Summary

In this episode of the Life by Design Podcast, Jessilyn and Brian Persson discuss the tax advantages associated with real estate investing. They emphasize the importance of understanding how to leverage personal residences, the concept of return of capital, and the significance of maintaining good bookkeeping to maximize deductions. The conversation highlights the need for consulting tax professionals to navigate the complexities of tax laws and strategies effectively.

Chapters

00:00 Understanding Tax Advantages in Real Estate Investing

07:04 Leveraging Personal Residence for Investment

09:50 Return of Capital and Tax Strategies

12:36 Maximizing Deductions and Bookkeeping for Rental Properties

Contact Jessilyn and Brian Persson | Weekend Wealth Investments:

• Website: weekendwealth.ca
• Instagram: weekend.wealth
• Facebook: Weekend Wealth Investments
• Linkedin: Weekend Wealth Investments

Transcript

Jessilyn Persson (00:00)

Welcome to the Life by Design Podcast, where Jessilyn and Brian Persson, struggling to align your financial goals or confidently invest in real estate as a couple,

Brian Persson (00:18)

That's why we created this podcast and the Riches Relationships and Real Estate program to help you build wealth and strengthen your relationship. Visit weekendwealth.ca to take our quiz and discover your real estate investor type. Let's create the life you deserve together.

Jessilyn Persson (00:36)

In today's episode, we're discussing a few of the tax advantages you can access when it comes to real estate investing. For us, taxes are our number one household expense above our mortgage or any other category of expenses. In Canada, we would assert it is the same for everyone. So if you can reduce that expense via real estate and create an investment at the same time, you should definitely do so. First, a quick disclaimer. This episode is for informational purposes only and should not

be considered tax advice. The insights shared are based on our personal experiences and may not suit everyone's situation. We strongly encourage you to consult a qualified tax professional before making any financial decisions. So the first one we wanna chat about is your personal resident mortgage because most people are homeowners and they have a mortgage and their goal is to pay it down and be mortgage free. But as we've discussed in other episodes,

There are things you can do with that mortgage that will create an asset and passive income for you instead of just sitting on something that is considered a liability.

Brian Persson (01:46)

Yeah. And it's considered a liability because you're paying for it with after tax dollars. your renters are not paying for it. No one else is paying for that mortgage for you. So how do you turn your personal residence, your mortgage on your personal residence from a liability to an asset? Well, in Canada, the tax law allows you to borrow money and

put it into an investment which has the likelihood of creating cashflow. And when you borrow that money, you can write off the interest of what you've borrowed. So if you borrow money from your personal residence, i.e. your mortgage, then you can write off the interest of that mortgage when you invest it. So for us, we chose one of the simpler strategies just to keep our life simple.

And that is we, every once in a while, when the mortgage gets paid down enough, we will borrow a lump sum of money from our mortgage and we will put it into an investment.

Summary

In this special holiday edition of Life by Design, the hosts discuss the importance of showing appreciation to tenants, investors, and team members in the real estate industry. They emphasize the value of personalized gifts, effective communication, and the law of reciprocation in building strong relationships. The conversation also highlights the significance of self-care and celebrating achievements, all while maintaining an attitude of gratitude.

Chapters

00:00 The Spirit of Giving in Real Estate

01:50 Personalized Gifts for Tenants

05:48 The Importance of Communication

07:10 Gifting to Investors and Building Relationships

09:31 Appreciating Your Team

11:56 Celebrating Yourself and Your Achievements

15:18 The Power of Gratitude and Giving

Contact Jessilyn and Brian Persson | Weekend Wealth Investments:

• Website: weekendwealth.ca
• Instagram: weekend.wealth
• Facebook: Weekend Wealth Investments
• Linkedin: Weekend Wealth Investments

Transcript:

Jessilyn Persson (00:03)

Welcome to the special holiday edition of Life by Design, where we embrace the spirit of giving and reflect on the importance of showing your tenants, investors, and team how much you appreciate them. Real estate investing is a very social activity, so it's important to build strong, lasting relationships through gratitude and appreciation. So tune in as we spread some holiday cheer and commit to making a difference in our teams and beyond.

Brian Persson (00:29)

Yeah, and I mean, this is a real estate podcast. So the very first thing that we're going to talk about is our tenants, because we love our tenants, and we really want to show them how much we appreciate them living in our properties and paying rent on time and keeping care of the property. And the funny thing is that it doesn't take a whole lot to make someone feel really appreciated.

Jessilyn Persson (00:53)

Yeah, not at all. We've been gifting to our tenants for as long as I remember having tenants. we originally started by giving usually gift baskets with different things in it. And then as we got to know our tenants more, we custom. So we knew like if someone was a tea drinker, we would buy them probably a basket with specialty teas or tea mugs, or if someone really liked making a specific type of drink.

we could custom a basket of that, or if they had a little bit of a larger family, maybe it was a bunch of different kind of cookies and popcorn and treats. And then as time has gone on, we've morphed that a little bit and we still do some gift baskets, but we've shifted it a little bit more to gift cards. we like, I think we like the experience. So we'd like to do dinner, theater, movie tickets, restaurants, but then there are some families where they're, like I said, they're a little bigger and maybe they don't have as much.

so that we'll get them gift cards for grocery stores or Amazon, trying to make their life easier.

Brian Persson (01:53)

Yeah, and we, you know, our personal portfolio is small enough that we can keep tabs on our tenants and understand what they have. But for our apartment buildings, I actually put it as a year-round job for our resident managers to watch the tenants and figure out what they need so that they know what we can give them at holiday time. you know, all portfolio sizes, you can make it work and you can discover a little bit of

personality about your tenants to give like a very meaningful, like thoughtful gift.

Summary

In this episode, the hosts challenge the conventional wisdom that paying off a mortgage is the best financial strategy. They share their personal experiences and financial strategies, illustrating how leveraging a mortgage can lead to greater investment opportunities and cash flow. The discussion covers the benefits of refinancing, the importance of understanding good versus bad debt, and the necessity of experience in real estate investment. The hosts encourage listeners to rethink traditional beliefs about mortgages and investments to achieve financial freedom.

Chapters

00:00 Rethinking Mortgage Payoff Myths

02:18 Leveraging Personal Residence for Investment

05:49 The Power of Cash Flow and Equity

08:30 Investment Property: Mortgage vs. Mortgage-Free

15:25 Understanding Good Debt vs. Bad Debt

19:26 The Importance of Experience in Real Estate Investment

Contact Jessilyn and Brian Persson | Weekend Wealth Investments:

• Website: weekendwealth.ca
• Instagram: weekend.wealth
• Facebook: Weekend Wealth Investments
• Linkedin: Weekend Wealth Investments

Transcript:

Jessilyn Persson (00:04)

In today's episode, we're flipping the script on a popular belief. The notion that paying off your mortgage is inherently better. And we're going to talk about two actual investments in our life that illustrate the difference. This episode was inspired by a notion that we keep seeing over and over again with our clients and friends. The idea of having no mortgage. Most of us were raised with the belief that you should pay off your mortgage as fast as possible. Well, we've learned differently.

and the two scenarios that we're going to detail will show the difference, which will allow you to make a more informed decision on your mortgage. So the first one we want to talk about is your personal residential mortgage.

Brian Persson (00:46)

And yeah, not just everybody else out there, but us as well. We were ⁓ told by our parents that paying off your mortgage is kind of your number one priority in your financial life. But we're going to show a little bit about why that's not entirely true. And we did go down that path when we first started ⁓ with our property. We tried very, very hard to pay it off until we discovered a different way.

Jessilyn Persson (01:11)

Yeah, we were, and I think we've shared this on multiple podcasts, we were, think, too much shy of being mortgage free before we actually decided to, instead of pay it off, we refinanced, pulled it out and bought property.

Brian Persson (01:28)

Yes. Yeah. So we want to work through some actual numbers in this podcast. So just so you can really see the financial difference that it creates by using the finances and the leverage that you have available for you in your personal residence versus actually just paying that off and then not using that leverage for any type of investment.

So as we just mentioned, we were very, close to paying off our personal mortgage and our mortgage had started at about 350K, but when we refinanced it, we were able to buy up to $2 million worth of property. So we now had $2 million worth of mortgages instead on those investment properties. But the portfolio is now cash flowing at $2,800 a month.

which was ⁓ almost or is now almost double our original mortgage payment. So we're actually paying our original mortgage and we are cash flowing and putting money in our pocket because we actually borrowed from our personal