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Nelda Schulte holding a mug - why I do what I do using real estate as the tool

Why I do what I do (using real estate as the tool)

Why I do what I do using real estate as a tool is a bit of a story. I always wanted to own real estate rental investments, but I honestly didn’t know how. Working as a music teacher with a big graduate school debt to pay off and a low income, I couldn’t imagine how I could ever accomplish this impossible feat.

What my parents taught me

My parents taught me to save, save, save until I’d accumulated a 25% down payment on a mortgage, then slave for years, pay the house off over 25 years, then retire on my pension from a  steady job of 25 years. They both followed that route, and financially, it worked pretty well for them.

My parents paid off the family house in my teens.  My Dad worked two jobs; they rented out our music room to music teachers for additional income. They worked hard, and they worked many hours to make sure we three kids had a roof over our heads, good meals, and support for our musical/artistic interests.

The world of work was a different place

When I graduated from university, the world of work was a different place than that of my parents. Job stability and pensions were not the norms. Education didn’t guarantee me a job, and a job didn’t guarantee me a pension or security. A job also didn’t ensure that I had anything left over for savings after paying my expenses.

As a music teacher, I could only physically teach so many students per day; even at 50 students a week, I was making 30k gross. In addition to my full-time work, I always took on additional part-time jobs, but dollars for hours also have a limit.

One decision created a different financial future

But, back to my childhood, when I was about 10 years old, one of our neighbors lost his job and had to sell his house quickly; he asked my Dad to buy his house, all my Dad needed to do was assume the mortgage.

As the 10th of 14 children, my mother grew up during the depression and spent her youth poor, hungry, and wearing hand-me-downs.  Taking on debt (even good debt) terrified her.  My father was a youth in Europe during WWII. Although he had enough to eat growing up, and wasn’t terrified of taking financial risks, he hated the thought of managing tenants or dealing with my mother’s angst. My mother won. My parents said no.

After my mother passed away, my Dad sold the family home. They had initially bought it for $40,000. Twenty years later, he sold it for $150,000. He and his second wife bought a new bungalow with that money and later downsized to a condo. Between their savings and pensions and good money management skills, they laid the foundation for a comfortable retirement.

Selling that one house, which had increased in value of 275%, made all the difference in their financial comfort level.

Would you be farther ahead with one more house?

Fast forward to my Dad in 2018. Dad was diagnosed with Vascular Alzheimer’s disease. His wife knew she had to take over all the responsibilities and was feeling overwhelmed with organizing the paperwork, bank accounts, savings, etc.  I offered to help. As I discovered, they had budgeted for living a long life after retirement but hadn’t considered the costs of home care or assisted living accommodations. His wife was worried about whether they could afford to maintain a comfortable lifestyle with the added home care or assisted living.

Luckily, their numbers proved they were good savers and would be fine –  if my Dad’s need for home care didn’t carry on for years and if they could sell their condo at a fair price.

I couldn’t help but wonder…how much farther ahead would my Dad have been if he had owned two houses? What if he had kept the house, rented it out, and sold it in his retirement?

Periodically I check housing prices in the area where I grew up. That same house now sells for $300,000. It’s definitely on the lower spectrum of housing prices, but…he would have also collected rent for 20 years. Even if he had rented the entire house for a very modest amount of $1000 a month and never raised the rent,  he would have made $240,000 over 20 years. If he had kept it, the house could have been passive income in his retirement.  If he owned two houses, he’d be significantly richer.

Buying houses as investment properties weren’t really something my parents’ generation did. Coming out of the great depression and WWII, having a roof over your head and food in your stomach meant you were successful. There also wasn’t the easily accessible information available today. My parents were risk-averse and impressed the fear of taking financial chances with us kids.

I saw the light!

Back to me – before I had any money at all, I started attending investment seminars.  At one seminar, I learned simple strategies for decreasing costs and increasing income. During the seminar, one of the presenters recommended buying a house and taking in a roommate. The other option was to buy a house with a rental basement suite to offset housing costs (also called house hacking). All of a sudden, I thought – hey! Here’s a way I can buy a house and have someone else help me pay my mortgage – I can make this work!

A few years later, I relocated to Fort McMurray, Alberta. When I moved to Fort Mac, it had a desperately sparse housing situation, and the rent was the highest in Canada. To offset the crazy rent, employers were offering their employees  (in addition to their wages)  a living out allowance (LOA). This put landlords in a plum position.

Realizing my dream (with some additions)

I had saved up a down payment over many years and was finally making a good enough income to qualify for a mortgage. After a year of renting an expensive condo in the oil sands, I realized I could own a house for what I was paying in rent, and have my roommates pay the mortgage. I bought a house with a basement suite, set about renovating it. I rented both the downstairs suite and the two upstairs bedrooms.  At age 40, I realized my dream and finally became a homeowner. I also simultaneously became a landlord and roommate. Living with roommates and tenants after many years of having my place to myself was an adjustment, as was the steep landlord learning curve.

That house has been the biggest headache of my life AND my greatest learning experience. At times the cash flow has been AMAZING! Other years, I sank money into repairs, and at others managed natural disasters I thought I’d only read about including two floods and a city-wide fire and renting during a pandemic.  How many landlords can say they’ve had their tenants evacuated twice due to natural disasters in three years?! Unfortunately, I can.  I still own the house, and I still feel the same way about it. I guess it’s a little bit like the colourful/problem child in the family  – there are good times and bad times. Some experiences make you laugh. Others make you pull your hair out.

Education makes all the difference

Looking back, I realize if I had educated myself on real estate investing and landlord-tenant laws, I could have bypassed 99% of my headaches, I could have also bought a house a lot sooner and be better off today. But everyone starts somewhere. I was a late bloomer, that was my start, and I’m grateful for it.

A couple of years after buying the problem child house in Fort Mac, I joint ventured with my brother-in-law and bought a condo in Edmonton, which for the most part has been worry-free and constantly rented. When I moved to Calgary, my husband and I bought a suited duplex and legalized the basement suite. It has also been continuously rented and the rent covers most of our mortgage.

Every time I bought a property, I got a little wiser, and every time I learned more about landlord and tenant laws, things got a little easier for me. I learned that buying real estate investment is ½ of the equation, the operational part is the other ½.  Both are critically important.

Real estate is like gardening

When I buy bedding plants and vegetables for my garden, I see the similarity between gardening and real estate investing.  Buying the plants is ½ the equation, learning how to nurture and grow my garden requires knowledge and skill. The more I learn about my plants, the better they do.

Back to the beginning – if my Dad had made one different choice, that he nurtured and grew over the years, his finances would have put him in a very different situation. I can’t think of too many other investments outside of real estate he could have made that would have yielded him the same profit.

The experiences I’ve had during my real estate journey have been interesting, exciting, fun, agonizing, stressful profitable, and costly. My aim is to help you become a wiser, smarter, lazier (yes lazier!) real estate investor by giving your education and resources that will put you in the right place to nurture and grow your investment. The more skilled you are, the less effort you’ll need to expend.

You buy the soil and the plants; I’ll provide the nourishment.

To your success!

Did you like this article? Follow me on Twitter @neldahelpsme and Medium.

Nelda Schulte is a property investor who is passionate about helping investors who self-manage have profitable investment properties through resources and education. If you struggle with the wrong landlord forms, or worse yet, no landlord forms check out Nelda’s 10 Essential Editable Landlord Forms that help you separate the good tenants from the bad and increase your property’s profitability.

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