Good Lifestyle

Anticipated retirement sounds as one of these pie-in-the-sky dreams that rarely becomes a reality. CornBryce Stewart, A sixth year school teacher and father of four girls, understood how to do. Now, he and his wife, who are not yet 40 years old, aresemi-retirement and sitting on a portfolio value of $ 1 million. The secret? Multi-housingReal estate investments.

It is probably not surprising that the possession of a rental property is a first step towards the passive income generation and, finally,Reach financial freedom. But while you can think it's not easy to do if you do not have a boat full of money to highlight, it's impossible, as does Stewart prove. "A house is yourThe greatest monthly expense And the greatest asset you will probably never clean, so your first purchase of a house can mean the difference between financial freedom and financial ruin, "he says.

After learning the harsh lessons of multi-housing real estate investment, Stewart wrote a book on the subject calledHacker House Guide at Galaxy: Use your home to make millions and take early retirement. Read on for his best advice, that he shares withBetter life, To make money without really trying. And for more small ways to save your hard earned money, see17 clever ways stores deceive you spend more money.

New properties tend to sell a premium. This leaves very little room for an increase in short-term value. First purchase of Stewart took place in a foamy market, and they bought a new brand, luxury condominium. "The value really only had a direction to go down," said Stewart.

Investors buy properties that still have "meat on the bone" where improvements would increase the resale value, it explains. "New construction tends to be at the price of the brand of high water when buying, do not leave a lot of space for future profit. And for more house buying tips, seeThe n ° 1 sign that you should not buy this house, according to real estate agents.

Calculate your potential monthly accounting costs. This number is generally the sum of the mortgage payment (principal and interest or P & I), land taxes (T) and the insurance of the owner (I). Piti is thefixed Ownership costs accession to property. For a condominium, include Association (HOA) of your monthly contributions. Then, the search for existing rents in your market for a home like yours. If the total Piti is higher than comparable rents and you are forced to move in a few years, you can end up losing money, which happened to the Stewarts.

"We bought a bedroom condo, two years later, we discovered that we were expecting a child and needed to move into something bigger," says Stewart. "We owed $ 152,000, and similar units sell for $ 85,000. We could not afford to sell. Stewart thought of renting a tenant, but the highest reasonable rent was $ 1100, and his monthly property costs were $ 1,400, so he determined that it would lose $ 300 per month.

If the Stewarts had shopped more astutely, they could have bought a three-bedroom home for $ 120,000 to $ 140,000 with the monthly accounting fee closer to $ 1,100. Two years later, if the move has become necessary, they could easily have rented a home like that for tenants for about $ 1,300 a month. "In the place oflosing $ 300 a month, we could have owned a property thatwon$ 200 a month in extra income, which would have been $ 500 a month difference, "he says. And for more means that you secretly throw money aside, check outThis the biggest loss of money is that you spend without knowing it.

Small multifamily units give you the opportunity to rent Collect and compensate for property costs while living in the property. The second purchase of Stewarts was a duplex. "The total monthly cost of ownership was about $ 1,200," says Stewart. "But we moved to one of the units, and a tenant lived in the other unit. The rent was $ 600, which paid half of our costs and significantly reduces the amount of money we had to direct to our own housing. It was crucial that we quickly had two girls to start and take care of $ 300 a month the loss of our first condo ".

The Stewarts bought the duplex using a US loan for Federal Housing (FHA), which only a deposit of 3.5%. This type of loan product is only available for buyers who purchase owner-occupying property and not available for buyers only for investment purposes.

"Because we were ready to live in one of the duplex units temporarily, We were able to buy the property at a very small acquisition cost, "said Stewart." We stayed for a few years and we slowly improved the unit we lived in and the other unit. We moved now and. that the duplex generates more than $ 1,200 a month in excess profits. And for more advice on finance, home and more sent directly to your inbox,Sign up for our daily newsletter.

If your life situation allows, repeat the steps above. Buy and live in a multifamily property, do it well, rent the units for a monthly profit and go to another property to start the process again.

The Stewarts experience with the duplex convinced them to buy a triplex. "It was not easy. But our first experience has proven that we could make consistent income from rental apartments," said Stewart. "So we did it again. At the moment we went out of the triplex, we were ready to settle in a single-family home near a primary school for our girls. The duplex and triplex produced a combination of $ 3,000 a month in profits. We used these benefits to pay $ 1,500 Piti on our family home and empotent the remaining $ 1,500. This allowed us to start saving money. "He put the stewarts on a strong way for financial freedom, and now, semi-retirement and $ 1 million. And for more where the best place where you have reached financial freedom,This is the best state of retiring in America, according to the data.