Amy Leong rented her first basement apartment in Surrey when she was 18. Working 40 hours a week selling cellphones at the mall, money was tight, but she started putting aside $500 a month, motivated by the law-breaking landlords who would enter her apartment without warning.
“I kept thinking to myself, ‘I have worked so hard all day and my paycheque goes straight into someone else’s pocket,’ ” says 36-year-old Ms. Leong, who purchased her first condo at the age of 24.
By then, she’d saved up $25,000 and her father rewarded her efforts by contributing another $10,000. With her $35,000 down payment, she could afford a 720-square-foot one-bedroom condo in south Surrey, near the home where she grew up. It wasn’t easy. Including mortgage and maintenance fee, she was paying $1,150 a month and was only making $1,900 after taxes, she says.
But she decided that real estate investment opened doors to early retirement, to wealth and a better lifestyle. After that first condo purchase, Ms. Leong became a realtor and met Ally Ballam, who is the same age and also bought her first property at 24 while working as a server at Cactus Club. Ms. Ballam had purchased a condo in Yaletown, which today pays her $1,000 a month from the rent.
“I always knew I wanted to start investing in real estate because I knew that was a way I could create substantial wealth over time,” Ms. Ballam says in an e-mail.
Together they now own 13 properties, worth more than $7-million in total. The broker duo, who are both advisors at Engel & Volkers, also coach newcomers on property investments including joint venture partnerships, in which each party usually puts in 50 per cent of the cost.
Ms. Leong is so passionate about encouraging other people, particularly women, to get onto the investment property ladder that she says she freely gives strangers big-sister advice while standing in line at a store such as Aritzia.
“I say, ‘Are you spending all your money on clothing?’ And they say, ‘Oh yeah, of course we are.’ And I’ll say, ‘Then stop doing that, follow me on Insta … I buy whatever I want and I can spend thousands of dollars here because of my real estate. I also have net worth [in the] millions, but you can do that too.’
“I plant the seeds. I feel like it’s just a debt culture and it’s a bad debt culture, and I hope to change it around.”
Property investment is key to wealth creation and financial security for a large segment of the homeowner population. Recent data released by the Canadian Housing Statistics Program show that one in five property owners in Vancouver own an investment property. In B.C., 62,570 homeowners owned three or more properties, according to a 2018 study by the CHSP.
But Ms. Leong believes that most people have a gap in their property investment know-how because no one talks about it. Her own parents were reluctant to invest in another property after having lived through an intensely stressful period of high interest rates in the 1980s. Her mom worked for 20 years at the bank and her father stocked shelves at the grocery store.
“No one is sitting around a table at the Cactus Club talking about real estate investing,” she says. “And parents or the baby boomer generation have either gone through something so traumatizing with high interest rates that they never invested again, or, on the flip side, they are power investors and don’t have the time [to share with their kids]. I found that people weren’t sharing with me. I was eavesdropping; that’s how I was getting the information about investing in real estate.”
Ms. Leong is also particularly inspired by the bestselling 1997 book Rich Dad Poor Dad. After reading the book, she wrote down her goal: to own three properties by the age of 30 and 10 by the age of 40.
“And I had no idea how I was going to do it,” she says.
Becoming a realtor who sold presale condos helped. Like a lot of realtors, she’s seeing investor activity return to the B.C. housing market.
“We are about to sell 25 suites in Kelowna to investors this month and we just sold 10 in Langley last week, all investors,” she says. “Some of them were baby boomers investing with their kids. That was so special.”
Their investor clients typically range in age from 30 to 50, and a lot of their younger clients are firefighters and police officers who worry their pensions won’t be enough. Ms. Leong says some of her clients have plans to own 50 properties by the age of 50, which means she needs to make sure that she finds properties whose rents will cover all costs, and that can be difficult in pricey Vancouver. She often tells them they need to look farther out, such as the hot Okanagan market.
It’s about following the trends of where people are moving, Ms. Leong says. It’s also about using the equity you build, which is how she could afford a character house on the North Shore. For example, she borrowed money from her first condo to purchase a house, and she was able to do so because the tenant’s rent was enough to cover the bigger mortgage.
“I always knew that without investing in these ‘nest eggs’ or ‘piggy banks,’ I would never be able to afford a house in Vancouver. So I took out the equity on the first condo I bought and I bumped up that mortgage. And because [the rent] was cash flow positive, I now had the money for the down payment on my house, and the tenant paid for the interest increase. She’s been living there for five years now, and she paid my down payment [on the house], is how I look at it,” she says.
“It’s smartly using debt to your advantage.”
She’s also increasingly finding that Gen Xers and boomers who are inheriting wealth or who are sitting on significant home equity are becoming active first-time property investors.
Don McPherson and his wife, who are in their 50s, purchased three rental properties in the past five years. They got started by using the equity on their Richmond townhouse to purchase a condo in Kitsilano, followed by two others in Richmond and Langley. Prices in Vancouver went up so quickly that they had to buy farther out.
Mr. McPherson, who works as a safety manager in the aviation business, says they plan to retire by the age of 68. The couple had worked hard to aggressively pay off their mortgage, making double payments for 12 years. They have long been averse to debt, but after meeting Ms. Leong and Ms. Ballam, they decided to leverage their equity. Their worry, Mr. McPherson says, was that they wouldn’t have enough to retire. Like many people, neither of them had pensions or companies that offered RRSP matching.
“We had no plan in place for what we were going to do for retirement,” he says. “We were watching some older friends approach retirement, and seeing what they had and what they didn’t have. It was a bit of a mystery box. You don’t know who to go to or to turn to, or who to trust.”
They’ve had to push retirement by three years because of the effect the pandemic had on their finances. But their property purchases have been far more successful than they could have imagined, with all the rents covering all their expenses, including line of credit payments, strata fees and property taxes. A property that costs about $450,000 needs about $2,200 in rent to cover the costs, Mr. McPherson says. He says that they never wanted to flip properties – the plan was always to be long-term landlords offering secure rentals.
“Obviously the growth in the market has been the big surprise,” he says. “We weren’t counting on that. We were looking at it more for when we retire, either living off the income from the rental if we can get the mortgages paid off, and/or liquidate one of them.”
They do not plan on purchasing more properties because of the taxes on rental revenue and the complexity that involves. They are satisfied that they have met their goal of owning the three investment properties, with the last one closing a month ago.
“The cliché of it is I wish I had known about this earlier,” Mr. McPherson says. “With land, you might see a drop in price, buildings might drop in price, but they always go back up again.”
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