Paying Yourself Rent

[Jonathan Bombaci]

We work with lots of clients off Biggerpockets and while I realize “Living For Free” is the dream, and we’ve helped many people achieve that, it is still okay to pay yourself some rent.

My first househack was a 3 family outside of Hartford CT and the other 2 units brought in about $1700 a month. My mortgage (PITI) was about $100 higher than that and I had to pay the water/sewer, Maintance, capex, and manage the property. I "paid myself $500 a month" but I was living in the largest, nicest apartment that could be rented for over $1000 a month while paying down my mortgage and building equity. To me that's still a huge win when looking at renting as the alternative. After a couple of years of raising rents and taking on a roommate I was actually getting paid to live there. Then when I moved out and rented the unit I was living in it became a very cashflow positive rental property.

In expensive markets like Greater Boston it’s hard to find a property where you can truly Live For Free but living for less in an apartment you own is still a fantastic way to get started in real estate.

Has anyone else done this? And if so how did it turn out? 

Best,

Jon

[Christian Ehlers]

Hey @Jonathan Bombaci I agree that it's very hard to find a property around Boston that cashflows while living there, even in the NH seacoast area it is tough especially if you are looking at deals on the MLS, even though its a bit cheaper here than the North Shore area of Massachusetts. I think that the confidence gained for somebody who has never owned a home or rental property before might be the best part of househacking. They learn to landlord, reduce their rent and begin to see their tenants paying down their mortgage every month, and usually it becomes addicting!

I've had clients who have bought single family homes and rented rooms to friends, and as they became more established in their careers they decided to keep the home for themselves without roommates, which made for a very easy and smooth transition, similar to yours of growing out of your househack multifamily. 

Last thing I would say is especially when the market is appreciating the way it has been, I wish more agents and investors would take the approach of looking at how the property will do 2,5,10 years down the road, rather than getting caught up in the small details today!