How I Get Paid To Live In My House

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So the other day i was hanging out with a friend of mine and we were talking about how i had just recently refinanced my property and we basically ran the numbers on my owner occupied real estate investment and came to the conclusion that i am officially getting paid to live in my house and of course he thought that was a pretty interesting video idea so i decided

I would make a video on this explaining a little bit about house hacking and what i am doing to essentially get paid to live in my house rather than paying to live in my house instead so the first thing we have to understand here is what is it that most people do well number one they either go out there and they rent somewhere where they live or number two they

End up buying a single family home so we’ll just start off over here i’m just going to draw a really bad drawing of a house just to indicate you know what it is that most people are doing so they go out there and they buy a single family house and let’s say maybe their mortgage is around you know eighteen hundred dollars per month on average something like that

For a decent home depending on how much money that you spend well the problem with that single family house is that there is absolutely zero income potential from that home because you’re the only one who can live there second of all because of that reason there are no tax benefits or write-offs or anything like that associated with that home that is why most

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People would say a single-family residence like this is a total liability meaning it takes money out of your pocket now what i did instead is i bought a multi-family property where i essentially live in the main unit so i’m just going to draw a similar drawing here but we’re going to pretend you know that it’s a three unit property something like this obviously

It’s a much bigger property than a single family home and it cost me more money in terms of what i paid for it so here’s the difference here guys my property has a mortgage right now since i just refinanced of two thousand four hundred fifty dollars per month so on the surface when you look at this you’d say okay the single family house has you know a mortgage

Of 1800 why would you want to have a larger mortgage for a multi-family property well here’s where things get interesting i live in the main house and i rent out the other two apartments and there’s also a cottage on the property which i remodeled and then i am now renting that out to somebody as well so now i actually have three units on this property that are

Producing income so the first apartment that i have here is the larger one that rents out for 975 dollars per month the second apartment is a smaller one which i rent out for six hundred dollars per month and then the cottage i actually just rent it out to my brother i don’t charge him a heck of a lot of money and i’m going to be renting that out to him for 500

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Per month now i live in the main unit obviously i don’t get any rental income from that because i don’t pay myself to rent it but when we take the rental income and we subtract that from my mortgage we get this number right here and that right there is 375 dollars per month which is essentially what i am paying in terms of the mortgage now i know what you’re saying

To yourself you’re probably wondering wait a second how am i getting paid to live in my house if i’m paying 3.75 per month well there’s a number of different reasons here we’re not even going to get into the appreciation of the value of the property or the tax benefits we’re simply going to talk about something called principal pay down which essentially means

As i am paying this mortgage i am paying down principal and owning a larger and larger chunk of my property so right now i just refinanced i’m at the very beginning of my loan so most of my money is going towards interest with a very small amount going to principal but right now about 600 per month of that mortgage payment goes towards the principal which is

Essentially going to be money back in my pocket if i decide to refinance down the road and pull money out or if i eventually sell this property so even though i am paying 3.75 per month of this mortgage 600 per month is being paid down by the rental income so if you go ahead and do the math on that guys that means that after my principal pay down i’m actually

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Getting paid 225 dollars per month to live in my house and when you compare that to basically having this massive liability costing you 1800 per month or more if you have a larger mortgage that’s a heck of a lot of a better deal in my opinion you know depending on your financial situation but anyways guys i thought this would be a cool visual example a quick

And easy video uh let me know what you think down in the comment section below if you haven’t seen me before make sure you like and subscribe and hit that bell for future notifications and i will see you guys in the next video

Transcribed from video
How I Get Paid To Live In My House By Ryan Scribner

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