How to setup a NAS

Is it possible to setup a remote harddrive storage on the lines of Apple Time capsule using a USB/Internal HDD and a router (or any other components ) ?

Time capsule is too expensive..
 
Totally possible.

DDWRT compatible router with USB port + external hdd + rsync for DDWRT.

This is the exact setup I'm using currently with my RT-N13U.
 
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