HOW TO LIVE RENT FREE AND BUILD WEALTH

Not a week goes by that I don’t hear someone complain about the lack of available rental properties, and how expensive it is to rent in the Seattle area.

Being a buyer in this market is even worse. Imagine spending over $600,000 for a fixer upper or a tiny townhouse with no yard and barely enough parking for a smart car. No thanks…

So for anyone who is frustrated by the high rent prices, and frustrated by the expensive home prices I have some solutions for you…

BUY A MULTI-FAMILY PROPERTY, LIVE IN ONE UNIT AND COLLECT RENT FROM THE OTHER UNITS

I’m amazed that most people don’t do this. It’s really the best of both worlds…

You get to take advantage of the hot rental market as a landlord, and your mortgage payment will be fixed for 30 years!

Worried about property values being too high? Have you ever done the price per unit math on a duplex?

For example, in my area an entry level house (outside of Seattle) is about $350,000 and most newer duplexes are going for $500,000. So a single family home costs $350,000 yet each unit of the duplex is $250,000. You just saved $100,000 per unit by buying two!

Now it’s hard with a $500,000 duplex to get the rental income from the other side to cover the entire mortgage payment, but if you look at the lesser expensive (and not as nice) duplexes that I own, one unit always covers the entire mortgage payment. So if I ever wanted to live literally rent free I could move into one of my duplexes and do just that.

Another thing to note is that FHA has a minimum down payment requirement of 3.5% of the purchase price and they allow gift funds from family members.

The owner occupancy period is only 12 months, so if you’re not too keen on living in a duplex 12 months is nothing. When you’ve met your owner occupancy obligation you are free to move on to another property (ideally another multi-family property) and rent out your unit.

My husband and I lived in one half of a duplex from 2010 to 2009. We had lived in his house before, then rented it out and moved into my duplex. I have to admit, it was so nice going from a $1300 a month mortgage payment to a $500 mortgage payment after we collected the rent from the other unit.

We still own that duplex today, and it has increased in value from $196,000 to $350,000 in 7 years and it provides $971 per month in cash flow! I am sooooo happy we spent 12 months living there those years ago!

At this point in the article I imagine you’ve made up your opinion on whether or not you’d live in a multi-family building. I get it, it’s not glamorous living but it’s only 12 months and it could completely change your financial future… but for those who are adament that apartment style living is not for them I have another option.

BUY A MULTI-LEVEL HOUSE OR A HOUSE WITH AN ADU/MIL AND AIRBNB THE SPACE

Lily is a great example of someone who has played the game to her advantage and instead of buying a multi-family property, she purchased a townhouse with multiple floors and multiple bedrooms and has been renting them out using Airbnb. This became such an income generator for her that she now does it full time.

So not only is Lily’s mortgage payment covered (she lives rent + mortgage free) but she makes money in excess of her mortgage payment – also known as cash flow.

While you may not get the benefits of the lower price per unit with multi-family properties, there are other options available for getting into one of these properties such as applying for a down payment with Loftium, a new Seattle based start up that offers down payment assistance in exchange for a percentage of the income renting out rooms using Airbnb.

Not ready to buy? Maybe you’re working on building your credit or just don’t want to own real estate… I have another option.

BECOME AN ON SITE APARTMENT MANAGER

Did you know that there are apartment complexes out there that are too small to have a full time property manager on site, yet still require an on site manager? These vary from 10 to 50 units.

Back in 2008 I moved out of the first house I owned and decided to rent with my good friend Breanne. We were hoping to save money since she was a full time student and I was saving for the next investment property, so I came up with the idea that we should be on site managers for reduced or free rent.

Breanne happened to call a small apartment complex in Lake Stevens, WA and told them what we were looking to do and it just so happened to be that they were looking to replace their current on site managers who were moving. The complex was only 12 units so while they did not offer us free rent, we received a reduced rent of half the normal rate.

The job was super easy, all we had to do was show vacant units to prospective tenants, collect the rent checks from the drop box and complete a move out checklist when tenants left.

I have several other friends who have been on site managers at 20+ unit complexes and get to live rent free.

There is still a wealth building opportunity with this option. My hope would be that you would save the money you’re not paying towards rent and invest that somewhere or

If you want to learn more about the option of living in a multi-family property and living rent free, I have an section dedicated to that in my course How To Buy Your First Rental Property. I cover everything from what to look for in a property, how to determine fair market rents, different zero down loan options available for owner occupants, what renovations generate the highest ROI and much more!