Shawn Rea

From Home-Owner to House-Hacker

Part 1: The Realization

If you talk to millennials about the real-estate market, you may hear a mix of sighs and doubt when it comes to the vision of owning a home. In Canada, millennials are taking on more and more debt, increasing their borrowing by 12 percent in the last year, according to a TransUnion Canada report released in March of 2018. So, how did our client Shawn combat these stats and give him and his family an additional 10 streams of income?

Shawn purchased his first home at the age of 25 years old. It was a new-build in the Stoney Creek area which was supposed to be his long-term home as his family grew over the years. On a typical day, Shawn and his girlfriend would commute 2 hours into work and come home to a pile of bills they didn’t want to look at. When we interviewed Shawn, he recalled one specific night where he was at home watching Income Property – one of HGTV Canada’s longest-running shows that revolves around host Scott McGillivray leading buyers through the renovation of their first income property. It was at this moment that a lightbulb went off in Shawn’s head.

Why live paycheck to paycheck?
Why keep paying all these bills with a big mortgage payment on top?
Why not offset the cost of a mortgage via a multi-unit home?

All these questions plagued Shawn and so he put pen to paper and laid out his goals:

• 1 Year Goal: Sell his property and purchase something that had another unit in it and rent it out; offsetting as much of his mortgage as possible.
• 3 Year Goal: Save enough money with the extra funds he was saving to purchase a 2nd property.
• 10 Year Goal: Purchase a 3rd property a decade later with the rental income he’d be receiving from his 2nd property and live happily ever after.

Shawn pictured above with his family at their favorite location, the beach.

Part 2: Change of Plans

After realizing the benefits, Shawn sold his Stoney Creek home and used the money to purchase a side-split converted into a duplex. Shawn’s original 10-year plan began to accelerate, and he also learned some lessons along the way. He received some pushback from family who thought what he was doing was not a good idea. “I received all the negative feedback you could think of. I remember having just finished reading a book called 7 Habits of Highly Effective People by Stephen Covey where he mentioned a quote that resonated with me.”

“Your actions are LIMITED by family-model traditions”

No-one in Shawn’s family had heard of the term “house-hacking.” Essentially, house-hacking is living in a multi-unit home while renting out the additional units. The goal, as Shawn stated to us earlier is to offset your monthly mortgage payment and save up additional funds to grow your real-estate portfolio.

Shawn’s first purchase went smooth with the exception that he didn’t know much about real-estate investing. He learned quickly that although he was able to offset mortgage costs on his duplex with tenants, he didn’t consider all the additional costs incurred by them such as insurance, hydro, gas, appliance replacement and repairs.

A few years went by and his 3-year timeline had arrived. However, he wasn’t able to save enough money to buy the 2nd property he’d planned for. With a toddler and a new-born now in the picture and his wife on mat-leave, Shawn had to do something in order to accomplish what he had planned. “I did the only thing I could think of and found a second and even third job.” For the next 18 months, Shawn hustled and finally saved enough money to buy another rental. Although it had taken him 4 years as opposed to his 3-year goal, he was able to purchase a triplex that cash-flowed nicely. It put him and his family in a situation where they made enough rental income to completely offset their mortgage payment. Shawn was 5 years into his 10-year plan and had gotten a taste of the benefits of house-hacking. He decided that a change of plans was in order, and he’d pursue his 3rd investment property sooner rather than later.

Part 3: Finding the Financing

Shawn’s first two investment purchases were done through the bank. On his third one, he was told he’d need minimum 20% down. He thought his goal to obtain a third property was way out of reach as those funds simply weren’t available. During this time, he browsed the popular real-estate investing and networking website BiggerPockets. It was here that he met Jacob Perez; Mortgage Agent with Synergy Mortgage Group and a like-minded and seasoned real-estate investor. Jacob has been investing in real-estate since he was 23 years old and has been featured on Realtor.ca with his own article geared towards millennials and the house-hacking strategy.

Jacob Perez

Mortgage Agent License No. M17001743

Synergy Mortgage Group

Mortgage Financial Corp

License #10421

Office: 905 529 2521 ext 208

E-mail: Jacob@SynergyMortgageGroup.com

Within 10 months, Jacob was able to leverage the equity in Shawn’s properties and helped him double his portfolio.

“We were able to get approved for an additional property because Jacob had access to a wide variety of lenders and knew what would work for us.

With a total of 4 multi-unit properties and a value of $1.5-$2 million, Shawn and his family now have an additional 10 streams of income that didn’t exist before. “Life has changed quite a bit and we now have some sense of financial freedom. Most importantly, I’ve realized that through real-estate investing you can escape the rat race. You can choose to continue working or like several of my investor friends, you can choose to retire in your 30’s.”

It takes vision to see through the ugly and bring out the beautiful in an investment property, and it takes fortitude to live through all the mess. Shawn has now done it 4 times and hopes to be closing on his 5th property in the next quarter with a plan to expand to 15 properties within the next 5 years. His goal from 3 properties in 10 years has now changed to 15! As the zeroes on his cheques continue to grow, Shawn realizes all the hard work is clearly worth it.

Synergy Mortgage Group has a large variety of lender relationships which allow us to provide clients with options that they may not have had knowledge of or access to on their own. We’ve helped over 1000 families over the years and we hope that Shawn’s story will inspire others. Start a conversation with us today and ask us about the house-hacking strategy!