F.A.Q.'s

I decided today would be a great opportunity for me to answer some of the more common questions that I receive about my recent ventures in real estate. It will give some background on my thoughts and goals in this whole process. Although some of the renovations will not occur until late summer, I want to be able to plan as much as possible to help reduce costly mistakes. I will be posting to the blog on a semi-regular basis as a result.

When are you moving in?

I am planning to move into the house in September 2008. Currently, the house is being rented by students. The students are under lease until the end of August. Their rent payment will be enough to cover my mortgage for the period that I do not live there. This will give me an opportunity to try to save up some money to help towards renovations.

How can you afford two houses?

I can't. I would never be able to pay the full cost of the two mortgages on my own. The key is to have income coming in. I have decided to rent out one property entirely, and the other property entirely until I want to take over. After I take over, I plan to rent out a room or two to help cover some of the expenses. Hopefully, by doing this, I will be able to get a little more money ahead to help with additional renovations.

When I bought the first house, I had used some of my personal savings for down payment. In addition, I had performed some legal maneuvering in order to obtain this home. I'm not going to get into many details, but tell you that I now own that house.

As for the second house, I purchased this home using money that I had saved up over the years using an RRSP. When I was 18, I put $3500 into an RRSP. Every subsequent month, I had put $50 per month into the RRSP. Honestly, if you have never done it, I would recommend making an RRSP contribution this year. There are tax benefits now and you will be saving for a home in the future. There are some serious benefits in doing this. The $50 a month is nothing. I do not even notice it coming out of my bank account each month, but it has paved the way for me to own a house.

In addtion to the RRSP advice, I want to give another little bit of wisdom. Although it seems like that it sounds very profitable and the opportunity to establish some equity sounds desirable, it is very important to consider many factors when purchasing a home. Most people will only ever buy a home once or twice in their lifetime. It is truly one of the most important decisions that you can make. Therefore, it is important to do your homework. There is not much point in paying a mortgage if you decide that you are not settled into a career or city. The transaction costs associated with homes is fairly significant and the concept of living in a home for one or two years is probably going to result in you losing thousands of dollars. You have to be sure you want the home.

Where did you find the second house?

I'm a bit of a real estate junkie. I frequently visit mls.ca to help keep an eye on the properties in the vicinity of the first home that I bought. I want to see if places are selling, what they are being listed at, and the details of those homes that are comparables to the home that I own.

Recently, I've been using mls.ca to look at homes in the area in which I wanted to live. I wanted to do some research on the area. I wanted to make sure that the place I bought wasn't going to cost me any more then it had to. I had stumbled a couple of properties in the past that I thought would be pretty good, so I had an old friend from high school send me some additional information. He's a real estate agent and he gives me some extra info on properties if I ask him. Unfortunately, the properties I thought might have some potential were listed on Bell Street. Bell Street is a dump and the houses were appropriately valued.

One day, I had came across another property. I asked my real estate agent for some additional information and he told me that it was on Arlington Street. Not knowing where it was at first, I google-mapped it and decided that this was a prime location. The price seemed right, so I made an appointment to go and see it. The rest is history and will explain it at another time...