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Free Rent: College Grads Apply Here!

Within five months of leaving college,

I had arranged for free monthly rent, $415 in monthly income and increased my net worth by more than $30k.
And you can, too.
We all know the challenges facing college students in this day and age. I faced them too:
• Ridiculous amounts of debt to repay
• Entry level jobs with laughable pay
• Desire for freedom and a chance to experience life

I had spent my entire life being told by parents, teachers and guidance counselors that a college degree was the ticket to a good life. What a joke!

Don’t get me wrong – I wouldn’t exchange my college years for the world. I had enjoyed four years of partying with amazing friends, had eye-opening experiences, and squeezed in a little bit of education around the edges.
But after the whirlwind of graduation, reality hit, and hard! The average student was left with over $20,000 in debt, and we were getting spit out into an impossible job market where our unemployment rate after a year was 9 percent!
So there I was, staring at the bleak prospect of spending the next ten to fifteen years trying to repay my loans while working at a low-paying entry-level job. If I was lucky enough to find one!
Higher education was starting to feel a lot more like an expensive ball and chain. It is one of the reasons I am glad to see the growth of apprenticeships and online bootcamp courses like Team Treehouse.
But I didn’t have it easy like you college graduates these days! 😝

I was stuck with two choices; get creative with my finances, or move back in with my parents. I went to college because I believed I had a mind that was up to any challenge, not just to take a four year vacation from my parents, so I decided it was time to take a look at my income and expenses.

Lucky for me, I had a family friend who pointed me in the direction of a book, Rich Dad, Poor Dad.

After finishing the book, I had a two-part epiphany.

My largest monthly expense was my rent.
• My landlord’s largest monthly income source was (you guessed it) MY rent!

So I started thinking: Why couldn't I be my own landlord?

Here was the answer to my problem: A way to eliminate your monthly rent payment, and as an added bonus, increase your network with real estate investing. In essence, I should be able to use house hacking to live rent free!

Ultimately, Kiyosaki's book, and my personal epiphany are what led me into buying my first investment property. It took me several months of research and preparation, but it was totally worth it.

I started my real estate investment journey just after the real estate bubble popped in 2008, so interest rates and prices were rock bottom. Even though almost a decade has passed, interest rates are still low, and there are still deals on the market. You just have to dig a little deeper. Additionally, the economy is stronger now, so there are more people looking to invest and give you money!

At the time, my rental experience was limited to my time in off campus housing – no real responsibilities, and parties every night with a neighborhood full of friends.
So why not stick to what I already knew?
As a die-hard Buckeye fan, I started looking for opportunities in the off campus area of Ohio State University. My plan was to buy a campus rental property, live in one of the units, and become a slumlord – I mean, rent the rest of the units to my friends.

After finding a realtor, I began looking at properties. I passed up what I now know were some good properties, but that’s what a learning curve looks like. I put in offers on two other properties, but they fell through. Third time’s the charm, though, and I found a property that I liked along the north side of the University.

The Offer

The property itself was a run down six-bedroom, two-bathroom duplex fresh off of a foreclosure. It needed a lot of elbow grease, but my father was a contractor and I had grown up helping him, so I wasn’t scared of that.
The bank was asking $140,000, and after my two previous failed attempts, I wanted to be sure of success, so I moved fast and bid high. I eventually settled at $135,000, with closing costs being covered by the seller. Not the best deal ever, but I was finally closing on my first house!

The Closing

Thanks to recent tax credits put in place (Thanks Obama!), and the State of Ohio, I hardly had to put anything down to purchase my property, even with banks and the federal reserve cracking down on the loan market. I had $6,750 coming in a tax return, and I only had to put 1.5 percent down - $2,025. I had my parents front the money, and I paid them back when the return came in.
Pretty slick, right?

Rehabilitation Time

I closed on the house in October of 2009, and I used some of the remaining tax return money to remodel the bathroom on one side, glass block and water seal the basement, and fix a few other issues. I continued to work on my side, painting and doing some minor fixes. I saved a lot by doing the work myself, and my friends and family helped out, adding extra hands and experience.

The Renters

I invited two friends to share my side of the duplex at $300 a room, and managed to rent the other half to my realtor’s daughter for $850 per month. Instead of a monthly rent, I had a free place to live, an income of $1450 per month, and a mortgage of around $1,000.

Here's the Math:

Property Value at Sale: +$167,900.00
Original Loan: -$ 132,259.00
Down Payment: -$ 2,268.60
Total Equity: $33,383.40
Monthly Rental Income: $ 1,450.00
Monthly PITI: $ 1,045.00 (Principle, Interest, Taxes and Insurance)
Monthly Cashflow: $ 415.00
Personal Monthly Rent: $0!!!
Before I purchased this property, I had been staying with my girlfriend of five months at her mother’s house (a little weird to say the least!). Now, after a little bit of house hacking, I was living in my own place rent free, and making money to boot! Not half bad, if I say so myself!
Opportunities don’t just present themselves; you have to make them happen. But with a bit of determination, research and hard work, you can eliminate your monthly rent payment and increase your network with real estate investing!

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