Change Your Thinking – Get Your House For Free!

When I do my “wealth building” classes, I emphasize that creating wealth has almost nothing to do with how much money you have to work with. It has more to do with your frame of mind (or how you think). I don’t mean for that to sound new age or weird. It’s simply a matter of how you understand your goals and the process for reaching them. For a long time I used an example that people couldn’t seem to grasp related to typical residential investment properties. Today, I have a better example. As I write this article, we are looking at several lake resorts. I expect that by Springtime, if not sooner, we will take ownership of our fourth resort property. Why so many?  Why not! They are basically FREE! Plus, depending on what you are trying to accomplish, you can even get a house for free in the deal along with the monthly cost of paying for it and it’s expenses.

If you’re having a hard time grasping what I mean when I say “They’re FREE”, then you are at the first step of understanding why wealth has more to do with your frame of mind regarding wealth. Let me explain……


View from the front deck of our “Lake Resort Home”

Mostly, we all approach home ownership exactly the same. We find something we can afford, hopefully in an area or setting we can enjoy. We go through the process of getting funded for it (mortgage) and then hope that we don’t lose our jobs along with our ability to pay for it. Everything about this approach requires our money to flow from us out to others. It’s Cash Flow, but in a direction that flows away from us. In his book “Rich Dad Poor Dad”, Robert Kiyosaki makes a profound statement concerning this. It’s the idea that our typical homes are not assets but they are liabilities. His reasoning is that whether we are working or not, they continue to consume cash (mortgage, insurance, taxes, maint/repair, etc) In other words, their cash flow was always negative and will never stop being negative, even if they are paid for. (you only lose the mortgage expense but everything else related to it’s expense is still there)

This idea drove me crazy when I first understood it. I kept thinking that there had to be a way to make this work so the cash flows in the right direction! Rental properties sort of did this in an indirect way, but it was still just “offsetting” the negative cash flow of a home with the positive cash flow of the income properties.

Don's pic 02

The “Sunrise View” from our deck

Five years ago, we purchased our first little resort property. Our intention was to make it a private family retreat with a residence attached. When people started driving in our driveway wanting to book a cabin for the night or the weekend, The light bulb finally came on! We had purchased a property in a cool place, near a lake, with guest cabins, a private home and had a built in income to pay for all of it. Does it make enough to make a living? Who cares! I was working when I was paying for any of my other homes. If I was still working a job, I would still be getting my home and living expenses for that home covered by the vacation guest income.

Free home in a cool place with extra income to cover “Pizza and Movie Night” once a week! (and maybe a cruise once or twice per year) What’s not to Love about that!

We took the same approach when we bought our Swimming Pool! That specific resort property included a 3 bed, 2 bath house with 7 cabins and a big 30,000 gallon in-ground swimming pool! With the guest cabins rented, guess what we get for free! A cool place to live one block away from the lake with a swimming pool!

In both cases, we have care-takers managing the day to day business, upkeep and housekeeping (and even that is covered by guest income)  Our treehouse resort and campground is a little different in that we have partners. But for the last year we have worked out a deal exchanging being the on-site eyes and ears of the property for a place to stay. So it’s still pretty much the same. On site staff take care of the business and maintenance.

As we prepare to transition to full time managers at the campground, we will be moving on to the next step in our BIG adventure. Guess what I’m looking at? My list of properties we are visiting this week includes 4 different lake front resort properties. All include a private residence and two include managers residence in addition to owners residence. (Did I mention, they are all on THE LAKE?) This is such an easy and workable investment model when approached correctly. The typical approach is to go into a resort business and buy it with the hopes of living the good life and making a living from it. And that can happen, but requires a bigger investment up front on typically a bigger, more expensive property.

The key is to look at it as a personal residence in an awesome setting with a built in income stream. An average home buyer doesn’t think twice about spending $150,000 on a home with nothing but expenses attached to it. Consider buying a resort property with enough income to cover all of the expenses. Even if you have to let someone else take care of the upkeep, there is usually enough income in it for that!

A couple of side benefits………

  1. We always have guest houses/cabins available for family and friends to stay in. (who love it by the way)
  2. Shelley and I have a “niece and nephew plan” where we allow each of our nieces and nephews to bring their family to stay for free for a week vacation in our area each year. (who love it by the way)
  3. The “Business Value” increases as the mortgages are paid down (from rental income, which we love….by the way)
  4. With us, we see it as a multi property strategy where we are not just paying down one house, we are paying down multiple business properties all at the same time with the income they are generating through guest reservations. (which………we love by the way)
  5. Our home has a vibrant atmosphere going on all the time. (Not everyone would like that, but we do)
  6. It gives us an opportunity to let friends live an interesting resort life when we decide to have a larger property managed by them.

By Springtime, we will have bought four resorts in five years this way and I think we are just getting started. We are preparing to sell one or two of the smaller ones as we are shifting our emphasis to larger and more exotic properties (like treehouses). Maybe you will find this investment strategy of interest!

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