Mail boxes in expensive building

Wealthy Landlord, Wealthy Renter: Should You Really Buy Your Home?

Spring has been a weird one in Montreal. House- and condo prices have jumped in leaps and bounds. Ten offers, bids 50k over asking price, and my clients still don’t get the house. People in Toronto or Vancouver may laugh: prices in Montreal are pretty reasonable. But for the city that real estate forgot, this is all new for us.
It’s an opportune time, I think, to examine just how conditioned we are to believe in owning our homes. I’m a bit horrified when I watch buyers add extra tens of thousands in bidding wars without pulling out their calculators!Alex Avery might say one word to this: opportunity cost.Before laying down large sums for a plex, condo or home that you plan to live in, I highly suggest you run some financial projections. You should probably also read Alex Avery’s book, The Wealthy Renter.

People assume that buying a principal residence makes sense from an investment standpoint. Why throw money away on rent, right?  

Not so fast. Investing is all about leverage.
The question should be, what else could you do with that money?

In The Wealth Renter, Avery argues that your down-payment money may be better leveraged in other ways.

Let’s take a simple example. Suppose you want to buy a condo or cottage for 300k. Let’s assume you put down 20% (60k). At 4% interest, these payments will run you 1250$ / month. Add 200$/month property taxes and the same in condo fees or, in the case of a home, 250$ in maintenance (no upgrades!!), and you’re running 1950$ in monthly payments. None of these expenses is tax deductible. You’re building equity at a rate of about 500$/month. Your ROI in terms of building equity is 6000$/60,000$ or 1%. Sound like a good investment?

“What about market appreciation?” you say.

Okay, let’s assume 3% appreciation per year. (This takes the ups-and-downs of real estate cycles out of the picture). You’re now making 4% on your money. Still sound like a good investment? Remember: your payments are made with after-tax dollars. None of the work or maintenance you do is tax deductible, and neither is your mortgage interest. Sure, you won’t have the capital gains hit when you sell. But still, 4%?

Let’s consider the same scenario, but with a rental property. Your cost structure is the same (1950$ / month), but now you’re making 1950$ in rent. Also, you expense all sorts of things to help create a loss in the early years of ownership, creating tax advantages. You can also expense your mortgage interest.

What about paying rent?
Sure. We all agree you need to live someplace. Let’s make your rent 1000$/month.

Your out of pocket is half the amount it would cost you to own.

Now, let’s say you’re still making 3% appreciation like in scenario one, but you’re also saving 1000$ per month because your tenants are paying your mortgage and building expenses. Add 12k to the initial 6k being capitalized. You’re now making a 30% return, plus the 3% market appreciation. 33% return. Versus 4% as a homeowner. See Avery’s point?

People may argue that there are drawbacks to renting. You can’t upgrade or really customize the place you live.

Says who?

I’ll tell you right now, if one of my tenants offers to redo a kitchen for me, I’d happily agree to reduce his or her rent a bit. Consider what happens if you spend 5k redoing your landlord’s kitchen in scenario two.

Suppose you negotiate a 100$ rent reduction in exchange for 5k of renovations. You now save 13,200$ on your living expenses in comparison with scenario one. Subtract 5k for the kitchen renos from your savings, and you’re still ahead by 8,200$ over the person who bought their home. Now add the 6000$ of equity. That’s a 24% return!

Still think becoming a landlord redoing someone else’ kitchen is such a bad idea?

I don’t want to bash home-ownership. I live in a house that I own, and if I took out my calculator, I expect I’d be horrified at my cost structure. That said, before succumbing to current market nuttiness and tying up vast amounts of capital in a project with a questionable return, you may want to reconsider renting, and save your first purchase for a rental property. This is especially if you prefer to live in a more expensive, trendy area, where the ratios and prices are right now out of whack.

Good luck and play smart!
Yours in investing,



Book by Karate School Owner Ben Stewart

I got my hands on this book a bit randomly. Coming back from an international kickboxing tournament, my coaches got handed a few copies of Millionaire in 90 Days in Schipol airport by Ben Stewart. They decided two copies were too many for their apartment, and upon our return to Montreal, the book found its way into my gym bag and finally onto my nightstand.

I have to admit, I was skeptical at first. The title and cover made me wonder what sort of writing could be inside. Once I opened the book (over Christmas break, on a transatlantic flight), I wasn’t sure about the simple and un-poetic writing style.

After the first half of page one, however, these things stopped mattering and I actually started reading Stewart’s book for the ideas and information inside. Stewart has had an unusual and quite successful go of things. 9-time world Karate/Kickboxing champion, millionaire business owner, and Karate teacher- and school-owner, Stewart has obviously done a few things right.

Millionaire in 90 Days, transmits some of Stewart’s ideas about how living with a millionaire’s mindset, lifestyle and attitude is the first step to success. He presents his game-plan for taking control of your time, finances and weight/fitness. Depending on where you sit on the spectrum with how well you control these areas of your life, Stewart’s advice may or may not be new information. As a holistic strategy, however, he does a good job of covering most of the bases and giving an overview of what a winning lifestyle could look like.

On leveraging time, he has some particularly valuable things to say. If you earn 30$ an hour, for example, why spend your time doing tasks that you can pay someone else 10$ an hour to do (for example groceries, dishes, and household chores)? Work one extra hour and this will effectively buy you 2 hours more of free time since the ratio of your time to minimum wage is 3:1.

For the small business owner as well, Stewart has some good advice. He advises moving from the position of doer to manager and coordinator. Systematize, he argues. You want to get your business to the point where it can function without you! This is how you will truly be able to take advantage of the time and lifestyle that wealth- and business ownership should afford you.

I enjoyed this book, and I believe just about anyone starting out in business or looking for practical, no-nonsense ways to gain control of their lives will find at least a few useful kernels in Millionaire in 90 Days.

It’s now been 10 days since I began reading the book (I finished it 2 days ago). By applying its lessons, I now have 80 more days to become a millionaire… 😉 Let’s see if it works!

You can check out Ben Stewart’s motivation businesses at:



“It is not what happens to you that determines your fate. It is what you do next.”
– Karen Wright, The Sequoia Seed

Karen Wright’s book, The Sequoia Seed, begins with an explanation of how the magnificent Sequoia tree reproduces itself. Its tiny seeds may lie dormant on the forest floor for many, many years before a fire comes along. The extreme heat of the fire activates the seed, allowing it to sprout. No intense, burning heat, no Sequoia!
This is the metaphor that guides Karen’s spiritual book. Here thesis: as humans beings, we are also forged in the fires of the challenges that we face. No searing wounds or challenges, no re-birth and no growth.

In this way, Karen dissects numerous issues that may hold us human beings back from living life to its fullest. She discusses, among other themes, the ability to accept the end of things, or a loss, as a new beginning. She explains how and why it is so essential to living for ourselves, and not for others. She sheds light on why so many of us have trouble with this. She argues also for the importance of taking stock once in a while, in order that we might accurately and honestly know where we stand.

Her books are simply written, and full of sound, easy-to-use spiritual advice. I would recommend it to anyone who is beginning or already on the warrior’s path!

Check out her website for more information:

Incrementality : The Slowness of Success

Incrementality : The Slowness of Success

It’s not news that we’re a quick fix, instant results kind of culture. We want it all. Now.

Advertising and “overnight” success stories have us believing that change is something that has to happen with a bang. It should be as easy starting a new, crash- initiative, right?
Why do so many ambitious New Years resolutions fail? 
When after a few days of effort, immediate success doesn’t show up, we declare defeat. Disenchantment shows up. Whatever we’re doing must not be working, because we didn’t get what we wanted in three days of dieting. So we revert to our old habits. Boom! No change happens.
I’ve made my share of such attempts. After making small, rational changes to my diet and not immediately losing 5lbs, I’m the first to reach for the chocolate. 
That’s why we need a dose of Darren Hardy’s The Compound Effect. This book is really awesome for illustrating how powerful incremental changes can be. Huge results are both more and less easy to come by than we think. Small lifestyle changes are easier to make than a giant, life-altering crash- initiatives. They also require a different kind of long-range discipline to carry out. 
The first step to this kind of discipline though is the understanding that you can’t always expect results overnight. Powerful, lasting change is a question of inches, if not millimetres. You have to give these small changes a chance to add up before dismissing them. Makes sense. But it’s good to be reminded!
Another key point: the compound effect can work for you as well as against you. Make small, successive bad decisions – and yes I am talking about the piece of chocolate every day after dinner – and you will reap incremental drag that pulls you away from where you want can go. 
It’s that easy, and that insidious. 
Apply these principles wherever you like: diet, investment, exercise, relationships. This is the power of incrementality. 



Angie Abdou’s The Bone Cage is not only entertaining and well-written, but it gives a great snapshot of the daily life of elite athletes.

Featuring the Olympic training camps of wrestler Digger and swimmer Sadie, the book traces the highs, lows and grinding fatigue that is part of these athletes’ lives. The book opens with a scene in which Digger and his teammates sweat to cut weight, and anyone who’s struggled with the psychological drain of sweating off pounds will relate.

Beyond Abdou’s story-telling, the book has two particularly interesting themes that relate to elite amateur sport. First, The Bone Cage explores how the practice of sport at the National and International level can become a self-centred way of life. Because they are required to give4 so much to better performance, elite athletes spend most of their time and energy in practice. This leaves little else for a family- or romantic life. At the amateur level, where athletes are usually living on very little while they train and compete, many individuals also give their careers a back seat. It’s interesting to follow the lives of Digger and Sadie as they negotiate family tragedy and financial stress.

For me, however, the most interesting aspect of the book, is the theme of retirement from the sport. Both of the protagonists are at the end of their competitive careers. The Bone Cage gives real insight into what it feels like to be so unfocused–with all your and your family and community’s energies and efforts directed at one goal. It highlights what it must feel like when, from one day to the next, you lose this focus because it is time to move on, and you go back to being a ‘civilian’. From a Buddhist point of view, it’s a great story about letting go.

Anyone who is or has been seriously involved in sport will relate to this story about what happens the day after your last fight. It’s also just a good read though. I recommended the book to my brother, who’s not involved in the serious competitive sport. After he asked me: “Why would you ever want to cut weight ?”, he told me he really enjoyed the book.

So it seems you don’t have to be an athlete to enjoy The Bone Cage.