2 real estate investors who are financially independent from their rental portfolio say they get the most bang for their buck by buying multi-family properties. Here's why they're 'a fantastic entry-level investing approach.'
The idea is to start off by purchasing a"fourplex," a low-density four-unit residential building, and live in one unit while renting out the other three. In doing this, an investor is able to subsidize the renovation of the property, as well as their own living expenses. This investing concept is known as"house hacking," which many young investors, including Matt, have used to get their start in real estate.
"You can see if you actually like being a real estate investor," he said about the method, which provides a new investor with immediate cash flow. If you enjoy the process of buying, renting, and managing tenants, and want to expand your portfolio from there, you then repeat the process, but at different levels of expense and effort.
For instance, should one decide to continue following the"4, 3, 2, 1" method, the next step after leasing the units in the fourplex would be to purchase a"triplex" , live in one apartment and then rent the others out. The process continues down the line, with the next step being to purchase and reside in a duplex property while renting out the other half.
By this point, you'll own a handful of units and your rental income may cover the majority of your housing costs, which will free up more cash to continue saving and investing in real estate. The final step of Matt's strategy is to buy a single-family home."You're moving up the ladder while having people largely pay your mortgage," he said.His and Bull's market, both of which are in New England, happens to have a large inventory of these properties.
If there aren't multi-families in your area, look for a property with an unfinished basement that you can turn into another unit and rent out, or even a home with multiple rooms that you could rent out, said Matt:"Why not have roommates pay you rent? Why not have their rent help pay your mortgage?"Subscribe to push notifications
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