The weather is finally starting to warm up and we are looking forward to a nice Spring and Summer! Heading into April we have had over 10 events this year and each one just gets better and better with the quality of people attending and rental properties being purchased. Visit our events page at www.venturepropertyinvestments.com/events to learn more or join us . For those that come to our events regularly, we are actively looking for a more relaxed and casual environment compared to the classroom or boardroom type setting. Stay Tuned!
When we first meet with new investors, most are drawn to the Return on Investment (ROI) that Real Estate can provide. Typically, our Guided Investing clients (we act as their Realtor & Coach) can make 20% – 40%+ annual ROI. Our Passive Investing clients (who let us do all the work and treat Real Estate much like a stock) usually make 12%-25%+ ROI. When investors new to real estate see Returns like this that typically are not available in traditional investments such as Stocks and Mutual funds, they are skeptical at first (as they should be). When they take the time to learn more about it and see how risk is mitigated, they see how Real Estate can not just build long term wealth, but also allow you to leave a legacy.
The above returns are great to any investor, however could they get even better? Essentially, if you invest in anything where you put $0 into it, then your ROI will be Infinite. Let’s look at purchasing an investment property. Typically a bank will give you up to 80% of the entire purchase price of a home in the form of a mortgage (that’s a huge portion of the money needed!). The remaining 20% down payment is where most people struggle, they think they need to physically save up for this, where it could come from many different sources. A typical down payment source for many new investors (including us when we started) is to use the equity in your own home. The Bank will usually provide you a secured loan (or HELOC) of up to 80% of the appraised value of your house, less the mortgage. So if you purchase a home and it goes up by $100K, then the bank will provide you a loan of up to $80K for you to use. Many new investors are hesitant to do this as it is their principle residence and it is personal to them. However we try to let them know that that loan is like any other loan from any other lender, there will be a debt service to it that needs to get paid back. There are other ways to find the remaining down payment, ie: private lenders, JV Partners, family, others, etc. They may even have higher interest rates, the key is to plug the numbers into your financials, and if they work then it could be a great alternative then saving up for a down payment, and allow you to move forward at a much quicker pace.
So how do we know the financials work? Essentially you need to find a cash flowing property, taking into account all loans and all debt servicing. So, once you collect rent from tenants on a monthly basis it should cover all monthly property expenses, all debt servicing, and also have a surplus (to hold as reserve and mitigate risk for the future). If you are wondering about tenants, rental demand, etc. check out our previous blog post Why is Ontario’s Golden Horseshoe Such a Great Place to Invest where one topic we touch on is vacancy rate which is less than 2% in many of the areas we invest in. So to sum it all up, if you are putting 0% of the funds into an investment and all of your debt is being serviced by that investment, any profit made is infinite and you didn’t really have to change your lifestyle or spending habits to save up. We for one love the idea of owning something where we did not have to invest out of our own pocket for, this is using leverage to its fullest potential (but also keeping your investment secure). As you move forward in your investing and you utilize your first properties for further down payments, very quickly you will see that the first properties you purchased will have paid you back any funds you had invested, and you will have built a business that did not cost you anything but continues to allow you to Build Wealth and Life Your Life the way you want too. Feel free to reach out if you would like a Free 1:1 consultation with Chris or Martin to discuss how real estate investment could help you move forward.
Visit us at www.VenturePropertyInvestments.com and our pages on facebook or LinkedIn to learn more about how we invest in real estate to profit in both an increasing or decreasing housing market. Or contact us if you would like to learn how we are providing double digit returns for our partner’s and clients year over year.
Until Next Time,
If you haven’t come out to one of our events, feel free to visit our events page on our site at https://venturepropertyinvestments.com/events/. If you are just starting out, or a seasoned pro, come out to Learn and Network with others like you.
Martin Kuev & Chris Shebib are full time Real Estate Investors, Realtors and Wealth Coaches who have over 20 years experience in Real Estate. With multi-million-dollar real estate portfolios and a team built over the past decade, they left the corporate world to have the flexibility to spend time with family, continue their own real estate investments and help others build long-term wealth.
Both Chris & Martin are first and foremost Husbands, and Fathers. Both are actively involved with their families and each have 3 daughters keeping home life full of surprises.