There is an unspoken rule in the real estate market. You must have a bank mortgage to buy a house. But did you know that there is a secret way to buy a house without a mortgage?

There is a secret financial trick that you can use to buy the house of your dreams in about 8 years and NOT have a mortgage payment. I know this sounds ridiculous but it’s true. When I write this article, most of the time, I focus on the negative aspects of homeownership and what to avoid when buying a home. This week I thought I would focus on the other side of the table. What to do if you are NOT in financial trouble or at risk of losing your home.

In the last couple of weeks I have received emails from people who are trying to get into their first home or upgrade their current home. I rarely get questions about what to do to save a home. So I will try to pay more attention to the improvement of your current home. Now let’s get back to what you really want to know. How do I get a house without a mortgage? Before I tell you how to do this, remember that not having a mortgage on a home, while helpful, is not the answer to all your financial worries.

You will still have to pay property taxes and electricity, gas, etc. And remember I said your dream home. It’s not your current home, so you’ll most likely face higher gas, electric, and utility bills. Your taxes could also be substantially higher. So if you are okay with these issues, I will share my secret with you. Have you ever heard of compounding or compound interest? Compounding is basically when you start with a small amount of money and allow it to build up over time, then take the money that has built up and reinvest it with the original money for an even bigger return.

Over time, you can achieve huge profits simply by reinvesting your earnings. Well, if I haven’t gotten too technical, this composition technique can also be used for a house. You can buy a house for less than market price, stay in the house for about two years, make some minor improvements, and sell the house at a profit. This is because home values ​​always increase over time, and when you buy a home below market value, the value increases even faster.

Take all the proceeds from that house and put it into your next house that you also buy at below market value. Do the exact same technique, by the 4th or 5th house you will have a bigger house, very little or no debt, and you will not have paid taxes on any of the proceeds from the sale of your other houses. The reason you won’t pay any tax is because the government allows you not to pay tax on the sale of your home if it’s your primary residence for two years and you take the proceeds from the sale and put it toward the purchase of your new home. . It’s the government’s way of saying thank you for stimulating the economy (selling your house and buying another).

Now I know you’re probably thinking that you don’t want to move every 2 years. You do not HAVE to move every two years, two years is the minimum you must be in the home to qualify for tax exemption. This is a great technique for young couples who don’t mind moving (especially to a bigger house) every couple of years. Now for the disclaimer. Before you start selling your home, check with your accountant to make sure you may qualify for this exemption. Also, this technique may seem a bit complicated. If you have questions about how to do this, email me and I can explain it a bit more.

Until next time, good luck and God bless and remember… If you have any questions about saving or selling your home or any real estate topic you’d like to know more about, email me and I’ll answer your questions at this column.