Starting to fret that homeownership is out of reach? With rising interest rates and tougher lending rules that make it harder to qualify for a loan as a single-income earner (especially in expensive markets like Toronto) — you’re not alone.

Danielle Kubes is a personal finance journalist who rents an apartment in Toronto and owns an investment property in Hamilton — despite the odds of homeownership being stacked against her. When Danielle bought her place for $355,000 in 2016, she was in her 20s, single and working as a freelance writer (a typical red flag for traditional lenders). On top of that, her income never exceeded $42,000 in the five years that she was saving for a house.

So how did Danielle earn the keys to the detached wood-frame bungalow? Livabl spoke to the determined Millennial about the four creative strategies she employed to step on the property ladder — without jeopardizing her lifestyle or financial future.

Photo: James Bombales

Look outside the city

It is still possible to buy property on a single income in Ontario if you’re willing to look outside exorbitantly priced markets like Toronto, where the average price of property in January averaged to $840,100 according to the Toronto Real Estate Board.

If you’re priced out of Toronto, you don’t have to give up altogether. “There are like, a million other places in Ontario where property is still affordable on a single income. A lot of my friends have purchased in Guelph, for example,” Danielle says. The average price of a Guelph home is $500,000.

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Yes, property values tend to be lower on the outskirts, but homebuyer hopefuls get more bang for their buck. “Condos in Toronto were more expensive than the house I bought in Hamilton,” she says.

Another major consideration for Danielle was land transfer tax (LTT), charged by the provincial government upon the closing of a real estate transaction. Say you’re looking at a condo for $500,000. Properties get taxed 2 percent on homes over $400,000 for both the Ontario Land Transfer Tax and Toronto Land Transfer Tax. Rebates for first-time homebuyers help significantly (if you qualify, you will be exempt from the first $400,000 of the Toronto LTT and will be given a credit of up to $4,000 for the Ontario LTT). But without this, homebuyers can expect a sticker price of $20,000.

“When you’re looking for an investment property, it’s really important to do the math. You have to look at the downpayment, land transfer cost, legal fees, other closing costs along with the chance of finding a tenant. Land transfer tax was a huge impediment to purchasing a condo in Toronto, along with condo maintenance fees which can run you $700 to $1,000 a month easily,” Danielle explains.

Photo: James Bombales

Family help comes in many shapes and sizes

The Bank of Mom and Dad is certainly one way to get a leg up as a single-income homebuyer but family contributions can come in many forms.

“By paying for my university tuition, my family allowed me to put my surplus income towards saving, instead of debt repayment. It’s going to be extremely difficult for someone in their 20s who has debt of any sort to start building savings for a downpayment,” Danielle says.

Her mom and brother also agreed to loan Danielle $10,000 each. She could have waited an extra two years to accumulate more savings on her own, but interest rates were on the rise and the government was two months shy of instituting the mortgage stress test.

“I’d recommend pitching it as an investment to your family. I gave my brother and mom an equity position. When I sell the property, they will get the percentage they loaned me back with profits from the increased property value,” she explains.

Danielle’s uncle also stepped up to be a co-signer: “None of the banks would have given me a mortgage otherwise. I was a freelance writer and in no way eligible.”

Hamilton. Photo: James Bombales

Live like a student, save like a future homeowner

It took Danielle five years of diligent saving to scrape together $31,000 — that’s how much she needed to cover the remainder of the downpayment and closing costs after the family contributions.

Danielle didn’t do it with complicated budgeting. Instead, she lived like a student with a $550 a month rent and a modest lifestyle (the homeowner has yet to order anything from UberEats).

Fresh out of graduate school, she got a government job where she earned $42,000 a year and put aside an impressive 27 percent of her income into savings. “Right away I set up an automatic transfer and it was very easy for me to live off the rest. I‘m freelance now, my rent is higher and I have a car, so I can’t save as aggressively as I used to. But saving only grows your money to a certain extent. You have to save and then put it into something that will grow your money on its own,” she explains. “You can’t save towards retirement, you have to invest towards retirement.”

Hamilton. Photo: James Bombales

Become a landlord

Financial experts will advise you to put down at least 20 percent on a downpayment to avoid mortgage insurance, higher interest rates and larger monthly payments. Danielle put down 10 percent but relies on tenants in the two units of her house to help cover the higher carrying costs.

Danielle also ensured that she could live wherever she bought property, in the event there’s a lapse in renters or she decides to leave her $875 a month rental into Toronto and call Hamilton home.

The process of finding tenants can be a challenge. “It’s scary to let people into your property because tenants have so many rights in Ontario. I check the credit score of every single tenant to make sure they’re reliable,” she says.

She also specifically looked for properties where she could manage the maintenance or outsource — for example, looking for places with no yards to reduce exterior maintenance. “You have to think of your property as a business,” explains Danielle. “Businesses spend money. I outsource all of the maintenance and really do think of it as a part-time job.”

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