Amy Leong rented her first basement apartment in Surrey when she was 18. Working 40 hours a week selling cell phones at the mall, money was tight, but she started setting aside $ 500 a month, motivated by the law-breaking landlords entering her apartment. without warning.
“I kept telling myself, ‘I’ve worked so hard all day and my paycheck goes straight to someone else’s pocket,’ said Ms. Leong, 36, who bought her first condo at the age of 24.
By that time, she had saved $ 25,000 and her father rewarded her efforts with an additional $ 10,000. With her down payment of $ 35,000, she could afford a 720 square foot one bedroom condo in South Surrey, near the house where she grew up. It was not easy. Including the mortgage and maintenance costs, she was paying $ 1,150 per month and only earning $ 1,900 after taxes, she says.
But she decided that real estate investing opened the doors to early retirement, wealth and a better way of life. After that first condo purchase, Ms. Leong became a real estate agent and met Ally Ballam, who is the same age and also bought her first property at age 24 while working as a waiter at the Cactus Club. Ms. Ballam had bought a condo in Yaletown, which now pays her $ 1,000 a month in rent.
“I always knew I wanted to start investing in real estate because I knew it was a way to build substantial wealth over time,” Ms. Ballam said in an email.
Together they now own 13 properties, with a total value of over $ 7 million. The broker duo, both of whom are advisers at Engel & Volkers, also coach newcomers on real estate investments, including joint venture partnerships, in which each party typically invests 50% of the cost.
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Ms. Leong is so passionate about encouraging others, especially women, to enter the investment real estate ladder that she says she freely gives big sister advice to people. strangers while queuing at a store like Aritzia.
“I said, ‘Are you spending all your money on clothes? And they say, “Oh yeah sure we are.” And I’ll say, ‘So stop doing that, follow me on Insta… I buy anything I want and I can spend thousands of dollars here because of my real estate. i also have net worth [in the] millions, but you can do it too.
“I am planting the seeds. I feel like it’s just a culture of debt and it’s a culture of bad debt, and I hope to change it.
Real estate investing is the key to wealth creation and financial security for a large portion of the homeowner population. Recent data released by the Housing Statistics Program of Canada shows that one in five homeowners in Vancouver owns investment property. In British Columbia, 62,570 homeowners owned three or more properties, according to a 2018 study by the CHSP.
But Ms. Leong believes that most people have a gap in their real estate investing know-how because no one is talking about it. Her own parents were reluctant to invest in another property after going through an extremely stressful period of high interest rates in the 1980s. Her mother worked for 20 years in the bank and her father stocked the shelves of the grocery store.
“No one is sitting around a table at the Cactus Club talking about real estate investing,” she says. “And parents or the baby boomer generation went through something so traumatic with high interest rates that they never invested again, or, conversely, they are powerful investors and don’t don’t have time [to share with their kids]. I discovered that people weren’t sharing with me. I was listening; this is how I got information about investing in real estate.
Ms. Leong is also particularly inspired by the 1997 bestselling book Rich daddy, poor daddy. After reading the book, she wrote down her goal of owning three properties at age 30 and 10 at 40.
“And I had no idea how I was going to do it,” she said.
Becoming a real estate agent who has sold condos on presale has helped. Like many real estate agents, she sees investor activity returning to the BC housing market.
“We’re on the verge of selling 25 suites in Kelowna to investors this month and just sold 10 in Langley last week, all investors,” she said. “Some of them were baby boomers investing with their children. It was so special.
Their investor clients are typically between the ages of 30 and 50, and many of their younger clients are firefighters and police officers who fear their pensions will not be enough. Ms Leong says some of her clients plan to own 50 properties by the age of 50, which means she needs to make sure she finds properties whose rents will cover all costs, which can be difficult in expensive Vancouver. She often tells them that they have to look further, like the Okanagan Hot Market.
It’s about following trends in where people are moving, Ms. Leong says. It’s also about using the equity you build, which is how she could afford a house with character on the North Shore. For example, she borrowed money from her first condo to buy a house, and she was able to do so because the tenant’s rent was enough to cover the larger mortgage.
“I’ve always known that without investing in these ‘pips’ or ‘piggy banks’, I would never be able to afford a house in Vancouver. So I took the equity in the first condo I bought and increased that mortgage. And because [the rent] was positive cash flow, now I had the money for the down payment on my house and the tenant paid the increased interest. She’s been living there for five years now, and she paid my deposit [on the house], that’s how I see it, ”she said.
“It’s using debt intelligently to your advantage. “
She is also increasingly finding that Gen Xers and Baby Boomers who inherit wealth or have significant net worth are becoming active real estate investors for the first time.
Don McPherson and his wife, who are in their 50s, have purchased three rental properties in the past five years. They started out by using the equity in their Richmond townhouse to buy a condo in Kitsilano, followed by two more in Richmond and Langley. Prices in Vancouver went up so quickly that they had to buy further away.
Mr McPherson, who works as an aviation safety officer, said he plans to retire at the age of 68. The couple had worked hard to aggressively pay off their mortgage, making double payments for 12 years. They have long been averse to debt, but after meeting Ms. Leong and Ms. Ballam, they decided to leverage their equity. Their concern, says McPherson, was that they wouldn’t have enough to retire. Like many people, neither had a pension plan or a company offering matched RRSPs.
“We had no plan in place for what we were going to do for retirement,” he says. “We watched older friends approach retirement and see what they had and what they didn’t have. It was a bit of a mystery box. You don’t know who to turn to, who to turn to, or who to trust.
They had to postpone their retirement for three years because of the effect of the pandemic on their finances. But their real estate purchases were much more successful than they could have imagined, with all rents covering all of their expenses, including line of credit payments, strata fees, and property taxes. A property that costs about $ 450,000 needs about $ 2,200 in rent to cover the costs, says McPherson. He says they never wanted to change ownership – the plan was always to be long-term owners offering secure rentals.
“Obviously, the growth in the market was the big surprise,” he says. “We weren’t counting on that. We thought about it more for retirement, either by living off the rental income if we can pay off the mortgages, and / or by liquidating one of them.
They are not considering buying more properties due to the rental income taxes and the complexity involved. They are satisfied that they have achieved their goal of owning all three investment properties, the last one having closed a month ago.
“The cliché is, I wish I knew sooner,” says McPherson. “With the land, you can see a price drop, the buildings can drop in price, but they always go up. “
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