Investing In Ontario Real Estate Not RRSP's For Retirement.

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 Master The Game” where 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 one-time 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?

Structuring Joint Ventures. Legal Pitfalls and Possibilities.

    Have you reached the end of your purchase power but still want to own more Real Estate?  One option to keep the asset train running is to consider a joint venture. So what does this mean?  Difinitively put, "An association of persons for the purpose of a particular commercial undertaking with a view to mutual profit with each participant usually, but not necessarily, contributing money, property or skill."* A Joint Venture Agreement ( “JVA”) creates a legal entity through a contract, and identifies the major rights, duties, liabilities and obligation of each participant in the joint venture.   More simply put - a joint venture is finding other like-minded investors to work with.  This could be the most beneficial to all.   

    One of the advantages of a joint venture is that each of it’s members maintains a distinct legal entity from the others and each will only be held responsible for it’s own personal errors against third parties. Each member of the joint venture retains ownership of his or her property.  

    What is expected of the join venture partners?  A group of people pooling together their resources can bring different contributions to the table.  Perhaps you have the cash for a down payment but are at the top of your debt to service ratio.  Finding other partners can allow you to use their under realized potential to help qualify your party to own more investment properties. Another contribution could be sweat equity.  If one or more party members don't have the time to tend to the investment another member could add their time and energy to renovate or manage the unit.