Risks involved with house hacking in Canada.

[Scott Galloway]

Hi guys! The wife and I are thinking about doing some house hacking in the Edmonton  area.

We currently live in a new house we put 20% down on and I have a condo I put 20% down on to.

We would like to have a place with a legal suite built worth about $480k with 5% down and have the other two being rented out. Then likely do the same thing in a couple years. 

Is there any risk with this, if you can always cash flow, pay the mortgage and you have repair money set aside? 

[Account Closed]

@Scott Galloway

Opex- operating expenses

Capex- capital expenditures

Wrt avoiding 20% down statement:

You’ll find a LOT of talk of people routinely turning primary residence into a rental. It’s a great strategy and one many folks use to get into landlording. Completely legal. However, you’ve gotta be able to prove your intention when the CRA calls. So the folks who buy a primary with 5% down, then “live in it for a year”, then buy another and then that into a rental and keep doing this over and over... CRA likely wouldn’t be a big fan of that and you could face some penalties. Anyone who ever drops the “just live in it for a year!” statement on you is ill informed or has been mislead by one of the many guru’s who make their $ on teaching, not doing. There never has, and likely never will be, a definitive number of days stated by the CRA in which you must occupy a home for it to prove primary residence. It’s all about proving intentions. So if you’re thinking of buying with 5% down, living in it for a year, then turning it into a rental... you may want to be careful with what you say and post online as far as timelines go. Nothing wrong with analyzing if your primary residence would cashflow. Just make sure it’s more of a “what if” type approach.