Saturday, August 25, 2012

Standing out from the crowd

I've been reading far too many personal finance blogs lately.  And to be honest, a great deal of them start sounding the same.  They all talk about how debt is bad and how they struggle to pay down their student loans while budgeting for this, that, the other, new houses, new cars, new babies, and the unexpected.

They are in essence more of a personal journal than anything else. Now I suppose journals aren't all that bad and we all have our curiosities and fascination with how others who seem to be doing so well are actually struggling and are drawn to these sorts of things like a moth to a flame.

I too had my fair share of struggle with debt, budgeting, and the like.  But I did it on a heinously inconsistent income.  I often go months at a time (typically in summer) without getting more than a handful of cheques that any properly suited worker bee would bring home in a day.  But then I'm not surrendering 44+h a week to help some jackass build his empire while I languish unrewarded and not credited on the sideline.

But I suppose what this posting is really about is debt.  So many people out there see debt as this big scary evil monster that threatens their lifestyle of the not-so-rich and infamous.  And it most certainly can be if you go all willy-nilly with your credit cards and buy every toy, trinket, oohm-pah, and boom-pah on the shelf.

I use debt to buy assets.  What kind of assets?  Stocks, shares, units and contracts are my first choice for using debt. Now I can hear you shaking your heads; what kind of crazy fool would use borrowed money to play in the stock market?  You no doubt have akin the stock market to a casino and everybody who's in it all the time a gambling addict.

But, if this is the first time you've gleaned my blog, then I'll be blunt and say this:  You've been scammed my friend.  (Not for not reading my blog... but for believing the tripe and rhetoric that has been jammed down your gullet by the media.)  If you don't want to think about it then I could call you an idiot.  But that's not fair to idiots.  You're just a stubborn, pig-headed, jack-ass who's too entrenched in your ignorance to even consider that there's money to be made with just a few strategic transactions a couple times a month.

How do I do it?

Since I live in Canada in a large metropolitan city, I've kept my eyes open and noticed tiny little badges on swanky buildings in the downtown core.  These little badges reveal the name of the property management company, most of which are publicly traded companies called REITs.  (Real Estate Investment Trusts)  They are in the business of owning properties, owning buildings, and renting out the space.

Very simple business model that even the most pedestrian, ignorantly entrenched, non-investor can understand.  It makes it very easy when you ask them how is this any different than buying a rental property and doing it yourself?  (Aside from having WAY less risk, quicker ability to sell, no need to hire lawyers to deal with dead-beat tenants, or plunge toilets, or get caught up in legal process just because the furnace died on Christmas Eve, the house froze, pipes burst and the tenants are suing you for being a slum-lord.)

I wrote a guest blog article for "Modest Money" just about this very topic and that can be seen here:

These types of businesses are about half of my investment portfolio.  The current Total Return (TR) from the monthly rental payments AND the increase in property value is about 12-15%.  Since it only costs me 4% to borrow (tax deductible I might add!)  I'm coming home with 8-11% profit.

Yes, there is risk, but there is a physical asset that you can go see, kick, and spray with graffiti if you so desire.  There are also ways to mitigate that risk which I've discussed at length in older posts.

Stay hungry my friends!

Standard disclaimer: My words are not gospel.  If you follow my advise you do so at your own peril.  If you don't make informed decisions they why should you expect to blame ME for YOUR stupidity?  If you do not want to take responsibility for your own actions then please move back in to mom and dad's basement and leave me and the rest of society alone.  It will make the world a better place.

No comments:

Post a Comment