Pay for a Mortgage and Generate Cash Flow (

How to Pay for a Mortgage and Generate Cash Flow

Pay for a Mortgage and Generate Cash Flow (How I was able to cover my mortgage and generate cash flow: Increasing your financial IQ with Real Estate Hacks

I am sure you remember how 2012 was smack in the middle of the “Great Recession”.

During this time I was able to purchase a 3 bedroom/3 bathroom + den with a 2-car garage for $135,000. I put 20% down and had a $600 monthly mortgage payment.

Generating Cash Flow to Cover the Mortgage and Live for Free:

Since I was relatively young (23 and was used to having roommates), I decided to rent 2 of the rooms out.  Each room rented for $400 per room + their share of the utilities.

I was able to live in my own home for free, while other people paid for the mortgage. I was paying off the amount I owed to the bank, and earning extra money on the side!!

This means that I was grossing $800 from rent, and only paying $600 for the mortgage. I was cash-flowing $200 per month.

Cash flow is my favorite kind of income because it is passive (money comes in even when you are sleeping), and is taxed at capital gains rate.

Increasing the Cashflow:

In 2016 I started dating someone, who I eventually moved in with. Since I now had an empty master bedroom, I rented it out as well for $500.

The gross income increased to $1,300 per month, and the cash flow went from $200 to $700.

By the middle of 2016, the guy who rented out the master bedroom found himself a girlfriend. She decided to move in and wanted to use the den area because she sometimes worked from home.

She was over at the property so often that the other roommates agreed and she paid $400 per month plus her share of the utilities.

By 2017 there were 4 people living in this 1800 sqft house, and the total gross income was $1700. The mortgage was still $600, which means that the cash flow was $1,100 per month.

Achieving Above Market Rent:

The monthly market rent in the area for a comparable home with one lessor was $1,200-$1,300.  I was able to generate higher cash flow by renting each room out individually.

The downside is that I would have to worry about re-renting each room at the end of the tenant’s 1-year lease. That is if they decided to move out. Most of the tenants stayed for longer than 1 year. Keep in mind, it is a hassle for a tenant to move each year. I found that most tenants stayed longer than a year.

Reducing Vacancy:

Leasing out each room was beneficial because there was never a time when the entire house was vacant. Only two of the four tenants had to occupy the property to cover the mortgage.

Usually, when you rent out an entire property, you need to assume some percentage of vacancy. Typically, we would assume a 90% occupancy rate.

  • Rule of Thumb: Good property managers should be able to get the house in rent-ready condition for a new tenant and market the home within one month. There are 12 months in a year, so if the house is rented for 11 of 12 months that equals 91% occupancy rate.


  • A side note: The company that I had built sold at the end of 2015. I decided to move to the Reno Tahoe area in January 2016. By the summer of 2017, I was in graduate school obtaining a Master’s degree in Business Administration with an emphasis in Renewable Technology.

This means that I was a long-distance landlord, and managing the home from so many miles away became a hassle.

Typically, a primary residence should not be considered an investment.

I was able to make my primary residence an investment because I generated cash flow by renting out several rooms.

The market had appreciated over the time that I had owned the property, and I had just hit the 5-year mark.

  • Tax Hack (the 2-of-5-year rule): There is a tax law that states that an owner who has lived in a property for 2 of 5 years can sell the property and keep up to $250,000/$500,000 (if you file as a single vs married) capital gains tax-free.

This is a huge tax saving!!!

Going with a Conventional 20% Down Payment Loan:

When I purchased the home, I used a conventional loan and put 20% down. You may ask why I would decide to put so much money down when I could have gone with an FHA 3.5% down payment loan.

The reason is because the higher the LTV (loan to value), the more you will owe on the property. This means that your monthly payments will also be higher.

By putting more money down, you open up the ability to generate passive income (cash flow). One huge bonus is that passive income is taxed at a lower rate (capital gains rate).

  • Avoiding Extra Costs: when you purchase a home with 20% down, you avoid a PMI payment (Primary Mortgage Insurance). PMI is an additional fee that banks charge to cover themselves in case you default on your loan (end up in foreclosure).

With a conventional 20% down payment loan, you can live in the house as a primary residence or purchase the property as an investment.

The reason for using the 20% conventional loan is to be able to live in the property for a minimum of 2 years and take advantage of the 2-of-5-year rule (explained above).

During these two years, you can fix up the property while you are living in it. You can decide to rent the property out after the 3rd year and purchase another home to live in.

  • Tax Hack: Once the first home reaches 5 years of ownership, you could 1031 exchange (like-kind exchange) the property out for a larger investment home or purchase 2 investment properties. The IRS allows you to tax defer any money owed on the property!!!

Tax Defer Indefinitely:

You can continue to tax defer indefinitely until you decide to sell the property. Most likely you will want to keep the properties indefinitely and set some aside for rental income while selling others.

Did you find today’s topic interesting? If so, what did you like (or didn’t like) and is there anything you want to know more about. Looking forward to reading your comments.

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8 Awesome Sustainability Quotes You Need to Read!

8 Awesome Sustainability Quotes You Need to Read!

I wanted to share a few great quotes that I found.

Hopefully, you will take some time to really think about their message. There are always ways to implement more sustainable practices into your daily routine.

I urge you to think about what kind of world you want your children to grow up in. One that is filled with smog, large oceanic garbage patches, and acid rain? Or one that has an unlimited supply of renewable electricity.

Sustainability and the environment

Is the US Falling Behind?

According to the US Energy Information Administration, in 2017 renewable energy accounted for only 11% of the total U.S. energy consumption and about 17% of electricity generation.

How is this possible?

Growing up, it was common to hear about how awesome the cutting-edge technology in the United States was. Unfortunately, it seems that times are changing.

The Financial Times recently wrote an article stating that America is falling behind in the field of renewable energy technology.

“The US is falling behind other countries in advanced energy technologies, threatening national security and undermining its global influence, former generals and admirals in the US military are warning the Trump administration.”

As a result, it seems that the tide is turning and we are not keeping up with the rest of the world.

Sustainability and the environment


In the meantime, we can make sustainability a burning issue by talking about it and making it a topic that politicians can’t ignore.

The fact is that half of the states have legalized marijuana (either for medical or recreational uses) … If a bunch of stoners were able to collect enough signatures to decriminalize pot, then concerned citizens who want to live in a society with limitless renewable energy resources should be able to mobilize too.

(No offense to stoners, I happen to have a few friends who enjoy pot and I love them very much. I was just using this for an example).

If getting renewable energy measures on the ballot is possible, then we must make it a priority to have sustainability discussions so that our voices are heard.

Making Sustainability Cool:

Sustainability and the environment

Another great way of supporting a new initiative is to make it cool! Let’s make “Green the New Black!”

Kind of like how smoking cigarettes was cool, but its image has changed so drastically over the past several decades.


Continuing to Support Businesses and Politicians Who Back Big Oil:

As our nation continues to invest in fossil fuels, our infrastructure becomes more entrenched in oil technologies making it even more difficult to make the switch to green energy.

The continued support of fossil fuels is at the detriment of the environment and our health. Many of the costs that our society bares is unseen, such as the increase in medical expenses due to respiratory illnesses.

If every individual only supported green companies through conscious consumerism, we can begin to make the shift toward a more renewable energy society.

Sustainability and the environment


Fossil fuel is a finite resource, and we will HAVE to find a different source of energy at some point in the future.

Why wait? Or continue investing in an antiquated fuel resource?

Almost everyone I come across seems to know that sustainability and global warming is an issue. They all seem to think that we will have to make the transition someday soon.

What are we waiting for?

Sustainability and the environment


What Can You Do?

Learn about sustainable living and put those habits into practice.

If you are remodeling your home, consider implementing a green energy efficient design.

We live in a throwaway society and need to retrain ourselves to live more simply.

One shocking statistic that I found is that although the United States makes up less than 5 % of the global population, we use about a quarter of the world’s fossil fuel resources (According to the World Watch Institute).

We should realize that all natural resources have a life attached to them. For example, cutting down the rainforest not only kills the trees but also eliminates the habitat for its wildlife.

You may counter that many logging companies replant trees for their future bounty. I would argue back that the loggers are only planting the one or two species of trees that they want to harvest in the future. This action reduces the number of species and varieties of plants in the forest.

Sustainability and the environment


As children, we were all taught about the three R’s (reduce, reuse, and recycle). Have music videos and reality TV shows brainwashed us into thinking that we all need a yacht to be happy?

This article isn’t about making you feel bad. It’s about getting you to realize that unless everyone jumps on the sustainability train, our resources will slowly dwindle and disappear. A simple supply and demand equation will tell you that when there are fewer resources, prices will skyrocket, and resources will be out of reach for many of the planet’s population.

Sustainability and the environment

Sustainability is About Preserving and Protecting Our  Planet:

We need to preserve and protect the planet by making it a part of our daily lives. I am sure many of you have children or want children.

We should ask ourselves, “What kind of world do we want them to grow up in?”

Sustainability and the environment

This is a complex issue with many moving parts, and I want your input. What do you think is preventing us from making the switch to a renewable and sustainable society?



Photo credits:

There is no such thing as away quote 1

Make earth day everyday quote 2

Green is the new black quote 3

The environment is in us quote 4

The greatest threat to our planet quote 5

Almost 50% quote 6

Small acts quote 7

Native American Proverb quote 8

How to Make Corporate Social Responsibility a Source of Opportunity

How to Make Corporate Social Responsibility a Source of Opportunity

Corporate Social Responsibility-The Advantage of Creating a Sustainable Business Practice:

Corporate Social Responsibility can be a source of opportunity, innovation, competitive advantage, and social progress.

Businesses can apply their resources, expertise, and insights to activities that benefit society and their bottom line. Companies should focus on their triple bottom line: economic, social, and environmental performance.

Corporate volunteerism and societal engagement create goodwill between the company and the community. Moreover, a stronger bond between the community and the firm will generate more support for the company’s products.

An individual and company’s legacy will soon be defined by the social entrepreneurs that lead us into a more sustainable and renewable future. They will be the heroes that save the world from all the many challenges that we face today (corruption, greed, inequality, etc.).

Ben and Jerry’s is one awesome example of a company that engages in CRS (corporate social responsibility). They donate 7.5% of their pre-tax dollars to social causes. They are known for using all natural ingredients and dairy products from cows that have not been treated with hormones. Additionally, Ben and Jerry’s makes it a point to hire people from low-income communities.

As we move into the renewable technology era, it has become an expectation that businesses look out for our society and the community. Just the act of creating a large profit margin is no longer satisfying the public.

Companies can choose whether to be caught like a deer in the headlights with negative publicity… or proactively engage in business practices that promote the well-being of society.

Beyond the Donation:

Corporations can involve themselves past just writing a check to a non-profit organization. The best corporate citizenship initiatives involve specifying clear, measurable goals that track results over time.

A company’s employees can take an active role and donate time as well as dollars to a cause. Follow up is extremely important and makes for a more effective use of corporate charitable donations.

Additionally, employees usually feel a great sense of pride in their participation, which improves employee retention.

Philanthropic initiatives should be described and tracked in terms of impact rather than dollars spent or in the number of hours volunteered.


Top Reasons for Business Owners to Become Social Entrepreneurs:

Businesses need a healthy society, as much as a healthy society needs successful companies.

No social program or government can rival the business sector when it comes to creating jobs, wealth, and innovation. The private sector is the biggest driver of efficiency and assists with the progress of society’s standard of living.

Engaging in Corporate social responsibility has many positive impacts on a company’s bottom line. Corporations that produce safe products and working conditions, will benefit from fewer accidents that result in future lawsuits.

Another benefit is that efficient utilization of land, water, energy, and other natural resources results in a reduction of input costs. This means that the overall expenses of the company will decrease, which will positively impact a company’s bottom line.

Making the Biggest Impact:

A company should look to impact society through their value chain.

  • An example of this would be a pharmaceutical company that donates vaccines. This is because the pharmaceutical company can obtain these vaccines at wholesale prices. This means that they can purchase more vaccines than a non-profit organization could at standard retail prices. By leveraging its value chain, the overall impact is greater than if it were to just donate money to a cause.

Each company should select an issue or issues that intersect with its business niche. This way there can be some overlap between the businesses goals which simultaneously support the community.

A company should ask itself whether it can create value by impacting the community in a beneficial way that also adds profit to its bottom line.

Businesses should look for ways to incorporate social entrepreneurship and social corporate responsibility with a company’s economic or regulatory interests.

There is a way to have these two interests overlap and coincide together.


CSR Opportunity and competitive advantage

In the past, the common corporate response has been neither strategic nor operational but cosmetic. Firms spent the majority of their CSR funds on public relation and media campaigns to showcase the company’s social/environmental good deeds.

The public is becoming more aware of these tactics.

After the Deepwater Horizon Oil Spill in the Gulf of Mexico, BP Oil engaged in greenwashing to control the damage to its image.

Greenwashing is any disinformation disseminated by an organization so as to present an environmentally responsible public image.

Instead of engaging in reactive image/brand control, companies should start with products and policies that support their triple bottom line.

If companies are more forthcoming with regard to their actions to reduce pollution, waste, and carbon emissions… I believe that karma will prevail and the community will, in turn, support the firm’s products.

Paving the Path Ahead:

CSR and sustainability should emphasize environmental and community stewardship.

Companies should operate in ways that secure long-term economic performance. Likewise, they should avoid short-term behavior that is socially detrimental or environmentally wasteful.

Where to Start: The global reporting initiative is rapidly becoming the standard for CRS reporting. In fact, according to the GRI website, 93% of the world’s largest 250 corporations report on their sustainability performance.

Business owners and managers can look to these standards to see what areas of operation where they can improve on.


Are There Any Disadvantages to Upgrading to a LEED Certified or Greener office?

Although there is a cost to upgrading, business owners typically need to replace and upgrade their office spaces over time (as regular wear-and-tear occurs).

When old appliances break down, business owners can take that opportunity to replace them with more energy conserving versions.

Luckily, business owners can write-off all of the upgrades to an office as a business expense.

Additionally, a good “green” consultant will know about the local and state refunds, rebates, tax credits, and incentives for the area.

Often times there is a cost associated with updating equipment to newer more efficient versions.

Companies looking to remodel their building to become a LEED-certified office, typically need to hire an expert consultant. Again, this expense is tax deductible :).

Another consideration is that the company may need to find an alternative office space during the re-construction period. One alternative is that companies could allow their employees to work from home during this time.

The company may see a loss of revenue due to the interruption of daily business during the remodel.

Of course, the company should calculate the cost of labor and materials that will go into the remodel.

Although a remodel can take time and money, companies can benefit from an increase of good will. The switch will also result in a reduction in utility costs and provide a healthier environment for their employees and the community.

Conscious Consumerism:

As a collective, the community holds all of the purchasing power!

We have come to a point where stakeholders and society clearly expect businesses to engage and look out for the community’s best interest. Companies that do not change their ways will slowly see a decline in their profits. is devoted to promoting conscious consumerism to speed up this change. Our goal is to signal to companies that they must fall in line with consumer’s demands.

Companies should choose one niche area that they can focus all of their attention.

This will allow them to make a meaningful impact instead of separating and diffusing their resources among numerous unrelated efforts.

Instead of focusing on the friction between businesses and civil society, we should focus more on the points of intersection.

List a few ways you believe that the company you work for can make a difference? Comment below!


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