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by DrPhish
4692 days ago
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The book you are looking for is "Mortgage Free!" by Rob Roy. He shows you how to go this route ie. buying cheap property and methodically building a house as you have the money to do it (and how to hunker down when you don't). Also, read Walden I took a slightly different tack, but also own my own home outright without ever having had a mortgage
Algorithm is:
-Save up enough money to have 1/2 the value of the worst house you can find in a neighborhood that isn't too bad
-Use that money to purchase the house using a line of credit backed by the house you're buying. You are allowed by the bank to take out a line of credit on a house you are buying equal to 1/2 the tax assessment or 70% of a formal valuation
-Put all your income directly against that line of credit. No maximum payments or other mortgagey bullshit to deal with. You must be disciplined in order to do this effectively. No buying toys!
-Spend all your free time renovating in ways that will increase the value of the house: Kitchens, landscaping, new flooring, paint, trim, siding etc
-Look for deals on properties (esp. bank repos) so that you can leapfrog up to better properties while still managing on the line of credit. I paid off the previous place before moving up, but I'm sure you could figure out ways to move up before then Voila. I have owned my own house for the past 7 years. Only took me 3 to pay off my first place, and another 2 to pay off the next, despite costing twice as much
Current place is a 1850sqft split level on 1 acre of land with a 30'x50' 2 level shop. 5 minute drive to city centre Full Disclosure:
-I live in a relatively rural area in western Canada. Homes now cost $300-500k. I got mine as a) a steal from a couple that needed a quick sale and b) a bank repo I jumped on the minute it hit the market
-We are a family of 5 with a stay at home mom. This is significant in that there is no second income, but all meals are home cooked which saves huge dollars. Also no child care costs
-My income not huge, mid to high 5 figures range
-I started off with about $50,000 I had saved up prior to marriage
-This adventure began at 25yo. I am now 35. I've been mortgage and debt free first at 28 and then again at 31
-The whole thing works best with low interest rates (obviously). I negotiated my line of credit at prime
-I had access to tools, know-how and traded labour from relatives (mostly my Dad). I only bought or rented about half the tools I needed
-Working in the lumber industry meant access to cheaper lumber
-Personal frugality and a frugal wife were huge accelerants.
-Being a car salesman's son probably endowed me with better negotiating ability than most |
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