7 Things To Know Before Investing In Real Estate

  1. Educate Yourself

Knowledge can take you from being a “good” investor to a great investor. This has always been true. What is going to separate you from the pack is how much research you put into your investments and how often. Markets are always changing, new trends are always beginning, old trends are always reversing.

If you dedicate yourself to researching and refining your investment strategies and you remain focused on investing in regions where economic growth is booming (which leads to job creation and population growth you will reap the benefits of a stable appreciation in the real estate market.

  1. Set Investment Goals

A goal is not a wish; you plan and execute specific steps to achieve a goal. Investment goals require sufficient research, knowledge, and planning. Setting clear and specific goals (and writing them down!) becomes your road map and action plan to becoming financially independent. You are statistically far more likely to achieve your goal of financial independence by writing down specific and detailed goals than not doing anything at all.

Here is an example of setting clear, concise investment goals for investing in one (or several) real estate property:

  1. Setting the number of properties you need to acquire each year (if desired)
  2. Specifying the type and location of the property
  3. Specifying the annual cash-flow your property should generate
  4. Setting the parameters for your desired rate(s) of return
  5. Specifying the ideal tenant for occupation

It may seem extremely basic, and you may feel you can carry this info around in your head, but by putting it down on paper and using it to keep track of your how you advance toward your goals will free your mind to “see the big picture” and make better (and more financially beneficial) decisions.

  1. Invest For Cash-Flow, Mortgage pay-Down & Appreciation

Cash-flow is what your asset should be generating for you so that your investment will sustain itself without draining additional cash from your monthly income total. It should cover all operating expenses and provide a pay down on your mortgage.

Mortgage Paydown is exactly what the name tells you it is. You pay down your mortgage by leveraging you cash-flow assets. This is unique to real estate investments. There is no other asset class where you can use the bank’s money to purchase the investment, and use a tenant’s money to pay back your loan every month.

Appreciation is the largest source of return on your investment, providing you have done the proper research and due diligence.

  1. Invest In The Fundamentals

Always start by selecting the best markets that align with your investment goals (see 2. Set Invest Goals).

The best approach is to choose your property’s location. To choose your property’s location, you need to consider many factors. Take the time to research each one. There is no “quick and easy way” to do this. Everything your investment does for you leads back to this step. If you are unsure as to whether you can make this commitment consult with an expert.

Primary Factors To Consider When Choosing Your Property’s Location

  1. The current housing market
  2. Unemployment rate
  3. Projected job growth
  4. Population growth
  5. Capital spending on any major infrastructural projects (ex: hospitals, highways, hospitals, hydroelectric projects, etc.)
  6. Supply and demand trends
  7. Capacity to pay

Secondary Factors To Consider When Choosing Your Property’s Location

  1. Amenities
  2. Transit access
  3. Schools
  4. Crime
  5. Rental demand

This is the most work and takes the most time. Research, research, and just when you’ve had enough, do more research. You really need to do your homework. Investigate each factor in as much detail as possible and you will be able to assess your investment opportunities base don the facts. You will be glad you did.

  1. Diversify Across Markets

Our recommendation: focus on one market at a time.

Accumulating from 3 to 5 income properties per market is a very good start to creating a solid portfolio. Once seasoned (and after doing even more homework) you would diversify into another prudent market that is geographically different than the previous one.

One of the underlying reasons for diversification within the same asset class (real estate), is to have your assets spread across different economic centers.

The reason for this is simple: every real estate market is “local”. Each housing market moves independently from one another. Diversifying across multiple states helps reduce risk should one market decline for any reason, such as increased unemployment rate, increased taxes, or reduced capital spending on infrastructural projects (see Primary Factors above).

Hybrid Markets:

Hybrid markets are areas that have linear, slow-growth characteristics for a period time, followed by periods of moderate cyclical-style appreciation. They never boom quite like Florida or California, but they also never need to correct like the more volatile markets either.

Markets like Phoenix, Las Vegas, Chicago, Seattle, Minneapolis-St. Paul, and Detroit are in this category.

Comparing Markets:

Although each market has different characteristics, one is not necessarily better than the other. Each market offers the real estate investor different levels of appreciation and cash-on-cash returns.

Some investors may not sleep well at night investing in a cyclical market and prefer the pace of a linear market. While other investors may find a linear market to slow and prefer to see greater appreciation potential.

However, over the long-term appreciation rates in both market types end up being similar. So the idea of chasing appreciation should be avoided.

It is more important to be concerned about the overall market health and its future prospects than it is to get lost in the potential cash-flow and other “numbers” on the property. They’re all important of course, but purchasing based solely on the property without considering the bigger picture of the market and neighborhood is like trying to sail a ship against strong headwinds.

If you don’t start with the right market and neighborhood, over time you will experience more tenant turnover, shorter lease terms, increased late payments/defaults, and decreased or negative appreciation (see 4. Invest In the Fundamentals)

  1. Use Professional Property Management

Our recommendation: never manage your own properties unless you run your management company. Property management is a complex job that requires a good understanding of tenant-landlord law, marketing skills and strong management skills when dealing with the constant and various needs of tenants. Your time as an investor is valuable.

Finding an experienced property management team is vital to keeping vacancy rates low and tenants happy. Additionally, they will be able to help you manage your investment properties in areas that you may not be able frequent on a regular basis, leaving you with peace of mind and freeing up time for you to pursue other interests.

  1. Leverage Your Investment Capital

Real estate is the only investment where you can borrow other people’s money to purchase and control income-producing property. This allows you to leverage your investment capital into more property than purchasing using “all cash”. Leverage magnifies your overall rate-of-return and accelerates your wealth creation.

As long as you have positive cash-flow and your tenants are paying off your mortgage for you, you are in a good position to borrow more for buying more income property.

The “Buy and Hold” methodology  methodology, as it is applicable to property, is and always has been the cause for making more millionaires than any other method. It lets you develop equity through appreciation over a period of time.

Your goal in property investing must be to develop as much equity as you can in the property while still having enough passive income to get you there. So long as you own the property, you’ll have the extra advantage of tax sheltering that you cannot obtain from any short term methods. This is the reason that explains why the Buy and Hold methodology is king.

As time goes by and you pay off your loan, you get the advantage of additional cash flow which is very useful in retirement. Traditionally, properties have doubled in value every 7 to 10 years going back 50 years in time. Imagine your equity position if you hold a property for 20 or 30 years!

Today, you are able to purchase a brand new $250,000 home with an investment of about $58.000. If you rent this home and simply break even on your cash flow, you will have an asset that grows while someone else makes your mortgage, tax, and insurance payments. At a 5% growth rate per year, that home will be worth over $697,000 in 25 years on a $58,000 investment Think of how you could use that money. This illustrates a major strength of investing in real estate: own something worth 5 to 10 times of the appreciation, cash flow and tax benefits.

True wealth in real estate is realized through equity growth and appreciation. Cash flow, although a must, is the glue that holds the deal together to permit you to wait until the value grows. Let your tenants cover your payments and make you rich!

How GDP Growth Can Influence The Price Of Real Estate

So, I’ve said this before: the most important part of any real estate purchase is its long term performance. This appreciation builds real wealth. With an ability to identify long term performance trends, it’s not hard to pick the right region in which to buy property.

The hard part is doing enough research on the region beforehand that will help inform your decision as much as possible. There is one major factor to this research that will go a long way in helping you do so: GDP growth.

What Is GDP?

The gross domestic product (GDP) is one of the most important primary indicators used to gauge the health of a region’s economy. It represents the total dollar value of all goods and services produced over a specific period of time.

Measuring GDP is complex, but in essence it can be measured in 2 ways:

  1. The Income Approach: adding up what everyone earned in that region.
  2. The Expenditure Approach: adding up what everyone spent in that region.

Both are tried and true approaches of determining an accurate GDP. With respect to real estate (and real estate investment), the Expenditure Approach can be very useful in helping to predict an increase in the regional GDP and therefore an increase in the regional price of real estate, particularly when for example, a government elects to increase infrastructural spending in that region.

How GDP Growth Can Influence Real Estate Prices

An Increase in GDP can heavily increase the regional price of real estate.

Here’s a 5-step outline of the process:

  1. A large expenditure in a specific region. This can typically be best exemplified with a large infrastructural project ( a mine, a hydroelectric damn, a new hospital, etc.).
  2. This large expenditure drives employment to that region in order to complete the project.
  3. As jobs are filled, the vacancy rate decrease as people move that region.
  4. Rental rates increase, which makes a mortgage payment seem more affordable. The demand to own a property increases.
  5. The regional price of real estate increases as a result and the regional GDP has seen a dramatic increase as a result of all the above factors.

Due to the fact that many large infrastructure projects are announced far in advance of their actual construction, and that they don’t exactly stop and cancel such large projects on a dime, the process is slow and predictable enough for property investors to take advantage of the region’s (at first very affordable) real estate prices. Once invested, they can enjoy a much larger (and faster) return than if they were to invest in a region without such an increase in spending.

The Value Of Proposition

As a realtor who has exclusively sold investment real estate for the past 25 years, I have realized that the residential real estate cycle is not difficult to predict – as long as you track the right numbers.

For example, northeast B.C. had record land sales in 2008. This was driven by large companies buying massive tracts of land in order to secure access to a valuable resource. In this case, the resource was natural gas. To buy before the crowd, you need to understand what to look for. To understand what to look for, you need to turn to experienced people.

Long Term Performance

The most important part of any real estate purchase is its long term performance. This appreciation builds real wealth. With an ability to identify trends, it’s not hard to pick the right area to buy in, but in this regard, not all developers are created equal.

The Senior Management at Western Canadian Properties Group have developed and sold over 12,000 properties over the last 20 years, through a well-proven and investor-friendly system that is the best in the industry today.

WCPG gives you the opportunity to buy into the best markets in Canada and the United States. These markets are identified through an analysis of economic fundamentals, which means increasing positive cashflow on the properties, and excellent potential for capital appreciation. What’s more, today’s exceptional financing terms and a truly hassle-free optional management program make this the perfect package.

Building New Homes In New Communities

In Northeast BC, WCPG builds brand new homes in growing communities. The VP of construction even lives where he builds. With a small down payment, you can secure your property for future purchase. In a rising market like Northeast BC, this means instant equity.

The materials selected for these homes are long lasting and virtually maintenance free. Everything from lighting to heating is designed for optimal energy efficiency, and with separately metered utilities, you won’t be hit with increased operating costs.

Thanks to a 2 – 5 – 10 New Home Warranty, there are no surprises, and no cash calls. What’s more, WCPG provides a dedicated internal management team, who keep you in the loop with photos and progress updates. You will always know what is happening, and when – all you need to do is ask.

On-The-Ground Leasing Team

WCPG also employs an on-the-ground leasing team, whose sole purpose is to ensure that your unit is rented from Day 1.

The leasing team starts the rental process when the construction of the property is 75% complete, and they leave nothing to chance. They maintain a strong internet presence on Kiijiji, Craigslist, and custom URLs, and run corporate campaigns. They know and speak regularly to the relocation personnel working at the largest employers in town, and field 24/7 responses to inquiries, meaning calls are always taken immediately.

WCPG’s professional management teams are always local to the market. They know the area, know the tenant profiles, and know the market rental rates.

They spend time screening upfront to avoid future problems, and perform regular physical inspections.

Leases are written with end dates, allowing rents and terms to be adjusted beyond rent control limits, maximizing investor return. Investor-friendly reports are distributed on a monthly basis, and meetings can be attended online, so you can easily join regardless of where your property is located.

Optional rental programs are available, such as sharing vacancy risk with other investors, sharing furniture costs to attract higher short-term rents, and negotiating discounts on property management.

The Turn-Key Solution To Property Investment

In short, when you invest with WCPG, you get a dedicated, award winning team of experts who deliver brand-new cash flowing properties in real estate markets which are poised for exceptional growth. You get contemporary modern properties under warranty, which are energy efficient, built with maintenance free materials, and are complete with fully managed rental options that deliver optimized results. This is a truly hassle free, turn-key solution, built for long term performance.

Why More People Are Investing In Real Estate

Since 2010, it’s become more common and more popular for people to invest in real estate. Investors are shying away from the stock market. Why? It’s become volatile.

Some History

The in 1980s the large financial institutions marketed “freedom 55”. The idea was to build up a “nest egg” of $1 million by the time you were 55 years of age, invest it in a GIC at 8 – 10% and live off the income of $80, 000 – $100,000 per year. Simple and effective.

In the 1990s, without warning, it suddenly became known as freedom 65. With GIC rates at 5 – 6%, you were then expected to work until 65. Why? Because you $1 million nest egg was only earning you $50,000 – $60,000 per year.

The trend continued.

GICs and term deposits were losing their appeal. No one was going to live lavishly off the income of their $1 million GIC if it was only earning them less than 5% per year in interest.

People Turn To Real Estate Investments

People began to turn to invest in real estate because it offered 3 things that the stock market seemingly could not:

  1. Cash Flow
  2. Appreciation
  3. Mortgage Paydown

Cash Flow: The Appetizer

Most investors focus on #1 – Cash Flow. With a $50,000 down payment, every $50/month of positive cash flow can generate an annual return of about 1.2%. With positive cash flow, there is no need for investor’s to support their property with money from their working income. As appealing as it sounds, cash flow isn’t where investors see the most gain from investing in real estate.

Appreciation: The Main Course

If cash flow can be seen as the appetizer, then #2 – Appreciation, is the main course. In Canada, the typical property has appreciated by 5% per year. Does this mean you’ve earned 5% on your investment? In a word: no, unless you had enough money set aside to buy the property outright. If you had to borrow any money to buy the property, the situation becomes very different.

Say you buy a property for $200,000 that appreciates 5% per year, your property gain for that year is $10,000. However, if you could only afford a down payment of $50,000 and you had to borrow $150,000 to do so, your $10,000 property gain was really a 20% annual return based on your $50,000 down payment.


The real key to generating the highest return possible is finding markets in Canada that will see the greatest appreciation. . If you can find an area that is likely to appreciate at 10% per year, your annual gain on the property would be $20,000 per year which would be an annual return of 40%.


Mortgage Paydown: The Dessert

When interest rates were at 6%, a mortgage payment of $960 was made up of principal, plus interest of 6%, meaning that only a fraction went to your principal paydown. In this case only 23.4% or $225.

Now we are in an environment of low interest rates and that same loan amount at 2.99% has a much lower payment of $709. Even more importantly, the principal amount of the payment has jumped to $342/month. Investors are earning 8% per year just by the amount that is being paid down on your mortgage.

If you assume that your property is going to appreciate at 3% per year, you’re looking to earn 1.2% per year on your cash flow. This is just over 8% on your mortgage paydown and 12% on your appreciation for an annual return of over 20% per year. Finding better appreciating markets earns you more per year. A market that appreciates 5% per year can earn almost 30% per year in annual returns. A market that appreciates by 10% per year can earn almost 50% per year.

These 3 items – Cash Flow, Appreciation, and Mortgage Paydown – make investing in real estate one of the most powerful wealth building tools available today.

Why Invest In Northeastern B.C.?

Northeastern B.C. will be one of the top investment markets in Canada with both Fort St. John and Dawson Creek seeing massive capital investments.  Investments like these lead to job creation. Job creation leads to a population boom and, in turn, raise demand for housing.

People will move to northeastern B.C. to fill jobs

In 2014, the population of Fort St. John grew by 4.5%. According to the North Peace Economic Development Office, the population is set to double over the next 6 years. Fort St. John was recently ranked #1 by B.C. business as best city to work for in in B.C. There are over 2000 people employed in the forestry industry and thousands of additional jobs being created with the Site C Dam and the natural gas industry. The employment base is heavily diversified and ripe to expand. The number of jobs created in Fort St. John will likely grow exponentially over the next 10 years.

The projects driving growth in the region right now

  • In 2012, a new $350,000 hospital opened in Fort St. John, population 25,000. The government believes there is a major population boom on the horizon.
  • Plans are in place to twin the highway from Fort St. John to Grand Prairie. Another major capital project.
  • Fort St. John has the second largest OSV plant in the world, operating with 400 employees per 8 hour shift running 3 shifts per day.
  • The Horn River and Montney natural gas fields are the third largest hydrocarbon fields in North America.
  • enCana is spending $600,000 on drilling in the area in 2015.
  • BC Hydro has announced the Site C Dam for the region, a $9 billion project, the largest infrastructure project in Canada 7 km away from Fort St. John.
  • Petronas announced their decision to proceed with a $36 billion natural gas project, the largest capital investment project in B.C. history.
  • In 2015, Shell’s BC LNG received approval from the provincial and federal governments for their $40 billion liquefied gas project.

There has never been a better time to acquire brand-new cash flowing properties in what is becoming one of the top real estate investment markets in the country.

The Hudson: Opportunity In Northeast B.C.

There has never been a better time to acquire brand-new cash flowing properties in what is becoming one of the top real estate investment markets in the country. Introducing The Hudson Condominiums, located in the heart of Fort St. John, one of the fastest growing communities in Northeast B.C.

Maximize Your Investment Return

There are several reasons to buy new in order to maximize your return on your property investment by buying new.

Here’s a rundown of the benefits:

·        A Quality building with modern finishes means durability and energy efficiency

·        A 2 – 5 – 10 new home warranty means there is no further cash to increase the revenue

·        It generates more rent per dollar investment and attracts a better tenant profile

·        It secures today’s prices with only a small deposit; a rising market gives instant equity upon closing

It gives investors a professionally-managed, predictable revenue stream – a complete Turn-key solution

Hudson Interior1 Hudson Interior2






Why I Believe This Is A Good Investment

As there are only 10 units left available, the developer is prepaying the interested costs for the next 5 years in order to meet their pre-construction threshold. This would effectively give investors a Net Effective rate of 1.49%* on their mortage.

A High Growth Market For A High Return

In 2014, more than $10 billion in projects was invested into the region giving Fort St. John the highest investment per capita in the country for that year. In 2014, the population of Fort St. John grew by 4.5%. According to the North Peace Economic Development Office, the population is set to double over the next 6 years. Fort St. John was recently ranked #1 by B.C. business as best city to work for in in B.C.

The facts are clear. Capital investments lead to job creation. People move to these areas to fill the jobs, driving rents higher and increasing the price of real estate. The region is set for maximum capital appreciation on your investment.

*For more details on this offer, download our brochure.


The Tax Deductible Mortgage Plan: An Introduction

The fact that you are reading this should tell you that you’re looking for a better way to structure your financial affairs. Or at the very least, that you understand that you have more options for your mortgage. Setting up your mortgage on your primary residence for tax efficiency is not a new concept. High end financial advisers and chartered accountants have been recommending this type of financial strategy to their wealthy clients for decades.

The top 3 reasons for setting up your residence for tax efficiency:

  • Paying less tax
  • Reducing debt by paying off your mortgage faster
  • Accelerating wealth by reinvesting the benefits

The Challenge

The rules are complex. Getting the right level of advice and support to properly implement the plan is tough. Not every investor has the time or resources to address all aspects of such an undertaking. To make things even more challenging, Canadians approach their financial affairs separately; obtaining mortgage advice from one adviser and investment advice from another.

There is however, a solution that is designed for homeowners looking to take advantage of an advanced mortgage strategy holistically, without trying to figure things out all on their own.

A Tax Deductible Mortgage Plan

Principal interest on one’s primary residence mortgage is not automatically tax-deductible. There is, however, a systematic approach that will allow one to convert non-deductible mortgage debt into a tax-deductible investment debt on a monthly basis while remaining in strict adherence to Canada Revenue guidelines. With the appropriate mortgage structure, you can generate free tax refunds simply by making your mortgage payments.

The average annual refund ranges between $2000 – $5000 per year. This number depends on:

  • property value
  • the size of the mortgage
  • the owener’s marginal tax bracket
  • interest rates
  • length of time spent in the mortgage plan

Your refunds can be applied as principle pre-payments to the outstanding balance of your mortgage, reducing amortization and saving on interest. Additionally, by reinvesting tax refunds and interest savings, additional wealth can be built for retirement without affecting monthly cash flow. No additional cash is required out of pocket and mortgage payments can be made the same as before. The plan is, in essence, self-funding.

By The Numbers

Let’s say you have a mortgage of $200,000 at 7% interest over 25 years. This would amount to approximately $220,000, which is more than the original loan itself. Additionally, Canadians pay their mortgage with “after-tax” dollars and, at an estimated this at a 40% tax rate, this would tack on an additional $280,000.

Here’s the breakdown:

$200,000 (mortgage) + $220,000 (at 7% interest) + $280,000 (tax) = $700,000 (to pay back a $200,000 mortgage)

The numbers are staggering. So the question now becomes “how does one reclaim any tax dollars and use them to one’s advantage?”

A quick case study

Jim and Lisa buy a home for $500,000. They are in 39% marginal tax bracket. Their mortgage is $250,000 and they will pay it off in 25 years at an average rate of 4.5%. They have $150,000 in equity which can be used to set up their cash flow asset. Jim and Lisa decide to implement a Tax Deductible Mortgage Plan.

Here are the benefits:

  • Accumulated investments can be sold and used to pay off all loans
  • They earn $98,000 in tax refunds which can be used to make extra mortgage payments
  • They achieve mortgage freedom in 14.5 years (instead of 25 years), achieving $172,000 in future savings
  • Additional tax refunds and savings accrued after mortgage freedom is achieved can be used for future investments

For whom will this work?

This sort of plan is optimal for those who have between 30% – 50% equity (the minimum would be 20%) in their property with good credit and are employed or self-employed. For those already on track to pay off their mortgage within 3 – 5 years, this method likely is not the most optimal but there are several other strategies one can use to generate similar financial benefits from their mortgage.

Would you like to know more about a Tax Deductible Mortgage Plan? Feel free to contact us.

Cynthia Aasen, Owner | Broker

Investment Revenue Realty Inc.

 604 764 5647



Fort St. John City Council preparing for ‘exponential growth,’ according to Annual Report

Lori Ackerman PhotoFort St. John’s city council is preparing for a continuation and acceleration of unprecedented growth in the area. “With over $68 Billion in recent investments, the lowest unemployment in the province, and anticipated exponential growth, we are firing on all cylinders economically,” writes Mayor Lori Ackerman in the city’s 2014 Annual Report.

The dollar value of projects inside the city limits grew more than 14 percent year-over-year, to a total of $154.9 million, and an application to expand the city boundary limits was approved in September.

Fort St. John has enjoyed Provincial support of the burgeoning Liquefied Natural Gas industry. In addition to planned pipeline construction, it stands to benefit from the impending construction of the Site C Dam, which is currently Canada’s largest infrastructure project by dollar value.

City Manager Dianne Hunter notes that “growth is expected to continue at a faster pace in the decades to come due to these major projects.”

Fort St. John’s Population has increased 15 percent since 2010, with a jump of 4.7 percent from 2013 to 2014 alone. In order to welcome and accommodate this influx of residents, City Council has worked to develop recreation centres and parks, improve road infrastructure, and prioritize the revitalization of the downtown core.

2014 Fast Facts

  • Total number of dwellings permitted: 531 permits – Increase over 2013 from 339 permits
  • Total construction value: $154,983,081 – Increase over 2013 from $135,654,000
  • 556 Development permits issued
  • 2082 Formal building inspections performed
  • 95 Single Family homes were approved, 71 duplexes and 22 Multifamily units



Alaska Highway News
Population Growth
Boundary Extension
Annual Report


What Needs to Happen to Make LNG a Reality

By some estimates, building 5 LNG plants by 2021 could create more than 39,000 jobs over a nine-year construction period, and approximately 75,000 jobs once those plants are operational.  In other words LNG has the potential to create thousands of jobs in the near future.

First, LNG proponents much reach meaningful agreements with First Nations.  To accomplish this they must be treated as true partners.  Which means First Nations concerns and needs must be addressed involving opportunities for protection of the environment, employment and contracting.  Progress has been made a recent newspaper report said at least eight of the northern BC First Nations have signed benefit agreements.

The propenents must have a means to transport the gas from northeast to the coast.  Major pipelines are being proposed across the province. Woodfibre LNG in Squamish will need modest new pipeline infrastructure to access the existing gas supply from FortisBC.

Lastly, of course, is customers.  Is there a market that is willing to take the product at a price that will cover the costs?  This is the Billion $$ question.


Job Growth in BCs North expect to explode


Join Us for this exciting event.  Great way to see first hand what’s happening in the north!

Register http://irrealty.ca/field-trip-discovery-june13-14-2015/