Hi,

I'm in my mid-twenties and have been renting since I was 19. I've read Real Estate Investing in Canada 2.0 (Creating wealth with the ACRE system). I'll be inheriting money in a few months and have always wanted to get into real estate investing for cash flow. My question is, should I buy my first home to get started with investing or continue to rent and buy my first investment property instead.

Regards,

Keshia

Where do you live ? What's your profession ? What's your income level ? What's your passion ? What life changes, if any, in the next few years do you envision ?

Generally speaking, in life you should own what you use a lot: your shoes, your jacket, your backpack, your house/condo. You should rent what you use only occasionally: a hotel room, your tuxedo, an airplane ride, perhaps even a car.

A residence is tax free when sold and generally goes up in value with inflation or more. As I mention in my book you should buy the biggest house you can afford, as you not only will have a decent investment (in most cases) but also can live in the investment, unlike a stock, bond, REIT or mutual fund.

I would not buy a rental property until you have a solid understanding of the process and issues, usually attained by reading a lot and taking education such as REIN offers plus being surrounded by like-minded peers (also provided by REIN or other real estate based local user groups that exists in many cities). But then it will be one of the best investments out there if bought at the right price, in the right location, with the right leverage and the right impeccable management. Cash-Flow is over-rated, and not required (besides covering your expenses) as that is not where the money is.

Some related articles:

http://myreinspace.com/threads/what-is-better-cash-flow-or-higher-roi.26596/

http://myreinspace.com/threads/blue...expert-deserves-to-make-some-money-too.29091/

I live in Toronto, I work for a telecommunications company and my fiancé does also. Income level about 100k/ year. 2 kids aged 5 and 18 months. Only life changes is a wedding in the near future. My passion is photography and interior design.

I'd buy a house in a desirable neighborhood within the green belt, close to an upcoming LRT/train station where you can walk to. Once there, it'll pop in price. Perhaps with a basement to rent out as a mortgage helper, where you can put the kids when they are teenagers [ they age predictably: they will be ten years older in ten years !]

Then I'd look for rental properties in Hamilton or KWC area. Not my area of expertise geographically, as I live out west and specialize in W-Canada, but many REIN members here can point you in the right direction there re realtors, mortgage brokers, location to buy or to avoid, plus REIN has some research reports on those locations. Get tooled up first though. Then decide what and where to buy and at what leverage level. More on leverage and cash flow on a hypothetical $1M invested here: http://myreinspace.com/threads/what-is-better-cash-flow-or-higher-roi.26596/

Depending on how much you will be inheriting, you could start small or take a giant leap on the first step. I would spend some time and invest in education or perhaps joint venture with an expert to learn as I did in my early days. For example if you are inheriting a large sum I would immediately invest in multi family vs. single family as a majority of building owners are doctors, lawyers, or other high income/net worth individuals as it can be argued the larger you buy the better the return, with less risk if you do it properly.

Hi,
It is good to invest first because as you are saying you are in mid 20 .So if you have investing plan that means you have saved a good amount of money .So in my opinion live on rent now as per real estate is the best investing thing which helps to grow fast in this running world.People in this world have everything but they are running short with time .So go ahead invest and do hard work .I will see success very soon.

No right answer here. I think "buying the most expensive house you can afford" is a recipe for disaster. The luxury is the market that is going to fall the hardest in a real estate crunch when job losses are highest. Not such a good investment when your property is underwater. Makes zero sense to me.

Why not do a bit of both? Buy a home, put in a basement suite using some funding from the government for example? This will give you an awesome understanding of what it takes to meet the code requirements for development. If you do the renos on your own time you will not put the same strain on your budget. And, if you decide that you don't want to rent it out you have a nice little spot to separate the in-laws when they are in town

SweetZone said:

No right answer here. I think "buying the most expensive house you can afford" is a recipe for disaster. The luxury is the market that is going to fall the hardest in a real estate crunch when job losses are highest. Not such a good investment when your property is underwater. Makes zero sense to me.

Click to expand...

Looking at all major cities across the world, single family houses will continue to APPRECIATE due to much foreign money leaving volatile, corrupt and/or autocratic places (like Russia, China, Middle East, N-Africa). As such, owning one, or better, several, continues to make sense to me. Plus your own home's capital gain is tax free. As stated, the key is to be able to afford it, and that is a very personal decision, as some folks expect higher incomes or have two, and some folks chose to live on one, but have two or expect the one to decline.

I continue to believe that living in the biggest home you can afford to be a very wise investment decision.

Investing in real estate will be the best opportunity to get success.If you want success and become rich real estate investment is the secure path to choose.

Why not Both? I bought my first property as a duplex and rented out one side it's a great way to live relatively mortgage free and you will be able to afford more. If you have any more interest in this type of thing feel free to give me an email!

khewitt24 said:

Hi,

I'm in my mid-twenties and have been renting since I was 19. I've read Real Estate Investing in Canada 2.0 (Creating wealth with the ACRE system). I'll be inheriting money in a few months and have always wanted to get into real estate investing for cash flow. My question is, should I buy my first home to get started with investing or continue to rent and buy my first investment property instead.

Regards,

Keshia

Click to expand...

Hi Keshia
In my experience of working with many REIN Members and my own daughter, a great place to start is as Thomas stated, to purchase a property that has a basement suite.
Consider that this is a strategy for investment, not your final home, so buy in an neighborhood that works for you but also that has a long term upside based on what is happening in the area...do some research.
Continue to develop your career or business and once you have increased income, built some equity in your property, perhaps some appreciation or sweat equity and mortgage buy down, then purchase your next property and now rent out the whole house you were living in.

I would recommend to get a purpose build duplex/triplex instead of having a house with a basement unit. Properties that have basement suites/nanny suites are the most challenging properties to manage as you have to deal with noise, share utilities, shared laundry, shared parking, etc. I find that there is more drama in such assets.

If you decide to move to another city later on, having a duplex/triplex provides the ability to out source property management vs a home with basement suite. Also your market will be small as there are not that many people who like sharing utilities, laundry, etc.

If you have limited funds then get a property with a based suite but be aware of the challenges that all. Good luck.