How to Live Rent and Mortgage Free

I’ve seen financial gurus that cite, as a general rule, you should spend no more than thirty percent of your average gross income on housing. Wait, what, huh, seriously?! How on earth can anyone achieve FIRE if thirty percent of their gross income is spent on housing?

Before you point to technicalities - let me cut you off: I understand that the recommendation is “no more” than thirty percent. I also understand that when most people are directed that they can splurge up to a certain amount on something, they tend to go all out. I mean, as a kid, if my mom told me that I could go to the grocery store and spend “no more” than five dollars on snacks, I certainly wasn’t coming home with a fifty cent snack!

So here’s my link between candy and housing: When most people are told to spend no more than a certain amount on something, in most cases, they spend that maximum amount. But, if you’re interested in FIRE, you can’t behave like “most people.”

Think Outside the Box for Housing

What I encourage you to do when it comes to housing, is to think outside the box. Don’t accept that you can spend thirty percent of your income on housing. Think differently! Consider what would happen if you told yourself that you should spend no more than ten percent of your income on housing? What if (gasp) you even adopted the crazy idea that you should spend nothing at all on housing?!

Well, that’s exactly what Amon and I did on our journey to FIRE. We got creative. We began to think of ways to live rent and mortgage free . . . and we did just that! In fact, we came up with ways to live rent and mortgage-free before we even started our FIRE journey. For more than ten years, we implemented five completely different strategies that allowed us to live rent and mortgage free. And we lived in beautiful homes. Check out our tour of a house we lived in for three years (rent-free) in Japan or check out our homes in the Bay Area that we lived in rent and mortgage free.

Want to know how we did it? Below are the five ways that we lived rent and mortgage free!

1. Resident Advisors

Being a resident advisor is a great way to get your housing paid for while you’re in college. But, you don’t have to be a young college student to be a resident advisor. Amon and I lived in UCLA’s graduate school housing when I was in law school (at the age of 32!). Amon was the only one working at the time and we needed to save money, so we became resident advisors. In exchange for getting free rent and an additional monthly stipend, we were only required to be on call eight weeks out of the year. Only eight weeks! Don’t get me wrong, we got some interesting 2:00 am phone calls during those eight weeks, but it was definitely worth it. If you’re not a student and don’t qualify to be a resident advisor, try applying to be a resident manager of an apartment complex - same concept, you just don’t have to be a student to qualify.

2. Renting Out Empty Rooms

Have an empty room lying around in your house? If so, get a roommate to pay your rent! Shortly after graduating, Amon and I purchased a lease option on a three-bedroom condo. But it was just the two of us and we had two spare rooms. We knew exactly what we wanted to do with those spare rooms - make MONEY by renting them out! Clearly, the con to this is that you have to share your space with strangers (who wants to share a place with a wacka-doodle?!).

Fortunately, we ended up with great roommates. One thing that helped was that we listed the rooms at slightly below going-rates. By doing this, we got tons of applicants, which meant plenty of roomies to choose from. The two roommates we selected ended up paying for our entire monthly lease option (allowing us to live rent free) and when we ultimately moved, we sold our lease option for a great profit. #WINNING

3. Strategically Downsize

Notice how I didn’t just say “downsize”? You’ve got to be strategic about it! Let’s face it - most of us live in a house that’s too big. Sure, downsizing will likely decrease your rent. But there’s also a way to decrease your rent AND live rent free! Here’s how we did it.

Obviously, we downsized. But, rather than getting rid of our larger home, we kept it and rented it out at a rate that paid for us to live in a smaller home while also paying the mortgage on the larger home. We put our larger home on AirBnB and VRBO, which allowed us to collect a much higher rental income on a nightly basis compared to the rent we could have collected from a long-term renter. This option worked for us because we got to downsize and embrace a minimalist lifestyle while also living rent and mortgage free.

4. Granny Flats

Not to beat a dead horse with the AirBnB/VRBO concept, but this fourth rent and mortgage-free technique also involved AirBnB and VRBO - just in another way. Under this method, we actually didn’t own a house. Instead, we rented a house - and still lived rent-free. We did this by essentially renting two homes at the same time - a main home with a detached granny flat in the backyard. We lived in the main home and rented out the granny flat on AirBnB and VRBO.

This was a great option for us because we got to profit from real estate without actually owning the real estate, investing in the real estate, or maintaining the real estate. Of course, if you use this technique for living rent free, you MUST get approval from your landlord before you do it!

5. Employer-Paid Housing

And our FINAL way for living rent and mortgage free was through our employer. When we lived in Spain and Japan, we worked for the federal government - and the U.S. government paid 100% of our rent and utilities while we lived and worked abroad.. What many people don’t know about the federal government is that (many times) they offer free rent and utilities to employees that work abroad - in places like Spain, Germany, Italy, Japan, Singapore . . . all over the world! But, it’s not just the federal government. Many corporations also offer free housing to employees willing to move and work abroad. It’s basically an incentive that employers use to encourage employees to work abroad. Of course, the incentive worked for us. We worked abroad and lived rent and mortgage free, which allowed us to save and invest a TON of money and . . . as the saying goes . . . the rest is history!

Family Lives Rent Free for Ten Years