Category: realestate (10)

15 Things to Know Before You Buy Your First Rental Property

Investing in real estate is not really “investing” as much as it is buying and running a business.

“More millionaires are made through real estate than anything else”.  Quotes like this make real estate investing sound easy, don’t they?  The reality is much different.  Investing in real estate is not really “investing” as much as it is buying and running a business.  Read on for the 15 tips that inspired our HGTV.ca article

1. Buy in a City with a Future, not a Past

You need to understand the economic fundamentals of the city that you’re investing in.  Just because a city’s real estate has historically grown by 10% per year in the past, doesn’t mean it will continue to do so.  Novice investors often start investing in smaller towns because it’s “cheaper” and you can get great “cashflow”, but they don’t realize the risk that they’ve now introduced due to tenant profile, smaller economies, stagnant populations, etc.  Your best prospects are to buy in cities that have strong economies, strong job growth, growing populations, and low vacancy rates. Shocker: even though Toronto is more expensive, it is actually LESS risky!

2. Don’t Buy Cheap, Buy Smart

Cheap is cheap for a reason.  If you don’t understand that reason, you shouldn’t be buying that property.  Only buy if you understand why it’s cheap, what risk it’s introducing, and if it’s part of your business model and your operational excellence to mitigate those risks.  For example, perhaps the reason that this property is $50,000 cheaper could be because its location lends itself to a lot of vacancy, or because of the amount of deferred maintenance by the previous owner, or because the tenant that you’re inheriting is a problem tenant.  Due your due diligence and be smart about your purchase… and don’t be misled by the cheap price tag.

3. Don’t Expect to Live Off Your Cashflow.

The reality is, you’re not going to retire off of the $300 or $500 of cashflow from the property… not yet.  Realistically speaking, cashflow generally gets recycled back into the property in order for you to hold for the long term.  Holding for the long term is the key to success – time allows for the mortgage to be paid down, the asset to appreciate, and rents to increase.  Game-changing cashflow is often when you have lots of equity in the property and you have a small (or no) mortgage.  You can use the “Multiplier Effect” to get to massive cashflow faster (described later)! 

4. It’s Not About “Timing” the Market, it’s About “Time IN” the Market.

Forget trying to buy low and sell high.  That’s not where the real money is made.  The real money is made by holding for the long term.  Staying in the market, through the ups and downs of the real estate cycle, is hands down the biggest determinant of success in real estate investing.  No one has a crystal ball, and therefore no one knows what is going to happen to the market tomorrow.  You can have a reasonable level of confidence, however, that the market will be solid over the long-term.  A property with good cashflow, low vacancy, and low headache tenants, is how you’re able to ride the ups and downs and stay in the market and not be forced to sell into a downturn. 

5. “You Make Money on the Buy”

Novices often interpret this to mean you need a killer deal or you need to find that diamond in the rough in order to make money in real estate, and this leads to inaction because the perfect property does not exist.  Once you understand the mechanisms through which wealth is built in real estate, the better way to interpret this statement is that you make money if you actually take massive action and buy a property, because the true wealth is built by holding real estate for the long term.  Does it really matter if you paid $800k or $810k for a property 10 years ago, if it’s worth $1.8M today?

6. It’s Not All About The Numbers

Contrary to popular belief, numbers don’t tell the whole story.  How could it?  How could it account for tenant profiles, risk, local economies, etc… and all the other critical key information not included in a standard proforma?  You need to look beyond the numbers to understand the full story of the property, the neighbourhood, and of the city that you’re investing in.  If something is too good to be true, it very well might be.  Remember: You don’t get something for nothing.

7. Multiplier Effect

You may be wondering, how do people grow their real estate portfolios to 2, 5, or 10 properties?  The answer is what Volition Properties has coined the “Multiplier Effect”.  After owning a property for several years, you can often take the equity out of that property via a refinance, and then you can use those funds as the downpayment for your next property.  Done right, and when investing in the right market, you may be able to massively accelerate the growth of your portfolio.  In Toronto, using the Multiplier Effect, Volition Properties’ clients have been able to double the size of their portfolios every 3-4 years.  Pro-tip: Make sure that your existing property still cashflows after your refinance!

8. Don’t use Uncle Joe as your Realtor.

You are buying an investment property.  You need an Investor Realtor, and you should rightfully have high expectations of your Investor Realtor, since they are a specialist.  The worst thing you can do is use Uncle Joe to help you buy an investment property.  Investor Realtors should be able to determine the best investment strategies for your particular market, run cashflow analysis for you, describe the tenant profiles for your area, and point out any areas of deferred maintenance (and ballpark costs to remediate).  Volition Properties has a team of Investors Realtors who specialize in investment real estate, each of whom is an investor and owns a portfolio of investment properties themselves. 

9. Top 5 Questions To Ask Your “Investor” Realtor

When interviewing your “Investor” Realtor, ask them these questions and see how confident they are in their responses.  1. How many investment properties do you personally own?  2. What is the tenant profile for this area?  3. What investment business models work in this neighbourhood?  4. What are the development opportunities to put this property to highest-and-best use?  5. Have you executed on at least 50 properties of this nature in your career?  If they stare at you dumbfounded as if you have three heads, walk away… quickly.

10. Understand your Tenant Profile

Tenants are the biggest risk factor to your business.  Better tenant profiles will pay their rent on time, treat the property with more respect, and be less headache. You need to have in-depth insights into whom it is that you’re targeting.  At Volition Properties, we actually identify our tenant profile first, then build our investment business model around them.  In Downtown Toronto, this means that our tenant profile is a young Millennial/GenZ, university-educated, 2-5 years out of school, making $60k-80k, working at a big company in downtown Toronto in professional services (health, accounting, consulting, finance, tech, etc.), who wants to live where they work and who wants to play where they live.  Who’s your target tenant profile?

11. Buy Near Transit

Transit is the single most desirable feature to look for in an investment property.  Your tenants will often not have vehicles, and thus will pay a premium to be within a 10 min walk of a dedicated transit station.  You’ll get a 15-20% greater lift in rents / property values than the rest of the market, and you’ll also be insulated by 15-20% reduction in rents / property values during a downturn.  A good long-term strategy is to look where future transit stations are being built and to buy close to them… it’s essentially an Investment Heat Map!  But only invest after shovels hit the ground… plans can always change! 

12. Join a Real Estate Investor Meetup Group

Your net-work is your net-worth.  Surrounding yourself with like minded people is the single most valuable investment you can make in yourself.  Other real estate investors can help provide you with guidance on how to navigate tricky tenant situations, or provide key contacts like Investor-focussed Mortgage Brokers, or can help advise on how to accelerate the growth of your portfolio so you can reach your goals faster.  A great place to start is the Toronto Real Estate Investors Mastermind, the largest and most active Investor Meetup in Toronto with over 3,200 sophisticated investors. 

13. Don’t Chase The Shiny Object

Choose a single investment city and stick to it, don’t always be chasing the shiny object.  Become an EXPERT in your chosen area, spend the energy to understand it thoroughly, and build your Investment Dream Team. Once you’ve committed to a particular city, stick with it.  This focus allows you to scale your efforts, build economies of scale, and to reuse the existing team that you’ve built.  A quote that I think is particularly pertinent: “Success isn’t that difficult; it merely involves taking twenty steps in a singular direction. Most people take one step in twenty directions.”

14. Real Estate Investing is NOT a Passive Investment

Like it or not, you are a small business owner.  You have functions such as advertising, marketing, customer relations, maintenance, accounting, tax, bookkeeping, insurance, finance, banking, accounts receivable/payable.  You’ll be making strategic and tactical decisions that will lead to the success or failure of your business venture.  Don’t fall into the trap of thinking that real estate is a passive investment.  A passive investment is buying a share of Apple or Google, where they have executive teams running the business.  In real estate investing, YOU are the one running the business.  Mentally prepare yourself for this before diving in.  Don’t forget: if you don’t have a Property Manager, you ARE the Property Manager.

15. Consider Owner-Occupied

If you’re going to live in it, you have an incredible advantage!  An owner-occupied property that is still an investment property essentially is taking advantage of the House Hacking strategy, whereby you could live in one unit/room and rent out the units/rooms.  Owner-occupied can potentially mean less downpayment (as low as 10% in certain instances), lower mortgage interest rates, being able to use up to $35,000 of your RRSPs tax free towards the downpayment via the RRSP First-Time Home Buyer Plan, Land Transfer Tax rebates (for example, in Ontario up to $4000 and in Toronto up to an additional $4475), First-Time Home Buyer’s Tax Credit worth $750, as well as other benefits.  This makes a big difference for first-time investors!

Ready to take the next step? Book a complimentary Advisory session to plan the roadmap to your first investment property!

How to Make an Extra $50k When Selling Your Home

Volition was featured on HGTV.ca to share strategies for getting top dollar for your home – you can check it out here.

As usual, we have more to say. Read on for the extended version!

To get top dollar for your home, you need to be strategic.  We’re going to go beyond the “regular” advice (i.e. staging, remodelled kitchens, curb appeal, etc.) and challenge some of the preconceived assumptions around getting top dollar for your home.  Any run-of-the-mill Realtor can throw something up on MLS and hope for the best… What separates an average realtor from a great one is their strategy and their market knowledge, and their ability to create a personalized Market Strategy for your home.  Also keep in mind: Investor Realtors make the best Realtors!  Investor Realtors work with regular home-buyers and home-sellers as well, and are trained to have higher-order thinking skills and possess the ability to see value where others can’t, leading to better outcomes and higher sale prices for you as the seller.  

Be Strategic

  1. Realtor Strategy: You need to be strategic about who you select as your Realtor.  Your Realtor is the quarterback for the entire transaction, so don’t hand out this responsibility lightly.  And definitely don’t go with someone just because they are “cheaper”: you may very well be stepping over pounds to pick up pennies.  The $5,000 you may save could mean that you’re leaving $25,000 or even $100,000 on the table – it’s not always “all things equal” because you may not be getting the absolute top sale price for your property.  You wouldn’t want a discount heart surgeon; why would you settle for anything but the best on the biggest financial transaction of your life?  Do your due diligence and find the best; you owe it to yourself.  What makes the best Realtor?  Keep reading to find out.
  2. Market Strategy: not to be confused with Marketing, a market strategy will help you understand the inner workings of your particular market, and give you deep insights into the current market environment, including important considerations such as supply/demand, mortgage interest rates, new government-imposed vacancy property taxes, pending tenant law policy changes, etc. – and more importantly, what this means for you and selling your home.  A good market strategy would then create an ideal target buyer persona and determine how to best position your home in light of the market conditions, and then cater all activities toward trying to attract that particular buyer profile.  If your expert Realtor develops a personalized Market Strategy for you and your home, then everything else flows naturally from this… marketing, renos, staging, descriptions.
  3. Reno Part 1 – Reno Strategy: Now that you know who the intended audience is, does your home already fit your particular buyer profile’s needs, or do you need to make upgrades to cater to their desires?  Don’t just make changes on a whim, or because you read an article about it.  Your Realtor expert should be able to clearly identify with laser precision what fixes or upgrades need to be done in order to attract the right buyer and what increased selling price you can expect as a result.  It’s even better if your Realtor expert has the renovation team internally (for example, Volition Properties has done many $25k kitchen upgrades resulting in an increased $75k sale price for clients!) or at least has partners who will do the renovations under the supervision of your Realtor expert.
  4. Reno Part 2 – Best Reno Bang For Buck:  That begs the question: will spending $25k on a kitchen remodel always yield an extra $75k in selling price?  Will I get a better ROI if I finish off the basement or if I improve curb appeal?  Contrary to popular belief, there is NO one size fits all answer – every property and every market is different.  Perhaps your property is a starter townhouse and your target buyer needs a move-in ready home because they won’t have any money left over for renos, in which case it makes sense to do renos prior to listing and you would see the ROI in the increased sale price.  There are lots of simple, general, easy to understand, but wrong, answers to this very popular question.  Get expert advice from your Realtor as your starting point.
  5. Reno Part 3 – Knowing When To Do Nothing At All:  Sometimes, you just aren’t going to get the money back, and the ROI isn’t worth it.  In a hot sellers market, perhaps you just need to get it listed ASAP to catch the hot market.  Timing could be everything, especially if you’re trying to get sold prior to new stricter mortgage regulations coming into effect, or other proposed changes that could affect the market.  Or maybe you do nothing because in your particular property in your particular neighbourhood, buyers require a blank canvas to put their own finishing touches on.  In addition to reno costs, other things to consider are time/energy spent, additional holding costs, living through renos or moving out, approvals/permits, and additional headache that you may not wish to take on.
  6. Listing Strategy: It’s not just maximum exposure that you want, you want the right exposure.  Your Realtor will create a Listing Strategy, which will demonstrate how they plan to target your ideal buyer, while simultaneously getting you maximum sale price.  What is your pricing strategy, should you have an offer date, and is this best served as an Exclusive Listing?  Should you be advertising in foreign language publications and marketing to overseas buyers?  How is your Realtor going to target their list of private buyers/investors?  Your Realtor’s marketing plan should demonstrate how they will be highlighting the property against current market needs (i.e. during Covid, outdoor space, walk-out/rooftop patios, and dedicated office nooks demand a huge premium).  Keep in mind – much of the “advertising” that regular Realtors do is really just to generate more business for themselves, and does very little to actually sell the property for a higher price.

Putting an Investor Hat On

  1. Be Flexible: Buyers may value certain things that aren’t important to you as the seller.  The key is to hone in on those aspects, and offer them to the buyer – especially since it’s no skin off your back.  This could include offering flexible timing on closing, or allowing the closing date to be extended at the buyers’ sole discretion (to a limit, that is). Perhaps if the buyer is planning for an extensive renovation, you could allow unfettered access to the property, allow permits to be drawn up and submitted prior to closing in your name, and then transferred to the buyer at closing.  You’re only limited by your imagination – Volition’s Investor Realtors have the depth of expertise necessary to conceive and negotiate these considerations to get you top dollar.
  2. Be Creative:  Creative deal-making can be an excellent way to get an extra boost in sale price.  If you don’t need the entire proceeds from the sale, you could offer the buyer a  Vendor Take Back, a form of Seller Financing in which you act like the bank and receive regular interest payments by lending the equity in your home to the buyer… and if this is not your Principle Residence, a VTB reduces your capital gains tax by deferring it over many years.  Other forms of creative deals include Rent-To-Own, Agreement For Sale, Sandwich Leases, Joint Venture with a contractor prior to sale, etc.  Caution: these are advanced-level strategies; make sure you are working with an expert Investor Realtor like Volition on these.
  3. Get Your Rents Up Before You Sell:  As an investment property, one of the primary ways that a buyer valuates the property is by looking at the rents it generates.  The higher the rents, the higher the ROI and therefore the higher the property value.  This means staying on top of rent increases every year.  Depending on your province, this also means investing in an area where there is a more transient tenant profile where you can increase the rents upon tenant turnover.  This also means looking for creative ways to boost income sources; for example, coin-operated laundry, renting out the garage separately, renting out parking spaces separately, etc.
  4. Create Value For The Buyer: this isn’t necessarily for the novice home owner, but you can create tremendous value though change of use.  Examples include putting in a basement rental suite, getting approvals for an extension or a laneway suite prior to sale, changing a single family home into a legal luxury triplex, severing/assembling a large plot of land for development use.  If your land is well-positioned for a land assembly by a big developer, perhaps band together with your neighbours in a united front to demand top dollar.  Change of use can, but doesn’t necessarily always involve, expensive renovations but time/energy will definitely be put into the planning process
  5. Work With Your Tenants: Investment properties can be more challenging to sell due to them being tenanted.  This often means that you can’t stage the property, access can be restricted, sometimes the units can be messy due the tenants, coordination of schedules can be difficult, etc.  One of the best tactics is to incentivize tenants: gift cards to Tim Hortons or Starbucks often work well in exchange for cooperation with showings, keeping their unit tidy for showings, vacating the unit for showings, agreeing to house their pets at their parents’ place for the listing period, etc.  More extreme action could include asking them to temporarily move out for the listing period and you put them up at an AirBnb as a mini vacation for a week, or maybe if you need the property completely vacant you could negotiate a mutually beneficial scenario.  Volition Investor Realtors are experts in navigating these tricky scenarios and mediating these discussions with your tenants for you.
  6. Is It All About The Money?:  Although as sellers we always want top dollar, it’s also worth considering the non-monetary aspects that are important to you.  A quick sale may be an important factor for you.  Minimized headache might be your most important consideration.  Perhaps reduced disruption to your lifestyle is paramount.  While maximum sale price is typically the #1 goal, have a frank discussion about this with your Realtor expert about what your priorities are, and this should be incorporated into your Listing Strategy as well.

Ready to sell? The Volition team is here to help. Get in touch with us at info@volitionprop.com

 

We are back with the second installment of the pre-reno walkthrough at the Danforth project!

We are considering options for our basement, which include:

  1. Leave unfinished, but move the mechanicals and electrical panel
  2. Finish as a recreation room plus den, extra bedroom and bathroom
  3. Finish as a legal secondary suite

We initially planned to leave the basement alone, but we realized that installing a new furnace and hot water tank (and removing the existing boiler and rads) present an opportunity to move the mechanicals, and plan future room layouts so the mechanical engineer can plan HVAC systems accordingly.

We worked with the architect to assess feasibility for a legal secondary suite as well as potential floor plans for options 2 and 3.

Considerations for each option:

1. Leave unfinished

Pros:

  • Lowest-cost option
  • Creates a more usable basement for now (storage space without the “icky” feeling) and future (can do rough-ins for drains and space plan for the future)
  • Assess waterproofing options and effectiveness as there are leaks through the cinder blocks with every rainstorm

Cons:

  • Delayed gratification – no finished space to enjoy right away
  • Costs more to do later as there are efficiencies rolling the work into the same project
  • Inconvenient – will have to dedicate headspace to finish later, and live through renos after move-in

2. Finish as a recreation room plus office/workshop/den, and add extra bedroom and bathroom

Pros:

  • Best “quality of life” option – we gain an extra floor to use and to grow into
  • Will still increase the value of the house and as it will become a 3 + 1 bed, 2.5 bath family home
  • Don’t have to rent out part of our primary residence

Cons:

  • No rental income to offset additional expense
  • Locks us into a less flexible option
  • Additional costs if we decide to create a legal basement suite in the future, although we can reduce costs by roughing in a kitchen now

3. Finish as a legal secondary suite

I will begin by emphasizing it is critical to work closely with professionals if you are considering this approach!

Construction strategy is one of my specialties (and one of the perks for Volition clients, as we guide investors through optimizing renovation investments and maximizing rental income), but there are many requirements to meet in creating a legal secondary suite, and I consult with the experts (i.e., architects and engineers) to ensure compliance with fire and building codes.

Here is why 80% of Toronto’s basement apartments don’t comply with all the rules – look at the steps involved to create a legal one!

Source: https://www.secondsuites.info/resource-centre/

Legal secondary suite considerations would be multiple blogs on its own, but here is a flavour of what we contemplated with this option:

  • Basement walkout – does one exist or would it need to be created?
  • Side setback to the property line – 0.9 m minimum, but our house is grandfathered due to its age and 0.8 m is sufficient (this is where I rely on SMEs), but we would have to demo part of the chimney to comply
  • Minimum ceiling heights – if we have to underpin, it is not financially viable
  • HVAC – independent or shared system?
  • Fire separation requirements
  • Sound attenuation requirements
  • Egress (escape window)
  • Attractive layout for two use cases: tenants now, and us later with the option to reclaim for personal use

… and the list goes on!

The key determinant for us is whether we can reach the basement minimum finished ceiling height of 1.95 m (6’ 4¾” – but I said 6’ 5” in the video) without underpinning.

This is a tall order (see what I did there?) when we take the extra layer of drywall and resilient channel for fire separation and sound attenuation into consideration, which is why we were digging the holes shown in the video to determine how far down we can go by breaking the slab.

Source: https://www.ontario.ca/page/add-second-unit-your-house

Pros:

  • Rental income to offset the additional cost of finishing the basement
  • Apply our specialized knowledge to create a rare legal secondary suite, and increase the potential buyer pool with a mortgage helper if we sell in the future
  • Flexibility through thoughtful design to reclaim the space in the future with multiple use cases: age-in-place option for family members, in-law suite for personal/non-rental use, convert back to recreation space plus office/workshop

Cons:

  • Most expensive option due to conformance with requirements
  • Giving up personal space that we may need, and realizing we could have just gone with option 2 with less time and cost instead
  • Minor costs to reclaim the space for personal use (e.g., open wall from interior stairs to basement, will end up with an extra set of washer/dryers, may get rid of or reduce size kitchen in the future)

There is a lot to think about and we haven’t made a decision yet. What would you consider? What would you choose? 

Expert Tips That Will Help You Become a Homeowner Before 40

Accelerate your journey to homeownership.

Volition was featured on HGTV.ca to share our top tips for becoming a homeowner before 40 – you can check it out here.

As usual, we have more to say. Read on for the extended version!

We are going to steer clear of the typical stuff you often hear like start saving early, live frugally, don’t spend more when you get a raise, don’t order that avocado toast, etc. We want to broaden your thinking – especially because the traditional methods of getting into home ownership may not work in more competitive and more expensive markets.  These 10 expert tips will accelerate your journey to homeownership before you’re 40.

To help provide a frame of reference for the article, we’ve grouped the 10 tips into 3 groups: 

  • Tips #1-4 are Real Estate Strategies
  • Tips #5-7 are How To Get The Money
  • Tips #8-10 are Think Differently About Real Estate

1. House Hacking

Turn your biggest liability into your greatest asset – earn money from your home.  If you were thinking of a 1 bedroom condo, consider buying a 2 bedroom condo.  If you were thinking of a 2 bedroom or 2 bedroom + den condo, consider buying a small house.  This might seem counterintuitive, but the idea here is to buy MORE than what you need, rent part of it out, and lower your living expenses – including utilities and even wifi!  For example, let’s say that the difference between buying a 1bdrm condo and 2bdrm condo is $150,000, which equates to a $425 increase in monthly mortgage payments.  But consider this: if you could rent out your 2nd bedroom for $1200, you’re effectively ahead by $775 per month (even after the increased mortgage payment) and now you’re building equity on a larger asset!  Similarly, let’s say that you were able to buy a small house where your monthly costs including mortgage are $4200, you could live in the basement and rent the upstairs unit for $3000, then your monthly living costs would be only $1200 (and you would own a house instead of a condo!).  A larger purchase also provides you with more versatility as your needs change, i.e. you could move into the upper unit later.

2. Purchase a Triplex (or Convert a House into a Triplex)

A triplex is a 3 unit house: you could live in one unit and rent out the other two.  This is taking house-hacking to the next level… the price tag is high, but the reward is even higher!  Even though you’ll be spending more up front, the flip side is that you’ll be making significant rental income which helps immensely with the carry costs, and you’ll own a much more valuable house with much larger growth potential.  It is also more versatile since you can move between units as your needs change, or you can even combine two units if your family grows.  Typically with a triplex, your living costs would come down even further than in a smaller property: let’s say that you were able to buy a triplex and your monthly costs including mortgage are $5000, you could live in the basement and rent main floor unit for $2200 and the upper unit for $2200, then your monthly carry costs would be only $600!  

3. Buy a Property with Laneway / Garden Suite / Coach House Potential

A laneway house is a separate building that is located at the rear of your lot, and replaces where a laneway garage would normally go.  Enjoy the perks of having tenants without the downside of sharing walls!  No shared entrances, no shared laundry, no shared space.  In order to build this, you need a property that can accommodate a laneway suite (there are very specific requirements, so not all lots can), and the property needs to be located in a municipality such as Toronto and Vancouver that allows them to be built.  The price tag is steep: the cost of building one starts at about $400,000.  But the rental income that you get for that investment more than makes up for it; you could rent out a laneway house in Toronto for $3000+ per month, much more than a condo of the same amount!  The key here is to have the foresight and to consider futureproofing yourself – you may not have enough funds now, but over time as laneway suites become more popular and more attention is paid to them, lots that can accommodate laneway housing will carry a bigger premium.

4. Furnished Rental

Currently there are headwinds for the Short Term Rental (AirBnb) or Medium Term Rental market, but chances are that it won’t stay this way forever.  If you have available rooms/units and want a way to boost your rental income, employing a non-traditional approach to your rental strategy could provide you with what you need.  It is not for everyone: it is very hands-on, some municipalities have licensing restrictions on what you are allowed to rent out short term, and demand for STRs is relatively low right now due to Covid.  Employing this rental strategy, however, may actually allow you to reduce your cost of living down to $0 (or even make you cashflow positive while living there)!  The cost of furniture adds to the initial outlay, but can pay dividends in the future since it can help immensely with the cost of carrying the property and there is flexibility on how often (or not) you rent it out.

5. Turn Your Parents into Real Estate Investors 

If your parents want to help you out in getting started with your house purchase, they don’t have to act like your personal piggy bank.  Oftentimes, the better way to structure it is a win-win scenario, so it’s not a handout!  If they have a Line of Credit, or (even better) a Home Equity Line of Credit, they could lend funds to you for your down payment, and in return, you would pay their interest on the borrowed funds.  To structure it as win-win, you could pay them a premium on top of their own interest payments.  For example, if they borrow at Prime, you could pay them back Prime + 0.5% or Prime + 1%.  Or you can structure it in a Joint Venture model (more on this below) whereby they help with the purchase, you do all the work and manage the property as a rental, and you both share in the equity upside.  If you are creative and resourceful enough, there are countless ways to make this work.  But make sure it’s all in writing!

6. Co-Living

Shared ownership with family or friends to buy something bigger to accommodate everyone’s living needs can be a great solution.  We have clients who have purchased together in groups of 2-6.  It can be trickier, and everything needs to be well defined and documented beforehand (sharing of expenses, major repairs, upside capital appreciation, decision making / voting rights), but done right, this can provide an excellent opportunity for younger individuals to get into a bigger and more valuable house, with more upside potential.  This comes with the added complexity (and risk) of owning with other people, so clear, direct, and regular communication is key (e.g. scheduled regular meetings to review living arrangements, rules of the house, deciding on who gets which bedroom, what happens if one person wants out, etc.).  Note that buying in groups of more than 4 can get tricky from a mortgage perspective, so make sure you speak with your mortgage professional early.

7. Joint Ventures

Joint Ventures are a way of using OPM (Other People’s Money) to buy real estate.  When purchasing real estate, you need all of the 4 M’s: Money (downpayment), Mortgage, Mastery, and Management (Asset Management, not just Property Management).  Whereas in a normal real estate purchase where one individual (or a couple) brings all of these things in order to buy a house, the reality is that these things can come from different people.  In a traditional JV, if you are willing to provide the Mastery and Management, then your co-venturer would provide the Money and Mortgage, and you would both share 50/50 in cashflow, mortgage paydown, and equity upside of the property.  Often, this does require you to have a proven track record so that you can demonstrate you know what you’re doing, but there are many investors who used JV money when purchasing their very first property – these people spent all of their time & energy learning about how to invest in real estate by joining real estate investment groups like the Toronto Real Estate Mastermind, the largest & most active real estate meetup group in Toronto with over 3,000 members.

8. Stepping Stone Approach

The biggest advantage that young people have is that they have time on their side.  Buying property early, even something smaller like a condo, has a compounding growth effect that will work in your favour.  Just as an example, buying a $500,000 condo now can potentially mean it being worth $700,000 in 5 years.  This compounding growth effect, which Einstein himself described as “the most powerful force in the universe”, builds tremendous equity which makes it much easier to upgrade to a house by the time you are 40.  Jumping straight into buying your dream home might not be a reality when you are starting out; consider a stepping stone approach instead, rather than waiting and waiting.  This is not a call to arms over FOMO – this is to demonstrate that taking action and getting in early is generally the best strategy.  The Toronto market has grown 7-10% every year, so that $500,000 townhouse you were eyeballing 7 years ago is now $1,000,000… while your $100,000 downpayment that you had ready 7 years ago but didn’t use is now worth $115,000 while sitting in your savings account.  The rest of Einstein’s quote: “Compound interest is the 8th wonder of the world.  He who understands it, earns it; he who doesn’t, pays it”.

9. Build an Expert Team

You are the CEO of your house.  Your job as CEO is to ensure that you have the absolute best team.  This is probably going to be the biggest purchase you will ever make in your life – don’t settle for second-rate team members.  Do you really want to entrust the fate of your financial future on using Uncle Joe as your Realtor?  You pay the same amount to most Realtors, so why not go with the best… or the one who truly offers the most value?  If you are considering a house with a basement unit, work with a Realtor who knows what to look for to ensure that it’s a legal basement unit.  Similarly, if you are considering a laneway house, work with a Realtor who knows the requirements and criteria for laneways so that you won’t be unpleasantly surprised later.  Demand this level of excellence and value-add from all of your service providers: Realtor, mortgage broker, insurance broker, accountant, real estate lawyer, contractor, etc.  When you start thinking about it in this way, you start realizing that home ownership isn’t a one-person show; the team that you surround yourself with can help you ensure that your purchase goes smoothly, and more importantly, ensure that it’s a well-considered part of your overall plan and financial future.

10. Invest In Real Estate, Even If You Stay As A Renter

Real estate investing can be one of the most lucrative ways to grow your wealth.  If you don’t necessarily NEED to live in the property that you purchase, then you can continue to be a renter – there is nothing wrong with that!  In fact, several of our clients have purchased investment properties in downtown Toronto, but continue to live as renters because they have apartments with very reasonable rents and financially, it just makes more sense to not live in their own property!  Keep in mind that your own home is a luxury, not a necessity (and as such, it is often a liability, not an asset).  With your equity growing in your investment properties and with renters paying your mortgage, you may eventually reach a point where that equity can help you purchase your own home by the time you’re 40… in a way that is sustainable and not a major financial burden!

Volition Properties

It’s hard for young people to buy real estate, especially with rising prices, escalating uncertainty in the market, and not knowing what you don’t know. 

Volition Properties sets out to demystify the real estate process. We get it – buying real estate is daunting.  It has many more zeros than your typical retail store purchase.  Volition is unique in that we aren’t just Realtors, we provide Advisory Services on your home purchase, which is immeasurably valuable when dealing with the biggest purchase in your life.  We can advise on your real estate needs and how it fits into your overall lifestyle, investment, and financial goals… beyond just the single transaction you will make with us.”  One great way to get started is to join a real estate meetup, such as the Toronto Real Estate Mastermind

IN-PERSON Real Estate Investing AMA with the Volition Team – Ask Me Anything!

NEW Date: Monday, August 30
Time: 6:00 -8:00 pm
Place: Withrow Park
RSVP for free!

Your most pressing questions about real estate investing in Toronto – ANSWERED LIVE AND IN-PERSON!

Yes, you read that right. We know we’re not the only ones tired of talking to blank screens and desperately craving facetime with the community. In line with public health guidelines, we’ll be hosting this Meetup at Withrow Park!

Record-breaking prices, falling rents, strict stress tests, “the exodus from the city”, possible rising interest rates, impacts of Covid, Laneway Suites, is it worth it to do this reno or that, do I need to change how I invest in Toronto, how do you do a legal triplex conversion… These questions that keep you up at night are the very same concerns that we aim to address during our much-anticipated AMA!

We get it. Not knowing how to get started or how to take your investing to the next level during these times is tough. But you’re not alone, Volition is here to guide you.

The Volition team currently has personal holdings of $32MM+ and 55+ units. We also run the largest and most active Real Estate Investor Meetup in Toronto with 3,000+ investors. Since 2012, we have helped hundreds of investors build over $100M of wealth and have changed countless financial futures along the way.

On August 30th, we’re offering an opportunity to have your burning questions answered by the Volition team in a live “Ask Me Anything” session – no topic is off the table!

We welcome (and encourage!) you to submit your questions to us at info@volitionprop.com beforehand, then join us live to engage in the conversation.

Your questions + our Real Estate Investing Advisors = the most valuable 2 hours you’ll spend all week.

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The Panel:

Matthew Lee – A real estate thought leader and advocate, Matt is passionate about the transformative change that real estate investing offers when done correctly. Having learned hard lessons from previously “chasing the shiny object” when investing in small towns, he has now created the Volition investing business model (an investment business model that actually works in the Toronto market) predicated on risk-mitigation, scalability, and resiliency, which he has taught to thousands of aspiring investors.

Ming Lim – Ming is a passionate educator and has 20 years of real estate investment experience in Toronto, the GTA, and Southwest Ontario. He purchased his first investment property in 2001 and has been hooked ever since! Ming has a dual role at Volition Properties as both the Head of Advisory and Construction. He mentors and guides new and experienced investors who are interested in purchasing and developing in the Toronto market. Ming’s background in Computer Science from the University of Waterloo and construction experience give him a unique analytical lens on investing, and a practical approach to implementing investing strategies.

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The logistics:

To help ensure everyone gets the most out of the event while staying safe, please read the entire post before attending.

Location: Withrow Park

What to bring: Something to sit on, personal snacks or drinks, your questions!

Food and snacks: Please leave no trace and dispose of all your waste at home.

Masks: As per public health guidelines, masks or face coverings are strongly recommended in all outdoor spaces when physical distancing cannot be maintained.

Weather: If rain is forecasted, we’ll reschedule to a later date. This will be communicated to registrants the morning of the scheduled date.

RSVP for free!

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Volition Properties

Volition Properties is an award-winning Toronto boutique real estate investment firm. We provide real estate education, help clients buy investment properties, renovate and build income properties, and have sophisticated property management. We have helped clients invest over $228MM in real estate in the Toronto area – we can guide you too!

Massive Action: From zero to 90+ units before the age of 30!

Date: Wednesday, July 21, 2021
Time: 7:00 – 9:00 pm

You’ve listened to them on podcasts, watched them on YouTube, and seen them featured in Toronto Life; now they’re gracing the Volition stage!! Volition is thrilled to welcome Austin Yeh and Mayu Thava, real estate investing superstars and leaders of RISE Network, as guest speakers!

Like many others, Austin started exploring the world of real estate investing after reading the classic book Rich Dad, Poor Dad. UNLIKE many others, Austin took massive action and has grown his portfolio from 0 to 40 units in just 3 years.

Mayu grew up fascinated by real estate and took quick action after graduating from university. Since then, he’s applied the lessons he’s learned to grow his portfolio to over 50 units.

Impressive, right? (And we haven’t even mentioned their ages yet!).

Austin and Mayu both quit their full-time corporate jobs before the age of 30 and will be revealing their strategic investment strategies. They’ve worked hard to put the right systems, teams, knowledge, and education in place and will be sharing how you can do it too.

You’ll learn:
– How to scale with minimal capital
– How to invest in long-distance real estate
– How to leverage social media to scale your investments
– How real estate helped them quit their full-time jobs

Watch the FULL recording below:

 


Austin’s Bio:
Austin Yeh is a 26-year-old full-time real estate investor and entrepreneur. Starting off with only $40,000 in cash less than 3 years ago, Austin has managed to scale his portfolio to over 40 rental units with properties in Windsor, Sudbury, and Toronto through using Other People’s Money (OPM) and with his own personal funds. In February 2021, Austin officially retired from his full-time corporate job to work on growing his real estate wholesaling business, called Ontario Property Deals, with his business partner, where they have ambitions to grow revenue to over $1mil in its first year of operation. Furthermore, Austin is the founder of RISE Network, a real estate community with over 5,200 members which serve to help, educate, and inspire all members to use real estate as an asset to achieve wealth and freedom. Austin is also the co-host of RISE Real Estate Investing Podcast, a Canadian real estate podcast which educates the everyday investor on how to invest in real estate through interviewing experts.

 


Mayu’s Bio:
Mayu Thava is a 29-year-old full-time real estate investor, mortgage agent, real estate coach and flipper. Mayu built his real estate portfolio through leveraging unsecured lines of credit, which today has allowed him to create a portfolio of over 50 rental units across Windsor, Sudbury, Kirkland Lake, New Brunswick and the GTA. In May 2021, Mayu left his full-time corporate job to jump into the real estate and financing world full-time. Mayu is actively involved in growing the RISE Network and a co-host of the RISE Real Estate Investing Podcast both of which are focused on educating everyday investors on how to successfully invest in real estate.

Connect With Us And Start Your Real Estate Investment Journey

Whether you’re a first time investor or a seasoned pro, our experts can help!



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