The easiest (and the Rebels’ favorite for beginners) is the “buy and use” method of real estate. We love this one for first-time investors or folks that are just attempting to get their feet wet in the wonderful world of Real Estate.
Yep, we love when folks buy their own home and live in it… AND look for ways to let it make them money.
But the first step before making money is actually getting a home.
Here’s the simple breakdown of a buy and use home. You find a home, buy it, move in, do repairs and improvements as needed, and live in it. It’s your home. Your residence.
Why to do this might be on your mind… Why buy a property and then live in it first? Well, here are a couple of great reasons “why” you might want to start this way:
- It’s easier to buy a home as an owner occupant than it is as an investor.
- With an owner-occupied home, you can get in for a lot less out of pocket, which is one of the big reasons people don’t invest in real estate.
- You’ll also get a better interest rate on your loan. This means a monthly savings over the life of the loan and big savings in interest paid.
- There are many programs that assist first-time buyers with closing costs and down payments. In fact, many programs help buyers get in for almost nothing out of pocket. This is especially true if you qualify for a VA loan.
- You can slowly do any modifications to the home to increase value OR set it up for as a rental (the Rebels like rentals! ).
- Buying a home is perhaps the easiest step to building wealth when done correctly.
Now for the second step: How can living in a property make you money? Before you read on it is important to know that we have helped clients, friends, and ourselves apply what you are about to read to obtain extra income… Hopefully, you want the same. Okay, you can continue:
- Buying a home that needs repairs allows for sweat equity. It allows you to increase the valuation of the property, thus making you money when you sell.
- Rent out a room to a full-time roommate. Or if it’s a 3-bedroom house, and it’s possible, rent out two rooms. We have clients that are now renting their extra rooms out and are earning more than their mortgage… They are living in their own house for FREE!
- Rent out a room on Airbnb. Or two. Or three, if it’s a big house. If you buy in the right place it can be a moneymaker.
- Rent out the garage for someone who needs to store stuff. Give them a discount over what a storage unit would cost and still make money for yourself.
- If there’s RV parking, rent that spot out to someone with a trailer, boat or old car.
Don’t make the mistake of treating your home as an expense, a liability. Instead, break the model, change the rules, and make it into a legal money-making machine.
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