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Investment-Real-Estate

Become a millionaire in 7 years...this time

We all know someone who became a first generation millionaire during the last market cycle from 2001 through 2008. It doesn’t take impeccable timing, mountains of cash, or any uncanny business acumen. All it takes is a simple plan to follow and the discipline and guts to see the plan through. That’s it, there’s no magic here. Thousands of millionaires will be made right here in the valley in the next seven years, so let's make sure we’re on that list! So how do we ensure we aren’t on the sidelines this time around the merry-go-round?

The real estate market isn’t nearly as complex as we make it out to be. It does the same thing over and over, it goes Slump-Recovery-Boom! And then Slump-Recovery-Boom! And around and around we go. It’s also not hard to determine where we are in the cycle because we know what has already transpired. For example, we know that Kelowna Real Estate was in a slump from 2008 until 2013. We have all read the headlines by now that sales are up, inventory is down, and prices have started to head upwards. So what do you think might happen next?

So here is the plan, it involves purchasing five very ordinary houses in good areas that have legal suites. The suites are important, as without one, a house will rarely cover itself, let alone cash flow. The ideal property is three beds up and two down as these rent typically for $1500 up and $1,000 down in good areas bringing in a total of $2,500. The common two up, two down will work, it will just bring in about $2,100. Mortgage payments on a house like this will be $1,514 with 20% down, $1,703 with 10% down, and $1,798 with 5%. Each of these assumes a 25-year amortization and an interest rate of prime. As you can see, no matter how you finance these typical Okanagan homes, they will cover themselves and then some.

The additional cash-flow can be spent at your whim, used to pay down additional mortgage principal, or my favorite, wisely invested into the property to raise its value even more. I'm talking about new floors, paint, bathrooms, kitchens, this kind of thing. These little additional bonuses are not even considered in the chart below, neither are rental increases, but I don’t want to be too technical. So let's now take a look at a simple grid that shows what happens to our investments as we move through this next seven year recovery-boom phase.

So now it’s the year 2022, we’ve had a good run, factor in the down payments invested, we have a net worth in real estate in excess of 1.5 million. We could sell everything, pay some capital gains tax and be left with a little over a million dollars. Then we could sit on the sidelines and wait for a market correction, pick up great deals when no one else is buying, and put this whole plan on steroids when the market goes Slump-Recovery- Boom all over again. It would have been like having a million dollars cash back in 2009 and wisely buying up all the fire sales that were popping up all around you. Could you imagine what you would have done with a million in cash during the last big correction? Literally a fortune at your feet!

This article isn’t about hindsight however, it’s about foresight. Those that have it will be a millionaire seven years from now and a multi-millionaire 15-20 years from now. And all it takes is the first step.

If you’re a first time buyer, good news - you can start building your portfolio with 5 or 10% down. Those of you that are little more established will need 20% down. For this there are many options; borrow against your primary residence, or bring on a money partner, private mortgage, vendor take backs, the list goes on.

Now as an important side note, it’s crucial to choose a bank that will use rental income offsetting, so that each property you add to the portfolio doesn’t make the next more difficult to finance. I have found that TD is currently the most favorable to the investor when taking rental income into account.

I want to conclude this by noting that what you’ve just read is not inherently risky, anyone you know who has ever lost money in real estate, including myself, has done so by speculating on real estate. We are not speculators! We are investors, and we are hunting cash flow. It is this cash flow that recession proofs any portfolio, so that even if you decide not to sell off at the end of the next cycle, your investments will continue to be paid down and yield a return. I am speaking from experience on this.  I followed this simple plan to create a seven figure net holdings in real estate the last time around, and I’m excited to do it all over again this time. It’s an exciting ride, I recommend being on it.



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About the Author

AJ is the owner of Kelowna’s downtown boutique firm, Vantage West Realty. The firm takes pride in breaking the mould when it comes to how they practice real estate. With a well-deserved reputation as a real estate renegade, Hazzi has been shaking up the Kelowna real estate scene since 2002.

Having been a student of real estate through two market cycles, AJ has come to see an absence of truly qualified professionals specializing in investment real estate. This has become AJ’s role within the firm and the community: To educate clients on how to achieve financial freedom through real estate.

Arming his clients with knowledge on where to find positive cash-flow, how to renovate for profit, and other creative avenues that most agents completely ignore, Hazzi has carved out his niche as a real estate investment advisor (REIA), and loves nothing more than educating people on the right strategy to capitalize on both boom and bust years.  AJ is a firm believer that the Kelowna market is rich with opportunity, if one knows where to look.

If you are in search of an advisor who practices what they preach, consider that AJ has built his own real estate portfolio up to include multi and single family cash-flow rental properties, development property, resort property, fix and flips, and commercial properties. By sharing the lessons learned from his own experiences, his clients get the knowledge and confidence to invest without having to make the expensive mistakes he and many new investors have made along the way.

His goal is to impart on people, especially of the X and Y generation, that depending on RRSPs and Government Pension Plans to look after us down the road is risky business. Most people don't realize that as little as one or two properties added to your real estate portfolio now, can secure a comfortable, even lavish, retirement.

Bringing a consultant's approach rather than the tired, old-fashioned sales approach, AJ and his partners offer a world class service from finding, pre analyzing, and negotiating your next acquisition, to property management, all tailored to today’s busy investor.

To hear what AJ Hazzi's clients have to say about his service view the testimonials.

Contact Information

For more details or to reach AJ Hazzi, please visit www.vantagewestrealty.com

Email [email protected] Cell 250.864.6433



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The views expressed are strictly those of the author and not necessarily those of Castanet. Castanet does not warrant the contents.

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