Owning real estate is a guaranteed way to increase your net worth while creating generational wealth. However, it does take work to own a home.
If you own multiple homes, you can significantly increase your chances of becoming wealthy. However, is the additional stress worth the payoff in the end?
Today, I want to share my experiences owning multiple homes and give some tips to help you along the way. Everything in life has good and bad points, so preparation is the key to success.
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The homes I own. My wife and I own three houses we have bought over the years. We purchased a large home with three acres in Arizona in 2008.
Next, we bought a smaller home (1,700 square feet) in Florida in 2017. Finally, we purchased our last house in Florida in 2020 because it is large (2,500 square feet) and has three acres.
You must think of each home as you would a child—they will always need something. You can spend an unlimited amount of money on owning just one home.
Detach yourself emotionally from your home. The most challenging part of owning a home is separating your emotions between your house and your family.
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We often believe that the house gives us memories when it is actually our family. Don’t get me wrong; I have had unforgettable moments across all of our homes.
But if you keep these emotions, you’ll begin to make emotionally-based decisions. And emotions and business do not belong together.
So prepare yourself to rent your home to someone else eventually. Your home is a means to an end. At some point in your lifetime, it will become a commodity so you may think of it this way as soon as possible.
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An excellent book to read is “The Book on Managing Rental Properties.” It will give you the scoop on preparing for tenants, renting your home, becoming a landlord, and starting a rental business.
Another good book is “The House-Hacking Strategy.” If you learn how to rent a room in your home, it helps build the mindset of a real estate investor.
Find your purpose for owning multiple homes. Owning numerous houses is a pain in the rear end. There is nothing fun about dealing with tenants, property managers, tax people, and maintenance folks.
If it is such a hassle, why keep dealing with all the additional stress of owning three homes? Because it guarantees my wealth in this world.
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Each month, I receive rental income from my houses. On top of that, the value of my houses slowly grows each year. Each day, my houses are building equity I can leverage someday while my tenants pay my mortgages.
More importantly, owning these properties ensures my children will always be okay in life (if they stay away from drugs and bad people, etc.).
Inflation is currently raging through the world’s economies, and there is no way to stop it. However, my mortgage stays the same (except for tax and insurance premiums).
That means the $1,200/month I pay for house #2 will remain close to that amount for the lifetime of the mortgage.
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I currently rent this home for $1,700/month, which is significantly under market value. I can rent this property for $2,200/month with a change in tenants.
Therefore, my children can move into the property and live well within their means. Or they can rent the home to someone else. Or move in, get roommates, and charge rent that pays the mortgage plus additional cash flow.
Options for everyone. Each home is like its own savings account and financial plan. Not only do you get options for living and renting, but for tapping the home equity.
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As your home values increase, you can tap the home equity to purchase more homes, add accessory dwelling units, invest in the stock market, or start a business.
The longer you own these homes, the more your net worth increases. Banks love when they have collateral they can leverage when lending.
Is it worth the hassle? Most people want to have smooth, quiet lives. They don’t want to get bad news in the middle of the night.
However, most bad news comes during the first ten years of owning a home. You won’t have much equity, your rents will break even on the mortgage, and you may not have a home maintenance fund.
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You will slowly get the hang of taking care of your homes. You’ll prepare yourself for the unknown by saving money.
When you get bad news, you’ll understand that it is just a part of life. If something happened to one of my homes today, I have multiple ways to cover the expense.
This level of responsibility comes in time. The important part is to go into owning multiple homes with your eyes wide open.
The Magic of Leverage
It takes a few years to become a real estate tycoon. There is no need to try to buy three properties in three years.
The hardest part is getting equity in the first home. You can do this with time or with sweat equity. The book “Buy, Rehab, Rent, Refinance, Repeat” shows us how to build massive amounts of equity quickly.
Once you have equity in your first home, you can leverage it for a down payment on your second home. Then you can use the equity in those two to buy two more.
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Conclusion. In short, owning multiple homes will give you and your family options for the rest of your life.
You can use these homes to pay for college, fund a business start-up, pay for your parent’s long-term care, or use the rent as retirement cash flow.
You must have organization skills to own multiple homes. You will have to pay property taxes, personal taxes, businesses (LLCs), insurance premiums, homeowner’s associations, property management fees, etc.
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The list goes on, but don’t let it scare you. Keep good notes, as I wrote in “Build a $1,000 Emergency Fund in 10 Steps.”
There is no feeling like knowing your kids will be okay. My kids each have a home they can leverage to get a head start in life. I can pass this knowledge on to them, and they can do great things.
Owning multiple homes is almost a must if you are serious about building wealth. Prepare for the headache, but focus on the future. I personally haven’t met anyone who regrets keeping multiple homes—as long as they didn’t get greedy. Good Luck!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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