Monday, September 29, 2008
Here is my idea and plan for you to succeed in Life. No kidding, this is the bottom line.
Putting your ideas and plans into action that is most important, you have to have the desire and persistence to stay with your plan for the long term. This will absolutely guarantee you financial freedom in the long term. Nothing else can 'guarantee' you financial success except for this below.
I guarantee that you will be financially independent if you invest for the long term in real estate. If you save 10% of your income per year and buy one small townhouse every 2 to 3 years from now for the next 15 years, you will own 5 to 7 townhomes. If you follow my investment and mortgage philosophy, the tenants will pay off your mortgages for you during this time period. On the first townhouse you will be mortgage free in 20 years. So, if you are 35 to 45 today, you will be completely mortgage free on your first townhouse you purchased when you are 55 or 65.
Now, even if they don't go up one dime in the next 20 years, you will have a steady income stream and equity of $260,000 in the first investment property.
Of course the above analysis is absurd, because the townhouse you bought today for $250,000 will be worth at least $350,000 to $500,000 in 20 years, and rents will likely be about $2000 - $2500 per month for that same townhouse, hard to believe isn't it, and you will be very financially secure, just by taking 10% of your income today and buying real estate for the long run.
If you don't believe it, ask yourself how much a townhouse was 20 years ago that is selling for $250,000 today. I can tell you, since 1987 was the year I got into real estate. You could purchase a townhouse for about $100,000 to $125,000 back in '88
I bought a brand new 1988 Honda Accord EXi in 1988, it cost me $24,800 and in 1999 I sold that car for $2500. I just checked the Honda website, the same car is about $33,000 Point is, things were cheap back in 88 compared to today.
1988 was almost the height of the last real estate boom in Ontario. If you purchased the same townhouse in 1985 or 1994 you would be even further ahead of the game.
We've had an unprecedented rise in real estate from 1995 to 2008. 13 years of growth. Some of those years saw huge double digit growth. I don't believe we will see double digit growth in the next few years, but real estate will continue to be a good long term investment in the west GTA.
I wish you All the best!