The Burn Your Mortgage Podcast: Credit Card Hacks to Maximize Your Home Renovation Rewards with Barry Choi

Full  Transcript

Sean Cooper

Welcome to the Burn Your Mortgage podcast. I'm Sean Cooper, and it's great to be back for another episode. On today's show, I'll be talking to Barry Choi. Barry Choi is an award winning, Toronto based personal finance and travel expert. As a completely self-taught Do-It-Yourself investor with no formal training. Barry makes money easy to understand for all Canadians. He combines his knowledge of finance with his passion for travel and encourages people to see the world.

Sean Cooper

Barry specializes in personal finance, trip planning, millennial money, Gen Z money, credit cards and trending desks. Nations. In my interview with Barry, we discussed moving up in the real estate market from a two bedroom condo to a three bedroom townhouse. Becoming a landlord, making the most of your credit cards on home renovations, and getting a mortgage as self-employed.

Sean Cooper

Without further ado, here's my interview with Barry Choi. Hi, Barry. How are you doing today?

Barry Choi

Good. Good to be here.

Sean Cooper

Hey, it's great to chat with you. I wish I had you on a lot sooner, but I had realized that I hadn't had you as a guest on the podcast here, so I guess better late than never.

Barry Choi

Yeah, it's weird, because I've known you for. I feel like, at least a decade now.

Sean Cooper

Yeah, I should have had you on a lot sooner, but I guess I can save the best for last.

Barry Choi

Well, hopefully I'm not your last guest. Hopefully you have many, many more after this.

Sean Cooper

Yes, hopefully. I'll try not to say anything to get canceled. Okay, great. Well, I realize you've been busy for the last while here, so. Yeah, maybe you can tell us listeners about what you've been up to from a real estate standpoint, to understand that you were living in a two bedroom condo and you moved up to a three bedroom townhouse.

Sean Cooper

So, yeah, maybe you can tell us a bit about your journey and how all that went. And just feel free to share the experience with the listeners, because some people are first time homebuyers and they've never actually gone through the whole moving up in the market or even like buying and selling at the same time. So yes, if you could share your experience, the good, the bad and the ugly, that would be great.

Barry Choi

You know, like everyone else, I feel like when you live in many places, you eventually want more room. I was in a two bedroom condo, as I mentioned, with my wife and my daughter, and honestly, for the three of us, it wasn't bad, right? We had 900ft². Lots of amenities are walking distance to the subway or close to the highway.

Barry Choi

My daughter's school was a five minute walk away, so it was comfortable, right? And we had built everything in the home where it was kind of specific for our needs. And what I mean by that is we had built custom closets, we renovated our kitchen for our needs. So it was a great place to live. But, you know, actually you just want more space, right?

Barry Choi

It would be nice to have an additional room to have a basement or whatever. So we had casually been looking for the last three years. The biggest issue for us personally was the fact that we did not want to leave our area specifically for the reasons I just mentioned. You know, it was too convenient. We could have moved much earlier had we moved out of Toronto.

Barry Choi

Just so people know, I live in Toronto in the Young and Sheppard area, which is very popular. Had I moved up to Irvine, it wouldn't have been a problem to get home pretty quickly. But there's a lot of competition in my area. So we lost quite a few homes, probably ten homes that we lost down on.

Sean Cooper

Wow, that's a lot.

Barry Choi

Yeah. And at the same time, it's not compared to a lot of other people. Right? Like, I'm sure you've spoken to people, you know, people who are in similar situations. And it kind of worked out for us because of the recent interest rate hikes in the last six months. So people were really worried. You really start to see it.

Barry Choi

I would say last fall where people weren't really bidding as much, but at the same time, sellers weren't really lowering their prices very much either. So there was not a ton of market activity. Someone this home came up with having lost some of them, a few others. My wife just really wanted to buy the home, so even though I felt like we were probably paying more than we should have and we could have tried to negotiate a little bit harder, the seller could have just said, you know what?

Barry Choi

We're going to wait for someone else to give us a better offer because that's what people have done. So in the end, we just agreed to the price with not much of a push back, and we got the home. But part of the reason we feel like we got is because they had a quick close. It was only 30 days and we met all the conditions and they actually agreed to meet our conditions, which was financing and home inspection.

Barry Choi

So it was a good compromise.

Sean Cooper

That's great. And yeah, I guess it all depends on what you tried to figure out why they were selling their property? I find it's always helpful to know the motivation of the seller, like some people are just listing it to try to see how much they get. Other times they have bought a property already and they need to sell their property.

Sean Cooper

Were you able to find out about their motivation, what they were selling?

Barry Choi

Well, a good agent never tells, right? Like they'll never admit why. But you know, to us it seemed rather obvious that if they had a 30 close, they either already bought property or, you know, they move countries. But just after touring the house, we just kind of assumed that their kids had already moved out. Their kids are grown up, so they're empty nesters.

Barry Choi

They're probably looking to downsize. So our kind of read was like, they are probably not in a huge rush to sell, even though there is a 30 day clause. So we didn't feel like we had much power. But again, they did agree to a home inspection, so we did have a little bit of power if you want to call it that.

Sean Cooper

Now that makes sense. And what made you decide to upgrade to a townhouse instead of like a semi detached or detached house? I mean, obviously there's a budget as a reason there, but I'm curious, like, what did you like about the townhouse? It was kind of the best of both worlds. It's kind of like you still get the condo living, but you get more freedom, like being a homeowner, like more space and such, I don't know, do you have a yard or anything like that?

Sean Cooper

But yeah. What made you like the townhouse rather than like going up to a house?

Barry Choi

So it was kind of like where we live. If you want to move up from a condo, you either went to a three bedroom condo or you went to a townhouse, because just in my immediate area, there's no semi-detached. There really aren't any semi-detached homes in this area whatsoever. And by this area, I mean my daughter's school zone and if we went to a detached one, the prices would jump up to about 2 million.

Barry Choi

And the reason for that is a lot of these homes or this area is so popular that construction companies will just buy it at any price, knock it down, build a big house, and then sell it for three and a half to $4 million. That's constantly see it. So any detached house gets knocked down now, like no detached house in the area that gets sold adds up to someone who wants to live in it.

Barry Choi

That was unfortunate, a reality. So then the compromise was a townhouse and I'm in a condo townhouse, so I have no backyard. I have a shared garage, so I do have some condo amenities. And by that it's really just landscaping. There's no pool, there's no security, there's no concierge. But the overall living is quite nice because I don't need to worry about mowing grass and things like that.

Barry Choi

But it's also a stacked townhouse. So from my basement, the top floor, three storeys, it's 46 steps. The first week I moved in, I was so out of breath it was pathetic. On the amount of stairs. Had to keep climbing. Fortunately I've adapted to it, so maybe getting this townhouse is good for my health.

Sean Cooper

Yeah, who needs the gym when you have all these stairs?

Barry Choi

Oh, I definitely still need the gym. 

Sean Cooper

Well, that's good for cardio. You could do it. Just do weightlifting at the gym. That's true. Well, yeah, that sounds great. And, yeah, I definitely hear you in my area as well. Like the starter homes, like the wartime bungalows. They're knocking them over and adding these McMansions. And my concern is that like, how is the next generation ever going to get a starter home when they're disappearing?

Sean Cooper

Like really your only choice. And a lot of cases are condos or townhouses or something like that. It's really hard to make the jump to attach home when you're looking at 2 million to start. So I totally hear you there, Barry. So yeah, like my understanding as well is that you didn't do like, the typical thing where you sold your first property and used the equity from that to buy the next property.

Sean Cooper

You actually held on to your two bedroom condo and decided to be a landlord. So I'm just curious, your thought process on that and what made you decide to go that route there? And maybe you could just talk a bit about the financing and how you did that. Like if you refinance that property and pull some equity out of that.

Sean Cooper

I just would be curious to hear why you decided to go in that direction and how the whole financing went.

Barry Choi

Well, the wife made the decision about becoming landlords. I actually wanted to sell the condo. It's funny because how do we sell the condo? And based on how much we had saved, maybe that 2 million detached house was a possibility. But that's just me. Wishful thinking. I'm sure there'll be other variables in place, but just to give some context, you know, we had bought our first home eight years ago, roughly, and we painted it off in about two and a half years.

Barry Choi

And that was kind of unintentionally intentional. Yeah. We had put in some extra effort to increase our mortgage payments and things like that, but it's just I used to work for an employer, and there was an employee stock plan in the stock plan. As long as I max it out, every single year was giving me like $30 to $40,000 extra.

Barry Choi

You know, mind you, 25, 50% of that was my money put in from my salary. But it was a good return. And then over the years I became self-employed. So I actually had another income stream. So that greatly increased my total compensation overall. So I was able to save a lot of money since I had no mortgage. And at the time, you know, my daughter was just born.

Barry Choi

The expenses weren't as crazy as we thought they would be. Besides daycare. And then, you know, it's also some sheer luck in the sense that during the time when the pandemic started, you may recall the stock market crashed quite a bit.

Sean Cooper

Yes.

Barry Choi

I continued to just invest like I normally did. I didn't make any changes to my investment strategy, still maxed out my to say. Had some money in a taxable income account. And you know, markets quickly rebounded and I haven't looked recently but they're up considerably since that market crash. So my investments just went up. But part of this like let's be like I wasn't necessarily planning on moving.

Barry Choi

So that's why I had my investments invested in the stock market. You know, when I was planning to buy the first place, I just had it in a high interest savings account. Right. So it's kind of like luck. Like I said, it was like, oh, this money was growing. I had also quit my full time job. And because at the time when I quit, interest rates were really low and I decided to get my pension paid out.

Barry Choi

So people may not realize that, but with pension adjustments and when you get your payout for the rise when interest rates are low, the amount of money you get is quite high. So again, all of a sudden I came into this money again. It wasn't like a huge amount, but it also wasn't insignificant. It was probably another 40 to $50,000.

Barry Choi

So over the years, I was just able to accumulate more money from savings and working. And obviously, you know, we're pushing in our early 40s now, just your regular career growth, you just naturally make more money. So to finance the home, that was essentially just a lot of savings and straight up, I'll admit it, my parents gave me more money.

Barry Choi

I wasn't expecting it. They gave us $100,000. I'll openly say that so people don't question my intentions. But that was unexpected. I was not depending on that. And then when I told my parents we were getting close to buying a home, they're like, oh, we'll give you $100,000. And my wife and I were obviously very grateful for that.

Sean Cooper

Wow. That's great. Thanks for sharing all those details with listers. It certainly helps. So yeah, like I guess happy wife, happy life. So that's what you do in terms of being a landlord there. So I'm just curious, can you talk a bit about whether you have a tenant right now in the condo? And can you talk a bit about the process of renting out the property?

Sean Cooper

How did you do it again, I don't know what stage, right? And whether you have a tenant in it, but I mean, did you hire a realtor to help you with that, or did you just use Facebook Marketplace to stay curious to hear about the whole rental experience, depending on where you're at.

Barry Choi

So our tenants are scheduled to move in like the next few days. She hasn't give us the exact date because she doesn't quite know yet, but we decided to go through our realtor, the same realtor that we bought our house with because it just made more sense these days with so many scams online as far as rental scams are concerned, I felt like using a realtor or a professional just gave us an extra layer of security and sometimes, to be honest with you, I don't know why realtors do it.

Barry Choi

The amount of work they have to do for the amount they get back because they have to give half of it to their brokerage. It's so much work for so little pay. It's such an underrated thing. And obviously I had to give up a month's rent. But to me that was a good value because we just had to screen all the tenants.

Barry Choi

We came up with the right strategy, we had photos done, and having that right strategy really mattered because essentially pricing the unit right, and because we knew we had a good property, we had a lot of applicants who were very interested in our property. So we chose someone that not only fit into what we were looking for. Obviously someone who had a stable income, but we also chose a family that we felt that they would really enjoy the neighborhood and they would really get a lot.

Barry Choi

And being part of this community, I know it sounds weird, but we just want to make sure we weren't looking for the best. The person who was willing to pay us the most.

Sean Cooper

Great advice, Barry, because yeah, like I echo what you said recently, I ended up moving upstairs in my property and renting out the basement. So I ended up using a realtor to rent out the basement just for, like, what you said. There's just you've got to be careful when you're dealing with people online. There's so many scams out there.

Sean Cooper

But yes, the realtor definitely earns their pay with all the work that they do. And yeah, in terms of pricing strategy with the rental unit, I echo what you're saying there. Like, you don't want to be greedy and ask for top dollar in terms of rental income, because you really only get the most desperate people. And that actually causes the pool of the tenants to dwindle considerably.

Sean Cooper

So yeah, I mean, you don't want to list it for dirt cheap or anything like that. You want to kind of come up with a fair offer, like a fair rental amount so that you attract something decent.

Barry Choi

Amount, actually pretty easy, right? It was like because I'm in a huge area full of condos, it was really easy to see what the average price was. And then while using realtor, it was showing us how long these rentals had been on the market. So just by pricing the unit at $100 less, we had so much demand and it obviously worked in our favor.

Sean Cooper

Yeah. And $100 may seem like a lot, but you claim income tax on it is a really insignificant amount. And yeah, having a good tenant and avoiding the landlord tenant board, like that's definitely something that you want to do. So I'm totally on the same page with you there. So moving on here, I understand that you've been undergoing some renovations on the new property, your new townhouse here.

Sean Cooper

So yeah, I'd love to hear about the exciting renovations to, I guess, make the space your own as well as since you're the credit card and travel expert, I guess more on the credit card side, I'd be curious to hear how you do utilize your credit cards from a home renovation standpoint. I mean, you're always talking about it from a travel standpoint, but my understanding is that you use them to your benefit for the renovation.

Sean Cooper

So yeah, I'd be curious about your perspective on that.

Barry Choi

So we'll just talk about the renovation really quickly. Essentially, the home is 25 years old, and it had a lot of things that were up there from 25 years ago, like a fireplace built in the TV monitor area. It just didn't make much sense for us. So we opened it up and then the previous tenant for whatever or our previous owner for whatever reason, had carpets on the stairs and upstairs floor, so we just had those redone.

Barry Choi

But overall, when it really comes down to maximizing credit cards we just have a lot of expenses coming up with renovations. So although the contractor didn't necessarily take credit cards directly, they said that like, you know, if you're going to buy your own appliances or the hardwood or whatever, they would obviously just reduce that price from our invoice and they get to price.

Barry Choi

So when I started pricing on appliances, I quickly realized, like, okay, it's going to cost us about $6,000 for new appliances. So I immediately just looked for a credit card that would give me a big welcome bonus for spending about $5,000, right? It was just that simple. So at the time that American Express Business Gold Card gave me 75,000 points when I spent $5,000, it had an annual fee of $199.

Barry Choi

But when you factor in that, the welcome bonus plus the amount I had to spend, that's $800. I was getting points. So I was ahead by $600. If I transferred that to Aeroplan, I could double the value. So I was getting a value of up to $2,200 in points just by signing up for that card. But obviously there's other expenses too.

Barry Choi

You know, we had to get new window coverings, and the quote we got was about $3,500 and they're like, oh, but we take credit cards. So again, I was like, oh, $3,500 is pretty close to $5,000. I should get another credit card. But, you know, I didn't want that immediate credit hit again. So what I did is I referred my wife to the same card because American Express has a referral program.

Barry Choi

I got 15,000 points. She got the 75,000 points bonus. So just from this home renovation. And I wasn't even trying that hard because I already have a lot of credit cards. I got like another 250,000 points overall. So there's a lot of good value in it. And again, it really just comes down to seeing what credit card has a good welcome offer that meets the minimum spending requirement that you're going to spend anyways.

Sean Cooper

Yeah, that's very interesting. Definitely. Thanks for sharing that. And not everyone as credit card savvy as you. So definitely all the listeners need to visit Berry's blog because yeah, it's not easy to kind of figure some of this out yourself. Berry breaks it down great on his website there, so be sure to check out his job site and we'll include links in the show notes as well.

Sean Cooper

So yeah, thanks for sharing your experience there. And yeah, the last thing I want to finish off with is if you could just talk a bit about your experience getting a mortgage as being self-employed, like I'm not sure if the first time like I'm not sure if you tried switching lenders when you were self-employed or this was really the first time that you had like applied for a mortgage.

Sean Cooper

Being self-employed. But yeah, I'm sure that was a bit like you're more financially savvy than the average person. I'm sure you had an idea about some of this stuff, like to your averages and stuff like that when you're self-employed, but you really don't understand it until you actually go through it yourself. So yeah, I'd love to hear like how the whole process went and things that you learned that you wish you had known before you had gone through the process that would have made it easier because, yeah, when we were talking offline, like the challenge of being self-employed is you want to it seems like the mortgage broker, whoever you're working with and

Sean Cooper

The accountant is working in separate directions, like the accountant wants to minimize taxes, but the mortgage broker wants to make sure that you have enough income so that you can qualify for the mortgage. So yeah, I'd love to hear about that balancing act and anything else that you learned along the way that would be helpful for the listeners that are in the self-employed situation, or thinking about going that way, because that's the trend these days.

Sean Cooper

More and more people are going self-employed, freelancing, stuff like that there. So yeah, anything you could share would be great.

Barry Choi

Yeah. So like I said, we started the search about three years ago, and at the time I had contacted the same mortgage broker I had used when we bought our first home, and he made it sound like it was really difficult to get a mortgage. As being self-employed, it would require a lot more paperwork. We had to prove all these things and that was fine.

Barry Choi

I knew it was going to be the case, so it wasn't a big deal. But when we actually got the home like the offer was accepted, I decided to reach out to a different broker just because I was like, you know what? I don't feel like this is necessarily right. I'm going to check with someone else. And weirdly enough, because it was such a quick closing, I decided to reach out to my regular bank, one of their mortgage specialists, and he called me back within like 15 minutes of me sending an email, and I explained to him my situation and he straight up said, it's like, listen, you being self-employed actually doesn't make a difference

Barry Choi

because all you need to do is show us your notice of assessments for the last two years or two for your business income. So just show us your business bank account or whatever. And you're good. And I provided it with them right away. He said, yeah, just looking at this, I don't see there being an issue unless there's something else that comes up.

Barry Choi

In case I had a case of identity fraud on my account like that. So as weird as it sounds, getting a mortgage, as someone who is self-employed ended up being super easy, I just had to submit more paperwork than my wife. And what's interesting is like, I like how you were brought up. It's like, oh, you want to minimize taxes from an accounting standpoint.

Barry Choi

That's where you minimize how much you're paid. You know, the broker said straight up, as long as you show the business income in your business account, you're good. And what's really interesting is working with a good broker can be night and day. Because when I initially mentioned what I was thinking about doing and having a finance background, I thought it was the best thing.

Barry Choi

He straight up said to me, he's like, no, no, no. It's like what you want to do is like, you should actually get a HELOC on your condo and use that to pay off or to help fund your new home because you're avoiding a certain step. It would actually lower the interest rate you're paying. So he gave some really solid advice.

Barry Choi

And this is what it really comes back down to, working with professionals that know what they're doing. That can really explain what your best option is. Overall.

Sean Cooper

Very well said. I couldn't have said it better myself there. And yeah, thanks for sharing your experience because yeah, being self-employed and applying for a mortgage, there's a bit of a misconception out there. It is true that you need more paperwork, but it's not as painful as some people say. So yeah, it's definitely a good idea. Don't just make an offer on a house and hand over your tax returns and hope you qualify.

Sean Cooper

Very important to get.

Barry Choi

I did have that financing condition. That's why I did it.

Sean Cooper

Yeah, that's very smart. But yeah, definitely a good idea to get pre-approved in advance because I would imagine you didn't just go out and go home shopping. You kind of crunched the numbers with like, yeah, I.

Barry Choi

Knew off line what we could, realistically speaking, afford, but oh, one thing we didn't touch on, I want to make sure we touched on that, because I know we're going to wrap up soon, as originally, like ten years ago when we first met, like I was like house prices can't go up forever. And I still don't think they'll go up forever.

Barry Choi

But my mindset now is the fact that, like, like I said, I feel like I overpaid for the song, but it came to a point where it's like, I'm just going to buy what I can afford and just get on with my life. So even though I felt like I paid more, I know I can afford the payments.

Barry Choi

If interest rates go up, I'm not going to be affected. This isn't going to affect me long term, so I'm content with that decision.

Sean Cooper

That's great to hear because yeah, you just read all these headlines in the media about housing crash and all this stuff, and housing's overvalued and all that and makes people kind of give pause. But at the end of the day, you just need to get on with your life. Like if you don't end up actually like making a decision, you can just sit on the sidelines and not do anything.

Sean Cooper

Like when I bought my house, I was like, read all these headlines about real estate prices crashing and stuff like that. But if I hadn't bought my house, the house that I'm in today, like I bought it for 25, it's actually worth like $1 million. Like if I had never bought anything back then, I would have kicked myself because I wouldn't even be able to get into the market these days.

Sean Cooper

Or maybe go on like my option would be like some shoe box condo on the outskirts of the Greater Toronto Area. So yeah, at the end of the day, you just kind of need to make a decision. Don't suffer from paralysis by analysis. However they like to say it, they're like, it's good to have data. At the end of the day, you just kind of need to make a decision because if you don't make a decision like your life's kind of constantly on pause.

Sean Cooper

So I mean, yeah, like it's great that you're able to find your property that was well suited for you. But at the end of the day, you kind of just need to finally make a decision and pull the trigger eventually.

Barry Choi

And that's exactly it. And in the end, like I said, we can afford this place, we're happy and we're just ready to move on with our lives.

Sean Cooper

That sounds great. Well, it was a pleasure having you on the podcast today, Barry. Again, apologies that it took so long. I meant to have you on sooner. And yeah, thanks so much for sharing your most recent experience, and be sure to check in with you again in the future. I'd love to hear how everything is going with being a landlord.

Sean Cooper

And yeah, I'd love to hear how townhouse living is going as well. So yeah, thanks again for your time today.

Barry Choi

Thanks for having me. Anytime.

Sean Cooper  

Thanks for listening to another episode of the Burn Your Mortgage podcast. Besides being a podcast host, I’m also an independent mortgage broker. If you or anyone you know, family, friends, co workers or neighbors could ever use any unbiased mortgage advice or a second opinion, feel free to reach out. Email me at sean@burnyourmortgage.ca or call or text me at 647-867-3711 for a free mortgage consultation.

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