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    HomeMoneyEarnHow this 33-year-old built an actual estate portfolio value $2.3 million: 'I...

    How this 33-year-old built an actual estate portfolio value $2.3 million: ‘I absolutely love debt’

    Only a 12 months after graduating from college, Karun Vij turned his dream of owning property right into a reality. It began with an “aha moment.”

    While earning an engineering degree at McMaster University in Hamilton, Ontario, Canada, Vij noticed that rental units near the college charged by the room, quite than the entire house. Things just clicked: He realized catering to students may very well be more profitable than renting out properties to families, and decided he desired to try his hand at it.

    It took a couple of years to save lots of up, but by 2016, the 12 months he graduated, he had saved enough money to afford a house near McMaster’s campus.

    “I knew the world, I liked the world — not too expensive or too low-cost,” Vij tells CNBC Make It. Plus, “it’s like a top five university in all of Canada. It was solid.”

    At 26, Vij made a 20% down payment of around $64,781 for a Hamilton home value $323,904, and rented it out to seven college students. (Conversions from CAD to USD were done using the OANDA conversion rate of 1 CAD to 0.73116 USD on Oct 3, 2023. All amounts are rounded to the closest dollar.)

    Karun Vij at home.
    Courtesy of Karun Vij

    Nonetheless, he didn’t plan to be a landlord full-time. After graduating, Vij worked as an application engineer, and later an account manager, at a world workplace automation firm in nearby Cambridge. Together with his rental earnings and increased salary, Vij was capable of buy more rental properties in southern Ontario.

    Now 33, Vij lives together with his wife and daughter in Chicago, where he earns just over $183,000 and owns 4 Canadian rental properties value a complete of about $2.3 million.

    “Once I bought my first property, it was probably the most exciting and nerve-wracking time of my life,” he says. “I had no idea what it will take to be a landlord, but I knew in my mind this was my business.”

    Saving up to purchase his first home

    Growing up in Brampton, Ontario, a part of the greater Toronto area, Vij says he was raised in a “traditional family,” where he was encouraged to “go to high school, get a job — engineer, doctor, lawyer — and buy one or two houses.”

    Vij “worked [his] ass off” doing “whatever it took to generate income,” he says. That included mowing lawns, delivering groceries, and eventually, a door-to-door sales job selling vacuums.

    “In every situation, I do attempt to be my best,” he says of his competitive nature. “If I didn’t come up No. 1, I’d return to the drafting board and I’d attempt to learn from my mistakes.”

    Karun Vij together with his family.
    Courtesy of Karun Vij

    While at McMaster, Vij was chosen by a Fortune 500 company to participate in a paid co-op program for 2 years. During that point, he earned about $45,000 while living in a rent-free apartment provided by the corporate, which helped him lower your expenses for future down payments.

    After graduating with a bachelor’s degree in electrical and biomedical engineering, Vij was hired full-time by the corporate to work as an application engineer.

    Investing in rental properties

    Vij’s first rental property was a two-story detached home with seven rentable rooms, two miles away from McMaster’s most important campus.

    As a first-time landlord, Vij was initially surprised by the variety of calls he got from tenants about every thing from fixing door locks to changing light bulbs.

    “I used to be picking up calls at three within the morning,” he says. “I needed to quickly learn to place things into perspective and prioritize the key concerns.”

    For non-urgent requests, Vij learned that good communication and follow-through actually mattered more to tenants than him being available “100% of the day.”

    “In case you say you are going to fix something in five days, get it done in five days,” he says.

    Karun Vij in downtown Chicago.
    Jeremy Applebaum for CNBC Make It

    In 2017, Vij put down a deposit of a “few thousand dollars” down on a pre-construction condo in Mississauga, a city near Toronto, that he intended to live in. 

    Otherwise, whatever money Vij made out of his job and rental property went straight into savings for more rental properties. In 2018, he put 20% down on one other house in Hamilton, value $316,227. And in 2021, he purchased an adjoining third property for $403,042. He also put 5% down on a pre-construction condo in Milton, Ontario.

    In 2022, Vij accepted a more senior role together with his company in Chicago. Knowing that he had to maneuver out of Canada, he hired a property manager and sold the condo he bought in 2017 for roughly $519,000 — greater than double the acquisition price.

    With that cash, he was capable of pay down debts, including his student loans, and put a $50,000 down payment on a property in Windsor, Ontario.

    All told, Vij has 28 rentable rooms across 4 properties as of October 2023. He has no real interest in cashing out, despite the fact that his properties are currently value about $2.3 million.

    Karun Vij outside his home in Chicago.
    Jeremy Applebaum for CNBC Make It

    “I do not care what the value is because I’m never going to sell, that is my mentality,” says Vij. “I would like to own as many assets as possible that generate money flow and use any extra money to purchase more assets.”

    In 2023, Vij broke even on his rental properties. He doesn’t mind that he isn’t turning a profit yet because he expects recently purchased properties to have higher upfront costs for furnishings and renovations in the primary couple years of ownership.

    All told, his expenses, including utilities, repairs and property management fees, come to about $11,000 a month. He typically brings in that much from his tenants as well, but any profit he makes in a given month is either used to pay down lines of credit or put into his savings account.

    “I absolutely love debt,” Vij says. “But I’ll say I only like good debt,” comparable to mortgages and features of credit, he adds. “Good debt is debt that you might have a technique for. My long-term strategy is to purchase up as much real estate as possible.”

    How he spends his money

    As the only real earner within the household, Vij covers the entire family’s expenses together with his income. Here’s how he spent his money in October 2023.

    Elham Ataeiazar | CNBC Make It
    • Housing and utilities: $4,439 for rent on a two-bedroom condo, parking and warmth
    • Discretionary: $2,644 for baby supplies, online shopping, travel and Fiverr
    • Savings and investments: $1,209, including $1,076 to his 401(k) and $133 to his health savings account
    • Food: $794
    • Insurance: $356 for health, dental, vision, life, disability and renters insurance
    • Company automotive: $100 fee paid to employer
    • Subscriptions and memberships: $51 for Spotify, Amazon Prime, Google Suite, calendar app and Cloud services
    • Phone: $50 for his wife’s phone

    In August, Vij and his wife Seema welcomed a newborn daughter, so a significant slice of their discretionary expenses go toward baby stuff, like bedding and clothing.

    Along with typical advantages, like health and dental insurance, Vij gets a couple of nice perks through his employer. For $100 a month, he’s capable of rent an organization automotive, including gas. Likewise, his phone is paid for through work, so he and Seema only spend $50 a month on her phone.

    Karun Vij and his wife Seema at Walt Disney World.
    Courtesy of Karun Vij

    Vij owes around $18,700 in bank card debt. That quantity is unusually high due to newborn, in addition to some unexpected dental expenses, he says. He’s also making a strategic alternative to not pay it off immediately: “I’m using the cash to purchase more assets.”

    Vij also has 4 lines of credit that he uses exclusively to finance his properties, two of which have outstanding balances totaling $9,798.

    As of October 2023, he has greater than $100,000 in investments, including index funds, company stock and an inactive company-sponsored pension from when he worked in Canada. Vij also has just over $73,000 in savings earmarked for an additional property in Windsor, Ontario.

    Plans for the long run

    Vij wants to maintain investing in rental properties, despite the fact that 25-year fixed mortgage rates, that are common in Canada, have nearly tripled since 2022. He actually sees it as a superb time to purchase since home prices in southern Ontario have dropped previously 12 months.

    He’s also working on plans to convert his two adjoining Hamilton homes right into a much larger condo, pending some changes to local rezoning laws.

    “Having a newborn has sparked much more motivation and drive in my life,” says Vij. “I would like to construct a life that we love for my family and show my daughter that anything in life is feasible when you put the work into it.”

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