This story is part of CNBC’s “Make It’s Millennial Money” series, which details how people around the world make, spend and save their money.
Just a year after graduating from college, Karun Vij realized his dream of owning a home. It started with an “aha moment”.
While studying engineering at McMaster University in Hamilton, Ontario, Canada, Vij noticed that rental units near school were priced per room rather than for the entire house. It just clicked: He realized that serving students could be more profitable than renting properties to families and decided he wanted to give it a try.
Saving took a few years, but by 2016, the year he graduated, he had saved enough money to afford a house near McMaster’s campus.
“I knew the area, I liked it – neither too expensive nor too cheap,” Vij tells CNBC Make It. Plus: “It’s like one of the top five universities in all of Canada. She was solid.”
At 26, Vij made a down payment of around 20% $64,781 for a home in Hamilton valued at $323,904 and rented it out to seven college students. (Conversions from CAD to USD were made using the OANDA conversion rate of 1 CAD to 0.73116 USD as of October 3, 2023. All amounts are rounded to the nearest dollar.)
Karun Vij at home.
Courtesy of Karun Vij
However, he had no plans to become a full-time landlord. After graduating, Vij worked as an applications engineer and later as an account manager at a global workplace automation company in nearby Cambridge. With his rental income and higher salary, Vij was able to purchase more rental properties in southern Ontario.
Vij, 33, lives with his wife and daughter in Chicago, where he earns just over $183,000 and owns four Canadian rental properties worth a total of about $2.3 million.
“When I bought my first property, it was the most exciting and nerve-wracking time of my life,” he says. “I had no idea what it meant to be a landlord, but I knew in my head that this was my business.”
Raised in Brampton, Ontario, part of the Greater Toronto Area, Vij was raised in a “traditional family” where he was encouraged to “go to school, get a job – engineer, doctor, lawyer – and get one or to buy several “two houses.”
Vij “worked [his] “Get your ass off” and “did whatever it took to make money,” he says. This included mowing lawns, delivering groceries and eventually a door-to-door sales job selling vacuum cleaners.
“I try to do my best in every situation,” he says of his competitive nature. “If I didn’t finish No. 1, I would go back to the drawing board and try to learn from my mistakes.”
Karun Vij with his family.
Courtesy of Karun Vij
While at McMaster, Vij was selected by a Fortune 500 company to participate in a paid co-op program for two years. During this time, he earned around $45,000 while living in a rent-free apartment provided to him by the company, which helped him save money for future down payments.
After graduating with a bachelor’s degree in electrical and biomedical engineering, Vij was hired by the company full-time as an applications engineer.
Vij’s first rental property was a two-story single-family home with seven rentable rooms two miles from McMaster’s main campus.
As a first-time landlord, Vij was initially surprised by the number of calls he received from tenants about everything from repairing door locks to replacing light bulbs.
“I was taking calls at three in the morning,” he says. “I had to quickly learn to put things in perspective and prioritize the most important concerns.”
For non-urgent requests, Vij learned that good communication and quick turnaround were actually more important to tenants than the fact that he was available “100% of the day.”
“If you say you’re going to fix something in five days, then you can fix it 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” on an under-construction condo in Mississauga, a city near Toronto where he planned to live.
Otherwise, the money Vij earned from his job and rental property went directly into savings for additional rental properties. In 2018, he paid a 20% down payment on another home in Hamilton valued at $316,227. And in 2021 he bought an adjacent one third property for $403,042. He also paid a 5% discount on a condo under construction in Milton, Ontario.
In 2022, Vij took on a more senior position in his company in Chicago. Knowing he would have to leave Canada, he hired a property manager and sold the condo he bought in 2017 for around $519,000 – more than double the purchase price.
He used that money to pay off debts, including his student loans, and make a $50,000 down payment on a property in Windsor, Ontario.
All in all, as of October 2023, Vij has 28 rentable rooms in four properties. He has no interest in cashing out, even though his properties are currently worth about $2.3 million.
Karun Vij in front of his home in Chicago.
Jeremy Applebaum for CNBC Make It
“I don’t care about the price because I will never sell, that’s my mentality,” says Vij. “I want to own as many assets as possible that generate cash flow and use any excess money to purchase more assets.”
In 2023, Vij reached breakeven on its rental properties. He doesn’t mind that he’s not yet turning a profit because he expects recently purchased properties will have higher upfront costs for furnishings and renovations in the first few years of ownership.
In total, his expenses, including utilities, repairs and property management fees, total about $11,000 per month. He typically brings in this much from his tenants, but any profit he makes in a given month is either used to pay off lines of credit or deposited into his savings account.
“I absolutely love debt,” says Vij. “But I say I only like good debt,” like mortgages and lines of credit, he adds. “Good debt is debt that you have a strategy for. My long-term strategy is to buy up as many properties as possible.”
As the sole earner in the household, Vij covers all of the family’s expenses with his income. Here’s how he spent his money in October 2023.
Elham Ataeiazar | CNBC Do it
- Housing and supplies: $4,439 to rent a two-bedroom apartment, parking and heat
- Discretion: $2,644 on baby items, online shopping, travel and Fiverr
- Saving and investing: $1,209, including $1,076 in his 401(k) account and $133 in his health savings account
- Eat: $794
- Insurance: $356 for health, dental, vision, life, disability and renters insurance
- Company car: $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 have given birth to a newborn daughter, so a significant portion of their leisure expenses are spent on baby items such as bedding and clothing.
In addition to the typical benefits like health and dental insurance, Vij receives some nice perks from his employer. He can rent a company car including gas for $100 a month. Likewise, his phone is paid for through work, so he and Seema only spend $50 a month on their phone.
Karun Vij and his wife Seema at Walt Disney World.
Courtesy of Karun Vij
Vij has around $18,700 in credit card debt. That amount was unusually high, he said, because of the newborn and some unexpected dental costs. He also makes the strategic decision not to pay off the money immediately: “I will use the money to purchase more assets.”
Vij also has four lines of credit that he uses solely to finance his properties, two of which have outstanding balances totaling $9,798.
As of October 2023, he has more than $100,000 in investments, including index funds, company stocks and an inactive company-sponsored pension from his time working in Canada. Vij also has just over $73,000 in savings for another property in Windsor, Ontario.
Vij wants to continue investing in rental properties, even though Canadian interest rates on 25-year fixed-rate mortgages have almost tripled since 2022. In fact, he sees it as a good time to buy since real estate prices in southern Ontario have fallen over the past year.
He is also working on plans to convert his two neighboring homes in Hamilton into a much larger condo, pending some changes to local rezoning laws.
“The birth of a newborn ignited even more motivation and drive in my life,” says Vij. “I want to build a life for my family that we love and show my daughter that anything in life is possible if you put in the work.”
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