12. How to Achieve Financial Independence: Real Estate Investments and Debt Management

In today's episode, Shawn takes us through a typical day at the cabin, dealing with firewood and preparing for the impending snow. As he works, he reflects on the challenges of off-grid living and the many questions he receives about finding affordable property for a self-reliant lifestyle.

Shawn shares his own experiences, recounting how he purchased a 20-acre property in an unorganized township for $50,000 in 2017, only to sell it for a significant profit later on. He emphasizes the importance of real estate in building wealth and achieving a self-sufficient life.

Drawing from personal stories of ups and downs, Shawn encourages listeners to consider the benefits of owning real estate despite the challenges. He discusses the historical trends in real estate prices, advising that there's never a perfect time to buy, but waiting might mean missing out on potential opportunities.

In a candid and reflective manner, Shawn offers practical advice on how to navigate the real estate market, stressing the long-term benefits of investing in property. Whether you're just starting out or considering a shift in lifestyle, Shawn's insights provide valuable perspectives on financial security, debt-free living, and the path to a more self-reliant future.

Tune in to gain valuable insights and join Shawn James at the cabin as he shares his wisdom on life, real estate, and the pursuit of a self-sufficient lifestyle.

No Permit Required YouTube Video:
https://youtu.be/8p2AcPYv7gY?si=kDDPmuEwwZwroXKt 

Transcript

Speaker 1: 0:00

Hey everybody, welcome back to the cabin Music Just dealing with firewood. Again. Today, Sunny day but cold, and then I think half a day of dry tomorrow morning and then snow starts in the afternoon. We're probably in for a couple days of snow. It's that time of year I think we're probably going to get some. That's, you know, possibly could stay. Now. We often, especially lately, we get some thaws in December, early December, and it may be all gone. But there's been lots of years that once the snow starts in November it stays. It stays cold enough that it doesn't know. No, it's not calling for much, I think it's just a few centimeters or inches.

Speaker 1: 0:46

So anyway, like I said, trying to get some outside stuff done, especially things off the ground, before I lose them in the snow. It doesn't take much either, by the way. It could be like an inch or two and it's just enough to cover up, you know, some pieces of wood or a tool or something, and you don't find it again till spring, especially my axes and splitting wedges and stuff that I've got by the wood shed hasn't worked in there splitting firewood. Anyway, as I was working, I was thinking about. I get a lot of questions about lots of things about off-graders, self-reliant living, and a lot of those are financial people struggling to start this life because they can't find property that they can afford or can't find property at all or can't afford any property because they're broke. There's no real good answer to that.

Speaker 1: 1:38

I did a made a video what five, six it's longer than that Five, six years yeah, probably five or six years ago. I'll try to put a link in the description of this video and in the show notes of the podcast. It was how to find no permit required actually is what the video was called, I believe. So basically it was where do you find land that is unorganized, that doesn't require you to get a building permit? So that was relevant at that time, still relevant to some degree, but costs have gone up I don't know like fourfold probably since then for this type of land, but I think the principles still apply and so, basically, so, if I go back and I don't know if I should say this because it sounds so a little greedy but we bought that property, the 20 acres that I built the old cabin on. We bought that in what would have been February I think. We closed, like April, around my birthday, april 10th and took possession of that property on that date. That 20 acres cost us $50,000.

Speaker 1: 2:56

At the time, there was another piece of property that we were considering. That was 12,500, but it was five acres split by a road, really kind of swampy and not really suitable for what I want to do. Even though there was lots of crown land adjacent and nearby, it still wasn't suitable for what I wanted to use it for. For one thing, it was right on a road, but that was like ridiculously cheap for land at that time. In fact, that piece of parcel, that parcel, was purchased. Then, right after we turned it down, somebody subdivided and I think they sold each like a three acre parcel and a two acre parcel. I think they sold them for like 30 or 40,000 dollars each. So that's a good indication of how much things have gone up. So that piece of property the 20 acres unorganized township adjacent to crown land on two sides we bought that for $50,000 in 2017.

Speaker 1: 3:54

What was it? Two years ago? Now, a year and a half ago, we decided that, with the issues that we were having there, that wasn't something we wanted to keep in the family, so decided to sell it and we had bought this property and the other property before that. So we already had somewhere to move on to. So we put it up for sale. We talked to the real estate agent and we thought maybe it's worth $150,000 because the market was going a little bit crazy at that point and I'd improved it obviously, put the pond in, made it the driveway-ish couple of clearings, sauna, the outdoor kitchen and, of course, the cabin and a woodshed and a little garden, so improved it obviously. So we thought, okay, not so unreasonable or greedy to be asking $150,000. Now the agent convinced us to list it for $250,000, keep in mind, like I said, paid in 2017, $50,000 for it. Put it on the market over the April or the Easter long weekend. Like I said, I think it was last year and we had a bidding war and two people were really bidding hard for it and we ended up accepting an offer of 416,000. So, after real estate fees, like an eight-fold increase in value in what? Four years? Four or five years? Just ridiculous.

Speaker 1: 5:35

My point being the only reason I'm telling you this is that owning real estate is almost one of the only ways to become wealthy, or self-reliant or wealthy I don't know if wealthy is the term but basically to be able to finance the lifestyle and almost any lifestyle. Almost everybody I know that had a decent lifestyle over my lifetime let's say my friends or my parents or sisters or whatever. A lot of the things they did was with by financing, refinancing their house and pulling equity out of it as the land values or property values or house values increased. So remortgaging, taking out equity and then either renovating, expanding, buying something else, going on vacation, buying vehicles, whatever. It's been like a very secure way of building or financing a life, basically a more interesting life, adventurous life, or more self-sufficient or secure life. So, point being that I would do, if I was younger I would still absolutely do everything I possibly could to buy some kind of real estate. Now I'm gonna talk about a few options how you can do that if you aren't wealthier don't, most people aren't or if you don't make a lot of money. Thank you, ali. What's up, pal? Look at the dust you kicked out.

Speaker 1: 7:14

Obviously, none of this is groundbreaking news that's worthwhile or advantageous to own your own home. There's some of the other obvious reasons, or security, just knowing that you're always gonna have a place to live and that you're not at the whims of a landlord and you have typically more selection and more options where to live in and often, if you wanna live, this kind of lifestyle allows you to live in the country, because not always place is available to rent in rural settings, at least ones that are well enough kept are worth living in for one thing. So why am I even talking about this then? Well, I think probably my main point is that throughout my life it always seemed like it was a bad time to buy real estate and that it was expensive. So, going back to when I basically when I was I was 17, bought that piece of property that with my parents, at two and a half acres on an island on a decent size lake, but it was boat access and it was not the most convenient place to get to. It was pretty far from from Newmarket where I was living, and like two and a half hour drive, and it was just far enough that it wasn't some. It was still cheap because people weren't looking at that as a viable option or a reasonable distance to travel on a weekend to a cottage. So we got that property for 16,000, and I'm guessing on lakes out of there would have been in the, you know 100,000, 100,000, maybe several hundred thousand for that kind of property, depending on the lake. So had to go that far north to get a piece of property for recreation. I built a little cabin on it like a little stick frame cabin, sold it and put a dock so people can land the dock or I could land my boat there. A future buyer Two years later sold it for 35,000, took that profit and bought a mainland property on the same lake that had five and a half acres on a road and then directly across the road was deeded access for the number of people that were off off the water, deeded access to little beach and boat launch.

Speaker 1: 9:34

So to me it was ideal. It was still reasonably priced. It was 45,000. I went in on it with my younger sister and her boyfriend at the time and unfortunately so I took all my profit. I had a life of ups and downs. Financially. I've been broke more than I've been secure. So during that period I was a courier down in Toronto, driving, driving courier like a car courier, making deliveries, and so were my sister and her boyfriend and I bought a car, financed it at Ford Escort with my dad's help. He's co-signed for it During that period.

Speaker 1: 10:19

I think probably what Just you know, as I was selling the property first property to buy the second property, to put the money down on the second property, the profit I got in a car accident and I had just stopped couriering and was not paying my bills and did not pay my insurance no fault insurance. The plan had just come into effect in Ontario and my car was totally written off and I was not giving any money for replacement. In fact I wasn't charged. I wasn't the at fault driver. I was stopped at a park, a stop sign, actually in a car, like a rural road. So I'm facing east on the stop sign and the road going the other way, going north-south. Somebody was coming south on that road at 80 kilometres an hour and the people approaching me so the other side of the intersection didn't stop at the stop sign, they were probably doing 80, clipped the back of the car that was southbound, that spun around and the car at fault that, coming towards me, spun and smashed into the side of my car, so lost the car, had to take the profit from selling the property to pay off the loan for the vehicle, paid my $15,000 third of the property and then ended up with no money left. I guess I paid my parents back with the rest of it.

Speaker 1: 11:58

So what happened next? Oh, sister and her boyfriend break up and then they stopped making their mortgage payments and I'm on the mortgage, of course too. So I took it over completely barely afford. It wasn't working, trying to get a job without a vehicle in a relatively small town just lots of financial struggles. Anyway, I was able to hold on to that property until I was 30, well, after my wife and I were married in fact we kept it until my wife we decided she was going to stay home full time with our second daughter, so with her two daughters, instead of having them a daycare. So we cut back all of her bills. So we sold that property, even though the mortgage was only 150 a month. Still couldn't really afford that. So we sold it for $30,000. After what? 10 years, 12 years or something like that sold it for 33% less than we paid for it. So just was able to pay off the mortgage and that was it no money in her pocket. So that was, you know, an up and a down. I thought real estate markets never go down. But I bought that piece of property the second one in 89, right at the very peak of the market, and it crashed months later and we were in a major recession in 1990 and real estate values were down.

Speaker 1: 13:19

So 1996, my wife and I get married. Before we get married, we buy a house together, bought it in May, I think, we took ownership in May and didn't move into it until after we got married, in September. We bought this house what an hour and a half north of the town that we lived in at the time because that's the only house we could afford In Newmarket where we lived. It was $250,000 for the average home and we just could not afford that. I think I was making $15 an hour maybe, and my wife was. Well, she was just working at a bank, making probably less well, for sure less than that, and by moving north we were going to take probably a hit on her, her wages as well. But anyway, she ended up finding a job that paid better than that in the new location where we're going and I ended up making more money as well. But still, we paid $99,000 for that property or for that house.

Speaker 1: 14:24

It was a 750 square foot biceroy wood, cedar sort of a cottage, basically, with a cathedral front, you know cathedral ceilings and full windows in the front and a big deck. It was pretty neat, was on half an acre and surrounded by a bunch of like sort of co-op land before you went into a county forest. So it was a pretty neat place that was able to hunt and fish nearby and do all the things I love to do and I like that rural living Point, with that being, with all that, is that each time, each of those real estate purchases, we went to less desirable areas, or I went and bought real estate in less desirable areas because that's what I could afford and that's the sacrifice I was willing to make. There's no way I could have gotten into the real estate market in the areas that I was used to. It's not like I preferred to live in the market, but it was a stretch. Most people that I knew, if they were going to a cottage or a camping or whatever, chose to live in an urban center where they could make more money and then on the weekends go to the rural setting, go camping or do the recreation. I just felt I would always prefer or thought it would be better to live where I like to play and where I like to work more at ease and healthier and then commute to the place of work. That's what I did my whole career.

Speaker 1: 15:58

After two years of that, my wife got pregnant with her first daughter After we were married a couple of three years later and we decided that house was just not suitable for a family. It was really cool, but it had a spiral staircase. That was the only way to get from one floor down to the basement where we had to put a second bedroom down there and install the wood stove to heat the house because it just had electric heat. At the time I installed the wood stove, we cut our wood and heated the house with that and we wouldn't turn the electric heat on because we were so cheap or broke. We would come home if we were away for a night or a day or two or something and that would be freezing freezing in the house Again. Those are the sacrifices we were willing to make. We decided that it was not going to be suitable for raising our kids.

Speaker 1: 16:48

We found a house in a village which was 10 minutes from that house, so still quite always north of where we grew up or where we had met and where our parents still lived. That was a huge to me. It was the biggest risk ever. We went from 99,000, sold that house for 135,000, but bought 172,000 to our brand new home that we had built custom in a subdivision. That just to me seemed like absolute insanity and such a big risk that I don't know really made me nervous. That was 70 square feet, 2200 square feet, two-story home with a basement that we ended up finishing later on, a half acre lot in this village of 900 instead of the village of 300 that we were living in, so still rural, but it had a small school At the time. It had a variety store but that ended up going out of business. They ended up with no businesses in town but good place to raise our kids.

Speaker 1: 17:48

We stayed there for 21 years, 172,000. We purchased it for. We did a bunch of renovations to it, extensive landscaping. It was a bare construction lot when we bought it and we planted, I think I said, 42 trees on that property. I made a big vegetable garden in the middle of it and had some belly-eat apples and chicken coop shed. We had quail in a quail and rabbit coop. It was a pretty cool property. Held on to that all through those really difficult times, lost the business. So that was done.

Speaker 1: 18:23

99, we bought that property Just as our first daughter was being born, actually two months before she was born, we moved into it. We did those renovations, did all the upgrades and renovations and stuff. So, 99, and then 2010 is when we lost our business and went and we were $750,000 in debt and we had creditors coming after the house and everything else that we had, which we didn't have anything else, but they wanted all my income and everything for forever. Essentially, fortunately, we had more use of that house. Like I was talking about taking out equity, and because we had started a business, we needed the equity. So we were fully leveraged on the house. So at the time it was worth about $320,000 or something and I think we had a $300,000 mortgage on it. So it was enough that it was leveraged, enough that it made it not worth the creditors going, after trying to unravel the ownership and the financing what do you call it? The lien against the property by the loan holder of the bank. So we were able to hold on to it and after, you know, through other business ventures, finally being able to pay off all that debt and make a deal with the creditors and get out from under that burden. You know I'll talk about that again in the future. Just all that turmoil and stress. During that period I ended up taking a job for a competitor who was a real tyrant and getting a wage but getting that garnish sheet, and that was just so soul-sucking for a variety of reasons that I would get into in the future. But anyway we're able to hold on to that and later just fast-forward to when we bought that, when we sold the cabin property.

Speaker 1: 20:28

We had bought this place for a few hundred thousand dollars to this property that we're on, which at the time again was ridiculously high. I think the guy that we bought it off of had only owned it for six years or something and I think he probably paid like 80 or 100,000 or something. So things were crazy. We paid 220,000 for the other lot that we ended up building the other house on the homestead house I like to call it a cabin, but it's bigger than the cabin and it's more modern, like fully connected and everything. Not fully connected, but it's connected to the electricity grid and it's closer to town. I guess that makes it different in this place. Anyway, we sold that Hillsdale house, the small town house, or that small house in town that we'd lived in for 21 years. We sold it for 715, which again we missed the peak of the market. It had identical house just down the road from us had just sold for 785,000 in one I forget the year, but anyway there was some things going on with the mortgage rates and stuff in Canada and it just drove the price down.

Speaker 1: 21:41

Where am I going with all this? Basically, there's never a good time to get in the market. It always seemed like it was really high, overpriced, that we couldn't afford it and that we shouldn't buy in. We should just maybe rent or just get a small place and stay there. But my life wouldn't be the same if we didn't buy real estate and if we didn't take a chance and extend ourselves to get into the market. Right now seems like a horrible time to buy real estate, but I'm telling you it's always going to look like a bad time and you always think prices are going to come down. We've been thinking that forever. My wife's brother's been 20 years ago probably had a down payment and thought I guess, wait for the market to drop a little bit and then buy in and it's gone nothing but go way up four or five times since then. So he lost it and he won't get into the market now.

Speaker 1: 22:41

So if I have one bit of advice for somebody who is starting out or maybe not even starting out later in life, possibly even and has an opportunity or is trying to figure out what the first steps they're going to take to become more financially secure or debt free so that they can do this, take on the debt of a mortgage and get into the market even though the rates are high. I'm the bunch of factors, a bunch of reasons. I really believe that most markets, prices are going to continue to increase and we're going to still going to be up 25 to 50% in the next, say, seven years, at least in the real estate market values. So if you can get in like, do absolutely anything you can to get into the market. As far as interest rates are concerned, they're kind of they're high right now, but they're no higher than they were when we bought our first house. We made it work and then, as rates dropped, we were in a better position.

Speaker 1: 23:38

So I would try to find a house or property that you can afford right now with these interest rates and then you get pretty well guaranteed they're going to over the next five or seven years. Rates are coming back down, basically close to zero again, but real estate values are going to keep going up, especially as those rates drop. So by postponing it it's you may never get into the market. I would buy in at a relatively high interest rate and lock in short term, like I don't even know what the terms are now. If you can get a two year term, one or two or five year term at the most, try to lock in or have a variable rate so that you take advantage of it as it drops. But I'm. It sounds like in the US that the Fed is talking about and you know what you call it. Yeah, yellen is talking about lowering rates already and they're going to be injecting money into the economy again crazy amounts of money just to keep it afloat or keep us from getting going into recession. But between that and the institutions that are starting to buy up residential real estate single home and multi-home they're multi-family like predictions are by 2030 that 60% of the even a single family real estate market will be owned by institutions and that you'll be renting those properties. So that's going to keep the market high anyways a bunch of factors like that.

Speaker 1: 25:10

So best advice I can give to anybody is to set themselves up for debt-free living, the future, or financial security, financial freedom and self-reliance. Work take any job you can get that pays it well enough to put some money aside to to save up that down payment. Or try to get creative financing through you know, vendor take back or family loan or something. Find some way to get into the market and then, five years from now, you'd be glad you did and you can maybe get out from under the the extra debt that you've taken on or the extra workload you've taken on, because rates are lower and you're hopefully making more money than you were today. Anyway, that's so, that's advice and basically I'm giving my daughters and anybody else that I know of that that's around that age. That's starting out.

Speaker 1: 26:03

Forget about all the other things you can invest in, which I'll talk about in the future too, like I talked about before the stock market and things like that but precious metals, bitcoin, things like that I'd like to talk to you more about.

Speaker 1: 26:16

But primary pay off your debt, pay off those credit cards. Take on extra work so that you can make enough money and there's lots of jobs and even remote places. If you need to go there or work in extra hours, whatever it takes to raise the capital to do that, I would do that and then forget about all the other investments until you get some real estate in your bill. Anyway. That's it. If you, if you're interested in any more of my self reliance talks, or if you're you're interested in how I got to my this place in my life, then you can follow me on podcasts, on any all the major podcast platforms spotify, apple, google, whatever other ones there are and on youtube. You can watch my main videos on my self reliance channel or watch these talks and other talking videos about the lifestyle, off grid, self reliant lifestyle on my Sean James youtube channel. So thanks for watching, thanks for listening, and I look forward to seeing you back here at the cabin next time. Take care.