Hi there,

My name is Ben Stevenson, I am a 22 y/o electrical engineering tech outside of the GTA. My significant other and I attempted to purchase our first home/investment property in April but couldn't conquer the stress test put in place January 1st. A major element of the failure was due to her being in school and working retail part time (non-management), so the banks and private lenders only looked at my income. Although we had 20%, I was not personally approved for the loan that we required - the house prices are ridiculous in the Barrie-Orillia area.

She's finishing up her last year and we are looking to purchase our first home/duplex. 

My question is... if you could have gone back in time, what would you have changed about your first deal? Do you have any regrets about a certain aspect of the deal, is there something you wish you had done differently? I am eager to learn.

Thanks for your time, have a wonderful day.

-Ben

Hello @Ben Stevenson ,

It sounds like you have a good plan in place. My first property was a 4-unit, and my only regret was that i didnt house hack(live in it). I put down 20% as my wife and i already owned our own home. The property has been a great investment, so it is tough to say i regret it, but if we would have been in the position to purchase it FHA and live there, the 3.5% down payment would have allowed us to buy another property much sooner than we did. It all worked out though. Good luck to you!

@Ben Stevenson I probably overpaid for my first property a bit. It still cash flows the tenants have been great.

Don’t really regret it. It got me in the game, I learned a ton.

Hi @DJ Cummins thanks for your reply! We would love to purchase a 4-unit, however, shacks cost 300k here haha. 

Are you required to put 20% down on investment properties that you do not live in? Our FHA equivalent here is CMHC.

Thanks again!

My first deal was September 2015.  House hack a 2 bed / 2 bath condo in a great gated golf-course neighborhood next to Las Vegas strip.  Cut my living expenses down to $200 / month and condo has appreciated ~$40k+ (potentially $60k since a comp just sold for $20k more than mine's worth).  Absolutely no regrets, but would have been nice to house hack a 4plex instead of a single condo as my first deal.  This would have benefitted me in many ways more than my condo currently does.

@Ben Stevenson some lenders may be different(some could require 25% or more, some less).  My lender requires 20% down for a commercial 20 year loan.  That is what we have on each of our properties.  If you live there is a primary residnce for at least 12 months, its only 3.5%.  So the difference in a 300k shack would be 60k vs. 10,500.  big difference! 

@Caleb Heimsoth that's one of my main concerns. I have been looking on MLS since I was 18, however, I have a really hard time valuing a property.

Our goal is to "house hack", so I doubt we will cash flow on a duplex. But it will subsidize our mortgage which is important :) 

Appreciate your insight!

@DJ Cummins  you opened my eyes a bit DJ. A plan of mine was to put a 20% downpayment on our first place to lower our monthly mortgage payment (and ideally break even with the downstairs rent). Reviewing what you said, that may not be the best idea. 

Our saved money would likely have a better ROI in a multi-unit home with a lower downpayment, and make more in the longterm. I don't know if 3.5% is a possibility here because we have tighter housing regulations, but it is something to explore.

Honestly, thank you very much.

@Ben Stevenson so I overpaid by a few grand.  In the time since, my cash flow, debt paydowm and appreciation have all cancelled that out.  

@Ben Stevenson , sure thing, glad to chime in.  Reach out if i can help in the future.  And FYI, i wouldnt do a deal if it were just breaking even.  Not much point in that if you ask me :) 

@Spencer Cornelia that is incredibly relevant to our situation because the property we tried to purchase was a condo. Thanks for the guidance!

I really appreciate your comment, Spencer. 

I skipped out on the sewer line inspection because the rest of the report came back good. Obvious signs of newer work done so I assumed it'd be fine... no issues with drainage during the inspection either.

Fast forward a year later... root ball required replacement. I took a gamble and lost haha.

@Matt K. that's too bad... What's the takeaway, inspect everything, everytime?

Thanks Matt.

Originally posted by @Ben Stevenson :

@Matt K. that's too bad... What's the takeaway, inspect everything, everytime?

Thanks Matt.

 Look at it differently....

New work in the house does not equal work done outside the house or even that the work was done correctly. Inspection was only few hundred and I could of planned for the repair vs emergency work.

Landscaping.... trees... I hate trees now. Big trees in front of the house... they'll mess up sewers/sidewalks/and driveways. Big ones in the back... expensive to remove. I also had to pay to cut down a big one in the back because it was dead.

So, home inspection, sewer line inspection, and if trees a tree trimmer. Also, you want to money so you can pick contractor... do not let home owner do it because they care more about price vs quality. 

@Ben Stevenson ,

When you buy your first house... verify the plumbing you have, take pictures, and if it's copper-- tell contractors, especially if there is any language barriers...   one way we got screwed is we hired bad contractors because they were cheap... ... but it turns out, not very cheap b/c they stole all our plumbing!   Lesson learned! 

@Ben Stevenson if you are interested in buying a condo, please take the time to look into owner occupied percentaged rules with your HOA. My HOA has an owner occupied percentage rule of like 40% which means you have to get on a list to be able to rent out your entire unit. I've been on the list for ~1.5 years and am still like #60, which means 60 non-owner-occupants need to either sell to an owner occupant or go back to being one. This really hinders me from renting out my place and house hacking the next property, which has hurt my growth potential. Something to keep in mind.

@Matt K. that is incredibly valuable information, I'm going to write that down. 

Thank you Matt.

@Linda D. that is so bizarre, what are the chances! I appreciate your insight nonetheless. Do you have any recommendations on how to find a reputable contractor since this experience?

Thanks Linda.

That's crazy... really appreciate you sharing your experience @Spencer Cornelia  

What killed it for us was the maintenance fees. That ruined any chance of cash flow. Since the experience, I don't think we will ever be buying a condo as an investment, but would love to live in one down the road. Didn't even think about owner occupancy... dodged a bullet there.

Thanks Spencer. 

Another thing I never see talked about on here is timelines.... Not everyone is going to keep an investment the same ammount of time nor will they get rid of it the same way.

I'd pay extra (to an extent) for something that had major repairs done recently but weren't brand new. Example, 30 year roof done 10 years ago vs..... 30 year roof on its 20+ year. Same with kitchen etc, I'll take that early 00 look all day long since it rents just fine... and upgrade it when I sell the house.

I don't need to sock away big cap ex money if I'm not going to keep the house for  a long time. Now, I'll probably have reserves (cash/credit mix) and go from there. Plus everything has a life expectancy and it's easy to figure out... instead of flat rate (%) you could come up with a better plan (either $ in reserve or monthly amount for set time). 

@Ben Stevenson

My biggest regret is not turning my earned income to passive income from the deals I've done so far (10).

Those 10 deals netted me $354,766.67, and I could've easily went out of state (prob PA, since I've been going down there on short weekend trips for about 15 years), and bought a 6 unit (2 adjoining properties, 3 units each) I looked at last year all cash, which from having run my #s, would've netted little over $40,000/yr after all expenses. 

Buying out of state wasn't in my radar cuz I still had NY prices in mind, where you can't even buy a condo in an area you want to live in for less than $550,000. And that's just in the outer boroughs. Manhattan would be at least over $1,000,000.

But lesson learned. ~sigh~~~ lol

My first deal was successful and I became addicted to all of this...

I struggled though, and learned.

Originally posted by @Ben Stevenson :

Hi there,

My name is Ben Stevenson, I am a 22 y/o electrical engineering tech outside of the GTA. My significant other and I attempted to purchase our first home/investment property in April but couldn't conquer the stress test put in place January 1st. A major element of the failure was due to her being in school and working retail part time (non-management), so the banks and private lenders only looked at my income. Although we had 20%, I was not personally approved for the loan that we required - the house prices are ridiculous in the Barrie-Orillia area.

She's finishing up her last year and we are looking to purchase our first home/duplex. 

My question is... if you could have gone back in time, what would you have changed about your first deal? Do you have any regrets about a certain aspect of the deal, is there something you wish you had done differently? I am eager to learn.

Thanks for your time, have a wonderful day.

-Ben

"My question is... if you could have gone back in time, what would you have changed about your first deal?"

I would have done it 10 years earlier.

Also wouldve done it 10 years earlier.  You gain so much more knowledge thru experience

Wow.  I could fill a podcast episode on this.

Paid too much for it, underestimated the scope of work and mismanaged contractors (in the beginning). Probably over-renovated it, but only a little. Most of it just had to be done. Thankfully I managed to get $15K over the originally planned ARV, so that mitigated my losses.

But no worries, I'll get it back on the next one.