Friday, August 31, 2018

In The Landlord Paradise

I love flowers on the side of the house!
In the last post, I shared that I've been tolerating an eight-month long vacancy because of fear, which wasn't even my fear to begin with, but it still paralyzed me.

Now, determined to fix the issue, I set out to find a great tenant ASAP.

Determining Price

To determine the price, I analyzed all for-rent ads on Kijiji. There were 39 of them.

Out of 39, only eight were listed under “House Rental” and the rest were in “Apartments and Condos”.

Even though my unit is an apartment in a duplex, it comes with a basement and a backyard, and takes up a larger part of a two-story house. I decided to put my ad under “House Rental”. It seems to be fair and puts my ad into a bucket with less competition.

Out of 39, the majority of 21 ads were two-bedroom places like mine.

In some cases, prices included all utilities, some covered only some of the services, and some were with tenants paying for everything in addition to the rent. In my case, utilities must be included because meters are not separate.

During my analysis, I made the following big assumptions about the monthly cost of utilities:
  • ·         Water = $100
  • ·         Hydro = $200
  • ·         Water + Hydro = $300

I used these assumptions to calculate all inclusive price for all ads.

Next, I looked at two bedroom units by price and saw that out of 21,
·         6 were below $900
·         4 were between $900 and $1,000
·         6 were between $1,000 and $1,100
·         3 were between $1,100 and $1,200
·         2 were over $1,200.

Aiming to be in the middle and also making sure cash flow would be positive, I decided to price my unit at $1,150.

Placing the Ad

Kitchen Looks Great!

I placed the following ad:

Big 2 Bedroom Duplex for rent $1,150 all inclusive

$1,150.00 URGENT

Looking for responsible tenant(s) for this Spacious Move-In ready Duplex!

- Lots of Parking
- Large Patio & Backyard

- Bright living and dining rooms
- Great functional kitchen
- 2 bedrooms with large built-in closets
- You'll love the spacious Bathroom (pls see pics)!

- Lots of storage space
- Central AC
- Appliances: Fridge, Stove, Dishwasher, Washer / Dryer

UTILITIES: all inclusive

Please text/call or email Anna at MY_PHONE / MY_EMAIL to book your viewing.

We'll be showing the unit this week on THURSDAY, FRIDAY and SATURDAY.

Please reach out to me now to book your viewing: MY_PHONE

Unreal Number of Inquiries

Living + Dining Remind me of Spain Villas - lots of white tile
I got a gazillion responses, mainly through texts!

I booked 31 viewings over four blocks of time: Thursday afternoon, Friday morning, Friday evening, and Saturday morning. Only two people are scheduled for Saturday morning.
So far, as of the end of Thursday, 20 people showed up out of 29.

Landlord Paradise

Since the level of interest turned out to be super high, I started to wonder if I’ve set the price too low.

I asked a few applicants how my unit and its price compare to other apartments they’ve seen. Most said that they are comparable; and only a couple of people said that I could charge a bit more. I checked with my property manager and he thought the price was right as well. It’s what people in the area can actually afford to pay for this size and type of a place.

It appears that the market is very landlord friendly. Lots of demand, and lack of units. Landlords get to choose from a large pool of applicants.

It’ll be a long time, before I forgive myself for an 8-month long vacancy in this landlord paradise type of market. Unreal. I’m such a la-la.

Home Alone: Ever Think a Tenant Might Come After You?

Source: Home Alone.
In my last post, I talked about a duplex conversion. Here’s a prequel to that story…

Eight months ago, we got a duplex in Chatham. The duplex has a one-bedroom unit at the front and a two-bedroom unit at the back. There was a door between the two apartments. I'll call it "The Door" for the remainder of this post.

At purchase, the small front unit was already rented to a tenant and the bigger back unit was vacant.

Long story short, my property manager and the tenant in the small unit did NOT start out with the right foot.

As a result, I was under the impression that the tenant in the front unit was a

  • frightening, 
  • sneaky, 
  • irrational, 
  • demanding, and 
  • crazy person, who is 
  • impossible to deal with, and 
  • who’d sue me at the drop of a hat. 
  • I was seriously afraid of her and her meaniness.

(Hmm... I was wondering if meaniness was even a word.
Now I know that it isn’t, but I’ll still keep it.)

By the end of 8-month long vacancy, the longest vacancy I’ve ever had,

I finally started questioning the absurdity of the situation.

After all, I am the owner of the property. My property manager is so scared of my tenant that he doesn’t take any action. I am so afraid of the tenant, because of how terrified my property manager is, that I haven’t done anything either for a very-very long time.

I know that every month without a second tenant costs me A LOT of money. The money that I don’t have. I am doomed unless I stop chickening out, step up, and take massive action. So I did….

Home Alone

This property is in Chatham, which is 3-hour drive away from home. I decided to come for a weekend and clean / paint / fix the back unit, so that it’s ready to be rented. If my property manager is too afraid to handle this, I’ll just deal with it myself.

I got to Chatham and kept to myself. I didn’t see the tenant face-to-face during the entire day. I cleaned, vacuumed, planned remaining action items around the unit, went to shop for small decorations for the upcoming showings, etc.

Source: Home Alone Movie - Bad Guy!
At sunset, I was starting to panic.

The darker it got outside, the more panicky I felt.

Finally, my brain started spinning and painting petrifying pictures…

I could hear my tenant having a guest over. They were watching TV…

My crazy-irrational thoughts went kind of like this:

“… There’s a door between the two apartments.

It doesn’t have a lock.

What if my tenant is indeed as horrifying as my property manager believes her to be?

What if she sneaks in during the night and kills me in my sleep?”

What if, there’s a lot of them next door?

How would I stay awake through the night to make sure that I’m prepared to run out of the house and call 9-1-1, if necessary?”

Survival Plan

Source: Home Alone Movie
I decided to set up my sleeping station on the main floor. I placed my sleeping bag strategically in the kitchen. As close as possible to the two exits: the main entrance and the patio door.

I couldn’t see The Door between the two units when I was laying down, but I’d only need to lean forward just a tiny bit to see it.

I tried very hard to stay awake.

I wanted my tenant to fall asleep first. The TV was still mumbling through the wall.

After a day of driving, cleaning, shopping, and working, with every minute passing by, it was getting more and more challenging to keep my eyes from shutting.

I put a Windex bottle next to my pillow. In the worst case, I’ll spray it into her eyes and run for my life!

I positioned a rolling chair right next to The Door with the intention that it would start rolling and make a rolling noise as soon as someone walks through The Door. And that'd wake me up!

I turned my computer on. It would be a lot more cheerful if I had youtube… but I didn’t want to use too much data on my phone.

Deadly silence on my side of The Door.

I turned on the only movie I had on my computer. Beauty and The Beast.

Bad decision! I dozed off before the first song ended…

OMG! She is Right Next to Me!

This is it.

I heard the sound of the rolling chair in my sleep.

It’s happening.

I opened my eyes, ready to run for my life:

“Oh, my gosh. I am so sorry! I just wanted to turn the AC up. I didn’t know you were here! I didn’t mean to scare you! Why are you sleeping on the floor? Would you like me to bring you a mattress?”, said my tenant. I could tell, she felt awkward.

As far as I can tell after meeting and spending some time with my tenant one-on-one, she is practical, to the point, and doesn’t plan to harm me or anyone else in any way.

I’m not sure what the actual misunderstandings and miscommunications have been about between the tenant and my property manager, but the "Horror Tenant" issue did cost me a lot of money, time, and stress.

Lesson learned –  Don’t let other people’s fears become your fears and put you into hibernation mode for months. If you have a problem, take action to start solving it.

$300 Duplex Conversion

Over the past year, I’ve been meeting a lot of investors whose strategy is duplex conversions.

Here is how it works, in a nutshell:

  1. Buy a home 
  2. Get permits to add a legal unit to it. For example, create a legal basement apartment; Or get a permit to split the unit vertically creating a quasi semi-detached home.
  3. Hire and oversee contractors & trades to get the work done
  4. Re-finance to get your money back
  5. Rent both units
  6. Live happily ever after (or until you get another one of these duplex conversions).

Based on meet-up presentations I’ve seen, my understanding is that the cost to add a legal unit nowadays averages at about $90K in GTA. Perhaps, you’d see numbers between $75-110K, depending on how optimistic the presenter is.

Here’s how our “Duplex Conversion” Happened

My husband and I got a duplex. It turned out that the two units are connected by a door. Initially, there was not even a lock on the door, which wasn’t an issue since one of the units was vacant at the time.

As we were getting ready to find a new tenant, we had to replace the door with a wall and properly separate the units.

In Our Case, Duplex Conversion Was a Lot Less Elaborate

Step 1. Take measurements & get some two-by-fours and other hardware

Step 2. Measure & cut.

Step 3. Put a back wall up & add insulation

Step 4. Finish up with the fancy front wall. VoilĂ !

Now we have a proper two-unit house. Can't wait to find a great tenant to move in!

Oh-oh! Power Has Been Shut Off

Taking out melted
two-week-old food
out of someone else's fridge
does NOT feel glamorous
Hi! Did you have a good summer?! I hope you did!  I'll post a few articles today. I did a lot of camping in August, and stayed offline most of the time. It's time to catch up now.

Yay! We got a New Door - door #18!

At the end of July, we acquired a new asset. It’s a condo townhouse in Barrie, ON, which we will fix up, clean, refresh and rent to a nice family.

This town house is different for us because it’s our first condo – comes with a pool, gym, and snow/grass services. Very nice!

On the flip side – vacancy costs a lot more than with our typical freehold town homes: Condo fee is quite an expense to carry in addition to mortgage payments!

Oh-oh! Did I miss something??

Since we’ve done quite a few acquisitions, you’d think that everything would go smoothly! but…

I didn’t call the power company to open a new account fast enough and they shut off the power!

This mishap was a definite oversight on my part: I had a lot on my to-do list and held off with all the administrative set up for too long, so that I could finish higher priority tasks. Now, I am sitting at the house and waiting for my hydro appointment.

Since it’s summer and there is no tenant yet, being without power isn’t really a big deal.
No hydro during winter when you already have a tenant would feel a lot more stressful. And that has actually happened last December at another property when a furnace suddenly died.

Having said that, previous owner of the place was leaving quickly and left all her groceries in the fridge. I can tell you for sure - Taking out melted two-week-old food out of someone else's fridge does NOT feel very glamorous. I had to triple-bag the garbage. Yucky....

Any Costs?

Luckily for me, there is no re-connection fee.

The only cost is my time – I have to drive to/from the property and stay here during my scheduled 4-hour appointment time block.

This trip pretty much takes up an entire day! I can imagine how stressed I would've been, if I was still working and had to ask for time off to take care of this.

I am keeping fingers crossed, and hope my cell phone and laptop battery will last until the technician arrives.

Here we go… The technician is here! Hurray!

Should've Would've

Here's what I should've done.

Within a couple of days after closing, I should've called all vendors, enabled new accounts and set up auto-payments for the following services:

Condo Fee

In addition, I should've notified each provider of my intention to rent the unit and to have tenant pay the utilities down the road.

In this case, many vendors have a process for rentals to make sure the account automatically goes back into the owner's name without re-connection fee, as tenants come and go.

Thursday, July 26, 2018

Little Things I Love!

Over this Summer, there were several days when 

I thought to myself how incredibly lucky I was. 

And that was because I was doing something I really enjoyed. In particular, I got to do some gardening around one of our properties. And I truly loved it.

The garden was all set up by the previous owner, and left to grow wildly over the past four years. 

It is a bright mix of perennials.
Bright white daisies spread out confidently throughout the middle.  

Orange lilies proudly take up an entire corner. 

Red blanket flowers are about to bloom and brighten up the entire garden. 

Mint and lavender add gentle aroma reminding me of our cottage back in childhood.

Beautiful yet overgrown, the garden needed some care.

I was delighted to give it a trim.

Under the warm Ontario Sun, this was a dream come true.

I first weeded, and weeded, and weeded. Until I took out 5 bagfuls of various greenery.

Then, I trimmed the bushes, making sure they wouldn't put too much shadow on the garden. I also wanted them to stay safely below the eaves.

Next, I re-arranged the fresh sprouts, and moved some of the flowers around. My goal was to add a little more order yet keeping the nature's charm.

Lastly, I put landscaping fabric and mulch all around. This made my work look complete. I hope it will last a while now.

Voala! Job well done. And so much fun.

"I have looked in the mirror every morning and asked myself:
'If today were the last day of my life, would I want to do what I'm about to do today?'
And whenever the answer has been 'No' for too many days in a row,
I know I need to change something",
Steve Jobs 

Friday, July 20, 2018

What?! Seven grand for life insurance!!!

As I'm building my portfolio of 50 Doors, I can't help but wonder what happens if I die yesterday.

Initially, just the thought of leaving a gigantic pile of debt behind for my kids to deal with, upon my passing, was giving me goosebumps.

Even though, the kids are older now, they are definitely not prepared to chase rent checks, fix toilets, make sure mortgage payments go through without hiccups, etc. Their current focus is studying and finishing their education.

Since I was freaking out a lot about all the debt I took on, I decided to get some quotes for life insurance. The quote came back at $579 / month, which is almost


I was shocked! My husband and I didn't have to think very long to decide that this price is definitely not in our budget. We've been chasing assets, which on average make $200 dollars a month, and are not in a position to set three assets aside to pay for the life insurance. It's just too expensive!

Dangers of Self-Diagnostics: Hire a Professional

Several weeks later, I met an outstanding financial advisor. I attended his talk, read his book, and scheduled a one-on-one consultation. It turned out that I was looking at insurance completely backwards!

Instead of consulting someone knowledgeable and experienced and letting them guide me, I rushed to a decision. I had self-diagnosed my insurance problems and self-assigned a cure: that I must buy a huge coverage policy to pay off all my debt immediately, the moment something happens to me or my husband. Then I discovered that the huge policy was too expensive and left myself and my family in the same risky situation of not having a contingency plan in place.

Only after I talked to a real guru, I realized how much difference knowledge makes. There's a reason we have professionals who know exactly what they are doing! It's a shame I thought for a brief moment, I knew anything about insurance.

Lessons Learned

1) Start by Educating Yourself and/or Hire a Professional

Whenever you do anything for the very first time, it pays off to spend time on education and find experienced professionals who specialize in the field. 

Having read the book by my advisor, I got a good initial understanding of key terminology and common problems, solutions, and use cases around insurance. This helped me ask good questions  during my one-on-one consultation and discover what my personal insurance needs are.

2) Understand Your Own Needs

Surprise, surprise! After understanding how insurance works and what options would be suitable in my situation, I discovered that I don't need a huge policy to cover all my debt. It just doesn't make any sense. No wonder that would cost a fortune!

Instead, I realized that my needs are completely different. For example:
  • Be able to stay home for a few months, if one of our family members gets sick
  • Survive a sudden income interruption, in case my husband has to take a break from work
  • Have a sufficient emergency fund to avoid a fire-sale of one or more assets
  • Ensure that our kids finish their education, no matter what
  • Establish a detailed plan for our executors and get their agreement on this.
What I realized is that insurance is NOT a lottery. There's no need to buy millions of dollars of insurance. All you need is sufficient to go through a life change without sacrificing your future financial and emotional stability. 

Make sure you have enough for you and the rest of the family to still have your lives, businesses, and routine to come back to, after the storm is over, and carry on from where you've left off.

3) Understand Your Family Needs

It was interesting to me to work with my husband. During needs analysis, we drafted his and my estates. This means that we looked at:
  • what my husband will need, should I become disabled or die; and 
  • what I'll need in case he dies or gets sick.
It turned out that our two estates are drastically different.  

I'm actually a lot more demanding aka vulnerable at the moment, because my husband covers most of our day-to-day bills, while I work on building our future wealth. 

In other words, a brief interruption to my husband's work schedule, would cause a sudden financial shock to the family. While if I am out of pocket for a few months, no major collapse would happen. In this case, we'd just need to adjust our long term strategy.

With this in mind, as of now, my estate needs to be insured at a lower amount, compared to my husband's. 

Being Prepared Feels Great!

Even though it sounds very creepy to be discussing in so much detail what will happen when one of us gets sick or dies, I feel great having gone through this discussion! 

Here are some of my take aways:
  • Statistically, the chances of being out of pocket are pretty high! 
  • Basically, almost everyone will be sick in the next 10-20 years. So it helps to plan ahead how to afford to stay home while you recover and/or stay home with a sick relative.
  • Dying is easier than being sick. Sickness is hard on the person recovering and those who take care of him or her.
  • If you plan your insurance coverage well, you'll have a much higher chance to weather a storm and reach your long term goals after it.
Being prepared feels great! If you'd like a referral to the awesome financial advisor I'm working with, ping me and I'll connect you. No obligations and no referral bonuses for me! I honestly think it's super helpful to know more about this stuff and make educated decisions about how to best protect yourself and your loved ones.

Friday, July 13, 2018

Hey! Where should I invest?

I often get a question:

"Hey, I'd like to invest in .... 
plug in any town or city you are wondering about - Toronto, Milton, Hamilton, Windsor, Oshawa, Montreal, Ottawa, Rochester, Buffalo, etc... - 

... what do you think?"

To be honest, in most cases, I think absolutely nothing. I'd really have to do some homework and educate myself about the market before I can answer such a question.

Sometimes, I have a gutt feeling. Especially, when I've had some previous experience in a certain city. Still markets are so fluent and I'd need to look up latest stats and information, in order to provide an educated opinion.

I'd like to share a few questions that I research, whenever I'm getting ready to expand into  a new location.

If you have questions or would like to share your own tips on how to choose a great location to invest in, please add a comment below or send me an email!

1. Do People Want to Live There?

Ideally, population should be 100,000 - 200,000. If it's smaller, you'd really need to study the demand and supply carefully and make sure you know who your tenants are and how you'll find, attract, and keep them. You’ll also need to verify current inventory. Last week, I came across a city that had 26,000 vacant units while the total number of households is around 85,000 and has been declining. This tells me that supply drastically exceeds the demand and I’d have issues filling in units. Prices will not go up for a while in this market. 

There should be evidence and factual proof of recent and upcoming population growth. There are many great cities that, for one reason or another, have experienced population decline. Study latest trends in detail, before deciding to invest in them.

For example, if you come across a town that has been losing people over the past 50 years, I wouldn't bet on a sudden popularity spike. Watch out when you see outward migration, job loss, crime rate increase, poverty climbing up, vacancy rates sky-rocketing, lots of unused or abandoned inventory, etc. All these signs show you that you will likely have difficulty finding quality tenants. 

On the other hand, if you see population decline slowing down, flattening out, and notice people  starting to flood back in, you are onto something! Projected population spike might be a potential gold mine. If you start investing at the right time and get your property at a price that works, you might catch the wave of appreciation. 

Even though appreciation is always a bonus and should not be used in your assessment calculation as a given, it still makes sense to look for areas with high probability of growth and stay away from dying towns.

Projected population growth, recent considerable increase in population, new jobs and businesses opening, new or refreshed infrastructure changes, nearby city or town becoming hyper expensive and over-populated, and vacancy rates dropping are some signals of an emerging market.

2. Lots of Diverse Positives 

Look for social and economic diversity with lots of positives. Be careful when you see a location that has only one great thing going for it. An example of this is all the single big employer cities as well as cities majorly supported by a single industry.

I know that it might seem highly improbable for a giant company to shut the doors, yet we’ve seen so many examples. Windsor, Detroit, and Rochester are some examples of cities that went through a relatively long down town due to larger employers leaving.

One of the ways to find cities with lower risk of over concentration is to look for diversified and balanced list of positives across a wide spectrum: diverse demographics, income levels from entry to high, education from high school to PHD, household sizes from single person to families with kids, several unrelated employment industries, various types and levels jobs - white color, blue color, small businesses, large businesses, new technologies, and established employers, etc.

3. Who and How is Helping the City Grow?  

Lastly, I do a lot of research regarding economic development plans for each location that I plan to invest in. 

Looking at the plans of a City gives you a lot of insight into upcoming trends. For examples, some cities would promote latest technologies, set up programs to attract businesses, implement solutions to upgrade skills of the population to meet incoming businesses' requirements. You'd come across articles when agreements are made between various levels of the government to fund major infrastructure improvement programs: build new bridges, highways, and train stations; grow wind mills farms; re-build airports, etc.

On the other hand, you might come across a town that has its entire budget dedicated to fixing some pot holes in the roads. Most achievements listed on their website would be outdated or insignificant. No major partnerships with outside investors would surface, when you search for news on economic development. You'd realize that no one cares if the city grows. The focus is on status quo. In this case, you'd need to make sure you are good with the status quo and it works for your strategy. Momentum might last a few more years and this may be sufficient.

To recap, since my strategy is mainly based on buy-fix-rent-and-hold-long-term, I focus on finding locations with a high probability of market appreciation due to:

  • Sufficient market size for my needs
  • Recent, current and projected positive trends in population growth
  • Lots of evidence for finding quality renters and demand for the type of units I offer
  • Good supply/demand balance and trends 
  • Minimal risk of economic collapse due to over-concentration in a single niche/industry/social group/etc.
  • Great leadership and people interested in helping the city grow with budgets dedicated to major improvement projects that will attract jobs, people, businesses, and money. Work already under way! 

Wednesday, July 11, 2018

Expectant Parents: How to Create an Effective Financial Plan


The following article was submitted to me by Sara Bailey and I believe it's priceless. Sara shares her experience after losing the love of her life and the father of their two children, Greg.

I hope Sara's story helps you take a step back, pause for a moment, and be grateful for and cherish every minute of every day with those you love.

Also, I truly hope that the article will urge you to take action and protect yourself and your loved ones from preventable financial hardship in case of an unexpected life change. 

Thanks to this article, my husband and I saw our Insurance Advisor a few times over the past couple of weeks. We learned a lot about the benefits of various types of insurance coverage and were able to set up a plan that will help our loved ones to keep going, should we die or get sick "yesterday". 

When your family member is sick, you should be able to take as much time off as needed, to help them get better! You should have a plan to help you keep your business or your career safe, until you are ready to get back to them. It's not a secret, that we all have an expiry date and get sick every once in a while. Why not plan for it? 

Lastly, I insist that you TAKE CONTROL AND ACTION towards building your own successful future - whatever your definition is - and live your life fully, for many-many years to come! There is no excuse not to plan and execute your personal success strategy. 

Cheers to planning, executing and being prepared!

"Like many people who have lost the love of their life, I never in a million years thought I’d be here. On my 40th birthday — which I spent with my husband and our two kids bowling, devouring cupcakes, and laughing more than I ever thought was possible — I never dreamed that by my 41st, I’d be a grieving single mom raising a son and daughter on her own. But here I am, and with each passing day, I get a little stronger, and life gets a little easier.", 

Sara Bailey, The Widow,

Expectant Parents: How to Create an Effective Financial Plan

A baby changes everything. The minute you learn you are expecting comes with a whirlwind of excitement and new worries. Suddenly, you are faced with a massive to-do list in order to prepare for their arrival. Between prepping the nursery and buying baby gear, there are the less fun tasks that need to be addressed, too. Creating a financial plan during your pregnant months is a vital step in preparing for your new child.

Start Saving Now

It is always wise to have an emergency fund. Life can be unpredictable: You or your partner could lose your job; one of you could get injured or sick, or the car may need to be replaced. When you have a child, these costly unexpected situations are twice as stressful. Most money experts advise you to have 3 to 6 months of expenses in your savings account for these occasions.

However, even if you already have a comfortably padded savings account, you should set aside even more money during the pregnant months. Having a child will increase your monthly expenses. In fact, according to CBS, the average cost of raising a child is $14,000 yearly. The best time to add to your savings is before your baby is born.

Build a Budget

Children are expensive, which is why creating a budget is key. Some studies have found that parents who do not plan their spending run into financial issues around when their child turns 6 months. This can put a serious strain on your relationship.

Before you have your child, keep meticulous track of your spending to help you identify where you can cut back. Then estimate how much your child care expenses will be, this includes items such as diapers, clothes, formula, and toys as well as larger one time purchases such as the crib and stroller. To make things easier, try using the baby cost calculator at

Crafting your budget provides a great opportunity to evaluate if it is more beneficial for you or your spouse to stay home. Child care such as babysitters and daycare on average cost around $200 a week. Crunch the numbers to see what makes the most sense for your family.

Prepare for the Worst

Though it may be unpleasant to think about, you need to make sure that your child will be taken care of if something were to happen to you. Time magazine encourages couples to sit down together and have a serious discussion about estate planning.

Take a serious look at all your assets and create an itemized list of what you would like to go into the will. Do not forget to include investments such as property or art and retirement and savings accounts. To get an accurate measure of their worth, you may need to bring in an appraiser. You could also calculate the value of your home by looking at similar homes in your area and what they recently sold for.

Now is also the time to update your beneficiaries, write or adjust your will, and invest in life insurance. Taking these steps now will save your family members a lot of grief, stress and confusion in the event of a worst-case scenario.

 Invest in Their Education

It is never too early to start planning for college. The earlier you start saving, the better. Treat their college fund as an investment and set up their savings in a college savings plan in their name. These are designed to make sure your child does not miss out on financial aid or end up owing thousands of dollars in taxes. Instead, this money will go directly toward their education.

Get Ahead of Schedule

The sooner you establish a financial plan for your family, the more relieved you will feel. Money problems are often cited as the number one stress factors between couples and this only amplifies when you have a child. Take the time now to come up with a successful money strategy so that you can later enjoy your time with your new baby.

Photo courtesy of Pexels. 

Tuesday, June 19, 2018

How to Stop Living Paycheck to Paycheck

2012 was the year my husband and I  decided to take control over our financial destiny.

At the time, Anton worked for a small start up. The start up didn’t make it, so Anton had no job and no income.

I was running a small consulting firm – we implemented Human Resources systems for companies around the world.

I was a workaholic and drove myself into the ground – I was extremely exhausted, depressed, and had to close the business.

You know what? Our three kids couldn’t care less that we didn’t make any money. They still wanted to eat, drink, do sports, buy Pokemon cards, etc. It was pretty horrible!

That was the rock bottom for us. 

So we made two decisions:

  1. We decided to write our resumes and get ourselves proper jobs. Like grown ups do.
  2. We decided that we will find a way to make sure that this type of financial disaster never-ever-ever happens to us again

 That’s when we realized that we had absolutely no idea about money.

We knew very well how to spend it. But that was it!

So we started educating ourselves.

Some of you might have heard about the Law of Attraction and Bob Proctor.

Bob Proctor is considered to be one of the world's greatest authorities on attracting wealth. What he says is

 “Thoughts become things. If you see it in your mind, you will hold it in your hand”,
- Bob Proctor 

Maybe it was the law of attraction, or maybe I was just click happy on the Internet.

But one day we got a call from Rich Dad Poor Dad coaching team. So Anton and I signed up for an 8-week real estate training program with Rich Dad Poor Dad.

Taking that course and committing to do as we were taught, was one of the best decisions we ever made.

We learned about assets.

An asset is something that puts money in your pocket. 

I’ll show you an example later.

We learned that to become financially independent, you need to acquire assets. Assets will work for you and put money in your pocket. If you own some assets, you’ll have income from them and you will no longer be at the mercy of your employer or your next paycheck.

We also found out about liabilities.

A liability is something that takes money away from you.

For example, traditionally, we think that our house and our car are assets. 

But the reality is that both of them are actually liabilities.

That’s because we have to pay money to maintain them every month - mortgage, insurance, utilities, gas.

Here’s an example of an asset.

This is a small house in Chatham, Ontario.

It rents for $800.

All expenses add up to about $700.

Cash in your pocket is $100 every month.
By show of hands. 

Who would like to have an asset like this? Right, most people think that 100 bucks isn’t worth the effort. 

Audible, Netflix and a Sushi Buffet for up to 4 people cost about $100 bucks.

All three of these liabilities together can be covered by the cash flow from the tiny Chatham house we looked at earlier.

You can look at it this way: if you stop going to work and never get another paycheck, you’ll still be able to afford Netflix, Audible and Sushi.

Let me ask you now. Who would like to have the tiny Chatham house, so that you can get free Netflix, free Audible, and free Sushi for the rest of your life?

Based on the concepts we reviewed:

Assets put money in your pocket. 

Liabilities take money away from you.

The formula to financial freedom is: 

Acquire assets and eliminate liabilities until the cash from assets covers all the expenses from your liabilities. Then you are financially free.

Monday, June 18, 2018

Pocket Deal: You make money when you buy! Literally

Got a property with 20% off!
In one of the real estate training programs I took, we learned about pocket deals.

I knew, in theory, that if you build great relationships with real estate brokers, you'd start getting deals off the market, which they call pocket deals. But so far this has never happened to me until today.

Today is my lucky day!


These deals are supposed to be great because:

  • Price is low - you get a gigantic discount
  • No one else even knows about the deal
  • No competing offers even in the hot seller market!

Here is how it happened.

One of my friends focuses of flips. It's essential for him to find properties at super low prices. So, he  designed a system of finding deals off the market and putting them under contract. His system works great!

He gets houses ch-e-e-e-e-e-a-a-a-a-a-p. Then, fixes them. And flips!

Occasionally, he comes across a house at a good discount, but the discount isn't big enough for a flip. The cost of the transaction would eat most of the profit. These situations are best for those who buy-fix-rent-&-hold, like myself.

So instead of flipping, the deal was assigned to me. In this transaction, my friend plays the part of a wholesaler. He adds a profit (aka assignment fee) for himself before re-selling the deal to me.

Here are the numbers:

Market Price
290,000 [1]
Sold to Whosaler At217,500 [2]
Assignment Fee15,000 [3]
My Price232,500 [4]
Closing Costs10,875
Total Investment80,250 [5]
Instant Gain31,625 [6]
ROI at Purchase39%[7]

1) Comparable houses are currently selling for 290K

2) My friend was able to purchase the property off the market at 217.5K

3) He charged finders fee,  which is called assignment fee, of 15K when he assigned the deal to me

4) I am paying 232.5K for the house

5) To get the property, my total investment will be ~ 80K, including dowanpayment, closing costs, and a renovation

6) Based on current market prices, I'll have immediate gain of 31.6K:

Gain = 290K - 232.5K - 10.8K - 15K = 31.6K

7) The moment I buy the property, my return on investment (ROI) is almost 40%:

ROI = 31.6K / 80.25K = 39%.

Thursday, May 31, 2018

Cash and Other Benefits of Refinancing

Refinance - a way to convert Real Estate equity to cash
I can't believe it's already June and half of 2018 has zoomed by! May was a productive month. One of the big accomplishments was re-financing two of our properties.

Real Estate isn't very liquid type of investment. This means that you can't easily convert the value of your real estate properties into cash and go buy some groceries. This value is called equity.

Equity equals to current market price of your property minus the mortgage / loan balance that you have against the property.

As you hold a property, equity grows as market prices go up and as your mortgage principal is paid down by your tenants. If market drops, equity drops as well.

There are several conversion mechanisms to convert equity to cash. Re-financing is one of them. Another method is selling the property.

When you re-finance a property, you are basically starting over with a new mortgage.

As a result, your monthly mortgage payment will change. In my case, it went up considerably because interest rate has gone up from 2.95% to 4.39% and also because the size of the new mortgage is a lot higher than previous mortgage balance.

It might seem on first glance that re-financing and getting a higher monthly mortgage may be a very bad thing. If you think about it, your level of debt goes up. Your interest costs go up. Your cash flow from the property goes down. There are also various costs associated with the refinance transaction including mortgage broker fees, lender fees, and lawyer fees. Why would you do it?!?

Here are the reasons why this worked for me:

1) Getting Your Money Back 

Several years ago, when I originally purchased the property, I put in some money as a down payment. After purchase, I invested some additional money to renovate the place.

Refinancing helps me get all of my money back.

Once you have your money back, you can use it however you please. You can put it as a down payment for another asset, for instance. Or maybe you are nearing retirement age and would like to spend the money on your day-to-day expenses. Or perhaps, you have higher interest debt and you could use the money to pay off the lenders.

2) Maximizing Return on Investment

Let's take a look at an example. Suppose you buy a property for $100,000 with $20,000 down payment and suppose the market goes up by 2% every year.  Let's also say that principal pay down is negligible, for simplicity of calculations.

Then, after the first year, the property will appreciate to $102,000 and you would've gained $2,000.

Return on Investment (ROI) = $2,000 / $100,000 = 10%.

In this example, the market went up by 2%, but you made 10%.

This is because even though you provided only 1/5th of the money (20% down payment), you benefited from the growth of the entire house - and you got all of the gain.

What if you re-finance and pull all of your investment money out? In that case, you no longer have any of your money in the property, yet again you benefit from the appreciation of the entire house. This is when you get maximum returns:

Return on Investment (ROI) = $2,000 / almost nothing  = Infinity!

3) Doubling # of Assets That Work for You

Suppose, you buy another asset using the money that you pulled out at refinance.

Now, you have two assets working for you. Together, the gain from appreciation is $2,000 + $2,000 = $4,000.

Here are sample numbers for a refinance transaction:

The numbers above show you key numbers behind a refinance transaction. In this example;

New lender approved a loan of 255K. Out of this loan, previous mortgage of 135.5K was paid. Almost 7K was paid in fees.

Investors got all of their money back.

There was 63.7K of cash pulled out of equity. This is ~ 115% return on investment since the start of the project. Or, 29% annualized ROI.

Note: mortgage debt increased from 135.5K to 255K.

If you have any questions or would like more info, please comment below or contact me.

Friday, May 18, 2018

Finally! A movie STAR!

Red Carpet Time!
As some of you may already know, in the past I attempted to become a movie star!

Like many aspiring stars, I signed up with a couple of agencies.

This was a great experience with some lessons learned!

On the positive side, I did feel great going to a couple of photo shoots, where a professional make up artist made me look amazing. The pictures turned out awesome as well.

On the reality side of things, I went to about 20 auditions and then gave up.

At the auditions, I felt seriously average and slightly worn out when applying for youth roles. When trying to go for Canadian parent type of roles, I felt puppy-ish and unqualified. It wasn't a surprise to have never been called back.

The biggest lesson I learned during my brief acting career was when taking a course in acting. Our acting academy teacher said one day:

"Guys! If you want to be in a movie, the easiest way to go about it would be to make your own movie!"

Since then, this is one of my core principals. If I really want something, it's on me to make it happen.

I think that this idea is one of the simplest concepts of life, which took me a long time to grasp.

Most of us probably agree with this concept on the subconscious level. This is why we often hear and believe expressions such as:

"Whoever needs it, does it",
- my Mom
"Remember, if you ever need a helping hand, it's at the end of your arm, as you get older, remember you have another hand: The first is to help yourself, the second is to help others."
- Audrey Hepburn
"Sink or swim",
- Wise people, often parents

Long story short, last week I partnered with a Canadian feature film producer and became one of the associate co-producers (aka investor) in his upcoming Canadian feature film.

This project is very exciting! It will be amazing to learn more about the entertainment industry from investor stand-point as the project develops. Here are some reason why I love this opportunity:

  1. Learn about a new industry
  2. Observe a production and launch of a new asset from start to finish 
  3. Acquire an asset 
  4. Differentiate into a field with great demand and lots of room on supply side
  5. Partner with an ambitious experienced team of people who have been successful in the past
  6. And lastly... have my name in movie credits and attend various film festivals!

Risks are everywhere of course! In this case, I strongly believe that the probability of success times reward greatly outweighs the probability of failure times loss.

If you are curious and would like to learn more, please let me know. There is still room for several film lovers to join the project.

Wednesday, May 16, 2018

Why I Love Assets!

I love assets! Imagine someone else going to work and then handing over the paycheck to you to spend? Well, this is how assets work. And this is why I love assets. When done right, assets work for you and put money in your pocket.

Thursday, May 10, 2018

Are You Sitting on a PILE of CASH?

Watch this video to find out!

To watch on full screen, please visit Just Over Broke Channel.

Monday, April 30, 2018

Untangling a Messy Insurance Situation!

Look before you Leap!
When I was a little girl, my parents always expected me to run into trouble because I often rushed too much!

I would occasionally run into a corner of a wall or hit my shoulder on a doorway, just because of running and not looking ahead.

At school, I'd replace a minus sign with a plus mid way through solving a math problem or substitute a 3 for an 8...

Small mistakes lead to wrong answers and, in childhood, to a lot of bruises.

Well, some things are just a part of our nature. I have to admit that I'm still experiencing similar types of issues and hitting obstacles just because of going too fast and not looking ahead.

Found Really Cool Insurance Company

A few months ago, when interviewing market leaders on various topics as part of my book research, I discovered a very neat insurance company.

They specialize in home insurance and use technology to let average consumers choose exactly the coverage they need for their homes.

This process gives you an experience similar to how the rich would do it - a consultant walks with the rich through their home, pointing out fur coats and expensive vases and painting, and asking whether those should be insured and at what value.

This company repeats the same experience for every client using super friendly online application process.

For example, if you own a bike and live downtown Toronto, you can add bike insurance coverage. On a flip side, you can skip everything that doesn't apply to you and save some money. So, if you don't need jewelry or fur coat coverage, you won't be adding it to your plan.

Evaluating Risk can be Tricky! 

Another very neat aspect is that selections by default include all the necessary coverage. So you can't make a costly mistake accidentally.

For instance, even though earthquakes rarely happen around here in GTA, you shouldn't remove earthquake coverage to save a couple of bucks on your premium.

When dealing with insurance, always imagine what you'd like your coverage to be in case a certain disaster happens. Would you think saving two bucks a month was a great idea, when your home got shattered by an earthquake that no one even expected?

No! You'd want some money to get yourself a new place or fix those cracks in the foundation.

I learned during the interviews, that insurance providers already figured out adequate cost based on the likelihood of a certain event. They wouldn't charge consumers millions of dollars for earthquake protection in GTA. However, they do have a lot of data to validate the scenario and, if there is a slight chance that an earth quake is possible and can cause considerable damage, they'd offer the coverage.

So what I really liked about this new insurance company is that they wouldn't let you waive coverage of the type, where a typical consumer wouldn't have sufficient data to make a wise decision. They wouldn't let you take on a risk of losing everything just because your assumptions are based on day-to-day life and not backed up by lots of data with detailed analysis of trends and probabilities.

Instead they'd let you make very safe decisions such as increasing your deductible to save money on your premium or removing coverage that will not cause you to be out on the street in case of a disaster. For example, removing bike insurance and increasing deductible from 1K to 5K would be a great way to save money without putting yourself at risk of becoming homeless at the same time.

Saving $1,200 = A Week on Vacation

Now, at last but not at least, this new insurance coverage ends up being cheaper than what I currently have.

All the small savings from choosing the specific optional coverage I need and waiving safely components that I don't need, add up. Also, even though I have several properties, this company doesn't charge me extra.

Each of my properties still qualifies as a regular residential rental home and there are no extra charges for being a commercial client with more than 3 rentals. Traditional insurance providers would usually charge you extra, once you have more than three rentals.

I got quotes for the first three of my rental properties with a total saving of $400 a year. This might not sounds like much to you, but here is my math.

Saving across all of my properties would be around $1,200 a year.

$1,200 roughly equals to half a year of profits on one of my rental home. This is because my typical goal is to make $200/month on every unit. By tweaking my spending on insurance, I gain half a year worth of profits.

Let's see how the saving compares to what people usually make on a paycheck at a job. Let's assume 30% tax and 80K/year salary.

$1,200 equals to  $1,714 paycheck earned at work before tax. This is about 5 business days worth of work. Basically a week!!!

No matter how you look at this. The saving of $1,200 sounds HUGE in my mind and I wouldn't want to miss it.

Going Too Fast

Better Safe Than Sorry!
Obviously, I got very excited about this opportunity to streamline my insurance expenses and rushed forward.

I got three quotes for three properties and successfully transferred two of them to the new insurance provider: my primary residence and one of the rentals.

It was a very smooth and easy process and only took a couple of minutes and clicks at the computer.

Unfortunately, there was a snag with the third property!

What I didn't realize was that the company only insures a very specific type of residential properties.

There is an underwriting process that takes place after you get a quote and before you get coverage confirmation.

Oops!!! Left With no Coverage!

My third property didn't meet the underwriting requirements and coverage was rejected.

This happened because this property is not a typical residence. It is a triplex and is on cultural heritage list.

Unfotunately, I rushed forward and had cancelled the coverage with the existing provider BEFORE I received a note from the new vendor that they would not cover this property.

I did so because:
  • I saw the two other properties transfer very smoothly. 
  • I loved the quote for the third property as well. 
  • It was the last day to cancel renewal with the current provider without any fees. 
  • I tend to rush!

To make matters worse, when I started looking for another new vender, it turned out that most insurance companies would not even quote you on rental properties insurance unless you also cover your primary residence with them.

So, now with only a few days left, before my coverage expires I have to find insurance coverage at reasonable cost and move two of the properties from the new vendor elsewhere.

The good news is that the new company that I describe above doesn't have the requirement of covering primary residence. So I can still take advantage of their pricing for most of my properties. In addition, their cancellation fee and process is easy.

Now, fingers crossed! Let's see how my search plays out.

Have any comments or questions? Please comment below the post or get in touch directly. I'd be happy to hear from you.