Episode 180: From Mortgage-Free to Triplex: A Canadian Playbook for Smart Leverage

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What if you could turn a $60K starter home into a launchpad for long-term financial freedom—by age 25?

Too many young families feel stuck between rising housing costs and stagnant incomes. But what if smart planning, not a six-figure salary, was the real key to building wealth? This episode breaks down how one listener from Nova Scotia used house hacking, vision-driven sacrifice, and strategic leverage to take bold steps toward financial independence—without chasing the typical “dream home.”

You’ll discover:

• How a modest, mortgage-free property became a springboard to purchasing a cash-flowing triplex.
• The mindset shifts and trade-offs that accelerated their wealth plan—despite a single income and two young kids.
• What numbers to analyze (and red flags to check) before jumping into your first or next real estate deal.

Ready to learn how long-term vision can beat short-term lifestyle upgrades? Hit play and see how this 25-year-old is rewriting the early wealth-building rulebook.

Resources:

• Ready to take a deep dive and learn how to generate personal tax free cash flow from your corporation? Enroll in our FREE masterclass here. 
• Book a Discovery Call with Kyle to review your corporate (or personal) wealth strategy to help you overcome your current struggle and take the next step in your Canadian Wealth Building Journey!
• Discover which phase of wealth creation you are in. Take our quick assessment and you’ll receive a custom wealth-building pathway that matches your phase and learn our CRA compliant tax optimized strategies. Take that assessment here.
• Dig into our Ultimate Investment Book List
• Follow/Connect with us on social media for daily posts and conversations about business, finance, and investment on LinkedIn, Instagram, Facebook [Kyle’s Profile, Our Business Page], TikTok and TwitterX. 
  

Calling All Canadian Incorporated Business Owners & Investors:

Consider reaching out to Kyle if you’ve been…

• …taking a salary with a goal of stuffing RRSPs;
• …investing inside your corporation without a passive income tax minimization strategy;
• …letting a large sum of liquid assets sit in low interest earning savings accounts;
• …investing corporate dollars into GICs, dividend stocks/funds, or other investments attracting cordporate passive income taxes at greater than 50%; or,
• …wondering whether your current corporate wealth management strategy is optimal for your specific situation.

Young investors in Canada are redefining what it means to build wealth by leveraging real estate, strategic financial planning, and long-term vision. Through smart investment strategies—like using mortgage-free equity to generate cash flow from rental properties—they’re accelerating toward financial independence and early retirement. A modest lifestyle paired with tax-efficient investing, proper insurance coverage, and tools like RRSP optimization and corporate structure planning can unlock powerful wealth-building potential. By aligning personal and corporate tax strategies, using detailed property analysis, and diversifying across investment buckets, these Canadians are crafting a financial system that supports legacy planning, passive income growth, and business owner tax savings. Whether you’re navigating real estate vs. renting or exploring salary vs. dividends, building long-term wealth in Canada starts with vision, structure, and action.

Transcript:

Jon Orr: At just 25, this Canadian wealth secrets listener from Nova Scotia is turning home equity into opportunity. In this episode, we are going to break down his real estate investment strategy, how he’s leveraging a mortgage free property to buying a cashflow owing triplex, and what every young investor can learn about using leverage wisely. From understanding mortgage underwriting to planning for unexpected risks, this is a real life blueprint of what smart early wealth building looks like. let’s dive into this case study.

Kyle Pearce: Yes, I had this conversation with a listener and East coaster and doing all the things is really what inspired me to share this story. You know, when you get a chance to chat with someone who’s young, who’s listening to podcasts like ours and a series handful of all kinds of others and is just trying to do all the quote unquote things, right? And

really was looking for a little affirmation before potentially taking their next plunge into the real estate game. So first off, let’s talk a little bit about this individual. They aren’t bringing in a massive income. So this is another part of the story that I think is really important. There’s some people, they come out of school, let’s say, and they go right into a really high paying T4 job or…

maybe they’re an entrepreneur and you know, they have some early success and they bring in a significant amount of income. Sometimes when that happens, it can be harder to actually get to work because you know, you’re sort of thinking, well, like there’s more money coming in. And in this case, they’re earning under $100,000. They have children, young children, which is, you know, obviously a very difficult time in life. And so one,

one year old and then they have another baby on the way. And so they’re going to be living off of one income for a little bit of time. But here’s the difference maker. Not only did they do it smart, they found a very affordable home. This was a handful of years ago. You could call it luck that it was right before COVID or just the fact that they were doing all the right things. And then timing and the universe sort of took over. They bought a home for $60,000.

They did a little bit of house hacking with it and they fully. Yes, exactly. You know, a lot of people, if you’re in GTA, your Vancouver, even some of the other big set city centers across Canada, you’re thinking like, how do I sign up for that? Right? So, you know, they bought the home, they paid it down aggressively and they now no longer have any mortgage because again, they had some rent coming in. They had some extra payments from their own income coming in.

Jon Orr: That’s you said this was East Coast, right?

Kyle Pearce: And the property is now worth $160,000. So already they’re almost 3X on the original purchase. So once again, some people are going like, well, that, you know, that’s great. What do I do now? Well, guess what? Many years from, I say many years from now, a handful of years from now, this could be you. If you’re a young listener who’s trying to get started, the price is a little different right now. But I think one of the big takeaways here is

They probably could have came out and they could have maybe gone for a really expensive property or a property that, you know, is nicer than that first time home buyers style home. You know, the higher our expectations are, the more difficult and challenging it becomes to find that extra cashflow to be able to really get the wealth building journey going. So huge hat off to them. And here’s the thing. They’ve got a baby on the way. They’ve already got a one year old.

and they are ready to make another splash. So they’ve paid off this property. They’re looking to pull equity from this property in order to purchase not another single family home, not a duplex, but actually a triplex. And they’re thinking about potentially even shifting over from the home they’re in now over to maybe one of the units in this triplex, all kinds of ideas. It’s like no option.

isn’t a possibility in this particular household. And I think that to me is what makes them so versatile and flexible and nimble to be able to really take advantage from such a young age to really put them in a pretty awesome spot come 10, 20, 30 years from now when they’re looking at that financial freedom number.

Jon Orr: For sure, for sure. So if you think about like the four stages of a healthy financial portfolio, healthy financial plan, this person is doing very well on that first stage, right? So vision, planning, thinking about some of the structures that they are going to optimize in the third stage. They’ve got that clarity. Like even going back to thinking about like, what is the goal here?

you said, like, if you’re young, sometimes those that mindset that you have is like, I want the nice house, I want to live, you know, this way, I want the nice car. But this is the essential part of stage one is going what, what do I want my life to look like down the road? And how can I get there quickly? Like, if I do want to like, do I want to have the nice stuff? Do I want to have the nice car? Do I want to have the nice house? And if I do,

Do I realize that that means that say this cash flow that could be going to say investments or buying a rental property or you know building my reservoir for emergency funds is going to go away like I have to realize that that’s the trade-off I’m making and if that’s the trade-off you’re making fine. It’s it’s completely fine

It’s just realizing you’re saying no to this thing over here, which means maybe retiring earlier than you thought or being, you know, financially like having your net worth greater than it could be. But you’re saying I’m going to enjoy life now. I’m going to enjoy these toys that I have. Whereas this person is, is, has the vision that people twice their age have, right? This is, that’s what that, that’s what makes the vision great here for this individual, because a lot of times it’s like we

get into life and we do these things. And then when you’re at 45, 50, you’re like, I wish I was the 25 year old that bought the rental property. I wish I was the one that paid down the mortgage aggressively so that I had the capital available to do this, this and this with, because that whole like higher expectation versus financial goals, you have to know the trade off. his vision was like, I know

where I wanna go, we’re gonna make the sacrifice now to buy this because in five years, six years from now, this is gonna be our likely situation and now we’re in a way better spot to do those things. And if I can wait the five years, I can now use the money I’ve made off the investments to buy the car, to buy the better house. Like it’s just, it’s a delay, which is the essential component of stage one.

Kyle Pearce: 100%. And you know, the part that I think is so hard for us as humans to recognize is like, if these this couple, if they fast forward 25 years, they get we’re talking age 50. And they think back to what they sacrificed. Now, I don’t think they’re gonna say, but we didn’t have blank, like, we didn’t have the nicest

car on the block or we didn’t have the nicest home on the block or we didn’t have the most space in the house. We didn’t have the nicest kitchen cabinets and count, you know, like all of those things. Like when you go far enough into the future, none of that stuff matters, you know, like none of it matters. So, but it’s so hard to know that in the moment. So that’s something that I want everyone.

regardless of the age, whether you’re 25 listening to this or you’re 50 or sometimes we’re chatting with business owners who are in their sixties and going like, you know, I maybe didn’t plan enough. Like what should I do now? How do I like it most often comes down to that where they’ve lived a really comfortable life for 25 or 30 years, but then they get to this place and it’s like the sacrifice that they have.

for the rest of their life is one of two things. Either they have to continue working harder in order to sustain that same level of comfort, which here’s the crazy part. When you do something for 25 years, that doesn’t feel comfortable anymore. It just feels normal, right? And it doesn’t feel exciting or anything like that. And that could be really like hard, you know, when you get to that point in that stage. So again, like this vision planning is so key in trying to figure out.

Is the dollars that I’m putting into this thing better or worse for me now 10 years from now 30 years from now, whatever that might be. And what is it like? What’s the real residue of it? And by residue, it’s like does that memory of spending money on a certain thing? Does it really have a positive or negative influence on my future self? What I do know is that those who have more than they need, it’s

never once have we had people going like I regret spending, you know, more money to get to this place, right? Now, in some ways, you can get to an extreme. So we’re not telling people to live in a cardboard box for the rest of their life. But it is a really important aspect here. And, you know, the other aspect that I thought was so great, and you can tell and this is all part of the vision planning and making sure that they’re not just, you know, sometimes people get

over excited about an investment and they rush into it. They’re looking at this triplex and we actually went through the numbers together and we put it through the property analyzer and you know, basically came into the conversation saying, I think this is a good fit, but I just want someone else’s take on it, right? Cause like sometimes you’re just like, you just don’t know what you don’t know. We went through the numbers and again, we’re talking Nova Scotia. We’re talking to triplex for 350.

So putting around 70,000 down on this thing, which he’s going to leverage against this property that he’s fully paid off 20 % down, we assumed about a four and a half percent interest rate over 25 years. And with rents coming in at a total of about 3000, just north of $3,000 a month, it puts them at a monthly positive cashflow number of about 385. That’s after accounting for a 10 % repairs and vacancy fund.

We didn’t include property management in this case, because he intends to do the property management rock and roll. know, John, you and I, we would be putting about 10 % for property management as well, just because that’s something that we typically are going to do. We’ve got the taxes in there, insurance, lawn and snow removal, which he’s prepared for. And this

This property is looking great. Like the year one return on investment, including a very conservative 3 % appreciation rate, puts it at about 29%. Without appreciation, just cash on cash with principal pay down, we’re looking at 14.8%. Like a great, great opportunity here. Now, the caveat I did give to this individual is like, haven’t seen the property. I don’t know the market there.

I don’t know whether it’s in exactly good neighborhood, bad neighborhood, right? Like if we’re gonna buy in maybe a rougher neighborhood, you might have more vacancy, you might have more expenses, you might have more challenges, who knows? So these are all parts that we can’t really factor in on. But overall, from a numbers perspective, if he’s feeling confident in this property and the properties and like decent, you know, decent good repair from a capital expenditures perspective,

looks like this is going to be the next greatest step along the journey. And the one question I did ask him though, as I did say, said, how do you feel about fully covering the mortgage on that triplex if, and also the money borrowed against his other property, how do you feel in terms of your cashflow? And it was so great to hear you was like, I’ve already accounted for that. And if I had to, we would be able to fully fund.

the mortgage and the cost for this building, even if we didn’t have rent coming in, when you’re getting started, that’s always a great place to be, right? I’m not saying you have to be able to have it all covered, but the fact was he doesn’t have a huge amount of money sitting aside for emergencies, capital expenditures. So it would be a line of credit. And that to me would be the last important question for this particular individual is like the what ifs, right? The Armageddon scenario.

You don’t want this next step in your journey to be the thing that totally like blows up your plan, right? And in this case, they’ve already accounted for that. And to me, I’m giving them the two thumbs up on this next step in this wealth planning journey.

Jon Orr: Right. So stage two, what I’m hearing is, is because this person has, has done a great job of, of using the reservoir. And when I refer to reservoir, the structure for this person’s reservoir was the equity in the primary residence, because the, said they aggressively paid that small amount of mortgage down because it was a $60,000 house. It’s worth 160. There’s a

great amount of equity in there that they could now use as their reservoir to go and do other things with and they’ve used this appropriately. They’re not maximizing that reservoir. Sounds like he like you saying he’s got this kind of other reservoir here because he didn’t use it all to kind of handle any sort of emergencies that may come up if we can’t rent it out or other let’s say life emergency. like stage two, we’re doing very well on the reservoir side because we’re making use of it. And so

I know that there’s going to be a listener out there right now, Kyle going like, wait a minute, if I dial back a few episodes or 20 episodes or 30 episodes, because they’ve been listening that long, they’re like, Kyle, you said that you should never pay down the mortgage aggressively, because, you know, you want to use the know, the, you know, the value of the abortion, use your your line of credit, like, like, why pay off the mortgage use the money now to do other things with so that you’ve got that person going like, wait a minute,

You said this person was dynamite, you know, on being aggressive, but then, you know, old self Kyle would have said like, wait a minute, you shouldn’t maybe pay aggressive down, but I think, know, the stickler listener right now is missing some of the big idea here.

Kyle Pearce: Yeah, absolutely. And the real the word never you had mentioned, I’m not going to say that I’ve never used never, but I try my best to always leave room for, know, when we talk about optimization, right, we do talk a lot about this idea of emotion coming into it. And I think that’s really important, right? So even though

Maybe there was a more optimal way for them to achieve this. If it satisfied the emotional need for the investor, for the wealth builder at the time, I’m all for it because ultimately the net result here is that he’s planning to use leverage against this home that he’s fully paid off in order to buy the next home, which is exactly what I did when I got started. I was aggressively paying off my original home. This was before I recognized the power of leverage, right? So it’s like,

I still don’t regret doing that. Could I have done it differently? Now I can, I see how I could have done it differently, but would I have done it at that time? I’m not sure. I’m really not sure, which is where this middle, there’s like a massive middle between, you know, when we talk about most optimal and least optimal, like there’s a big, big middle and everyone fits a little bit different in there. And it’s not always about the exact.

perfect optimization strategy. It’s what’s going to be perfect for you. And I would argue so far for this individual. He might agree with me, you know, you already might agree with you. And you might say, you know, I could have done it a little bit differently. But here’s the aspect though is sometimes by paying down that first mortgage that you have more aggressively in order to give you the confidence that you can do it. And also because it’s harder to get it back. Sometimes that’s a good thing.

right? Whereas sometimes people change their minds right from season to season, right? So they, they instead of pay down the mortgage, they put it in this other bucket, but then they make a poor choice. And then they use that bucket for something different than what they had intended for. So at the end of the day here, I think that this was a great move. So if you are listening and you’re like, well, I’ve been this like person feeling bad about myself that I’m overpaying on my mortgage.

don’t feel bad about it, just go, okay, now what is this unlocking for me? And what it’s unlocking for me is a huge opportunity to leverage against that same primary mortgage. You get the benefits of the Smith maneuver, right? You get the benefits of being able to write off interest when you utilize that equity for any type of income producing or income, you know, plan to produce income investment and

In this particular case, I think it’s a great move at such a young age. And I’m rooting for this young couple and hoping that some other listeners are inspired to do the same, whether they’re 25, 35, 55, wherever they are in their journey. Hopefully, they’re looking to them and saying, you know what? I think we can take our next step in the journey.

Jon Orr: Yeah. Talk to us about stage three, stage four, like, I know that this person is young, they’re 25. You know, stage three, stage four, stage three is optimizing your wealth plan, using your structures wisely, making sure that you’re planning for the future. Oftentimes, when we assess our clients on stage three, or the people that we’re having talks with and guiding them along this journey, we’re often talking about

making sure we’re making use of our structures like our ESPs, tax-free savings account, whole life insurance to build wealth. So these structures that we’ve often talked about here, we’re trying to optimize that. this particular person being young, the structure they’re making most use of is the investment class of the real estate. And so they are making some great use of that structure and to build their wealth. I sense that.

in the conversation that you had with them, we didn’t you didn’t get into say these other structures specifically to kind of say how can we optimize the next step there. So I think we were like assessing him as a bee in this area with some growth in terms of like what does it look like to you know contribute to the RSP or the tax free savings account. How do you how are you going to keep this flywheel moving down the road you know looping in real estate and then I don’t know about you know legacy and estate strategy at this stage of the game.

Just because they’re so young, know at this point like let’s get that triplex flowing and then all of a sudden can revisit

Kyle Pearce: 100 % and you know one aspect when we’re young is I try to make sure that we don’t put too much pressure on herself to have all the buckets full you know because that’s that’s the reality is like it does take time and when you’re young certain buckets like if they weren’t doing real estate then I would be going okay let’s analyze the tax free savings and the RRSP as

your buckets that you utilize right but they’re very into real estate as was I as was as is you so those buckets right now not as important in my opinion he’s also not earning a huge salary where he’s losing a ton in terms of taxation so to try to backfill the RSP right now would actually be a potentially counterproductive for him to scale the real estate side right because

He’s taking money out of his cashflow, which is already fairly like tight because he’s got young kids, his spouse is gonna be off again. And you know, that makes things a little difficult. When I put money into that RSP, while I do have the opportunity to potentially invest in other things, it’s a little bit more nuanced. Like I might have to go to some trust company if I wanna invest in real estate through the RSP and so on and so forth.

Right now I’d say that is one, that bucket that you’re gonna wanna come back to. You also mentioned about permanent insurance as a part of the structure. And to be honest, at this stage of the game, I was like, do you have your term life insurance? They do have some, I actually recommended a little bit more term insurance for now. If they keep scaling over the next 10 years, I would argue that they’re going to create…

a legacy and tax problem for themselves through real estate investing. And at that stage, I would say we want to start redirecting our attention to permanent life insurance, like a high early cash value insurance. If he wasn’t paying off the original mortgage, and he was going to put that money into what we call a wealth reservoir, potentially permanent insurance could have taken that spot.

right? But because he chose to pay off the mortgage, and we’re not going to say that’s, you know, better or worse. He chose to pay off the mortgage and re borrow from that reservoir. I’m happy with that as a start. The next most important insurance in my opinion for this individual at age 25 is disability insurance because right now he’s the sole income earner in the household until the spouse goes back to work. If he ever becomes

disabled and unable to work, that could be extremely problematic, not only just for the regular cashflow for the household, but obviously for the longer term legacy or not legacy, but wealth planning for the family. So the disability insurance is actually going to be one that’s more important for them at this stage. And I would argue the permanent insurance is going to be something that we’re going to want to come back to probably as he’s, you know, maybe

looking at that next property after the triplex or after a handful of years and they’ve, you know, they’ve got a good cashflow system going here and they’re looking to continue growing their wealth and also growing their capital gains tax issue that will become an issue down the road if and when they sell or I shouldn’t say when they sell eventually they will sell or not if but when they sell because eventually when you move on, there will be a deemed disposition on those buildings.

and therefore there will be some taxes to pay. And that’s where the permanent insurance is gonna become really important. So we can squeak that in there along the way, but I think we’re a little bit premature for that at this stage. Let’s focus on the disability insurance. Keep it cheap, keep it reasonable for your family, for your lifestyle, just to protect yourself and just enough term life insurance at this stage so you can create yourself a problem.

And then once you’ve got that problem going, we can look to introducing the permanent insurance is as the solution to that, to that problem in the journey.

Jon Orr: Yeah, yeah. This Canadian, know, well-secrets listener is showing early mastery in financial strategy and in demonstrating, you know, like we said before, more insight and intentionality in the vision than many of, you know, listeners or people twice his age and is positioning themselves and himself very well with his real estate portfolio. And so, you know,

We talked about the four stages here that we are assessing this individual on guiding him on. If you want to know more about where you stand on those four stages, head on over to our pathways page, canadianwellsecrets.com forward slash pathways. Also in this episode, Kyle mentioned that he guided this individual on his real estate journey with unpacking the numbers on that triplex. They use the sheet.

our property analyzer sheet. can get a copy of that sheet or see the actual numbers from this deal over at Canadianwellsecrets.com forward slash analyze. Canadianwellsecrets.com forward slash analyze. You can get a copy of our property analyzer if real estate is your area of where you want to say grow your net worth as well. And so just as a reminder here, folks, the information you heard here today is for financial purposes.

is for informational purposes only. You should not construe any information or other material as legal tax investment or financial advice.

There’s one more reminder, Kyle Pierce is a licensed life and accident and sickness insurance agent and the president of corporate wealth management here at Canadian Wells Secrets.

Canadian Wealth Secrets is an informative podcast that digs into the intricacies of building a robust portfolio, maximizing dividend returns, the nuances of real estate investment, and the complexities of business finance, while offering expert advice on wealth management, navigating capital gains tax, and understanding the role of financial institutions in personal finance.

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