Top up my RRSP and use that to buy my first property?

by Nick
(Nova Scotia)

Hi,

I'm 26 years old and I currently have about $10,000 in my RRSP through a program where my work more than matches my RRSP contribution(free money). My intent was always to use this as a piggy bank in saving for a down payment. I am currently renting and would like to buy a triplex or fourplex where I live in one unit and rent the others.

I am getting a little antsy and want to get started. However $10,000 is not quite enough for the 10% down payment required for a 3 or 4 plex, so I am thinking about getting a loan to top up my RRSP to $25,000. I've talked briefly with a local mortgage broker and my credit is good and he tells me that my debt to service ratio will be fine to buy most any of the local rental properties that I am looking at. All of the 3 or 4 plex rental properties in my town are in the 70 to 170k range depending.

Also, I believe that you don't have to use all of the RRSP withdrawal for the downpayment; you can save some of it for repairs or whatever else you need. Do you know if this is correct? If so, many of the properties that i am looking at would require a 7-15k downpayment. I would then plan on using only the minimum downpayment and using the rest of the money for a downpayment on a second building or perhaps repairs first if they were needed.

What do you think? Is it a good idea to top up my RRSP first? Can I use only part of the funds for my downpayment and then reinvest the rest into repairs and potentially remortgage to get my money back, or preferably, if no repairs are needed, use that money right away to buy a second rental property? If I do have to use all of the RRSP, would you use the full 25000 for the downpayment, or would you take out only a small RRSP loan to get the minimum downpayment?