When I first got started in real estate investing and was thinking about buying houses in Denver, my biggest challenge was how I was going to finance the house and overcoming the mental hurdle of accumulating rental properties. They were seemingly so expensive (looking back they were bargains) and I wasn’t sure how I would make it work. It was such a mental block to look at 200K homes and wonder how I was going to come up with the money.

I was new to entrepreneurship and getting a loan wasn’t happening for me. Luckily my parents bought the house under their name and did a rent to own with me. I was able to refinance them out a short time later. If you aren’t so lucky to have parents to help you do this, I highly suggest you read up on creative finance techniques like subject to, owner carry, and lease options.

Anyone, regardless of your job, can get into a home if they have the knowledge to do so.

I wasn’t making a lot of money at the time, so going from $500 rent to a $1500+ mortgage was a big jump. I had a plan though and that was to rent the rooms out to my friends to help cover the costs.

This is more commonly known now as “house hacking”.

This is where you buy a property, live in it, and rent out the other rooms. The hack is that those rooms you are renting out pay for your mortgage plus some, essentially creating a passive stream of income.

I had bought a 4 bedroom house, leaving 3 more rooms to rent out. I packed a few friends in and for a couple years I used this strategy to live for free. Looking back, I learned some lessons from this experience and have a few pieces of advice for anyone interested in this strategy.

Now at the time I was 25 years old and renting rooms out was not a big deal to me. I was used to having roommates at that point in life. I highly recommend all young professionals do this strategy. If you have decent W-2 income, you should be able to buy a house and rent the rooms.

Look for properties in desirable areas with lots of bedrooms. The more bedrooms you have, the more money you can make. So, with that said, single family homes work well. A 2-bedroom condo can work, but it wouldn’t be as good a 4+ bedroom house. I was really conservative at the time and bought a house that was on the lower price point of the market.

Looking back, I should have bought a small multi-family property. If I had bought a duplex or 4-unit building, I would have cash-flowed way more! You can buy up to 4 units and get a home owner loan, aka great terms and low money down.

Another tip I would have given to myself was to move more often.

I stayed in that home for over 4 years, but at 2 years, I could have sold it and paid no taxes on the equity gains. This would have given me cash to upgrade to a better house or multi-family property.

Even better is keeping the home and moving as often as you can get new primary home loans. If you are really pushing it, you could do this every year or so. Had I done that, I would have grown my rental fleet much faster and would have way more equity/net worth.

That first home I bought for 200k is now worth in the mid 500s and I didn’t do a thing to it! Imagine if I had done that 4 times over!

I am actually on my second house hack at this point.

This time it is a little different though, as I don’t have roommates. You may be asking yourself, well how is that a house hack then? Well, I found a property in the area I wanted to live in, which is a small home on a big piece of land. I really don’t want roommates and this home is only a 2-bedroom, but this home came with an additional lot and favorable R2 zoning. So, on my other lot, I am in the process of building a duplex.

I basically got the extra lot for free and after I build the duplex, I will be able to refinance out and the new rentals will cover my mortgage. To top it off, my zoning allows for an ADU (accessory dwelling unit), so I can put that behind my current home and I will have 3 new rentals in a highly desirable area without having to have roommates!

This is a strategy anyone can do at any point in their life if they know what to look for. It’s a great way to build wealth and live for free. I encourage you to look for these opportunities and start hacking your way to passive income and a free place to live!

passive income
Kyle Doney

Kyle Doney

I grew up in Pennsylvania and lived in multiple states during my 6 years in the Air Force. I landed in beautiful Colorado after the military and college in 2012 and started my entrepreneurial journey by starting a healthy vending company and a wireless wholesale company shortly after in 2013. I was part-time in real estate from 2013 until 2017 when I sold the other businesses to focus on growing my real estate company which has become an obsession that challenges and excites me every day! When I’m not working on my real estate business my hobbies include motocross, BMX, mountain biking, snowboarding, and hiking the mountains near my home in Golden, Colorado.

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