Real Estate Deal Analysis & Advice

Meet the Investors: How I Live for (Almost) Free by House Hacking With Kelly Marburger

Expertise: Real Estate Deal Analysis & Advice, Real Estate News & Commentary, Real Estate Investing Basics
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Baltimore, Maryland, USA Downtown Skyline Aerial.

Today I’m going to tell you about the perfect house hack in a big city. My friend Kelly, we met on the BiggerPockets Forums, which is a testament to that community and how you can use it to leverage your network and meet great, fantastic people with amazing stories.

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In this edition of Meet the Investor, Kelly is going to tell you about a house hack she did in Baltimore. It’s a fantastic house. She got the downstairs tenants to pay for all of it, which is incredible. And she’s going to tell you that it’s easy, which might seem implausible.

Kelly shares the numbers, how she paid for it, and everything you really want to know. With that, let’s go meet her right now.

Meet the Investor: Kelly M.

Hi, I’m Kelly. I invest in Baltimore, Maryland. I just bought my first house hack—you can check out the amazing building in the video above. It’s 120 years old. I’m super excited about it.

I got into real estate for so many reasons. I came from a family of architects, developers, planners, and brokers—it was kind of in my blood.

Related: Meet the Investors: $1,500/Month Cash Flow Per Door & Tenants Who Stay 10+ Years—Here’s How I Do It

How I Got Interested in Real Estate

I moved to Baltimore 13 years ago, and I saw these beautiful houses. I was like, “I’m going to buy houses in the city!”

I realize how expensive they were, and so I thought why don’t I just buy a fourplex? There are so many of them, but it was still a little bit more challenging than I thought. It finally happened, though—it’s been amazing. And, you know, I don’t pay anything for rent. I’m able to put that money back into the house or put that money back into another investment.

How BiggerPockets Helped Me Get Started as an Investor

When I started getting into investing, I had a little inkling about it. I started Googling stuff. I wanted to know more. And I found BiggerPockets just in a Google search. I was like, wow, this website has a lot of information and they’re not trying to sell something. And that was amazing. So, I started using it a lot.

I also started listening to the BiggerPockets Podcast because I was super busy working for over eight hours a day. So, I would just listen to the podcast on the way to work, on the way home from work. And I was learning so much from that.

Then, when I started getting ready to buy my first house hack, I used the calculators. That was really what gave me the confidence to go into a deal. I could use those calculators on every house that I analyzed.

The journey has been interesting. Nowadays, I’m really connecting with people because I have more confidence. People have been reaching out to me. Who am I?

But it’s been great.

Related: Meet the Investor: Cash Flowing Rentals Despite an Incredibly Expensive Market With Russell Brazil

My First Investment Property: 4-Plex House Hack

In the video above, we go through the house. There are four units—I live in one. The other three are occupied.

Finding the house was definitely difficult. I went through a lot of properties. I put offers on properties. I went through three different agents. Finally, I got to the agent that really worked for me as an investor looking for a house. It's kind of a specific thing.

So, it took me a long time, but it was worth it. And talking it out with support from BiggerPockets members and other people around me really helped get to that point where I was able to find the right house. It’s worked out.

The Numbers Behind the Deal

  • Purchased: $430,000
  • Financing: FHA loan
  • Down Payment: 3.5%, or $20,000
  • Units: 4 total, 3 rented out
  • Rents: $650; $1,000; and $1,200
  • Mortgage: $2,870
  • Total Paid by Tenants: $2,850
  • Total Paid by Me: $20

Related: BiggerPockets Podcast 356: 30+ Rentals (in a Pricy Market) Through BRRRR and Section 8 with Joe Asamoah

My Advice to Other Investors

Trying to get my first house was definitely a challenge. There were some key things that really helped me get there.

Build a Team

I was new. I barely knew anyone, but finding at least a few connections at first and then slowly growing, that is really important. Your agent is really important. Friends, people on BiggerPockets, people who support you—not even just people who are going to actually help you buy that deal.

Somebody that’s going to say, “Go for it! Keep trying.” Those were really important people.

Work Hard

I am a bit of a workaholic, and that really paid off with real estate. I found certain things that I really wanted to focus on. And I was just like honing in on them every day, late at night, working on this stuff. And not everybody’s like that. So if you find something that you are really into, lean into that. Keep going with that. It’s going to definitely pay off—especially in this real estate world.

Related: Meet the Investors: Husband & Wife Flip Team Aims to Win Big With Nate Cross

Be OK With Failing

Everyone’s going to fail. And I wake up in the morning and I remind myself: “You’re going to screw up.”

It’s going to happen, and it’s OK. I’m kind of a perfectionist, so it’s been really hard for me. But that’s kind of my mantra. You’re going to screw up.

I mean, things are always going to happen. You’re never going to be perfect. There’s not a real estate jail. You’re going to be OK.

The Bottom Line

I’m Kelly. I just bought my first house, and somebody else is going to pay for it.

It’s not that complicated! I did it. You can do it. Go do it.

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Questions? Comments? 

Join the discussion below.

Alex has spent his career in sales and finance industries and now invests in rental real estate along with working in the underwriting department at a bank in Las Vegas. Alex is an expert in long-d...
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    Stephen Predmore Rental Property Investor from Baltimore, MD
    Replied 8 days ago
    Congratulations Kelly! Inspiring story for another new investor like myself. Looks like the 120 year old property was in pretty good shape. What did you focus the 28k rehab budget on? Did any items come up during the inspection that allowed you to negotiate the price?
    Sam Lewis Real Estate Agent from Baltimore, MD
    Replied 8 days ago
    Great stuff!
    George Lui Investor from Palo Alto, CA
    Replied 8 days ago
    Super awesome!
    Rik Hunter New to Real Estate from Chattanooga, TN
    Replied 8 days ago
    Congrats! I had a similar experience. Moved to a new city for a new job, but couldn't find a SFH in my price-range that didn't need to be gutted. Changed my target to MFH and lucked into a duplex with one tenant. Their rent covered the mortgage, taxes and insurance. Now I've rehabbed both sides, and the rent covers not only that duplex but the SFH I'm living in now—with a few hundred leftover. Done with a 0% down VA loan, btw.
    Jon Simpson from Berks County Blandon Pa
    Replied 8 days ago
    Blia Xiong from Minneapolis, Minnesota
    Replied 8 days ago
    I paid nothing for mine. I used VA loan. Negotiated closing cost and got a bunch back which went towards buying points. Living for free is nice.
    Ashley Carr
    Replied 8 days ago
    Congrats! That is fantastic!
    Jon Simpson from Berks County Blandon Pa
    Replied 8 days ago
    That is so awesome. Its good to know you can live rent free. ($20)
    John Freeman Professional from Los Angeles, CA
    Replied 8 days ago
    Fantastic and bravo !
    Salvador Carlton Investor from Lancaster, CA
    Replied 8 days ago
    Very inspiring and positive attitude specially for a new investor...Congratulations!!!
    Esther Nordman Real Estate Investor from Pueblo, Colorado
    Replied 7 days ago
    I've read many stories of people buying multifamily homes for a tiny percent down. Here in Colorado, multifamilies are considered rentals even if you will owner-occupy, so we've had to pay 20% down on both of ours. Has anyone else run into this, or did we not look far enough for a lender?
    Jonathan Smith
    Replied 7 days ago
    Hi Esther, I think it would be worth chatting with a different lender. FHA is a federally backed mortgage, not state specific. I checked out FHA's website and not only do they offer 1-4 units, but loan limits go up as you go from say a duplex to a four plex. some counties you have a loan limit over a million dollars in some counties in Colorado, for a 4-plex. Heres a link to their website for your reference. Hope this helped!!
    Maryanne Cameron New to Real Estate from Finger Lakes, NY
    Replied 7 days ago
    It’s definitely the lender’s choice. They set their rules for who they will lend to. I’m in NY, local / regional banks will allow owner occupied numbers for MFH. Keep trying!
    Esther Nordman Real Estate Investor from Pueblo, Colorado
    Replied 7 days ago
    Thanks! I appreciate your quick reply and the information. Cheers!
    Jay Singh New to Real Estate from Gwinnett County, Georgia
    Replied 7 days ago
    Hey congrats!! Great and motivational story.
    Renata Tavares Wong
    Replied 7 days ago
    Wow. I have a lot to learn. You purchase your primary home in FHA loan and was able to turn around and rent out 3 apartment in that house. Amazing
    Renata Tavares Wong
    Replied 7 days ago
    Kelly. which bank did you use?
    Jay Shin from Chicago, Illinois
    Replied 7 days ago
    Great story but I want to say: this is impossible to pull of in Chicago, at least in the north/northwest Chicago areas. Vast majority of 4 plexes in those areas are too expensive to make the numbers work. Also, FHA loan limits are too low so you have to bring more money to seal the deal.
    Nakia Addison New to Real Estate from Las Vegas
    Replied 7 days ago
    Congrats! Thank you for sharing your story. If you can do it, I know I can as well!
    Crystal Evanisky
    Replied 7 days ago
    Who is paying the land taxes and Yearly insurance on the property I don’t see that included in the numbers
    Jonathan Smith
    Replied 7 days ago
    I think with FHA loans you have to impound tax and ins. and based on the numbers I would say taxes and insurance are definitely in the mortgage monthly payment.
    Ronaldo Gillespie Investor from Cincinnati, Ohio
    Replied 4 days ago
    That makes sense, wish they would be more explicit about this.
    Lashonda Reese New to Real Estate from Copperas Cove, TX
    Replied 7 days ago
    This is sooo awesome!
    Ash Hildebrand from Vancouver, British Columbia
    Replied 7 days ago
    I do love these stories and appreciate Kelly's journey; it's good to know what's possible. Unfortunately, I'm in Vancouver, BC which is home to some of the highest real estate prices in Vancouver. Obviously, Maryland is very different than Vancouver but similar to other city's within Canada. There are plenty of beautiful old triplexes and fourplexes but most would go for over $2M. We just bought a 1300 sq ft 1/2 duplex for $1.1M, with a suite. Legally, anything over a million needs 20% down and our lender wanted more, so we needed to put about $230k down, almost 12 times what Kelly needed. We had to borrow a portion of the downpayment through family. So we're left with a mortgage payment of $3525 and a loan payment of $1000/mth. The suite is rented for $1750 (utilities included), which leaves us with $2775 a month. Also note that the 1/2 duplex itself is 1300 square feet. The suite is about 600 which leaves us with 700 sq ft for two adults, a baby and a dog. Again, this is comparing apples to oranges, I know, but wanted to offer readers other sides of the coin throughout North America. As much as we would LOVE an opportunity like this, we'd need to move to a different province or deep within the interior of BC for an opportunity like this.
    Hope Ajayi
    Replied 7 days ago
    Congrats Kelly! I've just done the same and see many more investments in my future! Best of luck to you :)
    Izabel Parreira
    Replied 7 days ago
    Great job on moving on despite of the unknown which freezes a lot of people! Maybe I over analyze...but tell me something please how about other expenses, at the end of the year, are you coming positive or with a loss, in the rental portion of tax return? Thanks!
    Christopher Duron New to Real Estate from San Diego
    Replied 7 days ago
    Inspiring story. Thanks for sharing.
    Jeannine Harris New to Real Estate from Calvert County, Maryland
    Replied 7 days ago
    This is so inspiring. I live in Southern MD and am looking at buying my first house hack as well. Are you self managing? Thanks for sharing!
    John Edwards
    Replied 7 days ago
    Jesus, what a hateful video. Starts out with a booming racket 3x louder than standard YT videos followed by a guy practically hollering in your face.
    A Schwartz
    Replied 7 days ago
    What a minute! The cost of ownership is not $20 per month! That is only the rents versus the mortgage! There is property taxes; insurance; utilities; repairs; capital expenditures; and vacancies. All of which are paid by the owner (unless the apartments are metered for utilities). Trust me, the cost here is a lot more than $20 per month!
    Andrew Zimmermann Professional from Boston, Massachusetts
    Replied 7 days ago
    Exactly! It doesn't diminish the accomplishment to simply be upfront about all the costs of ownership. She is likely hundreds out of pocket a month, but that doesn't make a clickable headline so its ignored. Still living in an apartment for 50% of what it might rent for is a great way to start.
    Rick Pittser from Spanaway, Washington
    Replied 7 days ago
    Cost of ownership is certainly not $20, but I wouldn't focus on that. The point is that it is possible in many places to live rent free or close to it, and save that rent you would be paying for your next investment property. In the meantime let your tenants pay down your mortgage, ride the capital gains train and leverage that lazy money, while getting all kinds of home ownership, landlord, investing strategy experience. I am so bummed I didn't think of this when I was younger. My life would be so different now. Congrats, Kelly. Go You!
    Raphael Ramos New to Real Estate from Bergen County, New Jersey
    Replied 7 days ago
    Thank you for the inspiration!!! Wishing more success to you and everyone here!
    Andrew Zimmermann Professional from Boston, Massachusetts
    Replied 7 days ago
    This is a great story, very powerful stuff! What's even more powerful though is to not oversell the costs of owning the property. Even if your Mortgage payment is PITI (with PMI likely), there are other costs like common power, any shared utilities, water/sewer/trash and cap ex. I suspect even with those you are in a great spot Kelly. BP loves to dumb down the numbers in its articles but have your eyes open on all the "hidden" costs. I suspect after you refi and eliminate PMI, as well as grow rents a bit, then you truly will be "living for free". Living for $20 is just the great headline to grab some clicks.
    Danny S. New to Real Estate from Indianapolis, IN
    Replied 6 days ago
    This is gold! Congratulations on your accomplishment!
    James Conaway from Phoenix, Arizona
    Replied 6 days ago
    Kelly's story isn't accurate. There are a lot of numbers missing from the 4plex "The Numbers Behind the Deal"...
    Bao Chau Tran Real Estate Broker from Mount Vernon, Washington
    Replied 6 days ago
    Great story! I always like to house hack 4 plex but I can’t seem to find one. I am trying to find my second home in Florida but most likely need to go through the second home vacation home loan with 10% down.
    Sulaiman Shah Real Estate Investor from Staten Island, New York
    Replied 6 days ago
    I just have one question, how much income did you need for your FHA Loan to get approved? That is my only concern as I have a good credit score, I have the down payment but I have no job or very little income.
    Andrew Syrios Residential Real Estate Investor from Kansas City, MO
    Replied 6 days ago
    Great episode Alex and Kelly!
    Cody Smith
    Replied 4 days ago
    My wife & I did something similar when we first got married...but in a duplex. The rent from the other side covered our mortgage + about $100/month. Each side had separate utilities so that was not an additional expense from the rental side (tenants had utilities in their name). We utilized a first time homeowner loan through a local credit union so we avoided PMI & a large down payment requirement. The extra $100 from rent roughly covered our insurance which left us with a little over $100 out of our pocket to cover the property not too bad for newbies. We later bought an identical building on the same cul-de-sac & have now moved to a single family home. The 2 duplexes pay for all of their own expenses (mortgage, taxes, insurance) & pay for the mortgage on the single family home we now live in. There have been hiccups (namely new hot water heaters that became incredibly expensive & were relocated due to poor floorplan design) but we REALLY like have our investments make our house payment!
    Tomer Versano Investor
    Replied 3 days ago
    Thanks for sharing, Kelly! To many more properties!
    Emily Haskin
    Replied 3 days ago
    This was inspirational! Great job Kelly
    Nneb Okwumabu
    Replied 2 days ago
    This was great! Thank you Kelly for sharing your story, before it didn’t seem possible now I know I can do it too.