first time investment options
- Thread starter piperella
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Do you own your own principal residence? That would probably be the best place to start. And depending on where you live, you may be able to buy a suited home. You could arrange part cash back and part cash if you need a little more money.
And yes, it's still possible to do that, just not through the banks.
And yes, it's still possible to do that, just not through the banks.
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Many options exist:
a) REITs (Real Estate Investment Trust)
b) MICs (you become a lender or co-owner of mortgages in a Mortgage Investment Corporation)
c) a JV with an experienced person or firm
d) your own $80,000 condo with $20,000 down and a $60,000 mortgage
What is your goal ? Purely monetary growth ? or learning how to invest in and personally own real estate with more $s to invest later ?
What time, if any, in addition to money do you wish to invest per month ?
What are the liquidity requirements ?
Why real estate ? Why not gold, silver or oil/gas related investments ?
a) REITs (Real Estate Investment Trust)
b) MICs (you become a lender or co-owner of mortgages in a Mortgage Investment Corporation)
c) a JV with an experienced person or firm
d) your own $80,000 condo with $20,000 down and a $60,000 mortgage
What is your goal ? Purely monetary growth ? or learning how to invest in and personally own real estate with more $s to invest later ?
What time, if any, in addition to money do you wish to invest per month ?
What are the liquidity requirements ?
Why real estate ? Why not gold, silver or oil/gas related investments ?
no we do not own our residence we only own vacant land and would like to build but at this time because of past credit we cant do this we have looked at trying to qualify to buy a house but a house big enough for our 5 kids and us is not in our budget and the ones that are i would just rather stay away from or they are to far way to cummute for work.
initally while waiting for credit to come back it would be for monetary growth to increase captial to invest with in the future once we own a principal residence. I have all the time in the world to invest in our future i am a stay at home mom my husband is the earner in our household at this time. im unsure what you mean by liquidity requirements so i cannot answer that. as far as why realestate well i have a general knowledge and i am comfortable with its risk i prefer to do something that is a little more personal than gold and such though the thought of mining gold has always intreguied me i feel the realesate market is where i want to be.
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Start with the basics: improved writing skills and buying a few of Don Campbell's books on real estate, and also the one by Robert Kiosaki "Rich dad, poor dad", perhaps also: "The Wealthy Barber" by David Chilton.
is your credit card paid every month ?
Where do you live (roughly ? small town / big city )
Why is there a credit problem ? Fix those first before you even consider buying real estate for investment purposes.
is your credit card paid every month ?
Where do you live (roughly ? small town / big city )
Why is there a credit problem ? Fix those first before you even consider buying real estate for investment purposes.
I apoligise for my writing skills. I should probably put more effort into it when writing on forum.
Yes my credit card is paid in full every month.
I live in a small town near Peterborough, Ont.
My credit issues are from being young and stupid I've been paying for that for a few years now I should be good in a year.
I'm not considering buying realestate until everything is paid. I have this money sitting in a bank and want to invest it while waiting for my credit to get better. I just hate seing it sit in the bank not doing anything. Once I am in a better position I would like to find someone to show me the ropes so I can own multipul properties and have my own house paid off.
Yes my credit card is paid in full every month.
I live in a small town near Peterborough, Ont.
My credit issues are from being young and stupid I've been paying for that for a few years now I should be good in a year.
I'm not considering buying realestate until everything is paid. I have this money sitting in a bank and want to invest it while waiting for my credit to get better. I just hate seing it sit in the bank not doing anything. Once I am in a better position I would like to find someone to show me the ropes so I can own multipul properties and have my own house paid off.
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Keep saving as much as you possibly can while repairing your credit score. Beyond a bank account, I cant tell you where to put it because I have very little experience with stocks/bonds/gold/silver etc.
You will want your credit score to be as good as possible so you can obtain the best mortgage rates from the most favourable lenders. Then, once you have the cash for a down payment, a healthy cash reserve for unseen expenses and/or loss of income, purchase a principal residence, maybe a duplex where you will live in one half, and rent the other half out. You will be surprised how well you can build a nest egg over many years of diligent saving and investing. But be very cautious of over leveraging.
And while you are saving/repairing your credit, like Thomas said... read, read, read. Lots on this forum, and many good books on Real estate investing at your local library. Just know that much of it will be American content, and not necessarily worthwhile to Canadians.
I hope this helps, and good luck to you!
Jon
You will want your credit score to be as good as possible so you can obtain the best mortgage rates from the most favourable lenders. Then, once you have the cash for a down payment, a healthy cash reserve for unseen expenses and/or loss of income, purchase a principal residence, maybe a duplex where you will live in one half, and rent the other half out. You will be surprised how well you can build a nest egg over many years of diligent saving and investing. But be very cautious of over leveraging.
And while you are saving/repairing your credit, like Thomas said... read, read, read. Lots on this forum, and many good books on Real estate investing at your local library. Just know that much of it will be American content, and not necessarily worthwhile to Canadians.
I hope this helps, and good luck to you!
Jon
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I would sell the vacant land. At this time in your life it is a liability attached to a pipe dream. If you want to get ahead spending money to maintain vacant land is counter productive. If some day you have the money to build then buy the land to do so at that time. The cost will be the same relatively speaking but in the interim you will be growing your wealth.
Investing requires intelligence focused decisions.
As suggested I would recommend buying a property you can live in and earn income, possibly a duplex but first liquidate by getting rid of the money pit.
Investing requires intelligence focused decisions.
As suggested I would recommend buying a property you can live in and earn income, possibly a duplex but first liquidate by getting rid of the money pit.
My plan is to sever the land into 5 acre plots keep 1 for ourselves and sell 2 in the 5 years we have to wait to be allowed to sever work on clearing building sites to make it an easier sale. We purchased this 15 acres for 38k market price is 50k. do you really think it should be sold right now knowing what we had planned for it? single acre lots are selling for 30k here now i know vacant land is hard to sell so that is why we were thinking of clearing building sites to make it more attractive. As it sits property taxes are under 300 a year.
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When making investment decisions you must first consider present costs and value.
Your $50,000 lot is costing $300 plus the lost income from that $50,000 if invested (possibly $1800/yr).
What is the expected appreciation of the lot exactly as it now sits if ultimately you decided not to clear, divide and sell. What will it cost you to clear divide and sell the lots in the future. Will you complete your plans for the lot in 5 years or will something prevent that from happening.
If you took the $20,000 you now have plus the $50,000 from the sale of the land what would be your potential return on a income investment property over the next 5 years.
Rental income combined with appreciation (speculation) could exceed your projected land value in 5 years and in the intern a income property would be an asset compared to the vacant land which is a liability. With the right property you would own a home, pay down the mortgage and in theory if bought properly generate a income none of which vacant land can do.
I would definitely opt for more income today over uncertain income tomorrow if indeed it is your intention to begin investing today.
Your $50,000 lot is costing $300 plus the lost income from that $50,000 if invested (possibly $1800/yr).
What is the expected appreciation of the lot exactly as it now sits if ultimately you decided not to clear, divide and sell. What will it cost you to clear divide and sell the lots in the future. Will you complete your plans for the lot in 5 years or will something prevent that from happening.
If you took the $20,000 you now have plus the $50,000 from the sale of the land what would be your potential return on a income investment property over the next 5 years.
Rental income combined with appreciation (speculation) could exceed your projected land value in 5 years and in the intern a income property would be an asset compared to the vacant land which is a liability. With the right property you would own a home, pay down the mortgage and in theory if bought properly generate a income none of which vacant land can do.
I would definitely opt for more income today over uncertain income tomorrow if indeed it is your intention to begin investing today.
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[quote user=piperella]sever the land into 5 acre plots keep 1 for ourselves and sell 2
Find out first if the authorities allow such sub-division of land into smaller parcels. If they do, do it, as a new council might chnage their mind as is common in many communities where farmland is protected and small pieces are frowned upon or outright disallowed. THEN decide how to sell it or to clear it or to service it with a road, for example.
Owning land free and clear is one of many real estate ownership scenarios. Subdividing is another. Developing land is a third. Nothing wrong with it, great even in many instances, especially in a path of growth, but the devil is in the details.
Find out first if the authorities allow such sub-division of land into smaller parcels. If they do, do it, as a new council might chnage their mind as is common in many communities where farmland is protected and small pieces are frowned upon or outright disallowed. THEN decide how to sell it or to clear it or to service it with a road, for example.
Owning land free and clear is one of many real estate ownership scenarios. Subdividing is another. Developing land is a third. Nothing wrong with it, great even in many instances, especially in a path of growth, but the devil is in the details.
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I agree with the posts above. I would sell the land and buy an income generating principal residence. I have done some subdividing and it has been good but it required a lot of cash; and in both cases, it was cash that was not budgeted.
The subdivision process is ALWAYS more complicated and expensive than expected, especially when you subdivide down to higher density acreages (5 acres or less). Often, there is a lot of expensive engineering and internal road systems (possibly paved) that are required. There still may be profit after its done but it requires a lot of cash.
Good luck,
Lucas
The subdivision process is ALWAYS more complicated and expensive than expected, especially when you subdivide down to higher density acreages (5 acres or less). Often, there is a lot of expensive engineering and internal road systems (possibly paved) that are required. There still may be profit after its done but it requires a lot of cash.
Good luck,
Lucas
we are very lucky to have 1700 ft of road frontage so internal road systems are not needed each lot can have a driveway in place off the main road. the planner also informed me that there is a road allowance on the back side of our property if we wanted to go down to a smaller lot size but i don't want to get into that. we are hoping the subdividing cost less than 10k as that is what we are budgeting for that. i spoke with a real estate agent before we bought this and was told if the lots are cleared and driveway was in place if every thing is as it is today in the market we should be able to ask 65k each lot for a property we paid 38k for and added sweat equity to i'm hoping they are right because that is a decent ROI. But that is for the future. I'm more concerned about the cash lying around right now.
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[quote user=piperella]to ask 65k each lot for a property we paid 38k for
that makes sense. Do it. What about utilities: sewer, water, gas, electricity, telephone lines ?
[quote user=piperella]I'm more concerned about the cash lying around right now.
What can $20,000 be used for:
that makes sense. Do it. What about utilities: sewer, water, gas, electricity, telephone lines ?
[quote user=piperella]I'm more concerned about the cash lying around right now.
What can $20,000 be used for:
- One needs some reserves.
- Pay down debt.
- Buy an older ugly house and fix it up as a personal residence, or for re-sale
- Build a small house as a personal residence on the land you own
Get an RRSP and get a tax rebate.
Open a TFSA.
Buy another piece of land with sub-division potential
Buy a small rental property for $80,000 with 75% mortgage if it cash-flows at that leverage (but as stated earlier that is a function of your liquidity requirements. "liquid" means how fast can you get an investment into cash again. Some assets are very liquid, others less so. Real estate takes many month to sell, and has fairly high transaction costs, and as such a minimum 5 year timeframe should be envisioned, i.e. it is not as liquid as a REIT or stock or bond or ETF.)
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Piperella,
What are your goals for the mid and long term? Say, 5 years and 10 years? Where do you want to be? Desired income/net worth etc? Life style?
I found that getting VERY specific about your 5 and 10 year goals really helped me carve out a path.
Another good read regarding this is "Real Estate Action Plan" by Peter Kinch.
Jon
What are your goals for the mid and long term? Say, 5 years and 10 years? Where do you want to be? Desired income/net worth etc? Life style?
I found that getting VERY specific about your 5 and 10 year goals really helped me carve out a path.
Another good read regarding this is "Real Estate Action Plan" by Peter Kinch.
Jon
Taking your advice Thomas and have settled on 3 old debts that were outstanding on my husbands credit. and put in an offer for a fix er upper we found private financing for. we average 15k a year tax returns so the rebate wouldnt work much for us other then usinf the rrsp for the home owner loan so we opted out of that. the home we have put an offer on has a tax assesment of 155k average home same size in neighbourhood runs about 189k there is a full basement that can be made into an apprtment with a seperate entrance. there is no connection from the main house to the basement except through the garage. the asking price for this house is 139k its a cmhc sale its been on the market a while now i offered 120. wish me luck and thank you for your advice.