Western Investor December 2011 Section B

Page 9

B9

WESTERN INVESTOR DECEMBER 2011 www.westerninvestor.com

Cash-flow property, with upside potential, is smart buy for aging boomers seeking security

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ecently I had a milestone birthday that changed my life. I am not retired, and now well into middle age asking myself, “What am I doing all this for?� Most boomers are likely asking this question, feeling trapped, tired of the path they are on and worried about having enough money for retirement. Most of us can expect the gift of an additional 30 years of life, so what do we do with this gift?

3&5*3&.&/5 */7&45*/( MURRAY WOOD

Those in their mid-50s or early 60s may be experiencing doubts about having enough income to retire or perhaps worried about outliving their money. They may still want to work, or have to, but realize they do not have enough time left to build up a retirement fund by going to work each day. More than three-quarters of British Columbians plan to continue working in retirement, a new poll shows. Eighty per cent of B.C. residents said they plan to start their own business, continue to work full time, become a consultant or take on part-time hours, according to the CIBC poll conducted by Harris/Decima. From a financial-planning perspective, it’s important to have the plan provide the income you need for the retirement income you want. After 35 years of real estate investing through good times and recessions I believe that cashflow residential property, with an upside potential, is the steady course for long-term income. But is it the right thing for a 60-year-old to be

undertaking? If you live an additional 30 years, is a real estate investment that matures in seven to 10 years worth looking at? Investment real estate and its leverage aspects may be the answer. What follows is a very simple approach to building a property portfolio that is a cash-flow investment plan, not a speculative play.

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Each investor has his or her personal risk level. This fact, combined with their specific real estate goals, will direct an investor in his or her decision regarding how much leverage he or she will use within his or her portfolio. With leveraged real estate, an investor must find a balance between reducing the down payment and reducing the positive cash flow. Thanks to the overall long-term stability of Canadian residential real estate investments, banks and other financial institutions are willing to provide you with relatively inexpensive financing secured against your investment property. This leverage can dramatically increase your return on investment (ROI) but, as with any investment, the higher you try to push your ROI the higher the risk. The example shown (see sidebar) is for one property for one year. The Canadian average appreciation is 5 per cent; this example used 3 per cent. What if you found better cash flow and appreciation? What if you had more than one property? What if you sold one and paid down the others in 10 years? How would that

3FOUBM JOWFTUNFOU FYBNQMF Property Down payment Time Rental income 3% appreciation on property Mortgage reduction ROI on appreciation alone ROI on appreciation, mortgage reduction and cash flow

$140,000 (one-bedroom rental condo in Ladysmith) $30,350 20% plus closing costs One year $750 ($180 positive cash flow/month) $4,200 annually $2,424 annually 13.8% ($4,200/$30,350 x 100) 28.9% ($8,784/$30,350 x 100)

affect your cash flow? er, they take a huge amount of searching and The answer to all these questions is educa- many false starts. Remember that we are talktion first, and then action. ing about a passive investment approach to real estate investing so you can spend your time 'PVS TUFQT doing what you want while your portfolio is Do a financial mortgage review of your current building you cash flow and equity. Your system should give you the blueprint to present your and future portfolio. 1. Educate yourself in real estate invest- deal to financiers and joint-venture partners alike, time after time. ment; 2. Review your goals and discover what is 3FWJFX HPBMT important to a middle-age you. Take a breath or a weekend and think about 3. Take action 4. Have a mortgage plan for your portfolio. where you are now and want to go in the next First, meet with a mortgage broker who phase of life. This would include both a personunderstands real estate investing and have him al and financial reflection. Make some simple or her help you develop not just a plan, but your notes so you can review them and see if they plan, including: still seem important in a few days. Take a real • defining your end goal, and how much real open look at this new age and embrace it. We want to continue living to our highest estate you need to achieve it; • determining the kinds of investments that potential. We want to be valued, to experience well-being, happiness and love, to be fully selfare right for you; • identifying obstacles to your success, and expressed in the last third of our lives. We still have a lot to contribute. overcoming them; and • discovering financial options and solutions, We need to transform the culture of aging including recent market and regulatory changes from one of loss, disappointment and decline to that affect investors. one of possibility, power and purpose. We need Next, develop or find a system to reduce the to shift the way we look at aging. I like the statement from a favoured book, risk, increase the positive cash flow and find properties in both hot and cold markets. This The Elder, by Marc Cooper and James system should show you when and how to buy Selman: “Make the rest of your life be the best for maximum profits – location is important, of your life.â€?â—† but timing is everything. Successful real estate investors know when to buy and when to sell. Murray Wood, president of BuyHomesBC.ca, It takes money to buy real estate. One hears spent six years as a qualified financial plana lot of talk about “no money downâ€? deals but ner and has developed recreational real estate someone has to put the money down. There during his 35-career. He now focuses on helphave been books written that contain very ing middle-age people build simple real estate interesting strategies for these deals; howev- revenue portfolios. murray@buyhomesbc.ca

/PSUIFSO #SJUJTI $PMVNCJB Prince George

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For Sale or Lease

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;DG H6A: DG A:6H: Looking to invest in BC’s Northern capital? This beautiful 388acre parcel of land is located in the middle of executive high-end homes, only 10 mins from City Centre. Possibility of subdivision. Reduced from $1,100,000 to $999,900 MLSŽ N213581

s .EWLY CONSTRUCTED AT THE 0RINCE 'EORGE )NTERNATIONAL !IRPORT s ,OCATED ADJACENT TO THE MAIN TERMINAL s !VAILABLE FOR OCCUPANCY *ANUARY s 3UITS BOTH AVIATION AND COMMERCIAL OFl CE APPLICATIONS s SQ FT OFl CE MAINTENANCE SPACE ON TWO m OORS s (ANDICAPPED ACCESSIBLE COMPLETE WITH ELEVATOR s SQ FT HANGAR SPACE s (ANGAR DOORS ARE WIDE BY IN HEIGHT s (ANGAR IS EQUIPPED WITH A FOAM l RE SUPPRESSION SYSTEM s )N SLAB m OOR HEATING THROUGHOUT THE HANGAR SPACE s 2EMOVABLE PARTITION WALL CREATES TWO SEPARATE HANGAR BAYS s !MPLE PAVED PARKING WITH ADJACENT GRAVELLED PARKING AREA For sales or leasing inquiries please contact:

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$575,000

downtown - close to proposed wood innovation & design centre 9630 sq ft on 3 levels; separate entrances, electrical & heating systems ideal for retail, design & professional offices

2 waterfront development properties on desirable Cluculz Lake 26 acres, 2 titles $295,000 approx 1450’ of lakefront, easy access 55 acres, 3 titles $495,000 approx 1650’ of lakefront, hwy access

Rob Engen 250-552-4121 Elisha Flynn 250-981-9898 engen-rob@hotmail.com elishaynn@gmail.com

Elaine Kienzle

RE/MAX Centre City

250

Each ofďŹ ce is independently owned and operated

563-8769

www.elainekienzle.com

1-800-667-7330

NORTHEAST BC REALTY Ltd. Phone 250 785 4115

“Investing Our Energy In The North� Located at 10220 101 Avenue Fort St John BC V1J 2B5 www.NEBCRealty.com

F: 250 785 4120

RON RODGERS - OWNER / MANAGING BROKER Email: ron@northeastbc.com FOR SALE i 73.5’x122’ commercial lot - 10019 103 Ave Fort St John Asking $134,900 MLSŽ N4505054 i 10.78 Acres plus four newly renovated houses at Mile 101 Asking $395,000 MLSŽ N4504487 i 146.6’ x x150’ multi-family lot - 9608 97 Ave Fort St John Asking $449,000 MLSŽ N4504895 i 83’x120’ Highway Commercial lot - 808 121 Ave Dawson Creek Asking $468,000 MLSŽ N132643 i 4.74 Acres plus trailer home & shop - 6419 Airport Road FSJ Asking $695,000 MLSŽ N4504930 i Over 7600sf light industrial shop on 1.05 Acres FSJ Asking $1.28 Millions MLSŽ N4504981 i 36.36 Acre DEVELOPMENT PROPERTY close to new FSJ hospital Asking $1.45 Million MLSŽ V4022639 i 3.01 Acres HIGHWAY Commercial Property - FSJ Asking $1.68 Million MLSŽ N4504968 i 39,000+sf Industrial INVESTMENT property on 3.73 acres lot long term lease in place. Asking $2.88 Million MLSŽ N4504999

FOR LEASE i 2,810 sf office space along highway frontage - 11419 Alaska Rd FSJ Asking $19.00sf + triple net ($4449/month) MLSÂŽ N4504877 i 5,000sf office/shop/warehouse on 2.7 Acre lot @ Mile 54 on Alaska Highway Asking $16.00sf + triple net MLSÂŽ N4504884 i 5,000sf industrial shop/office on .599 acre lot 109 Street FSJ Asking $14.75sf + triple net ($6145/month) MLSÂŽ N4505084 FOR MORE INFORMATION OR TO ARRANGE VIEWING - PLEASE CALL RON

Holiday Message from NorthEast BC Realty Wishing you a very Merry Christmas and Happy New Year NEBC would like to take this chance to thank all who we worked with over the past year. We look forward to 2012 and wish you all a safe and happy holiday. From Ron and Theresa Rodgers

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