House hack: Forget having to make a rent payment or come out of pocket for a mortgage every month. This is exactly how you can essentially live for free by investing in multifamily real estate as a primary residence. Plus – if do it right, you can literally GET PAID to live for free. Here’s how.
When you already have some savings and want to make the jump to becoming a home owner, one thing most people overlook is multi-family properties. These include duplexes, triplexes, and fourplexes. What makes this unique is that in addition to your unit, you have other units that you can freely rent out which can cover your entire ownership cost of the property. When you buy these properties correctly, your rental income from the other units will cover your entire mortgage, property taxes, insurance and repairs, essentially letting you live in one of the units for free. Not only that, but you can apply the rental income towards your loan, meaning you can often qualify for a much larger loan than normal. You’re also paying down your loan and building equity at the same time.
My biggest recommendation to maximize the rental income is to look for vacant multi-family buildings that need cosmetic upgrades. This means you can immediately begin updating the property when you buy it – new floors, paint, bathrooms, landscaping are all cheap and make a significant improvement for rental income.
Now of course, there are downsides of doing this. First of all, you will have to manage tenants and that can be a part time job in and of itself. You will also have some shared common areas – it’s not any worse than an apartment, but you will be in close proximity with your tenants. It’s not for everyone.
But the good news is that when you’re ready to buy a house or upgrade, you can rent out your unit and you have a great cash-flowing rental property for you to keep long term. Essentially when this is paid off, it could be your retirement money that keeps cash flowing month after month. Or, you can live there long term and bank as much money as you can knowing that you don’t have be out of pocket every month for housing payments.
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