Sold!

Well, we sold our first property! Our cute little house in Niverville is now the starter home for a very nice engaged couple. Mostly I am happy as we will use the proceeds to overhaul the exterior of our house and pay off a few small debts. Yup, so I guess this real estate thing has worked well so far. Of course I had wanted to hold onto the house and realize a much bigger profit in the future but events (like the meltdown of the financial markets and the softening of the real estate market) conspired against us. So . . . we take a modest profit and move on.

Am I afraid to buy more real estate? Not really. As long as you are buying a property that brings in more then it costs monthly (positive cashflow), I think that there will be a lot of opportunity over the next couple of months. After all, here in Winnipeg, rental vacancies are still less then 1%! Would I buy a house if I was renting and wanted to move up to a place of our own? I have thought about this a lot lately and I think I would. I would wait until the end of November though. November is traditionally a slow time on the market with house prices usually dipping slightly and staying longer on the market. In my humble opinion it will be the best time of the year to find deals with motivated sellers.

Just a quick note: I learned this morning a really cool way to fund real estate investments. It's called RRSP mortgages. You can use OPM (other people's money) by getting family, friends, or investors to convert some of their RRSP money into a mortgage for a property. The great thing about this is that you don't have to go through the all the hoops that you would with a bank. Once you have someone on board with you, you can use their RRSP mortgage to buy property by reducing or eliminating the need for bank financing or as a substitute for a downpayment.

So lets say you find a property that will cashflow nicely when you buy it (and appreciate) but a bank won't give you financing. You show the numbers to your sister (who has lots of money in RRSP's which aren't making her any money). She agrees to provide you mortgage for 100% of the property. She gets 1/2 of the cashflow (you get the rest) and you agree to sell the home in 5 years where you'll both split the profit (or maybe you hold onto it until it's payed off in 20 years). Either way, it's win-win for both of you. She gets to invest in a deal that will help her to make a modest monthly profit, profit on the mortgage interest, and will free her from poorly performing investments (as she currently has her money in mutual funds - yuck!) and you get modest montly income and eventual appreciation profit without putting down any of your own money - it's all profit for you! Pretty cool, eh?

Anyway, this idea of using other people's RRSP money seems like a no brainer. Unlike stocks, real estate will not lose 30% of it's value over night. As long as your real estate is cashflowing, it won't matter if you have small dips in the property's value, you can always wait it out as you let your tenants pay off your investment. As I told someone the other day, this stuff is pretty easy to implement once you've done your homework. Anyway, if you are interested in partnering with me to invest in real estate, or if you have any questions about how to get started, let me know! I'm certainly not an expert but I can point you in the right direction. . .

May Light increase!