Growing up in France, my father was an avid investor who took advantage of property investment like most other smart Europeans. At a very young age, he began introducing me to the different aspects of real estate investment, and how to strategically assess its true value in terms of income versus appreciation, keeping in mind the financial benefits of emerging markets. His thing was to invest in pre-construction of brand new condos that required low maintenance. My father shopped for the best deals on condos like a woman shops for clothes: he simply wouldn’t buy unless he was certain he had the best deal.
Over the years, his portfolio grew to over 30 apartments, and he hired his own management company that allowed him to move to an even more passive real estate investment style. Once I understood the formula, I was hooked. That’s how, at an early age, I was introduced to the concept of passive income. I saw it first hand, I knew it was a reality. With a good plan and strategy in place, I realized that this was the doorway to financial freedom.
Financial freedom – what is that? What does it mean? The easy answer is, it means something different to everyone. The detailed (not hard) answer is: receiving a deposit in the bank each month that covers your lifestyle and basic expenses, while spending (very) little time to obtain it. Putting it plainly, let’s suppose you need $5,000 a month to cover your life style and basis expenses. Your goal, then, is to secure $5,000 a month of passive income (net after taxes). The less time you need to spend on your investment the more passive it is. Your passive income, therefore, grants you the freedom to live life the way you choose to do so, every day. That’s financial independence.
So, back to my story … after moving from France to San Francisco for university in my twenties, I moved to Montreal at the age of 30 and bought my first house. I resold it two years later for a $40,000 profit. The seed was planted – this gave me the leverage I needed to start my love affair with property investment. I spent the next years testing various models to answer my question: what is the best and fastest way to achieve financial independence through real estate?
The first challenge I posed for myself was to find investments that would generate enough cash flow to free myself from my 9-5 job. Hungrily, I began searching for the right condos in the Montreal area, but unfortunately nothing appealed to me. I just couldn’t get any developers to make the right kind of deal for me, one that would make the investment worthwhile and fit the necessary cash flow requirements to keep me on track for my goal.
Then, an epiphany. I met with a developer and managed to negotiate a very good condo deal on the condition that I buy not just one, but TEN units from him. I was ecstatic. He was ecstatic. We both left the meeting on cloud nine, and then I got down to business.
I called friends of mine, colleagues of mine, other investors I had met in passing. I told them all about the deal, and invited them to take advantage of the negotiated pricing with me. I must admit that many of them were doubtful, worried, even a little confused. But those in the know realized what I was doing and jumped on the bandwagon with full force.
After just a few days, I had my list of fellow investors in hand to take to the developer. We all received separate titles, but by purchasing together to leverage our investment, we obtained excellent buying conditions (price, rental income, balance of sale, lease coverage, etc.). There is just simply no way any one of us would have ever been able to negotiate such conditions on our own. I knew this first hand – even with my tenacity, alone, I was hardly able to move the developer on the retail price. But now I had a new weapon, and I’ve never forgotten it: group purchasing power.
Over the years, I’m proud to say that my investor group has grown substantially. The foundation of our success was largely in part to training ourselves on having a clear picture of what each of us want, and what we need to do to get there. Individual titles to our investments, attractive cash flow, emerging markets, great appreciation potential … these are just steps towards our ultimate goal, tools to help us get to where we want to be.
The first rule, therefore, is that our property investments are never to become a chore: we actively seek out hands-free investments where the developer or pre-arranged management entity agrees to take over the ‘active’ side of our investment. We have never lost our focus that our ultimate goal is not just financial wealth, but financial independence. This is what keeps us coming back.
My own path towards financial freedom has allowed me to achieve yet another one of my goals, that is, to become a developer myself. I’ve done this by changing my model to not only purchase units in a development, but to also acquire stakes in each project. This is very exciting, as this new form of partnership not only gives me more control and insight into the direction of each project, but it also gives me the power to obtain a better deal structure for myself and my investor group … wait, did I say a “better deal structure”? I should have said, to obtain UNBEATABLE conditions. After all, when it comes to my investments and those of my investor group, I put my money where my mouth is.
I’ve been very lucky to be presented with the experiences and conditions that have enabled me to follow this path. Perhaps it sounds silly, but I couldn’t have done it without everyone that has stood beside me and saw the deeper potential of property investment. My investor group is the best. That’s why I feel it is my mission to help others on their investment adventures – so they can avoid the mistakes I’ve made in the past, and be a guiding hand to whomever is ready to achieve the rewards that financial independence through real estate investment makes possible. I strongly believe that real estate investment can offer you the freedom to achieve your higher aspirations. But you must be willing to stick to your goals, acquire the right knowledge through trusted mentors, exercise patience, and exert your natural will and determination.