Sylvia Ho is joined by Jenny who, with her husband, just purchased their first investment property. Jenny shares the anxiety she had going into the process and how she overcame that anxiety by getting good advice and trusting professionals and her own instincts. 

Sylvia learns why Jenny and her husband wanted the investment property; for future retirement security and for additional tax breaks, and assures Jenny those are great motivations. Jenny reveals that her anxiety largely stemmed from it being their first time in the new territory of real estate and not knowing what to expect or how to handle things that came up. 

Jenny overcame her anxiety by talking with friends about their experiences, listening to Sylvia’s podcast, trusting their real estate agent, and assessing properties based on whether she would want to live in them or not, to ensure future tenants would feel at home. Sylvia explores all this advice with Jenny and offers additional insight into maintaining landlord books, tax records, and real estate agent costs for finding tenants. This episode shines a light on how a potentially daunting process is made easier with the right research and people guiding your decision and offering support.

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Transcript

Sylvia Ho: [00:00:05] Hey, friends, have you ever wondered how you can pay off your mortgage faster? Or maybe you like to help your kids get into the real estate market, or better yet, retire with some passive income? Well, you're in the right place. Welcome to the Sylvia Ho Mortgage podcast. My name is Sylvia. I'm here to teach you how to achieve your goals simply by owning just one more property. Hey everyone, welcome to the JOMP podcast. My name is Sylvia and I'm going to be your host today. Today we're going to be interviewing a client who just recently purchased their first investment property. So today I want to welcome Jenny. Jenny, thanks so much for coming to the JOMP podcast.

Jenny: [00:00:48] Hi, Sylvia. Thanks for having me.

Sylvia Ho: [00:00:51] How do you feel? You just bought your first place.

Jenny: [00:00:54] I'm actually really excited about it because it's something that we've thought about for a while and now we're finally doing it. Like, it's really exciting, but at the same time there's a bit of anxious and nervous. Like we don't know what's going to happen, but more excited than anything.

Sylvia Ho: [00:01:15] Beautiful. And we're going to talk about the anxiousness, but what got you into the JOMP program? Like you said that you've been thinking about it for a while. Why did you want to do it?

Jenny: [00:01:24] Me and my husband have been thinking about this every so often. It's always in the back of our mind and it's more because for retirement. So every year come tax season, we look at our numbers and we're like, Do we have enough to survive in retirement? Is there anything else we should do to secure that? You know, we're comfortable and we can continue our current lifestyle or even have a little more, you know, because we're in retirement, we just want to chill. So a couple of years ago, we did think about it. And I don't know if you remember, but we did come in and ask Hey Syl, do you think it's doable for us? And at that time you said, well, maybe just have a financial analyst look at your numbers and see if there's other opportunities. So that's what we did. And then the financial advisor gave us the option goal. You know, the market's not too bad. Why don't we just try to invest in other products and see how it goes? So we did that for like three, four years, but things weren't progressing as we had hoped. And we know it's for long term and things usually eventually, hopefully will go up. But it wasn't going the way that we'd hoped. And we're like, okay, let's just give Phil a call to see if this investment property option is still open for us because we don't know, you know, do we make enough? We're not sure where the market is at. So that's when we decided to make the call to you and see what our other options are. And we also wanted to diversify our portfolio with what we already have. So we decided, okay, I'm going to book the appointment, make the call to Sylvia and see where it takes us. And this is where we're at now.

Sylvia Ho: [00:03:01] Okay, that's amazing. So the whole idea behind JOMP is for future retirement security, right? And just to diversify your retirement portfolio as well.

Jenny: [00:03:13] Right.

Sylvia Ho: [00:03:14] Okay, that's great. You had mentioned you are anxious. What are you anxious about?

Jenny: [00:03:21] Well, for me, I'm not familiar with all this whole investment property. I hear about it a lot and I don't actually pay attention to what's going on in the market. Yes, I know there's a lot of condos going up, but no idea of the pricing. So I didn't I'm anxious because I don't know what to expect next. But I think because I have my husband to go through it with me and also because we have you to help us, guide us through, and we have other friends who are going through it. It's kind of helping with that. It's making me more comfortable. I think the anxiety is more like I don't know what to expect and then how to deal with the negative of it.

Sylvia Ho: [00:04:03] Right? And then so basically your mind is like, okay, this is new territory for me. And it's just like now that I have this investment property, what are their next steps and how do I handle things that could happen in the future?

Jenny: [00:04:20] I would go on Google and like listen to other people's stories. And then usually when you do that, it's always the horror story that you find like, Oh my God, is that going to happen to us? Then what do we do? So that's part of it. But I just try to stay positive and my husband is like, okay, you know, we're already in it. Let's just keep going and we have good help on our side, so we'll be fine. So that's why I'm just focused on the positive and go with it.

Sylvia Ho: [00:04:51] Horror stories sell. Humans are attracted to like hearing these horror stories. Right? But we don't hear a lot of, like, the positive part of things, right? Yeah, there are horror stories, but it's not like it's the first bad thing that's going to happen to you like it's happened to other people. So we can learn from other people and what they've done.

Jenny: [00:05:12] Right? So that's kind of what I did too. So I was like, Oh, and I asked my friends who have investment properties, has this ever happened to you? What would you do if it did happen to you? So instead of just focusing on those horror stories. It's just like buying anything. Even when you buy something off Amazon, I would look at all the reviews and then decide, okay, if this were to happen, what would I do? If I do get a bad tenant, you know, what are my options? And then after I do enough research, okay, it's not all bad. And even if it is bad, there's a way to work it out, right? So that's why I'm, like, more comfortable, more confident about it.

Sylvia Ho: [00:05:49] Okay, wonderful. So now that you bought your first investment property, how did you decide on this particular property? How long did it take you to find it?

Jenny: [00:06:00] Actually, we were really lucky. We didn't really look at too many, but like I said, I hadn't really paid attention to the real estate market, so we weren't sure what location we'd want. But we decided to go in a location that we're familiar with, right, because it's hard to sell something that you're not familiar with or you don't know about the location. So we decided to buy where we did because it's kind of close to where we are. So if there's any problems, we figured we can get to the condo quickly and fix or see what, you know, go there and fix it or be there quickly, basically. So, and we also have a friend who's a real estate agent, and she helped us through it. She gave us options. And then we decided on the location based on the price. And we want to start small, obviously, and within our budget. So the main goal was try to stay within our budget and then in a location that we're familiar with. So we pick one weekend we went to see four condos. Actually three of them were in the same building.

Jenny: [00:07:07] So we were able to compare within this building what there was. There was a studio and then there was a slightly bigger studio. And then there was like one that was a little older, or you can see that it was lived in, but the view wasn't good. But we saw three different things and they all had their own characteristics. And then we thought, Hmm, would someone want to live here or even would I want to live here? I know in the back of my mind, or people keep telling me, Don't worry, you're not the one living it. But at the same time, I want them to be comfortable. So that's what I went through when I was looking at the different properties. And the one that we decided on was like, Actually, this is somewhere I would want to live. So even when I'm selling it, I have good things to say about it. And it's not like I wouldn't be ashamed to sell it to someone. Or have someone live in it, I was like, you'd be comfortable. I'd be comfortable, you know?

Sylvia Ho: [00:08:08] Excellent. I really love your thinking in regards to future planning as well. Right? Is that okay if I were to sell this condo back out, what are the things that I like about it? And then just making sure that, you know, you're taking care of in the future as well, like the exit plan.

Jenny: [00:08:24] Mhm. It's kind of like I want to be very upfront about what I'm offering out there, right? And I want people to come and see it and go, oh actually it's so small or it doesn't have enough storage, so I want to make it so they, it's attractive.

Sylvia Ho: [00:08:42] Yep, yep. Yeah, yeah. It's like your selling point, right? Like, if it's, you want it, you want to be able to make sure you can sell your tenant on it and also sell in the future as a selling point, right? At the end, like what you're doing is you've created your own business. This is your landlord business, right? So you're thinking of it from a perspective of, Hey, I'm getting into this investment. How do I, you know, create this investment and make money on this investment and attract the right clients, right? And then what is my exit plan? So basically, that's what you've done. You've started this landlord business of yours.

Jenny: [00:09:18] Mhm. I kind of tried to put myself in a user's point of view. It's like if the view is ugly, do I want to come home and look at this every day? No. Everyone wants to come home and be comfortable at home. So whether it's a tenant or a future buyer, you know, same.

Sylvia Ho: [00:09:35] Yeah, perfect. So you're basically telling me in one weekend you went to go see four properties and you bought right away.

Jenny: [00:09:44] Pretty much. Because, oh, so before we went out to look at properties, obviously we had to make sure we had enough for the down payment. So in that process I started to look on the websites and I was like, Oh, here's a good one. But then in the blink of an eye, like two days later, it was gone. I'm like, Oh my God, I think, do we have to act fast? Like, is this how it's going? Like all those, oh, and also because of the bidding war situations a couple of years ago, I was like, Oh my God, are we going to have to go through that? So that's why like we're the type that as soon as they saw something we liked and it was within budget, we're like, okay, let's not waste time and let's just do it, you know? Because again, time is also money. So the sooner we keep the ball rolling, let's say then, yeah, then we can just get it over with.

Sylvia Ho: [00:10:34] I love your whole process and thinking, I know you'll be an awesome landlord. You're running your business exactly how you should in the sense that you're thinking about, you know, who's going to go in there and what's going to happen and, um, and how to take care of your property. Now, the question I had for you is you mentioned studio versus a one bedroom. How did you choose one over the other?

Jenny: [00:10:54] Oh, again, I went with my, Is there something I want to live in? Like, okay, studio, it's nice and cozy, but at the same time I was like, It's just a small box. Like would my tenant be comfortable living in here, are they going to feel claustrophobic? I might be a little. And then with the one bedroom, they were still a little small, but I felt it would give them a little more segregation and feel more at home. Like I like the coziness.

Sylvia Ho: [00:11:25] All right. Okay. Love it. Love it. You're basically, you're constantly putting yourself in the tenants' shoes and I love that. I love that. What recommendations or advice would you give other first-time investors in the process of buying?

Jenny: [00:11:39] I think the most important thing, and maybe I didn't do enough, was still do a bit of research before you jump into it. Maybe that's where some of my anxiety came from because I didn't know enough before I went into it. And so I feel like, it's just like anything else. If you do enough research, you know what to expect and then you weigh out your pros and cons. Also, I think it was really important to find people who have gone through it and ask them for advice. Because I remember as we were going through it, I also listened to your podcast about someone who just went through it as well, and they had the exact same questions that I had when I was going through it, and I was like, Oh my God, there's other people with the same questions going through the same thing. So I really think if I did more research, it would help a lot to know what's to come and how to prepare yourself for things.

Sylvia Ho: [00:12:31] Wonderful, wonderful. Anything else that you want to add maybe about the mortgage process or about buying process or about this whole JOMP program?

Jenny: [00:12:41] The whole mortgage process because you have always been my go-to for my mortgage, that part was really easy. But at the same time, yes, it was a lot of paperwork and I'm the type that likes to stay on top of it. So for us, as soon as we got your homework list, we stayed on top of it and it made the process really easy. You know, it's just a checklist. You know, you check everything off and done. So I say it's like, stay organized and it will be an easy, smooth process.

Sylvia Ho: [00:13:11] Beautiful, beautiful. Thank you very much for that. We love our checklist also. And we find that a lot of clients love checklists as well. Now, last question before we end this podcast. What's one piece of advice you would tell your younger self?

Jenny: [00:13:30] I would tell myself, don't wait. I mean, honestly. Yes, you don't know what's going to happen, but if you don't try, you really won't know what's going to happen. Even though we did it like probably ten years later than we'd wanted to, it's not bad, but I wish we would have started earlier.

Sylvia Ho: [00:13:53] You're going to be closing on your property soon. I just wanted to give you like a little bit of advice in regards to, you know, getting the property ready for your tenant. Before I go into it, what did your realtor recommend for you to do?

Jenny: [00:14:04] So the condo that we bought is in a building that it's not very big and there's not too many units. So she just suggested, to make our unit stand out a little more, to rent it out furnished. And then we can also hopefully get a bit more rent out of that.

Sylvia Ho: [00:14:21] I love that idea. So in regards to furnishing the unit and then just getting a little bit more, like are there a lot of listings that are for rent in this building or are there not? Like, why did she recommend that?

Jenny: [00:14:34] Um, yeah, actually, there's quite a few. So that's why she suggested it to make it stand out a bit more. Um, and then hopefully we can also attract the other tenants who just want to pick up and move in and not have to deal with all the furniture buying themselves and then, you know, I don't even know if they'd like to put furniture together. But it's more for convenience. Just pick up and move in.

Sylvia Ho: [00:14:59] Okay. I like that idea because you can definitely attract a different type of clientele where you can get a little bit more money. Right? And then eventually get your money back for the furniture. Now, we were talking about like booking the elevator. So my understanding is, is that you can book the elevator ahead of time. You just have to call the management company because I'm sure you're not the first person wondering if you can book the elevator to move your furniture in.

Jenny: [00:15:25] Yeah, for sure, because we're closing on a Thursday and obviously I want to get our unit out on the market as soon as possible. And because we've decided to furnish it, I mean, timing is everything with the delivery, but I wasn't sure if we can book the elevator even before we close. So if we can, that would be great. And we can just get in there on the Friday or even the weekend and hopefully get it furnished and then get the listing out.

Sylvia Ho: [00:15:50] And get it up on the market. Now, in regards to getting it up on the market, are you going to try to do it yourself or are you going to go through your realtor?

Jenny: [00:15:56] We're going to go through a realtor because, again, this is the first time and we just want to get everything done properly and not be surprised by certain rules or things that we're missing or even missing out that would benefit us. So I would suggest if you're unfamiliar or if it's your first time to, you know, like maybe I don't know if you have to pay them, but I would suggest go with a professional first.

Sylvia Ho: [00:16:21] So typically it's one month's rent if you're going through a realtor here in the Toronto area. So if you're renting the place for $2,300, they'll take $2,300 and they'll split it between the two realtors, the listing realtor and then the realtor who found you the tenant. So that would be what they would charge you is one month's rent. Because you're buying furniture, you're going to have expenses. So being a new landlord, very, very important to keep track of these expenses so that when you do your income taxes in April, March/ April, you have these expenses ready for your accountant. There are different ways to do this. How I do it with my properties is I have one credit card that have all my rental expenses on it. When and if I got audited by CRA, I just show them my one credit card and all the expenses on it. That's one way. Okay? Because CRA at times will say, Oh well, how do you know that this is for your rental and not for your personal? Like if you're buying a bed at Ikea, how do we know that you set that to the rental property and not for yourself, right? So little things like that. So that's what I do is I keep my credit card separate. Now I own a lot of properties and sometimes it's not feasible to have a separate account. So the other thing that you can do is with your rental landlord business, have a landlord account and then you could always, like when you pay something, you could always debit that account or just pay directly from that account. Okay? Those would be my two recommendations. But definitely, definitely, definitely keep all the receipts. I hate paperwork. So what I do is you can take a picture of the receipt and then save it to your phone in your favorites under, like the rental.

Jenny: [00:18:03] Mhm.

Sylvia Ho: [00:18:03] So that's one way to do it. Or you could just save the physical copies of it. And then the other thing is travel, talk to your accountant about these things, but if you're travelling, like say some new landlords on a monthly basis, they'll go and see on a quarterly basis, they'll go and check out the tenant, Hey, we're coming down. We just wanted to pop by and just make that aware to your tenant that, you know, every quarter you're going to come by and just make sure everything is working well. So you can now start expensing like gas and a bit of your insurance and maybe your cell phone bills and advertising and internet and stuff. Again, ask your accountant. But for me, those are expenses that I can deduct off of my income taxes. Yeah. So just have a separate account, that would be my recap. And then just make sure you track your expenses so that from now on your expenses are tracked and then you can have more deductions and therefore pay less to the government because who wants to pay more income taxes to the government?

Jenny: [00:18:54] That was another reason why we're doing this.

Sylvia Ho: [00:18:57] Okay. Tell me more.

Jenny: [00:18:58] Part of the whole diversifying our portfolio and to potentially pay less taxes. So me and my husband were just 9 to 5 jobs, you know, so all we had were our RRSPs. Was that enough? I mean, you can only deduct so much. So what are other ways? What are other tax-saving ways? And then this came up.

Sylvia Ho: [00:19:19] Right, right, right, right. Yeah. So a lot of my clients are T4'd individuals and this whole new world of other tax deductions is new to them. So I'm really, yeah, I'm really excited for you to be able to see the difference in less taxes being paid. So that that's awesome. That's awesome.

Jenny: [00:19:35] Always great.

Sylvia Ho: [00:19:36] Yeah. Keep the receipts and then make sure you keep your landlord business and your personal stuff very, very separate. Because when your accountant is going to talk to you about this, you want to make sure that you're well prepared. But I know you, Jenny, you are very organized that way, so I'm sure you will have no issues. And if you're not working with an accountant, please start thinking about an accountant next year. I can refer you my accountant. But this is a time where you want to start using an accountant for T4'd individuals. You may not have all the deductions. Well, you don't have all the deductions, so you just kind of maybe do it on your own. But at this time, now that you're having a landlord business, you want to use a professional accountant to do your income taxes each year. All right?

Jenny: [00:20:17] Yeah, good to know, because we were always the terrible tax people, do it ourselves. I did consider, so next year, should we just keep all our receipts and try to do it ourselves? But since you're saying, well, actually, I said it myself, always, since it's our first time, go with a professional. You're right.

Sylvia Ho: [00:20:35] Exactly. Yeah, go with the professionals because they know, like, deductions that you're like, oh, I didn't know I could deduct that. Right? So work with an accountant for sure. Thank you very much, Jenny. We really appreciate your time on the JOMP podcast.

Jenny: [00:20:49] Thank you, Sylvia.

Sylvia Ho: [00:20:49] So friends, we just heard from Jenny. She purchased her first rental property with her husband. In this podcast, Jenny shared her experience about her anxiety that she was going through, but was able to overcome that anxiety by getting good advice and surrounding herself with the professionals and really using her own instinct. Even though Jenny and her husband invested with a financial planner and put their money into stocks, they believe to better well-round their portfolio was to also put money into real estate as well. They're really, really excited about this. If you guys have any questions in regards to, you know how to get into your first property, please connect with me. I look forward to chatting with you.

Sylvia Ho: [00:21:29] Hey friends, thanks so much for listening to the Sylvia Ho Mortgage podcast. We'll catch you on the next episode. You want to learn more about the JOMP program, please connect with me at SylviaHo.ca. Love to hear from you. All it takes is 15 minutes for us to chat to see if this will work for you. Thanks, guys.