The Penny Savers
They kept a student lifestyle on adult incomes, and wound up with the perfect fixer-upper
The Owners: Kevin Wallace, 29, sales manager at a start-up, and Grace McClure, 28, content marketer at a start-up
The Place: A 3-bedroom, 2-bathroom row house at Geary and Delaware North
The Price: $802,000
The Closing: December 4, 2017
Grace: In 2015, Kevin and I had both finished university and found full-time jobs, making a combined $150,000 a year, but were still accustomed to a student lifestyle—waiting for the discount night at Pizza Pizza, that sort of thing.
Kevin: We lived in a basic one-bedroom at College and Crawford. Our rent was $1,675 a month. We never upgraded to a nicer apartment or bought a car, so we ended up saving a lot.
Grace: We never thought we’d be able to afford a house. Then, in 2016, I saw a listing for a rundown place at Queen and Shaw for $499,000. We didn’t want it, but the price made us realize we could maybe do this, and we started searching for real.
Kevin: We drew up a lofty wish list: west end, garage, fireplace, not a condo, and with a basement apartment to rent out. We set a budget of $500,000 but realized that was hardly enough for a closet, so we stretched it to the low $900,000s.
Grace: Last November, we found a three-bedroom on Delaware near Dupont, listed at $699,000. It was 105 years old but in good shape, and it had a basement apartment. Luckily, the listing photos were dark and blurry, and there was no open house, so we figured it wouldn’t attract much interest. We offered $103,000 over asking and won. We dipped into our savings, and I took out $25,000 from my RRSP for the down payment. By putting 20 per cent down, we avoided CMHC loan insurance. We got a 30-year mortgage through an alternative lender, not a bank, at a rate of 2.69 per cent. We moved in this past December and started renting out the basement in February, for $1,100 a month, which makes a nice dent in our $2,600 mortgage payments. We’re paying less now per month than we did as renters.
Kevin: We’ve retiled floors, replaced cabinets and appliances, and updated the staircase. We’re doing it ourselves with the help of family, so it’s been slow, but we’re just happy to be here.
Grace: Things are still in deconstruction mode, but we’re chipping away to create the charm we wanted. We’re fine with the slow pace—we have no intention of moving for a long time.
They wanted to own a house before age 25. In six years, they’ll have fully paid off their east-end bungalow
The Owners: Steven Trieu, 26, budget analysis supervisor in the city’s finance department, and Amanda Diep, 26, program development officer with the City of Toronto
The Place: A 2-bedroom, 2-bathroom detached bungalow at Birchmount and St. Clair
The Price: $650,000
The Closing: June 24, 2016
Steven: In 2010, a year after Amanda and I met at Ryerson, we read about how difficult buying a house would be for new university graduates. We joked about how we could buck the trend and buy a house before age 25. Then it became our goal.
Amanda: Our family and friends didn’t believe we’d be able to do it, and that motivated us. We both lived with our parents, which allowed us to pay off our student loans. I worked up to 20 hours a week at the Ryerson MBA office while taking a full course load.
Steven: I worked, by turns, as a bank teller, a TA, an accounting intern and a landscaper. After we graduated in 2014, Amanda got a job with the City of Toronto, and I worked a couple of part-time jobs. We worked so much, we didn’t have time to spend. We avoided credit cards and saved half of every paycheque.
Amanda: We still had some fun. We set aside three per cent of each paycheque, and travelled to Vegas, Cuba and Cancun.
Steven: By the middle of 2015, we’d paid off all our student loans and had $175,000 saved up. We set a budget of $600,000 to $700,000 and started going to showings that summer. All told, we made seven offers but were always outbid. We must have spent more than $2,000 on home inspections alone.
Amanda: Eventually, we found a two-bedroom bungalow minutes from Warden station, completely renovated, with a large backyard and a rentable basement. The asking price was $599,000. We offered $650,000 and got it. Our 30-year mortgage means we pay a very manageable $2,000 a month at the current rate.
Steven: We moved in a month after the purchase, by which time I’d found a full-time job. We’re actually paying more than our minimum right now—between $5,000 and $6,000 monthly, so we’re on pace to have the house paid off in six years. Our family and friends don’t think we can do that either!
He chose burgers over steaks, saved his cash and managed to buy three properties over eight years
The Owner: Safras Lafeer, 27, real estate agent
The Place: A 3-bedroom, 2-bathroom semi at Danforth and Donlands
The Price: $571,000
The Closing: September 4, 2014
I’ve wanted to own a house ever since Grade 9. While I was studying finance at Ryerson, I lived at home and worked full-time hours doing tech support and sales for Rogers. My parents didn’t ask me to pay rent, but I’d still give them $300 to $500 a month. I kept other expenses low. When I would go out, I’d tell my friends I had only $5 to spend. They still tease me about that. I never did the things people typically do in their 20s: I didn’t party or own a car—though I’d always coveted a Mercedes—and I certainly didn’t go out for steak dinners. My friends and I would grab two Junior Chicken sandwiches from McDonald’s instead. I never thought of it as a sacrifice. I just thought, “This is what I want, and this is how I’m going to achieve it.”
I believe in investing my money and using debt to leverage my assets. That’s why I’ve never opened a savings account. At 19, I bought a $260,000 pre-construction condo at Don Mills and Eglinton. I was committed to putting 20 per cent down by the time it was completed four years later, which would give me time to earn the funds. I was in school for almost six years, during which I rarely had a weekend off, between work and classes. I operated on five hours of sleep and napped whenever I had the chance. By the time I graduated, I’d paid off the condo.
I was working as a salesman for Pearson, an education company, so I bought a three-bedroom semi in East York, where I grew up. I used $30,000 in cash, two credit cards and a student line of credit to cover the 10 per cent down payment. I was making good money, but I could only qualify for a 30-year mortgage through alternative financing, at 3.99 per cent. I moved into the semi in late 2014, then sold my condo for $341,000, which paid off all my debts. Then I bought a bungalow in East York—a four-bedroom for $745,000—and rented out its two units, for a total of $3,400 a month. I’m now paying off two mortgages, for the semi and the bungalow, which total $5,000 a month. My income is north of $200,000, so I can comfortably cover the payments. After so many years of sacrifice, I treated myself: I bought a Mercedes C-300.
The Good Son
He put away 10 per cent of every paycheque, limited his vacations and eventually bought a four-bedroom detached
The Owner: Scott Symington, 23, maintenance operator
The Place: A 4-bedroom, 2-bathroom detached bungalow in Oshawa
The Price: $378,000
The Closing: September 29, 2017
Near the end of high school, I read The Wealthy Barber and began putting aside 10 per cent of my earnings. I never viewed it as a sacrifice, because I had a long-term plan in mind. I would see people blow cash on unnecessary things like a second pair of shoes, just because they were nice. I never did that. I kept my spending low and rarely went on trips. My only major expenses were $750 to help fix the shingles on my parents’ roof and $2,000 for a used GMC Sierra. Mind you, I still went out to eat on occasion and even travelled to Las Vegas with my family. After high school, I continued living with my parents in Whitby while I studied to become a maintenance technician. I graduated in 2014 at 19 and got a full-time job at a water plant in Pickering. I decided that when I moved out, it would be into a place I owned rather than to help pay off someone else’s mortgage. I wasn’t in a rush, but when the market started to cool last summer, it felt like a good time to buy. I enlisted a family friend who is a real estate agent. I had more than $65,000 saved up by June 2017—enough for a decent-sized down payment and some buffer room in case finances got tight—and my budget was $400,000. I wanted something close to work, ideally in Durham where prices are lower than anything closer to Toronto. I lived in a townhouse until I was nine years old and could always hear the neighbours, so I was set on a detached. A second bathroom was another item on my list, because it increases resale value.
I looked at a few houses every week and eventually came across a four-bedroom bungalow a 25-minute drive from work. The sellers had dropped their asking price from $430,000 to $380,000, and they told me they had just bought another house, so I knew they were motivated to sell. I was approved for a 25-year mortgage at 2.54 per cent, offered $370,000 and, after a bit of negotiating, got it. I moved in last September. It was a big change from living with my parents to paying for everything, including $1,700 a month for the mortgage, but I haven’t had to renovate, so my expenses are low. I plan on staying long-term. The extra space means I can stay put if I start a family.
He gave up nights out at the bar, lived with his parents and purchased a three-bedroom with a rentable basement
The Owner: Martin Willemsma, 27, mechanical engineer
The Place: A 3-bedroom, 1-bathroom house in Brampton
The Price: $565,000
The Closing: November 27, 2017
After finishing my mechanical engineering degree in 2012, I was lucky to get a job in my field, eventually making between $70,000 and $80,000 per year. I paid my parents $500 a month to live in their Brampton basement and saved much of my salary for a down payment.
I used to go out with my friends a lot, hitting the bars downtown and dropping $8 or more per beer. But as the years wore on, my friends started staying home more often, and it became easier to save. My older sister and her husband own three detached houses across the GTA, and I figured I’d try to follow their lead. At the end of 2017, the market dipped slightly, so I made my move. Based on my savings, I was eligible for a mortgage in the $300,000 to $350,000 range, but if my dad co-signed, I could afford at least $575,000. A must-have for me was a basement apartment I could rent out.
My agent and I looked at six houses in Brampton. I really liked a three-bedroom that was only a two-minute walk from the Heart Lake Conservation Area. Because I’m a mechanical engineer, I look at the structure and bones of houses, and I could tell this one didn’t have any major problems.
I scrounged up the $38,000 down payment by combining my savings and $25,000 I got from drawing on my RRSP. I was approved for a five-year fixed term on a 25-year mortgage, which will cost me $2,700 a month. I made an offer, conditional on inspection, of $7,000 under asking, which the seller accepted.
I moved in the day after closing. After all the fees and expenses, I had about $9,000 in my account, so I have to be extra conscious about my spending. I’ve added a second bathroom, and I’m putting a few thousand into renovating the basement so I can rent it out. I’m doing the work myself on the weekends and aim to have it all done in the next month or so. After that, I should have more disposable income. I’ve taken a leap of faith that nothing bad will happen until I get the basement to a rentable state. My fingers are crossed.
The Long View
He worked three jobs, swore off lavish trips, bought a bungalow and paid it off in three years
The Owner: Sean Cooper, 33, mortgage agent
The Place: A 4-bedroom, 3-bathroom detached house at Kingston and Danforth
The Price: $425,000
The Closing: August 1, 2012
I grew up in the Beaches, and during university, I lived in my mother’s house rent-free. I had three part-time jobs while studying, so I was able to graduate debt-free in 2009 with money in the bank and start paying my mom $600 a month for rent. In 2010, I got a full-time job at a pension consulting firm downtown, and on weekends I worked at No Frills. I was busy all the time, but I viewed the sacrifice as short-term pain for long-term gain. In December 2014, for instance, I made almost $14,000 as a freelance finance writer, but the workload nearly killed me. Including my other jobs, I worked 100 hours a week and completed more than 70 assignments. I even missed my family’s holiday party. Meanwhile, I rarely ate out or bought clothes, and when I’d travel, it would be to Niagara Falls instead of somewhere exotic.
I started searching for a house after graduating. I looked for a detached house with a finished basement that I could rent out. I also wanted something close to transit. I’m not very handy, so I avoided fixer-uppers. I made a bunch of offers and lost each one, and was ready to give up when I found a place at Kingston and Danforth that had everything I wanted. The seller was holding back bids until an offer date, so I made a bully offer of $25,000 over asking, and the seller accepted. I had $170,000 saved, enough for 40 per cent down, which made my five-year mortgage very manageable. My mortgage payment is $3,400 a month. I moved into the basement and rented out the main floor, which fetches $1,600 a month in rent. I kept working long hours and took advantage of all possible prepayment privileges, and after three years, I had paid off the house. I held a mortgage-burning party. I’ve had the same tenants for three years and have only had to do minor repairs, so things have gone very smoothly. My long-term goal is to attain a net worth of $1 million by the time I’m 35 and retire early. I guess I could have had more fun if I had taken longer to pay off my mortgage, but now I can enjoy financial freedom and travel while I’m still young. This summer, I plan to travel across western Europe. My fun had to wait, but it was worth it.
He didn’t see his friends for six months while he worked two jobs. It paid off: he moves into his townhouse this fall
The Owner: Pierre Barneto, 24, HVAC technician
The Place: A 2-bedroom, 2-bathroom pre-construction townhouse in Stoney Creek
The Price: $434,900
The Closing: November 20, 2019
I was studying kinesiology at York, but I wanted to do something more hands-on, so at 19, I dropped out to study to become a heating technician. I got a job as an insertion operator working from 3 p.m. to 11 p.m., five days a week, plus the occasional six-hour shift on Saturdays, making $14 per hour. It was hard work—I’d sleep for four hours and wake up with a headache from the lack of sleep. I worked a second job, too, at a rental equipment company, and saved by living with my parents, but I wanted my own place.
There were other sacrifices. At one point, my friends went to Montreal, but I couldn’t get time off. It happened again when they planned a weekend camping trip. I went without seeing them for six months at one point, and when I did, it was for 15 minutes at a Tim Hortons, because I had to rush to my shift. Eventually, they started making plans without me. By late 2016, I had saved $55,000, so I quit one of my jobs so I could see my friends again, and I started looking for a place. I own a golden retriever, Mitzi, and wanted something pet-friendly, with at least two bedrooms and two bathrooms, in case I decide to rent the extra space. I set my budget at $440,000, and looked in Milton, Brampton and Hamilton.
This past February, I came across a three-storey pre-construction townhouse in Stoney Creek for $434,900. It met all my requirements, and there was an off-leash dog park down the road. I realized that a decent house in this market won’t wait. A buyer will always come along. So when I went to the sales office, I signed on the spot. I wanted to put down more than 20 per cent to avoid CMHC, so I cashed in my savings and borrowed from my RRSP and TFSA. Recently, I got promoted—I now make $65,000—so I’ll add another lump sum before the deal closes in 2019 to bring the down payment to $100,000. At my current rate, my 25-year mortgage comes to $2,200 a month. I’m going to continue living with my parents until then. In three years, I’ll renovate and rent out the basement. Getting here wasn’t easy, but I own a house! And now I see my friends twice a week and can keep up to date with their lives.
This story originally appeared in the July 2018 issue of Toronto Life magazine. To subscribe, for just $29.95 a year, click here.
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