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Is Real Estate A Money Tree?

Updated: Oct 17, 2023

A pot of cherries, as an allegory to real estate being a money tree
A pot of cherries

Is real estate a money tree? Money trees are everywhere. You just need to find the right spot, plant a seed, and work hard to be able to harvest the fruit of your labor.

We have a cherry tree on our property, and it had a bumper crop this year. We spent a few hours on Saturday picking cherries. I think we ate more than what went in the pot! We brought them inside, washed them, pitted enough for a cherry pie and a cobbler, and then froze the rest. They'll be good all winter long. I have to say the desserts tasted amazing, especially after all that work.

It takes a long time before you're able to harvest any cherries, though. From the time you plant a seedling, water it, protect it from animals and pests, and allow it time to grow big enough to produce fruit, it is many years later.

Investments should be like that too. I think it is obvious to everyone now that the run-up in the real estate market wasn't sustainable over the last few years. Of course, massive immigration, low housing completions, and loose monetary policy fueled the fire. It appears now that the only reason the housing market has taken a hit is due to Bank of Canada rate increases, as the other two issues have only been exacerbated since. This will underpin the current market.

I first got into the real estate market in 2008. Fixed rates were around the mid-3% range then, and the market really didn't appreciate much up until 2016. The market had slow incremental gains, and then suddenly shot up for many years in a row. A home that we had purchased in 2016 for $350,000 was suddenly appraising north of $1 million. It quickly became obvious that this rate of growth couldn't be sustained. So we sold a triplex that we owned and over doubled our money in only a few years. But then I made a mistake.

With cash on hand that was depreciating in value quickly due to inflation, and with month-over-month increases in real estate prices, we decided to enter the market for our next project and ended up purchasing several properties to add units and bring them to market. With a solid plan in place and multiple exit strategies, we moved forward into these projects and completed them just in time for a downturn.

I'm one of the lucky ones. I still have properties that we've owned for years that have lots of equity we can unlock if needed, and we are still moving forward. It's impossible to time a market. However, this experience reinforced what I always knew: Money doesn't grow on trees, and houses don't double in value every year. While real estate is still one of the best long-term wealth creation vehicles in existence, volatility will be common over the next few years. Keep equity and cash on hand to get through the rough times and to be able to take advantage of opportunities when they come your way.

Recent headlines in the media are conflicted on what will happen on July 12 when the Bank of Canada announces its rate decision. The Financial Post put out an article titled "Bank of Canada Rate Hike At Best Unnecessary - At Worst, A Mistake," followed by an article by Reuters titled "Bank of Canada to Raise Rates 25 Basis Points on July 12th" (according to economists they polled).

We do know that the economy gained triple the expected amount of jobs published in a report last week. But unemployment also went up, signaling that there may be trouble ahead. I'm glad I'm not Tiff Macklem right now — LOL!

Update: The Bank of Canada did, in fact, increase rates another 25 basis points on July 12, bringing the overnight rate up to 5% and signaling they will increase again if needed. They need to crush inflation. However, the time for rate cuts may soon be on the horizon if we run into a predicted recession this year into 2024.

Have questions about your portfolio or want an outside opinion? Please select the button provided below, and I will schedule a free half-hour call with you to go over your situation! Talking to the right people can really save you money. I really believe that this is the time to expand your network and learn from those around you. I'll be in touch!

I'd love to hear your thoughts on this! Have a great week while working past those obstacles on your climb to success. Let's Grow Together!

Jonathan Beam

Real Estate Investor and Entrepreneur

Jonathan Beam is a real estate investor in the Niagara region who is passionate about helping you achieve financial freedom through real estate. He works with new and experienced investors to formulate a plan that fits your specific situation and provides market guidance and consultation on the best places and strategies to pursue within the Niagara Region. Book a free, half hour no obligation consultation to see how he can help you to achieve your goals. His travels are available at

For a free market analysis on 2 markets within the Niagara region that we are currently investing in, please visit the home page and fill in the contact form at the bottom for your free report!

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