How I Created Over $650K in Real-Estate Equity with Less Than $50K

Hindsight is always 20/20, particularly when it comes to real-estate and Montreal’s real-estate market is no different. Just like with most investments, typically, the more you wait the more you pay but that doesn’t mean you can’t play. First, you need to consider a few things:

  1. Objectives – are you buying your home or investing extra money or both? Are you banking on appreciation in the long-term or looking to generate positive cash-flow in the shorter?
  2. Remember that your first investment property won’t be your last. Unless you’re looking to settle into your house for the long-haul, check your emotions at the door. Personal preference with resepect to size, colors, layout etc… may matter when you’re choosing your dream home but not necessarily when you’re looking to create wealth, and that’s exactly what we’re doing here.

When I got into the game over 10 years ago, my objective was to use my personal home as a foundation for building equity while leveraging debt and adding value to increase my returns. The tax exemption on capital gains from the sale of a primary residence was a huge advantage that I was not going to ignore. With this in mind, my wife and I purchased our first home at the modest price of $240,000. It was a bungalow from the 1950s in Montreal’s sought after West-Island and it was in great but original condition. We opted for a high-ratio mortgage with only 5% down and used a balance of $30,0000 on renovations – tearing down walls, re-doing the kitchen and bathroom and sanding and repainting the floors. We could easily have exceeded the budget, cannibalizing our return, but were very selective in our upgrades. So, a year later we sold the property for $360,000. Using basic math, without accounting for mortage interest and insurance, we made:

  • Sale Price $360,000
  • Purchase Price $240,000
  • Down Payment $12,000
  • Renovation Cost $40,000
  • Closing Costs $5,000
  • Profit $73,000
  • ROI 155%

Yes, we opted for a high-ratio mortgage but the insurance premium was amortized over the life of the mortgage and we were able to transfer the debt onto our second home, a colossal dump one street over. We bought it at a purchase price of $225,000 with zero cash down and a renovation budget of $80,000. A year later we sold it for $375,000 and, once again, used the gains to invest in our first revenue property, a duplex with a bachelor suite in Montreal’s Lachine suburb.

At a purchase price of $405,000, a down payment of $80k and a 35 year mortgage (which unfortunately is no longer available due to new mortagage regulations in Canada) we minimized our monthly mortgage payment and maximized our monthly cash flow allowing us to live in the main floor all expenses paid.

In the years following the purchase of our duplex, we were lucky enough to pick up two more properties which we currently rent – a home on the Lakeshore in Dorval and another duplex in Lachine.

So the $650,000 in equity?

Duplex 1

  • Purchase Price $485,000
  • Current Market Value $575,000
  • Current Mortgage Balance $294,000
  • Equity $281,000

Duplex 2

  • Purchase Price $405,000
  • Current Market Value $525,000
  • Current Mortgage Balance $365,000
  • Equity $160,000


  • Purchase Price $280,000
  • Current Market Value $475,000 (land value)
  • Current Mortgage Balance $250,000
  • Equity $225,000

Total Equity $666,000

Best of all, we’re not just banking on future value since all three properties now generate a positive monthly cash flow. They didn’t at first. We added value with simple upgrades, mortgage re-negotiations and reasonable rent increases. With vacancy rates in Montreal’s residential rental market experiencing historical lows, we’ve ultimately hedged against possible downturns.

Getting into the Montreal real-estate market can be daunting. Often you have to determine where you can create value and invest accordingly but the first step is just getting in. We started with $47,000 and made mistakes along the way but, we learned and moved on. Now we’re hoping to share that knowledge with those interested in doing more of the same.

5 Financial Considerations When Buying a Home

1. Downpayment

In Canada, if you put less than 20% down on a home purchase it must be insured by the Canadian Housing and Mortgage Corporation (CMHC). Essentially, this is default insurance which means that your bank gets compensated in the event you can no longer pay your mortgage. You pay a fee based on the loan-to-value ratio of your mortgage. It can either be paid in a single lump sum or amortized over your mortgage period and added to your monthly payments which lessens the burden. For example, the premium on a mortgage with 10% down is 3.10%. Learn more about the CMHC premiums by visiting If you want to avoid or minimize the premiums, start saving.

Don’t forget that, in Canada, the Home Buyer’s Plan (HBP) allows first-time home buyers to withdraw up to $25,000 from their RRSP to purchase or build a home, without having to pay tax on the withdrawal. In addition, HBP withdrawals must be repaid over a 15-year period or included in the individual’s income if not repaid.

2. Mortgage Pre-Approval

The most important thing to know when shopping for a home is what you qualify for. Typically, your monthly housing costs shouldn’t be more than about 30% of your gross monthly income and your entire debt to income ratio shouldn’t exceed 40%. Speak to a mortgage broker to understand how much you can borrow. Not only does this help narrow your search and save time, it shows you’re a serious buyer. Having a pre-approval in hand gives you leverage when it comes time to negotiate.

3. Closing costs

Everything from a GOOD home inspection to a notary and adjustments for condo fees and taxes should be considered in this calculation. Then there’s the one time Welcome Tax to account for. And if you’re buying a new construction, don’t forget the sales tax. We recommend estimating at least 1.5% to cover these costs.

For up to date information on Welcome and Municipal taxes visit the Financial Management section of the City of Montreal website here.

4. Utilities and taxes

You’ll need home insurance to close the deal and if you’re buying a condo there’s monthly condo fees. In addition, municipal taxes are billed bi-annually but can be collected monthly from your bank on top of your mortgage payment. Then there’s utilities which, if you’re renting, you’re likely already paying.

5. Maintenance and repairs

When owning a home, it’s always good to put some money aside for any renovations or repairs you may like to do. That said, if you’re making some major changes like upgrading a kitchen or bathrooms, you’re likely to see a return on that investment when it comes time to sell. If you’re happy where you are, you can always opt for a re-evaluation and borrow against your home if it makes sense.