How These Siblings Saved Up For A $355K Edmonton Investment Property

Welcome to How I Bought It, where, each month, one Canadian shares how exactly they managed to buy their home. Our goal is to demystify the path to home ownership by talking openly about the challenges — and often the privileges — in getting there.

Location: Central Edmonton
The home: A 1953 two-storey home with 4 bedrooms and 2 bathrooms and a rental suite in the basement
When I bought it: June 2020
What I spent: $355,000
Downpayment: $39,000 split equally between my older brother (he’s 32) and me
Monthly mortgage payment: $1,530 split 50/50 between my brother and me 
Monthly property taxes: $330
Land transfer and lawyer fees: $0. We used a family friend as a lawyer and Alberta is one of two provinces without a land transfer tax.

How I bought it: Neither my brother nor I specifically saved for buying a house. The biggest thing for us was, when we each turned 18, our parents created an RRSP for us, and we’ve both been pretty consistent in contributing to that. The amount has changed throughout my life, but I currently put in $400 a month. Both of us have also worked for companies that had pension matching. These weren’t locked in, meaning you don’t have to wait until retirement to withdraw them, so when we left those companies, we were able to put them into our personal RRSPs, which bumped them up a lot. To help with the downpayment, we both cashed in just under $20,000 of our RRSP. In addition to this, we both took out a line of credit ($20,000) to supplement some of the additional cost and renos. The biggest thing for us was using the First-Time Homebuyer’s Tax Credit, which allowed us to claim a $5,000 non-refundable tax credit.

Both my brother and I attended university out of province and country; him in the U.S. and myself in Montreal. Our parents subsidized our living expenses while away and paid half of our tuition, which left both of us with about $20,000 in student loan debt (my brother was also subsidized by a sports scholarship). He was in student living, which was covered by his scholarship, whereas I was in small bachelor apartments throughout my four-year degree for around $650 a month. When we graduated, we both came back to Edmonton and lived at home. He stayed at home for about a year, and I lived at home for three years rent free. When we moved out, we both rented apartments that were owned by our parents. My dad — in addition to his job as a realtor — buys and rents apartments as investment properties. Essentially they cut us both a deal where we could pay $600/month plus utilities if we lived in one of their buildings. 

Why I bought it: It's funny because when it came to homeownership, I used to say, "I never want to own a lawnmower," meaning I never wanted to own property that required mowing the lawn. But then COVID happened. I was living in a small apartment and my brother was living in a small place of his own, and we really wanted to be out of there and have in-house laundry. We bought the house together as a future investment property for the both of us, because neither of us was comfortable buying a house on our own.

My brother is more of a silent partner. He’s allowed me to make choices on everything we've done with the house. He contributes half of what needs to be done and helps around the house. So we never drew up any formal arrangement. At some point we may, but for right now we’re just having conversations among the family. We both lived in the house while we renovated it, and I’m now looking to move out and move in with my partner. So now we're having these discussions of: Should my brother stay in the house by himself (and pay mortgage and utilities on his own)? Can he afford that? Should we be renting out the house completely? Should we sell the house?

We're trying to do everything we can to avoid selling the house. We know at some point we may inherit some properties from our parents and having this house gives us a trial run of how we work with each other. But if that's a failure, or if my brother wants to purchase a house of his own, then we would sell the house to free up capital.   

How the deal went down: We started looking for houses during the early months of the pandemic. When we first started looking, our max budget was $425,000 (the bank said we could look up to $700,000 with our combined financial portfolios, but both my brother and I were like… absolutely not), and we were looking for a place that was move-in ready. We really wanted to be close to the River Valley because we grew up in that neighbourhood. I was looking on Realtor.ca to see what houses came on, and anything that matched our criteria in neighbourhood, price, and having a good vibe, we would go see. Having my dad as our realtor was great; if something popped up we could message him and he could get us in after hours. 

We looked at about 15 houses and eventually got outbid on two houses we put offers in on. At first, there was a lot of uncertainty because of COVID. There were also a ton of listings. But then all of a sudden, when we started putting actual offers in, houses were all going for over-asking. We were completely defeated. We’d pretty much given up on buying a house, then one day my dad was out for a morning run in the neighbourhood where we were looking, and saw a house with a “For Sale By Owner” sign on the lawn. He went up to the front door and knocked, and it just so happened that the grandson who was selling the house was there. So he got to see it right away. Then he messaged my brother and said, You guys should take a look at this house. I think it would be a good opportunity. The house was listed around $360,000, which was way under our budget, but it had good bones. My dad ran past it on Wednesday morning, we saw it Wednesday night, and had the papers signed and accepted that night. We initially offered $350,000 and settled on $355,000. 

The house was definitely a fixer-upper, but had huge potential with the layout. It was built in 1953 by a brick mason. He was extremely talented, as we found out when we uncovered the amazing brick chimney in the kitchen. Although we purchased the home in June 2020, we didn't take possession of it until that September. (The house was part of an estate, so the seller had to wait until the will was wrapped up before closing.) This allowed us the better plan for renovations and to face the realities of home ownership (a.k.a being broke!). 

Once we got keys to the house, we started the official renovation process, 80% of which was done by contractors and 20% by ourselves. This included putting in a new kitchen and removing the wall between the kitchen and dining room. We’ve also fully renovated (completely gutted) the two bathrooms. We got new windows and completely redid the flooring throughout. We’ve done about $55,000 in renos, which still keeps us under our initial budget of $425,000. 

What I wish I’d known before I bought: How much money non-mortgage expenses are! I use a spreadsheet to track our monthly expenses — power, natural gas, insurance, internet, property taxes, and mortgage. Between all of this, we end up spending between $2,056 and $2,538 a month (split between the two of us). Who knew natural gas was so expensive? Anytime a friend starts looking at a house, I send them my spreadsheet, because it gives a lot more insight than plopping your mortgage and downpayment into a mortgage calculator.

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