How to Eliminate Housing Expense & Live for FREE
Today, we are going to take a look at how you can eliminate your biggest expense, every single month! Housing. I know most of you watching this have had the same thought as me; “Man, if I didn’t have to pay my housing expense (rent or mortgage) I’d be able to save up so much money”. Did you know there’s an extremely popular and well known real estate investing strategy called “house hacking”?
Unfortunately, house hacking is NOT extremely popular among society outside of a small pool of savvy real estate investors. This is not an end all be all house hacking tutorial. This is simply how you can own your own property while someone else pays your mortgage! As long as you make a small down payment of as little as 3.5%, you’ll have your mortgage paid off for you while you passively grow your net worth through natural appreciation (or forced appreciation through repairs)!
My name is Greyson Roberts and I am a realtor in the greater Springfield, Missouri area. If you’re looking to take advantage of the house hacking method, I specialize in helping people grow their income through real estate investing. Doesn’t matter if you’re looking to buy a $150k primary home or a $30 apartment complex. I would be more than happy to help you with ALL your real estate questions and needs, even if it’s outside of my local reach.
How house hacking works
For the purpose of today’s video, we are going to keep things VERY simple as a qualified real estate agent who understands this type of investing will give you all the details. It’s EXTREMELY important you pick an agent who fully understands the goals of your plan. Unfortunately, most agents have no business helping investors simply because they don’t understand it. If you’re outside my area, I’ll help you find someone who can. Also, connect with the right lender for the same reasons.
My favorite house hacking method is buying a duplex and renting out the other side. If you were to purchase a $200k duplex with 3.5% down through the FHA loan program, your monthly payment would be roughly $1,400 if you locked in a 4.5% interest rate. Duplexes around that value rent for anywhere between $1,100 to $1,500 per month. Meaning, you can rent out the other side to cover your mortgage.
Keep this in mind
Now, I understand sometimes it can be difficult to find a deal that completely covers your mortgage. If you have a mortgage of $1,400/mo and rent your other unit out for $1,400, you still need to set money aside for unforeseen expenses like hot water heaters, roof repairs and leaky faucets. A lot of the time, the rent from the other unit may not fully cover your mortgage. Consider this…
If you are currently paying $1,200 in rent, however, you buy a duplex and the mortgage is $1,500/mo but your other unit only rents out for $1,200, that’s a $300 defect. Let me ask you this, if you went from paying $1,200 in rent to a $300 mortgage, wouldn’t you pick that 10 times out of 10? Not to mention, with rent, you NEVER build equity. Your money goes down the drain every month. When you pay a $300 mortgage, you’re building equity through loan paydown and appreciation with inflation. That’s a recipe to make some serious net worth gains!
Here’s a caveat. In order to put 3.5% down, you must LIVE there (owner occupied) in at least one of the units for a minimum of 1 year. You can also only have 1 FHA loan in your time. Meaning, if you like the idea of putting 3.5% down through FHA, you’ll have to refinance into a different type of loan before rinsing and repeating. Yes, that’s right. You can do this over, and over and over. When you decide to move out of your unit and rent it out, your $300 mortgage just turned into serious passive income for yourself. It’s a win-win-win!
This is how many investors begin their real estate journey. Maybe you never even considered “investing” in real estate. Well, a lot of people who house hack never necessarily thought of becoming an investor. Newsflash, as a househacker, you’re a real estate investor! Exciting stuff. I hope this gets you excited to eliminate everyone’s most expensive monthly cost. Now, go find a great agent who can help you find a killer deal! I’d love to help you with that. Good luck!