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  • Bejan

I bought my first property at 22. Here's how.

While it may have only been 2017, it feels like forever ago. I was 21, heading into my last semester at university when a friend mentioned that he had been thinking about buying a rental property (obviously over a beer).

At the time, we were both renting rooms around campus but he had the brilliant idea of buying a rental property and having our other roommates cover all the expenses by paying us rent so that we could essentially live for free. This was a new concept to me. While I had been studying finance for four years by that point, I had no idea that this was possible.

"House hacking", he called it.

House hacking? Sounds interesting, right?

So after a couple more beers, I went home, started googling about it and reading everything I could find. Turns out, it was actually quite common. There were a number of online communities at the time that encouraged people to house hack as a way to save on their cost of housing while reaping the benefits of investing in real estate.

So what made me take the first step?

For most people, buying a home is the biggest purchase they’ll ever make. But for me, it was just the first step in my real estate journey. When I finally bought my first rental property, a small duplex in my downtown Ottawa, I had been offered a full-time finance job.

Truth is, I couldn't see myself going into work every morning to work in a cubicle and stare at an Excel screen. Just the thought of doing that for the next 40 years of my life, discouraged me from getting anything done.

Having that flame under me really pushed me to finally pull the trigger and jump into the business as an alternative to the traditional 9-5 career which I couldn't see myself in.

The process of buying my first property

So the journey was definitely not a clear process. It wasn't a straight line from start to finish. I got lost many times along the way many times. And that's perfectly normal, in fact, you probably will too as you try things, they fail and you learn.

Originally, it started with the friend that had suggested the idea. We started looking at properties around the university. Larger semis and single-family residences with many rooms. Say in a 5-bedroom house, we thought that we could each have a room and then rent out the other 3 to cover as much of our expenses as possible.

That eventually turned out to be a bad idea for a number of reasons. But the idea was stuck in my mind.

So I turned to another one of my friends who had also just graduated. We actually worked about a block away from each other and lived in the same house. Walking to and from work every day gave us a lot of time to think about the idea, discuss our options and finally find the right property. A small duplex right downtown with a one-bed, a two bed and two parking spots.

With that in mind, here are the main parts of the buying process that you will need to follow.

Finding an agent

When you're ready to buy your first house, you'll need to find a real estate agent to help you through the process. To find an agent, start by doing some research online. Look for agents who have experience working with first-time home buyers. You can also read reviews of agents in your area to get an idea of their work ethic and customer service skills.

I highly recommend finding an agent that focuses on rentals, student rentals, multi-families and commercial properties. Many agents only sell residential properties and so, they won't have the knowledge that you need to find the right property.

It's also a good idea to find an agent who deals with a high volume of transactions. They'll be more involved in the market so they have a better idea of what's going on, what's available, where the market is heading and they even have access to off-market listings!

Saving for the downpayment

Truth be told, I started unknowingly saving for that property at the age of 14 when I got my first job. My parents were always big savers and engrained that mentality into both of their children.

As a finance undergrad, I essentially gambled all that money by trading. While I would like to say that I was an excellent trader, the truth of the matter is that I was invested in marijuana stocks at a time when they were growing exponentially so it would've been quite difficult to lose money at all.

I realize that I was quite lucky with my timing so what can you do nowadays? I would strongly suggest starting to think about saving your income as soon as possible and taking on additional projects to make extra money.

Having a friend join me also meant that I only had to save half the downpayment. All-in all, we ended up buying the property at 5% and we were all in for about $17,500 each for the downpayment and all closing costs.

I would highly suggest partnering, searching for properties around $500k and financing 95% of the purchase to keep the initial investment requirements as small as possible.

Getting mortgage approved

This was actually the hardest part of the whole process but there's a couple things that I learned along the process. I would highly recommend reading our blog post about Finding Your Best Mortgage for tips and tricks to get approved for a mortgage in whatever situation you find yourself.

Tips for finding the right property

Location! Location! Location! You've heard it before but there's a reason. You'll want to find a property that is in a good location because that will ensure that the property is rarely, if ever vacant, and that the appreciation remains stable and greater than the city average.

Make sure that it is in good condition. If you've just spent most of your savings on the actual purchase, you can't afford to have unexpected costs come up. Ordering an appraisal is the easiest way to cover yourself from any issues in the future.

To find the right rental property, start by searching online and talking to your agent about your desires. Once you've found a few potential properties, schedule visits so you can see them in person. Pay attention to the condition of the property and the surrounding neighborhood.

Tips for other first-time buyers

Do your homework and know what you're getting into

Being a landlord comes with a lot of responsibilities and potential headaches, so make sure you're prepared to take those on before signing on the dotted line.

Have a solid plan in place

Know why you're buying the property, what your goals are for it, and how you'll go about achieving those goals. Having a clear plan from the start will help make the entire process much smoother.

Don't skimp on due diligence

When it comes to something as important as buying a property, you can never do too much research. Make sure you're thoroughly evaluating both the property itself and the surrounding area to ensure it's a wise investment.

Consider your options

Make sure you're weighing all your options before making a decision. Your home purchase should be thoughtfully considered, rather than just jumping at the first thing that looks good.

Be patient

Once you've found a property and are ready to make an offer, don't rush the process. As with any major purchase, you'll want to take your time and think everything over before getting carried away in the moment and making the wrong decision.

Watch out for the future

When you're buying a home, you should always look to the future. Are you planning on holding this place for a while? Are you going to live in it? What happens if you need money one day but it is all tied up in the property? Those are some questions that you should ask yourself before taking the plunge.

Save your money - that's it - save your money!

Making the investment work: being a hands-on landlord

I'll be honest, I went started, I was quite ill prepared and extremely over-confident. I thought that being a landlord would be easy because it's "passive income". The realization that there is actually a lot more involved with being a landlord than just collecting rent each month was eye-opening. Here are some valuable lessons that I learned as a first time landlord:

Always screen your tenants carefully

It is important to take the time to do a thorough background check on any potential tenant. This will help you avoid problems down the road. We encourage you to read our blog post about screening tenants for more information.

Be prepared for repairs and maintenance issues

Things will inevitably break or need repair and as the landlord, it will be your responsibility to fix them in a timely manner.

Stay on top of your bookkeeping

As a landlord, you'll be responsible for paying taxes on your rental income, as well as any expenses associated with owning and operating your rental property. Good bookkeeping will help you stay organized and keep track of your finances so that you can easily prepare and file your tax return each year.

In addition to keeping track of your income and expenses for tax purposes, good bookkeeping can also help you monitor the financial health of your rental business. By tracking your income and expenses over time, you can spot trends and identify areas where you may be able to save money.

For example, if you notice that your heating expenses are rising as the weather warms up, you may have an issue with your heating system or a tenant.

Don't ignore problems when they first arise

It's important to deal with issues as they arise when you're a real estate investor. By doing so, you can avoid potential problems down the road and keep your property in good condition. Additionally, addressing issues early on can save you money in the long run.

For example, if you notice that your attic is leaking, you may be able to take a few steps to fix it yourself and avoid the expense of hiring an electrician or plumber.

Don't let your emotions get in the way

When you're young, it's easy to let your emotions get in the way of business decisions. You may feel like you have to buy a property right now or you'll never be able to afford it. Or, you may become friends with your tenants.

It's important however to realize and understand that your rental property is a business and that your decisions will affect its ability to thrive. So think twice before you let your emotions guide your decisions.

The rewards of owning rental property

There are numerous benefits to owning rental property, especially if you get in at a young age.

For starters, there are the economic benefits. Once you build up a relatively sized portfolio, you will have the ability to control your own destiny. Secondly, rental properties can provide a steadier stream of income than other investments, such as stocks and bonds. This is because people will always need somewhere to live, regardless of economic conditions.

One of the biggest advantages of investing in real estate at a young age is that you have time on your side. The longer you own a property, the more equity you'll build up. And if you're able to rent out the property, you can generate income from it as well. Over time, these factors can help you build significant wealth through real estate investing.

Another benefit of owning rental property is that it can be a relatively hands-off investment. Once you've found and screened tenants, you can largely let them take care of the day-to-day maintenance and management of the property. And even if you do have to deal with tenants directly, it's usually not a big time commitment. In fact, most landlords can check in on the property about once every couple of weeks without having to do too much work.

Lastly, rental properties offer the potential for significant tax breaks. The government gives owners of rental property a tax break for their mortgage interest, as well as other tax breaks depending on which province you own a property in and how old it is. This can significantly reduce your taxable income and make your investment more profitable.

What I learned from the experience

If you're looking to invest in real estate, there are a few things you should know. For one, it's not always easy to find the right property. You'll need to do your research and be prepared to put in some time and effort.

You should also be prepared to get out of your comfort zone. You'll be faced with situations that you wouldn't have expected and have to make decisions rapidly.

At the end of the day, what I've learned is that if you are looking to jump into a business, real estate is probably the best one. As long as you purchase the right property, the added financial security that comes with guaranteed recurring income means that you can take risks, mess up and still catch yourself before failing.

Conclusion: would I do it again?

Absolutely! No questions asked! Yes, yes, yes!

How many different ways can I have to say it?

Investing in real estate at such a young age has given me opportunities that I never thought I would have. From financial benefits to making great new friends, I can honestly say that the journey has been a tough one but that I've loved every second of it. And it wouldn't have been possible without that first property.

It has also been a great learning experience. The knowledge that I gained from my finance degree pales in comparison to the vast amount of knowledge I accumulated from just owning and operating a business with one property.

If you still have questions, please don't hesitate to contact us directly and we will be more than happy to answer any of your questions.

If you're interested in investing in real estate but want to do it the easy way and earn higher returns by investing with us, let us explain how ReDeal can help you reach your financial goals by investing on autopilot.


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