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How To Live Rent and Mortgage FREE

Real Life Case Study - How To Live Rent FREE!

House Hacking is a GREAT way to get started in Real Estate. In fact, that is how I got started. I bought a 3-family property next to the town I grew up in. It was in pretty good shape, it consisted of 2 - 2bed room 1 bath units, and 1 - 4bed 1 bath unit. I lived in the 4-bedroom unit (which was on the top level and much nicer) and rented out the other 2 units. My total monthly mortgage payment (including taxes and insurance) was $1680. The two identical units were rented to long-term tenants for $770 and $850 = $1620. So i had to come up with $60 every month to pay the mortgage... not bad right? 

The tenant paying $770 ended up moving out in the first year and I re-rented that unit for $900. Now i was pulling in $1750 a month. Which means i was being paid $70 a month to live in a 3-bedroom apartment.... How cool is that?

The beauty of the situation, besides being paid to live in an apartment, is that I was a broke recent college grad. I was lucky enough to find a good job but my debt to income ratio was way out of whack. I didn't even qualify to buy a small condo that needed a full rehab. However, when I discovered that I could use the potential rental income of the property I was buying on the loan application I was just able to qualify. If I didn't find this House hack, I would have had to rent an apartment at $1000 a month, instead after just 1 year I was getting paid $70 a month to live in a much bigger and nicer place. In addition, my tenants were paying down my mortgage. 

Now I did still have to pay for maintenance and perform upkeep on the property. But it would be the same scenario with any single-family home and I would have had to pay the mortgage. 

5 years later I was relocating for work. Instead of being forced to sell my property to buy one 150 miles north I was able to just rent out the unit I was living in for $1250. I still own it today as an investment property and it brings in over $1000 a month in positive cashflow. How does an extra $12,000 a year sound while someone else pays down your mortgage? 

The house my wife and I bought 150 miles north due to my relocation is a duplex. Building a real estate empire 1 owner occupied property at a time.