Imagine buying a house, renovating it, and splitting it into three units. You live in one, rent out the others, and suddenly, you’re living pretty much rent-free.
Sounds like a dream, right? For many, the biggest challenge has always been coming up with the capital to pull this off.
But we think house hacking is about to make a serious comeback, all thanks to a new government-backed program where CMHC will finance almost the entire project.
In this blog post, we’ll break down why house hacking is likely to see a revival and how the CMHC’s new initiative will help make it more accessible.
What Is House Hacking?
House hacking is the concept of purchasing a property, living in a portion of it, and renting out the rest to offset your mortgage or living expenses. On paper, it makes perfect sense—you get a place to live and passive income.
However, the upfront costs have always been the biggest hurdle, especially for first-time investors. Not only do you need the down payment, but you also have to pay for renovations to make the property tenant-ready.
CMHC’s New Program: A Game-Changer
The good news is that things are changing. Starting in January 2025, CMHC will offer an insured mortgage that covers up to 90% of the finished home’s value, including renovation costs. This is a big deal for house hackers because it significantly reduces the amount of upfront capital required.
Key Details of the Program
- The finished home must be valued at under $2 million.
- Short-term rentals (like Airbnb) are not allowed.
- The program kicks off on January 15, 2025.
- It’s not just for house hackers—you can also qualify if a family member will live in the property, which adds some BRRRR-like potential.
Example:
Traditionally, if you wanted to buy a $900K house in Toronto and put in $150K to split it into three units, you’d need about $240K upfront (down payment and renovation costs).
With the new program, you’d only need $110K upfront—less than half! This opens up the possibility for so many more people to get into house hacking.
The Bigger Picture: Government Pushing for “Missing Middle” Density
It’s clear that the government is keen to promote what’s called “missing middle” density. By encouraging more multiplexes and rental units, they hope to address the rising cost of rent.
However, while this initiative will create more rental options, it’s unlikely to make homeownership more affordable in the traditional sense. In fact, we’ll probably see property values rise due to the enhanced quality and size of homes.
How Will This Affect the Toronto Freehold Market?
This new push toward smaller multiplexes could seriously shake up the freehold market in Toronto.
Single-family homes are going to become even more attractive, especially since they offer better cash flow potential and opportunities for value-add renovations. With only so many single-family homes available, demand is likely to rise—and so will prices.
For those looking to invest, it’s a great time to consider house hacking as a strategy. With lower upfront costs and a strong likelihood of price appreciation, now is a great window of opportunity.
How We Can Help
If you’re interested in house hacking and how this new CMHC-backed mortgage can make it easier, or if you’re looking for the best properties in Toronto to make it happen, we’re here to help.
Our real estate sales brokerage specializes in multifamily properties, whether you’re looking for a ready-to-go multiplex or want to convert a single-family home.
Here’s what it’s like to start as a client with us:
- Initial Consultation: We’ll talk with you to understand your needs and teach you how to invest wisely in Toronto real estate.
- Market Search: We’ll search the market to find the perfect property for you.
- Renovation Support: If the property needs renovations, our trusted contractors are ready to help, and we’ll support you through the whole process.
- Leasing and Management: If you need help renting out and managing your property, our leasing and management team is here for you.
Ready to get started? Click on the link below, and let’s start working together!
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