How Real Estate Investing Led to a Seven-Figure Net Worth

“I was trying to get rich quick and I ended up losing half of that,” he told Business Insider. “And then I got hit with a tax bill because I didn’t do my taxes properly.”

A few years later, shortly after buying his first property in 2015, he got conned while renovating the home by someone who claimed to be in real estate development. Insider reviewed a court document that ruled in his favor and ordered payment to him.

“He built up this relationship. He would give me cars for rent, like Porsche convertibles and Mercedes 300s, and keys to his cottages — and everything was rented on other people’s credit cards,” said Davidson of the person he sued, who he met through his ex-girlfriend. “And then after a year, he basically asked for my credit card, saying he would do my renovation for free.”

As Davidson now knows, it was too good to be true.

The mistake left him with “no cash in my bank and a house that was worth a lot less,” he said. “I was 25 and my life was a complete disaster. I hit rock bottom.”

Courtesy of Michael Davidson

Davidson chose to spin it into a positive and look at it as another money lesson: “I learned what could happen to millions of dollars in the future by not having contracts done properly and not doing due diligence that could protect me, so I’m actually grateful.”

At the same time, it was a wake-up call.

“I realized there’s a gap in my education on what I needed to do to get rich,” he said. And that’s what he was after: “I wanted to make a million dollars before I turned 30 years old. I was 25 and my life was completely a disaster.”

Real-estate investing as a path to wealth

With a specific goal in writing — a seven-figure net worth by 30 — Davidson started considering all of the different ways he could achieve it.

One was saving and investing as much of his six-figure income as possible. He was working for a large tech company at the time selling software, which Insider verified by looking at his letter of employment.

The numbers didn’t add up though, he said: “Even if I saved, after tax, 100% of it over the next four years and got general returns, I would still be way far behind in hitting that million.”

Courtesy of Michael Davidson

The next option was entrepreneurship: Starting a business, growing it, and selling it within four years. It was “a viable solution,” he figured, “but I already had a full-time job.”

He needed his second income source to be a little less time consuming than launching a company from scratch. That left him with real-estate investing, a popular wealth-building strategy that can eventually create a passive stream of income. Specifically, he wanted to create value through real-estate development and renovations.

“I thought, I can force appreciation here if I just learn how to do it,” said Davidson, whose first step was writing down everything he needed to learn about real-estate investing.

“Then, I started reading books and listening to podcasts,” he said. “Within a certain amount of time of listening to a podcast, you can pretty much get a PhD level of education, depending on what content you’re listening to, very quickly.”

Renovating his home, house-hacking, and growing his real-estate portfolio

After getting conned in the summer of 2015, Davidson’s home was “completely in shambles,” he said. The supposed renovator had started the demo process but none of the home improvements.

Davidson’s first steps were hiring a contractor to make the space livable — he sold stocks he’d received through his company’s employee stock purchasing plan (ESPP) to fund the project — and finding tenants to fill the extra bedrooms so he could offset his mortgage.

In the fall of 2015, four roommates moved into his single-family home and started paying rent. It was enough to cover his entire mortgage, allowing Davidson to live for free in his own home and rebuild his savings.

By 2018, thanks to the renovations plus three years of appreciation, his home’s value jumped from the original purchase price of $325,000 Canadian dollars ($239,266) to CA$425,000.

He refinanced the property, meaning he replaced his existing mortgage with a new, larger loan, and pulled out CA$56,000 in cash (the difference between his new mortgage amount and the balance on his previous mortgage).

Davidson took those funds and invested in a condo that same year. He filled it with a tenant, started generating cash flow, and later sold it for a CA$109,500 profit in 2022.

Davidson’s next real estate project was more ambitious than buying a rental property: He decided to convert his single-family home into a multi-unit property to further boost the value and generate more cash flow.

The project involved a complete renovation, plus an extension. He took a CA$1.35 million loan from the bank at the beginning of 2021 to finance it.

At the same time, he had a second development project in the works: building a cottage in Quebec. He bought the land in 2019 off of Kijiji, which he describes as “the Craigslist of Canada.”

Between the land and construction, he put about CA$310,000 into the development project, which he financed with a combination of a student line of credit, personal savings, and the construction loan he’d received for the multi-unit property.

Working on two major development projects was stressful, he admitted: “At one point in the summer of 2021, right before refinancing all my properties around the same time, I was at 100% leveraged on my lines of credit and construction loans, meaning I ran out of money completely.”

His plan was to eventually find long-term tenants for the properties. However, during the summer of 2021, he listed units from both projects on Airbnb to bring in extra income while simultaneously showing the properties to prospective long-term tenants.

Davidson ended up refinancing the cottage to finish the multi-family construction, “so I kind of leveraged one to do the other one, which is very risky to do,” he noted. “Because if one goes wrong and you have to make mortgage payments you can default on both and can get cleaned out.”

Courtesy of Michael Davidson

He might not do the same today — “that was the younger me who was naive and optimistic,” he noted — but he justified the risk knowing that he had a stable, high-paying job: “If things didn’t go through, I would always have enough cash to cover the interest unless I lost my job.”

In 2023, the cottage sold for CA$490,000, netting him a CA$190,000 profit. He’s putting the money into another development project: a triplex in Ottawa.

He finished the conversion of the single-family home into a quadplex in 2023. All four units are filled with tenants and he’s bringing in $12,000 a month in rental income, he said. Plus, it’s now worth CA$2.1 million, according to a recent appraisal.

Between his properties, investments in the stock market, and cash savings, Davidson’s net worth is above CA$1.6 million. He hit a seven-figure net worth for the first time at age 29, earlier than the lofty goal he’d set for himself a few years prior.

“Most of my money is in development projects, where I can control the destiny, and then the rest is in the stock market,” said Davidson, who prefers to park his money in low-cost index funds. “And then I have a lot in cash right now, about $400,000 sitting on the sidelines.”

Real-estate investing, in his opinion, is “the tried and true way of making money.”

That said, “right now is one of the most complicated real-estate markets I’ve seen in my whole life,” he said, noting that the Canadian market is similar to the market in the States currently. “You have super-high interest rates, you have massive volatility, and a lot of people are buying houses that will eventually go negative.”

He’s not encouraging everyone to stay on the sidelines right now, he added: “Just don’t go out and buy thinking it’ll work.”