My first purchase

kennyb

New Forum Member
Registered
First property purchased! After researching areas, gathering team members, and performing due diligence I finally closed on my first investment property. A townhome in southeast Edmonton. Here's the quick story.



So I'm in my late 20's, I live in Vancouver, I have some capital and I'm thinking what a lot of people my age are probably thinking, how in the world am I ever going to be able to afford to buy a home in Vancouver? Getting the downpayment together to buy a home here is one thing, but then being able to afford the mortgage once I get that capital together is a whole different story.



With that said, I read a few books on real estate including the ACRE system and decided that the best way to put myself in a realistic position to buy a home in the next couple years would be to start putting my money to work. I want to accumulate assets on my own initially, and once I can prove myself to potential partners start looking for JV's, all with the central goal (though only a small part of my personal belize) of growing my asset base, and eventually pulling enough equity out to buy a home and afford a mortgage here.



My education background is in Economics, so I used that to start the search for my first investment property. I looked at areas where there were economic fundatmentals that could substantiate potential equity growth. Once I decided on an area that convinced me capital appreciation was both possible and probable I started assembling a team in that area, which is tough to do when you live out of town. Trust is key!



5 months later, with a lot of work I have now made my first purchase. I take possesion in mid-March (a condition of my financing) of a 3 bedroom townhome in a cozy little area of Edmonton. I am excited to work with my property management company in the next few months to find a tenant, but even with all conservative estimates (I'm an accountant, so conservative estimates tend to be overly conservative for me) this place should still cash flow nicely, which I feel is a direct result of the hard work the great professionals in my team have done.



I have learned an amazing amount from the members of my team and this forum, and I am sure I will learn a lot more in the months and years ahead, but I feel the biggest hurdle for me was getting past the analysis paralysis and taking action on this first purchase. Thanks to everyone involved to date.
 

CorySperle

Senior Forum Member
REIN Member
Congrads on the purchase! Your going about the right way, in putting you own skin (cash) on the line to build a track record before looking at joint venturing. I assume you bought in Millwood's so the location and townhouse asset are solid bets as well. A healthy reserve fund and solid management and your off to the races!
 

Dan Golby

Frequent Forum Member
REIN Member
Congratulations! Good you're starting young and investing in a great market.
 

dsmandato

Inspired Forum Member
REIN Member
Congratulations Kenny, the most difficult thing to do on your way to success is taking that first step. Sure feels good though once you've taken action hey?



While education is important, it;s not worth much if you don't take action. I can relate on the potential issue of analysis of paralysis. It does get easier (and faster in making decisions) as you continue in your journey. Keep goin!
 

kennyb

New Forum Member
Registered
I thought it would be a good time to post my next update seeing as it's been a few month since the "machine" has been up and running smoothly. I took possesion of my place mid March and found a tenant with my property manager for April 1st and signed a 1 year lease. The tenant had a working relationship with my property manager which worked out great for everyone. It has only been a few month so far but the place is flowing a couple hundred dollars a month and because of that I can float my accelerated weekly mortgage payments which is great.



Now, I am trying to think about my plan of attack for purchase number two. Anyone who has any interesting suggestions with how to get your second purchase moving after you have thrown the majority of your cash at property number 1, feel free to leave your thoughts.



I appreciate all the supportive comments, so thanks to all for taking the time to write them.
 

Thomas Beyer

Senior Forum Member
REIN Member
Congratulations. The first one is the hardest.



To buy more you need cash. Why do you accelerate the mortgage payment ? Consider skipping one, too.



more to read here:

http://myreinspace.com/forums/p/10689/55963.aspx?#55963
 

kennyb

New Forum Member
Registered
Thanks for your comment Thomas, and the link.



As part of my plan is access the equity available when I refinance I will be trying to increase this equity as fast as possible, therefore accelerate weekly payments will allow me to get more of the mortgage paid down in 2/3 years when compared to standard monthly payments, this will increase the amount I can access through a HELOC when I go to refinance. That is my logic behind the accelerated weekly.



Cheers
 

invst4profit

New Forum Member
Registered
Financially it is more advantageous now to put as little down on the mortgage as possible. Accessing a HELOC is fine down the road but the max you can get out of the equity is only 80%. This combined with the fact that banks will value the home as low as possible, to protect their risk, you will get far less from the equity than if you kept your payment low and saved the positive cash flow outside the mortgage.

Tying up cash in a business mortgage parks it in limbo and it can be lost quickly in a real estate crash. What you need to concentrate on now is cash not equity.

Equity may be important in 20 years not now when you are trying to move forward.

Cash in a mortgage as dead money.
 

KHamilton

New Forum Member
Registered
I thought it would be a good time to post my next update seeing as it's been a few month since the "machine" has been up and running smoothly. I took possesion of my place mid March and found a tenant with my property manager for April 1st and signed a 1 year lease. The tenant had a working relationship with my property manager which worked out great for everyone. It has only been a few month so far but the place is flowing a couple hundred dollars a month and because of that I can float my accelerated weekly mortgage payments which is great.



Now, I am trying to think about my plan of attack for purchase number two. Anyone who has any interesting suggestions with how to get your second purchase moving after you have thrown the majority of your cash at property number 1, feel free to leave your thoughts.



I appreciate all the supportive comments, so thanks to all for taking the time to write them.
I'm interested in anyone's response here as that is my issue having all my money tied up in property! Thx!
 

KHamilton

New Forum Member
Registered
Financially it is more advantageous now to put as little down on the mortgage as possible. Accessing a HELOC is fine down the road but the max you can get out of the equity is only 80%. This combined with the fact that banks will value the home as low as possible, to protect their risk, you will get far less from the equity than if you kept your payment low and saved the positive cash flow outside the mortgage.

Tying up cash in a business mortgage parks it in limbo and it can be lost quickly in a real estate crash. What you need to concentrate on now is cash not equity.

Equity may be important in 20 years not now when you are trying to move forward.

Cash in a mortgage as dead money.
I agree, I've been told to may minimum you can to your mortgage, keep the cash out!
 

taniamcintosh2010gmail.com

New Forum Member
Registered
I am trying to do my due diligence on my first property, however I am a new immigrant and bank won't borrow any money to me until 2 years have passed to establish a credit record and so on. What other options I have to purchase my first property?
 

LAndersen

Inspired Forum Member
Registered
I am trying to do my due diligence on my first property, however I am a new immigrant and bank won't borrow any money to me until 2 years have passed to establish a credit record and so on. What other options I have to purchase my first property?
Have you considered a RTO strategy or partnering with someone else who has established credit to get going? In the mean time, educate ,educate,educate yourself and try to start to build a team and network!
 

LAndersen

Inspired Forum Member
Registered
Thanks for your comment Thomas, and the link.



As part of my plan is access the equity available when I refinance I will be trying to increase this equity as fast as possible, therefore accelerate weekly payments will allow me to get more of the mortgage paid down in 2/3 years when compared to standard monthly payments, this will increase the amount I can access through a HELOC when I go to refinance. That is my logic behind the accelerated weekly.



Cheers
Now that it's been almost a year, what did you decide for property #2?
 
R

rob ohs

Guest
Guest
Great mate congrats for the first purchase keep it up.Cheers:)
 
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