Real Estate Entrepreneur Earning Passive Income Explains His Strategy
- Vinny Soni had wanted to donate to charity for a long time.
- He worked tirelessly for years to save enough to buy rental property that brought in passive income.
- He now owns seven properties in Canada that generate $ 3,600 monthly in net income.
- Read more stories from Personal Finance Insider.
When Vinny Soni was 27, all he wanted to do was do charity work. “I wanted to get into a non-profit organization,” he says. “It was the only thing I knew I wanted.”
Originally from Nadaun, India, Soni moved to Canada as an international student in 2009 to study marketing. In the five years between arriving in North America and realizing he wanted to work for some kind of charity, he has achieved a lot professionally. He made a career in advertising and marketing, worked for both smaller companies and large corporations, and even set up his own agency.
But at 27 he made a promise to himself. “I decided to step down at 35 so I could devote 50% of my time to a nonprofit,” he says. “The other 50% I do something where I can still earn money, but I’m not tied to it.”
Soni recently turned 35 and has achieved this goal. He can comfortably leave his old job behind and devote more time to a charity that he is building. But it is not just the money saved that enables him to do this, but also a substantial stream of passive income that he has built himself.
From 2018 Soni started investing in real estate. He now owns seven different properties that are generating steady, recurring income every month. However, buying a property is not an overnight decision. It took time to save its initial down payment and strategic decisions to maximize its investment.
He realized that real estate would help him achieve his goals faster than other investment options
From 2013 to 2016, before investing in real estate, Soni put a lot of money in a fixed-term deposit account in India.
Similar to a fixed-term deposit or a certificate of deposit, he was lured by the high interest rates of these special accounts. In the case of Soni, this was 7 to 8%. “My focus was: make money, send money overseas, make sure I keep getting that 7 to 8% return,” he explains.
But it soon became clear to him that he could achieve his goal more productively through real estate. “I realized that the appreciation of the property is much more than that,” he says. “You not only gain equity, but also the increase in the value of the asset.”
While using the fixed-term deposit account helped him for a while, he knew that switching to real estate investment was the better option for his goals in the long run. “The foreign money that I saved for three years before I moved into the properties,” he says, “the return there was very low.”
He lived frugally while increasing his income
When Soni was saving up for a down payment on his first property, he knew he had to maximize his income while minimizing his expenses. “Can I afford a unit on my own? Yes,” says Soni. “But I didn’t want to do it because I wanted to make sure I had enough savings to invest and prepare for my future.”
Soni lived frugally for years, benefiting in particular from living with roommates, well beyond the point where he could afford to live alone. He also worked – almost constantly – for years. Outside of his advertising and marketing job, he spent his weekend doing telecommunications and internet sales.
“My motto was: my expenses have to be paid for by the job I do on the weekend and my full-time job has been 100% saved,” he tells Insider.
His monthly expenses were about $ 2,000 to $ 2,500 a month, including his portion of the rent – then $ 700 – bills, car payments, and groceries.
By making sure his weekend job covered those expenses, Soni was able to put almost all of his corporate job aside, which made him over $ 100,000, saving about $ 5,000 to $ 6,000 per month.
He made small down payments and then refinanced his loans
By the time Soni was ready to start buying real estate, he had saved about $ 100,000. So he found a property that felt right to him and negotiated to pay only 10% of the property – about $ 45,000.
“I decided to pay an extra 3% to insure the property because I wanted to use that other 10% and reinvest in another property,” he says. In the US, buyers who do not deposit 20% are required to take out personal mortgage insurance; The situation is similar in Canada.
He was then able to invest the remaining $ 55,000 of his savings in additional real estate. He bought his next two houses directly from the client and was able to come to an agreement with them. “I prepaid $ 20,000 for that [second] Ownership, “he explained.” And then $ 1,000 a month, which wasn’t a burden for me. ”
When he bought his third house in May 2019, the client asked him to reduce this too by 10%. That initial payment was approximately $ 50,000. To pay for this, he used the remainder of his original $ 100,000 plus more money he saved between his first purchase and then. With some of this money saved, he also bought his fourth house.
Now, with the goal of continuing to buy real estate, he is using the refinancing of his mortgages to free up the equity in his homes.
“I bought my fifth and sixth properties after refinancing my first and third,” he explains. He has just bought his seventh home with a business partner. He lives in one of all his properties, rents four, and the last two are still being built.
He is building wealth now
He earns around CAD 3,600 per month from the four rented properties (that’s just under 3,000 US dollars). As soon as the last two are built and rented, he expects the number to rise.
But he doesn’t plan to just put the money his rent brings in his pocket. “I will use this money to buy more real estate,” he explains.
When Soni set a goal of spending 50% of his time on charity and spending the other half on something that would make money, he wasn’t sure what the other would be. Now he knows: he is building a real estate company.
In the conversation about his plan for the next three years, he describes big goals. “When I turn 38, I want to make sure my real estate company is automated,” he explains, saying he wants recurring income and more independence at the same time. “Personally, I want to achieve at least 10 properties in the next two years.”