We are in the throes of moving into a new home and getting our current house ready for our buyers. It’s exhausting, but also exciting! We spent several months over the winter searching for our dream home for our family here in our city. Finally we came to the realization that we don’t know if this city in the Pacific Northwest will be our forever home. And we decided to stop looking.
Until 7 weeks ago when I heard a podcast and a light went on in my brain.
The story goes back a little further, to March, when I discovered a book by the Rich Dad advisors. (If you haven’t read Rich Dad, Poor Dad, it’s a great starting point before you read anything else regarding wealth and investment. It’s one of those books you will never forget.)
The book I discovered is called “The ABCs of Real Estate Investment” by Ken McElroy. In this book I was awakened to the fact that real estate investment is for anyone. He also opened my eyes to the fact that typical retirement savings is not the fastest or surest way to grow our wealth. (And by wealth I mean long-term investments that will provide for our family and allow us to be generous for the advancement of the gospel. We pray that our aim is not to be wealthy to live on more or to keep up with the Joneses.)
This light in my brain had been turned on, but was a mere flicker. How could I come up with millions, or even tens of thousands to invest in purchasing real estate? All the options seemed closed to us at the moment. But I kept reading to books and began listening to a real estate investing podcast called “Bigger Pockets.”
We are dipping our toes into real estate investment by house hacking.
It was on Bigger Pockets that I heard mention of a term called house hacking. This immediately piqued my interest. What is a house hack?? I wondered. (Anything with the word “hack” is immediately interesting to me, and always has been.)
House hacking, it turns out, is buying a multi-family property and living in one unit while renting out the others. The rent from the other units pay for your mortgage, allowing you to save up money for another downpayment on a second property. This can be done multiple times (I think one person can have 4 mortgages in their name).
My immediate thought: this is how a newbie can get into real estate investment with very little risk.
I updated my Zillow filter to include the word “duplex” and got started looking. I wanted to get my husband on board! I mentioned this to him and he said that sounded interesting. So, I took that as a go to talk to our realtor. It turns out his father-in-law was selling a duplex for a client that fit the bill perfectly for our family. Not only is each side of the duplex the same size as our current house, it is much newer, in a better school district, and in a better neighborhood.
This was a no-brainer for me! At this point I realized my husband wasn’t ready to move as quickly as I was to jump into turning our lives upside down to get this duplex. After getting some counsel from a real estate investor friend of ours, we both agreed this was a great decision for our family.
The duplex, being newer, has less updates needed, and also has a very small yard but borders a large wooded area. This means a fun place for the kids to play, with little yard maintenance on our part.
Since we have been working hard to live on less than we make for years now after getting out of debt, we are in the position to be able to buy a multi-family property, using the equity in our current home for a downpayment. For a multi-family conventional loan, the lender also requires your bank accounts to contain 2% of the home value for emergencies.
Now we will enter the world of landlording, which is really exciting. I can’t wait to update you on this new phase!
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