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Investing In Real Estate in London, Ontario Correctly

There is risk when investing in real estate in London Ontario
There is risk when investing in income properties!

Can You Lose Money Investing In Real Estate? Yes

Can You Earn Income as a Real Estate Investor? Yes

Can You Generate Wealth as a Real Estate Investor Over Time? Yes

Can You Lose Money if You Do Not Work With an Experienced Realtor? Yes

Can You Invest, Generate Cash Flow and Wealth Over Time With My Guidance? Yes

Should You Sell or Buy An Income Property in London, Ontario in 2024?

I get asked this question more often now that London, Ontario, and the area are in a balanced market.

A knee-jerk reaction to selling is that you can double or triple your initial investment, and for buying, if prices stay the same, rise or lower & interest rates rise, can you enter the market?

Earning income from a house or a condo in London Ontario

Please note: I am not an accountant, a financial advisor, a lawyer, or a banker. I have been working with investors for 40 years. Most likely, I have experienced every upside or downside you can think of or never heard of!

I will cover getting professional advice at the bottom of this page, but for now, let’s use some common sense. Common sense is free and personal, which is why 90% of people don’t use it; they pay to accept advisors’ noise, clutter, and self-serving opinions!

Stop Wasting Money if you do not have a good realtor to help you
Some People Would Be Better Off Throwing Their Money In The Garbage If They Are Not Prepared Or Ready To Be a Prudent Real Estate Investor
  • The allowable rent increase in Ontario in 2024 is 2.5%. London taxes are 2.78%; hydro and water, insurance, cleaning supplies, and repairs are your guess and are as good as mine!
  • If the so-called inflation rate is 3.1% as of January 5, 2024 (I guess the guru who came up with that rate has never bought groceries, hired an electrician for a minor fix at home or ate in a restaurant for the last five years), the uninsured five-year fixed rate to borrow is 5.94% at January 3, 2024; how long do you think mortgage rates will take to lower? I have read history repeats itself, but not so; people’s perceptions repeat!
  • With the cost of a starter home for buyers being $450,000 plus or, in some cities, $600,000, tenants will stay put. That’s a good thing for landlords; however, will the Landlord and Tenant Act and the decision-makers lean for the tenant or the landlord? You and I both know where that is going.
who should you listen to?
Do Not Allow The Noise To Distract You!

As Henry Ford said, “If you think you can or you think you can’t, you’re right!” Buying or selling an investment property is no different, but here’s the catch: from whom do you get advice? If you have a sore throat, do you go to your doctor, Dr. Google, or a Brain Surgeon? Three opinions: which advice do you choose? Get legal advice from Uncle Sid, a general practice lawyer, a real estate lawyer, a divorce lawyer, or legal aid. Get financial advice from a financial planner, Aunt Mary, the above legal options, an experienced investor, a licensed accountant, a tax preparer, or no one; you know it all?

Or, advice from:

. A loan officer at a central bank who had been in the position for two months and did not own a house or an income property.

. Mom and Dad (500 credit score) give mortgage advice to their siblings!

. A financial advisor whose only source of income is directing her clients into mutual funds or securities.

Thanks for reading this far; I end with three Samuel Clemens quotes:

Mark Twain, real name Samuel Clemons
Mark Twain, real name Samuel Clemons

“Don’t part with your illusions. When they are gone, you may still exist, but you have ceased to live.”

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

“There are two times in a man’s life when he should not speculate: when he can’t afford it and when he can.”

Maximizing R.O.I. 

Maximizing R.O.I. ( return on investment) isn’t just about buying a property and collecting rent. You might experience several events throughout the years that will increase or decrease your R.O.I.

For example, landlords can increase R.O.I. by keeping the premises in good shape and with modern appliances. (fewer repairs in the long run or that emergency call that the fridge is not working!) Tenants can decrease R.O.I. by not paying their rent, moving out prematurely, or damaging the property.

Investing in small real estate properties will not make you rich overnight, but you can build slow wealth over time! You make money in real estate when you buy, not sell! All my clients do well with this philosophy that I share, and as J.P. Getty said: “Investors bank on climate, while speculators bet on the weather.”

What Could You Do If Your Jar Was Full?

Are Your Cash Flow Calculations All You Need Before Buying?

So many beginning real estate investors will decide whether or not a real estate investment is good or bad based on the answer to this single question: “Will the property produce positive monthly cash flow?” Basing your entire decision on the response to a positive cash flow question is a minimal way to look at an investment. Sometimes there just isn’t a simple answer for you when you’re looking to create wealth. There are several things real estate investing beginners or even experienced investors should consider.

No Brainer Real Estate Investor Tips 

I have been very fortunate to have worked with wise, prudent real estate investors. They look like your neighbour next door but have a portfolio of 3-5 or more properties. They could be condos, single-family houses or multifamily homes, and whatever they are comfortable with, they take the attitude of slow and long-term growth. They do not flip; they do not take excessive risks and are great landlords because they know the secret to success.

Below are a few “lessons” that thousands of investors have experienced the hard way and tips on overcoming the consequences of poor decision-making and erroneous opinions, be they yours or the so-called experts!

1. It is not as easy as it looks on TV.

The problem with TV real estate investment programs is that they downplay the work involved and accentuate the money made by the investors. These programs will show you a tidy $50,000 profit wrapped up in a 30-minute episode with 12 minutes of commercials, so in 18 minutes, they are laughing, playing, and bright eyed! They’re not showing you the work done to find the property under market value, build the industry relationships necessary to tackle a sizeable project, the skills necessary to manage that project, and the market knowledge to accurately predict that property’s final sales price.

2. Walk before you run.

So many “investors” decide one day that it’s time to make millions in the market and begin looking for that perfect flip or perfect rental property – with a hefty price tag. Would you walk out your door today to run a marathon without training? Investing is very similar. You can make many mistakes; one big mistake can sour an investment. Please remember this: “Most of the time, opinions cannot hurt you, but when it comes to any investment, opinions will hurt you!”

3. For true wealth – think long term.

Many new “investors” come to me with the business model of “buying old houses and fixing them up.” This seems the easiest way to make money, but it’s not. Flipping houses takes skill, foresight, market knowledge, and market resources. Furthermore, flipping houses is hard work, resulting in quick profits and short-term capital gains. (Scroll down this page to see “Flippers Aren’t Investors.”

4. Put Together a Business Plan and Stick to It

The only time you can’t POSSIBLY lose money is before you invest it. That’s why a solid business plan is the wisest action step. Decide the type of property you plan to buy, what it will cost to purchase, what it will cost you to hold the property, and how much income the process will produce for you. On another note, I would not be wrong that 92% of people who think about investing do not take into consideration inflation, tenant contribution to principle and time.

5. When You See Something That Looks Good – Act!

No Body Ever Reached Their Goals Standing on The Side Lines!

I’ve worked with many investors with excellent business plans and great formulae but can’t pull the trigger. How many times have you said to yourself, “I should have __________________________________?”

6. Failure to Determine Your Time Need

Cash flow, capital appreciation,  tax benefits, equity pay-down and pride of ownership are some things that need to be addressed before making that investment. Still, most forget about the time required to manage their properties. (I have a client with ten properties who spends less than 10 hours a month on them, and I know of some investors who spend 10 hours or more a week chasing their tail!

There is no need for that if you prepare correctly, get greed out of the way and accept good advice!

7. Not checking out the Seller’s numbers

Claims of extremely high rates of return run rampant in real estate investment.   Don’t get caught up in the excitement – check everything: rents, payment history, taxes, expenses, deposits, future modifications…everything! Make sure you have an experienced real estate professional helping you. It’s like having a good insurance policy against overlooking seemingly insignificant but vital details.

8. Charge Fair Rents

Vacancies are your most significant expense.   Charge fair rents, treat your tenants respectfully and respond quickly to their needs.   Taking care of minor problems before they become big is much less costly in the long run. Vacant property is your Achilles heel. If the area supports it and the property is $1,895 in the current market, you can lose/waste a couple of months’ income chasing $1,995. How many mortgage payments will you make to get a “home run”? Most home run hitters bat 300, which means they fail seven out of ten tries!

9. Select Qualified, Good Tenants From the Start

Take the time to check references. Previous landlords, employers, financial references and credit checks are vitally important.    If there are any red flags, investigate thoroughly. Most evictions are the result of a poor or inadequate screening process. By extension, that means most repairs, vacancies, and legal expenses are also due to approving the wrong tenant. This is an area where you MUST do your homework and not rely on first impressions or instinct. Looks can be deceiving unless you have money to burn, screen well and know when to say NO. A little work up-front can save tremendous problems later on down the line.

10. Don’t Spend Positive Cash Flow

Successful investors end up having free and clear properties. Be sure to re-invest your cash flow into the property payment and speed up the amortization schedule.   This decreases your debt load and increases your equity…which builds your net worth.

Most Financially Free Have Built Their Wealth Through Real Estate

Andrew Carnegie famously pointed out more than 100 years ago that “90% of all millionaires become so through owning real estate.” There are many other quotes that allude to the riches to be found through real estate investing, like this one: 

“Don’t wait to buy real estate. Buy real estate and wait.” —Will Rogers 

Millionaires make up less than 10% of the population. But interestingly, according to business theorist Thomas J. Stanley, author of the book “The Millionaire Next Door,” 80% of U.S. millionaires are first-generation rich. That means new millionaires are made every year. So, how are they doing it? 

There must be something there—most of the wealthiest people in the world own multiple properties and a seemingly endless stream of income produced from them. It makes sense since property values have appreciated an average of 8.3% over the past ten years.

Do Not Ignore These Twelve London Ontario Real Estate Investor Basics

    Real estate investment in London Ontario has provided many investors with positive cash flow, tax benefits, and the satisfaction of impacting others’ lives.  However, like any investment, real estate has risks and market trends that, when ignored, can cause losses.

invest in real estate has its rewards and risks, be careful
The More Value You Add To Your Income Property, You Will Attract Quality Long Term Tenants!

Before you risk anything, take the time to read and understand these twelve basics below; the worst that can happen to you is your time!

Interested in Protecting or Increasing Your Net Worth?

Ty Lacroix Broker
Ty Lacroix Broker Sutton Group Preferred Realty Inc. Brokerage
All Multi Family Properties London Ontario & Area

Want Your Income Property Sold?

When selling your income property in London, Ontario, be it a house, apartment, townhouse condo, duplex, or larger, you have a choice of 2,300 + Realtors. We sell properties; we don’t just list them for sale and hope! Hope is not a strategy.

A Few Words From Some of Our Investor Clients

Satisfied clients make us happy

Hello Ty, We just wanted to take the opportunity to thank you for introducing us to Michael. What a wonderful man!   From the very moment we met, he genuinely took the time to understand what we were looking for. So quickly tuned in to what we were interested in, even as we were learning ourselves.   The process of finalizing our first investment property deal has been a bit of a roller coaster or perhaps somewhat of a scavenger hunt as we searched for the information we needed to accomplish the purchase.

And that is truly how Michael seemed to approach it… not with frustration and impatience with people who were not helpful and creating roadblocks but as a treasure hunt that with persistence, optimism, and determination, he would find the right puzzle piece would to open the lock…. and he did! He was able to get what we needed, and we are on our way!   What a kind and genuine man; we are lucky to have had the chance to work with him.  

Thank you again for making that connection for us,  

Hello Michael & Ty,      Roz and I would like to thank you both for the effort you put into finding us tenants on such short notice. We realize the process may not have started that well while the other folks were still living in the unit. We appreciate your patience and faith in us very much to bring the condo back up to standard to allow you to do your job properly.        It worked out well in the end, and we hope these new folks will spend a while in our place and treat it with respect.   Thanks again for your hard work. Have an awesome day.  

Sincerely, Joel & Roz  

Thank you! Ty your help has been invaluable. We are returning to Toronto tonight and really appreciate all you have done to help us.

Shabnam    

Hey Ty, thanks, great work, appreciate all your time and effort, and keep us on track.   Gregory    

We very much appreciate the work you have done in helping us to achieve a portfolio of ten rental properties, and in disposing of Pond Mills. We would not have known where to start were it not for having the benefit of your expertise.

I have been busy leasing xxxxxxxxxxxxx. It took six weeks to find someone decent, and I rejected seven applicants in a row, but I finally found a great candidate. All his references describe him as reliable and his landlord says he pays rent like clockwork. The lesson in leasing is not to compromise with a weak tenant and keep marketing like crazy until the right one comes along.

Best Regards,

Stephen  

Dear Mr.Lacroix Thank you for helping my client’s estate dispose of the seven properties. I and the family are quite pleased with the prices we received, we now have one more property to go, which is a private residence; see the details below and thank you again.

George    

Ty   The place is going great!! We have an incredible tenant that pays early every month and she’s super quiet. We have been really pleased with the location and neighbourhood and how everything has been with the house. We walk right downtown in minutes and never have to worry about parking! I would suggest this location to anyone, although we keep looking for similar properties for ourselves in the same neighbourhood for the future….   Nothing was really wrong with the sewer system other than large root buildup but once we got a competent plumber in that had a large enough root cutting machine we were back in business!   Thanks so much for all you did to get us this place and for the wisdom and experience you had to guide us into making a very attractive offer to get this house. Taylor and I really enjoy it.   Anna was an incredible resource for us as well. We were really happy we went with her and look forward to working with her again in the future.   We will definitely be using your office in our future home buying process!  

Thanks for the follow-up! Derek & Taylor

   Hi, Ty  Just a brief note to thank you for selling my two-income properties by Western. I know the six-bedroom was a nightmare and thanks for taking the time with the Fire Marshall, the electrician, the drywallers and getting the garbage guy out to clean up.    I thought the deal was off a few times; thanks for keeping it on track. At times I thought I would lose money on it but in fact, I did far better than expected.    I have included a little token of my appreciation for what you did for me and my family, and my father has asked me to offer you any of his various timeshares for a week.

Let him know, it’s yours.  

Dieter    

Hey, Ty   Just like you said, we are now into the 11th condo that we have bought through you and you know, as I teach this, your systematic approach was the same as our first one. The only change is we did not know what or how to do anything when we bought our first one.    Thank you for your patience and for setting us straight on the numbers; you have saved us I don’t know how many headaches or thousands.    We are now preparing to buy our 12th at the end of the year, of course, with your guidance. Oh, and thanks for the name of the furnace guy; he’s great; we even had him come to our house and look at our A/C.

  Graham

Hi Ty:   Thank you for your follow-up email. We are very pleased with Paul’s help in finding and buying the property. Paul was very efficient and effective on each step of the buying process. He was also very helpful to us in finding a home inspector, a mortgage agent and a lawyer for closing the deal. It was a pleasant journey for us, and I am sure we will have more opportunities to work together shortly.   Thank you for your excellent help.  

Best regards,   Wenqin  

Fiona Douglas has recommended your work as Broker of Record & Owner at Envelope Real Estate Brokerage Inc.

Dear Ty,
I’ve written this recommendation of your work to share with other LinkedIn users

Details of the Recommendation: “Ty has been a pleasure to work with over the past couple of years, on a least two major projects we have had on the go. He goes above and beyond and has never disappointed us, and his calm demeanour goes a long way toward keeping us focused when dealing in our very volatile real estate market. We have no qualms about recommending Ty’s services highly, and with pleasure!”
Service Category: Real Estate Agent
Year first hired: 2011 (hired more than once)
Top Qualities: Personable, Expert, High Integrity

Hey Ty,   When I was looking at places with you last year you mentioned purchasing gift cards for your tenants at Christmas time. I took your idea and bought a couple of gift cards and the tenants seemed to love it!! Inexpensive and pretty simple, but they felt it was very thoughtful and like you said…how many landlords give tenants gifts??   All is well with the properties so far, I really appreciate the education you helped provide me in 2012…nothing beats the gift of knowledge. It’s hard to believe I went from never owning a property only six months ago to now having two income properties in London running!! You really emphasized the philosophy that if you keep your place proper, and treat your tenants well, then you will have success (as opposed to the slumlord philosophy lol).   Thanks and best of luck in the new year!! I will definitely be using Envelope for all my future purchases!!  

Scott   ps…If any exciting properties or places pop up, I’m always interested in new ideas!! lol

Ty,  We finally closed the deal yesterday with Dan. Vanty and I would like to thank you for your professional service and help; we felt confident that we were in good hands. The tenant is more than happy to sign another one-year lease agreement for the condo highrise apartment. It’s almost like happy-ending Hollywood stuff for now, but Vanty and I are aware that there will be a steep learning curve for us in real-estate investment ahead. We believe it will be challenging and rewarding for us. We’ll be in touch again after our vacation.  

Best Regards,   Jerry and Vanty      

Dear Ty,   I reviewed all the statements and the invoices, and everything looks clear to me; you did fantastic work; I really thank you for your effort and appreciation.   Now I am planning my booking to London Ontario, on the third or fourth week of October, please let me know which time is more suitable for you.

  Thanks   Mohammed


Subject: Re: Another Tenancy agreement

Hey Ty,   Just wanted to let you know that everything worked out with the couple I showed my place to. They provided two references, both of which said they wished all their tenants were this good. The guy is doing a fellowship at the hospital, so he has a fantastic job and they just come across as very respectful, quiet people. I used the lease you provided, and they signed on Tuesday. I asked them to bring along a rent deposit for last month’s rent, and they could pay the first month’s rent on Sept. 1. Instead, they gave me a bank draft for the entire first and last months upfront!!!   I got $____________month, just like you thought would be reasonable and which covers my costs each month, and I only had the place for one week before finding tenants!!  

…Things have gone so smoothly, that it looks like I may have to come in and see you again to start planning my next move!!! lol   Here is a testimonial, in case you would like to ever use it:   Ty, I am very happy with all the service you have provided. As a first-time buyer, you were extremely helpful in researching, viewing and purchasing processes. And even after I bought my condo in Pond Mills, and you had already earned your commission, you have promptly responded to every question I sent you regarding tenants, leases and the entire rental procedure. I can’t thank you enough for everything. I will definitely be coming back to work with you again!!  

Scott

The Envelope Real Estate Group
The Envelope Real Estate Group