When she’s not with the kids – she dabbles in skydiving, flying, beer brewing and motorcycling.
I wanted to interview Christiane to feature another mama who has juggled a career, life, kids and real estate investments to inspire you and motivate you to take action or at least steer you in the right direction to live a purposeful life, by design.
Early on, she knew that significant money could be made in either real estate or entrepreneurship – and she chose real estate.
She has taken a LOT of time off with her husband to help take care of her kids and enjoy life all because of her smart choice investing in real estate.
In her own words, Christiane Aitken’s purpose is:
Her story will:
Help you figure out if real estate investing is for you;
Provide tips for buying your next and next next investment property;
Overcome your fear investing in real estate;
Inspire you with thought provoking ideas and critical financial advice;
Make you think twice BEFORE throwing your hard earned money to real estate workshops (and lose your downpayment for a property).
Without further adieu, here’s her interview.
Christiane Aitken – An Inspiring Interview on her Journey to Financial Nirvana
Everyone likes to hear why others choose to invest in real estate. Why real estate for you and how did you get started in real estate investing?
When I was finishing my university degree, I made a simple spreadsheet outlining all the types of investments I could make where I determined their ROI and associated risk and effort. Being logically minded, I compared bonds, stocks, 2nd mortgages, real estate and entrepreneurship in those categories.
Early on, it became clear that significant money could be made in either RE or entrepreneurship. Entrepreneurship was risky as several entrepreneurs I knew that had actually had been successful still didn’t have a padded bank account. RE became the winner in my eyes because of the big ROI due to being a leveraged investment. Investing in stocks is very hard to leverage and there’s a lot more to lose if the markets crash. The bank won’t lend you 400% of your principle to go out and buy stocks but they will for real estate investment. There is still a lot of risk in RE but I knew it could be mitigated with intelligence.
2. Did you have a lot of money when you first started investing in real estate and if not, how did you grow your portfolio to what it is today?
My first investment was made 10 years ago with $13 000 six months into my first job. This allowed me to buy a semi-detached property which I converted into a rental.
In today’s real estate market, I could make the same investment with $20 000 which is achievable for someone who is starting out.
Buying the first property is easy once you have the money. Finding the money for the second property is the real challenge.
Early on, I realized that having a well thought out growth strategy was key in buying the second property. If a fully detached house is bought, it will generally not cash flow. However it is possible to do a lipstick reno, and refinance the property to buy another property. A lipstick reno is a superficial reno of bathrooms, kitchen, painting and flooring. If a townhouse or condo is bought, it will generally cash flow well.
The strategy I used was to buy a detached house and townhouse intermittently in order to have a balance between cash flow and down payment for the next property.
3. How did you find your initial downpayment for the first property? Accumulating that much money is hard for the first time investor.
None of my fortune was gained through any inheritance. I paid most of my way through university and accumulated a lot of debt as a result like most typical students.
Once I found a good job, I saved meticulously from my salary by cutting back all unnecessary expenses. My credit card debt was repaid first and then I started saving for my downpayment. I stopped eating out, biking to work became a routine, all the clothes purchased were second hand, my consumption of electronics and household items diminished to only the necessities.
It`s worth mentioning this was also one of the happiest years of my life because I was suddenly focusing on the things I already had instead of the consumer items I could have.
Today, I’m still frugal but will splurge on some nicer things. You won’t find me eating in a restaurant but I will buy high quality food. From looking at my wardrobe, you could never tell that my clothes are still bought second hand.
Years ago, I found my successful landlord with 50+ doors shopping at Giant Tiger for groceries just like I was. I knew he had over a million dollars in the bank yet his frugal habits stayed with him and he could have cared less about what people thought.
How do you find what type of real estate investment is the best to invest in at this particular time?
Most successful investors won’t share all their secrets as they generally have found a niche market and don’t want other investors to come in and saturate their market.
Many financial gurus won’t share their real strategy of how they make money as what they preach is not what they actually do.
The financial gurus that are selling expensive seminars on how to get rich quick are using that very income stream to finance their next investment.
Other gurus will use their list of new investors as potential buyers of properties they have just flipped.
Knowing this, I took investment advice only from successful investors that I knew. These people had been my landlords. I was able to review their portfolio and talk to them about their strategy. They shared how they found good tenants and added value to their portfolio.
I trust sources of information such as Financial Nirvana Mama and many other blogs since their isn’t a second angle to it.
There are lots of real estate investment strategies out there, what real estate strategies do you use and do you mind sharing your tips for investing in that strategy to help readers who are thinking about this strategy (ex: student rentals)?
I was amazed to see how keen investors willingly deplete their entire RE downpayment to pay for investment education.
One investor thought he had all the information to start investing from the seminar he had just attended. He had just spent his $10 000 down payment on the seminar. Don’t make the same mistake.
The majority of investment gurus didn’t sell the strategy that they actually used to become rich.
I watched and emulated the successful landlords around me. Many of them did student rentals and had a successful portfolio as a result. Others rented to young professionals who would never do damage do their properties as they required good credit to buy a home of their own. Another set of investors successfully invested in family townhouses with great success.
I also took a keen eye to watch investors that had failed: either by leveraging too much and facing hard times or when they invested in a market segment that they were not good at managing and understanding the risks.
New investors and experienced investors always fear losing money, how did you overcome that fear and what are your tools for facing that fear ?
I don’t think you can be a super intellectual and invest. Most academics will study at nauseum investors but won’t have a successful portfolio of their own. If you think of all the possibilities and are risk adverse, you won’t sleep at night. At one point, you need to accept the risk and jump in.
We have a greater fear of losing money than a desire to make money. That is what stops most investors.
Jumping into your first investment is the way to break the ice.
Do you have any scary tenant or real estate investing stories that you wish to share? If so, please describe this experience and how you overcame it to help readers who are struggling in this situation and/or learn from your experience.
Most tenants are good. It is the few bad tenants that can take away all of your hard-earned earnings.
Treat tenants the way I wish to be treated. The properties I manage are well maintained and promptly tended to. There will be difficult situations – I’ve had to serve eviction notices and that is part of the job.
Whenever I have had a situation where a tenant situation has gone wrong, I always ask myself what I could have done better to prevent it even though it was not my fault. This has been a good strategy.
Managing the expectations of every new tenant is necessary. I tell my tenants that changing lightbulbs, losing their keys and dealing with plugged toilets falls under their responsibility. This way I will never get a call at 2 am on a Sunday morning asking me to come unlock their doors because they have forgotten their key.
One situation that reoccurs is that the parents of tenants will often submit a maintenance request directly to me which boggles my mind. I often need to remind my tenants that they are the responsible ones who need to submit a maintenance request to me as no requests will be taken from anyone other than tenants themselves.
My advice to someone seeking financial advice is to spend your time watching how new immigrants establish themselves here and learn from them on how they decide which investment to make.
When I was working as a security guard in university, I was amazed at the different perspective that many new immigrants held in order to bring about wealth. They worked hard long hours to support their families and spent lots of time devising strategies to build wealth. I was lucky enough to be in their circles.
We would gather together on our breaks and discuss people we knew and how they built their wealth on a meager salary. We would talk about how they found the seed money to start a new store or buy an investment property. The key point that I’m sharing isn’t that they had better access to investment information than the average Canadian had. My point is that they had a fascination with making money through building a business or investment and would seek out the information they required.
Immigrants often come to Canada with very few resources or advantages and as a result, they have strong motivation to succeed. I often see that lack of motivation with university students who believe that a career is their only path to success.
On the other hand, I found that my Canadian-born university friends only had one path: go to university, get a job in their field, buy a car and a house, open a paltry RRSP account (if at all), have a family, panic about retirement, and eventually plan to retire like their parents did. I’m not criticizing their choices but no one ever questioned which path they want to take for themselves. There is a lack of fascination with seeking different investment vehicles and entrepreneurship.
If you could travel back in time, what is one thing you would have done differently in your life related to money?
There is not a single step I regret even though there are a lot of things I could have done better.
A lot of sacrifices were made to save money for investments while most of my friends were living a more lavish lifestyle. As a result of our sacrifice, my husband and I have been able to be at home during the early years of our kid’s lives. We’ve never had to worry about losing our jobs or how we are going to pay our next bill. Now we are able to spend more.
The most stressed time I’ve experienced was when my investments took a turn for the worst and I realized that I would become insolvent within months if I didn’t make a change. I promised myself to never put myself in a compromising situation.
What is your favorite personal finance book? What’s the best actionable takeaway you got from it?
This book made me realize how most people make their money and who those people are. Most millionaires are made of “new money”. They didn’t get any shiny inheritances from their parents.
The millionaires aren’t the ones with the BMW in the driveway. They aren’t having dinner out at a restaurant on a regular basis. They are the ones with the rusty old Mazda that you see shopping in a second-hand store and don’t care about impressing anybody.
Please describe your economic theory and how it could impact your hard earned money.
Everyone’s investment strategy is based on their assumption of what the future holds for investors and I find it fascinating how people think and rationalize the economy. I think that intelligent investors should put more thought into how the ongoing uptrend of how oil prices affect the market will impact the economy and their investment over the next several decades. I certainly have thought about the future.
In the short term, my economic theory is that changing demographics is going to lead North American economy over the next 10 years. I forecast a downward economic trend based on the fact that Baby Boomers have passed their peak spending years as they are the biggest spenders in our economy. This trend started late 2000`s which is the best explanation of why we haven`t recovered from the last 2008 recession and can’t restart our economy.
I won’t speculate on how the stock markets will play out as it is hard to predict. However, one thing I am certain of is that the world GDP is directly correlated to world oil consumption as stated by the International Energy Agency. This means that should the oil prices climb, world oil consumption will be reduced and therefore world GDP will drop. During such a cycle, this leads us into a recession which brings me into my next theory.
My next theory is that our oil energy crisis is going to lead the economic events over the next 10 to 40 years as we inevitably move to higher priced oil. In my opinion, we will see a lot more recession cycles then in the past as they are caused by new spikes in high oil prices. In North America, we still have a lot of places where we can cut back on energy. As the price of oil increases, we will see less productivity in NA and that will be a real challenge to our economy.
I work in the energy sector and I have yet to find someone with a well balanced theory of how our economy is going to perform with a more and more expensive source of oil.
My investments are geared towards being recession proof. Low cost housing and tenants that don’t relocate during a recession are some of the best ways to be recession proof. Holding a large emergency fund to carry you through a bad year of job loss, debt and poor tenants is also important.
Thank you, Christiane, for sharing your journey and your actionable tips!