First home or first rental

8 Replies


I would like to pick at anyone’s interest as to whether I should purchase my first primary residence or should I focus on my first rental property? I am a 25 year old from Toronto, Canada. I still live with my parents. I am currently a registered nurse working under contract. Which is the first priority?

I personally want to move out ASAP, but also my end goal is financial freedom.

Any thoughts would be greatly appreciate. 

Why not house hack? Either a MF or SF. You can also buy a SF move out after 6-12 months, rent it out then buy a personal home

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Thank you for the input. I think the only thing I dislike about house hacking is having to live with other people. Because I don’t want to live with anyone. So is it a bad idea to buy a property to live in for a short term, then use the equity built up to buy another property. Or not sell and rent the first property after building up some equity to buy the second property.

For example, purchasing a preconstruction condo or townhouse. Once it’s built in 2 years or so, I have already saved up for down payment by then and I’d just have to contribute to the mortgage and live there until enough equity is built up and reduce the mortgage interest by refinancing. once I’m ready to purchase a second property, I can rent out the first property to then move out to the second property.

Is this a bad plan?

@Alvin Gonzales "The only thing I dislike about house hacking is having to live with other people." - This is literally the easiest sacrifice you can make to get into REI. You could turn a primary residence into a cash-flowing asset in 12 months. What are you going to sacrifice to start the journey?

Your entire example of purchasing a preconstruction condo is based on appreciation. That's a terrible plan. Don't bank on appreciation. Force it by adding value or buying under market. 

House hacking would give you a huge head start on your journey. While no one wants to live with others if they don't have to, it's a small sacrifice to make in the grand scheme of things. You'll appreciate the speed at which you develop by going outside your comfort zone. MF would be ideal because you really aren't living with someone or looking for a SF with a separate entrance basement which would create the separation you desire I believe.

@Alvin Gonzales I know you said you don’t want to house hack, but in this case that is really your ideal scenario if moving out is really that important to you.

In your case I would definitely not buy a personal residence if you’re looking to start your investing journey

Toronto is super expensive. Those not familiar with the market for a single family (semi detached or row house), your starting price is well over $500K for an older home (and that is outside of Toronto). As you are living with your parents, the first question is are you paying rent?  If not, then you won't be saving any money in living expenses by buying your own home.  Start by finding out how much you can borrow from the bank.  This will give you an idea of what you can buy.

For your own home, you can do 5% down (and pay CMHC insurance). Can you buy a place that has a rental suite?  You can move into the rental suite and rent the main part of the house.

If you buy a rental, you need 20% down and because of that won't have to pay CMHC insurance.

As for purchasing and selling in 2 years, you will lose money.  The cost of purchasing (lawyers fee, property purchase tax-does ON have one, inspection) and selling (lawyers fees, realtors' fees) and moving are not trivial.  The realtor's fees alone will be substantial.  You won't build up much equity through paying your mortgage in 2 years due to how the principal and interest payments work-go to a website for a big bank in Canada and look at the principal vs interest chart for a mortgage-most of the payments go to interest at the start.