Business is never for the faint of hearts. While we sing our praises to the richest billionaires in town, our hearts will sink to know only a third of businesses that will start this year will remain standing a decade after. Most of these enterprises will soon belong to the dustbins of history, doomed to fail. The majority will fold within the first years of operation. Indeed, for every Jeff Bezos that makes it to the top, thousands are wishing they can have a shortcut to business success.
That’s why we need people like Brandon Turner. Not only is this real estate entrepreneur a successful author (he’s written a couple of super handy real estate books), but also he has grown his real estate portfolio into over 40 units, not bad for a VP of Growth for a real estate firm. So if you’re looking for a subject matter expert on investing in properties, there may not be a better subject matter expert than Brandon.
Even better, this real estate wunderkind spills the beans on how you can start your business free of the burdens of house rent. Indeed, it may seem impossible for many. But what’s truly amazing is that such expert advice is not something he knows in theory but something he’s practiced himself right from the get-go to get his business off the ground in style.
The Wonderful World of House Hacking
To get started, learn the ins and outs of the term ‘house hacking’. Specifically, Brandon describes this as the process of allowing other people to pay for your mortgage or rent. Of course, for anyone, knowing these rates can help you choose which property works for you best.
For one, the best mortgage rates are paramount to settle in a property you’ve been longing for all your life at workable costs. On the other end of the spectrum, a suitable rental rate can go a long way to stretch your budget.
Although there is a slew of ways to house hack, buying a duplex, a triplex, or a fourplex is arguably the most common. The secret is to use one unit for yourself and rent out the others.
Brandon even recalled how he house-hacked during college. He did that by renting a four-bedroom apartment for a monthly of $800 while renting each bedroom for $400. The math says he’s earning more than he’s paying monthly. The profits he earned not only helped him finish college but also gave him a blueprint for his later success in life.
Making It Happen
You could be thinking of the extra weight you’ll get in terms of your finances when buying a bigger property. After all, you can’t rent a property if space is challenged.
But the expert details it’s actually easier than you think. Buying a property for house hacking is certainly possible. For one, house hackers are not categorized as investors. That would mean your down payment won’t have to be an uphill climb. That’s because a lender a mortgage company will look at a fourplex or a duplex as he would a condo or a single-family house. Thus, the possibility of being able to use low down loans such as FHA loans is high. It gets even better if you’re an active member of the U.S. military, as you can get a zero-dollar loan via a VA loan.
You must do the math before you set things in motion. Properties that carry over a million-dollar price tag can surely be a challenge for you. A good example here is the prices of San Francisco real estate. That will require you to pay tens of thousands of down payments. But you can actually make good money there. Just make sure you explore the idea of subletting bedrooms to earn a profit.
Brandon cites a friend in San Francisco who rents $50 a night for one bedroom in a house meant to accommodate 12 people. In the end, that friend is earning $18,000 extra monthly income. Not bad!
The Most Crucial Factor
Indeed, house hacking is an ingenious way to minimize your cash-out and maximize your cash-in. In short, it gives you more bang for your buck. But before you set out to zero in on a property, a word of caution. House hacking also has its pitfalls. To make house hacking work for you, you must first have the right property suitable for renting.
Therefore, this means that you should do your due diligence and analyze things before you even pay the down payment. You’d have to be doubly sure the property you’re looking at can give you the results you need. Take note that not all duplexes or triplexes are worth the trouble. It’s important then to have the smarts to zero in on a good one. And get paid handsomely thereafter.