Downpayment on a nest (egg) - MoneySense

Downpayment on a nest (egg)

My husband and I bought another home. The first in a series of acquisitions we plan to make as part of our retirement fund.




I bought another house.

Actually, my husband and I purchased a cute little bungalow outside of the downtown core —where our first home is located. And we’re not selling the original home.

Instead, we are becoming full-fledged ancillary landlords.

Despite all the tales of hard-won landlord lessons, my husband and I have chosen to use property management as part of our retirement plan. The plan: own several rental properties in various cities across Canada.

Now, before you bombard me with landlord horror stories, I just want to say we’ve already witnessed a few of our own: 14-hour shifts (with the generous help of family) preparing a rental unit for the next tenant; mice in the crawlspace; tenants unwittingly bringing bedbugs with them. (We exterminated on the spot! But we also spent hours helping our tenant to follow every protocol for getting rid of the pesky vermin. It’s been more than 12 months and not a bug in sight. Thank heavens.) I’m sure it will only get better!

But my husband and I made a conscious decision to use real estate as part of our wealth accumulation strategy. Not because it’s easy money. Not because we’re lazy. (Ask any landlord: it’s a lot of hard work.)  And not because of an aversion to the stock market: we also have RRSPs (and now I understand how to calculate a P/E ratio!).

We’re using real estate as part of our plan because we’re modest-income earners and strategic leveraging is one of the least complicated ways for people like us to grow our net worth.

It helps that my husband is a commercial and residential contractor. It helps that I’ve taken my real estate licensing course work. It also helps that we’re both willing to put in more than a few weekends to help secure a more stable retirement fund.

So we bought another house, or should I say we recently put a downpayment on our future. The hope is that in 10 to 15 years, after our tenants have helped to build the equity in those homes, we will have a nice nest egg. Along the way, we’ll have to deal with broken appliances, mysterious leaks, and a host of other problems. But we’re not in it for easy money. We’re in it for the long-term benefit.

At least that’s the plan.

In response to Rakesh’s comment:

My aim was to try and provide insight into our decision to invest in real estate. I am not a realtor — but I did take the courses to develop a better understanding of the market. For me it’s the equivalent of taking an accounting course to learn how to read the  financial statements of companies I’d like to invest in.

That said, I’d be happy to share a bit more:

We waited two years to purchase our first home. My husband Mark was more than ready to implement the plan, but we both wanted to save money. We needed both a downpayment and money for renovations (we buy homes that require work).

Last year we completed the renovations and paid off that debt.

This year we purchased this second home. We hope to repeat the process over the next 10 years. Each time we investigate the city, the specific neighbourhood, the potential tenants and the long-term prospects for the area. We also rely on experts: a mortgage broker that knows the investment process (this is key), a real estate agent that understands we are knowledgeable clients with a set criteria list and a need to see dozens and dozens of homes. Our realtor is also clear about our ground rules: no bidding wars, we require fast viewings and, when we find a place, we’ll start the offer process that day. To do this we make sure to have all our mortgage paper work ready and the complete pre-approval — which uses our specific metrics, not just estimates — complete and ready to go.

To give you an idea of what I mean. We spent four years researching the area where we bought our second home; actually we seriously considered another bungalow just a few doors down but, at that time, wanted to gather a bit more knowledge and firm up our long term plan. However, because we knew the area well, and had a realtor who was ready to move quickly, we were the first to view the bungalow — and the last. My husband thoroughly examined it on Friday. I saw it Saturday morning (as my husband did the last of his inspection) and we made an offer that afternoon. From what we’re told by our realtor the buyer and listing agent have turned down more than a dozen requests to see the home since our offer was accepted.

Our plan is not complicated: each time we put 5% to 10% down. We let our tenants pay off the mortgage. We claim the interest as a tax deduction. We earn our equity. In between there’s a lot of hard work. Many weekends are spent on maintenance and upkeep. But we’re hard workers and patient investors. And in 20 years we hope to hold a sizeable portfolio of investment products.

This plan is not solely based on my real estate knowledge or Mark’s construction knowledge. There are people that are successful at real estate investing that have neither expertise nor licensing (for an example, check out: But they are willing to learn about how to invest in real estate and they hire experts in the areas where they are not.

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