|The answer is YES. Your personal residence can be used to create something akin to the positive cash-flow of the real estate investor.
Here’s how: Buy property that has associated revenue generating potential. Use the income you receive from that element of the property to offset your mortgage payment and related costs such as taxes and insurance. If the net amount left for you to pay for those items is less than what you’d otherwise have to pay for that same property if you were renting it, the difference is “positive cash flow.”
The most obvious is a home with a rental suite, so let’s use that as an example. Suppose you have a home that you would otherwise pay $2000 a month to rent. Now, let’s say your monthly mortgage payment is $1500, your taxes are $300 and your insurance is $100, for a total of $1900 in costs. (Your mythical landlord, being smart,would be making $100 cash flow a month less the vacancy and maintenance cost allocation.) Now, suppose you have a basement suite in that home for which you can get $800 rent. Of course, with a basement suite, those initial $2000 costs may have increased to $2300. But now you offset that $2300 with the $800 rent and you are left with out-of-pocket expenses of just $1500 per month, $500 less than you would otherwise pay for that property. Essentially, you have created a monthly cash-flow of $500.
This is not an unrealistic scenario. And it well illustrates the value of starting your financial building block with a home that has a suite. When rent 2 own clients ask me whether they can get a home with a suite, I strongly encourage them to do so, and allow them to use the suite income to help them pay their monthly rent.I mentioned above the value of a “revenue generating” element in a property. That can be much more than simply a home with a suite, though, as there are many other ways to create income from a residence, at least if it is a free-hold property.