Multimillionaire and real estate consultant, Samuel Leeds, has shown a few ways to ‘The Entrepreneur’ – how a newbie can live somewhere with virtually no money.
“If you’ve just started a career and you don’t mind the idea of living with others, there is an opportunity to live rent-free,” says Samuel Leeds.
Leeds calls this concept house hacking. The idea, according to him, is simple: if you can buy or rent a place with more rooms than you need, then you can rent them out and pay off your rent or home loan.
Samuel Leeds is a multi-millionaire real estate investor and he shows he knows all too well what it means to be in the early stages of your career and trying to keep costs low while investing in a savings bank.
While home hacking may not be for everyone, at least it’s a good way to save money for many young professionals.
House for rent
Let’s assume that you are in the position where you want to save money on your rent. In most cases, what you do is this: you look for a room to rent in a house where other residents live, which is located in a not very elite neighborhood so that you don’t pay a high price.
What if you could live in one of the city’s best neighborhoods and, above all, pay no rent? According to Samuel Leeds, this is possible.
To begin with, you need to find an apartment in a preferred part of the city where the rent price for one room is high. Let’s take the example where you rent a 3+1 or 3-room-and-kitchen apartment.
First you need to negotiate with the owner and reach an agreement for him to let you rent 2 of the rooms. This will not be the easiest thing, so it is important to prove to him that you will be an excellent tenant and of course an employed professional.
If you manage to do this, the next step is to issue the notification for the remaining 2 rooms.
If the neighborhood you have chosen is good and desirable, you will be able to put a price on the remaining rooms, which can cover if not all the rent, at least a good part of it.
You probably won’t have an easy time finding an owner who will allow you to do this right away, so you have to keep looking until you do.
Purchase of property
You can buy a residential property in Albania, where the bank pays you a good part of the mortgage. If you are employed, the problem is not getting the loan, but finding a way to repay the payments each month.
If you want to minimize your costs, even to zero, what the British expert suggests is this.
Let’s say you are going to buy a 3-room house, where the rooms are big and you have the possibility to turn the living room into your personal room. That way, you can let out the other 3 rooms and keep one for yourself. If you do it right, you’ll be able to pay off your mortgage without a problem.
This means that you will have the opportunity to live practically rent-free in your own property!
To do this, you will need to do a detailed study of your market as this is not possible in every type of property.
You need to find areas where the demand for rooms for rent is high, and where the price of houses is low relative to the rent.
Challenges and risks
Of course, all this comes with its own risks and challenges that you should consider. First, you will be responsible for finding tenants. If they do not behave properly, their mistakes will become your responsibility.
You’ll also need to factor in idle periods where your rooms may sit empty. For this reason, you should put some money aside for the unforeseen periods where you will have to make the payments yourself.
Credit comes with a lot of responsibility, so it is not advisable to take it as a step without consulting some financial experts. It will be based on your salary and you have to do your calculations well and in the end, if this is not the right option for you, it is better to stay with the rental option.
Samuel Leeds is the founder of Property Investors – one of the UK’s largest property schools. He has sold over 300 properties, including a 20-room castle, and over 1,000 years of history. Samuel and his wife, Amanda, also run the Samuel Leeds Foundation.