How to Make Your Cost of Living Disappear

The Short Story

As I always say to whoever is willing to listen: great things happen when you earn a mix of American dollars and Swiss francs, live on Ukrainian hryvnias, and pay people in Philippine pesos, Indian rupees and Macedonian denars.

This post covers a quick and straightforward way to make a bit of the above happen; i.e., evaporate rent from your cash flows by renting expensive apartments for a premium while living in less expensive places.

The Long Story

“Everything Popular Is Wrong”
―Oscar Wilde

I used to own a couple of apartments I didn’t live in. To my surprise, people who knew this sometimes wondered why I didn’t live in any of those flats but rented another one. They seemed to think that living in your apartment somehow magically evaporates the cost of living. It doesn’t. If you live in your own apartment, you’re not receiving rent for it. So, there’s always a cost of living—be it paying rent or not receiving rent. Ownership doesn’t change this simple economic principle.

I later sold those apartments to partly finance Marco’s Grounds in general and Maximum Mind in particular, but that’s another story. What we’ll cover here is how to truly make the cost of living vanish from your cash flows just as fast as butter from a dog’s nose.

Act One: Residence in an Expensive World City

“It is vain to do with more what can be done with less.”
―William of Occam

I’m taking the example of Zurich, Switzerland, because I’m writing about what I know and have done only and that’s where I live. The concept applies to any expensive, high-income-high-cost-of-living city in the world, however.

The first step is to rent or own one apartment there. Renting it or owning it doesn’t change any economic tenant behind it. My father, who’s a bit of the real-estate honcho, would always advise for renting; i.e., generating income with a leased asset while letting the owner worry about renovations and maintenance.

Let’s take, for example, an apartment in the Zurich city center like mine, which you’d realistically rent for $1,500 a month. This kind of apartment can be rented back on flat-sharing platforms for around $2,500 a month. Even more, depending on how expert you are at renting and turning page views into conversions, but I’ll cap it at $1,000 net profit on the apartment. This is realistically achievable.

Step 1—The Law-Abiding World Citizen

First, in some jurisdictions, you need the authorization of your landlord. If you own your apartment, this step is useless (skip to the second step).

This is the case where I live. Getting this is where most people fail. They’re going to send an email or call once, and their landlord is going to say no. No is less effort than yes for any landlord in that situation—as simple as that. Sending emails or calling people for such requests is an unsophisticated, lazy, uninspired way to deal with things such as this one. As a rule of thumb, if someone saying no to you once stops you from doing anything, are you sure you really want it? In this step, I apply the following principle: nine times NO and one time YES means YES.

The best way, in my view, is to go and meet your landlord and be either annoying, compelling or charming, or all three. You must strike the right balance and adapt to your audience. At some point, you’re either going to be so annoying that they will give you the written authorization just so that they don’t have to talk to you anymore, or you’re going to be so charming that they will want to keep you happy. Whatever your style is. That’s how I did it, and that’s how I’d do it again.

Step 2—The Airbnb Hero

Second, you need to build a pristine reputation on the platform you’re using. I’m using Airbnb, where I’m a superhost with half a ton of five-star reviews. It helps. It enables you to charge a quality premium per night. You also appear first in search results. There’s a lot to cover when it comes to maximizing your income by renting, as I mentioned above. Like most things, the more you do it, the better you become at it. They say it takes ten years to master something. I think it’s true. There’s no way around expertise and work ethics.

Step 3—The Automation Enthusiast

Finally, you need to find a fantastic employee who takes care of your apartment when you’re not there, which is hopefully always. I work with the girl who used to clean my places when I had more. She does everything, from buying supplies to preparing the apartment between guests and communicating with clients—all of it. I do nothing. The only thing she doesn’t do is go into my bank account and pay herself for her services. We’ll get a solution for that later, worry not. Her cost is also already subtracted from the $2,500. Those are net of all expenses. The $1,500 from above also contains all fees, charges, utilities, etc.

In reality, the whole operation nets a bit more than $1,000 per month, but let’s round it down, as not everybody is as experienced in generating rental income. The glazing on this sweet cake of rental supremacy, for extra credits: I have a virtual assistant (VA) in the Philippines who costs me 175 pesos ($3.6) per hour and handles payments to the girl taking care of the apartment. The VA in the Philippines also handles a bunch of other things, but we needn’t cover these for now. With both the girl handling the apartment and the VA, I’ve de facto removed myself 100% from the cash flow generating part.

At this point, you might wonder about the business ethics of this. After all, we’re generating income with an asset that doesn’t belong to us. We are doing the same thing when we lease machinery and equipment to manufacture products. At the end of the day, the landlord struck a contract with you in the free market. Nobody is making them do so. They mostly do it because they want the security and low maintenance of a steady income stream. Also, I don’t think they have the knowledge to rent back things at a premium. That’s an art. It also requires a fair bit of spine, grit, organization, automatization, and creativity.

All being said, you have no reason to feel bad about this. You’re taking on a bunch of risk—cash outflows are certain while inflows are uncertain—and the market rewards you for that.

Act Two: Vacation/Live Anywhere Else

“Action may not always bring happiness, but there is no happiness without action.”
―Benjamin Disraeli

If the city you’re coming from in step one is expensive enough, you can live anywhere else for free. Taking my example from above, every month, I have $1,000 generated from renting a place I don’t own without doing anything at this point. Currently, I live in Kyiv, Ukraine, where rent costs me $850 a month. To be fair, the place I live in is a bit over the top when it comes to location and space. I could live in a place like my humble Zurich habitat for around $400-500.

As a side note, I asked Augustine—the great and powerful Philippines VA—to return a list of cool places to live in the world for $1,000 or less a month for those people who are not as ardent aficionados of the Eastern European culture as yours truly.

I asked her to cross-reference lovely destinations according to Google, with average prices on Airbnb for monthly stays. For comparison, she used the following preferences: two bedrooms, center of town or beachfront when applicable, high-speed WiFi and high-pressure shower—life is too short for low-pressure showers.

Here’s a list of my favorite places she suggested, in no particular order, rounded up to the next $100 per month:

You get the gist of it. As you noticed, most places even leave a nice amount of pocket cash as extra for drunken nights of great poetry reading or whatever you’re into on whatever beach you decide to live. As always, your imagination to envision and your grit to execute are the only real limits. All the rest is malleable.