Cliff Barron here with my weekly update for the real estate markets in Milton, Georgetown, and Glen Williams. This is for the week of November 22nd to the 29th, 2020. 

Before we get there, I missed last week - but two weeks ago, I talked about investing in real estate and how it can be such a lucrative thing.  It has created more millionaires in Canada than any other business - and I'm going to explain how it works.  So, two weeks ago, I talked about renting - about getting the right tenant, which is extremely important when it comes to investment properties. But the next thing I want to get to is, how does it work - how do you actually make money off of it?  

I've come up with an example for you. I usually do a spreadsheet and I meet with groups of investors occasionally, here and there, and I go through all the pros, the cons, everything, with them so they can be educated before they actually jump in and invest. But, real estate is generally considered one of the safest investments you could possibly put money into because it doesn't go down to zero.  So, say you own a house, and you want to buy an investment property. You're gonna have to come up with 25% down payment on the new place (just to keep that in mind). As a hypothetical kind of example, I've come up with a $600,000 property. Say you want to buy a $600,000 property - a freehold. So, if it's a $600,000 property, you have to put $150,000 down, which is 25%. And let's assume you'll have about $10,000 worth of closing costs. So you're in there for your total investment of $160,000.  I did some rough numbers:  I'm not gonna really shop around for a mortgage, so if you go for a basic five-year fixed mortgage right now (at TD, say) and you don't really try to negotiate, you're getting about a 2.14% mortgage, $450,000 mortgage, 25-year amortization, roughly a $1935 per month mortgage payment. So, you've got your $150,000 you put down and $10,000 in closing costs, which means $160,000 out of pocket. You could have possibly taken that out of your principal residence, or you could have saved that on the side. So, everything's great and you buy a house for $600,000.  Then you find a tenant, and the tenant is paying, say, $2200 a month. Every month, you're making what's called "cashflow positive" of $265 a month, which is $2200 minus your $1935 (which is your mortgage). But, I haven't taken into consideration a few things like taxes.  So, roughly about $3200 per year positive cashflow, but it's really probably zero, because after you pay taxes and everything, there's nothing left. You might actually be a little bit cashflow negative.  But don't worry about that, that's okay.  So, over the years, real estate has gone up by 3%. It goes up, it goes down, it goes up, it goes down. If you look at the graph of real estate over, say, 30-40 years, it's roughly a 3% increase per year. This year, we've had 15 to 18% increases (which is crazy) and this is not sustainable. But let's see, if I go with a conservative 3% per year increase in the property value, in the first year, that $600,000 property is going to go up by $18,000.  So, hypothetically, it's worth $618,000. You have $160,000 investment you put into the property, and you made $18,000 profit. So, if you do the math on that, that's approximately 11.25% return on your investment in year one. That's pretty darn good - pretty solid. You can make better returns in other places - but the higher risk, the higher the return. 

Like I said earlier, when it comes to real estate, the chances of you losing everything are very slim.  This year, some properties have gone up 18%. This is crazy, though - this isn't going to happen all the time. But if you bought that same house in 2019 for $600,000, it has gone up, say, 15%.  You're looking at a $90,000 appreciation on your investment - which is 56%. Because the key with real estate is - it's not your money. That's the key. Even though you put $150,000 down, the bank has given you $450,000. So they're giving you $450,000 at a 2.1% interest rate - but you're turning around and using that $450,000 to get a massive return. So that's what you're doing. You're leveraging $450,000 of somebody else's money and you're collecting the return on that - the bank's not. You're getting the profit on it.  So that's why, once you get ahold of things, as things start rolling, you can buy one investment property, it's going up, you can take some equity out of that, buy another one, it goes up, take some equity out of that... And over time, you can build up a pretty good portfolio, that could potentially be worth millions, or even tens of millions if you really do it right. So anyways, any questions about investing, let me know. That's really a quick synopsis of investing in real estate, but if you want more details, just let me know. 

So, anyways, let's get to the sales for the week of November 22nd to the 29th. It's been a good week. In Milton, 41 sales, as opposed to 25 last year in the same period. And the funny thing is, last year, in November and December, it started to really tick up. So, once we got into January, February of last year, it started into multiple offers again. So, it's interesting that the sales are still higher than last year. Out of those 41 sales, 11 sales were townhouses, $732k on average, 4 days on the market, 26 sales of detached at $1.123M, 5 days on the market, and semis, 3 sales at $833k, and 5 days on the market. So things are still active in Milton. 

Georgetown and Glen Williams are interesting too, because I remember, two weeks ago, when I did my vlog, the sales were actually a little bit lower than 2019, whereas this week, sales are exactly the same as 2019. And I remember last year in Georgetown when things slowed in November, and all of a sudden, it just took off for some strange reason at the end of November. So, the fact that we're keeping up with that is a good thing. And interesting too (I've never seen this before), where every single home sold in Georgetown and Glen Williams was a detached. There was no townhouses, no semis. So that's kind of interesting. But that's just because of supply. There is not a lot of towns or semis in the town. 18 sales, average at $1.017M and 9 days on the market. So things are still active. Things are still selling well. 

Anyways, that's it for Georgetown and Milton. Any questions, let me know. Send me a DM, PM, text, or old-fashioned phone call. Thanks. Take care.