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Mutual Fund News

ME AND MY MONEY

Special to The Globe and Mail

Jamal Hejazi, 42

Occupation

Chief economist for a law firm

The portfolio

Mostly investment properties (plus some equities, silver and cash)

The investor

Jamal Hejazi doesn't have an employer-sponsored pension, so he is putting aside money to build his own retirement fund.

How he invests

About two-thirds of his portfolio is allocated to income properties, including condo and single-detached dwellings.

Buying at the right price is crucial to avoiding a number of problems associated with real estate. Mr. Hejazi scours the market for properties that generate enough income to cover carrying costs and yield a return on capital invested. This is getting harder to do with prices having gone up so much, but he did manage to find one this fall.

He is aware of the risk of a price correction in the Canadian housing market, but his "investment horizon is 20 to 30 years, and real estate historically tends to do well over the long run." Besides, his properties are not in frothy cities like Vancouver. And he has additionally built in "a financial cushion for increases in mortgage rates."

His properties were constructed recently, within the past four to 10 years, "so maintenance issues have been minor." He hasn't had any problem tenants because of a rigorous screening process (required, for example, is a long history of bill payment or parental co-signers).

Why real estate? "I can get all the information I need to make an informed choice because property markets have just a few basic variables," he explains.

Moreover, he feels the prospect of "stocks returning sizable gains year over year is not as certain as it once was." Many of the factors that led to high growth rates in past decades were unique to those times - such as the rebuilding of the global economy after the Second World War.

Best move

Properties purchased when he started out in the early 2000s have since doubled in value.

Worse move

Not buying more real estate when it was cheaper.

Advice

Income properties can cause headaches but this may have more to do with how good a businessperson the owner is.

Want to share your strategies? E-mail mccolumn@yahoo.com

© 2007 The Globe and Mail. All rights reserved.

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