Net Worth Update December 2014 – Karl the Real Estate Agent

Welcome to the Million Dollar Journey December 2014 Net Worth Update – Team MDJ edition. A select group of readers were selected to be part of Team MDJ which was conceived after the million dollar net worth milestone was achieved in June 2014. Karl the Real Estate Agent was selected as a team member and will post net worth updates on a regular basis. Here is more about Karl.


  • Name: Karl
  • Age: 33
  • Day Job: Employed as a Real Estate Agent Full Time.
  • Family Income: $130,000 (Personal full-time job); $15,600 (rental income before expenses); and, $50,000 (spouse full time job)
  • Goals: Mortgage paid off by 36, million dollar net worth by 40.
  • Notes: Almost all of net worth is in the real estate market (principal residence and rentals). Current debts are $13,000 owing on a 2009 Audi a4, line of credit used to float business expenses. ($10,000)

My spouse and I currently live in our 4th personal residence since entering the real estate market in 2006. We used to move around town when I was able to find a decent deal to buy. That has all changed now with two kids (4&6), so now my real estate investing is done outside our principle residence. I currently own one rental semi-detached 3 bedroom in my personal name as well as another with 1/3 ownership between family members. We are currently in the process of purchasing a building lot to build and sell a spec home in 2015.

In terms of savings, I’m automatically making bi-weekly deposits into my TFSA to max out the year but I still have plenty of room left.  However, my wife’s account hasn’t been fully funded over the years. I’m looking forward to learning more about investing in securities and transitioning away from rentals as they are extremely labor intensive investments that take a lot of time away from my family.

My biggest challenges that I face to making my goal is a lack of budgeting and a lot of discretionary spending. Having the majority of our household income being commission based and somewhat seasonal has been a battle since day one. We deposit all my income into a Manulife one account secured by my rental property and then pay my family account $2,000 bi-weekly but this system has its faults. I’m hoping for some suggestions from readers in a similar position on how they handle this type of pay structure.

On to the net worth numbers:

Assets: $788,846

  • Cash: $1,500
  • Registered/Retirement Investment Accounts (RRSP): $6,896 (+0.00%)
  • Tax Free Savings Accounts (TFSA): $10,849 (+0.00%)
  • Rental Property 1: $230,000 (purchased in 2009 for $167,000 price adjusted for average selling price annually) (+0.00%)
  • Rental Property 2: $66,000 ($200,000 – 1/3 ownership purchased in 2011 for $160,000 price adjusted for average selling price annually) (+0.00%)
  • Principal Residence: $475,000 (purchased in 2012 for $350,000 price adjusted for average selling price annually) (+0.00% )

Liabilities: $409,735

  • Principal Residence Mortgage: $249,493
  • Rental Property 1 Mortgage: $107,125
  • Rental Property 2 Mortgage: $108,353 –1/3 ownership ($36,117)
  • Rental Property Line Of Credit: $17,000
  • Mastercard: $0

Total Net Worth: ~$379,111 (+0.00%)

  • Started Jan 2014 with Net Worth: $249,924
  • Year to Date Gain/Loss: +51.7%

Some quick notes and explanations to common questions:

The Cash

Any cash I have in my chequing account is currently used to pay monthly bills and living expenses. I deposit all my earnings directly to my Manulife One account.


My savings are held in a Tax Free Savings Account (TFSA) with BMO. I’m currently maxing out my TFSA and hope to do the same with my wife’s account by the end of the first quarter of 2015.

Where Do the Savings Come From?

I’m not a great budgeter or saver yet so the bulk of my savings are in debt reduction to cover investments I have already purchased. (Typically land and investment properties) I find myself that working from behind is the best motivator for me.

Real Estate

My real estate holdings consist of my primary residence and 2 rentals. One owned personally and one held in a corporation with 2 other family members. I’m currently in the process of securing a building lot to build and sell a spec home on.

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9 years ago

Great job. Thanks for sharing your net worth.

9 years ago

Karl, ding me in June…we’ll chat. :)

9 years ago

Passive Income Earner:

I’m in the process of selling one of my rentals now as there are better returns to be had in the stock market. Can’t wait to get about $100,000 free’d up in June hopefully..

Question is canadian banks or oil companies??

The Passive Income Earner
9 years ago

Congrats on the real estate. Lots of people may have opinion but it takes work to get them going and it’s good stream of income. That’s how real estate magnets have started…

Obviously, your RE properties should be treated like investments while your home not so. I would recommend that you figure out a way to understand your ROI for your properties and compare that with stock investments. You may be missing on massive growth by not having stock investments.

9 years ago

Is that correct? $1300 gross rent from the combined two properties? That doesn’t seem great from assets worth ~$300K ($230K Property 1, $66K Property 2). After deductions for property taxes, insurance, income taxes, and mortgage interest, you’re netting what, $600, 700 at best? That’s the same as a 2.6% dividend. Could do much better in stocks and given the dip that some have gone through, a good change at better capital appreciation in stocks than from housing. Of course, it’s hard to get the leverage, though with the equity you have and a margin account, you could probably get just over $200K to invest with.

9 years ago

But that’s exactly what Karl has done — one egg in one basket.

Two different camps: 1) put all your energies and resources into one area/sector/business and work it like a rented mule until you become proficient. professional, and successful, or 2) diversify your education, career, time, money, investments, geography, etc.

Both have their merits and drawbacks but I think route #1 requires a great deal more dedication than say an average Blue Chip middle-management 9-5er plopping 10% into RRSP index mutual funds every year.

The caveat with doing it The #1 Way is that you are most likely working in a tail-end, but you probably won’t know on which side of the curve until much later down the road. You’ll either make it or break it.

Re-read Karl’s story, it appears he may be a left-tailer admiring the green grass of the big 9-5er hump in the middle.

My advice (because every has one) to Karl is keep pushing with what you are doing, your break-through endeavor may be just around the corner. You want to complete your MDJ by 40 yet are considering abandoning your path after only 10 years — “I’m looking forward to learning more about investing in securities and transitioning away from rentals…”

Then again, selling RE and owning RE require completely different skill sets, so this may be a case of one egg and two baskets.

Sean Cooper, Financial Journalist
9 years ago

Congrats on your success in the real estate industry. It helps when you have a spouse earning a steady paychque. I could never imagine two real estate agents getting married. It would be too risky – like putting all your eggs in one basket.

9 years ago

I should have known that others would quickly comment on the extreme lack of diversification. To put a number on it, it looks to me like over 95% of your net worth is in real estate! Nearly 60 percent is in one, non-income-producing asset (many people would question whether you should include your home in your net worth).

If you’re serious about diversifying, I think that, as with all things, having a goal in mind would help. How diversified should you be in regards to real estate (admittedly an asset class where a lot of people hold much of their wealth)? One “rule of thumb” I’ve seen is the “rule of 90.” That is, RE as a proportion of your net worth should be equal to 90 – Your Age. In your case, 57% of your net worth should be in real estate.

Arguably, as a real estate agent, you should be diversifying away from real estate holdings even more than “normal” people. I know most real estate agents don’t do this in the least, but you’re really exposed to the vagaries of the housing market.

Also, on this site and many others, there are good analyses that tell you why paying off your low-interest mortgage aggressively is not as good a strategy as saving and investing early.

9 years ago


You should hold all of your real estate assets in the corporation.

The two benefits are:

1) tax efficiency; and,

2) liability.

Most online commenters do not understand point 2.

Regarding point 1, you are effectively building a real estate investment co. like Morguard or Dundee. Starting with a corp. Simplifies your future dealings with the assets.

I’ll try to put together a detailed post on the advantages in the near future.


9 years ago

Cold Truth, I agree that if someone isn’t prepared for a dip in property values it can hurt them. I would always advise people to ensure they have ample savings and diversified investments. Anyone looking to invest in multiple properties should be aware of the risks and should have a sound financial plan. We also put large down payments on all the properties, lowering the risks. It may not be for everyone, but we average a 15-20% annual rate of return on our initial investment. And to be honest, with the climb in property values over the last few years, it would take a very large collapse to even bring the home values back to what we paid for them.

However to suggest a drop in housing prices will create less rental demand is simply not true. We own in two different cities, one of them having some of the lowest housing values in Ontario (even Canada for that matter). Yet we still have huge demand for our properties. The reality of the world today is most people spend and accumulate debt. I am often amazed at how much some of our tennants earn yet can’t fathom saving enough for a down payment. If anything the rental market is getting stronger, at least when it comes to demand for my properties.

MistrustREagents: Of course if property values dropped, his net worth would drop. The same would happen if the stock market collapsed. At least with rentals a income source is still present. Additionally, investing in real estate is more about long term gains, not what your year by year net worth reads. It’s all about diversifying and having multiple income sources, so if one slips, the other can stabilize your portfolio.