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How to Buy Real Estate With No Money

Started From the Bottom, Now We’re Here!

Long before I became a real estate broker, I was a real estate investor. Now, when I say that, it cracks me up just a little! Why does it make me laugh? Well, because I literally had not one dollar to my name when I purchased my first Toronto condominium. Not one dollar. And, I swear, this is not a joke. When it comes to home-ownership for first-time buyers, it’s a big step. But, you’ve got to start somewhere, right?

5 Steps to Toronto Condo Home-Ownership

I thought I would roll back the clocks and share my first journey to home-ownership and the steps I took to pull it all off. It was a master plan and it worked! Here are my five crazy steps to Toronto condo home-ownership, without a dollar to my name…

1. Borrowing Money When You Don’t Need It (Yet)

At the time, I did not have any equity (meaning, zero cash or savings). But, I did have a good credit score and a job that paid an average salary. So, I applied for an open line of credit. Easy peasy. Now, it’s important to always ask for credit before you actually need credit. Remember this! It is an excellent piece of advice that you do not learn in school. Did I use this credit line to buy fancy designer bags or order bottle service at the clubs? Heck no. I just let it sit there for a rainy day (well, I might have dabbled in it from time to time, but nothing crazy).

Trust me when I tell you, my line of credit (approximately $30K) saved my real estate butt. At this stage in the process, I had a good credit score, an average paying job, and a big line of credit (relative to my income). That’s all I had. No expert advisor, goal, or anything, really. Just some savvy instincts and a desire for more!

2. Pre-Construction Condos Were a Revelation

For some reason, I made the decision that I needed to own real estate. Renting seemed to be the biggest waste of money. Like, a money pit. The idea that I was paying off someone else’s mortgage by leasing made absolutely no sense to me whatsoever. I felt like I was working for no reason. And, working to pay rent isn’t my style!

Now, no one told me to buy real estate. In fact, the media made it seem like the worst decision in the world. But, I wanted to prevail. The big problem? I didn’t have the cash for a downpayment on a condo. Like, not even 5% down. I asked myself, who has that kind of money? At the time, I didn’t have friends working in real estate. I had never talked to a financial advisor. And, I knew absolutely nothing about pre-construction condos. We’re talking big-time rookie here.

This is where my story gets a little blurry because I cannot remember how I found myself walking into the Sales Centre for Tridel’s new building, The Verve (going up at Wellesley and Sherbourne). An amazing Sale Representative took me through the project, floorplans, timelines and deposit structure. I was completely mesmerized. My mind was trying to make sense of it all. It sounded like I could buy a condo that would be built in four years’ time by putting instalments of 5% down, spread out over time? What! This was better than a timeshare in Florida. So, after 48-hours of deliberation, I took the plunge into home-ownership. I signed for my first condo without a dollar to my name.

3. What, You Can Back Out? What a Blessing!

Did you know? When you purchase a pre-construction condo, the Ontario Condominium Act protects you with a 10-day rescission period. This means, pre-construction buyers have 10 days to change their mind, review the sales contract with a real estate lawyer, get a mortgage pre-approval and sort out finances. If you’re not comfortable moving forward, you can cancel the sales contract. Yes, you’re off the hook entirely. I didn’t know that at the time.

Me? I did not do any of that. No one explained this to me and if they did, it went in one ear and out the other. Needless to say, I was out there buying a condo with no money. I had not reviewed the sales contract with a real estate professional or lawyer in any shape, way or form. So, I continued to dive right in and transferred the first deposit from my credit line to my chequing account. Then, I wrote the first cheque for my condo instalment. I think it was around $17,000 or so. I had no time to hesitate or find a reason to back out because I literally didn’t know what I was doing!  So, there I was. $17,000 in the hole with a commitment to buying a condo with my eyes wide shut!

4. Creating a Full-Blown Master Home-Ownership Savings Plan

I love pre-construction condos. It puts you on a forced savings plan. And, it’s amazing how you’ll find the money when you need to. And, that’s exactly what I did. I made a commitment to several drastic decisions, which shaped my entire savings plan, by:

Moving into a smaller rental condo to save about $400 per month;
Committing to two-years straight of not going out for dinners (I’m not kidding, I just didn’t go out, like ever); Purchasing two skirts, three blouses, two pairs of pants and two sets of heels for work, without buying an additional outfit for 12 months straight (I changed my hair, accessories and lipstick colour to shake it up…those shoes did not smell great at the end of the year, trust me);

Teaching 16 fitness classes per week (over and above my full-time job), on top of saying yes to every substitute classes I could (a win-win in my mind being able to stay fit and save for real estate, yes!);
Putting half of each pay cheque towards paying off my credit line (never once did I waiver on this plan); and Freelancing as a makeup artist at any gig that came my way (pulling from my early twenties working at MAC Cosmetics…contouring and highlighting weren’t a thing back then, so it was much easier).

What was I doing? I was paying down my credit line as much as possible and as fast as possible to afford my next condo instalment! In my mind, this was as absolutely brilliant plan. Was this responsible? Probably not. But I was driven to make it work by borrowing from myself and paying myself back in chunks, YES!

5. Closing on a Condominium – I had no Idea

After three years of working, teaching, eating-in and wearing many repeat outfits – I had finally done it. I paid the full 20% down payment! And, on top of this, I got a promotion at my full-time job, which took a bit of the edge off. Truly, I deserved a breather at this point, right? My mortgage commitment and interest rate were locked in. I felt like a freakin’ superstar! I was days away from closing and gosh, I felt really damn proud.

So, there I was at work, beaming with excitement (and an immediate action plan to eat out for dinner). My real estate lawyer calls to review the details of my closing and make arrangements to sign the final documents. I’m told to bring a government issued photo ID, blank cheque for condo fees and certified cheque for $16,000 to cover builder closing costs. Excuse me I ask? I don’t understand. According to my sales contract, there were builder closing costs. OMG. WTF. I called everyone I know – there had to be a mistake! I had no idea there would be additional fees owing at close.

What did I do next? I start bawling. I was mentally and physically exhausted, and emotionally distraught. After three hours of outbursts, full-body shakes and anxiety, I sucked it up again. I transferred another $16,000 from my credit line to my chequing account, and arranged a bank draft for the final amount due on closing. Talk about a punch to the stomach! It wasn’t the celebratory experience I imagined. But I got it done. I had purchased my first condo with only $16K to pay back to myself. Now, ask me what I sold this condo for three years later and I’ll tell you, I finally had the chance to celebrate!

The Real Deal on Home-Ownership

There you have it! The five crazy steps I took as a first-time buyer of Toronto real estate. Was it worth it? Heck yes. Would I do it again? Most definitely.

Had I not taken these drastic measures to get my foot in the door, I’m not sure where I would be today. It’s that first property that is so hard to acquire. And, with today’s prices, it’s even harder than it was for me.  I get it. I really do. But, you need that first property to be build equity. And, with equity, you have the ability to leverage. Once you have leverage, you can diversify. There is freedom in this concept despite the upfront sacrifices. Don’t you think a few nights in and some over-worn shoes are worth it? I really think they are. And, so are you!

I’m Cheering for You From the Sidelines!

If you’re feeling inspired by this story and want to learn more about home-ownership or buying a pre-construction condo, ask Fox Marin. Or, start by reading about The Advantages of Buying Pre-Construction (Especially in the Toronto Real Estate Market).

I hope you’re taking away a little something by reading this. I swear, this is a true story. It’s one that I live and tell about to this day.

Know that home-ownership is for you too! Good luck, you got this.

This article is written by Kori Marin, Managing Partner and Broker at Fox Marin Associates. With a passion for Scandinavian design and all-things-Toronto, Kori brings her own brand of charismatic energy, creative integrity, and expertise to her work.