He can joke all he wants.

But when Kerry Boyko says, “I kind of have a three-legged stool investment program,” he’s really talking about a series of well thought-out investment decisions and a whole lot of elbow grease for that stool’s third leg: Buying residential homes on the cheap, gutting them by the sweat of his own brow and then renting them out as they build long-term equity.

A facilities engineer with Nexen Inc. in downtown Calgary, Boyko sees his day job and stock market investments as the first and second legs of his investment program. He added the third leg when he bought his first residential rental property in 1987 after a business colleague asked him if he wanted to buy his best friend’s dad’s house in the Edmonton community of Riverdale.

With one house on a lot that stretched 285 feet, the $52,000 pricetag looked good, recalls Boyko, who was living in Edmonton at the time. It looked even better when Canada Mortgage and Housing Corporation’s Residential Rehabilitative Assistance Program kicked in $16,000 to help Boyko with the renovations.

Larry MacDougal photo, Business Edge
Property owner Kerry Boyko, left, gets a helping hand from sons Matthew, 14, and Andriy, 12, with maintenance duties.

“We gutted the whole thing right down to the two- by-fours,” recalls Boyko. His first suggestion to folks who want to follow him into the residential rent business: “It doesn’t hurt to be kind of a handyman.”

Boyko was living in Calgary by the time he bought his second rental home in 1989. This time, he purchased in the northwest community of Capitol Hill.

He bought another home in Inglewood about five years ago. The property was another steal. Purchased with a partner, it went on the market for $85,000. Figuring it would cost half as much again to fix it up, that’s what the two offered “and they took it.”

Boyko still smiles at their good luck. Redoing everything from the gyprock to utilities, the partners rented it out before the renovation was complete.

Boyko’s second suggestion for success in the residential real estate market: Location. Location. Location. He laughs at the irony of owning a $52,000 home smack dab in the middle of a community with properties selling for well over $500,000. (“The neighbourhood’s gone to heck,” kids Boyko.)

Back in Calgary, the house in Capitol Hill has a university in the neighborhood and Inglewood remains one of the city’s hottest inner-city addresses.

Timing is also critical. Boyko’s convinced there’s still money to be made in the rental market, but “I haven’t bought in five years because the market is just going crazy now.”

He’s also careful not to over-extend himself. A self-confessed farm boy who likes “having a list of things to do,” Boyko’s summer list for this year already features a couple of time-consuming maintenance jobs for his two sons, including fence painting.

Investment in single-family homes for rent “is actually fairly substantial with the way the stock markets have gone in the last couple of years,” says Calgary realtor David Brown of The Real Estate Company. A former banker who has owned rental real estate himself, Brown likes laying out “the positive and negative properties of being in rental real estate” for clients.

He agrees prices have risen dramatically, but says there’s still money to be made, especially with the right home and location. In Calgary, Bowness is one of his favorite rental property communities, with Albert Park and Radisson Heights also strong.

Down the road, he expects Forest Lawn to be hot as the inner core pushes east.

The biggest gains from owning rental property are long term, warns Brown. “People always fear, as a landlord, that you’re going to get the phone call at three or four in the morning and that almost never happens.”

Rental market fluctuations are a bigger threat to the investment. Right now, the market stats for Calgary sit at about five per cent vacancy.