June Lam [Investment Focused Realtor] - THE DOOR TO GENERATIONAL WEALTH: COMPREHENSIVE GUIDE TO REAL ESTATE INVESTMENT

THE DOOR TO GENERATIONAL WEALTH: COMPREHENSIVE GUIDE TO REAL ESTATE INVESTMENT

June Lam [Investment estment Focused Realtor]

Table Of Contents

Mastering Your Mindset for Real Estate Success 2

Financial Fundamentals

Financing Your Investments

How to analyzing different type of properties 42

What is Real Estate Wholesaling?

Benefits and Risks of Wholesaling

A Guide to Flipping Houses

Making Money on Flipped Houses

Renovation ROI

104

10. How to create generational wealth

118

11. Property Management 101

132

12. How to Sell or Rent Your Investments for the Most Money

166

13. Why Staging Makes All the Difference

174

14. Why Curb Appeal Matters

190

15. Why You Can’t Afford to Invest Alone

194

16. Why Professional Photos Matter

198

17. Final Thoughts

200

Foreword Message t d Message to my readers: eaders: This book is a heartfelt tribute to my beloved parents—my father, Mr. Yuen Tai Lam, and my mother, Dr. Shuk Chun Lau—who now watching over me in heaven. Your lives have been a profound source of inspiration for me in countless ways. You taught me the importance of dreaming big, taking decisive actions, and extending forgiveness and helping hands to others. Your humility, kindness, and patience never wavered, and your boundless love continues to surround me. Your unwavering belief in me surpasses my own self-confidence. Your forgiveness when I fall short serves as a constant reminder of your unconditional love. I miss you each day, and I am forever grateful for the enduring love and support you provided throughout your lives. Your legacy guides me, inspiring my soul to live with dignity and gratitude. I made a promise to you—to be the best version of myself, to serve as a role model for my daughter, and to contribute positively to the world around me. I pledged to make you proud and envisioned us laughing and celebrating together in Heaven. My vision extends beyond personal aspirations; it includes creating fun and unforgettable happy memories for you and your loved ones through the realm of real estate investing. This book aims to open your eyes to a world of possibilities, showcasing that solutions exist for every situation. Real estate is not a short-term gamble, but rather a long-term investment and wealth builder to generational wealth. Above all, my unwavering dedication to real estate springs from a profound aspiration to empower you in reaching your goals. Countless hours have been poured into crafting this book with the sole aim of extending a

helping hand to you. Time is a precious commodity, not to be squandered but cherished with every passing moment. My ultimate wish is for you to possess the freedom to decide your path, to pursue your desires alongside your loved ones, granting you the POWER of CHOICE in all that you do. A meaningful portion of my income is devoted to constructing sustainable housing and supporting women's shelters, providing individuals with the opportunity to live the life they deserve--- My Calling to real restate. Thank you for embarking on this journey with me. May this book inspire you, offer new perspectives, and serve as a testament to the enduring power of love, hope, and possibility.

With heartfelt regards,

June Lam-Awad and my team

About me Born into a middle-class family, my mom, a doctor, and dad, an engineer/architect, instilled in me the belief that with dedication, I can create anything. Embracing this mindset, I became a dreamer. Despite a challenging childhood during the Cultural Revolution, I saw my once-wealthy mother's family tragically lose everything to the government. They went from a comfortable life to a family of eight in two rooms with no shower or washroom. Although not born at the tragedy's onset but towards its end, I witnessed their struggle to adapt to such drastic changes. Despite these challenges, my mom completed her doctorate and married my dad to support the family. Observing these hardships, I lost my childhood innocence and vowed to change our lives for the better. Upon moving to Hong Kong from mainland China, I watched my parents transform our family's fortunes from nothing to comfort. Surrounded by the stunning architectural landscape of Hong Kong, I dream of a day when I can afford a place of my own and continue the journey of creating a life I deserve. Given the chance to study in Canada as a high school visa student with my parents support, I, like many teenagers, pursued my dream career. Driven by a passion for creating beautiful fashion, I graduated from a prestigious college as a fashion designer. Fortune smiled upon me when I was hired by the renowned Canadian designer Brenda Beddome even before completing my studies, leading to the acquisition of my Canadian work permit and citizenship. As a young and driven graduate, I committed five years of my life to different fashion companies. Yet, I found myself

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increasingly discontented with the disparity between the effort I exerted and the financial rewards I received. Yearning for a change, I transitioned my career path to become a financial advisor, where I had the privilege of guiding numerous families toward financial independence. Finding true fulfillment as my professional guidance began to harmonize with tangible results, I happily retired from this field in 2018 after dedicating 16 years to serving countless families. As my husband's business continually thriving, we made the pivotal decision to relocate, anticipating positive outcomes for his enterprise. However, unforeseen challenges arose, prompting me to choose the path of staying at home to take care of our young child and aging parents. Tragically, the passing of my mother-in-law and my own parents added a layer of profound guilt to an already demanding situation. The last five years of their lives were marked by intense difficulty, and despite my sincere efforts, I couldn't shake the feeling that my caregiving fell short. I longed to have provided them with better care and to potentially extend their time with us. This desire triggered a quest for the meaning of life and avenues to improve our financial situation while my daughter was at school. My journey toward self-discovery and healing unfolded through prayer, meditation, and introspection, eventually leading to a transformative realization. I reached a point of forgiveness, extending compassion to both myself and those who had deeply hurt me. This pivotal shift redirected my focus toward personal development, and amid this exploration, the realm of real estate opportunities became apparent. Devoting my energy to learning from Keyspire and obtaining an Ontario Real Estate license, I strategically combined this newfound knowledge with my background in financial

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planning. The result was a remarkable growth in our real estate portfolio, soaring from six digits to eight digits within a mere three years, with ambitions for continued exponential expansion. These experiences underscored the significance of financial literacy and astute money management. Recognizing that financial security and abilities to make choices are fundamental for meeting family needs and providing for loved ones, I discovered that it's never too late to acquire knowledge and implement improved financial practices with transformative potential. I am eager to share these insights and experiences with you, offering guidance to navigate similar challenges and cultivate a more enriching life with your loved ones. Reflecting on my journey, I pose the following questions: • What is the most significant regret in your life? • What changes would you make if given a second chance? I extend an invitation for you to join me on a journey of learning, assuring you of my commitment to guide you through each step. This endeavor is not just a calling but a safe space for exploration and growth. Here are the 3 questions I want you to reflect on your own journey: (Please write it down below) 1, What is your story? I would love to hear from you by email me at june.lam@purposedrivenrealty.ca

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2, What is the most significant regret in your life?

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3, What changes would you make if given a second chance?

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CHAPTER 1 Mastering Your Mindset f our Mindset for Real Estate Success Introduction: What kind of life are you dreaming of? A retirement at 40, 55, or 65? Or perhaps you haven't thought about it yet? It's crucial to sit down and figure out how much you need to stop working, ensuring you have the freedom to choose when and where to retire. As a former financial advisor/consultant planner, I've witnessed many families living without plans, living paycheck to paycheck, or lacking a backup for unexpected events. Life can be beautiful when it goes right, but without a solid plan, it can get tough. Embracing Challenges and Finding Faith: Growing up was a bumpy road for me, filled with traumas. It almost led me to abandon education and settle for any job just to make ends meet. However, finding faith in Jesus Christ transformed my life. This part of my journey is essential to share because, in the pursuit of wealth, we can't ignore the internal transformations that define true success. As bible said:"And we know that all things work for good for those who love God, who care called according to his purpose." Romans 8:28 We are financially secure enough to retire according to my plans, yet what truly energizes me each day is the prospect of creating new deals. Each opportunity brings excitement and joy, but what's most fulfilling is the chance to give back and make a difference. Growing up with parents who were generous givers, 2

I've inherited their spirit of generosity. For me, life without giving lacks meaning. My goal is to allocate at least 20% of my income towards supporting women's shelters and constructing sustainable homes, fostering hope and spreading love, and empowering those less fortunate to find fortune! The Reality of Real Estate: Let's get real about real estate. If you're expecting a magic formula for quick riches and retirement within a year, it's not that simple., The cornerstone of real success in real estate, and life, is your mindset. The Power of Mindset: Your mindset shapes how you see yourself and what you believe you can achieve.

Walt Disney said, "If you can dream it, you can do it."

Your dreams are within reach, and you have the capacity to achieve them. Your mindset is the key; you are who you believe you are, and you are the author of your story. Tony Robbins said: "Life is always happening FOR you, not TO you. Appreciate that gift and you are wealthy now and forever!" This is the power of mindset – you become what you believe, and your life reflects the story you create in your mind. There was time when I believed my life was miserable. However, a spark remained, fueled by the memory of my childhood dream – the dream of a life I truly deserved. Let's revisit your dreams; take a few moments to close your eyes, inhale deeply, and connect with your soul. Search for your authentic dream. Envision living that dream now, engaging in activities you love, with the freedom to choose where and how you live. Continue this imaginative journey for another 5

minutes. Breathe deeply, revel in the incredible life you've envisioned, wear a smile, and immerse yourself in it for a couple more minutes. As you open your eyes, capture those dreams and write it down at the end of this chapter. Create a vision board, a daily reminder hung where you can see it – a tangible representation of your aspirations.

Yes, it's happening – your dreams are unfolding.

The 80/20 Rule and Daily Priming: Understanding the 80/20 rule is vital. Eighty percent of your success is based on your mindset, and the remaining 20 percent is about execution. I personally spend at least 30 minutes daily priming my mind, using Tony Robbins' techniques. The transformation in my life is undeniable. My story: For the past year, I've incorporated Tony Robbins' free priming (from Youtube) into my daily routine. I've observed a remarkable alignment between the thoughts I set during priming and the way events unfold. Picture your brain as a blank canvas; you have the power to sketch anything on it. This underscores the significance of priming each morning—it triggers your brain to align with the positive images you imprint on it, setting the tone for your day. Your mind follows the direction you draw, making the practice of priming an invaluable tool for shaping a positive mindset and influencing your experiences. Transition to the 20% Work: Now that your mindset is primed, it's time for the 20%—the action. In the next pages, you'll discover the practical aspects of real estate investment. From property types to financing, I'll guide you through the essentials. Even if you're already an

investor, there might be strategies here that enhance your journey. What's Ahead: We'll explore various real estate investment types, share ROI insights, how I created our real estate business from $0 to running a eight figure plus real estate portfolio. We will also delve into effective marketing, building your investing team, working with agents, and the benefits of passive investing for those who don't want the hassle of dealing with tenants. Conclusion: Stay tuned; your real estate investment journey is about to begin. Whether you're a seasoned investor or a novice, these pages hold the keys to enhancing your financial future. Let's dive in and turn your dreams into reality! Let the fun begin!!

Here are 3 questions for you:

1, Following your meditation, what is the empowering narrative you now choose to craft for yourself, inspired by Tony Robbins' perspective that "Life is happening FOR you, not TO you"?__________________________________________________________ 2, Envisioning your future self during meditation, in alignment with Walt Disney's iconic quote, "If you can dream it, you can do it," what does this vision entail?_________________________________________________________ 3, Reflecting on your commitment to create a life you and your loved ones deserve, articulate two paramount goals you aim to achieve in the upcoming years. What are the two most important things you are determined to accomplish?____________________________________________________

CHAPTER 2 Financial Fundamentals

Let's talk about financial fundamentals, for many years of working at Finance industry, every time that I need to help my clients with any investment decisions. I always use the following steps to determine what kind of investments were suitable for them.

Here are how we start:

Define your investment goals:

A, Financial Objectives: Determine desired financial outcomes:

• Targeted Rate of Return (ROI) • Cash flow Requirements • Long-Term Capital Appreciation Goals

B, Risk Tolerance: Assess your comfort level with risk and volatility: • Consider your willingness to tolerate market fluctuations and potential losses. • Determine whether you prefer conservative, moderate, or aggressive investment strategies. I have 7 questions for you to ask yourself and get better ideas of which categories that suit you.

1. I need my money for some future occasions:

• within 6 months (1 point) • within 3 years (2 points) • between 3-5 years (3 points) • more than 6 years (4 points) 2. I have a diversified investment portfolio (A diversified portfolio is a collection of various investments across different asset classes, industries, sectors, and geographic regions): • less than 25% (1 point) • in between 25-49% (2 points) • in between 50-74% (3 points) • more than 75% (4 points) 3. With more than 80% certainty that my future income is going to be: • decrease (1point) • same or slightly increase (2 points) • growing faster than inflation rate (3 points) • growing quickly almost double (4 points) 4. I have emergency funds set it aside for 6 months of our monthly income: • no (1 point) • less than 2 months of our income (2 points) • 3-4 months of income (3 points) • 6 months or more (4 points) 5. I am willing to lost all my invested money in this deal to take the possibility to get more than 16% of my investments: • zero (1 point) • 10% (2 points) • 25% (3 points) • 50% (4 points) 6. I am a very experienced investor across different asset classes, industries, sectors, and geographic regions: • not at all (1 point) • yes in some of the above but feeling uncomfortable (2 7

pts) • not really but I want to try (3 pts) • yes and 100% comfortable (4 pts)

7. My ultimate investment goal is to: • To be able to keep all my initial investment funds (1 pts) • able to replace part of my income through the deal (2 pts) • my investment grow faster than inflation & provide some income (3 pts) • Just looking for the fast growth with no income concern (4 pts) Answers: • conservative investor: 1-14 points • moderate investor: 15-18 • aggressive investor: 19-24 What is your answer? Mine is 15. So I am a moderate risk taker investor. I've witnessed numerous individuals lose their life savings or life due to various investment ventures. My heart goes out to them, and it's this empathy that fuels my determination to write this book. Investing blindly is akin to diving into the ocean without knowing how to swim. It's a risky endeavor that can lead to devastating consequences. What is risk tolerance? Risk tolerance refers to an individual's or an entity's willingness and ability to withstand fluctuations in the value of their investments. It reflects their comfort level with uncertainty and the potential for loss. In general, risk tolerance is influenced by various factors, including financial goals, time horizon, investment experience, and personal preferences. In real estate investing, risk tolerance can vary significantly depending on the asset class.

Here are some examples of what real estate investments look like in each risk tolerance level: Conservative: Conservative real estate investment typically involves strategies aimed at minimizing risk while still generating steady returns. Here are some characteristics and principles commonly associated with conservative real estate investment: 1. Focus on Stability: Conservative investors prioritize stability over high returns. They often prefer established markets with proven track records of appreciation and rental demand. 2. Cash Flow: Conservative real estate investors prioritize properties that generate consistent cash flow. This could come from rental income or other sources such as leasing to businesses. 3. Low Leverage: Conservative investors tend to avoid high levels of debt or leverage to minimize financial risk. They often aim for lower loan-to-value ratios to ensure they have sufficient equity in the property. 4. Long-Term Perspective: Conservative investors typically have a long-term investment horizon. They focus on assets that have the potential to appreciate steadily over time rather than seeking quick profits. 5. Diversification: Diversifying across different types of properties or geographic locations is a common strategy among conservative real estate investors. This helps spread risk and reduce the impact of localized market downturns. 6. Focus on Quality: Conservative investors prioritize quality properties in good locations. They often look for properties with strong fundamentals such as desirable neighborhoods, good school districts, and

access to amenities. 7. Risk Management: Conservative investors conduct thorough due diligence and risk assessments before making investment decisions. They may also implement risk mitigation strategies such as property insurance and proper maintenance. 8. Resilience to Market Volatility: Conservative real estate investments are chosen with the aim of being resilient to market fluctuations. This can include selecting properties with stable tenant bases or properties in industries less affected by economic downturns. Overall, conservative real estate investment is about balancing risk and return, with a focus on preserving capital and generating steady, reliable income over the long term. Here are some examples of conservative real estate investment strategies: 1. Turnkey Properties: Turnkey properties are fully renovated and often come with tenants already in place. Investors purchase these properties and immediately start generating rental income without the hassle of renovations or finding tenants themselves. Turnkey properties are considered conservative because they typically involve lower risks associated with property maintenance and vacancy. 2. Single-Family Rentals in Stable Markets: Investing in single-family rental properties in stable, established markets can be a conservative approach. These properties tend to attract long-term tenants, providing a steady stream of rental income. Conservative investors may prefer properties in neighborhoods with low vacancy rates, good schools, and strong economic

fundamentals. 3. Triple Net Lease (NNN) P e (NNN) Properties: NNN properties are commercial real estate investments where the tenant is responsible for paying property taxes, insurance, and maintenance costs in addition to rent. This arrangement shifts many of the property management responsibilities to the tenant, making it a conservative option for investors who prefer a hands- off approach. 4. Real Estate Investment Trusts (REITs): REITs are companies that own, operate, or finance income- generating real estate across a range of property sectors. Investing in REITs can provide diversification across different types of properties and geographic locations, making it a conservative option for investors who prefer a more passive approach to real estate investment. 5. Real Estate Crowdfunding: Real estate crowdfunding platforms allow investors to pool their funds to invest in various real estate projects. Conservative investors can choose projects with lower risk profiles, such as stabilized income-producing properties or debt investments secured by real estate assets. 6. Low-Risk Development Projects: Conservative investors may participate in real estate development projects with low levels of risk, such as projects in high- demand areas with strong pre-leasing or pre-sales activity. These projects typically have well-defined exit strategies and conservative financial projections. 7. Commercial Real Estate Leasebacks: Leaseback arrangements involve selling a property to a tenant and then leasing it back from them. This can provide a stable income stream for investors while allowing tenants to maintain control over the property.

Leasebacks are often structured with long-term leases and creditworthy tenants, making them a conservative option for investors seeking steady returns. These examples illustrate various ways conservative investors can approach real estate investment, focusing on stability, income generation, and risk mitigations. Moderate: Moderate real estate investments typically involve strategies to increase the value of a property while managing risk. Here are some details and examples: 1. Value-Add Renovations: This strategy involves making improvements to a property to increase its appeal and rental income potential. Examples of value-add renovations include updating kitchens and bathrooms, adding new flooring, or improving curb appeal through landscaping. 2. Strategic Property Upgrades: Investors may focus on upgrades that have a high return on investment (ROI) and improve the property's marketability. This could include installing energy-efficient appliances, upgrading HVAC systems, or adding amenities such as a fitness center or community space. 3. Repositioning: Repositioning involves rebranding or repositioning a property in the market to attract a different tenant demographic or command higher rents. For example, converting an older office building into trendy loft apartments or transforming a retail space into a mixed-use development with retail shops on the ground floor and residential units above. 4. Acquiring Underperforming Assets: Investors may target properties that are underperforming due to mismanagement, deferred maintenance, or other

factors. By implementing better management practices and making necessary improvements, they aim to increase the property's cash flow and overall value. 5. Market Timing: Timing the market plays a crucial role in moderate real estate investments. Investors may target markets where property values are expected to appreciate steadily over time, balancing potential for growth with stability. 6. Diversification: Investors may diversify their real estate portfolio by investing in different types of properties or across different geographic locations. This helps spread risk and minimize exposure to market-specific downturns. 7. Active Management: Unlike passive investments like turnkey properties, moderate real estate investments often require more active involvement from the investor. This may include overseeing renovations, managing tenants, or working with property management companies to maximize returns. Overall, moderate real estate investments aim to strike a balance between risk and reward by implementing value-adding strategies while also considering market conditions and investor involvement. Moderate-risk real estate investments often involve strategies that aim to enhance the value of the property over time through active management or improvements. Here are some examples, with a focus on value-add strategies: 1. Multifamily Value-Add Properties: Investing in multifamily properties with the intention of implementing renovations and improvements to increase rental income and property value is a common

moderate-risk strategy. This could involve upgrading unit interiors, adding amenities, or improving common areas to attract higher-paying tenants. 2. Mixed-Use Developments: Investing in mixed-use properties, which combine residential, commercial, and retail spaces, can offer moderate risk and potential for value appreciation. Value can be added through strategic leasing, repositioning, or redevelopment to optimize the property's income potential. 3. Distressed Properties: Purchasing distressed properties, such as foreclosures or properties in need of significant repairs, can offer opportunities. 4. Value-Add Commercial Properties: Investing in commercial properties with opportunities for repositioning or lease renegotiation can offer moderate risk and potential for value appreciation. This could involve upgrading building systems, refreshing tenant spaces, or renegotiating leases at market rates to increase cash flow and property value. Aggressive real estate investments typically involve higher levels of risk and potential for higher returns compared to conservative or moderate-risk strategies. These strategies often require active management, significant capital investment, and may involve speculative elements. Here are some examples of aggressive real estate investments: 1. Development of High-Rise Buildings: Investing in the development of high-rise residential or commercial buildings in prime locations can be considered aggressive. These projects often require substantial capital investment, extensive market research, and navigating complex regulatory and zoning requirements. The potential returns can be significant,

but so are the risks associated with construction delays, cost overruns, and market fluctuations. 2. Speculative Land Investments: Speculative land investments involve purchasing undeveloped land with the expectation of significant value appreciation in the infrastructure development, or market demand. While the potential returns can be high, speculative land investments carry substantial risk due to uncertainties surrounding future development potential and market conditions. 3. Distressed Property Flipping: Flipping distressed future. These investments are typically made in anticipation of changes in zoning regulations, properties involves purchasing properties at a significant discount, making improvements or renovations, and quickly reselling them for a profit. This aggressive strategy requires expertise in identifying undervalued properties, managing renovations efficiently, and timing the market for resale. It can be highly profitable, but it also carries risks such as unexpected renovation costs, market downturns, or difficulty finding buyers. 4. Highly Leveraged Investments: Aggressive investors may use high levels of leverage, such as borrowing a large portion of the purchase price, to amplify returns. While leverage can increase potential returns, it also magnifies risks, especially in volatile or declining markets. Highly leveraged investments require careful risk management to avoid potential financial distress in case of adverse market conditions. 5. Promissory Note: Stands out as a widely utilized funding mechanism, offering investors the allure of high returns without requiring them to relinquish any equity stake. This financial instrument promises

investors a fixed return within a specified timeframe, providing an avenue for capital deployment that emphasizes returns over ownership. This approach is considered extremely aggressive due to its high-risk nature, as it prioritizes potential returns without offering investors any ownership stake or collateral. Investors essentially rely solely on the borrower's promise to repay the loan, making it a particularly bold strategy with significant exposure to default risk. 6. Investing in Emerging Markets or Niches: Aggressive investors may seek opportunities in emerging real estate markets or niche sectors with high growth potential but limited track record. Examples include investing in emerging technology hubs, revitalizing urban neighborhoods, or niche sectors like cannabis- related properties. These investments offer the potential for outsized returns but also carry higher risks due to market uncertainties and regulatory factors. Overall, aggressive real estate investments involve higher levels of risk and require a higher tolerance for uncertainty. While they offer the potential for significant returns, investors should conduct thorough due diligence, carefully assess risk-reward trade-offs, and have a clear understanding of their investment objectives and risk tolerance. After carefully assessing the risk tolerance applicable to real estate investments, the next step is to understand the four crucial elements essential for achieving well-rounded financial principles. I called them Four Wealth Builder Pillars: Emergency Fund; Diversification; Asset allocation and Asset Protection. As a former financial advisor, I strongly applied these FOUR financial principals to my business model when I make my

business decisions. I applied these 4 principles and have at least 9 months of expenses set aside and then divided asset allocation into 45/55 (45% at non-real estate related investments, 55% in real estate investment), and add Asset protect along way. I called it 4 Wealth Builder Pillars. 4 Wealth Builder Pillars: • Emergency Funds: • Percentage/Amount: 6-9 months of income • Importance Explanation: Critical for emergencies • Examples of Events: Interest hike, Illness, home repairs, etc • Resulting Benefits: Stress relief for the family • Diversification • Percentage: 40-50% (non-real estate related) • Importance Explanation: Spread across assets to mitigate risk • Examples of Events: Stocks, Bonds, Real Estates, Commodities • Resulting Benefits :Risk mitigation, enhanced returns • Asset Allocation: • Percentage/Amount: 50-60% (Real Estate related) • Importance Explanation: Aligns with objectives & risk appetite • Examples of Events: Aggressive allocation for younger investors VS conservative for those near retirement • Resulting Benefits: Optimize returns while managing risk

• Asset Protection: • Percentage/Amount: Strategies in place

• Importance Explanation: Shielding assets from legal liabilities • Examples of Events: Legal structures, Insurance policies, Trust, etc • Resulting Benefits: Protection from legal claims and creditors Emergency fund: I can't mentioned how extremely important that it is. Emergency fund are the funds are ready for your family to access in the event of any unexpected events. That can be illness stops you from earning your regular income; family unexpected expenses could be interest rate hike, your car broken down, your roof needs to be change or you need to go to visit your foreign parents and so on. This is so important because without it, you can put your family in a very stressful possition. For instance, as of 2023, borrowing costs have surged threefold compared to the period of 2021-2023. Numerous investors and homebuyers stretched their mortgage limits, anticipating interest rates to remain stable. Unfortunately, the rates have risen rapidly, catching many off guard. If, for example, you were previously paying $2000 monthly for your mortgage, you may now find yourself faced with a doubled obligation of $4000 per month. Diversification and asset allocation are two fundamental pillars of a well-rounded investment strategy. Diversification involves spreading your investments across a range of different assets, such as stocks, bonds, real estate, and commodities. This strategy is grounded in the idea that not all investments move in the same direction at the same time. By diversifying, you reduce the risk of your entire portfolio being negatively impacted by a poor-performing asset class. Essentially, it's the principle of not putting all your eggs in one basket.

Diversification provides a safety net, helping to mitigate losses while potentially enhancing overall returns. Asset allocation, closely related to diversification, refers to deciding how much of your investment portfolio should be allocated to each asset class. It's about striking the right balance based on your risk tolerance, financial goals, and time horizon. Younger investors with a longer investment horizon might lean towards a more aggressive allocation, with a larger portion in higher-risk, higher-reward assets like stocks. On the other hand, those closer to retirement might opt for a more conservative allocation to preserve their capital. Asset allocation helps align your investments with your objectives and risk appetite, allowing you to optimize returns while managing risk. In combination, diversification and asset allocation create a robust framework for achieving your financial aspirations. They work in harmony to decrease the impact of market volatility and provide a strategic roadmap that adapts as your circumstances change. By understanding these two principles and customizing them to your unique situation, you can construct a resilient investment portfolio that stands the test of time. Asset protection: involves implementing strategies to safeguard one's wealth and possessions from potential risks, liabilities, and unforeseen circumstances. These protective measures aim to shield assets from legal claims, creditors, and other threats that could jeopardize financial stability. Common approaches to asset protection may include the establishment of legal structures such as trusts, limited liability companies (LLCs), and offshore accounts. Diversification of investments, insurance coverage, and estate planning also play integral roles in fortifying one's assets. By carefully navigating legal frameworks and financial instruments, individuals can proactively mitigate

risks, ensuring the preservation and long-term security of their wealth. Ultimately, a well-executed asset protection plan provides a layer of defense, allowing individuals to navigate the complexities of the financial landscape with greater peace of mind. Now that you know the Four fundamentals, I want to point out that this section is geared more toward people who are interested in becoming a real estate investor but want to know more. If you’ve already started down this path, you could theoretically skip this section; however, if you flip through the pages of this section as you move to the next, you might find some new information. Maybe you’ll learn some strategies you haven’t tried yet, or weren’t even aware of. Maybe you’ll just find validation you’re on the right track, or a reminder of you why you got into investing in the first place… As for those of you who are looking to get into the real estate investment world, my goal here is to give you all the information you need to decide whether real estate investment is right for you, and then teach you how to jump in. So let’s get started!

The Stats

Investing in real estate holds significant appeal for Canadians, backed by compelling statistics that underline its potential for financial growth and security. To begin, the Canadian real estate market has exhibited remarkable resilience. Despite periodic fluctuations, the long- term trend has been one of appreciation. Over the past 10 years, according to the Canadian Real Estate Association (CREA), the national average home price has seen an approximate 88% increase. This consistent appreciation showcases real estate's ability to generate wealth over time.

In addition to capital appreciation, rental income is a driving force behind real estate investments. The Canada Mortgage and Housing Corporation (CMHC) notes that the national vacancy rate for rental apartments has remained relatively low, hovering around 2.4%. With a growing population and demand for rental properties, investing in real estate can provide a stable and predictable income stream. This is particularly appealing in an economic landscape where traditional fixed-income investments may offer lower yields. Furthermore, real estate investments offer a hedge against inflation. The Bank of Canada has a target inflation rate of 2%, and real estate has historically performed well in inflationary environments. As the cost of living rises, so do property values and rental income, preserving your purchasing power over time. By leveraging these supported statistics, Canadians can recognize the potential benefits of investing in real estate—ranging from capital appreciation and rental income to protection against inflation.

3 Questions for you?

1,What is the key takeaway you've gained from this chapter?________________________________________________________ 2, Reflecting on the insights shared, how significant is this takeaway to you? Please elaborate on its importance in your life. ______________________________________________________________ 3, Taking into consideration what you've learned, how can you integrate this valuable insight into your current situation for positive impact?________________________________________________________

CHAPTER 3 Financing Your Investments estments

Now that you know the financial fundamentals and why adding real estate investment is a good idea, it’s time to learn how to do it. But before we get into the nitty-gritty details of each investing method, let’s address the elephant in the room: To make money, you need to have money to invest, right? Well, yes and no. While you do need money to invest, it doesn’t necessarily need to be your own. If you are only reference for real estate information is house-flipping T.V. shows, you might assume real estate investing is all about cash buying. There are many investment deals that transpire throughout the real estate market on an annual basis. The majority are achieved through traditional lenders and institutions such as banks, but some are accomplished through less traditional means. In most cases, it’s because the investor couldn’t raise the capital or didn’t have the credit score to do so. According to the 2021 CREA® Investment & Vacation Home Buyers Survey, 52% of respondents who purchased a vacation property in 2020 financed it with a mortgage, while 45% paid cash. For investment properties, 63% of respondents financed the purchase with a mortgage, while 36% paid cash. So, whether you’re reading this as a newbie or a seasoned pro, you shouldn’t feel bad — not even for a minute — if you don’t have the cash to use. In fact, the ultimate goal for real estate investors is to not use any of their own money at all! This works to every investor’s advantage — those without the funds can still get in the game, and people who’ve been playing for a while can use other people’s 24

money as a way to invest more, which leads to increased income.

Obviously, there isn’t a bunch of people out there willing to just hand over their cash so you can invest. This is when having a solid network is important. You’ve got to be clear on whom you access for help and how to best use the help they give you. It’s also to your advantage to have a high credit score. Why does this matter in this business? First, you’ll get more access to working capital, but you’ll also have lower interest rates if you do take out mortgages or loans, which can lead to significant savings versus people with “so-so” or low scores.

Types of real estate investment: Active and Passive

Active real estate investment: Active Real Estate Investment involves hands-on involvement in property acquisition, management, and operations. This approach requires proactive decision-making, direct engagement with tenants or property managers, and active oversight of property maintenance and financial performance. Active investors typically seek to maximize returns through value-added strategies such as property renovations, redevelopments, or strategic asset management. While active investment demands a higher level of time, effort, and expertise, it also offers greater control over investment outcomes and potential for higher returns. Examples of active real estate investment strategies include: • Fix-and-Flip: Purchasing distressed properties, renovating them to increase value, and selling them for a profit within a relatively short time frame. • Buy-and-Hold: Acquiring rental properties with the intention of generating ongoing rental income and long- term appreciation. Active investors manage tenant relationships, property maintenance, and financial

operations to maximize returns. • Real Estate Development: Participating in the

construction or redevelopment of properties to create new residential, commercial, or mixed-use developments. Active developers oversee all aspects of the development process, from land acquisition and entitlements to construction and leasing/sales. Passive Real Estate Investment: Passive real estate investment involves a more hands-off approach, where investors contribute capital but have limited involvement in day-to-day property management and operations. Passive investors rely on experienced real estate professionals, such as active working partner, fund managers or syndicators, to identify, acquire, and manage properties on their behalf. This approach offers investors the opportunity to diversify their portfolios, access professional expertise, and generate passive income without the responsibilities of active management. Examples of passive real estate investment vehicles include: • Real Estate Investment Trusts (REITs): Publicly traded or privately held companies that own, operate, or finance income-generating real estate properties. REIT investors receive dividends from rental income and capital appreciation without direct involvement in property management. • Real Estate Syndications: Investment partnerships (Joint Ventures) or syndicates formed to pool capital from multiple investors to acquire or develop real estate assets. Syndicators manage the properties on behalf of investors, who receive returns based on their capital contributions. • Private Equity Funds: Closed-end investment funds that raise capital from accredited investors to invest in real estate projects or properties. Fund managers execute 26

investment strategies, such as opportunistic acquisitions or value-add repositioning, to generate returns for investors. In summary, active and passive real estate investment offer distinct pathways for investors to participate in the dynamic real estate market. While active investment requires hands-on involvement and expertise, passive investment provides opportunities for diversification and passive income generation through professional management. Ultimately, the choice between active and passive investment depends on individual preferences, goals, and risk tolerance. Now, let's delve into Finance Options, pivotal knowledge for both active and passive investors alike. Understanding these options empowers you to make educated decisions on your real estate journey, whether you choose to take an active role or prefer a more passive approach. By grasping the nuances of finance in real estate, you equip yourself with the tools needed to navigate the intricacies of investment and optimize your path to success.

Investing without Your Own Money:

The first and most common option is hard (i.e., private) money lenders. In this case, people or businesses loan you money as an investment for themselves. They make money through fees and interest rates, both of which tend to be higher than other types of loans. One way to make sure you still come out ahead in the deal is to use these loans to buy homes at a goal at 50 cents on the dollar. Partnerships are another popular way to get funding. These can work in a variety of ways, but you want to make sure that you balance each other out well. For example, if you have a less- than-stellar credit score, make sure your partner has a great one.

Perhaps you can be the one to find the ideal properties and your partner can get the financing, which will come with lower fees and rates thanks to that higher score. Keep in mind that you don’t want to partner with someone just because you already have a good relationship. The key to a fantastic partnership is being in sync, such as agreeing on what kind of risks you’re willing to take, determining what short- and long-term goals you have, figuring out who will do what, and deciding what kind of return you’d like.

Investing with Your Own Money:

If you have money or don’t have access to private lenders or partners, you can still start your investing career without having all the money on hand. One way to do this without paying any money upfront is through home equity. You can use this by taking out a home equity line of credit (which leaves your mortgage as-is) or rewriting your mortgage and getting a cash-out refinance. Of course, this works only if a) you currently own property; and b) there’s capital in it. For people been working for a while and accumulated sufficient equity in your home. You may consider refinance your home and then use the fund to buy investment property. This way you can avoid paying high interest to the private lenders so that you will be able to maximize your full return. Our story: Our journey started with the decision to relocate to a new city. At that point, we had already paid off our mortgage and were focused on saving for retirement. To make our move possible, we decided to refinance our primary home and used the funds to purchase a beautiful house from a builder. Remarkably, we

didn't need a mortgage for this new property. Subsequently, we made the decision to rent out our old house in to tenants. Now, our old home became a rental property, which turned our personal venture into a business. Because of this, we can deduct many of the expenses related to managing the property from our business income for tax purposes. This change not only transformed our investments but also allowed us to benefit from tax advantages as our financial situation evolved. For instance, let's say you refinanced your primary residence for $500,000. With this money, you bought an investment property. Now, the interest payments from the mortgage on your rental property can be deducted as part of your business expenses. This is assuming you're renting out the entire property, meaning it's not being used by you, your family, or friends for living purposes. (Please note depends on where your investment property is and double check with your local governing body and consult your accountant for verification.) Now you will need to calculated how much will be for you to covered all your expenses for this rental property and then come up with the rent that you wish to charge. One important part to figure out the reasonable rent will be compare your local market for the past few months. You don't want to charge too high or low to lose your desired potential tenant. For new investors, I will highly recommend you to find an investment focused realtor to do a comparison. This strategy is effective if you have accumulated enough equity in your current home and are considering relocating. You might ask, "What if I'm not planning to move?" In such a scenario, you can still use refinance funds to purchase an investment property and lease it out to tenants. Additionally, the interest payments for your investment property can indeed be

claimed as business expenses. However, it's important to note that if you refinance your primary residence and continue to live there, the mortgage payment for your current house will not be tax deductible.

Here is what CRA website explains on how to do it: Line 8710 – Interest and bank charges

You can deduct the interest charge on money you borrow to buy or improve your rental property. If you have interest expenses that relate to the construction or renovation period, go to Construction soft costs. You can also deduct interest charges you paid to tenants on rental deposits. If you are claiming interest as a rental expense on Form T776, do not include it as a carrying charge on Form 5000-D1, Federal Worksheet. Do not deduct in full for the year any lump-sum amounts paid for interest or a fee paid to reduce the interest rate on a mortgage. You prorate these amounts for the rest of the original term of the mortgage or loan. You also prorate a penalty or bonus paid to a financial institution to pay off your mortgage loan before it is due. For example, if the term of your loan or mortgage is five years, and in the third year you pay a fee to reduce your interest rate, treat this fee as a prepaid expense and deduct it over the remaining term of the loan or mortgage. Loan fees You can deduct certain fees when you get a mortgage or loan to buy or improve your rental property. If the loans relate to the construction or renovation period, first read about soft costs. Loan fees include: • mortgage applications, appraisals, processing, and insurance fees • mortgage guarantee fees • mortgage brokerage and finder's fees

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