I’m a 30 year old, married IT consultant with my first child and second one on the way. With my wife on maternity leave we are down to one income with increasing expenses. I’d love to spend more time with my wife and daughter however, I don’t see how this is possible. To get ahead in my line of work, I either have to move into middle management, which makes me a target when layoffs occur or, go oversees and relocate my children away from their grandparents. I work hard, but don’t seem to be getting ahead and can’t see my way out of this pattern. I have some equity in our home. Can we use it to turn this around so that I can spend more time with my family and control our financial future? Thanks.
   
   
  When Dean and his wife were both working, they had a steady predictable income. They were able to save enough for a down payment for their first home and save some money inside an RRSP’s. Now with Dean’s wife Tonya on maternity leave and a second child on the way, their financial situation has changed. With a complete review of their situation and finding out what was really important to them, we put them on the path of achieving their goals.
   
   
  Couple, married, 1 child with a second on the way
   
   
  Examine their current financial situation and make recommendations on how to achieve their goals.
   
   
  Examine their current financial situation and make recommendations on how to achieve their goals.
   
   
  An immediate plan that will allow Dean to spend more time with his young family while building a predictable retirement plan.
   
 
  Household income $80K/yr, $30K in RRSP’s, $5K in savings, $0 credit card debt.
   
 
  Principal Residence: $280K value w/ $205K mrtg, $1,330/mo
   
 
   After reviewing their current portfolio and objectives, we made the following recommendations to put Dean and Tonya on the right track.

They had some cash in their RRSP’s and equity in their home. Dean’s income was just enough to cover their monthly expenses, but not put any aside. In order to free up some cash to invest, we examined several options. 1. Refinancing their current home and use the money to invest. 2. Move out, keep their current home as an investment property and buy another home. 3. Sell the home and use the money to invest.

As they had a growing family, the need for a larger home was increasing. Their current home did not have an ideal layout as a rental and could not generate enough rent to cover all the expenses.

Therefore, they decided to sell, buy a larger home with a suite for $325K using 5% down payment and use the rest of the money to invest. The suite rented for $750/mo bringing their new payment of $1,590/mo down to only $810/mo. This reduced their personal mortgage costs by over 40% plus they gained a larger home.

Next, we looked at their RRSP’s. Most people are afraid to touch their RRSP’s since they are associated with their retirement. However, after looking at the rate of return just from cash flow and mortgage pay down with real estate compared to their current returns, they realized that they could do much better buying real estate than keeping their money in RRSP’s.

Plus, Tonya’s had the bulk of the RRSP’s in her name. Why is this important? Tonya’s income is much lower now while she is on maternity leave. Therefore if she withdraws her RRSP’s during maternity leave, the taxes will be lower also. They strategically withdrew the money out of the RRSP’s as tax efficiently as possible and used that money to invest in real estate.

During this process, we educated them on various methods of investing in real estate. We explored buy and hold, rent-to-own, taking over debt, foreclosures, creative financing, flipping, 2nd mortgage investments using RRSP’s, joint ventures and property management.

After the sale of their home, withdrawing their RRSP’s and purchasing their new home with a suite, they had approximately $68K cash to invest.

Next, they bought a townhome for $135K using 15% down ($20,250) and resold it as a rent-to-own for $154K in 24 months. They received $5K from the rent-to- own buyer and collected $180/mo in positive cashflow for 24 months. Total profit = $20,000. ROI = 49% per annum.

Next they bought a foreclosure for $167K again using only 15% down payment ($25K) and again resold it as a rent-to-own with $6K upfront and a sale price of $208K. They received $210/mo in positive cashflow. Total profit $41,000. ROI = 113% per annum.

Then they bought another property by taking over someone’s mortgage. The seller had been transferred and did not have enough equity to sell the property with a REALTOR. Therefore, Dean bought the home directly from them by giving them $5K to take over their mortgage. The home had 3 bedrooms and a bath upstairs with 1 bedroom, a bathroom and a separate entrance in the lower lever. In the lower level, they used $12K to put in a kitchen, new floors and paint to create a suite. The suite rented out for $750/mo and the upper level rented out for $1,100/mo. They paid $315K for the property.

In total, they were able to sell their single primary residence and acquire four properties using their existing resources. They also reduced their monthly overhead costs, moved into a larger home, created a reserve fund for their investments and a established a solid retirement plan. By the time they retire, they will have mortgage free properties to provide an income in retirement.

Dean also managed to renegotiate a 30% pay increase by working as a consultant, rather than an employee with the same employer. And, he reduced his work schedule to 4 days a week. Now Dean is able to spend more time with his family and control his financial future.
   
 
   
 
 
 

 
 
 
 
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