Laurel Simmons: Now we're onto the mortgage section and we have Teresa. Franciosa from Mission 35 mortgages. You're going to be talking about how you can understand personal and finance and marketing services for the real estate investor. And you've got some case studies for us.
Teresa Franciosa: Yes, I do.
Laurel Simmons: Take it away.
Teresa Franciosa: Thank you so much. Thank you for the invite and the introduction. I wanna start by saying I have a huge passion for investment real estate. From just watching my parents over the years. They purchased investments, held on two investments, and had also flipped a couple of properties.
You never know who you're influencing. I was very young at the time and didn't think that they were influencing me, but they absolutely were. And now watching their life by design, they are retired and enjoying the fruits of their labor, their mortgages are now paid off and they're just enjoying all of the revenue that comes in month over month.
I guess it gave them financial freedom. But how I got started in my real estate journey with my real estate journey as I met Brian, and Brian happens to be now my boss at the time, I was not working for him and I went to him for a mortgage. I was looking for a mortgage, and he planted a seed and it started something like this.
Just imagine if you owned an investment property down the road. And it stuck with me. It stuck with me for a while. And also with that little passion in the background, little firing away I purchased my first owner occupied property and after that purchase when the smoke had cleared and, your bills set in and things like that, My husband being self-employed.
He also has a labor intensive job when he's on the crew. Started navigating through what my retirement plan was gonna look like, what's my security gonna look like? And I started thinking about what Brian had said about having a property and started looking at my parents' situation.
At that time, I decided, you know what? I'm just curious. I got curious, and I thought, you know what? I'm gonna talk to more than one. I'm gonna talk to other people that have multiple properties that are in my situation and figure out how they did it. One few things that I started to do was ask lots of questions.
How did they navigate through the pre-approval process? cause I didn't even know where to start at that point. How did they come up with a down payment Because they didn't have one? What were the types of properties that they wanted? They looked at purchasing, why did they purchase them?
What, and I also asked about their tenants. What were their tenants like? I didn't know how to be a landlord. What were the tenants gonna be like? Did they screen their tenants? Did they have a property maintenance company management company that worked for them? Or did they do all the work themselves?
At that point most people had really great stories. Some people with not so great stories decided that, you know what, I needed a plan. So we reached back out to Brian and Brian went through my financial situation and we had some obstacles. Obstacle number one, I did not have a down payment that was a concern, but I did own a home Obstacle.
Number two which he was not aware of, was I had entered into a consumer proposal. It was under bad advice that I didn't but I needed a plan. How was I going to get this real estate property that I really wanted as an investment property? So what we came up with was, I paid off the proposal in less than a year.
I just aggressively went at it, came up with a budget, sat down and just did it. And then for the following year, I paid down my mortgage. And how I did that was I took my monthly payment, did biweekly accelerated payments, which shaved off some amortization and took down the principal amount.
I also made those payments on the mortgage, and that was how I was able to access a line of credit to then have that money for the down payment for my first purchase. Since then we went out and we've purchased two new builds and we're onto our fifth property. So it was all from just coming up with a plan.
Brian sat down and just said, this is what we need to do. And was able to leverage my owner's occupation to come up with the line of credit when I was ready to purchase the next property. So that was my introduction into the real estate world.
Laurel Simmons: Just before you go on I think that's really interesting. I think a lot of people in real estate investing think that, oh, everything has to be perfect and you have to have perfect credit score and a perfect credit history and you're a perfect example of no, like a consumer proposal. And look at what you did within a year, within two years, everything was under control to me when I heard people say I can't do it because of this, and I have bad credit.
Wait a minute. You talk to someone who knows what they're doing and you really work at it. You have a plan, you have a strategy and a plan. You implement it and look what happens, right?
Teresa Franciosa: Absolutely. And like my journey started in 2014 and my first property was purchased in 2016. So it took some time. The seed was planted definitely. And the passion was there to do it was just following something like, knowing where to start? Like I had no clue how I was gonna start that, and I didn't, never told my parents about that proposal. That wouldn't have gone over well.
I definitely had to take, own that one and say, you know what? I made a mistake. I should never have gone down this road. But, there's good learning from this.
Laurel Simmons: That's really great.
Teresa Franciosa: Definitely. So definitely there's a lot of solutions. Each individual is different, so there's gotta be a solution that's tailored to their needs, tailored accordingly, right? Like it absolutely is so imperative that you have the right people on your team that you have the right mortgage broker who's also a real estate investor that knows the lumps and the bumps and things like that. And a lot of people will. Just try to discourage you. Sometimes from your first one, because of the fact, they hear all these horror stories, but it's really, you just put yourself aside and go, this is a business, this is my business, this is my future, and I have so much more can take ownership of all of it.
A couple of things. A couple of people that we've helped and and done different things for one was a woman we'll call her Cheryl, who worked for a big bank and she wasn't enjoying her job anymore. She had enough with the banks and the policies and the changes and whatnot.
She was in the high figures. She was over six figures in the high six figure, and she had a ton of equity in her home. So when she came to us, she wanted to, she had three goals in mind and the first one was to leave the bank. She definitely wanted to leave the bank. The second one was she wanted to open up her own business, and the third one was she wanted some kind of financial security.
She had an owner occupied with not a lot of mortgage on it. So we did, we put a plan in place to leverage that owner occupied while she was working. Please don't quit your job and become an entrepreneur because you have this wonderful pay stub right now and wonderful letter of employment and history there.
We put a plan in place and we leveraged her owner occupied with a large line of credit, and within 12 months she purchased four properties. And she also Ended up with that security, having those rental properties just there in case of anything. And then during Covid there were some challenges with her business and she actually was able to liquidate one of the properties and just coast through COVID. It was a really good story for her for sure. So she did achieve all of her goals.
Laurel Simmons: That's a really cool case study because yeah, everybody as you said, everybody's so different, right? Every situation is different, and you can never, guess the lesson here is that you can never, ever compare yourself to someone else. Because even though you may all live on the same street and have the same house and have the same car, I have 2.5 kids. I don't care what it is. On the surface it looks like that you're the same, but underneath you're not. Many things are different.
Teresa Franciosa: Yes, there's so many layers and so many different things and events that turn people's lives around. We also had a first time home buyer that I wanted to share with you.
This is the first time a home buyer came to us. Him and his partner were both nurses. They had just come and had some money saved up and they were also given some funds from their parents and had been nursing for a couple of years at the time, but they had a large down payment. They had 25%. So we started talking about what they were gonna do and what their life was gonna be like.
They wanted to have a couple of kids over the next little while and, talking about finances and, nurses make pretty good a pretty decent wage, but it's still, Life costs. And we came up with a strategy and I thought we talked about, hey, why don't you, instead of putting all that money, that 25% and your owner occupied, that really doesn't make you any money.
It just sits in there. Why don't we take 5% of your down payment and have that as your owner occupied? Cause you can put 20% or less up to five to 20% down on your own or occupied and take the other 20% and put it into investment. So that's what they did. And they ended up with two, they acquired two within six months. They got the first, they got their owner occupied, moved in, settled in, and then purchased their investment property.
Laurel Simmons: What would you say is the most somebody new comes to you. And they're thinking about real estate investing. What's the most common question you get?
Teresa Franciosa: The most common question as it is brand new?
Laurel Simmons: Brand new investor.
Teresa Franciosa: Basically the one of the most common questions, I guess is I don't have all the 20% down. That's a big one for us. I don't have the 20% down as an investor, like they have their owner occupied, but they don't have the full 20%. So I don't have the down payment. How can I get the down payment? And that's pretty much one of the biggest ones.
Laurel Simmons: What do you tell people? Because a lot, It's not just new investors, right?
Teresa Franciosa: Oh, totally .
Laurel Simmons: It's like everybody's going, ?
Teresa Franciosa: Where do I get the money? Yeah, that was my question. Where do I get the money? I'm not asking mom and dad , where do I get this? Yeah. Most people don't realize that they can access the funds in their home, right? They can access their equity up to 80% of the value of their property.
Laurel Simmons: Okay. And but however, if you don't have that equity in your property, say you're renting and you wanna invest in property, cause there are people out there who are not living in an owner occupied, right? They're renting and they want to invest in real estate. So where do they start? What do you do?
Teresa Franciosa: They do have to have the 20% down . So for that, they would have to have 20% down. Sometimes I've had people come together, like family members come together and invest, friends come together and invest.
There's always that type of thought process in how I come up with the down. And that's pretty much, and the other one too, that I have had in the past, wasn't geared towards investing in let's say a real estate investment, but their own owner occupied, they didn't have the down payment.
We got an RRSP loan and from the RSP loan, they were able to use it as the down payment. Or if they're renting, they could always get a property that is an investment property that has that basement unit right, and they can put 5% down and have that investment unit on the bottom.
Laurel Simmons: There's lots of ways to do it, but you really do have to talk to someone. You can't figure it all out on your own cause nobody can. And it helps so much when you talk to a mortgage broker who really is investor, real estate investor focused. I guess the first question is, when you're talking to a mortgage broker do you have your own investments cause if you don't, then I'm going to go somewhere else.
I do have a question for you and this comes up all the time and I'm just gonna ask it again cause I think we all have to be reminded. I know that when I'm talking to people, especially newer real estate investors, they're always concerned about interest rates right? How do you handle that? How do you, what do you say to people when their main concern is about interest rates?
Teresa Franciosa: I'm basically handling it with the payment. Let's talk about the payment. Let's talk about what that market area that you're looking for holds in terms of your lease, your monthly amount, your monthly rent that you can actually get for that property.
What does that look like? And then we can look at the payment. We do a budget based on, here's payment here's your taxes. So the things that you're responsible for are your payment and interest, your taxes and your insurance, cause you have to have insurance on the property monthly. And those are the three key things that you have to have.
Does the rent cover all of that? and there's been times that no it hasn't. And I've had some investors and sat down with them where they're actually putting out of pocket a hundred to $200 a month, and we look, I sit back and talk to them about it and say, okay, so let's talk about this.
If you're putting in an additional hundred dollars a month, that's 1200 a year, are you putting money into an RRSP? Or into stocks, into something that you don't have control over. You have control over real estate. Eventually the interest rates are going to come down. They go up, they go down.
You could purchase a property today and be in the lower interest rate and then in a couple years be in the higher one. So I'd rather start a little bit higher and then it's coming down eventually over time and your cash flow's getting better. But people have this cons. Preconceived notion that you should be cash flowing all over the place.
Real estate is long-term. I find that it's long-term, it's that long-term investment year over year. In a typical market, it's going up by 3% and you're paying down about anywhere from eight in this market, probably, I'd say $6,000 to $10,000 a year. You're paying down over five years, that's $50,000 of an investment that you've paid down and you're not even taking into consideration that appreciation on the property.
Laurel Simmons: That is non-taxable, right? You're not being taxed on that. The government doesn't say you know you've paid down your mortgage and you've got $50,000 worth. No, that's that. People forget about that. That is nontaxable wealth that you have accumulated.
Teresa Franciosa: That's a great point, Laurel. Absolutely. Yeah, that is a great point for sure. I've not thought of it that way, but yeah, that is a great point for me to use. Thank you.
Laurel Simmons: I think the other thing too is that people sometimes forget that mortgage, or sorry, interest rates are not, they're not the primary focus of real estate investors. It's more about. , the long term strategy, because as you said, real estate's not, it's not a quick fix. It's not quick to get rich. Quick scheme. So it's about having a strategy, understanding that wealth grows over time and just because one lender may charge 1% more than another, but maybe you can. Two or three more mortgages with that lender versus the one that. It charges you less. It's a balancing act, right?
Teresa Franciosa: Absolutely. It's all about the solution. I think It's all solution based, right? So if you took a $500,000 property and you said, you know what, year over year it goes up in a normal market, on the low side, 3%, that's 15,000 a year, and I'm paying down my mortgage by 10%.
That's 25,000 a year and over five years, that's 125,000 and if I think about it, I'm like, how difficult is it for me to save 125,000 in five years when the average couple saves? And this was a study a few years ago, $10,000 a year. That's an amazing investment. It's the money that's making you money while you sleep.
Laurel Simmons: That's why we're in real estate , that's why. Because we want to make money while we sleep. And yes you're right. Like the market goes up and down and rates go up and down and prices go up and down. But over the long haul, there's only so much land. There's more and more people. And the government, at least in Ontario and the feds, the government in Ontario is saying, you build up not out, because we've gotta preserve. Conserve the land we've got.
Teresa Franciosa: Absolutely
Laurel Simmons: Okay. Thank you Teresa. That was great. Where can people reach or how people can reach out to you?
Teresa Franciosa: They can reach out to me @Mission35mortgages is my email address and my cellular phone number. Is it on the screen or?
Laurel Simmons: I don't think so, but we can include that.
Teresa Franciosa: They can call myself, they can text me. I'm very responsive.
Laurel Simmons: Okay. Thank you very much and hang around. I welcome questions in the networking section.
Teresa Franciosa: Thank you for having me.
Laurel Simmons: You're welcome.
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