How to make money acquiring a house that the bank paid for

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Complete the house, and rent the basement out to either a couple or two separate people.
Price the rooms comparatively to what a dorm room costs at your nearest college/university if you're near one, and if you're not, make sure it's priced comparatively to other rented properties in your area. If shitty ass two bedroom apartments that are small in an apartment complex are being rented for $1000/mth, you can get more than that easily. You are offering a brand new, clean, never been lived in, LARGE two bedroom apartment.

Now, use their rent to pay your mortage off. Where I am, shitty fuckin dorm rooms are rented for around $600/mth. That makes renting the basement to two students EASY for $1200/mth, because it's the same price as a dorm but a hell of a lot nicer. We're close to a university, so that allows us to be a bit more choosy with who we want living there as well.

With the mortgage being $1150/mth and rent coming in at $1200/mth, any amount of money you are able to save is able to be chopped right off of your mortgage. My fiance and I budgeted ourselves around $1100/mth, so I know we are comfortable with giving that up. So we put that on top of the rent, and the mortgage gets paid of way faster.

By renting the basement out and also holding ourselves responsible for "paying" the mortgage ourselves as well, we are able to pay off a shitpile of the mortgage over the course of two years. The interest in the first year was around $6500, and we're aiming to pay off close to $28k. The second year we'll pay off a similar amount, but the interest will be less.

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In two years time, we'll be able to sell a house that we initially paid $230k for, and have the mortgage paid down to ~$190k, for $300k.

That's $110k in our pockets, but we paid ~$55k into the mortgage on that. Now, we could have done that right off the hop (sold it), but the house value is still pretty much "brand new" after two years. Also, if you don't live in the house for at least a year (I think) you get taxed on all that. So you might as well live in the new house you just designed and built for a couple years.

So basically you start with fuck all, nothing, and go to SAVING ~$50k over the course of two years for living in a new house and renting the basement. You don't even have to sell it, if you stay there and continue doing that, you'll have the mortgage paid off in EIGHT YEARS. The bank gave you the money hoping it'd take 25.
Now, you don't have to pay the mortgage off that fast. If you're okay with giving the bank way more in interest, you can have your tenants pay the mortgage for you forever. You're still on the hook for property tax and utilities and all that, but not having a mortgage in a brand new house is pretty sweet.

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Here's the numbers because I know people will try to say that it's bullshit. You need to make enough money in order to support an $1,100 mortgage payment, that's it. If you can make the mortgage payment, the bank is happy to give you the money and rape you on interest over many years.
Those of you paying rent probably pay close to that already.
My bank is CIBC so I used their mortgage calculator for reference.2.79% on a two year fixed rate
https://www.cibc.com/ca/mortgages/calculator/mortgage-payment.htm
>First year
$230,000 + $6417 interest = $236,417 owed
Payment is $1,064/mth = $12,768 per year
1200 in rent x 12 months = $14,400 per year
You are paying $1,100 per month = $13,200 per year
So you're paying off $27600 total minus the interest per year

Which means, after the first year, you owe $208,319
>2nd $208,319
>3rd $186,028
>4th $163,112
>5th $139,551
>6th $115,329

So now you've lived in your house for five years. The bank will make ~$3200 off of you in interest the following year.

>7th $90,426
>8th $64,823
>9th $38,501
>10th $11,440

And obviously the entire mortgage is paid off in the 10th year.

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So, to round this all up, the bank lent you $230,000 with the intent of you taking 25 fucking years to pay it off. This amounts to them raping you in interest because you took so damn long to pay it.

You paid the entire thing off in 10 years, and you were under zero pressure the entire time because, if something were to happen in that time and you were in need of money, your mortgage for that month was already paid regardless. You don't even have to be frugal with your savings, this is assuming that you're holding yourself obligated to pay for your own mortgage and that's IT.

Now, you own a house that costed $230,000 to build.
The bank made ~$34,480 in interest.
You own a house that can be sold for $280,000+ easily, and now you are making $1200/mth right into your pocket if you don't want to kick your tenants out and take the basement back for yourself.

You borrowed money from the bank... and you made a lot more money with it than the bank did, as well as got yourself a new house to live in, and worry-free mortgage payments for a decade. Oh, and you own a house in 10 years, and that's by holding yourself to the bare minimum of paying your own mortgage and having tenants. If you can save more than that, you could have it paid off faster.

>>1098192
Interesting.

>>1098201
Isn't this assuming the housing value won't go down over those 10 years?

>>1098262
chea homie
>>1098265
Even if it does, you don't have to sell it. A lot of people just want to own a house without ever renting and without having a mortgage for their entire lives.

If you can manage to swing this in your early 20's you could own a house in full in your early 30's. Even if it's not worth as much as you'd hoped, you still own a custom house in your 30's and you don't have many other options if you don't want to rent like a moneycuck.

>>1098293
>A lot of people just want to own a house without ever renting and without

so what you're saying is a lot of people are ok losing money just for the privilege of having a paper that says you own the house. Because that's fucking dumb.

>>1098299
>so what you're saying is a lot of people are ok losing money just for the privilege of having a paper that says you own the house.

please explain the alternative

>>1098300

Renting and having more money in your pocket to spend on something more valuable than the privilege of saying "I own a house"

>>1098313
RENTING LOL

>>1098315

thank you for the sound financial counterargument

>>1098318
RENTING SMART

LMAO

I was planning to do this remotely, since I work in Silicon Valley and owning ANYTHING here is almost impossible.

Is there any advice for someone who wants to do this in another state? Any way to keep up on payments and such and make sure everything goes off without a hitch? I think with some careful planning, I can buy the land right out, and then keep a monthly payment of about $500 for the house, although the down payment might kill me.

>>1098320

Get in touch with a general contractor and work out the details of how much it would cost, get some examples of floorplans, some timelines and estimates and go from there.

The general contractor is going to run the entire build for you, and it's up to you to give them the okay on everything.

The bank comes to site to inspect it and make sure that its at a certain percentage of completion before they give you more payments, and it's up to the general contractor to make sure those things are done by those dates.
The bank will give you a checklist of how many percent each thing is worth. So plumbing is 5%, etc etc

>>1098324
So who would I contact first, bank or contractor?

In addition, it might be a good to get a third party property manager.

>>1098326

First, find lot you're interested in.

Second, contact bank, make sure they are willing to go through with it

Third, contact GC, get drawings, budget proposals and scheduling to give to the bank so the bank can approve it

>>1098327
Thanks man, saving this thread for when I get a bit more financially stable than I am now.

>>1098328
No problem dude, best of luck to you

>>1098329
Oh, any advice on whether I should get a property manager or not? Especially if I'm going to be renting the house out while I'm working out in SV

>>1098330
I don't know much about that part of it man. I've always just rented out my own place, myself, and had a direct relationship with the renter. Sorry bro

>>1098336
Hey this all sounds legit. Do you have any tips on down payments, like how much for this example, are they even necessary, etc.?

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>>1098192
>>1098194
>>1098195

Tl Dr: rent basement to cover mortgage

>>1098375
Bigger down payment on the initial loan, the better. You want to owe as little as possible man.

>>1099203
you forgot the part where you design and build the house
and then continue paying the mortgage even though it's already "covered"

>>1098313
A house is an asset whereas if you rent you have nothing at the end of each lease and a set of rules dictated by a land "lord"
I can 'own' a house that I'm paying a mortgage on and sell it to downsize if I'm getting fucked financially for some horrible reason and I don't have to worry about violating a lease

>>1098192
My father is a custom home builder, he has done this and suggested I do the same. Approximately every 2 years he picks up and moves into one of his empty concept homes. He doesn't even bother with renting out a basement. Just hops from one house to the next making loads of easy dosh.

And then you woke up.