If done correctly, real Estate Investing can be one of the most powerful mechanisms to generate long term wealth.  Once you get a taste of its power, you will be hooked on buying one rental property after the next.

Plenty of investors have been drawn to the Mississauga Condo market because of its low price point, high rents and extremely low vacancy rates.  Nonetheless, getting into the real estate investing game does take a good amount of money.  And at some time or another, all investors have to get creative when it comes to financing their deals.

Recently, I had the priviledge of working with a client of mine who was considering purchasing another two properties.  Since she had low liquidity with most of her money tied up in other investments, we were seriously looking at the possibility of selling off one of her Mississauga condos to buy two others.  This one Condo we were thinking of selling off was completely paid off with no mortgage on it.  However, she had originally purchased it for about $100,000 and it was now worth $250,000.  The profit was $150,000, and according to capital gain tax rules  50% of this gain was subject to taxation which meant 75,000. Depending on her tax bracket, this could mean that half of this sum – about $37,500 could go to the tax man.

This tax hit was not at all attractive to my client. To avoid any taxation at this time, we deciding on not putting her condo for sale in Mississauga and refinancing it instead.  As a consequence of this decision, my client secured a 190,000 line of credit from her bank with the assurance that she could qualify for an additional 2 mortgages.  This way, she kept her condo in Mississauga which we kept rented out and she was able to leverage the equity in the Mississauga condo to buy more homes.  And best of all, we were able to do all this without triggering any tax consequence.