Hello Investors of Hamilton Real Estate!!
Is Anyone else out there tired of having to defend investing in Hamilton? A novice investor from the GTA asked me on Saturday, “I heard the steel industry is dying in Hamilton so all the jobs a leaving,” a common sentiment for those without a geographic focus on Hamilton… but for those of us who have boots on the ground like my friend Ed who drives an 18-wheeler truck, he does business with Dofasco by hauling steel and they’ve been running full tilt for the last two years. US Steel is indeed suffering from a perfect storm of issues: economy, labour issues, soft market demand, high Canadian dollar, etc…. Big picture though, we’re talking about roughly 900 jobs whereas Hamilton added 20,000 jobs in 2011 (click here for the full article). Growth was mainly from small firms, another indication of the city’s diversification. Boom! Now shift the discussion on where one should be buying 🙂
When I last opened my quarterly statment for my RSP mutual funds, I was pissed. You see, I have some bad habits like everyone else such as not looking at my statements because I know the news will be bad and it was. I had lost money over the previous 12 month period, money I had worked very hard for and knowing how inflation is up and will continue on its way up, I lost more than what was on paper.
But misery loves company right? I know many of your out there are experiencing the same thing. A friend of mine named Gordon, he’s a hard working professional with a great job and he had an interesting alternative to investing in RSP, he opened an online sports betting account. Hahahahaha! Is that not the same as buying stocks and mutual funds? You have no inside information, you’re at a major information disadvantage (you only need to look at the Facebook IPO debacle if you don’t believe me), you have no competitive advantage so lets leave it all to chance, right?
Well it doesn’t have to be that way for Gordon. As he is a friend, we offered him the opportunity to earn a predictable return on a safe, RSP tax sheltered, investment secured on a top tier, cash flowing investment property (it is mine afterall). So Gordon gets to invest in real estate within his RSP and I get to borrow for renovations, take some of capital out of the property to use towards a future investment. How is that for win-win?!
Want to know more? Below is an excerpt from one of Kevin and Erik Mitchell’s highly comprehensive course for real estate investors:
Diversification has always been a buzz word when investing. The banks spend millions of dollars a year in advertisements to convince us that diversifying your RRSP portfolio is as simple as investing in Mutual fund A, B, and C. RRSP mortgages provide people with the opportunity to achieve true diversification within their retirement portfolio. As a real estate investor you are able to put RRSP mortgages on any or all of your properties. One of the stipulations is that the mortgages have to be arms length, meaning when investing in these mortgages you cannot have any ownership in the property they are being put on. Simply put, you or any of your immediate family are not allowed to place an RRSP on your investment properties. Real estate investors usually pay a premium over the posted mortgage interest rates on these mortgages. The payments are withdrawn monthly and go directly into the registered account. The typical length is between 2-5 years and at the end of the term the RRSP investment is paid back in full to the account. One of the main advantages of these mortgages to RRSP holders is the security they provide. They don’t have to worry about the volatility of the market as their returns are always the same and paid out in equal monthly instalments, and their money is tied to a real physical asset. It is also very beneficial to you as a real estate investor as these mortgages provide you with the opportunity to lower your total investment in the property which in turn will have a positive impact on the overall ROI you achieve from your investments.
On the other side of things, you can benefit greatly by finding other investors that are looking to put RRSP mortgages on their investment properties as well. This way you can invest your own RRSPs on other investment properties and achieve the type of returns that will allow you to retire the way you want. There is an abundance of information on these mortgages and we have included the most pertinent information in the resource portion of [the course] as well as an example of how it all works.
Erik and Kevin Mitchell are gold award REIN members, full-time investors and the creators of Strategic Real Estate Investing the training program where’s they’ve put all their knowledge onto paper (and videos) to teach other investors. Check it out!
If you too are interested in using your RSP’s to invest in real estate please let me know. You an reach me at erwin (at) mrhamilton.ca.
Hope that helps! Till next blog post – happy Hamilton investing everyone!!
Erwin | MrHamilton.ca
PS: If you are in search for a Realtor or RE expert/JV partner, very determined to acquire investment real estate in Hamilton in the near term, have been pre-approved for financing, and have a great heart then contact my assistant Maria (at) mrhamilton.ca. Life is short and our time is at a premium so only the best investors need apply.
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