Mike and Jess (names changed to protect privacy), a young professional couple, were renting a 2-bedroom condo in downtown Toronto for $3,000 per month.
With $200,000 in savings and a strong combined annual salary of $200,000, they reached out to us to figure out if buying a house in Toronto was still within their budget.
Even though Mike and Jess liked the benefit of long-term property appreciation, they didn’t want it at the cost of much higher monthly expenses of homeownership, especially given the higher interest rates at the time.
Another tidbit? They were okay with taking on renovations while renting a bit longer, as long as it fit their budget.
The Investment
After thinking it through, Mike and Jess decided to go for house hacking by buying a semi-detached home in East York and financing the purchase with a lower payment through the residential insured mortgage program.
By renting out part of their home, they can reduce their monthly home costs while also increasing the property’s value. This smart move lets them save on expenses while setting themselves up for future gains.
Here's a breakdown of the investment and monthly financials:
We’ve run the numbers based on a 10% downpayment.
Mike and Jess plan to live in the top floor 2-bedroom unit and rent out the main floor and basement 1-bedroom units, which will help them cover their costs and start building equity.
Numbers below are based on our best estimates. Feel free to change the numbers around to see how they impact investment returns.
Goals Achieved With The Toronto House Hack
Mike and Jess never knew that homeownership could be this achievable. Thanks to the residential insured mortgage program, they were able to make their dream a reality by house hacking.
By renting out part of their home, Mike and Jess have significantly reduced their monthly expenses. Plus, a portion of that cash flow is going toward paying down their mortgage (like a forced savings account!). The cherry on top is that they’re also benefiting from the home’s appreciation over time.
It’s a smart move that opens up more opportunities for investing and getting closer to financial freedom sooner.