Canadian Real Estate Investing Playbook

© ECRB Investments Inc.
All rights reserved. No portion of this book may be reproduced, stored in a retrieval
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Published in Oakville, Ontario by ECRB Investments Inc.
Cover Design: [Jason Mores]
Printed in Canada. June 2021.

The Canadian Real Estate Investing Playbook
ACKNOWLEDGEMENT
I want to first thank you, Cherry Chan, my wife, life partner and real estate accountant
extraordinaire who managed the writing of this book and helped write the benefits of
real estate investing and contributing to the tax information.
Thank you to James Maggs who contributed his knowledge and expertise on
rent-to-owns and shared his inspiring story about becoming an investor, real estate
agent, entrepreneur, and now coaches others to invest the same way he does.
Thank you to Tammy DiTomaso, the Duplex Queen for sharing your expertise about
legal secondary suite and being an extraordinary member of our IWIN Team in such a
short time.
Thank you to Tim Hong for his expertise on investing in Condos.
Thank you to Pierre Paul Turgeon for the multi-family investment information.
Thank you to Brian Kirow for his help (as our property manager) and his expertise on
Airbnb.
Thank you to Manny Cabral for his knowledge on flipping properties.
I want to thank the many investors, friends and colleagues who have appeared on my
podcast, The Truth about Real Estate Investing…for Canadians.
We have chosen a very select few to share with you in this book. I especially want to
thank John Roumanis, Evelyn Lamarsh, Joseph Costanza, Gillian Irving, and Charles
Wah for sharing your story, your life, your experiences, and your knowledge. You have
become friends and have inspired many people to reach new heights myself included.
A note about the content:

The information contained within is based on my own experiences, our team at IWIN
Real Estate and that of our investors. It’s a culmination of many years of experience
but any errors and omissions are mine and mine alone.
What people are saying about Erwin:

“Erwin consistently brings his clients new and relevant information. His wealth of
knowledge and willingness to go above and beyond to obtain and share this
information is instrumental to the continued success of his clients. Erwin is
exceptionally giving of his time and has benefited a huge number of families through
his charitable work with the Hamilton Basket Brigade.”.
– Kelly McConnell, Hamilton, ON
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“Erwin is not just a realtor, but also a master educator. He shares his market research
and gets other professionals to share their stories and experiences. These bring
immense value to the investment community. He’s certainly a role model for many of
us.”
- Stephen Tse, Toronto, ON
“Over the past few years since I first met Erwin a.k.a. “Mr. Hamilton” he has been up
to great things as a real estate investor. His assistance and mentoring to both new
and veteran investors to help them grow their portfolios is awesome to watch.
Most importantly his local expertise in Hamilton and surrounding markets has been
very helpful to me, and the referrals I’ve used from Mr. Hamilton’s Rolodex have been
excellent. I’ve received a ton of value through my interactions with Erwin over the past
couple of years and appreciate his help in growing my portfolio and business. I am
glad to have met Erwin and to have a local area expert I can trust in Hamilton and
surrounding markets.”
Andrew MacDonald ~ REIN Member, Rock Star Member, owner of Ownership

Solutions
What people are saying about iWIN:

“The value is in the people you surround yourself with, iWIN is like one giant team that
helps people out not just with real estate but other avenues as well. [iWIN] allowed
me to level up my network and my knowledge in real estate and wealth hacking. It
has broadened my horizon to other opportunities available.
After joining iWIN, I feel there are more possibilities and opportunities and that I have
the resources and network to pursue those opportunities with confidence.”
- Barbie Perry, Real estate investor, iWIN member, owner of Elevata BJJ
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DISCLAIMER
Real estate investing is a personal decision. Consult the services of a competent

professional if legal, accounting, tax, investment, financial planning, or other
professional advice to make the right decisions for you based on your personal
circumstances.
The information contained in this book is for general information purposes only. The
information is provided by Erwin Szeto and while we endeavour to keep the
information up to date and correct, we make no representations or warranties of any
kind, express or implied, about the completeness, accuracy, reliability, suitability or
availability with respect to the article or the information, products, services, or related
graphics contained in the book for any purpose.
Any reliance you place on such information is therefore strictly at your own risk. In no
event will we be liable for any loss or damage including without limitation, indirect or
consequential loss or damage, or any loss or damage whatsoever arising from loss of
data or profits arising out of, or in connection with, the use of this book.
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Contents
Introduction 7
Chapter 1: Why Play the Real Estate Game? 13
Cashflow
Portfolio Diversification
Appreciation
Build Equity and Wealth
The Power of Leverage
Real Estate Tax Advantages and Deductions
Chapter 2: Where should I Invest? 23
The Economy
Population Growth
Demographic Trends
Transportation
Look at Real Estate Market
Top 10 Investment Towns
Chapter 3: 8 Powerful Real Estate Investing Strategies 28
Single Family Rental Property
Legal Secondary Suites
Student Rentals
Short-term Rentals
Multi-Family Investing
Rent-to-own
Flipping Property
Small Scale Development
Chapter 4: Financing and Money Plays 67
All Cash
Conventional Mortgage
Interest Rates
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Owner Financing
The Joint Venture /Partnership
Private/Hard money lenders
Home Equity Line of Credit
Smith Manoeuvre
Chapter 5: Building Your Power Team 75
Accountant
Real Estate Agent
Mortgage broker/local branch manager
Property Manager
Contractor/Handyman
Lawyer
Chapter 6: Analyzing deals - Knowing Which Play to Use 82
How do you know if a property Cashflows?
Legal Secondary Suite
Student Rental
Rent-to-Own
Chapter 7: How to Avoid Taking a Loss 89
Expect the unexpected - and be ready
The Hail Mary Play
COVID-19 - What Happens to the real estate Market?
What have we seen in our local market?
Chapter 8: All Stars in the Real Estate Game 92
John Roumanis
James Maggs
Evelyn Lamarsh
Charles Wah
Joseph Costanza
Gillian Irving
Chapter 9: Where to Start? 108
Your first steps as a real estate investor
Ready to Invest?
Free Class: How a Beginner Can Start Building Wealth Through Real Estate
The Ultimate Win - Giving Back
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References 113
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Introduction
This book has been on my mind for a while now. Wealth creation and what is means
for our family has always been my focus. The book is a culmination of all my
experiences as a real estate investor and real estate representative in the Greater
Toronto and surrounding areas. You will find the information within a reflection of how
we do business and the lives we have touched in the last 10 years. It is meant as a
guide for those starting out and hopefully the seasoned investor can learn a thing or
two as well.
My Story: Playing to win
Like many I was taught to go to university and get a good job. So that is what I did. I
went to University of Western and got a business degree then proceeded to find a job.
My first job was for a tech company that paid $35,000. I graduated with $30,000 in
student debt and was living with my parents. I lived a frugal life, had coffee (no
Starbucks!) at the office, took the GO Train to save on gas and parking as I
commuted to downtown Toronto for many years.
There was not much left in savings let alone getting ahead.
So, I tried stocks and thanks to the urging of my girlfriend at the time, dabbled in
some real estate. Then came 2007, the financial crisis. I had stocks go to zero and
were delisted. My stock portfolio was down over 40% whereas our investment
properties received multiple offers to rent, and rent prices went up! It was only then
did I truly realize the opportunity in real estate investing.
In 2008, I made the commitment to learn the system of operating a real estate
investment business and we have acquired over 30 properties personally from that
time. My wife, Cherry and I currently hold 10 investment properties. We brought the
same system to help everyday local investors acquire hundreds of investment
properties by simply treating clients like family.
“Winning”
Being the guide, we would want someone who guided us by simply following the
golden rule: do unto others as they would have done unto you. To guide investors in a
market that is ever changing. Back in the day, we could cashflow with a single tenant
in a single-family home. Today, we apply more advanced strategies of rent to own,
student rentals, short term rentals, and secondary suites.
Investing in real estate is difficult in the beginning, we have all made mistakes
including my own that cost us over $10,000 by renting to tenants who with our current
system would have been red flagged long before handing over the keys.
We are the culmination of our own experiences as real estate investors, a living
knowledge base of our hundreds of clients and their hundreds of properties. We have
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interviewed 100+ of the best investors in Canada on what makes them successful,
and I mastermind with some of the best local investors in Ontario. The more
experience one has, the more you can give others.
We’ve created freedom for ourselves. That’s come from a lot of hard lessons. Helping
everyday, hard working Canadians skip some of those lessons and move to freedom
faster is a win for us.
My team and I at iWIN Real Estate have transacted over $200 million of real estate
investments, over 500 investment properties for over 100+ clients, with 99% of these
properties producing cash flow.
The results show that our clients returned 342% over 5 years (2013 to 2018). This is
an annual rate of return of 68.4% on their investment. This return is based on price
appreciation alone and does not account for rising rents.
We strive to be the best of the best and have been recognized for our efforts. I have
been awarded with:
● Top 20 Influencer in Canadian Real Estate
● Realtors of the Year To Investors by the Real Estate Investment Network (REIN)
in 2015 and 2018 (the first repeat winner in Ontario)
● Realtor of the Year by the Canadian Real Estate Wealth Magazine in 2016 and
2017 (the first and only repeat winner),
● REIN Leadership Award in 2014 and 2017
● REIN Top Player in 2014
● REIN Gold Award in 2018 (owning over 17 properties)
● City of Hamilton’s Top 40 Under 40
Life and business were good, but we felt that we needed to give back. Giving back to
our community started when we wanted to provide three Christmas dinners to families
without food in 2014 but the need was great. We have since provided over 1,000
holiday dinners, registered our charity (the Hamilton Basket Brigade) in 2016, and
now focus on providing the best holidays ever to the most impoverished families in
Hamilton.
Helping people who couldn’t buy investment properties is a win for us.
In order to share our experiences and help as many people achieve their goals
through real estate investing, I decided in 2016 to start a podcast, The Truth About
Real Investing…for Canadians. It started out as a pilot to test the waters. Now, four
years later, with over 200 interviews with Canada’s top investors, we are #4 podcast
among Canadian Podcasts in the Business Category of iTunes, #88 overall, and I’m a
top 20 Influencer in Canadian Real Estate. I continue in my quest to bring real estate
investors the latest truths about real estate investing in Canada.
So why do I do what I do? My why, my purpose: more people need to win. Taking
care of your family and friends is winning. Giving back to your community is winning.
When work becomes optional and you can spend as much time as you want with the
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people you love most… That’s winning. You need wealth for all of that. Helping you
build wealth feels like winning to me.
What does winning mean to you? What’s your why?
It could be:
● Increase your wealth
● Have your money work for you so you don’t have to work as much
● Plan for retirement
● Desire to assist your family and friends
● Fund your charity
● Help out your church or place of worship
● Go on vacations or go on extended vacations
● Be able to provide your family with financial security
● Be able to do what you want with your time
● Leave a legacy for the next generation
I will leave you with some questions below to think about as we spend some time
together. Once you have thought about it, writing out your answers and posting it
somewhere you can see everyday is even better. Dig in deep to get some answers.
Some may surprise you while others have probably been in the back of your mind for
a while. Take some time to go through this and sit on it for a while then refine your
answers as you need to.
You will need a strong reason why to get you through the tough times as real estate
investing isn’t a quick way to get rich but a journey in itself.
Identify your why.
1. Why are you investing in real estate?
2. What do you want out of real estate?
3. What is your goal?
4. Who do you want to do this with? Who do you want to do this for? Why?
5. What is your investment goal?
6. What is your investment horizon?
Other questions to think about specific to real estate:
1. Are you looking for a monthly income? Cashflow from the property?
2. Are you trying to protect your capital?
3. When are you expecting a return on investment?
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4. How much time do you have to devote to real estate investing? Do you want a
turn-key project? If yes, are you willing to pay more for it?
5. Are you willing to do some of the renovations yourself? Are you willing to a
value-add project that will require more effort and time?
I’ll address the one major reason why people want to invest. It’s so they can retire
in comfort.
The intent is to have the same lifestyle as you do now as you do in retirement. For many
people this is a big concern. In a 2019 study done by Scotia bank, 70% of Canadians
think they won’t save enough for retirement (1). In the poll, only 25% of boomers (aged
55+) and 12% of Gen-Xers (aged 35-54) feel comfortable they are on track to achieve
their retirement goals (1).
In the same study, two thirds of Canadians (65%) expect to need less than $1 million to
fund their retirement and the average Canadian expects to retire at 64 years old (1).
The latest statistics in 2016 showed that the average life expectancy is around 82 years
old (2). The potential is there for us to live to 90 or more years in the next decade. With
the increase in life expectancy, you need to make sure you have enough money to fund
your life.
How do you save enough? Whether in your RSP (Registered Savings Plan) or your
TFSA (Tax Free Savings Account). This means that people need substantially more
money now to last them for their lifetime, so we need alternative ways to invest outside
of RSPs and savings.
Where can you put your money? What are the different options?
1. Stocks
Investing in stocks is investing in public companies. By investing in shares of that

company you hope that the company will do well, the value of the company goes up and
in return values of the shares you own go up thus, making you money. The stock market
can be very volatile. The stock market may be irrational, even if the company you own is
doing well, the stock price drops. If you are investing in the stock market, you need to
be very well educated or work with a manager who knows that they are doing.
With the stock market you don’t have any control. As of this writing, the stock market
dropped to its lowest point on March 23, 2020 since the financial crisis in 2008.
Understanding the companies to invest in can get fairly complicated, you need to know
what you are doing. If you don’t want to invest in individual stocks, you can invest in the
S&P 500, you will be investing in 500 of the largest U.S. stocks. If you look at the return
on investment using the S&P 500 as it’s one of the most quoted (along with the Dow)
stock market benchmarks, the average return from its inception (1926) through to the
end of 2018 was about 10% (3). At first glance, the return seems very good, but it is
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difficult to hit these returns consistently in the long term if you don’t invest the time in
learning about the stock market.
However, I would like to briefly mention Stock Hacking.
You may have heard me or guests on my podcast share their experience about stock
options or Stock Hacking.
What is Stock Hacking? It’s a side hustle every day Canadians can use to generate
cashflow focusing on stock options strategies. Stock option trading is a way to
augment your income from your employment or another investment. Many Stock
Hackers are real estate investors who hold many rental real estate properties but
cashflow may not be at the level they desire. With the amazing results of the stock
options beta course participants, the Stock Hacker Academy was founded to continue
to provide an educational program for Canadians who want to learn how to use stock
options to create cashflow. For more information about the Stock Hacker Academy,
visit www.stockhackeracademy.ca
2. High Interest Savings

At the time of writing, in a high interest savings account you are looking at very low
interest rates, only 0.05 – 1.55% (4). These interest rates change all the time. It may
or may not pay more than the traditional savings account! Unlike a chequing account,
depending on where you do your banking, you may have higher transactions costs as
it is meant for you to save for the long term.
3. Mutual Funds
A mutual fund is a company that pools investors' money to make multiple types of
investments, known as the portfolio. Stocks, bonds and money market funds are
examples of investments that can be held in a mutual fund. Mutual funds are
managed by fund managers, so they need to get paid somehow. They get paid by
charging a fee, known as management expense ratio (MER). Some have really high
MER, 1.5% or more. Your investment gets eaten up by these fees. For example, if
you invest $1 million in mutual funds, and the fees are 1.5%, the fees would be
$15,000. You will be charged this fee regardless if the fund is making money or losing
money. Mutual funds may be a little safer than investing in stocks but if you factor in
the fees, your return will depend on the type of mutual funds you hold. Exchange
traded funds (ETFs) have been extremely popular as they have low MERs.
4. Real Estate
Real estate is a physical, tangible asset that is not subjected to the irrationality of the
financial markets. People always need a place to stay. As long as you invest in
properties that have good economic fundamentals, you are setting yourself up for
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success. With real estate, you are able to take the advantage of leverage by using the
lender’s money while only putting a small amount to take control of the property. Your
return will be higher than you would get if you put in dollar for dollar like when you invest
in mutual funds or stocks.
Real estate also gives you greater control of your investment. You are able to choose
which property you want to buy, the city you want to invest in and the tenant you want to
rent to. As real estate investing is the focus of this book, we’ll be discussing in detail the
benefits of real estate in the coming chapters.
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Chapter 1:
Why Play the Real Estate Game?
There are many benefits of investing in real estate. With well-chosen properties,
investors can enjoy predictable cash flow, excellent returns, tax advantages, and
diversification—and it is possible to leverage real estate to build wealth. Here is what
you need to know about real estate benefits and why real estate is considered a good
investment.
Cashflow
The rent from the property produces cashflow that is income received minus any
expenses to take care of the property. The longer you own it, reduce the mortgage,
and keep the maintenance costs inline then cashflow should increase over time.
Imagine having more than one property that cashflows.
Portfolio Diversification
Owning a physical asset such as rental real estate is one way to diversify your
portfolio. Many investors I know own stocks and bonds either in their registered or
non-registered accounts, gold and silver and real estate.
Appreciation
Real estate values tend to increase over time, and with a good investment, you can
turn a profit when it is time to sell. Although appreciation is not guaranteed, however,
looking at the statistics from The Canadian Real Estate Association shows the
increasing prices of residential real estate in Canada from 2005 to 2020 (5). It makes
a case for investing in real estate for the long term. I also wanted to show the price
history for Hamilton as it is a market that many of our clients invest in. Figure 1 also
shows the boom in Hamilton’s real estate from 2000 to 2020. Many of our clients have
been extremely happy with their investments and wished they had bought more
properties at the time!
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Figure 1: Hamilton Real Estate Price History
Source: Listing.ca. Reprinted with permission. Retrieved May 1, 2021 from:

https://hamilton.listing.ca/real-estate-price-history.htm
Build Equity and Wealth
With real estate, once you buy, you keep it for the long term to build wealth.
“Ninety percent of all millionaires become so through owning real estate. More money
has been made in real estate than in all industrial investments combined. The wise
young man or wage earner of today invests his money in real estate.” - Andrew
Carnegie, billionaire industrialist
The cost of buying and selling real estate is too high if you own it for a short time.
Unless you are an active flipper, it is highly unlikely you will buy and sell the same
property within a year.
Equity is accumulated over time. It takes time for real estate to appreciate. That is
why real estate is such a wonderful investment strategy.
The Ultimate Savings Machine
With real estate, oftentimes when we have been holding it for some time, we forget
how much our real estate portfolio has done for our family until we review what we
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have with another professional. For instance, when my wife and I went to get a loan
for another property, we needed to provide all the paperwork and then we realized
how much our portfolio had grown.
When my wife, Cherry Chan, bought her Toronto townhouse, she was scared but she
knew she was doing the right thing. She was single and buying a three-bedroom
townhouse in the west end of Toronto, banking on the fact that she would make more
money down the road seemed like a big deal at the time.
She remembers calling her mom and telling her, “I’m signing my life away now. I don’t
think the house will have any appreciation, but it is the right thing to do!” Her
commitment to a 30-year mortgage was scary.
She did not have the real estate experience she has today. Her decision to go with a
variable rate for her mortgage was because the payment was lower. Her “educated”
guess turned out to be a good decision.
House values have gone up significantly during the many years she has held it. It
had appreciated significantly in the first year which allowed her to purchase her first
student rental property.
The Toronto townhouse has now been rented out for many years. A significant
amount of principal has been paid down and it cashflows a small amount monthly.
Real estate has been the perfect vehicle to help our family save. Recognizing our
weakness in saving our money, we decided to shorten the amortization period for this
mortgage and increase the frequency of our mortgage payments (instead of monthly,
we opted for bi-weekly payments).
Paying down the mortgage of a rental property faster is probably not the smartest tax
move, is it? In an ideal world, we should maximize the amortization period and opt for
the monthly mortgage repayment. Any cash flow accumulated should be used to pay
down our personal residence first.
With this Toronto townhouse, for every dollar that we pay down the mortgage, our line
of credit increases by the same amount. This may not be the smartest tax move, but
it allowed us the flexibility to pull out the money to purchase another investment
property.
We have used the room available in the line of credit for a down payment to buy a
house for our son, Bruce. Knowing our goals and recognizing our weaknesses, we
are using mortgage payment, which is a legal obligation, to our advantage. This has
forced us to save and is helping us achieve our goals faster.
The Power of Leverage
Using someone else’s or the bank’s money is the key to building wealth in real estate.
You can fast track your real portfolio substantial and increase your net worth if you
know how to use leverage.
How do you do this? What does it mean to use leverage?
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Real estate allows us to borrow to purchase the property. You put a 20% down
payment and buy the entire house. You do not need to have 100% of the money in
order to buy the property. You have leveraged your money.
You rent out the entire house and enjoy the full 100% appreciation. The mortgage is
paid down on a monthly basis.
You can also buy stocks on a margin account and if the value of your stocks drop, you
may get a margin call. With the stock market drop of over 30% during February to
March 23, 2020 many faced this reality as stock prices tumbled quickly in a very short
time.
With real estate, you can hold onto and wait for your properties to appreciate over the
years, and you can even pull out some equity in the future. Can you do that with
stocks? For sure you can not do that within a RSP or Registered Education Savings
Program (RESP) account.
Here is a simplified example of leverage.
To illustrate the power of leverage, imagine these two investors where they both have
$100,000 to invest in rental real estate. Investor #1, Sue, invests all her cash into one
property, whereas Investor #2, Anna, decides to leverage her money by investing only
the down payment for each property.
Investor 1:
Sue decides to buy the property with cash, so she doesn’t have to deal with a
mortgage.
Investor 2:
Instead of buying one property, Anna decides to use the $100,000 and buys 5
investment properties, putting a $20,000 (20%) down payment for each property.
Using the bank’s or lender’s money, Anna is leveraging her cash to buy more
properties.
What happens when the real estate market appreciates by 3%?

Investor 1:
1 Property - $100K paid off, no mortgage
Appreciation:
Year 1: $3000 for a total of $103,000
Return on investment (ROI): 3%
Sue makes $3,000 or 3% on her $100,000 investment when the property appreciates.
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Investor 2:
Table 1: Appreciation after 1 year of ownership
Appreciation
Year 1
Property #1 $3000
Property #2 $3000
Property #3 $3000
Property #4 $3000
Property #5 $3000
Total $15,000
Year 1: $15,000 on a $100,000 investment = $115,000

ROI: 15%
As Anna owns 5 properties, her return on investment has appreciated 5-fold to
$15,000.
In the above example, Anna has leveraged the bank’s money and increased her
return on the capital she has invested.
It gets even better. With an average appreciation of 3% what does it look like in year
5? This is a very conservative rate of return for the region we invest in. Check out
Table 2 to see what the appreciation will look like.
Anna can refinance the properties and pull out the money to buy more properties or
choose to invest elsewhere. What do we mean by refinancing? It means taking on
more debt and pulling out the equity to invest in more properties. We like to make
sure that when we refinance, it still makes sense to do so, this means making sure
that the expenses of the properties are covered and the properties still cashflow.
This is the power of leverage!
Table 2: Appreciation after 5 years of ownership
Appreciation (3%
each year) In Year 5
Property #1 $15,927
Property #2 $15,927
Property #3 $15,927
Property #4 $15,927
Property #5 $15,927
Total $79,635
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Real Estate Tax Advantages and Deductions

Real estate investors can take advantage of numerous tax breaks and deductions that
can save money at tax time.
Cherry Chan, my life partner and accountant, has provided the information in this
section dealing with taxes and real estate. It is only a brief overview on what the real
estate investor is dealing with from a tax perspective, to find out more on taxes and real
estate investing in Canada, be sure to check out Cherry’s book, Complete Taxation
Guide to Canadian Real Estate Investing: How to Maximize Your Real Estate Portfolio
and Minimize Tax.
Cherry also writes a weekly blog about real estate and taxes. She excels in explaining
complicated accounting scenarios into simple digestible chunks for the everyday
investor. You can subscribe to her blog at www.realestatetaxtips.ca.
1. Mortgage Paydown
Even if the property does not appreciate while you are holding the property, your
mortgage is being paid down. While the first 5 years of holding the property, a lot of the
mortgage payment goes towards interest and not the principal, your tenants are paying
down your mortgage for you. After years of holding the property, more and more of the
principal is being paid off and you are building more equity. As illustrated in the example
above with Sue and Anna, you can use the equity you have built to buy another
property or fund other investments should you choose to.
2. Expense Reduction
Your expenses are tax deductible. All the expenses you have incurred for the purposes
of renting out the property is tax deductible. What kind of deductions can be made?
Here is a list of deductions:
1. Mortgage interest, not the mortgage principal

Your mortgage payments consist of mortgage interest and principal. Mortgage interest
is a deductible expense, but principal pay down is not.
2. Insurance
Insurance coverage for rental properties is different than the home that you live in and
is generally more expensive.
3. Advertising
Any advertising cost incurred for the purpose of renting out the property is deductible.
This includes any advertising costs in Kijiji or Facebook, ‘for rent’ signs that you
purchase or specifically tailored advertisements for your property.
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4. Property management fees / expenses you paid to fill the property

If you hire a property manager or a Realtor to manage the tenants and/or fill your
property for you, the costs are all deductible.
5. Repairs & maintenance
Repairs & maintenance are generally deductible expenses. The tricky part is to
determine whether an expense incurred should be capitalized or should be expensed.
Talk to your bookkeeper and accountant about what should be or should not be
capitalized.
6. Property taxes and utilities
Municipal property taxes and utilities are generally deductible against the rental
income.
7. Financing charge
Some real estate investors incur mortgage insurance expense or finder fees for their
mortgages. These expenses can be deductible over time.
8. Auto mileage
This one is tricky. Different criteria apply if you own one property versus when you
own more than one property. Check with your accountant to see what you can deduct.
9. Line of credit interest
Many real estate investors start out by refinancing their own home to obtain the down
payment for their real estate investment. Interest incurred on loans used for
investment purpose is deductible. Interest incurred on loans used for personal
purposes is not deductible. Check out the information on financing in Chapter 5.
3. Income Taxes
The Canadian personal tax system is a progressive tax system. This means that the
more you make, the more you get taxed on.
This is the chart that shows you what marginal tax rates are for Canadians who reside
in Ontario in 2016:
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Table 3: Simplified Marginal tax rate in Ontario
Marginal tax
Income range rate
$45,000 – $73,000 30%
$73,000 – $91,000 34%
$91,000 –
$140,000 43%
$140,000 –
$150,000 46%
$150,000 –
$200,000 48%
$200,000 –
$220,000 52%
$220,000 and
above 54%
(Source: http://www.taxtips.ca/taxrates/on.htm )
The table above has been simplified to summarize all major marginal tax rates. There
are additional income ranges and marginal tax rates below $45,000. There are also
basic personal tax credits that you are entitled to.
The best way to explain this system is to use an example. Let’s say Joe earns $80,000
income from his job. Joe is responsible to pay $6,632 tax for his first $45,000 of income.
The first $45,000 of his income is roughly taxed at 15%. The next $28,000 is taxed at
30%. The last $7,000 of his paycheck is taxed at 34%.
But his overall tax rate is different, it’s 22% as indicated in the table 4 below.
There are two main concepts here: average tax rate and marginal tax rates.
Average tax rate is calculated by dividing your total tax liability over your taxable
income.
Marginal tax rate is the tax rate being applied to your highest chunk of taxable income.
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Table 4: Marginal Tax Rate and Calculate Tax Liability
Marginal tax
Income range rate Tax liability
Below $45,000 6,632
8,400
$45,000 – (($73,000 – $45,000) x 30%)
$73,000 30%
$2,380
(($80,000 – $73,000) X
$73,000 – 34%)
$91,000 34%
Total tax liability $17,412
Average tax rate 22%
Why are these two definitions important?
As a real estate investor, your rental income is subject to tax.

If you purchase one property which earns you a net rental income of $10,000 for the
year, depending on what your marginal tax rate is, your rental income is added to your
regular income including your job income and gets taxed at the corresponding marginal
tax rate.
Using the example above, for someone who already earns $110,000 job income, the
additional rental income of $10,000 is taxed at 43%, an additional $4,300 of tax liability.
Adding to his tax from his job income, his tax liability is now $33,579 ($29,279 +
$4,300).
His average tax liability is 28%.
Despite all the benefits of investing in real estate, there is one major drawback. The
main drawback is the lack of liquidity—or how difficult it is to convert this asset into
cash. Unlike selling a stock or bond which can be sold immediately and relatively
easy, a real estate transaction can take months to close.
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In the next chapter, I want to introduce you to some real estate all-stars that I’ve had
the pleasure of working with over the last 10 years. They’re the people that prove,
over and over again, that anyone can start building wealth through real estate, as long
as you have the right attitude and a good support system around you.
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Chapter 2:
Where should I Invest?
Understanding Your Local Real Estate Market

Understanding the basics of the Canadian economy, interest rates, government
policies, and demographic trends are key components to knowing what changes may
happen in the general real estate market. But more importantly, you will need to look
into the local market where you plan to invest.
So, what do you need to look at to determine where to invest?
Before you invest in a city or an area, determine if it is a good idea to do so based on
the economic fundamentals. Some questions you will need the answers to:
● What is the local economy like?
● Are people employed?
● Are there major employers moving in the town or city? Is there a diverse number
of different industries?
● What is the population growth like? What are the demographics like?
● Are there major transportation and future transportation improvements planned?
● What is the real estate market like? How affordable are the properties?
● Are there future developments happening in and around the city? Any
infrastructure projects that are planned?
● What are the neighborhoods like? Is it safe? What kind of amenities are planned
or available to service those living in the town or city? Are there supermarkets in
the area? Are you tenants able to walk to the amenities?
I will be discussing some of the economic fundamentals in this chapter that you need to
look into when choosing an area to invest in.
The Economy
What’s the local economy like? Look at the economic health of the city you would like
to invest in. Is it growing?
Growth means jobs. Building permits mean jobs. Look into industry and commercial
vacancy rates. What are these like? Are the cities you are looking at providing
incentives to new businesses? Check with your local city’s economic department to
see what initiatives are in play.
Employment
Are people being employed? What is the unemployment rate? How is this town or city
compared to other towns and cities in the area? Research local websites to get this
Erwin Szeto 24
information. What types of jobs are there? More higher paying jobs means people can
afford a higher housing cost and have more disposable income which supports the
local economy. Is there only one employer? Or a diverse number of employers? You
don’t want to invest in town where there is only one employer. If that one employer left
town, the jobs leave with them.
What is the workforce participation rate like? How many people are actively working
or are working for a job? If this figure is higher than the provincial or federal average,
it’s a good indicator that you are in the right place.
People who are working can spend to run the economic engine of the city. Simply put,
if no one is working, there is no money being spent, then there is no growth and the
town is not advancing.
What is the rental market like? How do the market rents compare with provincial
averages? To get an idea of the market rents in the areas that our clients invest in,
check out the tables in the next chapter.
What is the vacancy rate? A vacancy rates are based on information from apartment
buildings but it’s still a good indicator of what vacancy rates are like in that city.
Population Growth
Is the area you are planning on investing growing?
Population growth is important as people who enter an area need somewhere to live
and will usually rent for the first few years before they can establish themselves and
can actually buy. Your potential pool of tenants increases with immigration or natural
population growth. Check out the statistics for the area to see if the area’s population
is growing. The economic department of that city or town would be able to help you
with this information. They will be also able to tell you if future employers are coming
to town. This is another indication of future growth in the area. As employers bring
people to the town, people need some place to live, buy their groceries, shop for
clothes, go out to eat, etc.
Government projections show that Canada’s immigrant population may reach as high
as 30 percent by 2036 (6). The Canadian government has set out a multi-year
immigration plan that commits to welcoming more permanent residents to Canada.
The original multi-year plan called for growing numbers each year from 2017 to 2020
(7).
Canada actually received more immigrants than the targeted numbers: 286,510 in
2017, 321,055 in 2018, and 341,180 in 2019 (8). However, with the Covid-19
pandemic hitting in the first quarter of 2020, like many other countries, the Canadian
borders were closed to stop the spread of the virus and the targeted number of
341,000 immigrants was not reached for 2020 (9). In the short-term, this has
consequences as Canada relies on immigration to fuel economic growth. We now
know that Canada welcomed only 184,370 new permanent residents in 2020, the
lowest level since 1998 (10). The numbers of immigrants are still expected to grow,
Erwin Szeto 25
but we will see if the original targeted number of 350,000 can be reached for 2021 as
we are still impacted by Covid-19 (9).
Demographic Trends
Generation Y, the millennials, will influence the rental market as they enter the
housing market. With high house prices, millennials have waited longer than their
parents to enter the housing market. Some will be renters all their lives as they do not
want to own their homes and the lifestyle that their parents had in the suburbs do not
appeal to them.
They would still like to live in a nice place with the latest amenities and gadgets, but
do not mind a smaller space and not necessarily owning their own place. It is this shift
in mindset that you as a real estate investor will need to prepare for this generation as
they make up a significant size of the population. You will need to understand what
they want as they are a large potential pool of tenants regardless of the real estate
strategy you choose.
Transportation
It’s been shown that transportation in and around a city will drive growth in that city.
Look for towns that are investing heavily in infrastructure improvements such as
public transportation like subway, light rail, traditional rail, places that are growing their
highway development and road expansion will drive additional growth to the city. The
focus is no longer the distance you commute from destination A to destination B, but
the number of minutes saved when commuting.
What future transportation is being planned for the areas you are interested in
investing? Is there potential for you to position yourself along these future routes Is
there an opportunity for you to invest in the area when housing prices are still
affordable?
Some examples of future and ongoing projects are below. As we are talking about the
government, it may take years for these large infrastructures to be planned and
implemented and changes are necessary a long the way. Keep the potential in mind
but buy in the area when there is confirmation that the planned transportation is
actually happening.
The GO Train that was planned and implemented contributed to Hamilton’s booming
real estate and population explosion. It allows people to work in Toronto while living in
Hamilton with its lower housing cost. It has been shown that homes and rental
properties that are within 500-800 m of these new transportation stations will receive
an average of 10-20% enhanced real estate values over homes that are further away
(11).
Some examples of major expansion include:
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● GO Train Expansion: Check out their Future System Map on their website for
planned new stations and routes:
https://www.gotransit.com/en/the-future-go/future-system-map).
● Light Rail Transit: There are light rail transit projects throughout the region. An
example would be the rapid Hurontario Light Rail Transit (LRT) that is being built
in the region of Peel, it will run through the Mississauga and Brampton, cities
west of Toronto. The project is expected to be completed in the fall 2024. You
can find more information and many more projects from Metrolinx on their
website http://www.metrolinx.com/en/greaterregion/projects/
● Major highways: The expansion of highway 401 from Mississauga to Milton will
reduce commuter time as many people work in Toronto and travel to the
surrounding areas to live as properties are cheaper. This busy stretch of the
highway is being expanded so people can get to where they want to go in a
more reasonable time. For more information, visit their website
https://401expansion-mississauga-milton.ca/)
Look at Real Estate Market

Local real estate boards will have monthly and yearly statistics. Check them out before
you choose a city to invest in. What are the inventory and sales numbers like? Look for
a more balanced number instead of a sellers market as you do not want to overpay for
the property. A sellers market is where the sellers are able to dictate the price and a
buyers market is where the buyers have the advantage to negotiate down the price.
Look at the year over year value in price appreciation where you want to see a
consistent upward trend so you are in a market that is supporting future growth. Make
sure that the city you choose is in line or greater than the provincial average.
A city like Hamilton has been a sellers market for many years with bidding wars as
demand outweigh supply. Many of our investors have moved to other cities such as St.
Catherines, Kitchener, Waterloo, and Niagara to avoid the competition and the
increasing housing price.
Affordability
With Toronto being an expensive city to buy property with the high house prices,
many families have moved to the surrounding Greater Toronto Area areas. It has
created a ripple effect where cities outside the GTA are booming like Hamilton and St.
Catherines to the west and Pickering, Ajax and Oshawa to the east, and to Innisfill,
Orilla and Barrie, to the north where house prices are more affordable. Many families
are being pushed further east, west, and north of the closest towns to Toronto
become less and less affordable.
Even if properties met all your criteria and house prices are too expensive and the
rent doesn’t cover your monthly costs then the property will end up costing you money
instead of putting money in your pocket. You want to look for cities that are close to
major metropolitan centres that are still affordable where rents will cover your monthly
costs. Also, look at places where there are lower commercial rents, lower commercial
Erwin Szeto 27
rents attract commercial tenants, growth in local businesses which further boost the
economical stability of the area.
Top 10 Investment Towns
For almost 30 years, the Real Estate Investment Network has been providing
independent research and analysis reports on housing markets across Canada and has
earned its reputation as a dependable source in providing unbiased research and
analysis.
I was a REIN member for more than 10 years and know first-hand the research that
Don Campbell and his team provided is second to none. I know this as I provided some
of the research on Hamilton.
Don Campbell is a Senior Research Analyst at REIN, a Canadian-based real estate

investor, researcher, author, and educator. He is also a best-selling author with an
investment portfolio which includes Light Industrial, Residential, and Agricultural
properties across Western Canada.
The 2019 Top 10 Towns and Cities Ontario report by REIN (12) ranked the following
cities in order of potential for housing market strength over the coming five-year period:
1) Ottawa
2) Kitchener -Waterloo-Cambridge
3) Hamilton
4) Barrie
5) Brampton
6) Durham Region
7) Toronto
8) Kingston
9) Orillia
10) Grimsby and St. Catharines
We at iWIN Real Estate focus mainly on the following areas west of Toronto: Hamilton,
Kitchener, Waterloo, Cambridge, and St. Catharines. We host educational workshops
and our coaches offer tours in the different cities. A lot of the information you’ll find the
following chapters focus on the Hamilton and its surrounding areas as I and my team
have intimate knowledge and invest in these areas ourselves.
For more information about what we do at iWIN Real Estate, check out the information
provided in Chapter 10.
If you are not interested in the Greater Toronto and Hamilton Area, or have other places
in mind, you can use the fundamentals above and do your own analysis of the areas
you would like invest in. In the next chapter, we will delve into the different residential
real estate investment strategies.
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Chapter 3:
8 Powerful Real Estate Investing Strategies
Residential Real Estate Investment Strategies
With the growth in Ontario’s population, the real challenge going forward is supply as
opposed to demand in real estate.
Property demand in Ontario is skyrocketing due to immigration with over 35% coming
to the Greater Toronto Area (8). The amount of land available for development and
new build is scarce, forcing existing home prices to go up. In the surrounding Toronto
areas, we have a unique set of circumstances where the greenbelt further constraints
land availability (see Figure 2: Ontario’s Greenbelt). With lake Ontario and the green
belt restricting development, the areas between have been a focus of densification for
government bodies. This is good news for real estate investors.
Nothing can be built on the Greenbelt unless there are some drastic environmental
and building policies that come in play which is very unlikely. With limited land and an
ever-increasing population – 45% of those who immigrate come to Ontario (8),
densification has been the key to address the issue of supply. To better use the land
available and address the issue of supply, condos are being built. The square footage
for condos has become smaller and smaller to keep the price more affordable. As
well, to address the issue of supply, many municipalities in Ontario have allowed legal
secondary suites to be built to address this need.
It is not surprising that the cities identified as good places to invest in by the REIN
Report (see the previous chapter) are within the Toronto and surrounding areas.
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Figure 2: Ontario's Greenbelt
Source: Greenbelt Foundation. 2005 Greenbelt Map. Map provided by the Greenbelt
Foundation. Reprinted with permission. Retrieved May 4, 2021 from:
https://www.greenbelt.ca/maps (Note: the greenbelt was expanded in 2017. Go to
their website to get the latest information and a closer look of each region)
In this chapter, we will show you several types of real estate investment strategies
you might want to consider as you plan to invest. The examples and the data are
based on our own experiences and that of our clients, so the information is focused
on areas west of the Greater Toronto Area. When you go through the different
strategies, you will find more detailed information and examples in the strategies that
we focus on, namely, single family, legal secondary suites, rent-to-own and student
rentals.
For the investor who is starting out, it is best to invest within an hour drive of where
you live. If your target area is too far, it makes management challenging and you are
less likely to make the commute necessary to grow and manage your portfolio. Of
course, there are investors who invest in other cities or even other provinces, but you
will need property managers in place as you won’t be able to look into the property
regularly.
Of course, what is right for you will depend on how much time you are willing to
commit, access to financing, and your risk tolerance, among other factors. Some
strategies are more hands on than others while others require more expertise and are
for more seasoned real estate investors. To be a successful real estate investor, it is a
Erwin Szeto 30
combination of many things, one of them being selecting the right real estate
investment strategy for you.
Erwin Szeto 31
Single Family Rental Property

Buy-and-hold is one of the most common and straightforward real estate investment
strategy. It’s when you buy are rental property (hopefully under the market value),
then hold it for the long term (more than 5 years) expecting to earn the monthly rental
income and allow it to appreciate in value in future years.
Many of our clients have purchased single family properties. What is a single-family
property? A semi-detached, detached or townhouse where you would rent to one
family. The typical single-family home has three bedrooms and two bathrooms.
The buy and hold strategy does not require as much experience as some of the other
strategies, e.g. flipping, multi-family. It is easy to rent, find tenants and get financing.
One set of tenants to deal with but also only one rental income coming in each month.
The disadvantage being that if the tenant moves, you will have no income until it is
filled while you are looking for another tenant. You will have to make sure you can
carry the property with no tenants during that time. The goal of this strategy is to have
your tenants pay off your mortgage and other property related expenses.
You can choose to manage the property yourself or you can use a property manager.
You will need to decide how you want to spend your time.
You can get a sense of the cost of the property values and the current rents in the
areas that our Infinity Wealth clients invest in, check out tables 5 and 6 below.
With rent control in place in Ontario, you may not raise rents if your tenant decides to
stay for a long time and your expenses increase. The 1.5-2.0% yearly increase
stipulated by the government may not cover the raise in property taxes, maintenance,
or utilities.
A buy-and-hold investment is relatively easy to finance as most lenders offer loans.
Depending on the lender and your qualifications, you can finance up to 80% of your
property value from the one lender. However, first familiarize yourself with the different
types of real estate loans available and then choose one that fits your needs. See
Chapter 5 for the different financing options.
With single family properties not producing cashflow like before, many of our clients
have shifted their strategy to buy properties that can be legally converted into second
suites. These legal duplexes are collecting two rental incomes instead of only one.
Legal duplexes will be discussed later in the chapter.
What are property values like for Single Family Houses?

The table below is a compiled list of average house prices for single family homes for
the areas that we ourselves invest in and those of our clients. The prices have
increased significantly over the years, but the market rent has also increased, as well.
Erwin Szeto 32
Table 5: Single Family House Prices (3 bedrooms, 1-2 bathrooms, detached)
City Average House prices
St. Catharines $ 450,000.00

Hamilton $ 525,000.00
Mississauga $ 950,000.00
Niagara $ 425,000.00
Kitchener $ 525,000.00
Cambridge $ 500,000.00
Waterloo $ 550,000.00
Brantford $ 450,000.00
Welland $ 425,000.00
Source: iWIN Real Estate, June 2020
What are rents like for single family home with a 3 bedroom?
As of this writing, the average rents for a single-family house is in the table below.
These figures are from our clients and our real estate network of investors. Be sure to
check out what the market rent is for your area when you are renting it out as rents can
increase quite a bit in a short time frame. Rents in the Table 6 do not include utilities.
Utilities expenses include gas, water, water heater and electricity. It is always best that
the tenants have the utilities in their name, so you as the landlord are not responsible
for it. If this cannot be done, you will need to outline in the lease agreement the
maximum amount in utilities you are covering and any amount in excess will be billed to
the tenant.
In today’s GTA market, do single family homes still cashflow?
As of this writing, the answer is “maybe”, it depends on a number of factors, for

example, what you are buying, what price you bought the house for, what the down
payment is, and what type of financing you received. When you go looking for a rental
property, you will notice that a semi-detached or townhouse is less pricey than a
detached home and there is not much difference in terms of the rent you will receive.
Erwin Szeto 33
Table 6:Average Rents for Single Family House
City Average Rent 3 Bedroom

Single Family House
St. Catharines $ 2,200.00
Hamilton $ 2,200.00
Mississauga $ 3,200.00
Niagara $ 1,800.00
Kitchener $ 2,300.00
Cambridge $ 2,400.00
Waterloo $ 2,500.00
Brantford $ 1,800.00
Welland $ 2,000.00
Note: Rents do not include utilities.
Source: iWIN Real Estate, internal poll of clients, June 2020
What about Condos?

Condominiums may be a good choice for some investors. Investing in condos may fit
with your lifestyle if you do not want to worry about cutting the grass or snow. This is
taken care of when you pay the maintenance fees. If you are buying a one bedroom or
two bedroom condo, the majority of your tenants are going to be young professionals
who may have a room mate, a couple or a small family. There are amenities (gym, pool,
party room) that the tenants can use.
There are two main types to invest in: pre-construction or resale condos. You buy
pre-construction condos and wait for it to built. This timeframe could be anywhere from
3 years or more depending on the project and number of phases for the condo
development. You can add your name to mailing lists, so you are notified when
pre-construction condos are released for sale. The best time to buy is during the “Family
and Friends” or “Platinum VIP” promotions before the condos are released to the
general public. Resale condos are relatively easy to find and rents are easy to
determine. You can ask your real estate representative to help you find these condos
based on your criteria.
Erwin Szeto 34
So, why invest in condos? Do the numbers work for you? It will depend on your
investment and lifestyle goals.
Below is an example comparing a single family house (freehold) and a condo that our
investors purchased not too long ago.
The detached single family house in Kitchener, Ontario purchased for $470,000. It is a 3
bedroom, 2.5 bath house that was built in 1980. The 2 bedroom, 2 bathroom low rise
condo is in Milton, Ontario and costs $493,000.
Table 7: Comparison between Condo and Single Family House
Monthly Payments Condo Single Family

Home (Freehold)
Mortgage $1,658 $1,581
(20% down payment,
3% interest rate, 30 year
amortization)
Property Tax $195 $275
Insurance $50 $100
Utilities (tenants pay for $0 $0
utilities)
Condo fee $371 $0
RENT $2,200 $2,000
CASHFLOW ($74) $44
Source: IWIN Real Estate, June 2020
In this example, it’s a small loss for the condo and breakeven for the single family
home in the market that we focus on.
While it’s easy to maintain a condo, you may have to deal with noise complaints, and
condos have tight spaces with no yard. Condo fees will increase in time and you have
no control over the increase. As you will not be owning land like in a freehold single
family house, the appreciation will be slower. With a condo, you need worry about the
major maintenance such as the roof, windows or the foundation.
You will need to decide if a single family home or condo will fit in your portfolio. If you
know what your goal is for investing in real estate, it will make it easier for you decide
the strategy you want to focus on.
Erwin Szeto 35

A legal secondary suite is a great strategy for many of our clients. We have been
helping our clients convert single family properties into legal duplexes as it is rare at
times in this market to find a turn-key legal duplex at the price that makes sense for
the property to cashflow.
The information provided here is based on Hamilton, Ontario. Hamilton has been our
focus for many years as the place to invest.
What is a duplex or secondary suite?
A duplex is essentially two separate and self-contained dwelling units housed within a
single residential structure. A duplex is typically purchased as a residential investment
property and one or both of the units are leased to tenants.
The term legal duplex or a second suite is also referred to and recognized by the city
as a two-family dwelling. So, what is legal duplex conversion? This two-family
dwelling is also called secondary suite, an in-law suite, accessory unit, or basement
apartment. It is a self contained independently accessible private unit within an
existing home that can be rented out to another person or family.
While most are found in basements, others are added onto the original structure.
These spaces have their own bathroom, kitchen, and living areas and may share
certain amenities with the rest of the home like the laundry area, yard, or storage.
A second suite is most commonly seen as a house that has been separated
horizontally but can also be done vertically. Vertical splits are not as common, but they
are definitely unique. Each unit will have an upstairs and a downstairs. You can build
a second unit at any part of the property. It can be all in one floor or have multiple
levels.
Most second suites are built in the basement. Building code can vary depending on
where the second suite is located in your house. Second suites can be done with
most styles of houses as long as it meets the city requirements. Be sure to do your
own due diligence.
Deciding on a legal secondary suite
Every investor is different. You will need to consider the location, the capital you have
to invest your capital and the budget for renovations. For example, an investor might
want to purchase a property on the lower end of the scale, renovate the property with
the aim to refinance to get most of the capital back. Others may want a turnkey
property, so there is not as much out of pocket cash for the renovations and to have
their purchase rolled into their mortgage.
Let’s look at the three strategies for legal duplexes:
Strategy #1: You can purchase an existing legal secondary suite and rent out each
unit. In the GTA, these turn-key properties are rare on the market. There is a lot of
demand for them.
Erwin Szeto 36
Strategy #2: Buy a property with an existing illegal secondary unit and convert it to a
legal one. After completing it, you can sell it as a turn-key property to an investor who
is not interested in doing the renovations themselves. Or it can be sold to a
homeowner who can live in one unit and rent out the second unit to cover their
expenses.
Strategy #3: Like in the 2nd strategy, instead of selling the property after renovating it,
you keep it, rent it out and keep the cashflow. You can then refinance and take out the
equity and repeat this process with another property. Many of our clients are using
this strategy to build their real estate portfolio.
What are the benefits of a duplex conversion?
Building a second suite in your home allows you the opportunity to create a safe and
affordable rental unit for residents. It also lets you maximize under utilized space and
transform it into steady income. Creating a legal second suite is one of the best
upgrades you can make to increase the resale value of your property if planned and
managed properly.
So, what are some of the benefits of doing a second suite conversion? It will:
● Help with property tax and maintenance costs.
● Help pay off your mortgage earlier.
● Provide extra income from the second suite rental can help home buyers afford
higher priced neighborhoods.
● Reduce debt by helping to repay the mortgage faster, help first time home
buyers.
● Fund property renovations to increase the property’s value.
● Provide a source of backup income if a household earner loses a job.
● Provide more affordable housing for renters.
We have housing affordability at such low levels that a lot of middle-income earners
cannot afford to buy a house given the harder lending rules, and they may not be able
afford to rent an entire house. This leaves a lot of high-quality tenants who demand
higher quality second suites and are willing to pay for them because of the lack of
affordable housing.
Many governments are encouraging home buyers to create affordable housing units
by building secondary suites in their homes. As mentioned in Chapter 3 many people
are immigrating to the Greater Toronto area making affordable housing an issue.
Investors can provide safe and legal rental units to meet these rising demands.
What area are we looking at?
Even within the city you are interested in, there are pockets or neighborhoods that are
more desirable than others. Work with an experience real estate agent to find out
where these areas are. Review the economic fundamentals in Chapter 2 to determine
the areas to invest in.
Erwin Szeto 37
The information provided here is based on Hamilton and surrounding areas. If you are
interested in a different city, it is important to meet the planning and building code
requirements. Doing so will ensure that your property and second unit are legal and
safe for your tenants before deciding to add a second suite.
What to look for in a property? Does it meet the requirements?
Before even going through what is required to convert a legal secondary suite, you
will need to know if the property is worth legalizing in the first place. If you do not have
the experience, make sure when you are visiting a property, bring along an
experienced contractor/real estate agent/investor who knows what they are doing and
can help you with your decision. They will know the costs of renovating, whether it is a
small or big job, and let you know if the property is worth converting in the first place.
If it is worth renovating, work out the estimated costs and see if you still want to
proceed.
Make sure to run the numbers to see if the property is worth legalizing. See Chapter
7: Analyzing Deals for an analysis of legal secondary suites.
What are the requirements?
Below are some of the requirements to keep in mind while looking for a property to
convert a basement into a second suite.
Zoning – Check the city that you are interested in and see if that area is allowed to
convert the property into a second suite. Look at the zoning to see if the by-law allows
a second suite as there are some zones that do not allow them. Be sure to check the
zoning as part of your due diligence when you are thinking of buying the property.
There are many duplexes that are not legal and there are many nonconforming
duplexes available. You should never make a purchase decision with the assumption
that a suite is legal unless you have documented proof from the municipality.
Parking - Some cities do not require extra parking, while others may require an
additional two parking spots for your second suite. Also, some cities will allow tandem
parking (meaning single file), while other cities do not.
Parking in Hamilton is one of the biggest obstacles when converting a property into a
legal duplex. The City of Hamilton requires two parking spots, one for each unit and
they cannot block each other. There has to be enough room to maneuver around
each car.
Unit Size – The second unit must be less than or equal to the size of the main unit.
In Hamilton, for the basement unit, the minimum square footage is 700. This minimum
square footage living space does not include the furnace room. Hamilton has a minimum
square footage requirement where other cities have a maximum requirement.
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Ceiling Height – For basement units, the ceiling height is a very important
consideration. If you don’t have enough height, you will not be able to add in a suite,
or it will be extremely expensive to lower the basement.
Egress - In general, second units can share a joint entrance with the primary unit,
subject to having a fire separation with the appropriate fire resistance rating, and at
least two means of egress (exit) that may include windows of an appropriate size.
If a legal secondary suite is a strategy you have chosen to invest in, there are more
requirements you will need to meet in terms of the plumbing, electrical and fire safety
standards.
Renovating the property
The renovation process can be exciting time as we can see progress. It is important
to be organized and surround yourself with a team of experienced professional who
really understand the process of legalizing a secondary suite. You should also only
hire contractors and trades people who have proper licensing, insurance, and
knowledge of completing work in accordance with the code and local bylaws.
Be sure to choose a contractor who has gone through the entire process in the past,
understand the legalities and have developed a relationship with the city inspectors.
Communication about the length of time and size of the job is key, especially if you
live in a different city. The city will require an inspection before any work is done. In
many cases, you will need to register or obtain a license for your suite with the
municipal licensing department.
Renting out the property
When renovations are close to completion, it is a good time to look for tenants. As of
this writing, in Hamilton units rent on average for a legal duplex at around $1800 plus
utilities for the upper unit or main floor unit, which is typically three bedrooms and
$1600 plus utilities for the lower unit, which is usually a two bedroom unit.
We have been seeing rents on the main floor unit going up every year at
approximately a hundred dollars a month. Do not forget to add on the extra $100 or
rent you negotiated if you have a garage to rent out. Some investors rent a garage
independently of the unit with its own lease.
What do rents look like?
Check out the rent in the Hamilton and its surrounding areas in Table 7: Average
Rents for Legal Secondary Suites. Some rents are inclusive of utilities and some are
rents plus utilities. Utilities include gas, water, water tank rental and electricity. If you
can, it is best that the tenants have the utilities in their own name, so you are not
responsible for it. Some cities will not allow tenants to have it in their name be sure to
check out what is possible.
Legalizing the property is not a cheap, quick, nor a guaranteed process but being
super prepared and educated in the process can save time and money. Over the past
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year, the GTA and surrounding areas has come a long way in providing information to
property owners looking to legalize or create additional living units in their buildings.
Check out an analysis of a legal secondary suite deal in Chapter 7: Analyzing Deals.
Table 8: Average Rents for Legal Secondary Suites
First Baseme Total

Floor Av. nt Duplex Av.
City Rent Av. Rent Rent
St. Catharines* $1,850.00 $1,500.00 $3,350.00
Hamilton+ $1,800.00 $1,600.00 $3,400.00
Mississauga* $2,500.00 $1,850.00 $4,350.00
Niagara+ $1,600.00 $1,400.00 $3,000.00
Kitchener* $1,950.00 $1,600.00 $3,550.00
Cambridge* $1,800.00 $1,400.00 $3,200.00
Waterloo* $1,950.00 $1,600.00 $3,550.00
Brantford+ $1,700.00 $1,500.00 $3,200.00
Welland+ $1,600.00 $1,400.00 $3,000.00
*Duplex average rents are inclusive of utilities
+plus utilities
Source: iWIN Real Estate, internal poll of clients, June 2020
Student Rentals
Student rentals or housing is renting out the property to students who are attending
post secondary school, in most cases a university or a college.
Like many parents, we want what is best for our children. Many are sending their
children to university. I went to the University of Western Ontario’s Ivey School of
Business. My wife, Cherry, graduated from the University of Waterloo with a masters
degree in Accounting. We believe in sending our children to university like many
parents. Education is expensive and we want our children to have choices, so we
decided to get a head start on tuition fees by buying one rental property each for our
two children when they were born.
I know of some parents who buy a student rental, have their children help manage the
property while attending university. This is a great way to leverage the investment, as
parents would have to foot the bill for rent anyways. Why not an income producing
investment? This way the children learn how to be responsible young adults.
Financially, a student rental can be a great investment if done properly.
Other investors invest in student rentals because of the cashflow that it provides.
Some of our clients feel that dealing with students are easier than the regular legal
secondary suite tenants. Sure, there is the potential of crazy student parties where
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200 people show up for a keg party and your property gets destroyed. There are ways
to mitigate them from happening to you.
One simple means for accountability is using Landlord Credit Bureau where landlords
can report rent paid on time, leave feedback on great tenants and vice versa, any
rental arrears, rent owing, damages from problem tenants. The great thing about
many of tenants is that they have bright futures and often value their credit history,
plus, they need the tenant references for their next rental.
Nightmare tenants are everywhere not just in student rentals. Students do want to
have a good time but the ones we have rented to so far, have been hard working and
diligently studying. Be sure to screen your students or have your property manager do
so thoroughly. One of the ways is to ask the students about what program they are in.
The more competitive the program, the less time the students have for partying. We
have had a ton of success with Nursing and Teacher’s College students. Certain
varsity athletes are wonderful, too. One of our clients regularly rents to varsity swim
team members. They’re so busy training and eating well, they don’t have time to
party. As an added bonus, they do all their showering at the school after swimming!
Think of the savings on the utilities!!
Check out their Facebook or Instagram posts to see if there are potential problems.
You’ll get a good idea of the type of tenant you are looking at. Having a guarantor
such as a parent or guardian sign a guarantor form is what we practice in case the
student is not able to pay or if there are damages to the property.
You may find an area or know of an area you are more familiar with and where
student rentals may work for you. Just remember to look at the fundamentals that was
discussed in the previous chapter to ensure that it is a good place to invest in.
Besides looking at the economic fundamentals discussed in Chapter 2, below are
some questions to ask and think about when buying a student rental property.
o How many universities and colleges are in the area? What kind of programs
do they offer?
o How many students is the school accepting? Is the school accepting more
students?
o How many student rentals are already in the area? Is there a lot of
competition?
o How close is property to the school (university or college)? Is it within walking

distance? If not within walking distance, is there a bus route? The ideal
location would be close to campus, ideally within walking distance so students
do not need to have a car or take a bus.
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o What are the surrounding amenities like? Are there grocery stores, coffee
shops and restaurants near by? Having amenities close by and within walking
distance so students can get there without a hassle. This will ensure the
students are happy and stay longer in the unit.
o Is it a safe neighborhood? Some students are leaving home for the first time
and parents are most likely to visit and want to know that their children are
living in a safe place.
o Is it a turn-key property, currently used as student rental? Or will it be

renovated for this purpose? What is the cost of the renovations?
o How many rooms does it have? Are there enough washrooms? Is there a
common area for students to relax?
● For tenants, what kind of students are you targeting? College vs. university?
Are you targeting those who are in a Bachelors or Masters/Advance degree?
o In my experience, university students rent for 12 months more often
than college students
What are the rents like for student rentals?
As mentioned previously, we focus on the Hamilton and surrounding areas, so we are
most familiar with McMaster University, Mohawk College, University of Toronto
Mississauga Campus (UTM), University of Waterloo, Brock University, and Niagara
College. You will see the average rent we have compiled for these areas in the table
below.
It will give you an idea of the total rent you can potentially get when you rent out to
students in these cities. The number of rooms can range from 4 to 9. We have seen
an average of 5 to 6 rooms which is reflected in the potential monthly rent in the table
below. In our experience, renting to a group of friends who come together to rent the
house is the ideal tenant. Note that we are renting the whole house, how the tenants
split the rent among themselves is up to them.
Make sure to sign full year lease even if school is only from September to April. The
rent you receive will depend on the property, the area, and the amount of competition
for rental units in that specific area.
Student rental rates vary based on:
● How close the house is to the school?
● What is included in the rent? Usually utilities and internet are included in the total
rent. Depending on the type of students you have, will cleaning service be
needed, as well?
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● How nice are the kitchen? When I renovate, my counter tops are stone as they
are durable and both the students and their parents love them. I don’t know what
it is, when I was a poor student, I was much more cost conscious but this is a
business and we cater to what the market demands. This means quartz
countertops and stainless steel appliances.
● How about the bedrooms and bathrooms?
o I’ll often have a bedroom room under 100 square feet but the rest are
around there or bigger
o The more bedrooms above grade the better
o Ensuite bathrooms are in huge demand and command $50-150 more rent
per month
● Do you provide any furnishings? We typically provide a leather couch, a wall

mounted flat screen TV, and whatever furniture we no longer want from our own
home
Table 9: Average Monthly Rent for Student Rentals
City Average Monthly Potential Monthly

Rent by Room Total Rent (average
5-6 rooms)
St. Catharines $450 $2,250 - $2,700
(Brock University)
Hamilton $500 $2,500 - $3,000

(Mohawk College,
McMaster University)
Mississauga $700 $3,500 - $4,200
(University of Toronto,
Sheridan College)
Niagara $450 $2,250-$2,700
(Niagara College)
Waterloo $500 $2500-$3000
(University of Waterloo)
Source: IWIN Real Estate, internal poll of clients, June 2020
Cashflow
If cashflow is your focus, then student rental may be the right strategy for you. You will
get more rent for student rentals in comparison to a single-family property, however,
you must look at the potential for more maintenance in terms of property and number
of people you need to manage. You could decide to manage it yourself or us use a
property manager in which case you will need to budget 5-10% of rent for property
management fees.
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What should you know about owning a student rental properties

● There is more wear and tear with student rentals. Thus, more maintenance as
most students are not used to living on their own and have no clue how to take
care of the property as they have been living with their parents.
● Many are young adults so the potential to party exists. We have the conversation
with the students when signing the lease. They are responsible for damages but
we educate them on being good neighbours. Why not ask them to invite their
neighbors to the party so the cops aren’t called?
● Ideally, sign yearly leases. Signing leases from May to the following April is
common in university towns, not as much for many colleges. If you bought the
property right, this should not be a problem.
● Dealing with neighbors who often times do not like students. Dealing with the
noise and the mess left behind made by students can cause friction with
surrounding neighbors. You need to develop good relationships with these
neighbors, so they know to contact you if a problem arises.
● Student rentals pay higher insurance premiums as there are more people in the
unit and higher potential for issues to arise. We have commercial insurance on
our student rentals with $2 million in liability coverage. To me, it’s worth the extra
money.
● Financing is more challenging as many banks do not recognize the rents on a
student rental fearing future rental licensing will render it impossible to achieve
above market rents. It is harder to refinance the property to take out the equity.
It’s not impossible though, you just need to have the right mortgage professionals
working for you to help you finance or refinance a student rental.
The student rental strategy works amazing with duplexes: this would be a best of
both worlds. Like any strategy, do your own due diligence when it comes to student
rentals. Contact the town or city AND the local Fire Department. That’s what I did.
Just as important, work with a Realtor and Property Manager who specializes in this
area. Get it right the first time as mistakes can be extremely expensive or worse,
someone could get hurt and the homeowner is liable.
Short-term Rentals
Short-term stay of less than one month in most cases. For hosts, participating in
Airbnb is a way to earn some income from their property, but with the risk that the
guest might do damage to it. For guests, the advantage can be relatively inexpensive
accommodations, but with the risk that the property won't be as appealing as the
listing made it seem.
The focus of this chapter will be on Airbnb, as it’s the most popular by far for
short-term rentals. The information provided pertaining to investing in Airbnb in
Southern Ontario, notably, the Toronto and surrounding areas. Like any investment
decision, you’ll have to do the research and see if this strategy is right for you.
Erwin Szeto 44
In Ontario, short-term stays of a month or less are not governed by the Landlord and
Tenant Board. If you are investing in other regions and parts of Canada, make sure
you know the by-laws of the city you are investing in.
This chapter is based on our experience with Airbnb along with our property manager,
Brian Kirow, who took care of our property for us when we converted an existing
rental to an Airbnb rental. Like any investment strategy, make sure you do your due
diligence before jumping into the Airbnb strategy.
What is Airbnb?
Airbnb is an online marketplace which lets people rent out their properties or spare
rooms to guests. Airbnb takes 3% commission of every booking from hosts, and the
fees varies for guests but it’s under 14% of the booking subtotal (13).
Where should I buy?
When buying a property and considering it for Airbnb rental, the fundamentals
discussed in the previous chapter still applies. Maybe the most important factor is the
location. Most but not all who want to come for a short term stay close to as many
amenities as possible – they are there for one or two nights only and want to be able
to walk to the amenities and not travel as there really isn’t that much time during their
visit. Downtown locations may cost you more money to buy but you can charge more
per night. It may or may not make financial sense. You will have to do your research
to see what the potential is.
Research the area:
Know the area you are investing in. Location matters. Do your due diligence. Planning
and thinking ahead will pay off in the long run.
● Check out if there is a market for short-term rentals, who will be your customers?
Are they tourists or parents visiting their college children? Think of all the
potential clients based on what is surrounding the property you plan to use.
● How close is your Airbnb to other short-term rentals? Check out your
competition. Look for comparables for same size and specs as other Airbnb
properties.
● What is the surrounding area like? Where is the property located? Can guests
walk to attractions? Is it a short drive? How far are other amenities?
● Research (e.g. Trip Advisor) to see potential attractions you may not have though
of. For example, if it’s downtown Kingston, what are the attractions like? 1000
island tours, how about the Kingston penitentiary?
Erwin Szeto 45
● Are there any special dates or events happening? You’ll need to make sure you
know what activities are in town so can change the rates to reflect popular dates
and charge accordingly to demand.
You can use AirDNA to conduct some of your research. It has extensive information
on the city, top 10 properties in that city so you know what your competition’s like, the
occupancy rate, what others are charging per night, how much they are making so
you know what your competition’s like. You can see what your competition is offering
and then offer something similar. There is a cost to subscribe.
By-Laws:
Check the by-laws for the city you are planning to invest in to make sure short-term
rentals like Airbnb is not banned or being banned. Also, knowing any of the rules (e.g.
maximum number of people allowed in a unit) will help avoid many of the problems
and potential complaints from surrounding neighbors.
If you are planning on using the Airbnb strategy, have a plan B in place in case the
city suddenly does not allow Airbnb in their city. As with other strategies, make sure
the property you end up purchasing can be used for another strategy if the short-term
rental strategy doesn’t work, can you rent it and put a long-term tenant in and still
cashflow? Always have plan B and C, and an exit strategy if the investment does not
work out.
For example, the city of Niagara Falls (Ontario, Canada) was in the process of
passing by-laws to deal with short-term rentals. The plans are such that it’s short-term
rentals will be allowed on general commercial, tourist commercial or business
commercial zoned areas. Knowing this, an investor and business owner, Brian Kirow,
Northern Host, bought properties in Niagara Falls in these zoned areas so that he will
not have problems in the future operating his Airbnb units.
Income May Be Irregular
The income from the Airbnb will really depend on the location, size of the unit, what kind
of amenities are available and what the competition is like and what they are offering.
As Canadians, we all know that the Canadian winter can be brutal. Who would really
want to come to Canada in the heart of winter? Unless you are in the snowbelt where
skiing and winter sports are the highlight.
We know that our busiest months would be summer. Be fully prepared that there will be
some vacancies expected in the fall and winter. As great as it is to have a fully rented
Airbnb in July and August, a portion of the money will likely be used to offset against the
vacancies in the winter.
Erwin Szeto 46
What are your expenses like?

Expenses May be Higher
● Staging the place. Decorate with high-quality furniture. Staging the place
well is important as are photos. Make sure to get it professionally photographed
to attract customers. The main risk to the guest is that the property may not live
up to its listing. If you want to impress potential Airbnb guests, you may need to
invest some cash to make sure the place is spotless, looks good and feels
classy. Airbnb guests want to feel like they are staying in a high-end hotel. This
will be an upfront expense that could cost thousands of dollars.
● Kitchen. Kitchen basics such as pots, pans, dishes, and cutlery are needed for
guests that stay longer than one or two nights who can buy their own groceries
and cook, if they choose to. This is especially important for families with young
children who are staying for a week or more and don’t always want to go out to
eat.
● Cable TV, WiFi, and more. If you rent to a long-term tenant, it will usually be
their responsibility to hook up the cable TV, WiFi, subscribe to Netflix. Airbnb
guests, on the other hand, usually expect these things to be in place during their
stay, so the cost of this technology—and maintenance—falls to you the owner.
● Property management and cleaning service – Unless you are doing the
day-to-day maintenance yourself, you will have to budget for these operating
costs. Even if you are managing the units yourself, you should still build in the
cost for your time.
Managing an Airbnb
Most Airbnb property management charge 20% to manage the property. As with any
service provider, the fees vary, so take the time to find the right one for you. It’s well-
deserved money as they answer questions all hours of the day. Budget for property
management if you do not want to be an Airbnb manager. To some management
expense is non-negotiable while others do not mind. You need to decide how you would
like to use your time.
● Screening Guests
How do you screen out partiers? This is probably the biggest concerns people have.
Airbnb has a pretty good system where the guest verifies their ID by uploading their
photo, usually, a driver's license. You can look at reviews of the guests and filter those
who have been negative reviews by Airbnb owners.
Airbnb has a process to claim damages. There is a way to claim a damage if the
guests do damage any property. You can set a certain amount for the damage deposit
(e.g. $500) and you can then claim this amount. If it is more than your set amount,
you can escalate it. Airbnb has an insurance policy. To further mitigate the risks, you
also should have your own short-term rental insurance. Talk to your insurance broker
about short-term rental. Just note that, it’s may be 30 to 40% more than the regular
rental insurance.
Erwin Szeto 47
Another thing that helps is having cameras on the outside of your Airbnb properties. If
you decide to have cameras, guests should be notified that there are cameras. It acts
as a deterrent as they know they are being watched and you will know how many
people are entering the unit. It is NOT advisable to have cameras in the living spaces
for privacy reasons.
For those customers who overstay, Airbnb will continue to pay you the daily rate.
Airbnb will continue to pay until the customer leaves, but this doesn’t happen very
often.
● Handling Noise
Noise is a challenge. If it is a house, you can soundproof between units and it will
resolve the issues. This can get expensive. If you think you need to soundproof the
units, take into account the cost compared to the income coming in and see if it’s
worth the renovation costs. Ideally, you will have determined this when you are doing
your due diligence before buying the property.
● Putting a system in place and automate the process
Brian Kirow, who managed our Airbnb, automates many of his processes to save
time. Brian does not meet guests personally. He puts in place a self check-in and
check-out process. The key is placed in a lock box or the unit may have an electronic
keypad provided in advance to guests to enter the unit. Just make sure the
instructions are clear and that a message is sent on check-in day of what the codes
are and instructions that they need to enter for the unit.
Other administrative tasks to automate:
● Welcome messages such as “Thank you for booking” saves time.
● Most importantly, make sure auto reviews are turned on so people can provide
reviews. Reviews are very important from guests who have stayed to make sure
you have full occupancy. Potential guests check reviews and book units based
on positive reviews.
● Manage cleaners with a cleaning application (e.g. Turnover BNB). The cleaning
App sends a message to the cleaners when the checkout is, and they can either
accept or reject that cleaning. When cleaning day comes, check the app and it
tells you when the cleaners arrive and if there are any issues, they can get in
touch with you.
● Managing properties that are far away

It's fine if you find the right people. Even if you do have the right people on your
team at first you should expect to be at the unit a lot to furnish it and get it ready
for your guests. But once it's up and running, as long as you have a good cleaner
and a good handyman that you can count on then you need to visit these
properties periodically to makes sure the property is still in top shape to be rented
out.
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Airbnb and other short-term rental strategies can be very lucrative, especially if you
are patient and willing to do the work to attract renters and keep them happy.
However, your operating costs will likely be higher than for a traditional rental
property, and city by-laws have made investing in Airbnb hard or even illegal in some
places. Be sure to do your due diligence and find out more about this strategy before
taking the plunge into Airbnb investing.
Multi-Family Investing
This section is provided to give you a brief introduction to multi-family investing.
Whole books have been written on this subject. If you are interested in this strategy
and are ready to pursue it, I suggest you educate yourself, do your own research and
due diligence and immerse yourself in this world of multi-family. Join the many real
estate networks out there and build relationships as you learn the ins and outs of this
strategy.
What is multi-family investing?
So far, we have been talking about small rental properties that are between one to four
units, single family, duplexes, triplexes and quadplexes (or mostly referred to as
4-units). When you are investing in a building with 5 units or more is considered
multi-family.
What’s the difference between small rental vs. multi-family units
The 4 unit cut off was created by lenders who would provide a mortgage under their
home ownership program. Properties with 5 or more units are income producing
investments and are considered by lenders under their commercial residential lending
program.
Many investors focus on single family investing because a smaller amount of capital is
needed, especially, when you are starting out as a real estate investor. Mistakes are not
as costly. In the multi-family space, there are fewer players in this market where your
reputation matters and building relationships are key. You need to be prepared and
knowledgeable before you make your first offer. Financing for multi-family is more
business-like where the personal income of the borrower is generally not as significant
as the property’s income and expenses. The financial performance of the building is
what lenders mostly look at. As long as you qualify for each purchase, your credit never
maxes out unlike in single family properties you will hit a lending wall if you keep
growing your real estate portfolio.
Give some thought to why you are investing. Some of these questions are addressed at
the beginning of the book. If you have not done so, take some time to think about your
investment goals and your investment horizon.
● What is your focus for investing?

● How much cashflow are you looking for?
Erwin Szeto 49
● Are you trying to protect your capital?

● When are you expecting a return on your investment?
● How much time do you have to devote to this investment? Do you want a
turn-key project where there is no work but are willing to pay more for it?
● Are you willing to do a value-add project that will require more effort and time?
What are the benefits of investing in multi-family properties?
● It’s a low risk asset and is good to hold even in a recession. People still need
somewhere to live.
● The wealth multiplier effect. Every time you increase your net operating income
(NOI) by a $1 you increase your wealth by $16 (14). This helps you create wealth
faster (depending on the cap rate of your market).
● By consolidating your operating expenses across multi-units, you get better
economies of scale.
● Vacancies have less impact on your income. E.g. if one unit is vacant in a 20-unit
building, it’s not as significant as a single family or duplex rental property.
● Larger multi-family properties will require property management and sometimes
onsite managers, it is less labour intensive for you as the investor to manage.
The costs of management are included in the expenses.
● With multi-family properties, you can borrow more against the property.
● With multi-family investing, it’s more likely that you are not using your own money
but other people’s money.
Multi-family properties are a longer-term investment and most of your return is in the
form of capital appreciation which will take time – 10 or more years. There is a longer
stabilization period to maximize the performance. Maximizing rent and reducing
operating expenses, changing the building systems, evicting tenants to get better
tenants in, or upgrading the units all take time.
How to make money in apartment buildings
Investing in multi-family building will provide you with cash when you sell the property.
You can refinance the property. By refinancing can take out the equity when the loan
matures and recover a portion of the down payment as profit. Like the benefits
discussed in Chapter 2: Where should I Invest?, you pay down the principal of the loan,
and with low interest rate environment, you are paying off your loan faster. Lastly, the
capital appreciates having owned the property for the long term thus maximizing your
return on investment.
What to look for in the property
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Invest in markets that have sound financial and demographic fundamentals. See
Chapter 2: Where should I Invest?. Invest in properties where historical rental
vacancies are reasonable to maximize the property value. Is it a desirable place to
move to? Are the rents in line with the market averages. Choose markets with historical
strong performance, low vacancy rate and a great neighborhood. Make sure the price
you are paying is line with comparable properties. Negotiate a lower price or look for
ways to increase the income and reduce expenses there by increasing the value of
property.
It’s hard to find good quality buildings in good cities. Most deals are not on MLS and are
done privately from investors to investors.
Some specifics to think about and questions to ask yourself

● Is the physical condition of the property in good shape? Look at the physical
condition of the property such as the building envelop, mechanical, plumbing,
electrical, any issue with major systems in the building that you need to spend
money to repair.
● Check out the zoning of the property, is there any potential negative impact?
● Does the building comply with by-laws, health and safety standards, and fire
code?
● Are there any illegal suites that were built or added it on without the owner
getting a building permit?
● Are you playing too much? Overpaying? Is the property price and cap rate in line
with the comparable properties in your marketplace?
● How much financing can you get?
● Is the estimate NOI sufficient to cover the mortgage payment? Do you have a
positive debt coverage ratio?
● Will the property generate a positive cashflow? If it doesn’t you should not have
touch it.
● What is your personal net worth? Generally, lenders require that you have 25%
of loan amount in personal net worth (15). Make sure you check with each lender
to see what their qualifications are.
● Do you have experience managing a multi-family building? You may need to hire
a professional property manager to look after the property. This is a good thing
as a property manager can handle the day-to-day operations and frees your time,
especially, if you don’t have the experience or don’t want to manage it yourself.
Cashflow
Unless the building generates a positive cashflow, it’s not a sound investment. The
exception is that you know you can fix the property and it’s NOI thereby increasing it’s
value. However, it does take time to stabilize the building so make sure you are able to
carry the expenses during this time to get the building to cashflow.
Some brief information about financing is below. You’ll need to check with your
mortgage lender/broker to see what the best source of financing is based on the
circumstances for each transaction.
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Financing the multi-family properties
Unlike financing for single family properties, multi-family investors will need to pay fees
to the lender to have your mortgage placed. There are two types of financing:
1. Conventional financing where the loan is provided by the banks or a private lender.
2. Canadian Mortgage and Housing Corporation (CMHC) is a crown corporation and is
more conservative when it’s assessing any real estate loan (CMHC insures lenders’
loan against default)
With conventional financing, your approval will be quicker than a CMHC loan. With
conventional financing, your loan is up to 75% of the market value (25% down payment)
with a 25 years amortization.
With CMHC insured mortgages, there is a significant turnaround time. CMHC finances
up to 85% of CMHC lending value, they rarely use market value and their lending value
is usually lower than the market value but there is the potential to get a 40 year
amortization with a new building. Why choose CMHC? CMHC has a lower interest rate
than lenders who provide conventional financing. A lot of large institutions and
organizations go with CMHC based on the fact the interest rate is lower and the longer
amortization timeframe.
If this brief look at multi-family investing excites you, I suggest that you learn more by
doing your own research. Perhaps, participate in workshops that will educate you and
provide you with a blueprint for multi-family investing. Totally immersing yourself and
fully understanding this strategy so you know what you are dealing with and are able to
take advantage of any deals that come your way.
Rent-to-own
What is Rent-to-own?
Rent-to-own investing is where a tenant rents your property but with the option to buy
it. There is not as much risk and you don’t need as much experience like the other
strategies such as flipping and multi-family investing.
You’ll get better tenants, little maintenance, cashflow, and a defined exit strategy. It’s a
good strategy, especially, if you are working full-time and do not want to worry as
much about leaky faucets and clogged toilets.
How does it work?
You buy a starter family property in a good neighborhood in your target city, but rather
than renting it the traditional way, you look for tenants interested in becoming its future
owners. There’s pride of ownership so they’ll treat the house like their own as they will
own it after the 2 to 3 years.
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Those interested in this type of arrangement mostly are people with credit issues
and/or who lack the money required to make a full down payment.
Once you find a tenant, you as the property owner will then set the purchase price
before you rent it out. The tenant must agree to a pay certain amount of the fee,
which can then become a down payment for the option to acquire the property at a
specific predetermined date in future.
That means the renter will be paying the rent and the predetermined amount you’ve
agreed upon on top of it, which will then go towards their purchase.
In addition to generating great cash flow, this kind of real estate investment is
preferred by investors in Toronto and across Ontario because the tenant pays an
amount that is above the market value in exchange for credits that accumulate
towards the purchase.
What’s more, tenants who opt for this kind of arrangement are mostly the serious type
who will also take good care of the property, knowing that it’s probably their largest
and a lifetime investment.
Like the property first rent-to-own, the tenant first Rent-to-own strategy is where you
have tenant choose the property and you buy the property they have chosen. The
entire process is the same with exception that the tenant buyer has chosen the
property they want. You need to make sure that it is a property you want to own for
the short-term as your name will be on title until they exercise the option to buy it from
you at the agreed upon price and time frame. The time frame is typically 3 years for
many Rent-to-owns.
Many tenant buyers cannot afford the property as they have damaged their credit and
can’t get a mortgage or they do not have enough down payment and want to ensure
that they are saving for the down payment while renting the place and assured the
price of the house. It is a win-win for both investor and tenant buyer, as the investor is
ensured a sale of a property (an exit strategy) and the tenant buyer gets the property
for the negotiated price after the 3 years, especially, in a rising real estate market it
may be a bargain.
Making money with RTO
1. Upfront option payment – a deposit that the tenant pays in advance prior to moving
into the house. Goal is to collect between 2-5% of the price of the property as this is
credited towards the tenants down payment when it’s time for them to buy it.
2. Monthly cashflow – cash left over after paying monthly expenses. Expenses
include mortgage payments, property taxes, and home insurance. Repairs and
maintenance are the responsibility of the tenant buyer.
3. Property appreciation - The amount the house goes up in value per year. Offer the
tenant a two year or a three year purchase price. The price is set in advance in the
lease option agreement.
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4. Mortgage pay down - While owning the property, a part of the mortgage payment
goes towards interest and a part goes towards the principal, your tenant buyers are
paying down the mortgage on the property. You are building equity.
What are you looking for in a property?

Look for a starter home in a nice neighborhood. The price of the starter family home
should be less than price of the average detached home’s selling price in the area you
have chosen. You can get this information from your local realtor’s association for free
online or in person. Why focus on starter homes?
● If the house is too expensive, the tenant buyer will never be able to come up with
the down payment at the end of the term. The whole point is that it’s a win-win
and you as the investor make a great return on your money and gets helped into
home ownership.
● The starter family market is very important. In a downturn this market is the least
impacted by price fluctuations. In a booming economy, people who are renting will
often turn into buyers and they buy in the starter home market and won’t jump into
the luxury market. In a downturn, those who are in luxury home market can no
longer afford those homes and they will downsize into the starter family market.
So regardless, if the real estate market is doing well or poorly, the starter family
market is stable. Choosing a starter family home ensures success in different
economic environment.
Like any real estate investment, look at the location that has amenities to attract a
wide range of tenant buyers:
● Park and schools in the area for families with children
● Transportation and access to transportation to get across the city.
● Restaurants and grocery stores
How to find rent-to-own deals
● Look for a local realtor who knows the area very well and who specializes in
RTOs. Look at their online presence, google reviews to see what kind of feedback
they get from their customers, asking other investors for referrals.
● Attend real estate meet ups and meet other investors who are investing in RTOs.
● Drive by the neighborhood you plan to invest in to get a good feel at different
times of the day and in the evening. Do you feel safe? Do you see families out on
the streets? This is a good indicator that you want to further check out for
investing.
● Attend local open houses in the neighborhood. It’s a good way to get a good feel
for the neighborhood and a lot of the attendees of the open house are people who
live in the area. Ask lots of questions and you’ll get information about the
neighborhood.
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When checking out the property:

● Is the foundation good?
● Does the roof look like it will last at least 5 years? 10 years would be better.
● How is the plumbing? Furnace? Electrical? As these are your largest expense,
you want to make sure these items are in good working order so that you do not
need to make capital investment into the property while owning it for the short
term (as Rent-to-own arrangements are typically around 3 years).
● Is there a garage? A garage is not a necessity but add value for potential tenant
buyers.
Make sure all the high cost items last 5 to 10 years for the duration of your ownership
of the property so there is minimal maintenance costs as not all Rent-to-own work out
the first time and you want to make sure that you can offer it to the next tenant buyer
without incurring more expensive maintenance and renovations.
All the maintenance and repairs that are typically passed onto the landlord are the
responsibility of the tenant buyer. This means that the typical surprise maintenance
that can wipe out the monthly cashflow at the moment’s notice.
What are we looking for in a tenant buyer?

Why would we want to deal with someone who has bad credit? The goal is creating a
win-win relationship. We help people with bruised or damage credit get on the path to
home ownership. Maybe they need time for their credit score to be recover now that
their debts have been paid. Maybe they had bankruptcies in the past and need it to
fall off their credit report before they get back into the market again. They can be
going through a separation or divorce and the funds that they need for their down
payment are tied up even though their income is really good.
Target tenant buyer is some one with bad credit, no debt and good income. This is
important to determine up front as the tenant buyer doesn’t have a high enough
income to buy the house at the price we want them to buy at the end, we are not
setting them up for success and they shouldn’t be in the program. Likewise, if the
tenant buyers have major credit issues with judgements against them, recent
bankruptcies, are on consumer proposals, have large amounts of debt, they need to
take care of these issues first before they enter RTO program.
The tenant buyer also needs to work with the bank to get financing for the property at
whatever option price set which is two to three years option price.
How to find the tenant buyer:
● It may vary from city to city but some that work well are Facebook Marketplace,
Kijiji, Padmapper, Renters.ca, Google Ads, Craigslist, Gottarent, or even create
your own online website to drive traffic to it with paid advertisement.
● Some tips about advertising RTOs so it’s not lost in a sea of rental ads:
o Paint a picture with words, tell a story of what it’s like to live you in house.
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o Make listings stand out.

o Get professional pictures done so your house shows well.
o Offer 24/7 recorded message as you don’t want the phone ringing at all
hours of the night; it also gives people more time to listen to detailed
information about the home but also screens the tenant to let you know
the amount of down payment they currently have so you don’t waste your
time taking potential buyers out to the property.
o After getting a list of potential buyers, book all showings at the same time.
By doing this, you create sense of urgency and competition, they will
make decision and take action.
o Have a sign in sheet is important as it shows that other people are
interested in the home.
o Make sure you get them to fill out the application on the spot at the house
or if they say they have to think about it, they probably won’t get back to
you. Remind the tenant buyers to bring all pertinent information like pay
check stubs, or any identification to make the application process
smoother.
The Option or Sale Price

The option price is the price the tenant buyer will pay for the home if they buy it.
Usually, there is a two year price or a three year option price which is different. This
price is set in advance when the lease option agreement is signed. You are obligated
to sell them at this price regardless of market value. This is the downside of RTOs.
There is the potential that the property has appreciated in value so much that you
could be selling the property for a lot less than it’s market value. Or there is a chance
that the house’s sale price is higher than the market value. If you pick the right
market, it should be a win-win for both of you. How do you determine this buy out
price?
You need to look at the year over year increases in the market you are investing in.
You can get this figure free by asking the realtor you are working with or the going to
the realtor association. Take a look at the last 5 to 6 years to see what the trend is.
This determines what price your market will support. The price should not be set too
high otherwise the tenant buyer will not be able to get a mortgage on it as the bank
will not approve as they won’t perceive that it’s worth what you want to sell it for. We
want to pick a year-over-year figure that is a little less than the average, this offers the
tenant buyer additional incentive to buy with you rather than waiting 3 years then
going buying the house on the free market.
How did we determine the Option Price or Sale Price?
● Use the year-over-year average increase for the area you are investing in. Use a
figure slightly more conservative than the year over year average.
● Add any initial expenses (e.g. closing costs) to the purchase price to get the total
purchase price.
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● Apply the year-over-year percentage to the total purchase price for each year the
term of RTO program, in most cases 2 or 3 years.
● Run a few scenarios with different sale prices and rent credits before presenting
your win-win RTO to the tenant buyer.
Rent credit
The option payment contributes about 2-5% of the down payment that is required by
the bank. How about the rest of the down payment that is needed? Each month the
tenant buyer pays their rent on time, they receive a rent credit towards the down
payment. It not a physical credit each month but a future credit towards the down
payment of the house that you offer when it is time for them to buy. It is determined at
the beginning of the term and the total of the credits usually add up to 2% or more of
the required down payment. The rent credit along with option payment means that
the tenant buyer will have a little more than 5% for the down payment towards the
purchase of the home, as well as, the closing costs.
How did we determine monthly rent credits?
● We can get the market rent from online like Facebook Marketplace, Kijiji,
Padmapper, Craigslist, or any regular site where rental units are advertised.
● We need to determine what rent we can get from a straight rental for a single
family house that is priced at. In our example in Table 9: Setting the Rent Credits,
the market rent for a single-family home is $2400 per month.
● Rent credits should give tenants the incentive to pay the higher monthly rent in
exchange for a credit larger than the rent increase. If the monthly rent is set at
$2500 and the rent credit is $100 ($2500-$2400), that is not enough of an
incentive.
We give the tenant buyers the choice of rent credit savings. Here is an example of the
different rent credit savings available and the rent credit the tenant buyer would
receive in Table 9: Setting the Rent Credits.
In the No Savings column it’s a traditional rental and they pay $2400 a month in rent.
In the Gold Savings, they pay $100 more but earn $200 in rent credit. By paying $100
more a month the tenant buyers are doubling their savings to $200 per month. By the
2nd year, they would have saved an extra $4,800 towards their down payment. And in
the last column, Super Savings, they pay an extra $200 a month and get $400 in rent
credits. By the 2nd year, they would have saved $9,600 towards their down payment.
The credits add up quickly for the tenant buyer. For the investor, the credit doesn’t
come out of pocket but at the end when you sell the house to the tenant buyer. The
extra rent serves as extra cashflow over and above the traditional long term rental.
If they don’t purchase the home, the rent credits are non-refundable. Monthly rent
credits are an incentive so that tenant buyers do not miss a rent payment. If they do
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miss a payment, it’s like throwing away free money and they jeopardize the rest of the
down payment by the end of the term.
Check out Chapter 7: Analyzing Deals to see how an RTO deal would be analyzed.
Table 10: Setting the Rent Credits
No Gold Super
Savings Savings Savings
Monthly House $2400 $2500 $2600
Payment
Monthly Savings $0 $200 $400
Credit Earned
One Year Savings $0 $2400 $4800
Credit Earned
Two Year Savings $0 $4800 $9600
Credit Earned
Flipping Property
Why do you want to flip houses? Is it to generate income and put it into long term buy
and hold property or into another investment? Multi-family, legal secondary suite?
Flipping is considered an active pursuit. There is a lot of hard work and not at all
HGTV-like. You need to love it for you to stay the course. Hard work will pay off but
flips are not pretty. There are long hours and not at all glamorous as you see on TV.
What is it?
The idea is to find a property that needs cosmetic fixes such as countertops, paint,
carpet, and the like and sell the property for a large profit a few months down the
road.
Flipping can provide a quick turnaround on your investment and avoids the ongoing
hassles of finding tenants and maintaining a property, but costs and taxes can be
high.
Flips may take longer than the typical 4 to 6 months, just make sure it is worth return
on investment is worth the carrying costs and the time. If the property is too run
down, it may not qualify for conventional financing, and you may need to buy it with
cash. So, having money partners who have deep pockets would be beneficial.
Understand your market
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Understand the cities that you are flipping in. Understand your markets and have
people in those markets that will help you out. You will need to build relationships with
realtors and trades people in those markets.
Do your research to find out what’s selling, what’s not selling, and how much the
houses are being valued at. You will need to know the neighborhoods to the point that
when you are driving around there, you can pinpoint the houses that you can rehab,
and know that if you can get it for a certain price then you’ll be making money. Take
your time to learn and educate yourself. Don’t bounce around in different markets until
you know that one market very well.
Building a Team
It’s important to have a team of professionals who has the expertise to help you. Who
should you have on your team? Build your core team members:
● Real estate agent who knows the market you are investing in
● Lawyer who understands real estate investing
● Contractor or handyman who knows your style of investing
● Insurance broker who understands flipping properties
● Lender who understands what you are doing and has the ability to get you funds
for your projects
Having a team in place before finding a deal is important. You will know how much
funds you have when you are sitting down with sellers to discuss the deal. Knowing
what you can offer sellers will help you agree quickly on the price.
Gathering trades people and scheduling them may be a challenge, especially, in a
competitive market where trades people are in demand. Assembling the resources
both people and materials for the renovations and manage the cost overruns if the
renovations do not go according to plan will be challenging as a project manager. If
you decide a general contractor will responsible for managing the project, you’ll be
managing the “manager” and making sure the project is completed on budget and on
time as cost overruns can sink your profits. This is why many flippers do this full-time
and are extremely hands on.
Finding deals
You know your target neighborhood, where your funding is coming from, and have a
team in place, it is now time to find the property. Drive around and talk to those in the
neighborhood you are interested, also known as “Driving for Dollars”. Knock on doors.
Handout business cards and flyers in the neighborhood. Tell your friends and neighbors
and everyone you meet what you are doing. Word of mouth is still the best way to find
deals.
Have others help you look for deals. Developing relationships are key as you may get
more business from friends and family of the seller, they may know who else would like
to sell and don’t want the hassle of going to the realtor or who may not have the time to
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list on MLS. Maybe it’s someone who is in the neighborhood everyday mowing the lawn
or picking up old appliances that who can help you get your name out there.
Remember to provide incentives for those who are referred to you. The referral fee can
be any monetary value but make sure it’s worth their effort to refer you. Flippers have
paid $1,000-$1,500 as referral fees. You’ll get a deal, and the person who referred a
friend, colleague or neighbor will get a referral fee.
You can launch a marketing campaign using a handwritten letter (a personal touch) that
says “We buy houses for cash”, who you are and your contact information. Just make
sure the title is clear and stands out as there is a lot of junk mail competing with your
flyer. The letter marketing campaign is still one of the most cost-effective way of
marketing. Even if you don’t get deals right away after dropping the flyers or the
personalized handwritten letters, those interested may call you months after or they may
know someone who is interested or is in trouble and need to sell their house fast.
Circumstances may have changed, and some distressed sellers may need to sell their
house quickly due to a divorce, unemployment or they just can no longer afford to keep
their house.
Posting what you do on Facebook, Instagram, YouTube and on your own website, is
another way to market yourself and your company. Online marketing can target the
specific audience you want. You’ll have to put time in creating an online presence and in
the long run, it will bring you not only deals but potential money partners. Be consistent,
whether in whatever strategies you decide to use whether it is sending flyers via
Canada Post or creating an online presence you will need to do it over and over again
to get results.
Be prepared to win the deal
If you find a property that fits your criteria then be prepared to offer a deal to the seller,
especially, those properties that are not on MLS. Be prepared to go in with an offer
without conditions (inspection or financing) to win the deal. If you do not have the
expertise, partner up with a contractor or a property inspector so you are ready to look
at the property quickly. Have the paperwork ready so that you can offer sellers the
deal on the spot if the numbers on property works.
Estimating the cost of the rehab
Build relationships with contractor or handyman. Have a contractor walk through and
be presented as part of your team. Once you have more experience, you may no
longer the contractor to walk through the property and can probably estimate the
costs yourself.
Be organized and create a checklist of what needs to be done to the property. When
you leave the property you have a good idea of how much work is required in the
property to get it back on the market.
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Analyzing the numbers

The table below is an example of the carry costs for a starter home in Barrie, Ontario.
The estimated After Repair Value (ARV) in this example is $610,000.
Where do you get this number? To get the ARV, you will need to estimate the
property’s current value and you will need the estimated value of the renovations
based on the market you are investing. Find out what the real estate comparables or
comps as they are commonly referred as. Your realtor can help you with the
comparables for the properties in the neighborhood.
In this example, the property is expected to be flipped in 6 months so the carrying
costs reflect this timeline. If you flip a certain kind of property in certain areas, your
“cookie” cutter type of property, then your lending fees, legal fees, and other carrying
costs are similar and you can use a formula to calculate what it will cost you to carry
the property during the rehabbing. You now have a systematic way of going in and
quickly analyzing the numbers to see if the property will work for you.
Table 11: Carrying Costs for Renovations

Starter home
Purchase price $400,000

Rehab costs $80,000
Carrying costs:
Lending costs (8.5% financing $26,000
the property and rehab costs)
Legal fees (both buyer and $6,000
seller legal fees)
Land transfer taxes $4,000
Utilities $1500
Insurance $800
Realtor fees (based on ARV $30,000
and selling commission)
Total carrying costs $68,300
The Rehab
You will need to produce a detailed scope of work so you can handoff to your
contractor so they know what to do. What type of finishes? What kind of materials?
What paint colours are going to be used? A detailed scope of work needs to be
completed so it is easier for any contractor to price the job and give you an estimate
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without going back and forth. You will need to decide if you will be acting as the
contractor or you have the contractor managing all the trades for you. It is a very
time-consuming job. Don’t under estimate the amount of time it will take to be the
general contractor, especially, if you have a full time job.
You want to make sure you are on site as much as possible. Being on site will ensure
that the work is being done, you can address any issues right away and timelines are
being met. If you have a contractor who is doing this for you, it may be better to
spend your time finding other deals instead. You need to decide where to best spend
your time.
When the renovations are almost done, it is time to list the property. Time is money so
make sure you have everything lined up ready to go.
Listing your property
Contact an agent and list the property. It’s important to stage the property properly so,
the house shows well and buyers know what rooms fit where and they can visualize
themselves in the place. Showing the closed permits as part of the marketing
materials will help you sell the property.
What kind of return should you be targeting?
Some flippers need to have a certain ROI and others use a dollar amount. An investor
we know will not touch a property unless he can make a minimum of $40,000 or
$50,000 profit on the flip. He says $20,000 or $25,000 is too little as unforeseen
circumstances can eat into your profit. You will need to decide for yourself what you
are comfortable with. As always, with any strategy you should analyze the risk and
reward potential.
Flipping properties can work for you if you know what you are doing. If you don’t have
the experience or expertise, make sure to partner with someone who does. Learning
from an expert first before you decide to do this yourself is always a good idea as
there are many moving parts in flipping that can be an expensive lesson if you don’t
know what you are doing.
Small Scale Development

I will be providing a brief introduction to this strategy as it’s not the focus of many of
our clients but wanted to briefly give you a taste of small scale development as some
of my close friends have been employing this strategy. There are many opportunities
out there and this is just one more strategy that is possible for real estate investors. It
is not for everyone as you’ll need some real estate investing under your belt so it’s
definitely not a beginner strategy.
Before you decide to go ahead with small scale infill development, find out more
information or better yet get a mentor or coach who is knowledgeable about this
strategy. It will cost you less money, time, and headaches in the long run.
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What is infill development?

Infill development is developing vacant or under used parcels of land within existing
urban areas that have already been largely developed.
What kind of infill development are we talking about? These developments are small
scale and are for the investor who does not have millions of dollars in capital to invest.
How do you start? What to look for?
As a starting point, you can look at Google maps for an aerial view of the
neighborhood to see if there’s extra land and go knock on some doors to see if there
is a possibility of selling. Or go for a walk around a neighborhood you are interested in
to see if there’s vacant land next to a house or an old garage or shed that can be
taken down and a new building put in place. Maybe you know of an investor who
already owns property where the lot can be severed, and another house can be built
on the property. It is not about rezoning the property but severing the land into two or
three extra lots.
Opportunities like these exist everywhere. You need to be creative. Look for corner
lots, extra deep, wide lots and lots you can potentially combine with other lots to build.
You need to have a paradigm shift to realize the actual opportunity.
You need to look at property as a developer and unlock the potential value you see by
working with professionals you trust. You may never imagine that a house or two
houses can fit into a piece of property until you’ve actually worked it out on paper.
Nowadays, people do not need those big yards anymore. There is definitely value you
can unlock. There is less competition with this strategy. Small scale development is
too small of a project for big builders and the average investor perceives infill
development as being too hard for them.
I imagine most of you who are in urban centers like around in and around Toronto
have seen this before. The most common example is a house gets torn down and
then it's replaced with two semi-detached properties that are then worth a million
dollars each. This strategy does not work in the areas that we invest in, mainly
Hamilton, Niagara and Kitchener. The ratio of land value versus the overall property
value is actually a lot lower when compared to Toronto. If you decide to tear down a
house with the intention of building something new to replace it, you will need to
replace it with very high density housing to make the money back. As always, run the
numbers to see if tearing down the house and building two semi-detached on the land
will make you money as a lot of times it will not because construction costs are very
high.
What does a small scale development look like?
My good friends, Charles Wah and Andy Tran, have been focusing on small scale infill
development in the past few years. Now along with Stephen Ford, a general
contractor, who is also a client, they are a team of three who are passionate about
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infill development projects and are currently involved in several projects in the Golden
Horseshoe.
Charles of Gateway Group is an accomplished land developer and investor in the
Hamilton region. Charles has navigated the successful land development for over 150
housing units. Andy Tran is a highly sought after designer and consultant for second
suites in the Greater Toronto Area. He is an advocate and influential voice for urban
intensification. Andy’s company, Suite Additions, has designed over 160 legal second
suite conversion projects. Stephen is an experienced real estate investor and home
builder. He has supervised over 1000 new home construction projects across the
Greater Toronto Area, and is the owner of Stefor Group, where he is a consultant for
new home construction projects. Each bring a unique skill set and experiences in
development, design, and home construction. The information provided in this section
is based on their experiences.
One of their projects was a property they bought in St. Catherines. They kept the
existing house and rented it out. Then, they severed the rear yards creating two new
extra lots.
With their strategy they prefer to keep the existing house, if possible. They look for
houses that are on the one side of the land so that a lot of value is maintained. They
may need to renovate the house but as long as the foundation of the house is good.
This way they can get conventional financing for their mortgage with a 20% down
payment. The goal is to keep and rent out the existing house. The monthly rental
income will mitigate the costs of holding the property. This will provide income while
the property is being developed. It is especially important to have the expenses
covered or partially covered as delays can happen.
For Charles, Andy and Stephen their St. Catherines project was delayed for a year.
Why did it take so long? They got rejected by the committee of adjustment as they
were going through the approval process to severe the lots to build their
semi-detached houses. They did not agree with the decision because they thought
they had a very strong case as the planning staff at the city had given them their full
support. It was a very frustrating time (costing them another $20,000 in consulting
fees) as no reasoning was given by the committee about why they were rejecting their
proposal. As there was no opportunity to address their concerns, they decided to go
through the appeal process. With most of their expenses covered they were able to
take the time needed with this development project.
What’s the risk and reward potential?
It’s important to look at the risk versus reward profile. As with any investment, you are
trying to minimize the risks by covering all bases to increase your chances of
success. Thus, the chance of succeeding is higher than losing. If enough projects are
done over time, you’ll increase your chances of having a positive outcome as no
single project is guaranteed. You need to analyze for the best case, middle case and
worst case scenarios as you go through the proforma and budget for the project.
Erwin Szeto 64
What’s the other reward?

Neighborhoods are being revitalized. You get to know the people in the neighborhood.
Charles, Andy and Stephen have seen their development projects spur other
development projects within the area. They do not see this competition as bad for
business as there are more than enough opportunities out there for everyone. Infill
development is best for those who have been investing in real estate for a while. It
makes sense as a next step for many real estate investors who can take some small
losses, but there is the potential for a big gain at the end.
There are lot more details for infill development, but I’d like to give you an idea of the
possibilities using rough numbers provided by Charles, Andy and Stephen for their St.
Catherines project. They’ve been generous to share some numbers and this example
below is only snapshot of the first phase of their project.
What do the numbers look like?
St. Catherines Project
The house was purchased in February 2019. The house is on one side of the land.
The house on the property was considered a “dump” and was not renovated before
renting it out. At the time, Charles, Andy and Stephen had only severed the property
into 3 lots and were deciding on their next steps. The potential is there for them to
build the new houses themselves.
Some numbers below illustrate the potential of infill development. These are rough
figures only. Use it as an example of some of the costs involved but by no means
totally accurate as the figures have been rounded up or down to make it easier for
illustration purposes.
Phase 1: Severing the lots
● Purchase price: $320,000 – paid a premium for this property
● Down payment and closing costs: $80,000
● Mortgage: 80% Loan to value
● Soft costs: $60,000
● Rent: negative cashflow of $100
● Total capital invested: $140,000
What are their options now that the lot is severed?
#1: Build the new houses themselves
#2: Hire a builder to build the houses
#3: Sell the severed lots
Having severed the land, they now have three lots. The two new lots are 55ft wide
by 70ft deep. They have not had the lots formally appraised but think they are worth
$100,000 for each lot.
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With an investment of $140,000, they now have two lots worth $200,000
conservatively. They have created $200,000 worth of extra value. If they decide to
build two semi-detached homes on the lots, more value will be added. There is also a
great rental potential if they decide to build the two new semi-detached homes with
basement suites. The beauty of infill development is that any newly constructed units
after November 2018 is not subjected to rent control in Ontario. As well, as these will
be brand new, they can charge premium rents or if they decide to sell, they can sell at
a premium price.
Should they decide to build the two new semi-detached houses, they could then
refinance to pull out their original investment after the build. It will be a balance
between holding the properties and redeploying the capital for more development
projects.
If they do decide to build the two semi-detached houses as Phase 2 of this project,
what do the estimated expenses and reward on their investment look like?
Phase 2: Building two semi-detached houses
At the time, if the estimated cost for building both semi-detached houses is $450,000
and each semi-detached house is worth an estimated $500,000 to $525,000 then
conservatively the semi-detached homes are worth $1,000,000 in total. Potentially,
with estimated expenses of $700,000 for the property, hard costs, soft costs, and build
costs, the equity created is around $300,000.
By creating purpose built secondary suites in each of the semi-detached homes,
thereby, creating four new rental suites, the potential rent is estimated at around
$6,900.
Combining the second suite strategy along with infill developments has created home
runs for many investors.
In Summary
This chapter described the different types of real estate investment
strategies available for anyone looking to invest in the Toronto and surrounding areas.
There are more real estate investment ideas out there, but before you look for the
unknown, you are better of giving either of these opportunities a try.
In the next couple of chapters, we will be focusing on how to finance your investment
property and building your own power team. As with any investment, do not forget to
do your own due diligence and educate yourself.
Find professional help when you are in doubt or unsure of the move you want to
make. And when doing so, remember to only work with reliable and reputable
investment consultants and property management companies with a proven track
record.
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Build your own team of professionals (see Chapter 6: Building Your Power Team) to
ensure you have the right people who are knowledgeable and can help you with your
real estate portfolio and avoid costly mistakes, especially, when starting out.
As with anything new, it can be overwhelming at the beginning, delve in and learn as
much as you can but there comes a time you can not do it all yourself.
Join real estate networks to keep up with the latest information on rents and
government policies that may affect your real estate portfolio, however, seek
professional help when you need to do so as you can work on higher ROI items that
require your time and especially when you don’t have the required expertise.
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Chapter 4:
Financing and Money Plays
Understanding Real Estate Financing

In Chapter 3: What should I invest in?, we looked at the different investment vehicles
you can take to invest in real estate (such as single family homes, legal second
suites, multi-family residential real estate, and more), as well as some of the different
strategies (buy and hold, and flipping) you can use to make money in real estate.
Do you need to have a lot of money to invest in real estate? The short answer is no.
The longer answer is more complex. There are numerous strategies that investors
use to invest in real estate without having a lot of cash.
You’ve probably heard of no money deals. Not exactly no money, the fact is you are
not using your money but other people’s money (OPM).
Unless you have a lot of money on hand, you will need to finance your purchase
some how. The following is a list by no means comprehensive, but it will give you a
good idea of the many ways to finance your real estate investment. Doing your own
due diligence when it comes to financing can save you a lot of money and a lot of
time.
I suggest you consult a mortgage professional to help determine how to finance your
real properties depending on where you are on your real estate journey. For those
starting out, it’s best to have a plan in place before you buy your first property so you’ll
know what to expect in terms of financing and if the mortgage lender you decide
today will affect how you qualify for future loans.
It is a good idea to be updated on any changes to the housing and lending rules that
can make financing properties harder. In the beginning of 2018, the government
implemented a stress test aimed at assuring the lender that the home buyer could still
afford the mortgage if interest rates were to rise. It meant that buyers would now
qualify for a smaller loan amount. It was an attempt to cool down the housing market.
All Cash
This is the easiest form of financing, as there are typically no complications, but for
most investors (and probably the majority of new investors), all cash is not an option.
Additionally, the return given from an all cash deal will not be the same as when
leveraged. As shown in the example in the first chapter with the story of Sue and
Anna, you’ll get a better return on your investment if you purchased using financing
rather than all cash.
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Conventional Mortgage
Conventional mortgage loans can come from a variety of sources, such as banks,
mortgage brokers, and credit unions. Conventional mortgages do not carry any form
of high-ratio or lender insurance premium. A high ratio mortgage exceeds the 80% of
the property value and must be insured by government backed institutions like
Canadian Mortgage and Housing Corporation (CMHC) or Genworth. There are strict
rules that may make conventional financing hard to obtain, especially for real estate
investors and those who are self-employed.
Financing your investment property can produce significantly better returns than
paying all cash. Most investors choose to finance their investments with a cash down
payment and a traditional conventional mortgage.
What do you need to know about financing? I’ll not go into much detail here but
consult a mortgage specialist who knows about the latest information on mortgages
and how to place them.
Here is a basic list of things you will need to know about mortgages:
● Interest Rate - variable or fixed, this will really depend on your situation and the
type of property you decide to buy and how many properties you already own.
● Amortization - 25 years is the norm but there are 30 year and 40 year (now rare)
mortgages available, you’ll need to qualify for
● Types of loans available – mortgage only, mortgage with a line of credit
(HELOC), mortgage loan plus improvements
● Down payment - how much of a down payment do you have for the property, for
most rental properties, it’s a minimum of 20% but it can be more dependent on
the property, the number of mortgages you already own, and your financial
situation
Interest Rates
A low interest rate environment is a driver for increasing demand in housing,
especially, in the Greater Toronto and Hamilton Area. Interest rate for mortgages has
remained very low for the last 15 years. In Figure 3 you will see a comparison
between a 5-year fixed vs. a variable mortgage rate. As of this writing, the prime rate
in Canada is currently at 2.45%. Prime rate is important for those who hold variable
mortgage rates.
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Figure 3: 5-Year Fixed vs. Mortgage Rates from 2006 - 2020
Source: Ratehub.ca. Variable or fixed mortgage rates (June 12, 2020). Reprinted with
permission. Retrieved May 1, 2021 from
https://www.ratehub.ca/variable-or-fixed-mortgage
Owner Financing
Sometimes, the owner of the property you would like to buy is able to fund the property.
You will simply make your monthly payment with them rather than the bank or a lending
institution. Typically, the owner will own the property free and clear and does not have an
existing mortgage. Make sure that all legal documents are in order so that you do not
have any issues in the future. If the conditions are right, owner financing may be a great
option without using a bank.
The Joint Venture /Partnership

For real estate investors who do not have enough cash and/or credit available, having
joint venture partners can help you grow your portfolio substantially. The partnership
can be for any real estate strategy – legal duplex, flipping, rent-to-own, etc.
Joint venture partners not only share risk of owning the investment property but also
may share their knowledge, talents, and skills.
You may be the real estate expert responsible for identifying the property and putting
the deal together. You can also be the money partner qualifying for mortgages. You
are hands off and let your Joint Venture partner handle everything else and still earn a
better return than the average mutual funds can get you.
Erwin Szeto 70
You should put everything in writing and come up with what is expected in the
partnership in a legal agreement so that all partners are clear on the roles and
responsibilities involved to eliminate any issues down the road.
Maybe just as important, make sure your partner has some skin in the game because
that will mean they can take more ownership of whatever is involved in the venture.
Private/Hard money lenders
A private money loan comes from sources as family and friends where relationships
are the basis of the loan. For these types of loans, make sure you come to an explicit
agreement on terms of the loan.
Hard money lenders are in the business of lending money and have a process in
place with established criteria for you to apply for the loan. They will lend you cash to
buy property in exchange for a specific interest rate for a specified time period.
These types of loans can used on projects that the bank may not turned down or are
not comfortable lending (e.g. flipping).
Home Equity Line of Credit
Many investors choose to tap into the equity in their own primary home to help
finance the purchase of their investment properties. Banks and other lending
institutions have many different products, such as a HELOC (a Home Equity Line of
Credit) allows you to tap into the equity you have already built up. A Home Equity
Line of Credit is a line of credit secured by the property. It is sometimes called a
re-advanceable mortgage.
Having a re-advanceable mortgage allows the homeowner to pay off their mortgage
while increasing their HELOC at the same time. As the HELOC is secured by the
property the interest rate is lower than a personal line of credit.
Banks will typically only lend up to a certain percentage of your home's value –
sometimes 80% of the value of your home - but this percentage differs between
lenders.
HELOCs are an important arrangement to have when looking into acquiring more
investment properties. Many real estate investors have a HELOC on their principal
residence then use the HELOC portion to fund the down payment for their investment
properties.
How does this work?
For example, if you have been approved for total HELOC of $450,000 but you only
need $400,000 to finance the property. You have $400,000 mortgage and $50,000 in
the line of credit portion. You only pay the negotiated interest on the $50,000 if you
use it.
When you pay the mortgage every month, you decrease the mortgage amount while
increasing the available funds in the HELOC.
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Using a mortgage calculator, the table below shows what happens when you pay off
the mortgage of $400,000 based on an interest rate of 4% and a 25-year amortization
with a monthly mortgage payment of $2104. By year 5, the total mortgage amount
would be $348,215. You would have paid off $51,784.95 ($400,000 minus $348,215).
The principal you have paid off is now available for you to use in the HELOC.
Table 12: Mortgage Pay Down
Year Principal Principal & Interest Principal New Principal
Outstanding Interest Outstanding
Payment
1 $400,000 $25,249.08 $15,695.81 $9,553.27 $390,446.73
2 $390,446.73 $25,249.08 $15,309.86 $9,939.22 $380,507.52
3 $380,507.52 $25,249.08 $14,908.32 $10,340.76 $370,166.75
4 $370,166.75 $25,249.08 $14,490.55 $10,758.53 $359,408.23
5 $359,408.23 $25,249.08 $14,055.91 $11,193.17 $348,215.05
Source: RBC. Royal Bank Calculator. Retrieved May 9, 2021 from:
https://apps.royalbank.com/apps/mortgages/mortgage-payment-calculator/
Why is this important?

1. The Interest is tax deductible
If the money is used for investment purposes, the interest that you pay can be tax
deductible. This would decrease your tax liability.
2. The money in the HELOC can be used for another investment

The funds in the HELOC portion can be used as down payment for another property
or to fund other investments like stocks or second mortgages. In the example above,
$50,000 was the original amount available as it was the approved amount, now an
additional $51,784 is available as the mortgage gets paid down.
What can you buy with a little over $100,000? What happens if you have HELOCs on
2, 3, 4 … or 10 properties? Something to think about as you grow your real estate
portfolio.
Another strategy I would like to mention is the Smith Manoeuvre.
Smith Manoeuvre
In the United States, homeowners are able to deduct the mortgage interest they pay.
This is not the case in Canada. Canadian homeowners cannot deduct interest paid on
their principal residence.
The Smith Manoeuvre is a strategy used to convert the interest you pay on your
mortgage into a tax-deductible investment loan interest. This way you turn bad debt
into a good debt. You need to be comfortable being in debt even if it is “good debt” to
make this work.
Erwin Szeto 72
The Smith Manoeuvre was developed by and named for Fraser Smith, a financial
planner. There has been a lot written about the Smith Manoeuvre over the years, if
you are interested in more information, read Smith’s book, The Smith Manoeuvre: Is
Your Mortgage Tax Deductible? to get an idea how to tailor this strategy so that it
works for you. Or speak to your real estate Accountant. Luckily, I married mine and
here’s what Cherry Chan, CA, CPA shared about how it’s done and how it can
increase your tax deduction. If you are unsure how this works or have questions,
contact your accountant to make sure you understand the details before you proceed
with this strategy.
Step 1: Get a re-advanceable mortgage on your primary residence/personal used
properties
The key here is to start with a re-advanceable mortgage. A re-advanceable mortgage is
a mortgage that allows you to increase the home equity line of credit as you pay down
your mortgage.
As you pay your monthly mortgage payment, your line of credit availability increases.
You can now BORROW MORE from your line of credit.
If you borrow from this line of credit to invest in stock or buy an investment property, the
interest on the borrowed fund is tax deductible.
Step 2: Use your after-tax earnings/extra saving to pay down your home
mortgage
Generally speaking, your primary residence mortgage interest isn’t tax deductible.
If you have extra cash available for investment immediately, you can first use your extra
cash to pay off your primary mortgage, which in turn increases the line of credit
available for investment.
Step 3: Use the extra line of credit available to invest in stock and real estate
You borrow against your line of credit to buy a house or invest in the stock market.
Interest from your line of credit is now tax deductible.
Word of caution though, if you borrow to invest in TFSA, RRSP and any registered
account, chances are, the interest would not be tax deductible.
The investment you use your line of credit to make must be outside of a registered
account.
Step 4: Keep up your paperwork for year-end tax deduction
If you use the extra cash/saving to invest, your primary home mortgage interest would
not be tax deductible.
Erwin Szeto 73
By transferring cash the proper way and taking advantage of what is available from the
mortgage terms, you are now making your primary home mortgage interest tax
deductible.
Like I said all the time to my clients, in Canada, you need to “earn your deduction”.
Earning your deduction means that you have to keep track of your paperwork, all the
transfer slips, deposit details to ensure that you can prove that the funds from your line
of credit is used for investment purposes.
Make sure you keep the documents until you fully repay the loan.
Step 5: Rinse and repeat
You can rinse and repeat with your savings – turning your non-deductible primary home
interest to deductible investment interest.
Commonly asked questions
1 . Line of credit interest is usually higher than my mortgage interest. Wouldn’t it be

beneficial to pay less interest?
It depends on your marginal tax rate.
Marginal tax in Ontario can be as high as 53.5%.
If we round it down to 50% for ease of calculation.
A 50% tax rate means that if you get to write off your mortgage, you save taxes for
approximately 50% of the interest cost.
Your deductible interest cost x 50% tax must be greater than the difference between
your mortgage interest and your line of credit interest.
Even if the numbers don’t work out, which is unlikely, you can also restructure your line
of credit into a low fixed interest rate mortgage. At the time of writing, I’ve heard
mortgage rates as low as 1.89% these days.
2 . My mortgage term ended. My banker suggested that I should combine my mortgage

and line of credit as one lump sum mortgage. Can I still deduct the interest against my
investment?
Absolutely. All you need is to keep all your initial documentation, your paperwork to
combine the line of credit with mortgage, until you eventually stop deducting the interest
cost.
Remember, paperwork is the key.
Just because CRA says that you are required to keep 7 years of documents, this does
not always mean that you don’t need to keep certain paperwork for longer.
Erwin Szeto 74
3. If I combine my primary home mortgage with my line of credit that I use for
investment purposes into one giant mortgage, how do I know how much interest I can
deduct?
The balance outstanding on the line of credit at the time when you combine it with your
home mortgage matters.
Say, at the time when you combine the two, you owe $100K on your Line of Credit
(LOC)and you used the entire LOC for investment purposes. And you also owe about
$200K on your home mortgage.
The new mortgage balance is $300K.
1/3 of the interest expense would be tax deductible
= $100,000 (LOC balance before the new mortgage is formed) / $300,000 (new
combined mortgage balance x Interest expense
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Chapter 5:
Build Your Power Team
If you’re going to win, you want the right people behind the bench.
In some chapters, I have touched on the need to build relationships and a team. This
chapter goes into a bit more depth. You will need to develop relationships along the
way as you cannot do everything yourself and you will not have the expertise. Start
cultivating relationships early on and keep them and they will be there when you need
them. It is not always about money. As you may have heard, people like doing
business with nice people who are courteous, respect others, and their time.
These are some of the professionals that you will need as part of your team. This is
not an exhaustive list by any means but will get you started. As you get established
and have a larger portfolio, it is best to have more than one set of professionals in
your network, e.g. lawyers, property managers, real estate agents as the one you
prefer to work with may not be available or cannot always accommodate you or have
the expertise to deal with the real estate transaction you are involved in. Your team
should change and grow as your portfolio grows but do keep in mind, loyalty gets
rewarded.
The best way to get a power team together is by referral. Do you know another real
estate investor who can recommend you their mortgage broker? Or their accountant?
How has it worked for them? Did they like their service? Did they do a good job? The
professional has been vetted for you. Having said that, your experience may be very
different so take everything with a grain of salt until you have experienced it for
yourself.
You should always have a list of criteria for each professional you would like to add to
your team. Some of it may just be rapport – someone you feel comfortable talking to
as you may need to ask many questions and shouldn’t feel intimidated or
uncomfortable asking the “dumbest” questions.
If you haven’t been through the process with any of these professionals, ask what to
expect, what they can do for you (what is their specialty) and what they expect of you,
as well as, the timelines/time frame.
Here is a list of general questions to ask or think about:
1. Do they own rental real estate themselves?
● If they don’t, how can they really advise you of something they know
nothing about? If there is a choice, it’s better to get someone who have
intimate knowledge of real estate investing as they are doing it themselves.
2. What kind of service do they provide you?
Erwin Szeto 76
3. Is it in line with other providers of the same service?

4. What exactly are you paying for? Are you paying for something you don’t need?
5. Are their fees straight forward and is it itemized so you know what you are being
charged? This is especially important when contracting for renovations. Having
the large job itemized will let you know the actual costs of each item/room and if
there any overruns you can follow-up with the contractor. This will be good for the
next renovation job you take on.
6. Do you feel comfortable talking to them?
7. Who will be working with you? Who will be working on your
file/documents/property? Is there a main point of contact in case you have any
issues or any questions? Be clear on how you are going to communicate with
your team.
8. Can you speak with someone who has used their services before?
9. What is their timeframe for completing X, Y or Z?
10. What are their credentials if you do not already know?
Accountant
Not all accountants are created equal. I guess that an said for many professions, as
well. If you decide to prepare the tax returns yourself, makes sure you have a
Chartered Professional Accountant (CPA) review your tax return and have at least a
yearly planning session to make sure you are not missing out on tax deductions. It
may be less costly in the end if you get your accountant to do your taxes if you own
many properties. The amount you save in taxes may be worth the cost of having one
you can turn to for advice in the long run. CPAs can advise you on incorporating your
business and with the help of a lawyer determine the structure that your
corporation(s) should be.
My partner and wife, Cherry Chan, is a professional accountant. She specializes in
real estate and small business accounting. She has been taking care of our multiple
businesses.
Some specific questions to ask and think about:
● What do they specialize in? If you don’t know then ask unless they have been
referred to them from a colleague/friend/family and you know what they
specialize in.
● Do they own their own business? Do they have a team? Who will be working with
you? How do their staff treat you?
● Can you understand what they are saying to you in plain English without all the
accounting jargon?
● How do they treat certain deductions? Are they too conservative? Are they too
risky? Do they know what they are doing?
● Do they have a process for handling tax returns? What do they need from you?
Erwin Szeto 77
● Can you meet with them virtually or face-to-face to discuss any issues or
questions? Will there be an extra fee for this?
Real Estate Agent

There are more real estate agents than ever. When I started in this business, I was
the only Hamilton investor specialist as in 99% of my business was in Hamilton
working with real estate investors. Today, I can name at least ten and I know it’s the
same in many cities. Real estate has attracted many as that’s where the money is.
You as the investor can be pickier than ever so it’s OK to have high standards. I’m the
child of tough Asian parents so I was always reminded that there is someone better
so why not take the time to seek out only the best of the best. Finding an investment
Realtor specialist with 10 years experience is not hard if you know where to find them.
Often, they are not promoting themselves on social media as they work almost
entirely by referral. Start by asking for a referral.
What to look for: Someone who knows the area very well, preferable street by street
so you as the investor need to know what kind of property is where and if any future
issues will arise. Someone who has the connections to trades and know how to coach
and walk you through the process and who is a successful real estate investor
themselves. Someone who has been through the process themselves.
Some one who has looked at many, many houses and can see the potential and know
what they are. Someone who can get back to you and has the answers at the tip of
their tongue. After all you are paying for their expertise. It is worth taking the time to
develop the relationship if you are a serious investor, you may not only be buying one
property from them but many, many properties in the years to come. It’s also best not
be a tire kicker (waste their time) because they won’t get back to you when it really
counts. Keep in mind, Realtors earn a commission when they make a sale. A great
Realtor can detach the potential for income with watching out for the client’s best
interest.
On our own team, we have over 100 investor clients who own hundreds of investment
properties in the top neighbourhoods for investment hence we are very familiar with
prices, tenant profiles, the finishes tenants will pay top rent for and of course rents.
Some questions to ask:
● How many years have they actively invested?
● Where are their investment properties?
● Are they local? Do they know the area you are looking at? Do they have
customers in this area?
● Do they have time for you? Or are they going to refer you to someone on their
time? Are you able to work with this person? Does the person have enough
experience?
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● Are they available when you need them?

● Do they own real estate investment properties?
● Do they know what the rents are like?
● Do they work only with real estate investors?
● What kind of transactions or properties have they done in the past?
● How many transactions have they done?
● Do they know of trades people they can recommend?
● Do they have impeccable ethics?
Mortgage broker/local branch manager

Working with an independent mortgage broker can be advantageous as they can look
for loans that you do not necessarily know about. They can help with private money or
hard money or just those lenders you cannot access.
In Canada, there are the six big banks Royal Bank, CIBC, Toronto Dominion,
Scotiabank, Bank of Montreal and National Bank. There are credit unions, as well.
You can go to your local branch and ask for a loan. They will most likely not know
about other sources of financing the property. Those working in your local branch are
not necessarily familiar with rental real estate.
Many times, mortgage brokers work offsite even if they are employed by the bank.
They have more flexibility when working with clients.
The banks do have their own mortgage brokers where new mortgages are negotiated.
Once you have secured a mortgage, the mortgage broker will pass your mortgage to
a bank/financial advisor to maintain this relationship with you. Just remember, a bank
employee can only offer you product offered by that bank when that might not be the
ideal solution for you.
I love banks for the mortgages they give me so I can buy more houses then refinance
and buy more houses. One must be strategic, however, if the goal is to own 5, 10, 15
or properties. There is a right way to do it and a wrong way. Make sure to get some
guidance on how and where to start.
Regardless, if you choose to work with a mortgage broker or go to your local branch,
you will need to provide documentation to finance your property. Make sure to have all
your documentation together and the process will go more smoothly for you.
Some specific questions to ask:
● What is their experience placing mortgages?
● Which lenders are they working with?
● What type of loan is best based on your situation?
● What is their strategy if you plan to buy X number of properties? Should certain
lenders be placed first before others to maximize the number of properties you
can buy?
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● What kind of loan can they get for you? What is the interest rate? What is the
discount?
● How much down payment is required?
● What are all the costs?
● What are the prepayment penalties?
● What are the timelines?
● What kind of documentation do they need? How far in advance to they need it?
Property Manager
A property manager will be a key team member if you do not plan to look after the
rental property yourself. They are your link to your tenant. Your tenant is your
customer. They will be paying you rent every month so it’s important to treat them with
respect and do any maintenance within a reasonable time period. Chose your
property management company with care as they are the ones who will be taking
care of your properties for you. You’ll be managing the property manager so it’s
essential that they know what they are doing and are not too busy to look after your
property for you.
Property managers are your long term key to success. On a personal note, I have
been through five different property managers in my career as an investor. It can be a
tough business but there are ways to make it easier. As the tenant is my customer
who pays me over $10,000 per year (how many people pay you $10,000 per year?), I
want them taken care of. I have instructed my property managers if there is a problem
and it costs less than $300, don’t even ask me, just do it.
For example, a mice problem. An exterminator is less than $300 and there is no way
I can take care of this myself so my property manager does not ask me, he just does
it.
Your property manager has to know they can do their job in taking care of the property
(your asset) and your customer (the tenant) and be paid to do so. One of my
favourite messages we received on a Monday from our St Catharines property
manager was we had a gas leak at one property and a mouse problem at another
over the weekend and he’d already taken care of it.
A bad working relationship is where a property manager has to wait for the landlord’s
approval to resolve a gas leak and a mouse problem. This is often the sign of a micro
managing investor.
Before choosing a city to invest in, confirm there are at least three property
management companies who you would be willing to hire. If there is not at least three,
I’m not interested.
● Do you specialize in certain areas? Do they specialize in certain types of
properties?
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● Are they knowledgeable about the issues in that community?

● Do they have enough resources to take care of your property?
● What is their process for maintenance? Is there a certain amount of maintenance
that would require your approval before it goes ahead? Some property
management companies will ask for approvals for any maintenance over $250 or
is the level under $500? It is good to be clear so that you can expect to be
contacted when there is maintenance pass a certain dollar value.
● What is their process for finding tenants? Is there a guarantee that the tenants will
stay a certain timeframe without you paying for placing them again?
● How do they handle problem tenants? What is their process for evicting tenants?
Do they keep you informed regularly when this is happening?
● How do they keep you updated on what’s happening with your properties? Is
there a website or an application that you need to login and check out what is
happening?
Contractor/Handyman
A handyman is a very important person to have on your team. Every property will
need a little maintenance from time to time. If you are handy and it’s something you
like to do, you can take care of the work yourself. Other times, you may not want to do
the work yourself or it may take too much of your time. You will need the services of a
handyman. It is essential to build a relationship with a few different handymen and
contractors who can help you fix the odd thing when it’s broken or needs to be
refreshed. You may need someone to do the odd small job like fixing the baseboards,
painting the washroom, fix the door handles, etc. Getting a recommendation from a
friend or from your network is one of the best referrals you can get. Be prepared to
pay for their services.
● What type of work do they do?
● Are they licenced?
● Do they have liability insurance?
● Is their work guaranteed?
● Will they be doing it themselves or sending their team?
● Do they have a team?
● Are they local? Will they travel? Do they charge extra if they are travelling?
● Do you have to sign a contract?
● Do they provide a quote in advance?
● Can they provide a detailed quote? Line by line item especially for big projects?
● What are the timelines like? How quickly can they get the job done?
Pro tip: when you get busy with a larger portfolio and have trouble getting enough
attention from your handy person. I bought mine lunch, a nice one, like The Keg, and I
made him an offer he couldn’t refuse. The offer: guaranteed hours at a higher rate
than he was charging his other clients. In my case, one day or 8 hours per week, he’s
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working on my properties, if I don’t have any work, then I pay him anyways. Don’t
worry, that’s never happened, I always have work at my properties or my clients
do.This is win-win. My tenants and I get better service and my handy person makes
more money.
Lawyer
Like any professional, finding the right person may take time. The best way to find a
lawyer is still to ask your friends and network for any recommendations. You need to
know that they specialize in real estate law and have the experience to help you. In
most cases, you are using a lawyer to draft documents to buy or sell a property and
any issues that arise. Be sure to find someone who will answer your questions. Make
sure you are comfortable with them based on their personality, experience, reputation
and temperament.
● How long have they practiced law?
● What type of cases do they generally handle?
● Who is their typical client? Do they specialize in real estate?
● Do you have previous experience handling a case, or a company such as mine?
● What are their fees and billing process?
● Who else is working on your file/case?
Pro tip: my lawyer is not only a great lawyer but he is very intelligent. He and his family
have successful businesses. Not only is he a lawyer but he has experience that I
don’t have. For example, he is knowledgeable about raising capital from the public,
how the wealthy prepare wills and estate planning and how to setup a charity and a
charitable foundation.
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Chapter 6:
Analyzing Deals - Knowing Which Play to Use
How do you know if the property cashflows?

We have talked about cashflow. How do you know if the property will make any
money after you deduct all the expenses from the rental income you receive? You’ll
need to gather some information and crunch some numbers in order to do so. Of
course, some numbers are estimates unless you can get exact figures from the
sellers themselves.
Ask your investment specialist Realtor to see if they have the figures you are looking
for, they should be able to tell you what you need to know for the area you are
interested investing in. If they are not able to do, you’ll need to find out for yourself or
better yet find another real estate representative who can do so, especially, when you
are starting out.
Keep in mind, Realtors are not miracle workers, real estate is all relative and the
market determines prices. It’s rare for a Realtor to be able to consistently source
below market priced properties and if they do, it’s because the property needs work.
Sometimes a lot of work and in some cases, the bank won’t lend on the property thus
eliminating a lot of competition allowing those with cash to get a deal. Getting a deal
is largely dependent on your network and if you have access to cash.
The more information you have the better you can assess to see what kind of capital
you need to buy the property and if it cashflows. See below for a list of numbers you
may need depending the real estate strategy you are using.
● Rent
● Interest rate
● Mortgage payment
● Down payment
● Maintenance numbers
● Utilities
● Insurance
● Property tax
● Condo fees
● Property management fee
● Lawyer fee
● Renovations, if any
● Other fees
Figure 4 shows an example of a property analyzer. We’ve shared this analyzer with
many of our clients.
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Play with the analyzer and see what happens when you change the numbers. Some
costs are one-time only and affect how much money you will need upfront to close the
property while others are monthly costs that affect your monthly cashflow. Plugging in
the numbers will give you an idea what happens to the cashflow if there are changes
in interest rate, if insurance goes up, or if more maintenance is needed than planned.
Maintenance can sometimes be expensive and unexpected. Does it still cashflow?
How much of a buffer is there if something goes wrong? What is the worst-case
scenario? It may not happen, but I suggest you plan for it. Make sure you get the
most current numbers are as rents and expenses can change substantially in a short
timeframe.
If you are starting out and don’t know how to analyze the numbers and what they
mean, I suggest reaching out to your network and ask your questions. By getting to
know the area well and the income and expenses associated with the specific real
estate strategy, you won’t need to use the analyzer in the future.
Figure 4: A Property Analyzer Worksheet
Source: IWIN Real Estate, May 2021
Let us analyze properties based on the different real estate strategies. These
examples that follow are the strategies that we at IWIN Real Estate focus on. We are
finding that many of our investors have focused on legal secondary suite and student
rentals as they produce cashflow.
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The following two examples are legal secondary suite conversions in Hamilton,
Ontario. The first example shows the refinancing of the property the same year it was
bought and the equity pulled out. This strategy is used by many investors to fund their
next real estate property. While the second example was a more recent purchase and
the investor was still in the middle of renovations. You’ll note the purchase price has
increased substantially from 2019 and 2020. A third example is a turnkey legal
duplex that is being offered for sale in Kitchener, ON.
Example 1: East Hamilton Mountain (February 2019) Conversion and Refinance

This bungalow in East Hamilton Mountain is just a little over 1000 square ft. The
property was in a very good condition, had original hardwood floors and ceramic tiles.
The single wide driveway had plenty of room to expand. The basement was setup for
an easy conversion. It was in a great location. Our client renovated the basement,
had it appraised, and refinanced it in the same year. The property still cashflows
monthly after the refinance.
The Numbers:
Purchase price = $470,000 (February 2019)
Renovation = $60,000
Monthly Rents = Main floor - $1750 and Basement - $1500 (plus utilities)
Refinance: What do the numbers look like?

Re-appraised property value = $600,000 (December 2019)
New mortgage = $600,000 x 80% = $480,000
Pay out old mortgage = $376,000
Equity pulled out = $480,000 - $376,000 = $104,000
Monthly cashflow = $600
Example 2: East Hamilton Mountain (October 2020) Conversion

This bungalow in East Hamilton Mountain is just a little over 1000 square ft. It was in
a good condition and had original hardwood floors. It had a large driveway and yard. It
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met all the criteria to convert the basement. This is a very similar property to the
example 1, note the purchase price. Property values have increased substantially.
The Numbers:
Purchase price = $566,000 (October 2020)
Down payment = $113,200 (20%)
Estimated Renovation = $110,000
Estimated Closing costs = $10,000
Total investment = ~$233,000
Projected Monthly Rents = Main floor - $2000 and Basement - $1700 (plus utilities)
Projected Monthly Cashflow = $1470
What’s the projected ROI after one year?

Investment required = $233,000
Yearly cashflow = $17,600
New market value = $700,000
Appreciation = $134,000
Mortgage paydown = $10,288
Total Year One Profit = $162,000
Return on investment = 70%
Example 3: Turnkey Legal Duplex

If you’re not interested in converting a single family into a duplex, how about a turnkey
duplex? Below is an example of a turnkey legal duplex in Kitchener that a client has
put up for sale (2021). Little or no renovations are needed on this property. Our client
is selling this legal duplex to re-allocate funds.
The property is listed at $625,000, the upper unit is 2 bedrooms and 2 bathrooms.
The main floor unit is 2 bedrooms and 1 bathroom. The duplex is steps to the
Kitchener Market LRT stop in a growing area in downtown Kitchener. The property
has separate hydro for each unit.
The Numbers
Purchase price = $625,000

Down payment = $125,000 (20%)
Closing costs = $12,500 (estimate)
Renovations = Could be none, but could renovate somethings on the main floor
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Total investment = $137,500 + any renovations
Mortgage Payment = $1,971 per month (2.5% interest rate, 30 year amortization)
Property tax = $235 per month
Insurance = $150 per month
Utilities = $350 per month
Total Monthly Carrying Cost = $2,706
Projected Monthly Rent = $3,300 ($1,650 + hydro for each unit)
Projected Monthly Cash Flow = $594
What’s the projected ROI after one year? How about if we assume that
Kitchener properties only appreciate at 3% in the next year?
Investment required = $137,500
Yearly cashflow = $7,128
New market value = $643,750 (3% appreciation)
Appreciation = $18,750
Mortgage paydown = $11,946
Total Year One Profit = $37,824
Return on investment = 28%
Note: The examples above do not include vacancy, property management or maintenance in
the calculations
Student Rental
On a personal note, my last acquisition, a house in Hamilton near McMaster
University is now leased for the May to April 2021 school year. I’m super excited as
we set some new market highs in rents getting $650 per room above grade and $550
for basement rooms. I was proud to walk the students and parents through the house
pointing out all the renovations, brand new electrical, the renovation permit, where we
went above and beyond to cancel noise and create fire separation. Plus, an egress
window in the basement which is not required as we don’t have a kitchen in the
basement. The feedback was excellent, questions and objections were limited and
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that’s what happens when you put in 110% into a property and can be proud of the
work.
Rent-to-Own
The following example is a typical RTO. This RTO is in Hamilton, Ontario. The
numbers used reflect the home prices before the price run up in Hamilton during
Covid so make sure you do your own research to find out the current market rents
and home prices.
The analysis is calculated using a down payment of 20% plus closing costs. For this
example, you’ll need to invest around $113,000 for the 3 year term of the RTO. A
$20,000 deposit was received when the lease agreement was signed.
The expenses only include the mortgage payment, property taxes and home
insurance as the maintenance cost is covered by the tenant buyer and comes to
$2100. The monthly cashflow is $550 based on $2,650 rental income. The profit from
the sale is $73,800 after subtracting the rent credit of $16,200 (refer to the rent credit
table in the Rent-to-own section in Chapter 3: What should I invest in?).
So, what is your return on this investment? With the profit from the sale, cashflow
and mortgage paydown, the total profit would be $124,100. That’s a ROI of 109% for
3 years or 36.6% annually!
See how the figures are calculated below. Note that the figures have been rounded so
are not exact.
I would suggest that you run a few scenarios with different sale prices and rent credits
before presenting your win-win RTO to the tenant buyer.
The Numbers
Starter home in Hamilton, ON:
● Purchase Price: $500,000
● 3 year rent to own
● Monthly expenses including mortgage, property taxes and insurance:
$2100/month
● Rented at $2650/month
● Received upfront $20,000
● Sale Price to Tenant Buyer (3 years from now): $590,000
Monthly Cashflow:
Total monthly rent received $2650
Total monthly expenses $2100
Total Cashflow $550
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Profit on Sale:
Calculating the Sale Price:
● In the Hamilton single-family home, the year over year average increase for
purchase price for the area is around 6-7%. A conservative 5.5% was used to
calculate the sale price.
● We added $5000 to our initial purchase price to cover expenses and closing
costs.
● We then apply 5.5% yearly increase to $505,000 for 3 years (the term of the
RTO) = $592,000
Sale Price to Tenant $590,000
Buyer
Less: Credits Earned $16,200
($450 @ 36 months)
Net Sale Price to Tenant $573,800
Less: Price Paid for $500,000

Home
Net Profit on Sale $ 73,800
What’s the Return on Investment?

Profit from Sales $73,800
Total Monthly Positive $19,800

Cashflow ($550*36 months)
Principal Paydown from 3 $30,500
years of mortgage payments
Net Profit (not including tax $124,100
savings)
Divided by Initial 20% Down $113,000
payment and Closing Costs
Return on Investment % 109%
(36.6% year over
year)
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Chapter 7:
How to Avoid Taking a Loss
I want to address about being prepared on your real estate journey. Preparation is
key. As Benjamin Franklin said, “Failing to prepare, you are preparing to fail.” Some
of you have not taken action thinking of what can go wrong. So, what’s the worst case
scenario? Plan for the worst and you’ll have a plan in place when it happens, if it
happens.
Most people are worried about tenants not paying the rent and trashing their property.
We talked a little bit about tenant issues in another chapter. As your tenants are the
lifeblood of your business, it’s important that you treat them well but sometimes they can
be a big problem and cause you many headaches.
Screen your tenants properly and you will be less likely to have problems with tenants
or get a professional tenant. Credit checks are a must and tenants who care to protect
their credit are the best. Like anything else, there is no guarantee even if you have a
rigorous tenant screening process, you might still have issues after placing the tenant
as their personal situation changes. They might have started out really well, but maybe
they are going through a divorce, are sick and can’t work or have lost their job. There
are ways to deal with problem tenants and those who do not pay the rent.
If you can not come up with a workable solution for both of you, you will need to evict or
buy them out so you can recover the rent and rent it out again. It’s not fun but necessary
at times when they can’t or don’t pay and don’t intend to pay.
In Ontario, the Landlord Tenant Board is the place to file the paperwork for non-
payment of rent, any damages, negotiate recovery of rent and file for eviction if
mediation does not work. You do not necessarily have to do this yourself. You can hire a
paralegal to help you with the eviction process. It may cost you but in the long run, it
may be worth it not having to deal with problem tenants yourself.
Expect the unexpected - and be ready

How do you prepare for upcoming potential issues for your rental property? We
suggest that you create an emergency fund with 3 months of cash to cover expenses
for each property. When you have many properties, it may seem like a lot of cash
sitting on the sidelines. It doesn’t have to be cash though, it can be your line of credit,
you just need access to the cash readily to pay for your expenses in case tenants
don’t pay or you have unexpected major maintenance that you were not aware of
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when you bought the property. If you do have cash, you can always put it in a high
yield interest bearing account, so your cash at least earns a little interest.
The Hail Mary Play
If the worst happens and you no longer want to deal with the tenants, or if the property
is no longer working for you, you can always sell it, and you’ll probably still do better
than if you didn’t buy the property in the first place. Most investors we work with don’t
want to sell their rental property. If bought right, the property would have appreciated.
Before selling the property, make sure you look into the cost if you need to break the
loan agreement to sell the property. It may cost you thousands of dollars to do so.
Covid-19 - What happens to the real estate market?

So, the Covid-19 pandemic shut down the country in mid-March 2020.
The pandemic has thrown everything in a loop. Housing activity from coast-to-coast
plummeted when Covid-19 hit. With things opening back up, the housing activity will
start to go back up. The housing market will be impacted in the short term. Low
interest rates will reduce the cost of carrying the rental property. Just make sure you
look into the local real estate market and don’t worry too much about the general
Canadian market as the area you are looking into may rebound faster or be more
devasted than you think. It’s best to work with someone who is familiar with the area
you are interested in investing.
What have we seen in our local market?
As of writing, prices in the GTA haven’t dropped. As people adopt the
work-from-home arrangements, this could shift demand to more affordable markets
from expensive urban markets.
For investors looking to buy, it may be a good time. As supply is tight, bidding wars
may be a reality, again. Make sure to get your financing in order so you are ready to
take advantage of an investment property that meets your requirements. How’s
financing? Is it harder to get with all the mortgage deferrals? Ask your mortgage
lender or broker for the latest changes in any policies and updates about financing.
When the pandemic first hit, one of our clients asked to get on a call with me and I
did. He shared with me that his mentor said the market was going to collapse and had
sold off his entire real estate portfolio. He asked if I was selling all my properties too.
My answer was no, my plan is to continue to hold for the long term. My JV partners
had deferred two of our mortgages and Cherry and I deferred one mortgage because
both the upstairs and downstairs tenants lost their incomes.
Our client was shocked with my response so I explained I invest for the long term.
The long term fundamentals have not changed and if I did sell and I was wrong, I
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would have to pay even more money to re-enter the market. Or worse, the market
would get away from me and I would not be able to invest at all.
At time of writing, the Canadian government underwent historic spending and my real
estate property values went up around 20% from the previous year.
Our client, for some reason he followed my example and not his mentor. He, of
course, ecstatic with his real estate returns and is still buying houses.
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Chapter 8:
All Stars in the Real Estate Game
Everyday people who took their lives to the next level by taking action. The following
stories are of people who are clients and have become friends. I hope you enjoy their
stories and will learn a lesson or two from what they have shared. Most importantly,
maybe you’ll find something in their stories to inspire you to take action wherever you
are in your real estate journey.
John Roumanis
John is an old friend, a very successful part time investor in Hamilton and the Niagara
Region and has a full time job in Toronto that he loves. He is a father of two young
boys, plays the guitar and is an avid reader of both fiction and non-fiction.
John’s Story
John was born in Toronto and now lives in Burlington. He is a part-time investor who
has a full-time career as a Senior Director of Marketing for one of North America’s
largest coffee companies. Prior to his current role, John worked for a number of the
world’s foremost consumer packaged goods and retail companies including PepsiCo,
Loblaw and Shoppers Drug Mart. He is also a part time professor at Sheridan
College, having taught business math, business communication, and marketing,
which he did his undergraduate degree in.
As a diversified investor, John invests in both the stock market and in real estate. He
was interested in real estate as he saw his parents buy their house in Toronto for
$220,000 at the peak of the 1980’s market and by the time his parents wanted to sell
(a few years ago to move to a more manageable condo), they listed it at $900,000. It’s
an incredible ROI. John has often asked himself, “Could you imagine if I had bought a
couple of rental properties in my early 20s how much further along I would've been
now?” He regrets not pulling the trigger sooner. This happened a number of times
throughout his life where he considered buying rental properties but didn’t.
When John was ready, he educated himself by doing what had been most successful
for him in the past: going to his local bookstore to find a book. He went to the real estate
area of the business section, and found a book called Real Estate Investing in Canada
by Don Campbell. He loved Don's perspective on real estate, "Listen, if you're interested
in flipping, or making a quick buck this book's not for you. If you are a buy and hold kind
of person, and you're interested in creating wealth slowly, steadily, and over time," which
he had become accustomed to with the stocks, "This book is for you."
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So, he read the book and loved it. He saw the advertisement for the Real Estate
Investment Network’s ACRE Event at the end of the book. He ended up going to ACRE,
and thought it was brilliant. You often hear about people going to real estate events, and
spending thousands, and thousands of dollars, and at the end of it not really getting
much out of it. John spent $800 for 18 to 20 hours of education (Friday night, all day
Saturday, and all day Sunday). I’d say it was well worth the time and money spent
educating himself.
John finally pulled the trigger and invested in real estate in 2010 when he worked with
me to buy his first property. He bought a single-family property in Hamilton for
$233,900 and spent about $3000 in renovations. Today, this property is worth over
$570,000, a 135% increase. This property continues to be rented out continuously
and is a “cash cow” for him. John has gone on to buy 5 more rental properties and still
works full-time. He has property managers who look after his properties, meaning that
he spends about 2 hours weekly managing his real estate portfolio. He would spend
even less time managing his portfolio if he didn’t like the bookkeeping and the
financial aspects of owning real estate. He finds it exciting seeing the money come in!
Even if he were retired, he would still not be managing the properties himself. Early
on, John realized the importance of building a team, so he doesn’t need to be hands
on.
Real estate has afforded him a high degree of comfort knowing that if there were ever
an emergency or if there were a pause in his employment, he would be financially
secure. Real estate has helped him round out his portfolio and allowed him to
meaningfully diversify his investments.
What is John’s advice for those starting out?
1. Educate yourself in whatever fashion you find most comfortable, be it through

books, online, or in class sessions. Figure out what you want and learn it! Don’t
stumble blindly into endeavors when a bit of education could have helped you
soar.
2. Find someone you trust and who has a proven track record. Find someone who
knows what they are doing and is willing to teach and mentor you.
3. Just do it! At some point you need to pull the trigger instead of over analyzing
the numbers. Unless you get some experience under your belt you will not know
how it’s going to feel. If the property cash flows, go and do it, because the
greatest education you're going to get not just about real estate investing, but
more importantly about your own ability to tolerate the ups and downs of real
estate investing is by owning the house.
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James Maggs
James is veteran investor, Hamiltonian since 2005, Real Estate Investment Network
(REIN) member since 2011 and REIN Silver award winner. James has personally
invested in rent-to-owns, multi-family and student rentals all in Hamilton and St
Catharines. Prior to becoming a Realtor, James’ 11 years of corporate world
experience involved managing multi-million dollar projects for some of Canada’s
largest financial institutions for one of Canada’s largest telecom companies. When
James is not working on real estate, he enjoys reading; spending time with his wife,
daughter, dogs and cat; working our four times per week; vacationing at his condo in
Costa Rica (paid for by his real estate investing).
James’ Story
James has been interested in real estate since his university days. He attended a few
seminars and had read a few books in his early 20s. He did not know where to start
and did not have enough capital to invest in a house of his own. So, he put real estate
investing on the back burner and concentrated on work.
He worked at Bell Canada as a summer job and got a full-time job there after
graduating university. Within a year he became a manager and figured he would do
this until he figured out what else he wanted to do. He had no direction. A lot of his
friends were doing exactly the same thing, as he did not have any entrepreneur
minded friends to get some guidance from.
So, like many, he just assumed that this was the path that he was meant to take. This
was a path that many of our parents took as well. Where you work for 30 to 40 years,
retire, get benefits and a pension. He realized there was no way that he was going to
last that long. He was not engaged at work and colleagues would get fired up over
issues that was seem so irrelevant.
He started to take a look at real estate when he dreaded going to work. He signed up
for free real estate information and tips from the Robert Kiyosaki (Rich Dad, Poor
Dad) website. He eventually signed up for their real estate coaching program. His
coach was able to give James some over all best practices and guide him about
market fundamentals (e.g. market rents) but he had to learn the nitty gritty stuff on his
own as the market in the States was completely different than the Canadian real
estate market.
Luckily for him, being in Hamilton, he chose Hamilton to invest in 2009. He
approached his father with his thoughts on investing in real estate and partnered with
him on their first triplex. This first property was a “trial by fire” property where they had
looked over 50 properties before buying the triplex. It was in a less than desirable
neighborhood and was not in the best condition. While focusing on cashflow he
neglected to look at some of the fundamental characteristics that would make it a
good property to rent out.
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James and his father ended renovating to improve the units and bring the house up to
code. He did most of the work himself which made it a slow process. At least he had
income from 2 of the 3 units to cover his costs while he renovated the 3rd unit. It was
a major learning experience, but he was glad as he now knows what not to do!
I met James when I became his coach and introduced him to Rockstar Real Estate
Brokerage. He joined Rockstar immediately as he realized how great their system
was for Rent-to-own (RTO). He had learned a lot from their CDs and newsletters.
James and I worked together searching for quality properties in Hamilton, but there
seemed to be a drought at the time. We finally found two properties (one RTO, one
straight rental) worth putting offers in on at the same time and both closing on the
same date. James rented the single-family home two days after getting the keys.
Progressing from his real estate investing, James had started his own property
management company. He had plans to expand but he asked for my advice on his
expansion plans. At that time, I invited him to join my rapidly growing team as an
agent and he did. He left his full-time job of 15 years with Bell Canada. Commuting by
by GO Train and picking up his young daughter from daycare was stressful. Even
though he had the flexibility to work from home which allowed him to start investing in
real estate, he knew he was going down a path that he didn’t want to be in 10 or 15
years down the road.
During his first year as an agent, he doubled the income he got from Bell Canada.
His investing income has increased every year. When there’s a tenant turnover James
updates his properties, which increases property values and also drives up the rent.
After only 4 years being a real estate agent, in 2019, James became the top
performer on my team. He had successfully transitioned out of corporate Canada and
started to work full time coaching investors to acquire quality investment properties.
When Opportunity Knocks
James real estate portfolio is quite varied. He doesn’t have one distinct real estate
strategy. He has invested in multi-family, has completed legal secondary suites,
Rent-to-owns, single family rentals, and student rentals.
Is there a best strategy to focus on when it comes to real estate investing? Investors
ask him this all the time. His answer:
“… I think it's from seeing other investors get pigeonholed into being the student
rental investor or being the rent to own guy. And if you look at them, I wonder how
many really, really good opportunities they passed up because they were so focused
on this niche, or that niche. So, I wanted to be the opportunistic guy instead.
So, if a good opportunity came my way, I was going to jump on it no matter what,
whether I had experience in student rentals or not, I knew enough people that know
how to do student rentals. [I knew] that I could do anything.”
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Costa Rica
In early 2015, he was vacationing in Costa Rica. He and his family loved the location,
loved the beach, the surf, the people, and the town itself. They loved it so much there
that when they walked pass the site for the new build, he contacted the builder and
ended up buying it from them. It was an impulse buy but he used the same
fundamental analysis he used for rental properties in Canada on this vacation
property. It was a good financial decision.
He and his family enjoy spending time in Costa Rica each year during holidays and
breaks.
Giving Back
James is giving back to his community through the Hamilton Basket Brigade. He is an
original founding member and sits on the board of this registered charity. Hamilton
Basket Brigade provides holiday meals and clothing to Hamiltonians families in need.
He identified like many with the Rockstar motto of Your life, Your terms being able to
choose his work hours, have that flexibility, to do what he wants when he wants
(within reason!) He now has the financial freedom to enjoy life as he chooses while
also positively impacting those around him and his community.
Evelyn Lamarsh
Evelyn is a mother of two young children. She is an occupational therapist working in
Hamilton in an outreach program supporting mentally ill patients in the community.
Evelyn first started investing in real estate at the age of 26. She has since acquired 10
properties. More importantly, her husband was able to retire from his job as car
mechanic to work a 15 hour work week to maintain the properties and spend lots of
time with their two young kids.
Evelyn’s Story
Evelyn is an occupational therapist and works with an outreach program in Hamilton
where her clients have been diagnosed with schizophrenia. She works to support
these people in the community, so that they could have the best life possible despite
the fact that they have a really terrible illness. Her unique skillset is to teach daily
living skills like how to clean their apartment, how to shop for groceries, how to look
for deals using flyers or how to stretch their grocery dollars, or how to use the bus to
get to where they need to go.
She got into real estate investing by accident. When she was in her second year at
university, her parents were moving to London, Ontario and she wanted to stay at
McMaster University in Hamilton, Ontario. Her parents stipulated that she could stay
in the house if she had roommates. So overnight she became the property manager
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for her parents' house, which is close to McMaster. She found tenants and was
responsible for the maintenance. This experience gave her the confidence she
needed to get started in investing in real estate to secure her own financial future.
Evelyn worked all the way through university and is super thrifty, so she graduated
debt free. She wanted to do something with the money she earned from her job.
At 26, she saved up a down payment on a rental property. She was still a renter at
this point, and knew almost nothing about mortgages, interest rates, or buying homes
- she knew she needed to do it and educated herself as she went along.
As a young, single woman she was nervous that tenants wouldn’t take her seriously.
She almost walked away from her first house because the home inspection freaked
her out. I talked and coached her out of her comfort zone to buy her first property.
That first property is a century home with a spotty roof of leaky basement knob and
tube wiring in a historically rough area on a street that shared the same street
address as many of the major steel mills in Hamilton. She bought this house in June
2011.
She knew that there were plans to build GO Train stations, and the house was within
800 meters of it. And the city had put a whole lot of money into developing the
waterfront and there were other positive signs, as well. The house was being sold by
the owner. It was a flip and the owner had been holding onto it for a while and wanted
the money for his next flip. So, with a handshake, Evelyn had negotiated a better
discount of $2,000 even after the owner had dropped his price by $10,000 if she could
close in 15 days.
The original owner was unlikely to be aware of what was coming to the area. If he had
been, I’m sure he would have held onto the property. It’s definitely important to know
the city you are investing in and any plans for future developments.
Evelyn hit a home run with this one, she bought the property for $150,000 and it had a
cashflow of $700 per month! This was when you could still get a 40 year mortgage on
a rental property with a 20% down payment. In 2015, she refinanced it and it was
appraised for $230,000. After 4 years of owning it, the value went up by $80,000!
Properties have appreciated considerably in Hamilton over the past few years. The
property has now nearly tripled in value.
She feels fortunate to have invested in Hamilton in 2011 when home prices were still
reasonable and single-family homes would cash flow well.
After buying another rental property, she bought her principal residence and rented a
part of the house to help pay her mortgage. It just so happened that her neighbor,
Mike, was a good-looking, single, auto mechanic who she fell in love with! Mike
owned his own home with a full basement apartment with a separate entrance, but he
never thought to rent it out. When Mike rented out his basement, he began to see the
power of rental real estate.
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Mike helped Evelyn with maintenance and renovations with her properties and even
bought a rental in his name before they got married to show his commitment to
investing and growing their business together.
After getting married, Evelyn made the big move next door, and her house was added
to the collection of rentals. Mike had a goal of quitting his job, and they wanted a bit
more financial security before starting their family. With this in mind, all of Mike’s
paychecks went to a separate bank account that was just for saving money and
buying more properties. They lived off of Evelyn’s income. With the savings from
Mike’s paychecks, the cashflow from all the properties, they have refinanced their
properties to pull out the equity which helped them buy more properties. They had an
ambitious plan to purchase as many properties as they could to be financially secure
that would make it possible for Mike to quit his job.
Using this plan, they brought a total to 10 properties, a mix of single-family homes and
student rentals. The day the tenants moved into their 9th rental, Evelyn went into
labour and had their first child, a little girl named, Isabella. They now have two
children, with the birth of a son, Dominic, making them a family of 4.
Evelyn and Mike continue to manage the properties themselves. More importantly,
Mike was able to retire from his job as a car mechanic in order to take on this new
role to maintain and renovate their rentals properties working only 15 hours a week.
Evelyn still works at the job she loves, and they have lots of family time: boating,
barbequing, and playing at the park.
The cashflow has been great but this has never been about money. This has been
about freedom and peace of mind. Real estate has bought them financial security and
they no longer need to worry about money.
Charles Wah
Charles was named one of Hamilton’s Top 40 Under 40 in 2018 by Business Link
Media Group and selected as the winner of the Rising Star of the Year Award by
Canadian Real Estate Wealth Magazine as well as the Innovative Investor of the Year
by the Real Estate Investment Network (REIN) in 2017. He is a popular speaker on
land development and has been featured in various media including magazines,
podcasts, and television. Charles is a proud member of the Hamilton Chamber of
Commerce and Hamilton-Halton Home Builders’ Association (HHHBA) where he also
volunteers as a HHHBA board member.
Outside of his professional career, Charles is a sports enthusiast who enjoys playing
golf, working out at CrossFit, and travelling the world. As a supporter of giving back to
the community, Charles volunteers and participates in local charities such as the
Hamilton Basket Brigade.
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Charles’ Story
Charles was born and raised here in Hamilton, but his parents come from the same
city in Malaysia, even though they actually met here, while attending the University of
Toronto 40 years ago. They immigrated to Canada for school, and for a better future.
His parents had very humble beginnings, especially his dad, who grew up as a poor
chicken farmer. His father grew up in a family with nine other siblings, so it was very
difficult. His father told him and his brother many different stories to make sure that he
and his brother appreciated what they have in Canada.
When his dad came to Canada, he only came with one pair of jeans and worked at a
convenience store for only $40 a month. Although his parents were educated, they both
had limited job opportunities as immigrants, and it was exceedingly difficult for them.
They worked very hard and opened up their own private school business.
How did Charles get into real estate?
For political reasons, the company that Charles worked for as a computer engineer,
was shut down in 2013. He was happy as an engineer, he was good at what he did, it
was challenging and rewarding at the same time. After the shock of being laid off, he
tried to stay positive and viewed the situation as an opportunity.
It was the perfect opportunity for him to transition into entrepreneurship, instead of
finding another job, which his mom thought was crazy. Charles decided to follow his
dream to be an entrepreneur, to own his business. He likes the flexibility knowing that
the sky’s the limit and that his business has unlimited growth potential even though it’s
tough not to collect a paycheck. He is looking forward to building his future goals.
When he was in University, his dad was diagnosed with stage 4 colon cancer in 2004.
During the next few years, it was an extremely dark period for his family until they
received the good news that his dad had survived cancer in 2007. His dad was mentally
strong and stayed positive but it was his investments in real estate that really helped
their family.
Their real estate portfolio generated enough income to enable his parents to sell off
their private school business that they've owned for 30 years and allowed his dad to
focus on his health. Charles and his brother were able to witness firsthand the
opportunities that real estate can provide for a family. Getting into real estate was a
natural decision for him.
Charles is now a full-time entrepreneur, and co-founder of the Gateway Group, his land
development company. He manages their real estate properties, as well as work on the
development projects. Unlike Charles, I prefer to delegate to a property manager, and
as other professionals in order to protect my time so I can spend more time with my
family.
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Power of networking
Charles went out to a few real estate seminars, and a few courses from an
organization based in the States. Charles and his brother were coached and
mentored at Robert Kiyosaki’s Rich Dad, Poor Dad Training program in Canada.
Coaching led him and his brother to add other networks, such as Real Estate
Investment Network (REIN),Rock Star Real Estate Brokerage (Rockstar), and the
Hamilton Halton Home Builders Association.
All those networks have been absolutely instrumental to his growth. Without them,
Charles definitely wouldn't be where he is today. It's really the connections, and the
relationships that he’s made through these networks that were truly invaluable. He
looks back and is grateful to the many people he has connected with that has helped
him and his brother along their journey.
Through our relationship which later developed into a friendship, Charles met Donato
Cascioli, a fellow real estate investor. Donato connected Charles to his builder partner
for his first development project. Charles is still amazed at the networking and the
relationships he’s built along the way. It’s a small world, and it's really, really important to
get out there, do things, get involved, get engaged, and be around like-minded
individuals.
He recommends that anyone who is thinking of getting into development, or investing in

any real estate, definitely go out there, and join networks, and get involved.
Why pursue land development?
Charles has always been interested in land development ever since he was a kid
playing the video game SimCity 3000, where you build your own city on the computer.
He decided to fully pursue land development in March 2014. That was following several
months of brainstorming. After the engineering office shut down, he took some time to
really think about his plan, and what he wanted to do next. A light bulb didn’t go off nor
did a million dollar idea ever materialize, but he kept coming back to real estate which
made sense to him. Having made the decision to move forward with development, the
next day he received a call from a neighbor that owned an adjacent parcel of land that
was vacant. That neighbor asked if he wanted to buy their land. It was the craziest
timing. Charles believes that everything happens for a reason.
With that first land acquisition, he was fortunate that the owner was aligned with
Charles’ vision. It took two months to negotiate the deal. The owner was retired, so they
were willing to offer a vendor take back mortgage, which made the deal possible as
neither Charles nor his family had the capital to buy the land. Even if his family had the
capital to lend him, he wouldn’t have borrowed from them. The owner was willing to
work together with Charles to make it happen.
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It was really difficult, and challenging, for Charles as he did not know anything about
development at the beginning. He didn’t have a team. He didn't even know what a
development team consisted of, or what steps to take. He didn’t even know the
questions to ask sometimes. So, he learned development on the fly, which was difficult,
and it led to many mistakes, but like anything, you learn the most from your mistakes.
He wasn't afraid to ask questions from consultants, or other people in the development
industry. Don't be afraid to let people know that you don't understand something and ask
many, many questions as that is the way you’ll learn. There aren't many courses out
there that teach development, so it’s important to learn through others who have
experience. Go out there, meet people and ask questions.
Like any real estate strategy, development is not for everyone. Look into the risks and
costs before getting involved in development. Development is capital intensive. This
adds stress as the cash outflows to pay for consultants for studies, and reports and
other upfront costs but you don’t see the return until the end of the project if it is
successful.
What advice would you give investors who are interested in pursuing land
development?
As a developer, you're basically a project manager, so you need to be extremely

organized to be able to direct your team of consultants. Although you may be the expert
in one field, not the expert in engineering, environmental, archaeological, or planning,
you need your team of consultants. Even with this team in place you still need to know a
bit of everything, so that you can provide valuable feedback and make sure that
everything is congruent with your vision.
Sometimes there's a preconceived notion for some people that only those with the most
experience, and millions of dollars can get into development. That's not true. It helps
obviously, it helps with any business venture, but it's not required for you to be able to
get into it, or even be successful in development.
Charles started out with absolutely no experience, and no knowledge in development.

This is totally different from what he studied in university. All of this can seem really
daunting, especially at the beginning, it’s similar to any other business in that he
strongly believes it's possible for anyone with the right mindset, drive, and determination
to succeed.
As long as you're getting into it for the right reasons, and you have these attributes, the
right mindset, drive, and determination, he thinks, the sky's the limit. Just go out there,
get engaged, join networks, meet up with people who have development experience,
and you never know what can come up.
Don't ever be afraid to let people know what you need, what you don't know, or what
you're looking for. There's nothing wrong with being vulnerable. Being new to
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development, Charles let others know that he was a rookie and didn’t let his pride get in
his way.
Joseph Costanza
Joseph bought his very first property at the age of 24. He has been working since he
was 16 and has several side hustles including bartending and landscaping. He’s
always had at least two jobs while in school.
He graduated from university as an architect, Joseph was lucky enough to get a job in
his own field of study as an intern architect and quickly realized that having a job did
not translate into freedom. He researched and then decided to invest in real estate
after being referred to me and my team. Joseph was being coached by Tammy
DiTomaso, an IWIN coach, who is part of my growing team. Joseph acquired his first
rental property within a month working with us. He bought a single-family home that
he will be converting into a duplex with a legal basement apartment.
Joseph’s Story
Joseph was born and raised in Vaughan, a suburb of Toronto.
He had brought up the idea of investing in real estate to his parents but since no one
in his family had any experience with real estate investing they were confused about
the idea of building income from real estate.
His thoughts on real estate have changed since meeting Tammy DiTomaso, our team
and other investors. Before meeting my team and I, he was considering real estate
but not fully committed. He credits the people he surrounds himself with and saw how
others were building wealth and building income, so it changed his perspective
entirely. Knowing that other people were building wealth had solidified his interest in
real estate.
He has made friends and connections at iWIN Monthly Meetings and generally
everyone has been extremely helpful whether it’s to recommend a book, lift his spirits
or change his perspective. Networking with other real estate investors has given him
the opportunity to grow more as an individual.
Joseph was anxious when he started. This is completely normal when you start
something new and don’t fully understand all the pieces. He has changed his
perspective that he doesn’t necessarily have to go full tilt but has learned to ease off
at a slower, more comfortable pace.
His parents are more supportive now of his real estate investment than before. They
were not opposed to him buying real estate, but it was the renovations that they were
not comfortable with. They feared what they didn’t know. It helped that those in
Joseph’s network, two people he connected at iWIN, were going through the same
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process he was at the same time. They were able to bounce off ideas and support
each other.
Of course, in real estate it’s not all smooth sailing there are going to be challenges
along the way. His parents were more than willing to help but had a lot of anxiety with
affording the renovations, but Joseph found solutions to the challenges by leaning on
his network.
When faced with these challenges, his mother’s gut reaction was to sell the property,
but for Joseph this didn’t feel like that was the right decision based on what he had
learned. He stuck to his guns. He made some mistakes in doing the analysis so
deferred some of the spending on non-critical items to get the house rented and
waited for the refinancing. According to Joseph, you don’t need to know everything,
but you need a supportive network around you who can walk you through as the
problems arise. Tammy DiTomaso, his coach was his rock as he went through this
process.
Joseph bought a single-family home on the upper mountain in Hamilton for $470,000.
He was in the process of renovating the property into a duplex which would cost
around $60,000. The basement and the main floor would be separated to create two
completely separate units. The main floor was rented out right away. The main floor
with the three bedroom was a little dated but was rented for $1,700 plus utilities. The
basement was estimated to bring in $1,200 in rent plus utilities after renovations.
Depending on the refinancing, Joseph is expected to pull more than $80,000 in equity
from the property.
Joseph was managing this property himself but will eventually have it professionally
managed in the future.
Why is Joseph investing?
He’s always been really interested in real estate when he was in high school. He
misunderstood that interest in real estate as an interest in architecture. So, he ended
up going to university for architecture and he loved every second of it. When he
jumped into the workforce, he understood that architecture was not necessarily his
true interest.
Joseph has done some day trading and bought and held stocks. The anxiety he got
from day trading foreign exchange did not fit his personality.
Joseph has always been really interested in investing, but he is investing to give
himself freedom. He has no problem working hard. He regularly works 70 and 80 hour
weeks and it doesn't necessarily bother him. For him, the freedom to be able to do
what he wants when he wants, say at 35, while his real estate pays for his life. This to
him is more valuable than going out and partying.
Joseph is interested in other ways to create wealth but would rather put his capital in
real estate right now. What’s Joseph’s plans for the future? He’ll always be doing
something, but plan to live his life more on his terms by the time he turns 35.
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Gillian Irving
Gillian is an old friend, client, mother of four who had life pretty good, yet decided to
go to the next level, hire a real estate coach, and buy property focusing mainly on
student rentals. She also co-owns Sky Zone, a 30,000 square foot trampoline park.
Gillian’s Story
The first property Gillian bought in 2009 was a duplex in an up-and-coming area of
Toronto called Leslieville. On a run one day, after having just finished the book Rich
Dad, Poor Dad by Robert Kiyosaki, she saw a “For Sale” sign in front of a big house
on a corner lot in a fantastic location. Inspired by the book, she arranged a viewing. It
turned out to be a beautiful house with a unique and expansive layout just steps to
quaint shops and restaurants as well as the 24-hour streetcar to downtown.
So, she bought the house on a whim, only knowing one thing about real estate - that
rents should cover the mortgage and expenses.
Gillian bought the property in 2009 for $690,000. Two years later, she pulled out
$100,000 and another two years later she refinanced it yet again! Since rents were
rising quickly in Toronto, she still managed to cashflow.
At that point she thought, “If I can do so well in real estate with only one house and
knowing barely anything, what would happen if I actually focussed on getting some
specific real estate education, then what could my success look like?”
That is when she launched full steam ahead in her real estate education, took
courses and hired Julie Broad, a successful investor and coach. Julie connected
Gillian with me. Gillian wanted to expand her portfolio, but not necessarily in Toronto
as properties were getting more and more expensive and were getting harder to cash
flow. So, she turned her investing sights to Hamilton.
That’s how Gillian and I met. She lives in Toronto and had never even been to
Hamilton before she bought her first property with me. She purchased her first student
rental within an hour of our meeting! Even though she had never been to Hamilton,
she knew that it was a great market because she had done her research and felt
really confident about both the market and the student rental strategy. She
remembers me telling her, “If you don't buy this house, it will be sold to someone else
in my network by the end of the afternoon.” So, she took the plunge, never looked
back and has kept purchasing since then. Now she invests in student rentals with
partners in multiple cities in Southern Ontario.
Midterm Strategy
As a student rental investor, Gillian was accustomed to getting above-average cash
flow on her properties. While she was also drawn to the short-term rental strategy
because of its excellent cash flow potential, the strategy was too labour intensive for
her. With a busy family life and another active business to tend to, she didn’t want the
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hassle of managing a continuously revolving door of AirBnB tenants. What she

wanted was a balance between short-term and long-term tenants. Having just come
out of a renovation at her primary residence herself and finding it almost impossible to
find somewhere to stay for only 4 or 5 months, she thought to herself that's the
strategy - rent the house in Leslieville to people who are doing renovations and don't
want to be tied to a one year lease.
It's a hybrid strategy – neither short term, nor long term. And what's ideal about this
particular strategy is that people are willing to pay a premium for not having to sign a
one year lease. They stay for a few months and pay more than market rent.
Her property is a truly unique three-bedroom unit with parking in a great location.
Using the midterm strategy, she charged $3,800 a month - a whopping $1,000 a
month more than she charges long term tenants. In addition to the higher rents,
another advantage of the strategy is that because tenants are there only temporarily,
they are a little bit more forgiving if the property is not quite perfect. Knowing they are
not staying long-term, they do not tend to compare your unit with hotels and you also
don’t have to worry about cleaning, restocking supplies, and being a slave to high
reviews (the lifeblood of short-term rentals).
With the mid-term strategy, you get both the benefits of the long-term and short-term
strategies. You get tenants who can afford to pay higher than average rents with none
of the hassles of short-term rentals.
At her Leslieville property, there's another unit upstairs. It’s still a long-term rental. The
one bedroom rents for $2,400 a month. She raised the rent by $500 the last time it
became vacant and it was still snapped up in less than a day. So, would Gillian
convert that one bedroom apartment into a mid-term rental, as well? She doesn’t think
there’s much demand for a place that small. The upstairs apartment has never been
on the market for more than a few days anyways, so she has options. This is what’s
great about having the flexibility to change your strategy when the market shifts. She
has already pulled out all of her capital from this property and has redeployed it into
other properties. The original goal of her Leslieville house was to buy it, pay down the
mortgage, let it appreciate, and then refinance that property to pay for her kids’
education. Mission accomplished.
Sky Zone
She opened a Sky Zone, a 36,000 square foot trampoline park, with her sister in
Whitby in July 2015. Her sister is a brilliant entrepreneur who brought the first-ever
Canadian Trampoline Park to Mississauga in 2011. As a master franchisee for all of
GTA, she had the obligation to open up a number of franchises in fairly short order.
Gillian’s sister took her on as a partner to get the Whitby Sky Zone up and running
quickly. Partnering with her sister was an easy decision – not only is she a
super-smart businesswoman who had a great track record, the business also made
sense to Gillian. She loves the business and what it stands for – getting teenagers out
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of the basement, away from their video games while enjoying active, healthy fun! It’s
been a huge learning curve for her but well worth it!
Real estate absolutely played a part in helping her raise capital and her real estate
education made her comfortable choosing the market to be in. She did a ton of
research about where to go, and the demographics pointed her to the Durham region.
She read a lot about the Durham region while investing in real estate prior to investing
in Sky Zone.
Gillian originally wanted to open up a Sky Zone in Hamilton since that’s where all her
rentals were, but the municipal development charges were projected to be in the
multiple six figures! Given all the red tape and the expenses, they took their idea and
went to Whitby. The economic development office in Durham was very welcoming and
made it much easier to open up the business there.
In September 2019, Gillian realized it was time to move on from Sky Zone. So
together with her sister, they found a buyer and were out of the business before 2020.
The timing couldn’t have been better. In March 2020, COVID-19 locked down Ontario.
Trampoline parks went out of business.
Mothers of Real Estate (MORE)
Mother’s of Real Estate is a passion project that Gillian and her two great friends and
real estate investing colleagues, Rachel Oliver (a mother of two and the queen of
Rent-to-Owns), and Monika Jazyk, (a mother of four and Buy-Rent-Hold specialist)
founded in 2015. Recognizing that there were not a lot of women in real estate and
that together their skills encompassed a broad perspective in the real estate investing
space, they joined forces to empower and train other women to achieve the same
successes as they had. They started their own TV show and also developed an
in-depth online course to teach real estate investing (MothersOfRealEstate.com).
Their course focuses on investing fundamentals as they feel that if everyone could
have a foundational knowledge, they could invest profitably with confidence.
Coaching/training
In the early days, Gillian was mentored by Julie Broad and, in her opinion, Julie was
simply the best coach in the real estate business. She’s the reason why Gillian
refinanced and branched out in real estate investing. She felt so much more confident
when she knew what was possible and had a system to follow.
Gillian feels that once you learn a system, surround yourself with a great team, and
you know how to analyze a property with confidence and ease, it's just so much
easier to pull the trigger with purchases. Many people are paralyzed by fear and just
can’t move forward. Having a coach, someone in your back pocket who can counsel
you through your first purchase and can point you in the right direction, means you
can make decisions so much easier. Having a coach is key!
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Gillian really aligned with Julie because Julie had already achieved what Gillian
wanted for herself. Gillian feels strongly that you shouldn’t get your training from
someone who isn’t doing what you want to do and doing it well. Gillian did several
different courses, a joint venture workshop as well as an in-person weekend with
Julie. There were biweekly calls as well as access to her via email, so questions could
be answered. Julie’s Rolodex was really important too because, as a connector, Julie
introduced Gillian to so many people in the real estate industry. As mentioned, Julie
connected Gillian to me and that’s how Gillian started investing in Hamilton. She also
connected Gillian to Quentin D’Souza, another investor with his own network, in the
Durham region. It’s an asset knowing who to call when you have questions.
What’s the difference between Julie and other coaches? Julie comes from a corporate
background. She has proper business training. Be very careful with coaches. You
want to find someone who is already where you want to be. Julie made Gillian
accountable and also brought out Gillian’s competitive edge.
Giving Back
My connection with Gillian has had a lasting impact. Watching how Hamilton Basket
Brigade has given back to the community has inspired her to do something similar.
She supported Quentin when he started his Basket Brigade in Durham. She
volunteered at his event and she also donated space at Sky Zone Whitby every year
for the event itself. After watching and participating for several years, Gillian
eventually started the Riverdale Basket Brigade in her own community. Not only has
it been hugely successful at raising lots of money to help those who need it most, it
has also been one of Gillian's greatest joys.
Erwin Szeto 108

Chapter 9:
Where to Start?
Now that you know more about real estate investing, where do you start? Here is a
short checklist to get you started.
Your first steps as a real estate investor:

1. Finish the exercise at the beginning of the book if you haven’t done so, starting with
the question, “What do you want out of real estate?”
2. Decide on a strategy and where you want to invest. Look at the economical
fundamentals.
3. Decide who you are going to work with. Do you have a real estate agent in mind? If
you don’t, feel free to reach out and ask!! Start building your power team.
4. Find the property and complete your due diligence.
5. Buy the property and complete any renovations.
6. Rent out the property if you plan to keep it.
7. Manage the property if you decide to keep it.
I hope this book has served as a guide to you in your real estate investment journey. By
providing the above stories I hope I have inspired you.
Some last thoughts:

1. Do it with friends. I am around friends who are successful entrepreneurs,
including my wife, Cherry. This makes the experience and the journey that much
more fun. I regularly go on outings with friends as we learn and support each
other.
2. Take lessons. You don't know what you don't know. You can't see what you can’t
see. Take advice from a professional who has a track record of producing
successful clients.
3. Use your time wisely. Don't be afraid to try new things. Nothing ever goes
perfectly the first time. Five or 10 years from now, you're going to look back and
laugh at how you started from the bottom. Think how much more challenging
things will be in the next 10 years if you have not started. And how much further
ahead you will be if you started today. That time will pass no matter what, choose
wisely how you spend your time.
Erwin Szeto 109

I would love to hear from you or better yet meet you in person at one of our training
sessions. There is more information about our investment community, IWIN Real
Estate within this chapter. Good luck with your investment journey. I hope our paths
cross at some point in the future.
Infinity Wealth Investment Network (iWIN)

A group of like-minded people who meet monthly to share and network. It’s a place
where the latest strategies on real estate investing, productivity, how to improve
business and personal wealth are discussed. It’s a time with awesome speakers and
good company. It is hosted in the Greater Toronto Area for local investors to meet
face-to-face (or virtually while COVID restrictions are in place). You won’t regret your
decision to invest in yourself.
iWIN Real Estate
Our team of coaches are handpicked and mentored by me, who share your vision of a
more financially free future and we coach you to make it a reality.
We are much more interested in your results, paying attention to detail, and seeing
you become successful. Nothing makes us happier than seeing clients succeed. I
demand excellence from myself and the team. To me, this is not a “numbers game,”
we prefer, unlike most agents, to build long-term relationships with a select few and
not the masses.
Once you are part of our network, you will be assigned a coach who will work with you
to find your property, whether it’s your first, second, third, …or 10th!
Coaches have experience in their chosen geographic areas and can help investors in
their journey whether it is long term buy and hold, rent-to-own, showing the property,
managing the property, getting contractors for renovations, or just some hand holding
that is sometimes needed when first starting out.
Ready to invest?
You're ready to make a move! You know which strategy you want to use. You know how
much financing you qualify for. And you know what your purchase criteria are. Now it’s
time to find deals. Schedule a meeting with one of our investor coaches. They are
licensed realtors who are really good at finding you deals and walking you through
every phase of your investment.
Street Smart Tours

We offer tours in the Greater Toronto and surrounding areas, such as
Hamilton/Stoney Creek, St. Catharines, Niagara Falls, Kitchener, Waterloo and
Cambridge. Tours are a great way to spend a few hours with our coaches and
Erwin Szeto 110

like-minded investors to learn which properties to chose and what strategies can be
used on the property itself.
The tours are a practical way to learn and ask specific questions on how much
renovations could cost, who can help with the renovations and what are some of the
steps to secure permits and how the city deals with investors. These are all important
“insider” information where it would take a lot of time to research on your own.
These tours and networking events are great ways to immerse yourself in building
your knowledge.
Free Training Classes: How a Beginner Can Start Building Wealth Through Real
Estate
At these in-depth, free training classes you will learn how to take your first steps as a
real estate investor. Nothing is held back. Everything from analyzing basement suite
conversion deals, to renting out your first property at a profit, and even how to
refinance your properties. Some things you’ll learn:
● How to profit in a HOT market
● Municipal by-laws to watch out for
● Mortgage terms that favour refinancing
● A barely used tactic for higher appraisals
If you’re frustrated, unsure of how to get started, then these training classes are for
you.
Podcast
Truth about Real estate Investing for Canadians podcast where you will get to meet
and be inspired by real estate investors and wealth hackers as I interview them to
share their knowledge, their life, and their successes.
To listen to the latest episode visit: http://www.truthaboutrealestateinvesting.ca/
Wealth Hacker Conference

On November 9, 2019, we had our inaugural Wealth Hacker Conference in Toronto.
Grant Cardone, a bestselling author, renowned speaker, and real estate mogul, came
to speak at our one-day Conference. The Conference was well attended and many
people spent an inspiring Saturday with us. Our great team along with our sponsors
help us 10X our goal of providing education and sharing our message of wealth
creation.
Any future events will be announced on our website, visit often to get the latest
updates, better yet keep in touch by signing up to receive our email newsletter.
Erwin Szeto 111

To contact us, sign up for our training classes or newsletter, visit our website:
www.infinitywealth.ca
The Ultimate Win - Giving Back

Become the change you want to see in the World
“Thoughts and prayers are not enough to meaningfully improve the world. What’s
required is action.”
The Hamilton Basket Brigade
Built on the notion that one small act of generosity on the part of one caring person
can influence hundreds. What began as an effort from a few individuals to feed
families in need, has now grown into the Hamilton Basket Brigade. A charity
committed to improving the lives of those less fortunate and spreading a message of
love and caring for every soul in our community.
How did it all begin?
It all started in Roger Auger’s home delivering food baskets to 34 families in Christmas
2014. Most the donation at the time (we were not a registered charity) was donation
received from our network, all real estate investors.
Without receipts, we were able to raise enough funds for years, all from real estate
investors.
What separates the Hamilton Basket Brigade from other charities of its kind are the
volunteers involved. This is a group of individuals who believe in taking action to
produce positive change in the world. In just a single morning volunteers actively
gather, organize, and deliver all the food door-to-door. Volunteers get to intimately
interact with and see the faces of the children and families they are feeding.
We are a small local Hamilton charity taking a grass roots approach to feeding
families in need. Every single dollar donated goes directly to funding the purchase of
food, clothing, and toys.
Volunteering and gifting have changed over the years for the Hamilton Basket Brigade.
The budget per family grew from $75 per family to approximately $500 per family in
order to have a deeper and lasting impact on each family. We now make a deeper
impact by helping few families beyond dinner for Easter, Thanksgiving and Christmas.
Teams of volunteers are given a budget to go shopping based on the family needs and
wish list. One year there was a gift-wrapping party including a DJ, Batman, Thor &
Valkyrie, hot dogs, snacks and drinks, music, crafts and balloons. The gifts and food are
delivered to those who in need. The families are invited to pick up their gifts and enjoy a
day of celebration.
Erwin Szeto 112

It’s so heartwarming to see we’re making a difference in the community. For us, it has
become a family event involving my wife, Cherry, and our two children. I have dedicated
countless hours to fundraising and organizing the events.
Want to do something about it, too?
Being a part of the Hamilton Basket Brigade is a profoundly moving experience.
Witnessing the tears of gratitude, shock, and overwhelming joy, you’ll be transformed
seeing how your small act of involvement for one day truly does change the lives of
hundreds in our community.
Be the change that our community and the world needs. If you are local, new
volunteers are always welcomed to participate in future Hamilton Basket Brigades.
You’re invited to help lend support for the next Hamilton Basket Brigade. Donations of
any size will be accepted. Please give what you can and make a difference in the
world today. You can find more information about the Hamilton Basket Brigade at
www.hamiltonbasketbrigade.com.
I hope I have inspired to you to reach out to lend a helping hand in your own
community if not in ours.
“Be the Change You Want to See in the World”
– Mohandas Ghandi
Erwin Szeto 113

References
1. Scotiabank. (2020, February) News Release: 70% of Canadians Think They

Won't Save Enough for Retirement, Scotiabank Poll. Retrieved May 9, 2021 from:
https://scotiabank.investorroom.com/2020-02-11-70-of-Canadians-Think-They-Wo
nt-Save-Enough-for-Retirement-Scotiabank-Poll
2. World Health Organization. Canada. Retrieved August 21, 2020 from:

https://www.who.int/countries/can/en/
3. Wohlner, R. Average Stock Market Returns. Retrieved August 21, 2020 from:
https://www.wealthsimple.com/en-ca/learn/average-stock-market-return#stock_m
arket_return_historically
4. Ratehub.ca. Compare the Best High Interest Savings Accounts in Canada 2021.
Retrieved May 8, 2021
from:https://www.ratehub.ca/savings-accounts/accounts/high-interest)
5. The Canadian Real Estate Association. April 15, 2021: Record home sales in
March 2021, new supply increases. Retrieved May 1, 2021 from:
https://creastats.crea.ca/en-CA/
6. O’Doherty, H. & Katen, E. (2017, October 17). Immigrants Make Up 21.9% of

Canada’s Population: StatsCan. CIC News. Retrieved May 1, 2021 from:
https://www.cicnews.com/2017/10/immigrants-make-up-21-9-of-canadas-populati
on-statscan-109735.html#gs.xh8dt3
7. Government of Canada. Immigration, Refugees and Citizenship Canada

Departmental Plan 2018–2019. Retrieved August 21, 2020 from:
https://www.canada.ca/en/immigration-refugees-citizenship/corporate/publications
-manuals/departmental-plan-2018-2019/departmental-plan.html
8. El-Assal, K. (2020, February). Canada broke another record by welcoming

341,000 immigrants. CIC News. Retrieved May 9, 2021from:
https://www.cicnews.com/2020/02/canada-broke-another-record-by-welcoming-34
1000-immigrants-in-2019-0213697.html#gs.8jb5wu
9. Immigration.ca. (2019, August 21). How many immigrants come to Canada each
year. Retrieved on May 8, 2021 from:
https://www.immigration.ca/how-many-immigrants-come-to-canada-each-year
Erwin Szeto 114

10. El-Assal, K. (2021, February). Canada welcomed 184,000 new immigrants in

2020. CIC News. Retrieved May 9, 2021from:
https://www.cicnews.com/2021/02/canada-welcomed-184000-new-immigrants-in-
2020-0217133.html#gs.0xu6g5
11. Campbell, D.R., Reuter, M. & Fischer, A. (2014). GTA REIN Transportation
Report. Langley, BC: Real Estate Investment Network.
12. Campbell, D.R. & Hunt, J. (2019, Winter). Real Estate Investment Network – Top
Ten Towns and Cities Ontario. Langley, BC: Real Estate Investment Network.
13. Airbnb. What is the Airbnb service fee? Retrieved August 21, 2020 from:
https://www.airbnb.ca/help/article/1857/what-is-the-airbnb-service-fee
14. Turgeon, P.P. (n.d.) Multifamily Investing Secrets Revealed: Making Money with
Apartment Buildings. [Powerpoint] https://www.multifamilyinvestingcanada.com/
15. Turgeon, P.P. (n.d.) Multifamily Investing Secrets Revealed: Assessing the
Investment Risk. [Powerpoint] https://www.multifamilyinvestingcanada.com/
Erwin Szeto 115

Free Events For the Beginner Real Estate Investor
Check out these free events we put on every month (excluding the summer months). Click
on the event you think would suit you best:
iWIN Monthly Meeting
Absorb wisdom from seasoned empire builders. Our

iWIN Monthly Meeting brings together Ontario's most
successful real estate investors and wealth hackers. We
get to learn their tips and tactics and see how they're
finding success in real estate today. These monthly
meetings are 3 hours long, packed with market updates,
strategic seminars and practical workshops. The cost of
registration is $20, but all profit is donated to our local
charity, the Hamilton Basket Brigade.
infinitywealth.ca/events
Free Real Estate Training
Do you need help getting started investing in real estate?

Would you like to learn the #1 strategy for profiting in this
crazy real estate market?
We offer a free class teaching you how to take your first

steps as a real estate investor.
You’ll also learn how to analyze basement suite

conversion deals, rent out your first property at a profit,
and even refinance so you can do it again!
Street Smart Tour
Whether you’re just starting out or are a seasoned

investor, you’ll gain valuable insights on our virtual
property tours.
At this Street Smart Tour, you'll see real deals in

Brantford, find hidden profit boosters, walk and talk with
experienced investors, and even connect with industry
pros.

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What events are available for beginner real estate investors?

© ECRB Investments Inc.

Published in Oakville, Ontario by ECRB Investments Inc.

Cover Design: [Jason Mores]

Printed in Canada. June 2021.

A note about the content:

What people are saying about Erwin:

Andrew MacDonald ~ REIN Member, Rock Star Member, owner of Ownership

What people are saying about iWIN:

Real estate investing is a personal decision. Consult the services of a competent

6. What is your investment horizon?

Other questions to think about specific to real estate:

2. Are you trying to protect your capital?

3. When are you expecting a return on investment?

Investing in stocks is investing in public companies. By investing in shares of that

However, I would like to briefly mention Stock Hacking.

2. High Interest Savings

Figure 1: Hamilton Real Estate Price History

Source: Listing.ca. Reprinted with permission. Retrieved May 1, 2021 from:

Build Equity and Wealth

The Ultimate Savings Machine

What happens when the real estate market appreciates by 3%?

Year 1: $15,000 on a $100,000 investment = $115,000

Table 2: Appreciation after 5 years of ownership

Real Estate Tax Advantages and Deductions

Here is a list of deductions:

1. Mortgage interest, not the mortgage principal

4. Property management fees / expenses you paid to fill the property

Table 3: Simplified Marginal tax rate in Ontario

$45,000 – $73,000 30%

$73,000 – $91,000 34%

Table 4: Marginal Tax Rate and Calculate Tax Liability

Below $45,000 6,632

Total tax liability $17,412

Average tax rate 22%

Why are these two definitions important?

As a real estate investor, your rental income is subject to tax.

Understanding Your Local Real Estate Market

Some examples of major expansion include:

Look at Real Estate Market

Don Campbell is a Senior Research Analyst at REIN, a Canadian-based real estate

Residential Real Estate Investment Strategies

Figure 2: Ontario's Greenbelt

Single Family Rental Property

What are property values like for Single Family Houses?

Table 5: Single Family House Prices (3 bedrooms, 1-2 bathrooms, detached)

City Average House prices

St. Catharines $ 450,000.00

Source: iWIN Real Estate, June 2020

In today’s GTA market, do single family homes still cashflow?

As of this writing, the answer is “maybe”, it depends on a number of factors, for

Table 6:Average Rents for Single Family House

City Average Rent 3 Bedroom

St. Catharines $ 2,200.00

Source: iWIN Real Estate, internal poll of clients, June 2020

What about Condos?

Monthly Payments Condo Single Family