Monday, May 26, 2008
The RE Addiction
Real Estate is addictive.
The other night, L and I splurged and bought Richard Bach's Automatic Millionaire Homeowner - Canadian Edition. It was filled with good advice, the biggest of all is this:
Smart and Wealthy People DO NOT sell their first home.
What do they do, you ask? They keep it and rent it for enough to cover their PTI (prinicple, taxes and interest). Then they borrow against the equity accrued in that first home for the down payment for a second home.
That got us excited since we are lucky enough to know someone who just might consider renting from us AND who would be the perfect tenant. My mother. If she could rent our house for as much as she pays to rent, then she gets a whole house to herself while we get to a) have someone else pay down our mortgage and b) keep our lovely little house in the family. Then we could borrow against the equity for a down payment and buy something else, hopefully in BC.
Truth is, I don't know if we could afford to buy in BC (we're looking at Nanaimo as our next move since I believe it is the most affordable and up-and-coming Island community available). Even with the nifty plan of Mr. Bach's, properties are STILL high enough in BC that are mortgage payments would go from $385 a month here in Moose Jaw to around $900. I know what all you big city people are thinking - $900 is still cheaper than renting - and it is. Which is why EVERYONE should be a homeowner. Yet, there are always other, additional costs to take into consideration so it is hardly ever just $900 a month. Plus, the jump is kinda shocking from $385, where, when one of us is unemployed and the other has only a part time gig (like we just experienced in April/May, making our payments is still a cakewalk. Soooooo...
Another option is that we could buy a second property here in Saskatchewan since we are going to be here until Spring '09 at least. Find a cheaper property like we did with this house and fix 'er up - like we are with this one - and then sell it when we are ready to go back to BC, using whatever we make on that second buy toward a down payment. This would leave our first property alone, allowing Mom the affordable rent that she desires.
SEE WHAT I MEAN BY ADDICTIVE??
It is stressful, too, no doubt. Real Estate isn't without its heart aches and lord knows it can be a huge albatross on your back. But for a couple of creatives, I think it is an excellent way of creating an investment portfolio and future wealth. In fact, I welcome any of my creative buddies who might be reading this, to get in on the action. Anyone want to give us some down payment money with the understanding that when the house sells in '09 you can get back your profit in proportion to what you invested? I tell you, you won't find any other investment with this kind of ROI!!!
Guess I am starting to remember why I took that RE course in Van.
Ask me how I am feeling about all this next week when we have the carpenters in to level the back room floor.
;-)
The other night, L and I splurged and bought Richard Bach's Automatic Millionaire Homeowner - Canadian Edition. It was filled with good advice, the biggest of all is this:
Smart and Wealthy People DO NOT sell their first home.
What do they do, you ask? They keep it and rent it for enough to cover their PTI (prinicple, taxes and interest). Then they borrow against the equity accrued in that first home for the down payment for a second home.
That got us excited since we are lucky enough to know someone who just might consider renting from us AND who would be the perfect tenant. My mother. If she could rent our house for as much as she pays to rent, then she gets a whole house to herself while we get to a) have someone else pay down our mortgage and b) keep our lovely little house in the family. Then we could borrow against the equity for a down payment and buy something else, hopefully in BC.
Truth is, I don't know if we could afford to buy in BC (we're looking at Nanaimo as our next move since I believe it is the most affordable and up-and-coming Island community available). Even with the nifty plan of Mr. Bach's, properties are STILL high enough in BC that are mortgage payments would go from $385 a month here in Moose Jaw to around $900. I know what all you big city people are thinking - $900 is still cheaper than renting - and it is. Which is why EVERYONE should be a homeowner. Yet, there are always other, additional costs to take into consideration so it is hardly ever just $900 a month. Plus, the jump is kinda shocking from $385, where, when one of us is unemployed and the other has only a part time gig (like we just experienced in April/May, making our payments is still a cakewalk. Soooooo...
Another option is that we could buy a second property here in Saskatchewan since we are going to be here until Spring '09 at least. Find a cheaper property like we did with this house and fix 'er up - like we are with this one - and then sell it when we are ready to go back to BC, using whatever we make on that second buy toward a down payment. This would leave our first property alone, allowing Mom the affordable rent that she desires.
SEE WHAT I MEAN BY ADDICTIVE??
It is stressful, too, no doubt. Real Estate isn't without its heart aches and lord knows it can be a huge albatross on your back. But for a couple of creatives, I think it is an excellent way of creating an investment portfolio and future wealth. In fact, I welcome any of my creative buddies who might be reading this, to get in on the action. Anyone want to give us some down payment money with the understanding that when the house sells in '09 you can get back your profit in proportion to what you invested? I tell you, you won't find any other investment with this kind of ROI!!!
Guess I am starting to remember why I took that RE course in Van.
Ask me how I am feeling about all this next week when we have the carpenters in to level the back room floor.
;-)
Posted by Krista J. Konkin at 9:13 PM
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