I know it's going to be an easy decision. I know it's going to be real estate investing."

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