So, you want to get into real estate investing, but the idea of dropping 20% on every property feels impossible? Did you know that there’s a strategy that savvy buyers have been using to slowly build a rental portfolio, and guess what! It’s all without being a millionaire.
It’s called the 5% Down Primary Residence Strategy. Let’s break it down.
The Basics: What Is the 5% Down Strategy?
When you buy a primary residence in Canada, you’re allowed to put as little as 5% down instead of the typical 20% required for investment properties. The catch? You have to live in the home for a reasonable amount of time.
That’s where this strategy comes in. You:
Buy a home with 5% down.
Live in it for at minimum one year.
Move out and rent it out.
Buy another home as your new primary residence—again with just 5% down.
Rinse and repeat.
Why It Works
Lenders offer low down payment options to people buying a home to live in. It’s considered lower risk than investment property loans. Once you’ve lived there for a year (the typical minimum most lenders require to consider it a true primary residence), you’re free to move—and rent it out.
Done consistently, this strategy lets you build a real estate portfolio with a fraction of the upfront capital you'd need if you were buying each one as a rental from the start.
The Fine Print: What You Can’t Do:
There are a few things to keep in mind so you don’t get into sketchy territory:
Don’t lie on your mortgage application. Saying you’re going to live in the property when you have no intention to is mortgage fraud.
Actually live there. Most lenders want you to stay for at least a year. Some might even check.
Have a good mortgage broker. Once you’ve got a couple properties under your belt, qualifying gets more complex. You’ll want someone who understands how rental income is used in your approval.
Keep in mind the down payment rules in Canada and how this will determine what type of property you can utilize this strategy with.
5% of the first $500,000 of the purchase price
10% for the portion of the purchase price above $500,000 to $1.5M
$1.5M or more - 20% of the purchase price
Pro Tips for Success:
Buy smart. Look for homes in areas where rental demand is strong so that when you move out, it’s easy to find tenants.
Keep your properties in good condition. You’ll build more equity and attract better tenants.
Plan your financing. Eventually, lenders will want to see that your rental properties are cash-flowing. Don’t just break even, aim for positive cash flow.
Conclusion:
This isn’t a get-rich-quick trick, but it is a smart, steady path to owning multiple properties without needing hundreds of thousands in cash up front.
If you’re patient, organized, and ready to commit to moving every couple years, this method can be a game-changer for long-term wealth building.
Want to run some numbers and see if this could work for you? Reach out—happy to help break it down based on your market.
