House Hacking: Living for Free and Building Wealth - Part 1
The internet is full of “life hacks.” You’ve seen them with clever tricks like storing your pancake mix in old ketchup bottles. These are cool, but they don’t help us significantly improve our life. House hacking, however, is epic, life-changing stuff that’s better than buying bitcoin. When properly implemented, this can have a dramatic effect on the financial legacy of your family.
House hacking is about building wealth automatically and getting paid by people to do it. House hacking is simply buying an owner-occupied multi-family property and having other people pay your mortgage.
Wait, what? ‘I know this already,’ you say? Okay, I apologize for wasting your time if you’ve already done this. If not, what are you waiting for?
Also known as an owner-occupied multi-family property, duplex, triplex, or fourplex, these properties have more than one unit. Still, they aren’t large enough to be an apartment complex. There is a good chance you’ve even rented a multi-family unit in the past or know someone who has.
By purchasing a small multi-family, the rent your tenants pay each month can cover all of the expenses for the property (and more). For example, if you buy a fourplex, live in one unit, and rent each of the other units out for $500 a month, you could earn $1,500 per month. If your loan, taxes, insurance, utilities, and other expenses come to just $1,200, you could get paid $300 a month just to live in the home. Even better, when it comes time to move out into your future home, you can rent that fourth unit for even more income.
These types of properties exist in every market, in every neighborhood, and at every price point. By purchasing a small multi-family property, living in one unit, and renting the other units out, you can live for free and even make money on top of it.
I understand that a small multi-family home is not for everyone. If you’re stone-cold broke, drowning in debt, regularly switching jobs, and can’t seem to avoid calling those late-night infomercials for the junk you can’t afford, then maybe it’s best to get your life, budget and savings in order first.
Buying an investment home is not a light-hearted, rash decision. I tell every new college graduate the same advice - save your money and house hack. Buy a home you can build wealth on, not necessarily one you want to show off to people or live in for the rest of your life. The truth is too many people aren’t willing to make the tough sacrifices that require an action (investment or sacrifice) today for a better tomorrow.
When it comes to house hacking, I’ve met too many Black and brown people who rebuttal, “I don’t want to live in a multi-family” or “the units are too small for me.” These attitudes are short-sighted. The reality is that you don’t have to live there forever. Still, the money you earn as income and the equity you will build over the years will help you move into a better single-family home later. Don’t worry. If you house hack, you will be able to impress people late with your single-family show home.
Buying an investment house is not just for older people with retirement money. Suppose you have decent credit, a stable job, and small savings. In that case, you can enter the world of multi-family investing and start hacking your living expenses. The second principle of The Culture of Money is to OWN MORE! House hacking is practical way to step into wealth.
In my next posts, I’ll share some details on how to buy small multi-family properties and an insider tip on how I’m investing in these properties all over the country.
De’Andre Salter