How to Use Your RRSP
Get a fixed rate of Return on your RRSP in Real Estate
Using your RRSP for real estate investing is much easier then you think. Mana Investments will walk you through every step of the way, and as with all our investments, your RRSP will be secured by REAL PROPERTY. Simply put, your RRSP will be registered as a mortgage against the investment property. Its like you and your RRSP become a bank, and we “borrow” the money from you. Your money is on title as a mortgage, just like a bank mortgage when you buy your home. We never touch or see the money. It is all handled by you and your trustee. We make monthly mortgage payments to you and your RRSP, just like we would a bank mortgage. And because this is set-up as a RRSP, your profits from this investment are tax deductible, just like any other RRSP. This type of investment is the safest and most secure way to receive a guaranteed return in your RRSP. And unlike other mutual fund RRSP’s, there are no hidden costs or fees. All the costs are explained up front ( and we even pay for some of them !).
First off, we will help you set-up a “self-directed RRSP” with a trust company. You can transfer the money from any current RRSP account that you now have, or you can deposit money into your new self-directed RRSP account just like any other RRSP plan that you have. You also can use any funds that are in a locked in plan ( LIF, LIRA) as well.
It’s easy to do, here’s how…
Step # 1: A Self-directed RRSP account is opened with a Canadian Trust company for you the plan holder. The annual administration fee charged by the Trustee is $125 payable by us. The initial one time set up fee is paid by you ( $125.00).
Step # 2 : Your current RRSPs existing elsewhere is rolled over tax free into the Self-Directed RRSP set up by the trust company ( trustee). Once set-up you can make future RRSP contributions directly into your new self-directed RRSP.
Step # 3: Mana Investments will now look for a property and make an offer. Upon acceptance of the offer, Mana Investments will pay for, and get an independent appraisal of the property by a bank qualified appraiser.
Step # 4: You will then send a letter of direction to your trustee instructing them to release up to 75% ( for a 1st mortgage or up to 15% for a 2nd mortgage) of the appraised value of the property from your self-directed RRSP. The money is transferred in trust to Mana Investments solicitor with instructions for the lawyer to release those funds to the mortgagor for a first mortgage ( or second, depending on the funds available) on the property. A copy of the mortgage deed is remitted to the trustee within 30 days of funding. There is a one time charge of $125 to set up the mortgage and an annual mortgage administration fee of $125 charged by the trustee. We pay the yearly administration fee, you only pay the one time set-up fee of $125.00.
Step # 5: Every 30 days thereafter, monthly mortgage payments ( or biweekly mortgage payments if set up on a bi-weekly basis) are automatically debited from Mana Investments bank account and deposited directly into your self-directed RRSP account by your trustee.
Step # 6 : Thereafter statements are sent out by the trustee to you tracking all deposits, withdrawals and administrative charges on your self-directed RRSP account.
And that is all there is to it. This whole process can take as little as 48 hours to complete, depending on your present financial institution that is holding your current RRSP’s.