Borrowing to invest is a wealth building strategy that has been used for thousands of years. The financial term is leveraging.

Investment leverage, simply put, is borrowing to invest. That is, it is using someone else's money to achieve your investment goals. Whether you know it or not, you may have already taken advantage of this strategy. For example, if you've had a mortgage, a student loan or an RRSP loan, you've used someone else's money to achieve your goal of home ownership, higher education or a more comfortable retirement. Investment leverage is similar to the examples above. Leverage is simply borrowing money to purchase investments, with the goal of achieving greater wealth.

Why is leveraging controversial? - Mostly because of a lack of information on leveraging. Here are some myths about borrowing to invest;

Myth one: Leverage is only for the wealthy. While it is true that the so-called wealthy are users of advanced financial strategies like leverage, this does not mean that they are the only ones that can use them.

Myth two: All debts are bad. Were you taught by your parents that all debts should be paid off as quickly as possible? This is good advice for most of our personal debt such as credit cards and personal debt where the after tax interest charges can be anywhere from 12-30%. That is expensive non-deductible debt that should be paid off as soon as possible. But in addition there is also good debt that is often used by the wealthy. This type of borrowing is used to buy things like investments or businesses that increase in value. The interest rates are much lower and usually tax deductible.

Myth three: Leveraging is too risky. Like I said above - most people have already leveraged in a less effective way without even knowing it.

Borrow to increase wealth. Most people borrow for consumer purchases and pay cash for their investments with whatever is left over. For financial planning purposes - this is backwards. If you are comfortable borrowing and able to spend thousands of dollars a year in payments then it is better for you to do so in a way that decreases your costs and increases your wealth.

There are many pros and cons of leveraging. This strategy could be beneficial to your financial plan. Call me for more information.

   

                Why invest in Real Estate?

Leverage
Real Estate is a "hard asset" and is easily financed. This means that you, the investor, can benefit from leveraging our time and expertise and your funds to substantially increase your ROI. Based on a typical 20% to 25% down payment, the return is substantially higher than that of non-leveraged investments such as stocks or mutual funds which involve a considerably higher risk.

Wealth Creation
Real Estate values have increased significantly over the last 25 years and have proven to be a powerful method of creating wealth. The seven profit centers (equity, leverage, appreciation, principle reduction, cash flow, tax benefits, and reinvesting your equity)

working in conjunction ensures that Real Estate is a secure investment with an above average Rate of Return.

Low Risk

In today's precarious world of the stock market many investors are transferring money's held in risky mutual funds and other consumer stocks to more secure Canadian Real Estate. And although the crash of the US markets has scared a lot of people, the Canadian mortgage system is different than that of our neighbours to the south and we are not in the same position. Mike Lathigee, Chairman and CEO of the Freedom Investment Club (which holds over $80 million in assets) warn his investors, "Leaving your money in bank accounts right now is the path to financial bankruptcy."

Why Carpe Diem?

Track Record

Our investments to date have included purchasing raw land which has appreciated over 400% in a five year period, fix and hold that has shown a gain of 120% in three years and many fix and flips that have reached up to 300% ROI in an eighteen month period or less. We live on Vancouver Island, have access to properties and private sellers and have the motivation, experience and passion to make Real Estate Investing a lucrative long term career goal.

Why invest in Vancouver Island/Nanaimo?

Population Growth

City planners anticipate 20 years of growth to 2031 and beyond fueled by the aging Canadian population.  

Location

Called "The Harbour City" Nanaimo boasts the second highest amount of waterfront property on Vancouver Island, next to Victoria.  

Ladysmith, also known as "Heritage By the Sea," was named one of the 10 prettiest towns in Canadaby Harrowsmith Country Life Magazine.  

Economics

Nanaimo is also home to an expanding retail, service and technological sector. It has a new and very successful 800-seat Port Theatre, an expanding university campus, and will soon see a new Convention Centre and Hotel complex completed in the newly revitalized downtown area.

We are currently looking at 2 investment options, one in Ladysmith and one in Nanaimo. Both are buy/hold properties, will cash flow when purchased for the right price, and offer significant gain due to their prime locations.

One of the properties is being sold as a package; two adjacent properties must be purchased at the same time. Both have two rental suites for positive cash flow and development approval is in place for building a 12 unit condo building. We see this one as a terrific opportunity. Not only will it meet the 7 profit centers but it has the 8th profit center of "reuse of property" for substantially higher gains. This one will go fast.

For more information on either of these opportunities, please contact me directly. I would be happy to further discuss the exciting details of these projects. 

PAM MORESIDE

CARPE DIEM

Real Estate Investments

121 Pine Street

Nanaimo, BC V9R 2B4

t: 250-729-1411