- Joined
- Nov 8, 2007
- Messages
- 3
Hi,
My wife Heather and I are new real estate investors, and we would really appreciate some wisdom from the forum about RRSPs.
We bought our first investment property last summer, a four plex that is cash flowing nicely. (Thanks Don.) We plan to buy another property soon, and after that will likely do a couple of JV partnerships. A major restraint for us of course is a shortage of seed capital and time. We both have good jobs, but with three small kids, braces, sports, my wife`s part time Masters` Degree program, etc, we will not be achieving our Belize in any great hurry.
We also want to be careful that we plan our first few deals properly so we don`t limit ourselves. (ie, the 1.1 rule to keep the banks engaged, and an attractive portfolio to keep future JV partners engaged.)
Like most Canadians, we are not pleased with the returns we are getting on our RRSP, and would like to evaluate our options. My employer does not have a defined pension plan, but puts a percentage of my earnings into an RRSP account on my behalf. This sum is growing to a good size, and I would like to use it to help me best achieve my Belize.
Since this is currently my `pension` as well a big part of what I would consider my `savings`, I want to be conservative with it, however I am confiident that my RE dealings will be able to provide for me in the long term. This will be a personal decision based on risk, reward, and liquidity.
OPTIONS:
A. cash it out, use it for investing - ouch, the tax man will keep half, do not want.
B. keep it invested, in GICs, mutual funds, stocks, etc. - well managed, it could get a fair return, is highly liquid, is as secure as the financial markets are.
C. Invest it with an RRSP eligible limited partnership offering. (I won`t mention any by name.) Although not liquid, it should produce a return better than B, and is surely more secure than B. Is it true that it should have no impact on credit score, future borrowing capacity, or debt ratios?
D. Borrow against it - some firms can arrange a loan for the amount of the RRSP, then could use the money for investing. (Eg, i-finance.) Although the RRSP it is not used directly as collateral, they issue bonds that are bought in a self-directed RRSP, then issue a loan with a personal guarantee required. The negative with this is that this loan is additional debt that works against debt ratios, real cash flow, might have a high interest rate, but can be directly used for getting property #2 or #3.
E Others?
We would really appreciate your thoughts and comments.
Best regards,
Dave and Heather Kahle
Coquitlam, BC
[email protected]
My wife Heather and I are new real estate investors, and we would really appreciate some wisdom from the forum about RRSPs.
We bought our first investment property last summer, a four plex that is cash flowing nicely. (Thanks Don.) We plan to buy another property soon, and after that will likely do a couple of JV partnerships. A major restraint for us of course is a shortage of seed capital and time. We both have good jobs, but with three small kids, braces, sports, my wife`s part time Masters` Degree program, etc, we will not be achieving our Belize in any great hurry.
We also want to be careful that we plan our first few deals properly so we don`t limit ourselves. (ie, the 1.1 rule to keep the banks engaged, and an attractive portfolio to keep future JV partners engaged.)
Like most Canadians, we are not pleased with the returns we are getting on our RRSP, and would like to evaluate our options. My employer does not have a defined pension plan, but puts a percentage of my earnings into an RRSP account on my behalf. This sum is growing to a good size, and I would like to use it to help me best achieve my Belize.
Since this is currently my `pension` as well a big part of what I would consider my `savings`, I want to be conservative with it, however I am confiident that my RE dealings will be able to provide for me in the long term. This will be a personal decision based on risk, reward, and liquidity.
OPTIONS:
A. cash it out, use it for investing - ouch, the tax man will keep half, do not want.
B. keep it invested, in GICs, mutual funds, stocks, etc. - well managed, it could get a fair return, is highly liquid, is as secure as the financial markets are.
C. Invest it with an RRSP eligible limited partnership offering. (I won`t mention any by name.) Although not liquid, it should produce a return better than B, and is surely more secure than B. Is it true that it should have no impact on credit score, future borrowing capacity, or debt ratios?
D. Borrow against it - some firms can arrange a loan for the amount of the RRSP, then could use the money for investing. (Eg, i-finance.) Although the RRSP it is not used directly as collateral, they issue bonds that are bought in a self-directed RRSP, then issue a loan with a personal guarantee required. The negative with this is that this loan is additional debt that works against debt ratios, real cash flow, might have a high interest rate, but can be directly used for getting property #2 or #3.
E Others?
We would really appreciate your thoughts and comments.
Best regards,
Dave and Heather Kahle
Coquitlam, BC
[email protected]
