Category Archives: Home Buyer Profiles

First-Time Home Buyer Profile: Live-in Landlord

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First-Time Home Buyer ProfileThis week, a friend of RateHub, who will remain nameless, shares his unique first-time home buying experience with us. We are keeping his identity hush-hush due to the high value nature of his property and the fact he shares this property with other tenants.

Our home buyer purchased a single family home in Toronto’s Annex neighbourhood with the intention to convert the dwelling in to three units: one unit to be occupied by him and the other two by renters.

If you are looking to rent a room in a house or to be a live-in or first-time landlord, read on to get some amazing pointers from someone who’s recently gone through the motions.

Meet our home buyer

Age: Early 30s

Occupation: Self-employed

Marital status: Single

Kids: No

Home value: Paid $900,000 but worth $1.2-$1.3M after renovations and appreciation

Mortgage value: $855,000

The home buying process                                                                      

What made you decide to enter the housing market? What were you looking for?

I had a somewhat unique requirement in that I was looking not only for a place that would hold multiple units, but something I could convert myself. I enjoy working with my hands and the renovation aspect. So, I was seeking an investment property with a time investment too.

Did you have a checklist? Did you distinguish between needs and wants? Any ‘odd’ requirements?

I looked for something that would be easily divisible into units. In the basement there was already a ‘granny suite’, so I did most of the converting on the main floor and upper unit.

Tell us about finding ‘the one.’ Did you have to compromise?

I got lucky because it was a buyers’ market at the time. I only needed to look at four properties, and this one had been on the market for six months.

Did you stay within budget?

I knew going in to the purchase that I was looking for more than what I could afford to support on my own, and had a budget in mind allowing for that premium. In a buyer’s market, I was able to secure my property at a fair price.

Landlord and Tenancy

First-Time Home Buyer ProfileTell us about both the positives and negatives of landlord and tenancy.

On the positive side, it worked out well financially for me. My tenants obviously help pay off my mortgage. If I charged myself fair market rent for my own unit, I would more than cover my mortgage. My tenants are also a pleasant surprise. When I renovated the place, I knew I wanted to attract middle-aged young professionals, so I built and marketed the units as upscale rentals.

Of course, there were drawbacks to consider as well. You don’t quite realise how much work it is being a landlord, so it’s a good idea doing it on the small scale like this first. It’s basically like running a second business. There is the administration side and you also must respond to tenancy issues as they come up. Luckily, when there are maintenance issues, I enjoy handling the handiwork myself and only need to call in professionals for bigger projects.

My advice to first-time landlords is to manage your expectations and prepare for what will be required of you in terms of administration and customer service.

The hard part: financing                                                                             

Did you find the process of financing your home overwhelming? How did you learn?

Well, RateHub wasn’t around then, so I had to make due. I found a good mortgage broker and did my research. With such a large purchase, I had some bargaining power.

First-Time Home Buyer Profile

How did you source your down payment?

I used a combination of savings and the RRSP Home Buyers’ Plan.

What mortgage product did you decide on? Did you go fixed or variable?

I am highly leveraged so it made more sense to go with a fixed mortgage rate and avoid the volatility of a variable. I have fixed income with my tenants, and I wanted a fixed cost.

Notes & Advice

Fill in the blank. ‘I would rather ___________ than go through home financing again.’

What? I enjoyed home financing, especially the negotiating aspect.

[Well, that’s a RateHub first.]

Anything else you’d like to share?

Don’t buy a ‘fixer-upper’ if you aren’t prepared to fix it up!

 

First-Time Home Buyer Profile: Jeff Larcina

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Here at RateHub, we’re dedicated to providing you the best rates, tools, and calculators to make your home buying experience as painless as possible.  And sometimes, you can learn a lot from the experience of others, which is why we are introducing a series of home buyer profiles.

For our first profile, let’s meet Jeff Larcina, a single guy in the city, who through saving and investing at an early age was able to buy his first home this year at the age of twenty-four!

Meet our home buyer                                                                                     

Name: Jeff LarcinaJeff Larcina

Ages: 24

Occupation: Corporate Finance / Real Estate Consulting

Marital status: Single

Location:  The Toronto beaches neighborhood

The home buying process                                                                              

1.  What made you decide to enter the housing market? What were you looking for?

I wanted to build equity rather than pay rent, and did not like the idea of condo fees on top of a mortgage, so I decided to buy a house. I was looking for something in the downtown-ish area with good access to public transit. The Beaches and Leslieville seemed like good areas for what I was looking for.

Jeff Larcina House2.  Did you have a checklist? Did you distinguish between needs and wants? Any ‘odd’ requirements?

No formal checklist but I wanted multiple bedrooms to rent out a room or two to friends to help with the mortgage. I also wanted something with recent renovations as I did not want to be doing renovations myself.

3.  Tell us about finding ‘the one.’ Did you have to compromise?

The only thing I compromised on was that I am on a major street, as opposed to a side street. However, it was difficult, if not impossible, to find a home that met my expectations, while still being within my price range, on a side street.

4.  Did you stay within budget?

Yes.

The hard part: financing                                                                                 

5.  Did you find the process of financing your home overwhelming? How did you learn?

I did at first – it seemed like car buying.  Rates and pricing changed all the time. I kept hearing about a rate or term that someone else got that sounded great, but could never find it myself. Through coincidence, a friend referred me to his roommate who is a mortgage broker, who helped me out on the process. (James Laird at True North Mortgage, on RateHub.ca!)

6.  How did you source your down payment? What % of the home value did you put down?

Jeff Larcina Living RoomApproximately 25%.  The down payment was sourced through savings and investments.

7.  Were you aware of the $750 first-time home buyer tax credit? Did you use it?

I was not. I haven’t filed my taxes yet – maybe I should look into this.

8.  Did you use any other first-time home buyer programs or incentives?

First time homebuyers in Toronto can avoid the land transfer tax.

9.  What mortgage product did you decide on? Did you go fixed or variable?

I went with a variable rate. While I knew interest rates could only go up (from June 2010), the fixed rates at the time were significantly more expensive. I felt the differential was wide enough that, even with increases in the variable rates, I would still come out on top on the five-year term.

Cutting back…or maybe not                                                                            

Jeff Larcina Yard10.  Can you list some of the indulgences you’ve had to cut back on since taking on a mortgage?

I “should” start to cut back. But to be honest I spend just as much, if not more, compared to pre-home ownership. I’ve taken 4 big vacations in the past year. I’m starting to realize, it’s a bit excessive with a mortgage to pay.

We`d like to thank Jeff for his time and wish him the best of luck in his new Toronto beaches home.