How many times have you heard people say,” I have lost my way?” In addition, they don’t know which direction to take and no “Why” to their destination.
In most people’s lives, losing their way comes in many different areas; their career, health, family, sports, fashion, diet, spending, finances, and 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/
Reviewing The Investment Real Estate Way, I use “Way” as a noun.
With The Investment Real Estate Way, in other words, 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.
Therefore, 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. However, I have found that most people’s responses fit into three categories: improving their financial foundation, developing sustainable wealth, and creating a living legacy. All these categories are 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 that these same people have a ton of real estate experience by purchasing 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 principal paydown as you acquire equity.
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; however, 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 most of your rent? In addition, you build a stronger financial foundation each time someone pays your rent.
Therefore, I would like to tell my daughter’s story, who became a single mother and a sole income earner. My daughter could afford the down payment on a house, her principal residence. However, the mortgage payment would have been a tough pill to swallow.
Our daughter bought a bungalow, converted the basement into a two-bedroom suite with a den, qualified for a municipal grant to turn her principal residence into two suites, an income suite and 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. Above all, she was collecting $1100 a month in rent.
In addition, 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 property value over the years.
My daughter has since married, therefore whatever direction she chooses. She has many options with her principal residence and its impact in helping her get further ahead in her future.
Is this not a better method of finding your way and owning a principal residence? Therefore a greater “Why” even if you are single or married with no children?