When building a business, every dollar is important to the long-term growth and sustainability of your business. Therefore, every dollar you save, especially in the beginning of building your business, is critically important.
The same is true with building a real estate investing business, which offers a unique and powerful tool many investors embrace to save money and grow their business: living rent-free in one of their investment properties.
The Basics of Living Rent-Free
The basic theory behind living rent-free as a real estate investor is simple. First, you need to purchase an investment property you can live in, while renting out a portion of the property.
Multi-family properties are prime candidates for living rent free as a real estate investor. After you purchase the property, choose a unit to live in, and rent the others out. If you structure everything correctly, you can live rent free, and even make a profit to pay other living expenses.
Purchasing a Property to Live Rent-Free
It’s true of real estate investing in general, and it’s especially true of purchasing a property to live in rent-free: your success depends on your ability to purchase the right property.
Multi-family housing (e.g., duplex, apartments, condos, etc.) is ideally suited for investors wishing to live rent-free, since generating revenue from these types of properties is fairly straightforward. But there are a few other considerations to keep in mind when looking for the right property to purchase in the pursuit of a rent-free lifestyle.
For starters, investors must pay special attention to the purchase price and financing of a property that is large enough to live rent-free. Most importantly, rents collected from tenants should be able to pay the mortgage and all expenses. Furthermore, don’t neglect to factor in vacancies and budget for maintenance and repairs in light of the age and condition of the property.
Best Way To Get Started: Duplexes, Triplexes, and Fourplexes
Financing multi-family housing can be challenging for many investors, especially if you are a new real estate investor.
Thankfully, though, lenders do not consider an owner occupied duplex, triplex, or fourplex as “investment property”; therefore, the buyer can apply for an FHA mortgage with a 3.5 percent down payment, exactly as if he was purchasing a single-family home.
Because of this, one of the most affordable ways a new real estate investor with minimal finances can get started is by purchasing a duplex, triplex, or fourplex and living in one of the units.
Live Rent-Free to Build Your Real Estate Business
If you are starting a real estate business, purchasing a multi-family property and living “rent-free” is a cost effective way to start investing. Not only will you have more money to invest in your business, you will get hands-on experience managing your own investment property.
As long as you find the right property to purchase, it’s entirely possible to live rent-free.
Graystone Investment Group
Graystone is an experienced Investment Group, wholesaling properties in the Greater Tampa Bay market.
Unlike other wholesaling groups, we find properties that we resell to investors at discount prices, while also connecting them with private financing. We also coordinate with rehab and management companies we’ve worked with for years, at no extra charge.