After interviewing dozens of real estate investors, I've learned that it's more affordable to become one than you may think. The one strategy that many of them use to afford their first property is called 'house hacking.'
It's cost-effective for two main reasons. One, since you're actually living in the property, you may qualify for an FHA loan, which is a government-backed mortgage that gives people the opportunity to buy a home with down payments as low as 3.5%.
He purchased a duplex, moved into the downstairs unit , and rented the upstairs unit to a family. To maximize rental income he also got a roommate to fill the second bedroom in his unit. Plus, his girlfriend moved into his room, meaning he technically had three tenants paying him rent. He was bringing in $3,600 per month in rental income, which more than covered his $3,300 mortgage payment, he said.
Ali and Josh Lupo, who reside in upstate New York, were actually living paycheck-to-paycheck when they bought their first duplex. While buying a duplex or multi-family property is ideal for house-hacking, since you can still maintain a level of privacy by living in your own unit, if you can't afford a multi-family , you can always do what real estate investor Todd Baldwin did at the beginning of his career.
This form of house hacking means finding compatible roommates and having significantly less space, but it can be an effective way to save on housing costs and, ultimately, afford your first property.
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