How many times have you heard people say,” I have lost my way?” They don’t know which direction to take; and no “Why” to their destination.
In most people lives losing their way comes in many different areas; in their career, health, family, sports, fashion, diet, spending, finances and so many areas of their lives.
For this blog, I am talking about your financial portfolio way.
What does “Way” mean? According to Oxford Dictionaries “Way” can be a noun or adverb. http://www.oxforddictionaries.com/us/
In reviewing The Investment Real Estate Way, I use “Way” as a noun.
With The Investment Real Estate Way, we will describe “Way” as either a method, a process, a procedure, a technique, a system, a plan, a strategy, a means, a mechanism, or an approach.
Part of my current role is to advise people on how to purchase investment real estate, and the first question I ask them is why? Why are they buying investment real estate and how do they see it impacting their lives? Answering these two questions can make their “Way” clearer.
There are many different answers, and I have found that the majority of people’s responses fit into three categories; making an improvement to their financial foundation, wanting to develop sustainable wealth, and creating a living legacy. All these categories are all built around personal finance.
Only a small percentage of people in the world own investment real estate. I have talked to you about 8 percent of Americans and Australians owning investment real estate, and in Canada, the number is only 4%.
Your Principal Residence – Buy or Rent; Your Way
What is incredible about how low the percentage of Americans, Australians, and Canadians owning investment real estate is; these same people have a ton of real estate experience through the purchase of their principal residence.
Remember for the most part your primary real estate (home) is not investment real estate, but I will show you a better way.
Your primary real estate residence does not create any revenue; your residential home comes with mostly expenses. One area of gain is you have mortgage principle paydown as you acquire equity.
In making your decision on purchasing a home, I would like to share some advice from TV’s Shark Tank judge, Kevin O’Leary.
Whether to buy or rent is a “crucial decision,” says O’Leary, and to help you make the right choice, he offers up this two-question test.
“Are you married?” asks O’Leary. “If the answer is no, rent.”
“If you’re married, do you have children?” he asks. “No? Rent.”
Kevin’s advice is good; I would like to make this advice better for you along the way.
The Better “Let Someone Else Pay Your Rent Method”
If you are single or married and no kids how do you get someone else to pay your rent or the majority of your rent and you build a stronger financial foundation each time someone pays your rent.
I like to tell the story of my daughter who became a single mother and a sole income earner. My daughter was able to afford the down payment on a house, her principal residence but the mortgage payment would have been a tough pill to swallow.
My daughter bought a bungalow, converted the basement into a two bedroom suite with den, qualified for a municipal grant to turn her principal residence into two suites, one an income suite and the other a suite she used as her primary residence. She rented out the income suite.
The cool thing about her renting out her basement suite is her mortgage payments were $1500 a month, and she was collecting $1100 a month in rent.
The return on my daughter’s real estate investment has been very positive, with increased equity through both the tenant paying rent which has helped to pay down her principal mortgage amount and the increase in the value of the property over the years.
My daughter has since married, and whatever direction she chooses there are many options she has with her principal residence and the impact it will have in helping her get further ahead in her future.
Is this not a better method of finding your way and owning a principal residence; a great “Why” even if you are single or married with no children?