At a recent member event for Rock Star Real Estate out of Oakville, Tom Karadza talked about the true cost of management fees charged by managed funds.
Tom quoted a recent book he was reading by Tony Robbins “Money Mastering The Game”. We heard about the hidden fees charged by managers.
“Most people don’t do the math, and the fees are hidden. Try this, if you made a onetime investment of $10,000 at age twenty, and, assuming 7% annual growth over time, you would have $574,464 by the time you’re nearly my age[eighty]. But, if you paid 2.5% in total management fees and other expenses, your ending account balance would only be $140,274 over the same period.”
Someone’s making out well in this scenario but it’s probably not you or I.
So if mutual funds by the way of Registered Retirement Savings plan(RRSP) aren’t a rewarding way for Canadians to save, what is?
To reduce the fees I was looking at paying, from purchasing RRSP’s, I opened a discount broker account at my bank. Which is a way for investors to self direct which stocks and bonds they wish to buy, but without all those fees.
My choices to buy were well established companies stock at a fairly steep price or lesser known ones that may be equivalent to rolling a pair of di’. I liked the idea of buying funds that paid you back(dividends), however it would take years to make any significant gains and get a decent return on my investment.
Through more investigation and planning, I realized if I saved that same amount that was set aside for mutual funds and paid down the mortgage on my investment properties I would get a nice return later.
The benefits of owning Real Estate in Ontario are 3 fold.
Over the years as living expenses has increased I plan on keeping up by making the rental price adjustments necessary. As for my would be RRSP’s hopefully at retirement they would be there when I need them.
I choose something not so easily evaporated with market volatility!
Here's how to find five star tenants
and manage your units like a pro!
Landlords, want a fast easy way to increase your cash flow? How about an increase in your rent collected? An increase seems like a quick, easy way to balance the books. So when is it a good time to bump up the rent? The answer I respond with is actually in two parts.
First, landlords can only raise rent on their tenants after a year of tenancy. Typical leases run for an entire year and then, if not renewed are considered on a month to month basis. This is the point you may follow the landlord tenant guidelines to raise it which is subject to regulated caps - or simply put - no more than the prescribed amount for that year. In 2015 the amount is 2.6%. There are instances where you can apply to the Landlord and Tenant Board for a rental increase sooner (interest rates have changed significantly, the necessity to refinance to cover costly repairs)
The second part of my answer to landlords is should you be raising the rent? Market conditions and comparable properties should be taken into consideration. If you raise the rent too much on tenants who may already be at the top of their comfort zone, they will most likely begin looking elsewhere. This could leave you vulnerable to unexpected expenses for advertising, paint and other maintenance or repairs just to fill your property all over again. Over time, consistently keeping your units filled is the best way to ensure your investments remain profitable.
Whether you choose to wait for the anniversary date of the lease or apply for an early rental increase, you should always consult the ltb.gov.ca site for more information. Here you can also learn how to properly serve a rental increase notice to your tenants and avoid any unnecessary conflicts.
Please leave me a comment if you found this information helpful.
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Again I'm reminded of the challenges that face many this time of year. Sometimes we neat to treat difficult tenants with a bit more reserve then normal. After all holiday bills are rolling in, manufacturing slows down and some of us are fighting the effects of Canadian winters. Us, as Ontario landlords inherit our tenants problems.
I must admit to something here dear readers, I don’t always feel like greeting each challenge with a smile on my face. I'm a person after all and sometimes my initial reaction is to shout, give notices and yes sometimes I even curse! Thankfully, this is done internally and when reason returns (often times with the direction of my better half)I find a more constructive way to deal with my tenants.
To this day I believe communication is one of the keys to reaching residential resolutions.
So pick up the phone fellow landlords and property owners, send that email, knock on those doors. Let’s see if we can’t get Johnny student to pick up his clothes so we could spray for bugs. Let’s let Mrs. Tenant know if the foundation leaks it’s perfectly okay to give us a shout. And let Martha “maybe next friday” know hey, if you have some of the rent right now I can hold on to it for you! With a bit of work and decorum we can find a solution that works for all.
Good luck hope your holidays don’t seem to distant yet.
Glenn Brown is owner of My Rental Unit property management and has enjoyed success with multiple unit investing.