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Katarzyna and Tomasz, 27, Ottawa

Should these newlyweds renovate their rental at their own expense? Hoping to save for their first home, she wants to gussy up the two-bedroom apartment so they can stay there longer. He thinks it's a waste of money. Facelift or folly?


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Saving up for a sizable down payment is really important to me. When we eventually start having kids, we want one of us to stay home with them until they're in school full time, and having low mortgage payments will make it possible to live off one income. Tomasz would like to be a stay-at-home dad, and our government jobs allow us to take up to five years off for family purposes. If we save $300,000 for a $500,000 duplex, the income from renting one unit could cover most of the monthly mortgage. That's why I think we should stay in our current rental for five or six more years - the rent is $300 to $400 lower than the average for our area. If we upgrade the kitchen and floors, it will be nicer to live in while we wait. But we'll probably have to pay for it ourselves. Our building is owned by a slumlord. He takes weeks to fix things, and he still owes me money for emergency repairs we covered.


We've been able to save by living frugally, and that includes our current apartment: At $850 a month, it's a bargain. You could call it a student ghetto building. Most of the tenants don't stay long, and the landlord doesn't invest much in the place. My wife wants to get a new IKEA kitchen and rip out the old carpet. And we want to get a dog, so wood or tile floors are a must. But it's probably going to cost around $4,000, and I'd be surprised if we saw a penny from the landlord. I don't see the point of investing any money in a property we don't own, and I'm also not convinced we should spend too much more money on rent. If we save $50,000 a year for the next two years, we'll have enough for a 20-per-cent down payment on the house we want. If we get a duplex, we'll be getting income from renters to help offset the mortgage. I don't want to wait much longer - the recession barely touched the Ottawa housing market, and prices keep going up.

Vital stats

Occupations: Public servants (she's an administrative assistant, he's an engineer)

Annual household income: $110,000 (split evenly)

Assets: $57,000 in RRSPs, RESPs and TFSAs

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Debts: $18,000 in student loans at 5.5 per cent

Rent: $850 per month


Financial expert Kelley Keehn:

I agree with Tomasz. Not only is your rent payment, albeit low, wasted money each month, but putting one dollar into a rental is ludicrous (especially for a pooch). As wonderful as owning a dog can be, consider that the lifetime cost of a dog can easily total thousands of dollars. Keep your eye focused on home ownership first.

The goal of saving half your income over the next two years is lofty. But if you can pull it off and come in with $100,000 and get a duplex for the amount you're projecting, I think that's a great idea.

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Let's pretend that rates remain constant (4.2 per cent for a five-year fixed term) for the next two years. With a down payment of $100,000 and a mortgage of $400,000, you're looking at monthly payments of $2,147. Let's assume you can rent out the other duplex side for $1,000 a month, and your payment will be $1,147. Of course, you have to factor in the risk of not being able to rent it out every month, as well as the extra costs of ownership - property taxes, repairs, operating costs. However, if you're both in the habit of saving aggressively each month, those extra costs shouldn't be a problem.

While this would mean living for two years in an apartment that isn't renovated, the sacrifice is worth it. Or consider getting into a home sooner, with a smaller down payment.

Whatever road you choose, I'd like you to focus on topping up your non-registered emergency savings before you do anything else. You've got a great start with your RRSP, and I hope you're planning to pay down that student loan (although you have a decent rate), but I'd like to see your first priority be at least three months' household salary sitting in a liquid, safe investment.

Kelley Keehn is the host of W Network's Burn My Mortgage (

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