7th Income Source – Real Estate

7th Income Source - Time For That Milestone.
7th Income Source – Real Estate

It is time to start seriously looking into creating our 7th source of income for our household. It has been almost a year since we last added our 6th source of income – Solar Panels.

If you have been following me for a little while, I’m sure you know how big a fan I am of multiple streams of income. It has been stated lots of times on the internet that the average millionaire has 7 different sources of income.

We want to be (and will be)  millionaire’s one day. So one of the best things we can do to achieve that, is simply emulating what they are doing. Start slowly, but don’t stop! Little by little, day by day we grow.

Income Sources

As I mentioned already, we have already created 6 different income sources for us. They are –

  1. My Job – Landscaper
  2. Wife’s Job – Hygienist (Currently on mat leave)
  3. Dividend’s – Started Investing January 2016
  4. Private Investment – 12% rate of return
  5. Website Ads & Affiliate’s – Coffee money… =)
  6. Solar Panels – 10kw system on our roof.

Both me and the wife’s jobs have been around for awhile. In 2016 we started dividend investing. The beginning of 2017 I decided to make the website and things took off. We added our 4th, 5th and 6th income source all in 2017. Feel free to check out How We Increased Our Forward Income By $12,000 In One Year to see how we did it.

2018 has been slower on the investment front. With the wife on mat leave our income has been reduced for sure, but we make sure to always be putting some money to work in the market. I really was not expecting to pursue the almighty 7th source – Real Estate, but I feel the stars aligned and something keeps pushing me to not put it off anymore.

Real Estate

I have known for quite a while that real estate will most likely be our 7th passive income source. We live in the Gta though, real estate here is not cheap! Seriously……. I cant stress this enough.

One of my best friend’s has 3 houses now and has done very well with real estate, but he hasn’t bought a unit for awhile. I don’t think prices here really offer a great value from a investment point of view at current prices at the moment. To give you an example new build townhouses in the area I live sell for 500-600k before they are even built!!!! wtf….

So I always said the next big crash we buy either a cottage to air bnb or a townhouse to rent out.

Recently the picture has widened though, My viewpoint has changed to a landscape portrait. This is in big part again to the community. The choose-fi podcast is a great source of information and you hear some guests talk about real estate and hiring property managers to fix that problem. Bloggers like Cheesy Finance showing real world number’s and scenarios about her rentals and experiences.

It makes me want to at least dip my toes in and get my feet wet, who knows maybe there’s a glimpse of some treasure down there and we will have to dive in!

Houses under 200k?

My sister lives 2 hours away from me. She moved to get away from the city, start a new life and probably for the cheaper cost of living. (The more I hear about Geoarbitrage, the more I think why don’t we as well? Then the wife says no….. so we move on haha)

Anyways she recently shared a real estate post of her friends. (who is a agent) It is a 3 bedroom house 1 bath, finished basement. 1/4 acre lot, steel roof on house and separate garage and 2 car driveway in a great mature part of town for 190k….. wtf! This to me is unheard of! I’m used to gta prices. I asked what the approx rent would be and she told me $1,300- $1,450 plus utilities. Yup, another wtf moment was had.

O.K. now my brain is firing all over the place, this could really work! Make another coffee and start typing some numbers into a mortgage calculator. I know we need to put 20% down so we will be working with a 152k balance.

The Numbers

Wow, here is a rental investment that really works! And its the first house I looked at (online) in my sisters area. So we are in the $500-650 a month cash flow minus property taxes (1300-1400 yr), insurance and property manager fees. $300 of the mortgage payment also go’s down off the principal roughly a month as well. This seriously looks good and caught my attention.

If we factor about $130 a month for property taxes, $50 for insurance and 10% of rent for property manager (if i do this) our monthly cost would be $1117.08. Therefore our net worth would increase by approximately $500-600 a month plus hopefully house appreciation over time. Not Bad!

Of Course we need to factor in that initial investment. If we paid full price we would need 38 thousand and maybe like 4,000 in lawyer fees/ closing costs, home inspection etc. That would come right from our tfsa account and we would lose that dividend income. Let’s use a 5% dividend yield, which is most likely higher then my portfolio average. Losing $2,100 in dividend income.

From strictly a numbers perspective that is a solid increase $6000-7200 a year vs the $2100 in dividend income. Of course these numbers will fluctuate. Housing repairs, vacancies, dividend increases etc.

There are a bunch of houses in this price range, as well as cheaper ones but in a worse area. (think Ill avoid those)

Things look good, so whats next?


We all tend to be a little nervous about things we don’t know much about. As much as I would love to get into the real estate investing sector, me and the wife are no expert. We are lucky that my friend has experience, as well as her family. To be truly confident in our decision though, we need to know what we are doing first.

I just started reading this incredible book on Canadian real estate investing that seems to be full of information. Making Money in Real Estate: The Canadian Guide to Profitable Investment in Residential Property, Revised Edition (Amazon Affiliate) Its a big book and full of new terms so it will take a little bit to digest. (Note – I found it at Value Village, I tend to find most of my books there these days)

I’m trying to find and follow more real estate bloggers who love to share their stories both good and bad, as well as the numbers behind the investment.

I need to read more about cap rates, The Ontario tenancy act and the 1% rule.


My eyes are now open, it definitely is a option. That elusive 7th Income source, can become reality. While I am in no real rush, I talked to a real estate agent friend today who said she tells her clients to not list until February. The market is slow in the winter and if I want the best deals as a buyer, right before Christmas may be the best time to make a low offer. People could use the money and want to celebrate the sale of their house over the holidays. Let them pick the closing date and they are happy.

Also pulling out all this money from our Tfsa this year would let us reuse that contribution room next year. Which is a nice bonus!

What do you think? Would you want to own real estate rentals? What kind would you rather have? townhouses, freeholds, duplex’s, multi units etc.

Do you have any advice for me if you have rentals? Would you be interested in doing a interview questionnaire?

 Any great real estate related blogs, books or podcasts I should checkout?

I’ll do my best to continue to get schooled and keep you posted on what we are doing.


26 Responses

  1. I’ve kicked the tires on doing something similar with some of the proceeds when we sell the cabin (hopefully in the spring).

    I don’t think I want to be a typical landlord…but if I can find a cheap solid rental – and find a trusting family member who would be interested in renting it long term..something like that would appeal to me.

    If you want some cheaper house prices – look over here to winnipeg 🙂
    Maybe one day we can go halfers on one or two…haha

    • Rob says:

      haha Hey Man

      Maybe id consider it, if you managed the property there. I’m way to far away. haha. I wish I had family who would rent it, but I don’t. This would be to some screened tenant.

      Curious have you ever thought of Air bnbing your cabin? Seems like cottages can bring in quite a bit of money during the season.
      cheers Jordan!

  2. PCI –

    I say if you have the time, the strategy – doing one at those prices may be a great first one, to see if it works and you won’t be too leveraged. #7…. lucky 7. I dig it.


    • Rob says:

      Just awesome

      Thanks Lanny, so many comments from my online cheerleaders. Its really great.
      Got to finish this book, but things look like they may go that way.
      cheers man!

  3. caroline says:

    Hi Rob,
    I say JUST DO IT! Honestly, I wish I did it much earlier.
    Even if I sell my townhouses earlier than planned (because being a landlord is no picnic, as I get older I don’t have as much patience with tenants and I am not a handy woman!), I am glad I did it. No point in having regrets on that one!
    Where and what you select is based on what YOU are comfortable with. I like having properties close by even if I could get much better deals further. And I own condos because I wanted to limit my potential liabilities. Money wise, I would have probably been better off with single homes…maybe.
    I gave up on the 1% rule in my area. You need to research the area you are looking at for vacancy rates. Having a vacant rental can kill your return quickly, I have two coming up on the market!
    Don’t forget to factor in LTT and home inspection, and small utility fees if you don’t rent right away. Two other bloggers I follow for real estate: GuyonFire (http://guyonfire.us/) and Coach Carson.
    Looking forward to read more:) Cheers

    • Rob says:

      hey Caroline

      Love it! thanks a lot. Will definitely look into those 2. I recently started fallowing Coach Carson on twitter after hearing about him on choose fi.
      Love the advice on vacancy rates. Is there some place where I can easily see that? Or just search for rentals and see how many are available?

      I hope your 2 empty rental rent fast, Ill be following your journey!
      cheers and thanks again

  4. Cody says:

    Hey Rob,

    I just recently sold a townhouse rental I went in on my someone. Turned out to be a great investment. I had a great tenant and bought brand new so didnt have to deal with any issues while owning it. I held it for 4 years. Sold it this summer hoping for a correction in the market. I live in a community about 30mins out of Vancouver so similar market too Toronto. I’m unsure if I will get back into the market later on buying another rental place or put the profits towards the townhouse I currently live in. They are still building lots here with townhouses that have rooftop patios which I really like so could also look at buying one of those to live in. I don’t think buying real estate is ever a bad idea. My dad lives in northern Alberta and he’s always telling what farm land is going for there and just like everywhere it’s doing nothing but going up so I don’t think you lose on real estate if you do your homework.


    • Rob says:

      hey Cody

      Just awesome. Love hearing others success stories.

      My best friend bought a town house when he was 18 and wanted it to split it with him then. (we all lived in it bachelor style!)I said no. Anyways I have always regretted that, we lived there for about 5 years and he still rents it out to this day. The value of it has skyrocketed and It would of been great buying assets that young.

      Rooftop patio sounds nice! Property’s don’t always go up, (although they have for awhile) and buying in a small town may not have the rental demand of the big city. We will see what we do, but love the encouragement and hearing winning stories.
      If I wait a couple years to buy a rental, I may regret it just like the previous opportunity.

      cheers Cody!

  5. Wally says:

    Hey Rob – great to hear that you will have 7 streams of income! You are on your way to millionaire status now! I own a couple of rental properties, but still in the learning process too. I actually moved into both of mine, so I was able to get into them with very little down (5%). I say you get into it, don’t let any fear hold you back.

    • Rob says:

      Woot Woot! Go Wally go!

      Just sweet. If I sold our current place and moved into a duplex that would be a ideal start. The wife loves our current place/neighbourhood so that wont happen. Would be awesome though.
      Sounds like your killing it. Any advice or issues you learnt from?

      cheers Wally

  6. Cris says:

    Hi Rob
    If all your research are adding up them GO FOR IT!
    I have myself multiple properties which I bought in the last few years and I am happy so far. My market investments didn’t gave me so much return as the real estate.
    After you have one, you will understand all the pros and cons.
    Anyway, here are a few things to consider before buying as you won’t be able to change anything about them:
    -LOCATION – check the historical price increase in the area and the perspective. In GTA a correction is on the go and will continue. Most of my return comes from increase in value.
    -RENTING OPTIONS – Are you sure that you will find easy a tenant and they will pay $1400? Go on Kijiji or other sites and check the rental offers. Keep an eye on some adds and see how long are on the market. Eventually, call some of the landlords and ask them about the tenant market (some might be honest with you).
    -HOUSE – because is a house you will have more area/surface to clean, maintain and repair. All my properties are townhouses and the condo fee is covering some parts of the building. You will save money, but if you will have more rentals, will be hard to take care of them.
    -INSPECTION – I don’t know how old is the house (mine are under 10 years old) but be careful about: roof, furnace and A/C (if they are 10 or over have an inspection), foundation and potential water infiltration, electrical and plumbing, windows, and if is too old, asbestos and mold
    Open a HELOC on your house and take the down-payment from there. After closing, ask the bank to split the HELOC and set the down-payment into a mortgage as well. All the interest from down-payment and the mortgage is tax deductible, as expense for the unit. When you take the mortgage, ask the bank to open a HELOC on the new house as well (it is free now, later you will pay $750)
    -Distance – If is too far from your house might be a hassle some time. Mine are 1 1/2 hour away and overall I can handle them.
    If you are OK with location, tenant market and inspection then it will be a good investment.
    Good luck!

    • J says:

      Nice write up Cris

    • Rob says:

      Cris, man do I love your comments.

      Thanks man

      I really Like the down payment suggestion. That is something I really need to look into as that would eliminate the regret of lowering our dividend income. Distance seems o.k now and might promote us to go to my sisters place more!

      As for the correction that’s what I have been thinking… Real estate keeps dropping based on higher interest rates and new mortgage rules. But i think a trend also happening is people selling in gta area and moving further away to cheaper places (ie where I’m buying) Waiting to see what happens… Is that not the same thing as market timing? (stock market) That’s one question I keep asking myself.

      As for the freehold place, I think I can ask tenant to cut grass and shovel driveway? I don’t know for sure, but the first place I rented we had to do that. Thats one thing I want to read up more on.

      The searching kijii and asking rental unit owners questions is one I need to do and one my friend actually recommended me doing as well!

      The house inspection is huge for sure. Our first house was aluminum wires, with a fuse panel…. De3finately would need to change that panel right away to lower liability.

      Love the comment and gives me lots to think about, thanks again!

      • Caroline says:

        I agree 100% with all of Cris’ comments. Use a HELOC if you can. Also check out some of the rates available for the area via local real estate associations (Ontario) for cap rates, vacancy rates.
        Making the decision to buy the first rental was the toughest.

  7. Mr J Fisher says:

    Real estate for me certainly boosts my income and as mentioned above its the raising house prices that really make a difference. Taking out an equity release to raise the deposit certainly works but you do need to ensure the rental outflow (mortgage , insurance etc) is below 50%. I keep a excel spreadsheet and monitor the percentages. Once they go over 50% i start to look at selling or raising the income (lower the mortgage or raise the rental rate). If you go over 50% and the house becomes empty for a period of time, or you need major works, or you even have a bad tenant : then it will really hurt your pocket. The highest one i currently own is at 41.41 % with a mortgage etc at £170.18 a month fixed for 5 years, and rental at £411 (£240.82 profit a month) .
    So to use equity release successfully the combined expenses must all come under or at 50% to make it work. Otherwise you are just taking on more debt and when a problem does arise (and it will) you will feel the extra costs bite you very hard.
    1- Find a property you think is a good deal, is sound in construction and has good rental value.
    2- Find a decent fixed (interest only) mortgage. (fixed so you know your out goings for a longer period)
    3- Find a deposit through an equity release. (or use personal cash)
    4- Work out all your income from the property to all your outgoing.
    5- Confirm whether your outgoings are 50% or less of the income.
    6- Buy the property if all is good.
    7- Transfer the equity release to the rental property.

    Now pause and wait as nothing in life is smooth and you get the hang of being a landlord. Once you are comfortable you can repeat the process. I could also tell some horror stories if you like as nothing in life is as easy as it sounds, but the above is the basic principals.
    Kind regards and good luck.

    • Rob says:

      Hey John

      Wow, thanks for the info and welcome to the site!

      The 50% equation seems high. I don’t think the numbers will work if I use that, but definitely something to consider. Do you put down more money to make that work? Or stick to the minimum. Man your numbers are so low, where in Europe are your from?

      I like your 7 steps and suggestion to just sit back after and see how it go’s before the next buy.

      Id love to hear your horror stories as well and what you did to fix the problem/ situation if anything. I know real estate investing ain’t just sunshine and rainbows. lol.

      cheers John!

  8. Hey Rob! It certainly doesn’t make any sense to buy a house in the city and rent it out. The rent will never cover mortgage payments, unless you’re willing to put a big downpayment. The 200K house that is 2 hours away from your area is not a bad deal, but it’s too far for you. It will be hard to manage things from a distance. But you have your sister there 🙂 Also, houses can get very expensive to maintain and to renovate when the tenant moves out.

    Here’s what I would do, but I’m not suggesting you to do that. Instead of buying one house, I would buy two small apartment units for $100K each. I mean small studios that are under 500sqf. Your mortgage payment will be low and almost no maintenance cost. Every time your tenants move out, you just have to repaint the four walls and maybe resurface the flours and you’re done.

    Anyway, since you’re not in a rush, you have all the time you need to weigh your options. Do what you feel right for you.

    • Rob says:

      hey German

      I have never seen studios for 100k or id definitely look into that route.

      2 Hours doesnt seem that bad, of course Id prefer closer but I don’t think that’s a option. My sister may help a bit but the more I think of it, its probably a bad idea to hire her to be a property manager. Business with family can be risky, don’t want it creating tension.

      Your right, I’m not in a rush. Its a nice bonus to have time on your side when finding a place to buy.

  9. GYM says:

    That’s great that your sister can help out since she lives there. That sounds like a very reasonable deal and gives you positive cash flow. A lot of people have done well with real estate as landlords in Canada.

    I read that book too- it made me want to buy a rental property LOL. Things are still too $ here in Vancouver.

    • Rob says:

      hey Gym

      Yeah the sister help would be great although Im starting to lean against hiring her to be property manager. Don’t want no rift in the family. Cool that you read that book. Tonnes of information for sure.

  10. Craig says:

    We recently moved from a small town to Edmonton, and were unable to sell our home in the town, so we decided to rent it. I never intended to be a landlord but we were desperate to reocate to somewhere that had more amenities.

    We will be renting our home for approx $2500 between the upstairs and basement suite, utilities included, and should net a small positive cash flow. I would suggest researching the smith maneuver if you are putting 20%+ down. It will allow you to continue investing in stocks while borrowing from your rental home loan that is tax deductible. If you are a knowledgeable investor already, it’s a way to utilize your skill set while using real estate as source of capital.

    • Rob says:

      hey Craig

      Definitely will look into the smith maneuver more. Thanks! What are your thoughts on being a landlord? Especially a far away one. Has everything went smoothly?

      Sometimes the world works in crazy ways, seems like it worked out for you!
      cheers Craig

      • Craig says:

        We rented out the basement when we were living there, so renting hasn’t been foreign to us. I’m glad to not be renting part of our new house, nice to have your own space. Come tax time I’ll be interested to see how that all works out, but overall I’m excited to have a property earning income and paying down the mortgage. In 4-5 years time the mortgage will be down and hopefully the Alberta market will pick up and can sell the home for a small cap gain

  11. DivvyDad says:

    I’ve contemplated real estate as well, but my wife is quite opposed to it because she only hears the horror stories from people that have tried it and failed.

    For the time being, I am only getting my real estate exposure through REITs but looking forward I see a couple of potential opportunities. First, our older son is talking about moving to another state with a couple of friends–and I have floated the idea of buying a house there and they would in turn pay me rent (although having a few ~21 year old guys living there leaves some concern on cleanliness). The second would be that in a few years my wife and I are planning to move out of the state we live in now, and rather than selling our house we could keep it and rent it out.

    I still have a lot to learn in this space too, and I am sure you’ve come across it already but the site BiggerPockets has a ton of great information (I don’t know how much they have specific to the Canadian market but should still have good info that is applicable).

    • Rob says:

      hey Dd

      Ive contemplated the reit only exposure as well. I keep looking at propertys and recently inquired about the complete financials of a multiplex. Its a bigger investment but should have some better returns… I want to finish this book before making any moves though. I think the opportunity with your son would be a great one. That’s one i know a bunch of my clients have made and has done very well for them. Your son would feel like its his place and probably do a good job of taking care of it.

      Never heard of that site, definitely will look into it. Thanks!

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