The #1 Millionaire Maker


Here’s a trivia question for you…

What form of investing has created more millionaires than all the others?

Answer: Real Estate Investing!

Yes, investing in real estate is the proven way to become a millionaire. Countless others have done it and that means you can too. All it takes is a plan, some dedication and the patience to see it through.

Here are a few tips to get you started…

Tip #1: Buy your own home. Start by owning your own home, so you can build up equity and establish a credit record. Begin small: even a condo apartment will start you off in the right direction.

Tip #2: Use your equity. Once you’ve spent a couple of years making payments and watching your property appreciate, take out enough equity to make a down payment on a revenue property.

Tip #3: Use Other People’s Money (OPM). Make a 10-20% down payment and rely on the bank for the rest. Ideally, find a property that generates a high enough rent to cover your mortgage payments. After a few years, sell the property at a profit.

Tip #4: Build Momentum. Use these funds to buy a more substantial property with two or three rental suites. As it generates income, set aside some money for a down payment on an additional property.

Tip #5: Focus on Cash Flow — Appreciation is a Bonus. Gradually build your pool of revenue properties and before long, you’ll be earning enough income–above and beyond mortgage payments, maintenance costs, property tax, etc. –to comfortably live on. Plus, you’ll also have a substantial asset pool that appreciates every year.

Michael Jackson

The King of Pop made the best-selling album of all time, Thriller, with sales of 100 -108 million copies.

Yet in spite of the huge revenues he continued to receive from such recordings, Michael Jackson died broke — or at least debt ridden.

How could this be?

The answer to this question reveals some important lessons for anyone who wants to achieve long-term financial freedom.

Michael’s main problem was that as his income dwindled, several years before he died, he never changed his spending habits.

In 2005, a forensic accountant testified that Michael was spending $20-30 million more per year than he earned and was in debt by as much as $285 million.

In 2001, he borrowed $200 million from Bank of America just to stay afloat.

His 2,600 acre private estate, Neverland, cost $5 million a year to maintain and was facing repossession.

Unfortunately, Michael didn’t understand the difference between good debt and bad debt.

Borrowing money to pay for living expenses and possessions that never pay a return is bad debt. It may give you short-term pleasure, but it offers no long-term value.

Instead of buying the latest big screen TV and taking exotic cruises, set more money aside so you can eventually start investing in assets that will increase in value over the long term.

This is good debt, and includes borrowing to pay for retirement investments, strategic renovations to your home, or the purchase of a revenue property.

It’s true that Michael did choose some good debt, like buying the rights to 259 Beatles’ tracks. Now estimated to be worth $1 billion, this investment will at least be enjoyed by his heirs.

Here’s the key lesson you want to implement…

Live within your means and set aside at least 10% of your income to invest in cash flow producing assets.

Do this, and you’ll never have to lose any precious sleep worrying about how you’ll make ends meet.

If you’d like some tips on using the equity in your home to start investing in return-producing assets–so you can enjoy financial security and avoid dying in “Neverland” — we should talk.

As your mortgage professional, we can offer objective advice and give you access to innovative, affordable financing so you can position yourself for an abundant future.

How to Keep a Budget


If you’re anything like me, keeping records of income and expenses–and convincing your spouse to do the same–can be a real challenge.

Here are a few tips that you might find helpful…

Tip #1: Budget envelopes. This old-fashioned idea works great for visual people.

When you get paid, put the cash in an envelope labeled Income. Start other envelopes labeled Mortgage, Utilities, Groceries, Dining Out, Movies, Clothes, Vacation Fund, etc. and put enough cash in each one for the month.

When each expense is due, take the cash out of the envelope. If you feel like a movie, but that envelope’s empty, you wait till next month!

Tip #2: Expense Limits. Set a limit for non-essential expenses.

If you or your spouse wants to buy something over the preset limit (maybe $200), you have to discuss it first. No more month-end surprises!
Tip #3: Annual Projections. Rather than keeping track of each expense, figure out how much each one costs per year.

When you see that the $4 you spend on coffee each day actually costs over
$900 a year, you might start taking coffee from home. Do this for lottery tickets, snack food, fashion items, etc.

Tip #4: Reverse Budgeting. Pay all your bills and buy all your essentials as soon as you get paid. Then you only have what’s left–if anything!–for discretionary or luxury items.

Hope that helps…

College Fund


If you have kids and/or nephews or nieces, today’s video is especially for you…

According to MoneySense magazine, experts forecast that the cost of a four-year university education in Canada, including tuition and accommodation, will run upwards of $130,000 by the time today’s toddlers graduate from high school.

But if you start planning while your kids are young, the costs can still be affordable. Plus, you’ll save them from being burdened with thousands of dollars in student loan debt!

Here are a few ways to start saving…

A Registered Education Savings Plan (RESP) is an excellent place to start.

You can contribute up to $4,000 a year per child, to a lifetime maximum of $50,000.

You don’t get a tax break for the money you put in, but the funds grow tax-free. Since withdrawals belong to the student, they’re also effectively tax-free since any tax owing is offset by the student’s education credit and personal tax credit.

There are two types of RESPs: self-directed and group plans.

Group plans are pooled investments that involve regular monthly payments to a company that manages your funds and guarantees your principal.

But self-directed RESPs are generally considered to be a better investment because they offer greater flexibility and lower fees. They’re available at most Canadian
financial institutions, and you can choose to invest in mutual funds, stocks, bonds or GICs.

The best thing about an RESP is that it qualifies for the Canada Education Savings Grant that gives you 20¢ for every dollar you contribute up to $2,500 a year per child.
So even if your investments perform badly, you’re guaranteed a 20% return on your first $2,500 per year!

Your mortgage can also help fund your child’s education.

You can free up money for your yearly RESP contribution by taking advantage of many mortgage lenders’ “skip a payment” feature. Or when the time comes, you can do an equity take out to cover tuition fees so you end up paying affordable mortgage rates instead of expensive consumer loan rates.

Pros and Cons of Reverse Mortgages


If this doesn’t apply to you, perhaps you know someone over 60 who might find it helpful…
A reverse mortgage lets you turn your home’s equity into cash without having to move or make monthly payments. It’s designed for homeowners 60 and over who want to “spend down” their home equity.

If you or someone you know is in this situation and needs extra cash flow, here are some things to consider before choosing a reverse mortgage…

If you simply want money for a vacation or new car, a reverse mortgage is an expensive way to get it. And if you want the money for investments, keep in mind that the cost of the loan is likely more than you could safely earn.

Because the interest rate is high and the amount you owe grows every month, the younger you are when you take out a reverse mortgage, the more your equity will be eaten away by the time you’re ready to move.

As your mortgage professional, chances are we can tailor a home equity loan or line of credit to meet your needs in a more cost-effective manner than a reverse mortgage. We can offer a lower interest rate and we can set the monthly payments low enough to ensure you’re still getting all the cash flow you need.

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DBA – Invis West Coast Mortgages