A real-estate investor who’s written multiple books shares 2 ways to build wealth through rentals — including one that can deliver financial independence in 15 years

  • David Greene is a real-estate investor and the host of the “BiggerPockets” podcast.
  • He just published his seventh book on real-estate investing.
  • Greene shared two strategies for investors including house hacking and rotating cash-out refinances.

David Greene does not believe in life’s shortcuts.

Whether it’s in work, sports, or anything else, the host of the “BiggerPockets” podcast believes that hard work is required to achieve your goals.

Greene says that today, particularly on social media, tips for shortcuts from financial influencers abound.

“There’s a trend in the world of online content where they want to explain to you how they can easily help you make money.” “Like in the ’90s, the trend was to sell easy-to-use workout equipment,” said Greene, who owns rental properties in several states. “It was like, ‘You can get a great workout without breaking a sweat from the comfort of your own home!'” It did not work.”

That’s why he’s releasing his seventh book, “Pillars of Wealth: How to Make, Save, and Invest Your Money to Achieve Financial Freedom” — he wants new investors to adopt a work-hardening mindset in order to achieve their goals.

Greene shared two book tips with Insider last week that new investors can use to build wealth. While he claims they are “incredibly simple and easy to execute,” they are both long-term strategies rather than get-rich-quick schemes.

Two ‘incredibly simple’ strategies

The first is house hacking, or renting out a portion of your home to a tenant.

According to Greene, this could include renting out a room in your home to a long-term tenant or Airbnb guests, purchasing a duplex or triplex and living in one of the units, converting a garage into a living space, or constructing a small house (known as an accessory dwelling unit or ADU) in your backyard.

House hacking enables investors to reduce or eliminate their own housing expenses while also accumulating equity in a property that is likely to appreciate in value.

“What they’ve done is they’ve taken that $3,000 mortgage payment, and now they’re only responsible for $500 a month, which is the same as being able to save $2,500,” Greene explained. “And they now own an appreciating asset that in 30 years is paid off and has probably quintupled in value over that period of time.”

Greene’s second strategy consists of several steps. To begin, he advised purchasing a cash-flowing rental property (which you could also live in), taking out a 15-year mortgage on it, and then using all of the excess cash flow to pay down the mortgage. Then repeat the process with another property the following year, and another the following year.

With rents rising year after year, you will eventually generate positive cash flow on the properties. He said that once the first property is paid off after 15 years, you can do a cash-out refinance on it, live off of it, and use the rent money to replace the equity you took out.

When the second property is paid off, you can withdraw equity from it, and so on. When the first cash-out refinance is paid off, you can take more money out of the property and repeat the process. Of course, after 15 years, one could live off monthly rental income. However, this is taxable income, whereas money from cash-out refinances is not considered income and is thus tax-free.

“You would theoretically never have to work again,” said Greene. “You’d just live off of the money that pull out of your properties if you work really hard for 15 years.”

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