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Old 04-27-2012, 10:10 PM   #61
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I have an Asian wife who absolutely abhores debt of any kind.

By the way, we bought our house over 6 years ago. It was a lot cheaper back then.
Asian wife is the key to making money
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Old 04-27-2012, 10:19 PM   #62
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I've always used the philosophy of investing in something which you can enjoy now, and have it appreciate at the same time. Now that you have your house paid off, I'd probably go with investing in a recreational property.
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Old 04-27-2012, 10:21 PM   #63
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Refi the house and buy about 20 doors in the US and enjoy you life as a slumlord making 15-20% cash on cash pre capital appreciation.
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Old 04-27-2012, 10:41 PM   #64
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Asian wife is the key to making money
Want to get married?
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Old 04-27-2012, 11:41 PM   #65
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Want to get married?
I think Girly is taken and bakin'.
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Old 04-28-2012, 01:05 AM   #66
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Refi the house and buy about 20 doors in the US and enjoy you life as a slumlord making 15-20% cash on cash pre capital appreciation.
I know your joking but i always think people who take loans out on the equity built into their houses are so stupid.
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Old 04-28-2012, 01:53 AM   #67
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Asian wife is the key to making money
just trying to get an estimate in my head...
how much do you generate per month?
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Old 04-28-2012, 07:40 AM   #68
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I know your joking but i always think people who take loans out on the equity built into their houses are so stupid.
Depends on how much and what you are using it for. Mortgages always almost have lowre interest rates than lines of credit or student loans. It's common to take out lines of credit to pay for kid's tuitions (moreseo in the states where tuition at top schools is around 40k/year). Also, it can make sense to take the money out and put it into an RRSP, where the tax benefits can often exceed the mortgage interest.

I have yet to find one of these "guaranteed" return investments, but good deals do exist out there. Taking a moderate amount from your mortgage to finance one isn't always a bad idea.
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Old 04-28-2012, 08:23 AM   #69
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Wow. CPer's really do make over $100k. So many of you guys are mortgage free or close to it. Congrats! I envy you guys. None of my friends are even close to being mortgage free. Well except for the ones that are still renting. Lol
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Old 04-28-2012, 09:03 AM   #70
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I don't want a larger house, but a house in a location closer to downtown. So, it would be downsizing in size, and upsizing in cost. I would like to move, but my wife wants to stay in this house for another few years. She has emotional attachment to the house, I'd just like the sell it while the prices are still high. My worst case would house prices here go down, and where I want to move they stay the same.

The vacation property, would be cheap - I am thinking < $200k for a cabin somewhere around the gulf islands or vancouver island. We like it there, and I could see myself spending large amounts of time there. It's not something that is a priority, but I don't know how things will be 30 years from now if property will still be unobtainable for a sane price. But you're right, it would be cheaper to spend money on a hotel up to some certain point. We only have so many weeks of vacation anyway.

So in short, the answer to the above questions could be considered "no". So maybe the best bet is going the investment route.
My thought would be that since you are not done buying your last primary dwelling I would make short term investments that would be used to purchase your inner city home in a few years. If you wait long enough you could have enough to cover the difference between your current house and new one. A TFSA would work well for that as it would also give you flexibilty if you decide to keep your current house long term.
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Old 04-28-2012, 09:56 AM   #71
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I know your joking but i always think people who take loans out on the equity built into their houses are so stupid.
What makes you think I was joking?
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Old 04-28-2012, 11:09 AM   #72
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One of things is, we're not really savvy investors or anything (obviously). So we have been kind of going with the flow, doing all of the "wealthy barber" kind of tips. My wife is pretty conservative and would prefer to stick to GICs, even though they aren't generating a lot of interest.

I have been reading a bit and curious about the whole RRSP -> RRIF conversion that you have to do when you hit a certain age. Is it almost worth it to not have too much money in an RRSP?

I wouldn't be opposed to owning 20 properties, but if they're so cheap, would anybody bother to rent?
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Old 04-28-2012, 11:12 AM   #73
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Want to get married?
Are you ready to be subserviant and play along with your wife's ambitions for you to become a CEO and make lots of money so she can finally stay at home and not have to work anymore?

Which reminds me, I need to go and find my ear spoon...
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Old 04-28-2012, 11:37 AM   #74
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just trying to get an estimate in my head...
how much do you generate per month?
Hard to say but RRSPs are a must.
I have a general rule that "when you get your paycheque, pay yourself first"
So when I get paid monthly, money goes into RRSP and money goes into high-interest e-savings. That's first priority and then work with whatever is left for mortgage, bills, spending whatever.
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Old 04-28-2012, 11:40 AM   #75
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If it were me, I'd take 6-12 months and just keep making regular payments into a savings account. Give yourself some time to really plan out the next step. To me it doesn't make a ton of sense to immediately take on more debt (second house, bigger home, vacation property etc) until you've had time to think about it.

But that's just my two cents.
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Old 04-28-2012, 12:02 PM   #76
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I fully intend to have mortgage debt until the day I retire. I have a hard time saving but seem to be a lot more motivated to pay down debt. As soon as I am getting close to being debt free I will borrow more money to sink myself again.
It probably sounds retarded but for me it is forced savings. If I tried to put away $2000 a month into an investment account I would likely find myself making excuses and saying only $1500 this month and I am going on vacation next month so I can skip one payment. With a loan payment I couldn't imagine missing a payment so I always make them. The big key here is that when I borrow money I use it to top up RRSP/TSFA accounts and the rest goes into the cash investment account.
A truth in life that I have discovered is that expenses will try to expand to fill available income. So essentially, I am happy in my current financial situation and know that spending more money will not likely make me happier. As such, I hide the money from myself in the hope that future me will find a way to make the money increase his happiness level.
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Old 04-28-2012, 12:21 PM   #77
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So were you happy with the choice of investing in a property? The way I kind of see it, is that you'll end up with an asset at the end of it, whether you paid for the whole thing or a renter contributed to paying the mortgage down. As long as I am comfortable paying the mortgage on a property and bills on a property even if I had no tenant in it, then I don't mind. But I'd like to feel comfortable knowing that I could walk away from it and not suffer a large loss.

We don't have anything huge in terms of investments outside the house. There's probably about $100k in RRSPs, mostly from the wife because her company did the 100% matching and so she always maxed hers out every year.

Without going into all of the huge details here is a bit of a snapshot for my wife and I so feel free to pick away. So as of next year, the mortgage payments will be gone, and one kid will be out of daycare, so that's an additional $900, which will probably go into some after school activities and stuff.

Income before taxes: ~$170,000.
RESP contributions: 2 kids * $210 / month.
RRSP contributions: $1200/month total.
Expenses:
Mortgage: $2000 / month
Childcare: $1800 / month
Bills (phone/internet/tv/enmax): $500 / month
Vehicles (gas): $300 / month.
Assets:
2 vehicles
1 house
RRSPs value ~$100k.
RESPs value ~ $20k.
I am happy with the decision. For me as well, because the alternative was to sell the house I didn't want to pay all the fees involved with selling. The house was in great shape and fairly new so I hope there won't be any big expenses over the first 5-10 years. My take is that you won't see a positive cash flow on a revenue property for at least 10 years unless you are willing to do a ton of work yourself and make sure you find a great place at a cheap price. Even in the first year though I had a positive increase in my net worth as a result of the rental. I have to pay some money towards the principle and my tenant contributes about $2 for every dollar I put in at the moment.

Diversity is important though and really should be considered. If you live in Calgary and work in the oil and gas industry then house prices are loosely tied to the oil and gas industry. It is possible that the industry could tank causing you to lose your job at the same time that the value of both your house and your revenue property drops in value.

Your best bet I think is to continue to siphon off the mortgage amount that you were paying into a savings account and start drawing up a few scenarios. One option to consider is re mortgage and use the money to buy dividend paying stocks.

ex. You borrow $200000 and invest it in solid dividend paying companies collecting about 5% a year in dividends in addition to the growth in value of the stock.
The mortgage will cost you $1000 a month with a 25 year 3.5% loan. The stocks should pay a dividend of about $850 a month and you will be able to write off the interest on the loan which works out to be about $175 a month putting you ahead $25 a month in the first year. The stocks should also increase in value over the years increasing your dividend and adding to the monthly gains. At the end of 25 years you own the stocks outright and have made money most months in the process. If you were always comfortable making the payments you can continue doing that and reinvest the dividends to grow your portfolio faster or you can use the dividends to top up your mortgage payments and own the stocks outright.
*** The above example has a few assumptions and nothing is guaranteed so make sure to do your own due diligence and likely meet with a financial planner.
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Old 04-28-2012, 12:45 PM   #78
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Mortgages end? Weird...

Im guessing you are a two income family. I have many years left on mine and the wife works really part time.
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Old 04-28-2012, 01:38 PM   #79
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I know your joking but i always think people who take loans out on the equity built into their houses are so stupid.
I guess I'm stupid then but I've been doing it now for the last 14 years and it's working for me.
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Old 04-28-2012, 04:28 PM   #80
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I wouldn't be opposed to owning 20 properties, but if they're so cheap, would anybody bother to rent?
Lots of reasons, don't want to own, can't afford down payment, can't qualify, bad credit, etc. There's always renters.

And it's not always so cheap to buy, we're in a historically unusual market.

I'm in that general area of properties, and there's a TON to learn and know, and there are a ton of pitfalls and mistakes to be made. It's a lot of work and can be stressful sometimes, I'm not positive it's been worth it so far, and I purchased most of my properties before or during the big run-up, so they're all in pretty good shape.

Work with people that already do it, or join something like REIN for the basic info on how to operate.

Or buy out of city which forces you to get property managers and treat it more like a business.

If I had it all to do again, I'd be MUCH more focused on the quality of the property, while I don't mind arranging renos and repairs and stuff, and I know the amount I'm spending isn't unreasonable, but the stress of it I really don't like...

It's not for everyone, heck I'm not even sure it's for me
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