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Reader, did you survive the Black Friday madness?

If your inbox looks anything like mine, it’s still recovering from the absolute barrage of "LAST CHANCE" emails. I hope you managed to navigate the noise, maybe used that Return on Time (ROT) filter we talked about, and didn't buy a toaster just because it has Wi-Fi. 😉

I ended up purchasing a doorbell camera and a floodlight/camera (for a rental property), more on that below.

It’s been a whirlwind week on my end. On Thursday, I had the incredible privilege of being interviewed by TD Direct Investing for their Inside Investing series. We dove deep into investing hacks for healthcare entrepreneurs, and honestly, seeing "Financially Fulfilled Pro" on that platform was a bit of a "pinch me" moment. A huge thank you to everyone who tuned in!

After the interview, Katie and I were downtown Toronto and decided to celebrate (and be savvy with our perks!). We hit up Lulu Bar to use our annual American Express Platinum Dining Credit. It was a fantastic meal, seriously delicious, and we walked out with plenty of leftovers (some of which I am still finishing today)

The best part?

The bill came to $227, but thanks to the $200 credit, it only cost us **$27 out of pocket**. That is financial optimization in action (and tasted pretty good too!).

After the high of that presentation (and the chaos of Black Friday), Katie and I decided to unplug.

We escaped up to Prescott for the weekend to spend some quality time with family. We traded screen time for a beautiful hike, fresh air, and the kind of quiet you just can’t get in the city.

But, let’s be real, even while hiking through the woods, my brain wasn't entirely off. I kept drifting back to a major financial decision looming over me: My Rental Property.

My tenant gave 60 days notice. I have a $200,000 equity cheque sitting in a "lazy" asset. And now, I have to decide: Renovate, Invest in the Market, or Pay Down Debt?

Let's break down this $200,000 case study using the frameworks I use to make big decisions.

First, let’s look at the raw numbers of the property as it stands today.

• Estimated Value: ~$450,000
• Equity (Net Proceeds if Sold): ~$200,000 (After paying off the remaining mortgage, capital gains tax, and realtor fees).
• Current Cash Flow: **$56/month** ($672/year). I had to refinance at a suboptimal time and with previously rising interest rates, it squeezed the juice out of the cash flow. Not to mention, with rent control policies, I was unable to keep up with the rising costs of property tax, insurance, and utilities.

Lesson 1: The Return on Equity (ROE) Trap. Many investors look at "Cash on Cash" return (based on their initial down payment years ago). But that is a vanity metric. The real metric is Return on Equity (ROE): How hard is the money currently trapped in the house working for me?

• Formula: Annual Cash Flow / Current Equity
• The Math: $672 / $200,000 = 0.33%

My $200,000 is sitting in this house earning 0.33% a year in liquid cash flow. That is terrible efficiency. Even a basic savings account pays 4%.

This asset is "lazy."

Sure, that doesn't factor in equity increase due to mortgage paydown. But even if we factor in 10K a year in paydown (which is an overestimate), you'd be at 5.36%

To make a savvy decision, I have outlined three distinct strategies to deploy this capital.

Option 1: Renovate & Hold I invest $25k to renovate. Rent increases. Cash flow hits $519/month

• The Strategy: Force appreciation through renovation and hold for long-term real estate growth.
• The Upside: I keep the asset and the leverage.
• The Downside: Sweat Equity. If you know me, I'm useless with a tool in my hand, unless it's a calculator. I have to manage a renovation, find tenants, and deal with toilets and trash.

Option 2: Sell & Invest Aggressively. I sell the house, unlock the $200k, and split it: 70% US ETF / 30% Bitcoin.

• The Strategy: High liquidity, zero effort. Historical market avg return ~8% + Bitcoin upside.
• The Upside: 100% Passive. No midnight calls. High liquidity.
• The Downside: Volatility. I have to have a stomach of steel for price swings.

Option 3: Sell & Kill Debt. I take the $200k and make a lump-sum payment on my primary mortgage (4.5% rate).

• The Strategy: A guaranteed, risk-free, tax-free return of 4.5%.
• The Upside: Freedom. Massive reduction in personal debt and immunity to interest rate hikes.

There is a massive personal layer to this option. Four years ago, while navigating a separation and an eventual divorce, I scribbled a list of big, audacious goals on a piece of paper and pinned it to the bulletin board in my office, where it has hung ever since.

One of those goals was specific: "Pay off primary mortgage by age 40."

I am currently 1.5 years away from turning 40 (who is counting?)

It is not lost on me that this rental situation has presented itself exactly when I need it to hit that target.

Call it serendipity, call it the Reticular Activating System, or call it "putting things into the ether", but I truly believe that when you clearly define what you want and put it out into the world, the opportunities to achieve it have a funny way of showing up.

• The Downside: Opportunity Cost. I mathematically leave money on the table compared to the market, but I fulfill a promise I made to myself four years ago. I'll have to determine, how much that is worth.

To truly make this decision, we need to look at the Net Worth Effect over time. I’ve run the numbers assuming a 25% Marginal Tax Rate on income/gains.

Assumptions: Real Estate Appreciates @ 3%, Market Grows @ 8%, Mortgage Rate 4.5%.

This chart reveals the brutal truth about investing choices:

1. The Power of Leverage (Option 1): Real estate holds its own because of Leverage. Even though the appreciation (3%) is lower than the stock market (8%), you are earning 3% on a $450k asset, not just your $200k equity. Plus, the tenant pays off the $250k debt for you. This "forced savings" allows Option 1 to result in a massive tangible asset (a paid-off house) in 20 years.

2. The Compound King (Option 2): If we look purely at the numbers, the stock market wins over 20 years.

Why?

Zero friction.

No property taxes, no maintenance costs (which eat into rental profits), and no vacancies. Pure compounding at 8% turns $225k into over $1 million. It requires the least effort but demands the most emotional discipline to hold through crashes.

3. The "Sleep at Night" Dividend (Option 3): Mathematically, this is the "loser" ($542k vs $1M). BUT... Finance isn't played in a spreadsheet. Option 3 guarantees me a lower monthly expenses today. It frees up $$$ a month in cash flow immediately because my personal mortgage is crushed. For many, that immediate freedom and zero risk is worth "losing" the potential upside of the market.

"Yeah, But..."

I know some of you savvy investors are already shouting at your screens, so let’s address the critical "What Ifs" that change these numbers.

1. "But Robin, Option 3 frees up cash flow! If you invest that, doesn't it win?" The chart above assumes "Lifestyle Creep", that I enjoy the extra $1,000/month from having no mortgage payment rather than investing it. If I were a robot and invested every penny of the saved mortgage payments into the market for 20 years, Option 3 would actually rival Option 2. But behaviorally? Most people spend the extra cash. Option 3 creates freedom today, not just wealth tomorrow.

2. "What about maintenance on the rental?" Option 1 assumes a smooth ride. One bad tenant, one roof replacement, or a special assessment can wipe out 3 years of cash flow instantly. Real estate is a job; the ETF in Option 2 never calls you at midnight about a leak.

3. "Is 8% market return guaranteed?" Absolutely not. Option 2 has the highest potential number, but it also comes with the volatility of the stock market (and Bitcoin!). Option 3 provides a guaranteed return. In a shaky economy, certainty has a value that spreadsheets can't calculate.

My Decision Framework

When I look at this, I ask myself:

• Do I have the energy to manage a renovation and tenants for 20 years to maximize leverage (Option 1)?
• Do I want to maximize total net worth, even if it means enduring volatility (Option 2)?
• Or is peace of mind and lower personal overhead my current priority (Option 3)?

This is why personal finance is personal.

So, knowing the full 20-year picture... are you Team Leverage (Option 1), Team Growth (Option 2), or Team Peace (Option 3)?

I'll tally up the votes and reveal my actual decision in next week's newsletter!

Yours Truly,
Robin Valadares

​@financiallyfulfilledpro and Certified Financial Counselor CFC™

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