Live For Free
I am frequently asked what can I do right now that's easy, that can grow my wealth quickly? I ask myself sometimes what would I or the elite investors I work within the brokerage business do differently if they could do it all over again? If I knew then what I know now, I would buy a house, live in it for two years, sell it, roll the gains over into the next house, and pay no capital gains taxes because we lived there for two years. That's a great way to build wealth, but had I known better, the better way would be to buy a multi-unit complex and live in one unit while collecting rent on the others. In the video link below you’ll be able to see me demonstrate how powerful this is when you see it on a spreadsheet. Let’s assume that you're going to buy a quadruplex. You're going to live in one of those units and collect rent from the other three units. You’ll actually pay rent to yourself into the same bank account as the other three tenants and the reason you want to do that is because when you go to sell in the future the bank and the buyer love to see records of a 100% occupancy over the years you owned it. You still have access to the rent you're paying into because it's your money. This just keeps the records nice and clean for the buyer and the lender later on. Let’s set this up: the purchase price of the quad is $320,000, which is about $80,000 a unit. We’ll go with a 6% cap rate and a 6% commission and 2% for closing costs. These are all common estimates but obviously can vary by a percent or two. Monthly rents are $800. Using some other common estimated costs, I’ll show you in the video below how you can live rent-free for five years AND make over $12,000!!
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