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My first house (1981) was an 800 sq. ft. 2BR, 1BA starter home. We got it 6 months after we got married, and our first baby was on the way. We stayed there through baby #2. That was all we could afford, so that was all we bought.

Then we moved up to a 2-family home. Our half was 3 BR, 1 BA. Second apartment was 2BR 1 BA. The rent allowed us to have bigger piece of real estate, and thereby benefit from bigger appreciation. It was a huge lesson for me, seeing how well that worked. The rental income was added to the mortgage qualification. (80% of that income, to be precise.) We essentially doubled our appreciation trajectory. The cost to us was essentially a second part-time job as landlords. Want more income? Work a second job! We expanded to 4 kids in that 3BR apartment.

In 1989 we sold it and moved into a 3000 sq. ft. single-family house using the equity we amassed with the 2-family property.

When my daughter and son-in-law were bouncing from apartment to apartment, my counsel was for them to buy a multi-family property and live in one apartment. They went with a 4-unit property. With sweat equity they fixed up the property, improved the quality of tenants, and ended up covering the whole mortgage with the 3 rental incomes. They therefore lived completely “rent-free” in the 4th. After 8 years they sold and put the equity into their own single family home. The realtor at the time was surprised that they didn’t want to keep the 4 unit and rent all 4 to have a huge positive cash flow, but by that point they reached their limit with landlording. They sold it and never looked back. I’m happy for them for how it all worked out.

It’s not an approach that many of today’s younger generation wants to consider. Too much work, I guess. It’s not ideal. It’s not easy enough. Lots of excuses. But it works, and works well, if you want to put your effort into it.