A young man owns 6 properties in Ontario

Mustafa Sheriff is 26 years old. He owns four properties in the GTA – plus two in the cottage country – and he has a simple message for other millennials who are losing hope of ever owning a home in Toronto’s hot real estate market.

You can, and sooner than you think.

Lowering expectations was just one of his strategies; he knew his first property would not be his dream home.

“The big misconception is that people want to have a nice house to live in right away, but that’s not always the case,” Sheriff said.

“If you can, buy it at the low end and rent it. It goes step by step. There is a procedure to follow.

As the son of immigrant parents who came to Canada from Pakistan, the sheriff said he knew how to hustle at a young age, not wanting to burden his family with personal expenses.

At 15, he started reselling used phones, making a profit and saving money while working part-time.

This strong work ethic continued while he completed a Bachelor of Commerce degree at Ryerson University, working full-time while in school in an entry-level position for a logistics company.

At the time, he was making around $48,000 and taking most of his classes online and in the evening.

He credits this as the key to his success: Working through his undergrad helped him save enough to buy that first property in 2019 – a condo in Richmond Hill that he bought for $505,000 with a down payment of 20%.

“It was tough for years, but I only looked at the end goal,” said Sheriff, who graduated in 2017 after accumulating significant savings mostly from living at home. “If you work during school, it really gives you a head start.”

“Once you’ve bought that first home, you can build on it and buy more,” he said.

The experts agree, and the numbers don’t lie.

Kelsey Schram, sales representative at Royal LePage, said buying a first home “isn’t as bad as it sounds.”

Some sacrifices may be necessary, such as moving in with the family while saving up, or accepting the fact that your first home purchase doesn’t have to be a “forever home,” Schram said.

“It’s important to get in (the market) and let that equity build up,” she said.

An alternative to entering a heated market, Schram said, is to buy a cheaper property elsewhere, rent it out, and let it appreciate while continuing to pay rent.

And don’t be afraid to ask your family for help with the down payment, she said. It can also be an investment for them.

“Offer a profit share when you sell so they can get something out of it.”

Jamie Madigan, a Toronto-based certified financial planner, said many potential buyers don’t realize that any down payment of less than 20% gets better mortgage rates because the mortgage needs to be insured. This means that the insurance is paid for by the buyer of the property to protect the bank against defaults.

If you are short on a down payment, the Home Buyers’ Plan allows a person to withdraw funds from their Registered Retirement Savings Plan (RRSP) to buy or build a home. The maximum withdrawal amount is $35,000 and the plan allows the individual to repay the funds withdrawn within 15 years.

If the annual minimum repayment to your RRSP is not made, it will be included as taxable income for that year, Madigan said.

“For most, it’s probably a small amount and shouldn’t put them in a higher tax bracket, but it’s important to be aware of it,” he said.

Plus, a mortgage pre-approval helps give potential buyers an idea of ​​what they can afford and their upper price limit.

“I recommend they go a little lower because the housing market is so competitive, you have to leave some wiggle room to raise the stakes,” Madigan said.

He added that it’s best to only buy what’s affordable, otherwise all the money goes into the house, leaving little room for other expenses like travel or retirement.

Wins Lai, a Toronto realtor, called the sheriff’s method of entering the real estate market by living at home and saving while working and studying “smart” and a “good investment”.

But, she acknowledged, while investing in the real estate market is not as volatile as the stock market, people need to assess their own risk tolerance by factoring in unforeseen risks such as interest rate hikes. interest, unreliable tenants and potential job loss.

“The main goal is really to enter the market,” Lai said.

It was this mindset that made the sheriff work hard and get in whenever he could. He is now reaping the rewards.

A year after buying his first property, he refinanced the house, allowing him to take up to 80% of the equity in the property, using the money to purchase two new residences. He and his wife, Farheen Kadwa, have bought a condo in Markham and a townhouse in Scarborough, paying down payments of $80,000 for each of the properties they rent.

The couple also ventured into the cottage industry, setting up Belle Vue Lakeside Retreat – a cottage rental business, in 2021. One cottage they bought together and the sheriff bought the other alone. Both cabins are on Lake Nipissing and are also rented.

More recently, Sheriff and Kadwa bought their dream home: a detached house in Richmond Hill.

“Low interest rates in the pandemic have made it more affordable,” Sheriff said.

“We are breaking even on all of our properties. The money we earn is the appreciation of the property and the equity built.

Kadwa said she helps run the properties with her husband, but he provided the majority of the finance. “I really support him, because it’s a project he’s passionate about, outside of work.”

Today, The sheriff’s annual salary plus commissions is around $300,000, having progressed in his career in logistics over the years, and his high income has helped sustain his efforts.

But, he wants millennials to remember he bought his first home with an annual income of $48,000.

This was made possible by living at home, working full time, and mastering his expectations for first time ownership.

The sheriff thinks if he can do it, others can too.

“Even with an average salary, if you save like I did, you have a head start.”