The Modern Playbook for Super Successful Real Estate Investing

Every winning team has two things: a great coach and a great playbook. At Fundscraper, our coach is Luan Ha, MBA, our founder and CEO. And he recently published “The Modern Playbook for Super Successful Real Estate Investing.”

What is the Modern Playbook for Super Successful Real Estate Investing?

Luan is one of North America’s leading real estate experts. His playbook — which you can download for free — is filled with valuable insights about putting your money to work. He writes in a conversational, easy-to-understand style, drawing comparisons to the sport of professional football: scouting, leading, game-planning, and play-calling. But you don’t have to be a sports fan to get a lot out of it. If you’re interested in learning more about real estate investment, this free resource is an excellent place to start.

A good playbook is the secret of success, whether in sports or business.

Luan methodically describes the background homework behind his playbook. In the “Tips and Quotes” section, he explores advice from industry icons that helped him find success. Very informative is the “Profiles of Best Investors” section, a look at the big players, banks, institutions, wealthy families, and pensions. Have you ever heard of the famous 20% rule of investing, practiced by the Yale University Endowment Fund? Luan will tell you all about it!

Luan’s 9 best go-to plays for successful real estate investing

At the heart of Luan’s playbook is his actual list of go-to plays. These are the real, tried-and-true methods that got him to where he is today:

  1. Do your Due Diligence – from creating a checklist, to relying on experts to make sure the “story” makes common sense
  2. Determine the Location Works – all the factors to bear in mind
  3. Assess the Fundamentals of Supply and Demand – key things to remember
  4. Understand the Zoning – useful rules of thumb
  5. Consider Debt as an Investment Vehicle – important considerations
  6. Carefully Analyze the Debt Leverage of the Project – a double edged sword
  7. Figure Out Your Real Estate Investment Style – match your risk appetite, liquidity, expectations and return objectives to the deal
  8. Maximize Your Exit Options – more are better
  9. Avoid Mistakes – automatic if you follow the first 8 Go To Plays

Luan is convinced his playbook will give you a leg up in making real estate decisions. At the same time, he recognizes that not everyone has the time or skills to make these types of decisions on their own. That’s where Fundscraper comes into play!

How to get started

Who are we? We’re a team of experts who can do the heavy lifting for you, but at the same time, leave it to you to decide which real estate investments are right for you. We’ll be your coach, or your cheerleader, or both. We’re here as much or as little as you need.

Fundscraper is on the cutting edge of technology and government compliance. We’re registered with and regulated by the Ontario Securities Commission and also falls within the jurisdiction of Financial Services Regulatory Authority of Ontario.

To quote Luan, “Go for the touchdown and pass the ball to Fundscraper.”

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How Much Money Do I Need to Retire? Learn How Real Estate Can Help You Achieve Your Goals

Planning for retirement is a life-long process. Whether you’re 30 and just starting to climb the corporate ladder or you’re 80 looking to ensure you have the monthly income you require, you should be thinking about and planning for retirement. It’s never too early — or too late! — to save for retirement. Talking about money can be daunting, but we’re here to help.

Most people understand the importance of saving early, but many struggle with this question: How much money do I need to retire? Many factors determine how much money to save for retirement, which is why we recommend you speak to a licensed financial advisor to discuss your options. To get you started, here are a few things to keep in mind.

Key Points

  • The 25x rule shouldn’t be the only tool in your financial toolkit, but it might give someone who has yet to start saving a ballpark figure to aim for if they intend to retire around age 65.
  • There’s another major benefit to holding your retirement savings in a registered account that more investors should know about: You can use your registered funds to invest in real estate.
  • Having asset-backed investments like real estate provides greater security and lower risk to your portfolio.

How much you should be saving goes directly to how much you think you will need to live on each year that you are not earning an income.

How much should I be saving now?

There’s no cut-and-dried answer to this question, but you can make an educated estimate. The 25x rule invites you to calculate how much you think you’ll need in a given year in retirement, then multiply that number by 25. The 25x rule shouldn’t be the only tool in your financial toolkit, but it might give someone who has yet to start saving a ballpark figure to aim for if they intend to retire around age 65.

(Expected Annual Retirement Expenditures) x 25 = Required Savings Amount

How much should I withdraw from my retirement funds when I retire?

Financial advisor Bill Bengen created the 4% rule in 1994. It recommends an individual withdraw 4% in year one of retirement and adjust the fraction in subsequent annual withdrawals to reflect the rate of inflation. Due to lower inflation, he recently revised his recommendation to the 5% rule. Lower inflation means investors can “safely” pull out more than the 4% rule. That’s good news for investors seeking passive income. (Source: The Creator of the 4% Rule for Passive Income Just Changed it!)

The Modern Day Playbook For Super Successful Investing

How can a smart, modern investor get in on the real estate investing action, especially since going on your own may require prohibitive amounts of capital? Most people do not have the requisite knowledge or expertise to invest in real estate on their own.

How can I save early and wisely?

The vast majority of Canadians use their RRSPs (Registered Retirement Savings Plans) to make contributions to their retirement savings, whether in an individual or spousal plan. RRSPs have many advantageous qualities for individuals planning their retirement, including:

  1. Contributions are tax-deductible – “RRSP Season” as we like to call it runs for the first 60 days of the year, just before “Tax Season.” During this time, you can make RRSP contributions with pre-tax dollars, allowing you to deduct RRSP contributions from your income each year. This provides immediate tax relief in any given year.
  2. Earnings are taxed sheltered – If you use your RRSP to invest, any earnings made are sheltered from taxation as long as they remain in the plan.
  3. Tax deferral – RRSP contributions and earnings will be taxed when you withdraw them. However, it is likely that upon withdrawal, your marginal tax rate will be lower than when you initially made the contributions.

There’s another major benefit to holding your retirement savings in a registered account that more investors should know about: You can use your registered funds to invest in real estate.

It’s important not to pigeonhole yourself into only investing in a handful of assets such as publicly-traded equities and bonds. This is where real estate can come into play! Many Canadians tend to focus their attention (and RRSP contributions) on a small handful of asset classes and are unaware that RRSPs can also be used to invest in:

  • Canadian mortgages
  • Mortgage-backed securities
  • Income trusts

Having asset-backed investments like real estate provides greater security and lower risk to your portfolio.

Fundscraper has numerous real estate backed offerings that are eligible for investment with your registered capital (RRSP, RRIF, TFSA, etc.), helping you contribute to your retirement savings.

Start Investing in Real Estate Today

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How Do I Invest My RRSPs into Private Real Estate?

Private real estate investment is too often overlooked in an investment world dominated by hedge funds, ETFs, Principal Protected Products, publicly traded shares, and bonds. If you think private real estate investing is only for the wealthy or experienced, think again. Private real estate investing is for everyone, especially because you can use your RRSPs to invest. It’s an affordable, approachable way to get started. Not sure how to do that or what that means? We’ll explain.

Key Points

  • Most people don’t realize that they can invest in private mortgage investment entities like mortgage investment corporations and mortgage trusts, as well as mortgages directly, with their RRSPs.
  • What is evolving today is that the less risk-averse investor should actually be the one weighing their portfolio more favourably toward real estate than otherwise. This is because real estate is such a strong non-correlated asset class to the hoped for “high flyers” to which so many less risk-averse investors are attracted.

What is an RRSP?

RRSP stands for “registered retirement savings plan.” A “registered” plan means the plan, and the account associated with it, is registered (or held) by a service provided by the Canada Revenue Authority to manage accounts that benefit from the special treatment our federal and provincial government’s grant to these unique retirement savings plans. Other examples of “registered” plans are “Registered Retirement Income Funds” and “Tax Free Savings Accounts”. What is discussed below is applicable to RRIFs and TFSAs as well!

The majority of Canadians hold their retirement savings in registered accounts. Most often people invest their RRSPs in stocks, bonds, mutual funds, exchange traded funds and other public securities. Many people believe that is all they can invest in through their RRSPs, but that only scratches the surface of what’s possible.

Most people don’t realize that they can invest in private mortgage investment entities like mortgage investment corporations and mortgage trusts, as well as mortgages directly, with their RRSPs. If you’re interested in doing this, we can help.

What are the benefits? Considerations?

Investing in private real estate is an excellent way to diversify your portfolio. Savvy investors know not to put all of their eggs in one basket, and private real estate helps minimize risk of loss. It also helps generate return and preserve capital.

Investment advisors commonly recommend that a person’s portfolio have between 10% and 20% in real estate. It is generally thought that investors who are risk-averse would tend to hold a mix with more real estate and less risk-averse investors would tend to weigh stocks more heavily in their portfolio. What is evolving today is that the less risk-averse investor should actually be the one weighing their portfolio more favourably toward real estate than otherwise. This is because real estate is such a strong non-correlated asset class to the hoped for “high flyers” to which so many less risk-averse investors are attracted.

Most people don’t realize that they can invest in private mortgage investment entities like mortgage investment corporations and mortgage trusts as well as mortgages directly through their registered accounts.

How to determine which real estate investments are right for you

If you’re interested in investing your RRSPs in private mortgages, whether directly or through a mortgage investment entity like a MIC or mortgage trust, then the first thing you should do is seek expert advice if you have little experience in the private mortgage markets. The process is not difficult, but if you’ve never done it before, you’ll need an expert to walk you through it. That’s what we’re here for!

Your advisor should be a registered mortgage broker or an exempt market dealer focused on mortgages. At Fundscraper, we’re both. We begin by asking about your investing experience, investment portfolio to date, risk appetite, expectations, current needs, and future needs. This is called a suitability assessment, and it helps us determine whether private real estate is an appropriate investment for you at this juncture of your life. If yes, the next step is identifying a mortgage investment product that would be suitable for you.

How to Invest in Real Estate, How to Invest in Reals Estate Canada, How to Invest in Commercial Real Estate

How to invest RRSPs into private real estate

Once we have found something that is suitable for you, the next steps are setting up how you can acquire the private mortgage investment security with your current RRSP funds that are held by your bank or financial advisor. Those RRSP funds are likely tied up in mutual funds, exchange traded funds, and other RRSP eligible securities. We’ll help you with this process as much or as little as you need.

  1. Fund your investment. Liquidate a fraction of your RRSP holdings to the cash amount you need to make your new investment.
  2. Open a self-directed RRSP. Ask your financial institution (any Canadian chartered bank or trust company) to do this.
  3. Transfer your liquidated funds to your new account. You’ll complete a “transfer instruction” whereby your new financial institution will request that your current RRSP institution transfers the liquidated funds to your new self-directed RRSP account. Once all the forms are completed, they are filed with the originating institution instructing it to transfer your cash portion to your newly created self-directed RRSP account with the new financial institution.
  4. Wait for the funds to transfer. The transfer can take up to four weeks. In order to maintain RRSP eligibility, funds must move directly from one RRSP account to another. You cannot withdraw the funds yourself, take them to your financial institution, and deposit them.
  5. Invest your RRSPs into private real estate. Once the funds arrive in your self-directed RRSP account, tell the self-directed RRSP account to fund your investment in the private mortgage investment entity. You do that by way of delivering to the financial institution a “payment direction” — the financial institution has a standard form of payment direction that it will provide to you. The payment direction tells the financial institution to invest in the private mortgage investment entity for you through the newly created self-directed RRSP account for the amount set out in the direction.

Investing your RRSPs in private mortgages is easy! Nevertheless, it’s important to have your advisor orchestrate the process on your behalf, as there are moving pieces that have to be coordinated.

How do I get started?

Your registered account savings are your nest egg. Be careful with how you employ and invest these funds. Work closely with reputable dealers to first determine whether investing in private mortgage securities is suitable for you and, if so, what the best private mortgage investment products are for you at the time you want to make the investment.

Start Investing in Real Estate Today

Explore the investments available on Fundscraper.

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The Modern Investor's Playbook
to Super Successful Investing

Become a master of real estate investing! This playbook has inside industry knowledge that you can use to help generate passive income! Discover tactics used by the savviest investors, how to diversify, maximize your returns and avoid mistakes. It’s everything you need to know to invest like a pro.

Start investing with Fundscraper today.