March 5, 2021
If you are a younger Millennial or older Gen Z like I am, you are without a doubt aware of the struggles our generation is facing. We are hearing “Boomers killed the planet and the economy, and we are doomed to poverty.” Well I am here to bust this myth and explain an accessible path to longterm financial stability. The key is to eliminate your largest expense through passive income.
What is the largest expense? According to a study by Harvard University, about 40 million households pay more than 30% of their income in rent. Everyone needs a place to live, so that housing expense is never really just going away (unless you live in your parents’ house for the rest of your life), but what we can do is subsidize it with passive income. Passive income is the concept of your money working for you. It is money that can be regularly collected for effort often as minimal as simply collecting it.
In my experience, the easiest way to start generating passive income is by becoming a landlord. The solution is to buy a multi-unit property to live in and rent the other unit(s). Renting from a tenant’s perspective is throwing 30% of their income into a black hole every month. From a landlord’s perspective, that money is being put directly into your pocket. For our purposes, this money would go to cover the mortgage and taxes so that the out-of-pocket expenses are virtually eliminated.
You may be saying to yourself, “This sounds all well and good, internet Realtor guy, but I’m barely covering my expenses as it is. How am I supposed to buy a house?” And this question has been answered decades ago so that renting versus owning is a choice rather than a barrier. It is true that the downpayment on a home loan can be tens of thousands of dollars, but with a team including a savvy Realtor and lender, that can be reduced to what is comparably a pittance. A vast amount of programs exist to help you get out of renting and into home ownership, the only problem is that many people simply do not know about these programs so they think home ownership is out of reach.
You now know that you can do it, but you know nothing about home ownership, and even less about being a landlord. That’s ok! Everyone starts somewhere and if you have a great Realtor, they can continue to help you after you buy the house and can act as a property manager to take care of the landlord responsibilities.
Contact Merrimack Valley Realty to help you find the best multi-unit property today.