The Best Real Estate Investing Advice You Aren’t Following
We talk a lot about the profitability of your real estate enterprise as if your income is the sole marker of your financial success. We emphasize the importance of careful calculations, meticulous math, safety nets, and buffers for your expenses. And we talk about operating within the right niches and making the right renovations to ensure the profitability of your asset. But the best real estate investing advice out there is probably not what you’re expecting. And it’s the one crucial element of your financial success—perhaps the most important one—we have yet to touch upon.
That element is your personal finances. You could have the most financially successful real estate enterprise in United States’ history. But if you’re personal finances are out of control, you won’t derive any true benefit from your hard work and reputation of prestige. And if you’re a beginner, having poor personal finances may be the single largest inhibitor to your first purchase. Below we explore a few of the sometimes challenging, sometimes fun, and always interesting ways to save your money for what’s important. The best real estate investing advice we can offer is to be smart about your expenditures, preserving financial leverage in the more important facets of your life, like family and education.
Rent
For most people, rent comprises the vast majority of their monthly expenditures. No wonder you’ve decided to go into real estate! But what you are receiving in rental income is of no real use to you if you’re unnecessarily blowing it all on your own rent.
One smart and creative way to save on your own rent is to run a pseudo-landlord operation. Doing so gives you some practice in wheeling and dealing in real estate. It also helps you save money for your own investments, and it’s some of the best real estate investing advice out there.
Consider renting a house with multiple bedrooms, then renting out the bedrooms to other people. In doing so, you assume responsibility for the entirety of the monthly rent instead of forcing the landlord to make contact with multiple individuals. In making that contact yourself, you act as a middleman. And by charging enough from the other tenants to cover your own rent, you save yourself some money. Just be forewarned: you must be prepared to cover for your renters should they default on payment, as you are solely obliged the cover rent to your landlord. Choose your renters wisely.
You should also be sure to be forthright with your landlord about what it is that you are doing. Some landlords might be hesitant to concede. A more palatable option, and perhaps even more profitable, may be to post the rooms on Airbnb. Again, though, you must be aware that in doing so, you assume responsibility for any damages that the renters incur.
Food
Food is second to rent on the list of major monthly expenditures. Unless you benefit from a working or living situation that frequently provides free food, you can easily spend a few hundred dollars on food per month. And that’s without accounting for treats, like going out for dinner and drinks.
We all know that cooking at home saves money. Cooking takes time and energy, so it can be useful to outline a plan for your week to help you avoid impulse take-out. Searching for 30 minute recipes and cutting and cooking foods in advance reduces kitchen-time, incentivizing home-cooked meals.
Cooking at home isn’t always enough, though, to help you save with the intent of investing. Consider purchasing a membership at Costco or Sam’s Club. Buying frequently used items in bulk is a great way to save money. Though you may not see major differences in the short term, buying in bulk significantly impacts finances over the long-term, and is thus some of the best real estate advice that exists. Costco as real estate advice may sound outlandish, but every bit of savings counts.
Foregoing expensive products will also help you save money over time. Meat constitutes approximately a third of the average American’s grocery bill. Cutting back on meat therefore results in some pretty significant savings. You should also read about the Dirty Dozen and Clean Fifteen. Knowing what produce to buy organic can help you simultaneously maximize your health and minimize your budget.
Transportation
Biking to work is an excellent alternative to driving. It’s not only better for the environment and for your body; it also saves you a lot of money on gas and monthly car payments. Though taking public transportation can be expensive, using an App like Uber to carpool to and from work is an excellent money saver and a great way to meet other individuals working in your area. The intimate environment in an Uber vehicle is far more conducive to casual networking than a busy subway train.
Minimize Utilities and Clean Your Space
Remember the childhood adages reminding you to turn off the lights and to not let the water run? Those existed for a very practical reason. Small tweaks and habits can, over time, amount to large savings on your utility bills. That’s right: those childish songs were actually created to save your parents some money.
Remember to unplug all electronics and chargers you aren’t using, even if they’re off. Turn off all of the lights you aren’t using. Shorten your showers to reduce water usage. If you’re an expert penny pincher, you can even hang dry you laundry and save dishwater for watering plants.
You can also make a little extra cash on the side by selling items that you no longer use. The App LetGo is great, for it allows you to sell used items without going through the hassle of arranging a yardsale.