Monthly Archives: September 2015

Retirement Planning: Don’t Depend on Government Pensions; Try Real Estate: Part 1

 One thing that every one of us will eventually do one day, if we are granted the privilege by God, is get old. We get old to the extent that we are no longer able to do what we actively do now. We are no longer able to work and earn a living from a regular job.Retirement ahead

Another complication that comes with aging is health care and costs. Usually, as we get older, we tend to need more regular medical attention. Although government provides some subsidies to seniors, most times, this is not enough to meet the medical bills of the retiree. Housing and personal support are yet another item that requires money for the upkeep of the senior.

In this post, I will attempt to detail the conventional retirement programs and their characteristics, why you cannot rely on government to plan your retirement for you and the need to take control of your future. In particular, I will try and encourage you to explore the opportunities available in real estate by investing in professionally and carefully researched and selected markets with cash flow producing turnkey properties that require no active involvement as an avenue or retirement. In this part, I will introduce this topic and the subsequent parts, will deal with afore mentioned sections.



There are several options available during the active years of an average worker to plan and prepare for retirement. Several products and programs have been developed to assist in retirement planning. Retirement savings accounts help to create annuities upon retirement. However, investment pool must be sizeable enough to produce a decent income from the 4% annual withdrawal.

The question often asked is, how much do I need to have in my retirement savings account and be comfortable at retirement? Well, there’s really no fixed amount and it all depends on the level of quality of life and location that the retiree wants to live. Understandably, at this time, mortgage is already paid, kids are out of school and so, and the only concerns of the retiree are living expenses, medical and possibly (funeral)…. So if your planned annual living expenses at retirement is $30,000; ( assuming your monthly expected income is about $2,500); at 4% withdrawal rate, the expected balance in retirement account is $750,000.00 (this is a straight quick and dirty method, not considering other nuances & investment vehicles that might impact this number).

You must be wondering, how and where in the world do you expect me to get $750,000.00 to put in my retirement account? Well, do not panic as you are not expected to save up this amount. The power of compounding interest concept will help you achieve this depending on how long you are able to save consistently.

Unfortunately, in United States today, the statistics from U.S. Census Bureau, conducted as recent as September 8, 2015 are anything but shocking:  the average retirement age is 63 and 6,100 Americans turn 65 everyday!

Now read the rest:

  1. 36% of Americans over 65 who rely completely on Social Security
  2. Total cost for a couple over 65 to pay for medical treatment over a 20 year span is $218,000
  3. 80% of people ages 30-54 believe they will not have enough money put away for retirement
  4. 38% of Americans don’t save anything for retirement

Now if you think that above statistics which relate to the retirees are discouraging, it is even worse for the working class; hear this:

Out of 100 people who starts working at the age of 25, by the age 65:

  1. 1% Will be considered wealthy
  2. 4% Have adequate capital stowed away for retirement
  3. 3% Will still be working
  4. 63% Are dependent on Social Security, friends, relatives or charity
  5. 29% Are dead

Let me allow you time to digest this piece of statistics; may be the impact will sink better before our next post.

The intent is to arouse urgency in you to think about retirement planning. In our next post, we will examine the currently available pension plans and why they are not adequate for a safe retirement.

Thanks for reading this post.. please provide your feedback or comment.



Retirement Statistics Data
Average retirement age 63
Average length of retirement 18 years
Average savings of a 50 year old $42,797
Total cost for a couple over 65 to pay for medical treatment over a 20 year span $218,000
Percentage of people ages 30-54 who believe they will not have enough money put away for retirement 80%
Percentage of Americans over 65 who rely completely on Social Security 36%
Percentage of Americans who don’t save anything for retirement 38%
Number of Americans who turn 65 per day 6,100
Percentage of population that is 65 years of age or older 13%
Out of 100 people who starts working at the age of 25, by the age 65:
Will be considered wealthy 1%
Have adequate capital stowed away for retirement 4%
Will still be working 3%
Are dependent on Social Security, friends, relatives or charity 63%
Are dead 29%

Source: U.S. Census Bureau, Saperston Companies, Bankrate

Research Date: September 8th, 2015


Are you a landlord or an investor?

I have asked and been asked this question over and over again by friends. I know different people have different opinions on this and in this post, I wish to generate those opinions by briefly stating my views of what I believe are the differentiating factors.

According to, a landlord is defined as: 

  1. One that owns and rents land, buildings, or dwelling units.
  2. A man who runs a rooming house or an inn; an innkeeper

And what are his responsibilities? According to (well, I live in Ontario), here are your responsibilities (I summarized them) if you are or wish to be a landlord:

  • Keeping the home in good repair: You must repair and maintain the home, and obey provincial and city health, safety and maintenance standards. You are responsible for repairs even if the tenant knew about problems before agreeing to rent the home.
  • Maintaining common areas: You are responsible for cleaning and maintaining the common or shared areas of the building, such as hallways and yards. You are also responsible for removing snow from driveways, walkways, etc.
  • Providing access to vital services: You must provide access to hot and cold water, electricity, heat and fuel (e.g. natural gas). You cannot shut-off these services, even if the tenant has not paid rent. You may shut-off these services temporarily in order to make repairs. You and your tenant can agree that your tenant will pay for these services as a standard fee each month or based on what the tenant uses.
  • Providing Heat: You must provide heat in the home from September 1 to June 15. During this period, the minimum temperature is 20C. Some cities and towns set additional requirements. You can check with your local government to find out more about minimum heat standards in your community.
  • Providing documents: You must provide your tenant with a copy of the lease or tenancy agreement, and written notice of your legal name and address. If the tenant requests rent receipts, you must provide them. You cannot charge a fee for any of these documents.

Notice that all these are ‘active’ words-verbs used to describe the work of a landlord. A verb is a doing word.

In addition to these , he has to cope with mid night calls from tenants, handle lease documentations of boarding and onboarding of tenants, chase rent payments from late paying tenants, handle evictions, repairs and maintenance etc.

Well, count me out of all that! I will rather leave that to those specially trained and equipped to handle them, while I spend my time on the things that matter most to me….my family, friends and leisure: this is my target.

Let’s talk about the investor briefly:

According to, an investor is an individual who commits money to investment products with the expectation of financial returns.

His primary objectives are the returns from his investment. He is principally concerned with the numbers and invests with no emotions. He is focused and disciplined. If the numbers don’t make sense, he does not invest, period!

A landlord often has sentimental attachment to his house: its my first property, it reminds me of my childhood, I had and brought up my kids  in this house; it must not be sold because my father bequeathed it to me….etc.

Ok. Let me take a pause here: frankly answer this question: Are you a landlord or an investor?


Building Wealth Through Real Estate


Real estate is the most powerful way to build wealth, and more people have become millionaires through real estate than any other means. Despite the obvious need to save for retirement, a recent Wall Street Journal article indicated that a startling 95% of Americans will face financial difficulties at retirement!

Of course, you have several options for your retirement and other savings, but most of these options pale in comparison to real estate. Consider options like savings accounts, CDs, fixed deposits, bonds, and money market accounts. These are safe options, but you certainly won’t reach a goal of building significant wealth through these means. For the most part, these options will barely outpace inflation. Think of it. How many millionaires do you know who have become wealthy by investing in savings accounts? The stock market can bring you some interesting returns, but it can also lead to some big losses. You have very little control over the companies you invest in, and there aren’t significant tax advantages to owning stock.

Historically, real estate has provided investors with a stronger return than other options. Consider the growth of the median price of a home from 1950 to 2007 (57 years):


While there may have been a few small dips at certain points in time, the fact remains that real estate has had a strong history of steady appreciation.

Here’s an interesting experiment. If you were to ask your parents what the best investment they ever made was, what would they say? More likely than not, they’ll mention their home, and if they could do it all over again, I bet they wish they would have bought a few more.

Let’s take a simple example. Let’s say you purchase a $125,000 home today with an investment of about $15,000. If you rent this home and simply break even, you will have an asset that grows while someone else makes your mortgage, tax, and insurance payments. At a conservative 4% appreciation per year, in 30 years that home will be worth $405,000, free and clear! Not a bad return for a $15,000 investment! Think of the ways you could spend that money in retirement by simply sacrificing $15,000 today. That’s called leverage and is a major strength of investing with real estate. With the use of leverage, you can own something worth 10 times your initial investment, and still be able to take advantage of 100% of the appreciation on that asset!

Now, you may be saying to yourself, “that’s great, but I can’t wait 30 years to retire”. Real estate loans have a solution for that as well. The following chart provides some examples:


Loan scenario # 4 above shows a standard 30 year mortgage that is paid off in 30 years. However, if you were to make an additional $1,000 payment per year (loan scenario #3), that same loan would be paid off in 22.5 years! An extra $2,500 per year (scenario #2) pays it off in just 17 years. And finally, an extra $5,000 per year (scenario #1) pays it off in only 12.3 years.

By investing in carefully selected growth markets you will build your wealth and become financially independent. What are you waiting for? The best time to invest in real estate is now.

Culled from