Recently I have had the opportunity of being involved in a condominium highrise sell-off. One institutional investor decided to sell a number of units within a particular building in downtown Ottawa. The focus of the sale was to minimize the inconvenience to the present tenants in these units. As a result, the Investor offered the tenants first option to buy the units. The presentation to the tenants indicated the selling price, the mortgage payments inclusive of taxes and condo fees, the minimum down payment necessary according to CMHC’s policy, and a costing inclusive of legal fees, land transfer tax, appraisal fees, etc.

In all cases, with as little as 5% down, the monthly cost to support the mortgage, taxes and condo fees was lower than the rent these tenants were presently paying. In all cases, the mortgage rate quoted was for a five year period, which meant that the tenant would face no surprise extraordinary increase in payments for the next five years. All the tenants thought this was a marvelous opportunity to get into the real estate game, and while they would own the unit, to buy in bulk this way, the cost for legal fees and expenses would be averaged over the whole group, saving them hundreds of dollars.

Now came the problem. Most could not muster up the necessary down payment, which was 5% of the purchase price, plus they had to demonstrate they had 1.5% extra to pay for closing costs. It may not seem like much however, 5% of $80000 (example) is still $4000 + $1200 for closing costs (actual cost was less than $1000). When queried however, most did have RRSP holdings (which can be accessed tax-free for a first time buyer), some savings, and since Christmas was around the corner, gifted down payments from family members. It all goes to show you that home ownership is just as inexpensive as rent. The down payment objection becomes negligible when one puts one’s mind to it. You can look up all the wonderful ways of accessing perfectly legal down payment methods from my website.

At the end of November, there will be dozens of new home owners in this building, who just last month were in the tenant mode and throwing away rent money every month. Now these same people are paying down their mortgage debt and eventually will have the opportunity of accessing equity dollars for investment though their real estate holdings. Those of you still renting should take a serious look at home ownership for your financial future; it may not be as expensive as you think.