6 Simple Ways to Cut Costs in Your Real Estate Business

by | BiggerPockets.com

Real estate, like any business, requires low overhead to make high profits. You must, of course, spend money to make money, but your spending shouldn’t be in excess. It’s easy to let your regular costs and expenses get out of hand by justifying them as investments with the potential of greater profits.

However, you may be putting more into it than you should be. As you look for ways to cut spending in your business, consider the following tips.

6 Ways to Easily Costs in Your Real Estate Business

1. Purchase more basic equipment.

You should invest in technology to further your business. Whether you’re investing, managing, or selling real estate, digital and technical access will be a huge benefit. However, you don’t need to spend an arm and a leg on your technology.

For example, rather than purchasing the latest iPhone for your business endeavors, you might look into an older, but high-functioning different phone. Even if it’s an older model, but it will likely have all the capabilities you need for hundreds of dollars less. You could also purchase a standard laptop rather than an expensive MacBook or Surface Pro.

Reducing the initial cost of technology for your real estate office will mean positive growth for your business.


2. Use freebies.

There are a variety of free tools available to supplement your paid tools, including dozens of apps, websites, software, and other resources to promote your business and make your life easier. Here are some of the most popular:

  • Social media: Marketing and promotion
  • Hubspot.com: CRM
  • Google Drive: File sharing and cloud storage
  • Trello.com: Project management and organization
  • BiggerPockets: Publication and information sharing

Look into all the free options at your disposal to streamline your business and reduce overhead.

Related: Tenant Turnover Can Wreck Your Profits: Here’s the Simple Solution to This Costly Issue

3. Take advantage of tax breaks.

Many new real estate investors are unaware of the real estate tax breaks available to them. There are too many tax breaks to list in one article, but here are the most prominent:

  • Deductions: You can deduct nearly all the expenses associated with your real estate investments and business. Your mortgage, loan interest, office expenses, and other real-estate activities fall into this category.
  • Capital gains: Any profits made, both short term and long term, can be subtracted from what you owe on your taxes.
  • Depreciation: On the other hand, if your property decreases in value, you can subtract your losses. The same goes for expensive office supplies that can be deducted over a few years.

These are the three primary ways that you can reduce your tax burden. Discuss other options with your accountant.

4. Find cheap labor.

For most businesses, real estate included, labor is an expensive cost. Finding cheaper labor doesn’t mean hiring inexperienced workers or doing everything yourself. You’ll need a few experienced people on your team, but there are a few ways you can reduce the labor burden.

  • Hire interns: Interns are free or cheap and can do much of the grunt work that would otherwise fall on your shoulders.
  • Use automation tools: By automating social media, email marketing, finances, and other practices, you can reduce your responsibility and increase efficiency in the office.
  • Do more yourself: You shouldn’t feel overwhelmed with all your responsibilities, but adding a few extras to your daily tasks can help your budget. Just make sure you don’t overwork yourself.


5. Make eco-friendly updates.

Sustainable updates provide an excellent way to cut costs on your regular expenses. Not only are they good for the environment, but they’re typically more affordable to operate in the long run. To cut costs and reduce your carbon footprint, here are some eco-friendly updates you can make:

  • Sustainable landscaping: Usually, this involves a yard and garden that needs less watering. Native and water-resistant plants will grow beautifully without the need for excess hydration.
  • Smart tech: Research from Inman.com shows that smart technology is one of the most sought-after features in the housing market. Homes that use smart lighting, thermostats, and other tech can reduce utility bills and increase tenant satisfaction. For the sake of money, you shouldn’t replace everything with smart tech all at once; however, you can replace a broken thermostat and make small updates on the way.
  • Regular maintenance: Keep your properties well-maintained. Old windows and crumbling siding can reduce efficiency and lead to other serious problems like water damage. You’ll save more in the long run by investing time and money into maintenance and repairs.

Related: 3 Hidden Costs That Can Tank Rental Property Profits

6. Borrow wisely.

In real estate, you’re constantly looking into new properties and updating your existing ones. For that, you’ll need a loan, but you must be careful when borrowing the money. Don’t forget about the interest rates and payments that come with loans. If you’re not careful, you’ll pay thousands extra on your loans.

Go into the loan process with eyes open. Look for reduced interest rates and longer loan repayment periods. This will limit what you pay in the long run.

Just because you’re dealing with some of the most expensive assets in the world doesn’t mean you have to overspend in the process. You can increase your profits and decrease stress by taking advantage of these simple, but powerful tips.

Are there any steps you’ve taken not on this list to decrease costs in your business?

Be sure to leave a comment below!


About Author

Larry Alton

Larry is an independent, full-time writer and consultant. His writing covers a broad range of topics including business, investment and technology. His contributions include Entrepreneur Media, TechCrunch, and Inc.com. When he is not writing, Larry assists both entrepreneurs and mid-market businesses in optimizing strategies for growth, cost cutting, and operational optimization. As an avid real estate investor, Larry cut his teeth in the early 2000s buying land and small single family properties. He has since acquired and flipped over 30 parcels and small homes across the United States. While Larry’s real estate investing experience is a side passion, he will affirm his experience and know-how in real estate investing is derived more from his failures than his successes.


  1. Tim Sabo

    Google has a ton of free tools (Drive, web site developmen, email, etc) that I use everyday to operate our business at next to nothing. Auctions are also a great place to save, on both properties and tools, appliances-we buy used appliances and install them in our rentals-and other bargains. We also meet with other landlords and property owners to share experiences and find new ways to save. Good article.

  2. Single most effective way to lower costs…….vet tenant prospects and only rent to the best. Inspect your properties religiously and don’t be afraid to assert the ‘rules’ of occupancy in your lease.

    Vacancy rate may increase by a tenth of a per cent, but the expense line goes down exponentially. Don’t get caught chasing a $5 bill with a $20.

  3. That’s a great article Larry and well explained about the ways to cut costs in real estate business. One can also use free websites or social media for cutting costs in real estate business. Everything should be done wisely.

  4. Scott Radetich

    I save money with these five words: “What is your best price?”

    Anytime I need supplies like flooring or appliances or tile I always ask what is your best price? You’d be surprised how many times they go lower, even at big box stores. I recently purchased a new gas range from Home Depot, it was on the clearance row marked down from $2000 to $1600 to $1000, I went to the floor manager and asked what he would take if I took it away today, They went down another 200 and I got it for $800. I also use Craigslist a lot, the last two washer and dryer sets I purchased were practically brand new and I got each WD set for $150. Shoot I use Craigslist for more than my rentals, I just bought a mountain bike off of the site, bike was less than a year old and I got if for 45% off of its original msrp! And yes, when I purchased bikes from bike shops I ask what their best price is, and every time they went a little lower.

  5. Glenn F.

    I always see many people overlooking insurance. They’ll cut out a $3 coffee and overlook saving hundreds (even thousands) every year because they won’t pick up the phone and get insurance quotes.
    Another is getting trapped into the overpriced Apple devices ecosystem. Everything is made to for vendor lock-in. Apple also brags about making so much more of a profit percentage per device than other manufacturers to shareholders. My whole business runs on Google products, phones, and tablets at a much lower price point. I can also do so much more and am so much more efficient because of the capabilities Google has over Apple. That’s thousands saved yearly, while those same people with a $1,000 phone contemplate cutting $12 Netflix.

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