Thank you,

Secunoid

Positive NW growth year to date in a year like this is great FT!

Congrats on selling the rental (I guess). My first thought was: “Why would FT sell his cash-flow positive rental? Is he suddenly into market timing?”

FWIW, your timing is probably good :)

Like frugaltrader I employ a HELOC so I can use the expanded line of credit for leveraged investing in the market. Up until the last few weeks I was holding ~120k of leveraged investments, but it has been a very difficult 9 months, so I chose to move to an all cash position while I was still +10% (I would like to say I managed to stay +10% due to my investing prowess, but I only managed to hold that gain because the loonie fell from near par, to 79 cents and I was holding all US stocks)

I constantly debate with myself whether it would be wiser to pay off the bulk of the mortgage in the future. As mentioned above, future dollars should be worth less due to inflation, and interest rates are low enough that when I renew in 2010, I could have a very low rate.

On the other hand, it is obvious that with the BOC prime rate at .5%, rates have nowhere to go but up, and in the future banks might increase their quarterly profit by increasing their spread between BoC prime and Bank Prime. Several banks have already abitrarily increased LOC interest rates for this reason.

For now the deciding factor for me hasn’t been based on a business decision,but rather a personal one. It keeps me motivated and focused to set a highly aggressive target on my mortgage. Given a couple more years of solid income, I may be able to reduce my mortgage to zero by the 2010 renewal date.
And if I see investment opportunities arise I can use the HELOC to take advantage of them. It would also make me very happy to be able to reach the zero debt mark.

What is everyone elses opinion?

Kirk

Also, since you appear to be an American (based on the website you link), you should be aware of the taxation differences between there and Canada when you make your assessment.

In addition, the profits from selling the rental pale in comparison to FrugalTrader’s existing savings, so I think that issue is covered.

I not only would second Paul s’ advive — I have applied it myself!

DAvid

Anyways good luck on your journey……

I am kind of surprised that you decided to unload your rental property. (I know you stated that you were helping out a tenant/friend perhaps a lease option would have been better). I would just be leary of the capital gains tax that you would have to pay on it. But 124k isnt that bad I guess.

I am currently in the middle of buying into a completely passive investment opportunity. Its a luxury condominium hotel. You purchase the condo/suite and participate in the pool if you want to. Or you can choose to live in your suite if you’d rather. BUT as an investment property it is very lucrative. So why would you live in it! It is run and operated by a hotel management company and I do absolutely nothing, but collect the cheque in my mail (or auto deposit).

Just to give you guys the heads-up. Keep an eye open for a club called Private Investment Club. This is how I am able to do this deal. Buy in at wholesale rather than pay retail prices.

I realize this club exists currently only in Ontario. They have 6 chapters opened up. But, with their success rate, I wouldn’t be surprised if you had a club open near you (in the next few years anyway).

http://www.privateinvestmentclub.ca

Allthough this is my first post, I’ve been following your site for a few months now and must say I appreciate the thought and rigor you put into making your blog an interesting and balanced read everyday. I apologize in advance for posting this comment off topic (didn’t know where else to write).

The reason I am writing is because I noticed that CIBC just raised capital by offering an investment with a 10% return. Given many of the yeilds we are seeing in the market these days are low, this oppurtunity seems exciting; perhaps too good to be true. I was wondering if you, or any of the other posters (hi everyone) could share some insight on what it has historically meant when banks raise capital at such a high cost?

Matt, I’m with you, we definitely could go lower from here.

BC Game Developer, my HELOC is for investing only and I would prefer not to intermingle it with regular spending. I do, however, have a PLC that kinda acts like an emergency fund if need be. As I mentioned above, we deploy our cash periodically. Some of it will go to the RRSP, tfsa, mortgage etc.

abcstocks, DGI – the reason I sold the property had nothing to do with the economy. I basically helped out the tenant/friend to get them started in home ownership.

However if you increase your REIT allocation at least you won’t have to worry about finding tennants, unclogging toilets, and midnight calls that “something exploded ” :-)

With reits you might have to worry about dividend cuts, distributions, solvency, management briliancy etc however :-)

That is some pretty aggressive advice! I guess you’re in the camp of thinking that interest rates are going sky high?

Here’s my take FWIW

Take all liquid assets and pay down mortgage and pay off HELOC. End up with $38K mortgage. Add taxes later to that, unless selling investment losses in SM help offset gains in real estate and minimize tax hit?

From here maximize RRSPs and TFSA each year and pay off your mortgage (set aggressive target). Great personal balance sheet and limited risk.