Investor · Canada · Member since 2025 · 6 posts · 1 vote
Hey guys, I'm a 19 year old trying to get into the real estate game in Edmonton Alberta, Canada. I'm looking for as much help/tips as possible to start, currently work in the trades and am saving up lots to put down on a house hack. One thing I'm worried about is in the Edmonton market, all most all properties I underwrite are negative cash flow, even when I underwrite it with all units occupied let alone me living in one.
Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
1y
Here's how I would do it:
1. Get a list of expired listings or listings that have been on the market for a long time. 2. Send letters offering them top dollar, no commissions, no closing costs, in exchange for a lease purchase. 3. Disqualify everyone who wants a down payment and screen the rest by how much they want per month. What you're looking for are the sellers who will finance 100% of your purchase at 0% interest. 4. Live in one room and rent the others.
Investor · Canada · Member since 2025 · 6 posts · 1 vote
1y
@Doug P. hey thanks for the feedback, the only questions I would have is would the property owner be my bank basically? What's in it for them in this case? And I'm guessing this strategy takes away my equity in the property or actually no because I'm paying them the principal? Thanks Doug!
@Stevo Sun so is your advice to wait it out and save up lots of cash for down payment in the future?
That's what I'm doing currently. Just continuous watch the market and run your numbers. Be patient, at some point something will come up that will make sense. One of the properties that has the best cashflow was during the COVID craziness. Bought it over asking, no conditions. The math worked and to date it has been the best cashflow property I have.
Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
1y
@Kenneth Taylor The seller isn't lending you money the way a bank does, but they are extending credit to you. I like to keep the whole concept very simple so I don't even bring up interest to the seller. Think of it this way: Instead of paying one lump sum you're making payments over time. That's it, just as simple as that.
Those things I mentioned are what's in it for the seller: #1 Price. #2 Huge cost savings (no commissions or closing costs). #3 No landlord management headaches but #4 Still getting income.
Continuing to use that listing as an example. I wouldn't pay more than $300k cash for that house at current interest rates. But I'll buy that $470k option if they let me pay in monthly installments. As long as $470k is around market value I'd be OK with that.
A question you should be asking is what happens if the bottom falls out of the market and the house drops to $350k? Well, you don't have to exercise your option, and you haven't put any money down so there's nothing to lose besides having to find a cheaper house to move to and do it all over again. You would have been living rent-free and hopefully investing all of those savings into the stock market anyway so you're way ahead financially.
On the flip side if the market stays stable or appreciates then you can decide if you want to go ahead and cash the seller out, put your savings into the property and have a much smaller mortgage than if you bought it conventionally today.
That's one of the nice things about Options. They're unilateral. They bind the seller to sell but don't bind the buyer to buy. So that gives you a lot of flexibility.
Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
1y
@Nicholas L.For the example property I'm using, let's say OP gets a 5 year option, the seller would need at least $96k equity ($1,600/month x 60 months). So anything from $96k up to free and clear would be fine. Less than that and OP would have to decide if he's willing to do the deal without getting 100% principal paydown.
If the seller has significantly less equity than that you can still do this but you have to decide if taking over their existing payment is worth it for you. If you believe it is then you can set your lease payment to be equal to their mortgage payment and the option price to the balance of their mortgage at the time of exercise. Set up like that a Lease Option is functionally similar to buying sub2 without the risk of triggering the due on sale clause.
Investor · Canada · Member since 2025 · 6 posts · 1 vote
1y
@Doug P. wow that's a lot of good information, I'm gonna go ahead and dive deeper into learning about all that! Thanks, and one last thing, would the buyer (in this case me) have ownership in this property or no? Or would I get ownership once agreed purchase price is fully payed off?
Investor · Kitchener-Waterloo, Ontario · Member since 2008 · 1k+ posts · 1k+ votes
1y
@Kenneth Taylor With a lease option you would only own it once you exercise your option.
If you want to own the property immediately you can accomplish essentially the same thing with a vendor takeback mortgage. The seller transfers the deed to you in a conventional sale but instead of you going to a bank for financing the seller holds the mortgage.
Investor · Canada · Member since 2025 · 6 posts · 1 vote
1y
@Doug P. ohh ok, makes sense. And let's say for example, the seller doesn't like the principal only payments and will only agree to self if there's interest, what are my options? Move on to the next property?
@Doug P. ohh ok, makes sense. And let's say for example, the seller doesn't like the principal only payments and will only agree to self if there's interest, what are my options? Move on to the next property?
Everything is negotiable. If you want you could agree to pay interest in exchange for a lower price, or a longer duration, or anything else you might want. When you're putting a deal together directly with a seller and not boxed in by the policies and practices of realtors and lenders there's virtually no limit to how creative you can get.
And for you personally in this particular situation as a house hack it's not purely an investment. You might decide to compromise on down payment, monthly payment, interest rate, or price because a property works for you as a home, where you wouldn't if it was just an investment.
At 19 it might be hard depending how long you've been working. Start by talking to a bank and know what all of the costs are. If you live there, you can get a lower down payment, but that means a larger mortgage and higher payments. I can't remember if they still have it, but the federal government used to have a plan where they would give first time home buyers so much money (eg 10%). When the house sells years down the road, you have to pay that money back.
Edmonton (and Calgary) markets are closely tied to the price of oil. I know the prices went down a few (10??) years ago and it took years to recover. Doesn't happen for all of the cities/towns in Alberta.
Seller financing may work, but if you go that route defining get your lawyer (not the seller's) to make sure that document is solid. I'd stick with a bank or credit union.
Investor · Canada · Member since 2025 · 6 posts · 1 vote
1y
@Theresa Harris hey Theresa thanks for getting back to me, yes I would only put 10% down here if I lived in one unit for 12 months I believe. But rents here are not quite caught up to the crazy high housing prices. So I might wait and get some more cash saved up for later investments in the future. What do you think?
@Theresa Harris hey Theresa thanks for getting back to me, yes I would only put 10% down here if I lived in one unit for 12 months I believe. But rents here are not quite caught up to the crazy high housing prices. So I might wait and get some more cash saved up for later investments in the future. What do you think?
I think that is a smart move. With CMHC mortgage insurance (which you have to have if you put less than 20% down), it can add up. Take time to determine where you want to live and if the right place pops up, be ready to move on it. You can often get a better deal in the winter (though you have no idea what the yard looks like if there is snow on the ground). Right now it is a seller's market (as least where I am in Lethbridge) and houses under $400K are selling fast, some with multiple offers at or above list price.
Realtor · Calgary, Alberta · Member since 2018 · 291 posts · 132 votes
1y
I also started investing at 19 as well, so I know exactly how exciting (and overwhelming) it can feel starting out. I’m now an investor-focused realtor in Calgary and work with new and seasoned investors every day. Happy to hop on a quick chat if you want to go over strategies or run through numbers together.