Real Estate: The Cornerstone of Sustainable Long-Term Wealth Accumulation

On January 10th, 2024, I began my 34th?year as an Advanced Case Specialist laser-focused on wealth management with a focus on retirement & estate planning.

In 2010, I entered the mortgage and banking sectors and brought to the ‘table’ a unique perspective and attitude towards sustainable long-term wealth creation strategies via an actively managed real estate portfolio.

I’ve adopted the attitude to view mortgages as an ‘asset facilitation’?instrument, not necessarily as an ‘expense’ or monthly payment debt, but as a facility where you get to use other people’s money to fulfill your goals of home ownership and building a long-term wealth accumulation portfolio.

They say hindsight is always 20/20, which makes sense; why? I could have owned 5 or 6 properties with the same capital outlay, and at the same time, I owned three (3) homes. If I had possessed the knowledge and wisdom I have today, our financial picture would have been clearer and stronger.

Going forward, I want every Canadian to benefit from my experiences and own a basket of real estate assets, along with investment funds, which will produce retirement income and, more importantly, real estate will preserve our family’s long-term wealth accumulation assets. (*approx.)

The Mortgage EliminatorTM created by The Money Café creates a revised mortgage schedule, achieving mortgage freedom in 12.5 to 15 years.

Just like real estate is the cornerstone of wealth accumulation,?life insurance?is the cornerstone of comprehensive financial planning, as it’s the only tool that guarantees the realization of your goals in the event of your premature and tragic death. We’ll discuss the critical importance of life insurance later, or as a separate topic for my next issue.

I’m steadfast and confident that Canadians with an ‘active’ portfolio of rental homes (single, duplexes, condominiums, and commercial) will not only realize a steady rate of return but will also hedge themselves against inflation and market unpredictability, as it possesses the ability to automatically and/or cyclically correct itself. Real estate, as with any other asset class, has its natural circle of movement; however, this brick-and-mortar ‘hard’ asset has ‘fool-proof’ attributes, not enjoyed by a stock, bond, or equity fund.

Let’s face it, every investment class has its ebbs and flows; however, certain asset classes can rebound faster than their peer group when the market corrects itself, such as blue-chip and dividend-paying stocks, with real estate leading the pack.

We’ve all heard the phrases, ‘It’s a buyers’ market’ or ‘It’s a sellers’ market’. When do we buy, When do we sell? Well, here goes lesson #1. There is never an inconvenient time to own real estate! Historically, real estate has never dramatically increased in a single year; you paid twice as much (within its peer group), for no real reason, compared with the natural growth of real estate year after year.

Lesson #1:?Never liquidate an appreciating asset, especially if your objective is to access cash. We have multiple liquidity extraction options without interrupting the asset’s natural growth pattern.

Old School:?Many financially focused professionals have touted for decades for Canadians to buy real estate, and when they retire, they start selling them off (liquidating) and living off the proceeds. What’s made this strategy incomplete is the effect of taxation.

Every property you own, over and above your family home, is subject to capital gains and/or deemed disposition charges upon liquidation. If you own multiple properties and need advice on structuring your retirement or income streams, let me know; we can help.

New School:?Do not sell your real estate portfolio; continue enjoying your property's natural appreciation. Selling it today will deprive you of all that organic growth that may never be duplicated with any other asset class.

The only exception is that you are the last person standing with no family or beneficiaries.

However, if you need cash, you can simply collateralize the asset, access tax-free cash, cover the carrying costs, or not, while you enjoy your golden years. not 100% certain how to proceed; contact me at [email protected]

Wrap-up and a comparative analysis: I’ve also been around long enough to remember older clients proudly telling me, they purchased life insurance policies 25 or 30 years ago and were advised to cash them out at age 65; to generate and supplement their retirement income; Hello, at age 65, aren’t we closer to mortality?

Especially when the cash value would have been around 20%* of the death benefit (*differs per policy type)? Guess what; Like my real estate strategy, if anyone comes to me with a cash-rich policy, I’ll show them how to access tax-free cash, without interrupting the natural life of their policy, and when it is time; your family will receive 100% death benefit minus any tax-free advances you enjoyed while you were alive.

Our Strategy:?We’ve launched our ‘2-4-1 Real Estate Wealth Builder?’?program, where we educate Canadians on how to become mortgage-free (with), use substantial interest savings (tens of thousands), and purchase a second/third property; have tenants cover the mortgage payments while you enjoy its long-term appreciation. Our process is systematic, sustainable, and highly competitive when compared with any other mortgage elimination strategy.

I’ve focused my attention on accumulating wealth via an active basket of real estate assets, combined with equity, dividends, and fixed-return investments.

Good Luck With Your Financial Journey; we are here to help, Just reach out…

Article created by Riyad K Mohammed; CEO, of The Money Café; Riyad is also a Financial Advisor with Financial Horizons Group.