Proven Steps That Took Me from Dreaming to Home Ownership
In this blog, I actually get personal and reveal how I personally went from being in major debt, to owning an investment condo at the age of 27. It was this story that fuelled my passion for real estate and eventually led me down the path to a new career.
My goal is to inspire you and to show you how I did it. Every word of this is true, and I use this story as my strength when I find myself up against a rock in a difficult situation. The fact that I’m sitting here telling you that I own an investment condo is proof that I went from zero to a hundred because of a positive mindset. And, because of this first purchase over 10 years ago, my husband and I are well on our way to purchasing our second investment condo using the same mindset. Although the details of our circumstance are different now, the desire is the same and we’re so close to making it a reality.
Having a Wealth Mindset
Have you been thinking about homeownership but don’t have a clue where to begin? Does your goal of owning a property seem out of reach? You might be surprised to learn it isn’t as far fetched as you think. Home Ownership is a possibility for so many, it might just take a mindset re-boot and some serious goal setting.
I am a huge advocate of how most of our wealth in life comes from an abundant mindset about wealth and money. And this fact became so obvious when I decided to buy my first condo over 10 years ago.
I’ll never forget that moment sitting in front of an Agreement of Purchase and Sale at a Downtown Tim Horton’s, holding the pre-construction plans for a condo I wanted so badly.
I had $5,000 that I knew of stashed in a TFSA. Upon signing, I only needed to worry about $2,000 which I thankfully had in my checking account. So, for my first payment- 5% of the total purchase price, I knew I could make up at least $7,000 of the $13,250 that I would owe in the first 10 days after purchase.
I looked blankly at my mother who turned to me and said: “do it”.
And I did. I signed on the dotted line and bought my very first condo with no idea how I was going to come up with the remaining $32,750 that I would owe over the next 365 days.
That amount doesn’t seem high in real estate terms, but to me it was insane. I had a decent salary but was living on my own and paying rent. I also liked to shop, and should also mention that I had $21,500 worth of student debt and a maxed-out credit card (actually two).
A fire was lit under my butt that day. I knew I wanted a condo and I knew I had to make it happen. I knew this was my only chance at homeownership, and the deposit structure of a pre-construction bought me the time I needed to come up with the money in stages. But, I also knew I couldn’t default on those payments, and had to figure it out.
Get Creative with your Saving and Stay Focused
That year, I got creative. I saved any way I could. I was laser-focused on my goal— to come up with the full 15% downpayment and closing costs. I pulled the money from wherever I could, and started thinking outside the box to come up with the rest. I compromised with my parents for some of it— having to choose between help with an eventual wedding or my condo. I chose the latter because after all, I was never going to have a wedding (or so I thought!). Needless to say, we ended up having to pay for our ENTIRE wedding on our own, so I think things evened out in the end!
I chose Real Estate. I chose myself. I got smart, and creative and believe my wealth mindset drew the money to me that I needed to close the deal. And I did. And I can proudly say I did it almost entirely on my own, with that little bit of help from my parents.
My point is this. If you’ve decided you want to own a property. And, if you’ve decided you’ll stop at nothing to get it. You can. And you will.
At the start of my journey, I was in debt and had only a small amount of money that I knew of. But, my back was against a wall and I wanted the condo so bad! So much more than that pair of shoes, or that new purse. I found ways to save and found money in places I never thought about before. I took advantage of the first time home buyers plan that allows you to draw from your RRSP tax-free to purchase a home. I gave up some of the frivolous purchases. I moved back home with my parents. I did those things because they were only temporary. And in the end, I now have an investment that has now more than doubled in market value.
Needless to say, my life changed so much from the time that I purchased pre-construction, to the time that it was finished and ready for occupancy. The condo that I set out to personally live in ended up turning into an investment condo that has been tenant occupied since 2012. I accidentally became a landlord, and am so glad I did.
Get a Plan in Place. You Can Do it!
If you’re even remotely thinking to yourself, I’d like a condo but can never afford one. You can. If I could do it, you can too.
Get yourself into a “wealth” mindset. There are so many books out there to help with that. I highly recommend You Are a Badass at Making Money by Jen Sincero (p.s. this book has fundamentally changed me). Pull the reins in and watch your frivolous spending. Take advantage of monetary gifts and squirrel them away for your down payment. Meet with a financial planner or set a budget. Research all the ways that the government is now offering incentives to first time home buyers.
Today, homeownership is getting expensive and this kind of talk is all the rage in the media. But, don’t let that deter you. It might seem impossible, but there’s no time like the present. In 10 years, you’ll look back at your investment and the fact that it has now doubled, and be so glad you did it.
The first step to homeownership is deciding. Decide that you want it and that you are going to make it a reality.
You’ve decided to go for it. Here’s what you need to know:
1. Commit: Become clear on your goal. No and’s, if’s or butts. You got this. One way or another, you will own a property!
2. Decide: Do you want to purchase re-sale or Pre-Construction?
Re-sale properties will require an initial deposit to accompany your Offer (usually 3-5%), and the balance of your downpayment to follow by your closing date. In Ontario, the minimum downpayment is 5% but can be as high as 20% or more.
Pre-Construction properties will typically require an initial amount— usually between $2,000-$5,000 on signing, with the balance to 5% of the purchase price within 10 days. After that, you’ll be required to make regular deposits between your purchase date and closing. Usually increments of 5% to a maximum of 15-20% by closing.
You’ll want to take into account any costs in addition to your downpayment. A few things to highlight include:
3. Lawyers Fee: typically budget for around $1,000-$3,000, depending on complexity.
4. Land Transfer Tax: applies to the purchase of all Real Estate in Ontario. Here’s a link to a handy land transfer tax calculator.
5. HST: Applies to new construction, however you might be subject to a rebate depending on your situation.
6. Adjustments: Your Lawyer will prepare a statement of adjustments accounting for minor debits and credits pertaining to your specific transaction. This cost is relatively minor.
7. Development Charges: Can apply if you are purchasing pre-construction, but are often capped by the builder
8. Tarion Warranty: A charge can apply if you are purchasing pre-construction which can run around $1,000 in some cases.
So now that you know what’s involved you can put a plan in place and start saving! Homeownership may be closer than you think.
Obviously the Real Estate landscape has changed over the last 10 years, but that doesn’t mean homeownership is out of reach. It might just mean that you need to get even more creative or re-define what it looks like. Perhaps it’s a condo, a joint ownership venture, or stepping outside your preferred neighborhood or city. There are certainly ways to get you closer to your dream, but the first step is deciding.