Pie in the sky? No way!
Thinking about buying your first home? Let me get you started out right. The simplest, easiest way for you to stop paying rent, avoid paying a mortgage, and ultimately live for free is to buy a multifamily property as an owner occupant – such as a duplex.
Is this pie in the sky thinking? Not at all. In a May 2012 client’s property search, I located 26 duplexes, which average 2022 sqft, year built 1958, list price $186,267, and monthly income of $1500.00. The average monthly mortgage payment was $1100 with the FHA downpayment of 3.5% ($6500). The average single family home in the same search area was 2058 sqft, built 1969, listed at $227,135, and will bring in to you a monthly income of $0.00 per month. The average cost to carry this mortgage is $1350 per month.
If you start by buying a duplex and renting out half for between $700-$1000, your net cost to carry your mortgage is about $100-$400 per month. Think you could enjoy living that cheaply for a year? Assume you rent out half the duplex for $850/month and live in half of the duplex. You pay only $250/month net on your mortgage instead of the $1350/month you would pay to own a regular single family home. That’s a savings of $1100/month or $13,200 in a single year!!
At the end of your year, bring your $13,200 to me and we’ll turn it into a down payment on the home of your dreams! Now you are taking in $1500/month on a duplex that costs you only $1100/month. You profit $400 every month while sitting pretty in brand new single familyhome of your own.
Want to take that further and LIVE FOR FREE? Can you put off your dream of single family homeownership one more year in exchange for a lifetime of passive income?! Take that $13,200 and put it down on a fourplex. Live in the fourplex for a year, not just saving money but actually profiting every month while you live for free. In Colorado Springs, you can live in one unit of your fourplex and reasonably profit $500/month from rents coming in from the other three units. Add the $500/month from the fourplex plus the $400/month profit from your duplex and you’ve got yourself a steady income stream.
Save your $900/month all year, not to mention the $1350/month you’re NOT paying on a mortgage, and what do you have? $10,800 profit + $16,200 savings = $27,000 you would not otherwise have had. Plus you have property ownership in two profitable properties that will provide you an income stream you can live off of for the rest of your life.
Now let me help you buy your brand new home. One twice the size of what you could have bought two years ago on your original $6500 down. Let’s say your new home costs $270,000. You put 10% down and interest rates are now up a little bit to 4%. You’ll still only pay about $1560/month. With rents from your duplex and fourplex netting you $2000/month or so, you are now living for free! You even have a buffer to cover expenses such as maintenance and repairs. I’d trade 2 years of my life to set that up.
And that is why you come to Live Dream Colorado for real estate advice. We think like investors, we are investors. We are here to help you buy the perfect home. But we are here to do more than. We want you to live a long, happy, healthy life of financial freedom. Property ownership is an absolute cornerstone of financial freedom. Let us help you stop paying rent and avoid owing a mortgage payment every month. With wise purchase decisions, you can live for free and begin profiting from your real estate investments in only a couple of years. Call us to get started! 719-581-3115