Do YOU have enough??

I read this ARTICLE a few weeks ago and was not really surprised.  More and more there are reports that Canadians are working into retirement – many because they simply have not saved enough.

Of the 53% mentioned in the article, I’m sure some of them are working because they choose to do so….but how many are working because they HAVE too?

I was lucky to have learned the value of a dollar at a young age and started saving quite early in my life, but many Canadians do not learn any sort of financial literacy until well into their working years and, by then, it may be too late.

There are countless financial calculators out there, but here is just a sample of how just a little money each month can make the difference between working through retirement and retirement bliss:

$300 per month savings + 8% interest + 40 years = $1,007,211

That’s right if you can get an 8% return, putting just $10 per day away starting at age 25 could make you a millionaire by 65. 

Bump that to $500 per month and you can be a millionaire in 34 years!!

I am a realistic person and maybe everyone  cannot save $300 per month….but come on….even at $100 savings per month, you will have $335,000 in 40 years.

There are two keys to this though:

1.       Starting early – This formula doesn’t make much sense if you start at age 40

2.       Keeping on track – You don’t need those new pair of Nike sneakers…put that $100 in savings

This blog post will probably fall on many deaf ears…and I realize that this exact same thing has been preached for years….it’s putting it into practice that is the hardest part.

I think about retiring quite a bit.  However, my version of retirement will involve working because I want to stay active and stay engaged.  I plan to work as long and as hard as I want, but after age 50 my goal is that working will be an OPTION.

Think this will happen for me?  Check my blog in 20 years to find out!

Well, well, well

This just in!!!....same old same old.

http://www.theglobeandmail.com/report-on-business/economy/interest-rates/bank-of-canada-softens-stand-on-rate-hike/article4630682/

This morning, Mark Carney informed us of what we already know.  Canada's hands are tied when it comes to interet rates.

With the US printing money like it is growing on trees (it might as well be)....and the world economic outlook looking more like doom and gloom each day, is anyone surprised?

The Canadian dollar is hovering at - or above - parity.

The US economy is limping along.

The economy is in the tank over seas.

The bottom line is that everyone is trying to trash their currency to boost their economy.

My only wish?....that I could go back in time and change ALL my mortgages to variable. 

Bump up You Mortgage Financing Without Bank Approval!

Many of us would like to purchase a rental property or two, however with the minimum down payment for an investment property now 20%, investors are stuck with having to come up with a large down payment

For example, you would like to make an offer on a property that is listed for $250,000.  If you pay full price, and want to avoid CMHC insurance, you will need a 20% down payment of $50,000….not exactly chump change.

However, your realtor has informed you that the vendor is motivated and will likely take $230,000.  Great news!!  However, with a 20% down payment, you would need $46,000….really not much of a difference!

What if I said there was a way to pay $230,000 and only put up $30,000 (12%) without paying the CMHC insurance fee?....Here is how to do this:

Offer the vendor full price (that’s right…FULL PRICE), however ask for $20,000 cash back at closing.  You are essentially going to pay the vendor the $230,000 that was expected, without having to outlay the full $50,000

Yes, you will need to initially put up the $50,000 down payment for the offer, but after your $20,000 cash back at closing, you will be left with only $30,000 out of your own pocket.   Now you can either take that $20,000 and put it back into the mortgage or you can keep it and treat it as an ‘extra’ loan at the going bank rate….much lower than a line of credit!

For those visual learners, here is a chart for reference:

	$250,000 offer	$230,000 offer	$250,000 offer with $20,000 cash back
down payment	$50,000	$46,000	$50,000 - $20,000 cash back = $30,000
mortgage amount	$200,000	$184,000	$200,000
Loan-to-Value	80%	80%	13%
CMHC fee	0	0	0

 Thoughts?

 

A Little Trick to Getting a Tentant in Place…..BEFORE Closing!

Although, my latest investment property came with an existing tenant, my student rental property did not.  Additionally, the closing date of the property was Jan 1^st…a tough time to be finding students in any town! 

This is a big fear for many investors….finding that “first tenant”.

How long will the property be vacant?

If it is vacant now, how long has it been that way?

How will I fill the property without owning it?

Luckily, there is a simple answer to improving your chances of renting the property BEFORE the sale even closes!

The simple trick is including a provision in the Agreement of Purchase and Sale which allows for access to the property before closing!  For my student rental, I had a 60 day closing.  This meant that I had access to the property for two whole months to show the property to prospective student tenants!   This little detail allowed my free access whenever I needed to set up a showing (conditional on informing the current owner) and I was able to land a group of co-op students looking for a 4 month term.  To top it off, they renewed for another year after the term was up!

The “conditions” of sale is an under-utilized section of the Agreement in my opinion.  You can put just about anything in here you want as long as the vendor agrees to it!

Does anyone else have any sneaky conditions that they have used in the past?