The real estate market in Saskatchewan has finished on a strong note. Sales for the year were up 24.5 per cent over sales in 2019, with the number of listings and median sales prices going up as well.

The average house price in Saskatchewan was $257,000. Please keep in mind that this can be misleading, as an average house sale in Saskatoon ($333,000) will be different from an average house sale in Prince Albert ($175,000) for example.

Our final piece of our EL CP TAR model is Reinvestment. This is one way you can really turbo charge your real estate investing. I really dig into the numbers here, so stay with me to the end.

Let’s look at an example: House price: $300,000 Down payment of 20 per cent/$60,000 Mortgage of $240,000

If we assume a five per cent appreciation rate, which is an average for Canadian real estate, after five years the property will have appreciated to $382,884.47. Our mortgage would have been paid down (by our tenants), so that after five years we will owe $200,365.

This will leave you with $182,519.47 in equity. If you took out a line of credit for $60,000 on this property, you would be able to go and find another deal just like the last one.

Now, you have new properties that are cash flowing and they have their mortgage being paid down by the tenants. And in five years, you can do the same thing over again, but this time you can buy two more properties.

Let’s take a look at the return of investment on this example, because this is magical. You have a $60,000 line of credit that is earning the following

$10,000 Tax savings in deductions

$3,600 Principle Pay Down

$1,200 Cashflow

$15,000 Appreciation

That is $29,800 in total, which is a return of 49.6 per cent. Now, here is the really cool part. That 49.6 per cent return is on the initial $60,000. But where did that $60,000 come from?

It was “dead equity” in your personal residence. So, this is not money that you had to earn. Which means, for all intents and purposes, this is an infinite return.

In 10 years’ time, you now have four cash flowing rental properties that are paying you every month. Now, of course, someone is going to say, “10 years! That is a long time to wait until i’m making money!”

Yes, 10 years is a long time, but the time is going to pass whether you buy a property or not.

Someone smarter than me once said that the best time to buy real estate was 20 years ago, the secondbest time is NOW. The key is to take your profits and reinvest them where they will continue to pay you passive income, that reinvestment.

That’s it for the profit centres of real estate, folks.

We have covered quite a few ideas here over the last couple of months.

Next month, we will dive into some new topics for real estate and real estate investing.

Now is the time to take some action on what you have learned. I would be honoured to have to the opportunity to work with you on something like this, or any other real estate transaction you may need help with.

Please feel free to reach out to me anytime.

(Brad Chisholm is a Realtor and real estate investor based in Saskatoon. You can find him at bradleychisholm. exprealty.com or at 306-220-2217.)

-Brad Chisholm