October 15, 2006
When the bank box is too
small
2006 has not been a great year for us in real estate
investing. After the $20,000 in fines and work orders we had
earlier in the year for the "crack house" in Niagara Falls, and
$5,000 in plumbing repairs in May on our three unit home in
Toronto, we hoped the expensive surprises were done for the
year. Sadly, in September we had to rewire the same three unit
property in Toronto. After we stopped choking on the $25,000
bill, we sat down and refocused on what our objectives are.
Every month we bring you back to those objectives that we
talked about in the very first
newsletter, but sometimes they are all that keep you going
forward. As we figure out how to pay for the new debt when we
still haven't paid off the other surprises from the year, you
can see how our objectives are especially important.
So, this month as we take you through a few of the deals we
did in the last five years, remember to revisit your goals for
your wealth, health and life. You never know when you will need
them to guide you on your next decision.
The Eleven Dwellings:
Our five years of purchasing history
 by Julie Broad
Neither Dave nor I make six figures (yet! we still have high
hopes). In fact for almost two years while we were investing, I
wasn't making anything because I was a student. So, before you
turn away thinking you can't possibly afford to buy one
property let alone 11 in the next five years, remember there
are ways to achieve any goal with a little determination,
effort and creativity!
As promised last month, here's a high level look at how we
picked up eleven new properties in five years:
1. Nanaimo A - bank financed deal with
savings
2. Toronto A - primary residence purchase using
RRSP's
3. Toronto B - we assumed the vendor's mortgage
and our real estate agent held a second mortgage on the
property (this has been a mixed blessing purchase - it's one we
were never sure how we qualified for, but had we not qualified
for it we would have saved tens of thousands of dollars in
repairs and renovations that we didn't expect - shown in the
photo above, our new garage construction)
4. Niagara Falls A - No money down deal with bank
financing and a VTB ("No
money down doesn't mean it won't cost you" - remember that
edition of Rev N You? It was about this property)
5. Niagara Falls B - 85% mortgage from the bank,
with CMHC insurance, a promissory note from the vendor and a
credit for work to be done
6. Nanaimo B - 80% VTB, no bank financing and we
partnered with a friend of ours to come up with the downpayment
(this is an example of one of the deals out there worth looking
for, and when you find a good deal it's not too hard to find
someone with cash willing to go in on the deal with you)
7. Toronto C & D - pre-construction condos
where we partnered up with several people to come up with the
15% to purchase them; and we have to pay the other 10% down
when they are finally built in 2008
8. Nanaimo C - Refinanced Nanaimo B as it had
appreciated a considerable amount in 12 months, and we used
that money to buy this property (no money out of our
pockets)
9. Nanaimo D - Refinanced Nanaimo A to purchase
this property, and used some of the left over cash to renovate
Toronto B (this is when we love real estate and the hot market
we have been in!)
10. Vancouver A - All we will say for now is that we can
thank the creative and hard work of our mortgage broker and
some help from our family.
There are deals you don't see in that list that we walked
away from. There is even one deal we left our deposit ($1,000)
on the table because we walked away too late. Sometimes the
financing just doesn't come through. Sometimes the deal doesn't
make sense in the end. This is where having at least one
condition in your Purchase and Sale Agreement is key as we
discussed in a previous edition (so that you can still walk
away and not lose money!).
We have since sold one of the Niagara properties because of
the constant problems with the tenants, the property manager
and the city, and Toronto A is on the market to pay for the
costs of rewiring Toronto B. We will never say this has been
easy. But, we always tell ourselves that if it were easy
everyone would be doing it.
Our point of showing you what we have purchased over the
past 5 years is to give you an appreciation for how a little
creativity can go a long way with real estate investing. You
don't always require a lot of capital or a ton of experience as
there are other people you can work with to help get you going.
Short of cash? Talk to friends or family to see if they might
be interested in partnering up. Short of ideas? Speak with
someone you know who has a fair amount of real estate investing
experience. Think "outside the box" even if the bank's want you
to be in it!
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