Room Rental House Hacking in Canada with Maria:
In this final episode of the season, we will be discussing house hacking Canada with Maria. She and her husband tackled a roommate style house hacking opportunity in Alberta, Canada.
Maria is a financial blogger at Handful of Thoughts who shares her journey and stories about being a mom while pursuing financial independence. Her house hack story begins in
Canada, where Maria and her soon to be husband move into a three-bedroom home.
During the process of moving in, Maria contacts a younger sister and a friend about potentially renting out the extra two bedrooms in the house.
Before she knew it, Maria’s mortgage net cost was less than half of what it would’ve been without roommates. By combining a roommate style house hack with an accelerated mortgage option, Maria was able to completely pay off her house in just 5 years.
Let’s find out more about this successful house hack!
The Idea Of House Hacking
Maria was first introduced to the concept of house hacking while at University. She and several
friends were renting rooms from one friend’s parents. She quickly saw the appreciation opportunity of real estate, especially while someone else was paying off the mortgage.
Although the term house hacking hadn’t been coined yet, that is what Maria and her husband were able to accomplish.
Buying A House
A few years later, in 2009, she and her fiancé bought a house to call home. At the onset, they had no intention of house hacking. In fact, they increased their monthly housing costs from $800 to $1,700. At the time, they just thought of buying a bigger living space as a part of growing up.
The couple did not know too much about personal finance at the time, so doubling their housing cost didn’t seem like a big deal. Since the bank had approved them to buy a $500,000 home, they thought they were on the right track by keeping their purchase under $400,000.
But many offered advice that they should buy a bigger home. Plus, they got strange reactions when they decided to accelerate their mortgage payments. But Maria was less comfortable with debt than her husband, so they worked together to pay off the house early as a compromise.
Although house hacking wasn’t intentionally on their radar, two tenants fell into their laps. Maria’s sister and a friend needed a place to rent at the time. So Maria and her husband offered to rent out their spare bedrooms to these friends and family members that needed a place to live. The spare bedrooms were rented out quickly after they took possession of the property.
The house had an upstairs bedroom and bathroom which Maria and her husband lived in. The two tenants took over the downstairs bedrooms and bathroom.
Each of the tenants paid $500 for their room. They did not have to sign a formal lease and simply paid with cash or e-transfer.
Throughout the ten years that Maria and her husband lived in the property, they had several roommates throughout the years. They never sought out roommates, but when friends or family needed a place to live, they offered up one of the spare bedrooms.
The couple bought a three-bedroom home for $375,500. It was 1,050 square ft with one-bathroom upstairs and one-bathroom downstairs. In the Canadian market at the time, the house was somewhat of a starter home. But it was turnkey, so they didn’t need to spend any money on renovations.
They were able to put down 13%. With that, they had to pay the Canadian equivalent of PMI on their mortgage. The total monthly cost of their mortgage was $1,700 on a regular payment plan. However, they decided to choose an accelerated biweekly option which required that they pay $1,056 every two weeks.
With help from their tenants, Maria and her husband were able to pay off their home in 5 years. They used a variety of hacks to make this a reality such as RRSP hacking, career hacking, and of course — house hacking.
Eventually, the couple decided that the home was no longer functional for them. They decided to buy a new home that would comfortably fit their young daughter and in-laws. When they moved, they turned their first home into a rental because the market was soft. In the future, they plan to sell the market when they can get the right price.
In their new home, they have an in-law suite downstairs. In the future, Maria hopes to rent this out to a tenant to continue their house hacking adventure with a long-term tenant. But for now, her in-laws use the space when they come to visit.
Looking back, she recognizes that house hacking with friends was a great opportunity. The couple was able to pay off their house quickly and enjoy the company of friends. It was also a good chance to learn about how to manage tenants effectively. Since then, the couple has grown a rental real estate portfolio that they self-manage. The early days of house hacking helped them become more comfortable with being a landlord.
Although Maria wishes they had pursued filling their spare bedrooms more diligently, she is very happy with what she accomplished.
The Famous Six
Here’s what Maria has to share:
What is your favorite blog, book, or podcast personal finance?
Your Money or Your Life by Vicki Robin
What’s your favorite real estate related blog, book, or podcast?
The Little Book of Real Estate Investing in Canada by Don Campbell
What is your favorite travel destination so far?
South Africa and Zimbabwe. Find out more about their travel hacking adventures on Handful of Thoughts.
What’s next on your travel or vacation list?
TBD. They have a long list.
What’s the biggest bucket list item that you haven’t accomplished yet?
What is your favorite life hack?
Using the Reminders app on her phone. She works full-time, manages properties, and is a mom so she has a lot going on.
How to Connect
You can connect on her blog, Handful of Thoughts. Or follow her on Instagram and Twitter
- How We Paid Off Our Mortgage in Less than 5 years – Handful of Thoughts
- The Little Book of Real Estate Investing in Canada by Don Campbell
- Your Money or Your Life by Vicki Robin
You Can Listen On:
More Room Rental House Hacks:
Room Rental House Hacking in NYC with the Millers on Fire – https://fibyrei.com/room-rental-house-hacking-in-nyc-with-the-millers-on-fire/
Room Rental House Hacking with Adam – https://fibyrei.com/room-rental-house-hacking-with-adam/
Be sure to check out our Ultimate Guide to House Hacking for a great overview of the different styles of house hacking and different types of tenant bases.
Check out the home page for “The House Hacking Podcast” here.