This is for all of you who are looking to buy your first house. It’s not exactly what you’re used to seeing; It’s going to be more of a road map to financial security. But wait! Don’t stop reading because you think I sound like your parents. It’s not like that. I am lucky enough to have been fairly successful over the years picking the right properties to provide a pretty nice retirement for myself and my family. Unfortunately, I’ve also been pretty good at picking some of the bad ones; guess that makes me an expert of some kind. Regardless, at least humor me and keep reading. Instagram can wait (find me @mark_mcmahon_real_estate) a few minutes. Who knows, maybe I’ll change your life.
Imagine having enough income to retire at 50. It’s totally possible. All you have to do is get started now. What you say? If I get started now, I can retire at 50? But I’m already 45, what then? Hmmmm, possible, but not probable. That’s the bad news: good news is you might have to work till 65, just like you planned. The difference is you will be comfortable, vs being at the mercy of Social Security. Let’s concentrate on 20 and 30 somethings for now. Or maybe you’re in your teens and want to get started. That’s cool. We can talk about that too.
So, you’re looking for your first house. A place to call home, to raise your family. Or maybe you’re still single (especially if you’re in your teens!). Maybe you should look at things a little differently. Perhaps you could buy your first property and make it pay for itself. What??? That sounds too good to be true! Let me tell you how it works, then you can decide if I’m full of s#!*t. This won’t take long.
The first thing you’re going to have to do is decide what kind of property you want. I suggest a 4 unit apartment. Also known as a 4-plex. You move into 1 of the apartments and rent out the other 3. If you’re smart (I know you are, you’re listening to me J) you’ll take the biggest unit, use one bedroom, and rent out the other, or others. There’s a real good chance you won’t have to pay a penny to live there. You might even cash flow (that’s the money left over after you pay all of your expenses. We’ll cover this in another article). There are other sources of income at your 4-plex. Look at your property as a mine; you are mining every bit of cash flow you can. There are garage rentals (you’re driving a car that doesn’t require a garage, you’re smarter than that!), laundry money, and the cash you’ll save fixing things, managing your units, and cutting your own grass.
Wow! This is getting exciting; I’m going to live for free and make money to boot! Yep, it’s possible. Now you know how you’re going to make it work, but how do I buy it? Most properties you buy require 20% of the purchase price up front (also known as the down payment). In other words, if your 4-plex is $800,000, your down payment would be $160,000. What!!!! Wait a minute, you said I could do this! Liar!
True, I did say you could do this; here’s the secret: It’s called an FHA (Federal Housing Administration) loan. Simply put, it’s a government backed loan that allows you to buy 1 to 4 units at, get this….. 3% down! Yep, you heard me, 3% down. That’s $24,000 down! Plus about another $10,000 for closing costs. So, you can be an apartment owning landlord for about $34,000!
There’s lot’s more to discuss, like where to buy, coming up with the down payment, living a frugal lifestyle, saving and investing diligently, working out at the park instead of the gym, surfing, camping, hiking, hanging around people that have similar goals, and lots of other cool stuff. But I’m going to show you how to do it. If you have a decent job and a desire to be your own person and you don’t want to count on anyone else, take a listen to what I have to say. The world is your goldmine, and I’m going to show you where all the gold is located; you just have to be committed to doing a little digging.And listening. Now go