Getting paid $160 per month to live for free in our MFH!!!

[Troy Sheets]

My wife and I are currently spending $1400/month to rent a town home in Philadelphia. We just purchased a 4-unit MFH two blocks away from said town home via FHA that will be our primary residence come January when the first tenants lease is up. The best part? Each month after paying mortgage, ins, taxes and water for all 4 units, even with us living there and only collecting rent from 3 units, we'll have $160/month left over. Not only are we living for free, we're actually being paid to live there!!!

Before you all jump up and down about maintenance, vacancies, management, etc., I get that the building isn't a cash cow but, it'll still cash flow several hundred a month even after we move out in a few years (subtracting 30% for the above costs) as our unit currently rents for $1025/month. Maintenance should be on the lower side as the entire building was rehabbed in '07-'08 including separate HE gas HVAC units (separately metered) in each unit and a new roof on the entire building. Electric is separate for each unit as well and was upgraded at the same time along with all plumbing right out to the street. Additionally, the area is rapidly appreciating with new construction all around, coffee shops, a microbrewery coming this summer and several good eateries already open a block away. Our units are rented by young professionals and the neighborhood is a haven for hipsters. The upside is huge and we're excited to be a part of it.

Another funny accounting piece, we put around $6k down for EMD, then with seller assists, we needed another $6k at closing. We then received almost $8k back at closing for prorated rents for the month, last months rents and security deposits! I realize this isn't all our money to keep but it's a pretty funny feeling to leave with a bigger check than you showed up with!!! Lastly, due to the way the mortgage and rents fall due, we get all of Decembers rents to pocket and our first payment isn't due till January when the next round of rents are due again!

The best part of all this? My wife initially wanted to buy someone else's flip, which I could never do for several reasons. First, I work in construction and could never live in someone else's work knowing I could've done the same thing myself for less and pocketed the difference plus profit. Second, I couldn't stand to be tied to a $2k-$3k/month mortgage for 30 years with minimal hope of appreciation as the neighborhoods she was interested in have already peaked. This is what her friends have all done and she was simply "keeping up with the Joneses". After my wife realized all the benefits I've just written about, she turned to me in the car the other day and told me how smart I was! When's the last time you heard that from your spouse, at least in a non-sarcastic tone?!?! I can tell you it's been awhile for me!!! ;)

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