First Home Purchase (2012)

4 Replies

Investment Info:

Single-family residence other investment in Calgary.

Purchase price: $242,000
Cash invested: $12,000

A beautiful well-appointed unit in Calgary, AB that was my first ever home purchase. I initially bought the house as a buy and hold, and have house-hacked for the last 8 years. I now have over $80,000 in equity and hope to withdraw the funds when I refinance to fund another purchase.

What made you interested in investing in this type of deal?

At 18, I knew that I didn't want to pay somebody else's mortgage. So I began working and saving for a down-payment, and looking at different property. Originally, I wanted to have the place to myself (I was hoping to purchase a small condominium). I soon realized I would be house poor, and began thinking of a larger purchase so that I could rent the additional bedrooms and cut down my personal housing expense.

How did you find this deal and how did you negotiate it?

I was obsessed with MLS at the time. I was ALWAYS looking for new properties, and after a failed bank auction purchase, I looked at this property with my realtor and we knew it was a good fit. The old owner, as it turned out, was the mother of a friend I had in middle school. The original price was $250,000 I believe and I ended up paying $242,000.

How did you finance this deal?

As it was my first home purchase, I was able to put 5% down on the property and with a good corporate job, was almost immediately approved for a mortgage at the initial rate of 3.29%. The 5% I use to put down were a combination of savings, and RESP funds my parents put away for me. I was confident I wouldn't attend college and was thankful they allowed me to put the funds towards my new home.

How did you add value to the deal?

I think my tenacity and determination back then added significant value. I was flexible, knowledgable about the market and made some very good connections.

What was the outcome?

I am almost 8 years into the investment, with about $80,000 in equity from house hacking. I learned when I re-negotiated my mortgage in 2017 that the mortgage product I chose is quite strict, and does not allow me to withdraw equity from the house at this time. The housing market is not favourable for sellers at this time, so appreciation has not occurred in quite some time. I am looking forward to a rebound in the market as I believe my renovated unit could fetch a good deal.

Lessons learned? Challenges?

I have learned so many things as a landlord! Primarily, the legal benefits involved when you occupy the residence as well as tenants. The potential problems that can arise managing tenants that rent rooms. The savings a property inspection and condominium documents can provide you with (the original property I made an offer on, ended up being rejected by my mortgage broker because of the risk involved with special assessments). And that I don't like condo boards! ;)

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

Christy Bamber (though I don't believe she lives in Calgary, AB any longer) - she was incredible and sprung for my second home inspection when my first offer failed to go through. She was patient, and she was one of the only real estate agents to take an 18 year old seriously while looking at property.

Great job on starting so young! I wish I had that discipline at 18 and would have started earlier then I did. On a side note, I am jealous you are in Italy and not dealing with all this darn snow we got 🙈 keep up the hard work!!

"I learned when I re-negotiated my mortgage in 2017 that the mortgage product I chose is quite strict, and does not allow me to withdraw equity from the house at this time."

If you don't mind, could you expand on this please? I am looking to get into my first property soon so I want to know what I should be on the look out for when it comes to the mortgage. Thanks!

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