What sacrifice have you made for down payment?

What sacrifice have you made for down payment?

Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes

I have heard a lot of posts about how to buy real estate with no money down, low down, first time buyer program, etc. All these paths are possible, but they are financial decisions that you are now just realizing when you want to buy real estate. If you have saved money from the start, meaning when you got your first job, then you will be in a better position.

Personally, it is either earn/save more money or cut expenses. Here are my cost cutting sacrifices.

1. My driving commute car is a 1995 acura integra that was a hand me down from my millionaire sister who drove that integra for 10 plus years. 

2. I go to goodwill to buy my work clothes. Don't knock it, I found Georgio Armani suite for $50. Retail is $2k. 

3. No starbucks coffee. I drink work coffee provided for FREE.

4. limit my lunches at work to about $2 a meal. Sometimes less as work has freebies from time to time.

5. Cut my own grass lawn, as gardener raised from $40 to $80 a month. I had gardener for 12+ years.

6. Buy gas at Costco as seem good quality and lowest price around. But doesn't that Costco card cost money? Yes, but I look like my brother, and group together to get 2% cash back card that pays for itself, and some back at end of year.

7. I buy Nikes running shoes, at the outlet mall. Can throw in washer, air dry, and look like new again.

8. I buy and sell things on craigslist. Once found kitchenaid built in refrigerator for $100, and re-sold for $900.

What have you sacrificed for saving down payment?

Terry

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Real Estate Investor · Macedon, NY · Member since 2016 · 251 posts · 290 votes
8y

I sold a kidney on Craigslist for my first one.  

See this reply in the discussion

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  • Perris, CA · Member since 2017 · 20 posts · 15 votes
    8y

    @Terry Lao

    Since you asked me, no, I don't see anything wrong with your post. You are talking about YOUR sacrifices/choices.

    Perhaps it was the word "sacrifice" that got some people to adopt an antagonizing attitude? 

    For some people getting/affording a 15+ year old car would be a blessing instead of a sacrifice. For you it was a sacrifice though, so I get it.

    The way I see it, the things you mentioned are the choices you made to cut back on so that you could have a bit of extra money for the other luxuries or to have a bit of extra money for marketing, negotiating, etc. So congrats for making those choices! 

    Will those same choices work for everyone? No, but that's OK. They have to make their own choices anyways :-)

    So... I take it you write off all the transportation and lodging when you go to Las Vegas because you always visit some of your rental properties for business reasons, right? *wink*

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    8y

    @Gerardo E. Saldana

    Thanks for your response. Perhaps I should replace sacrifice with " gave up"? It is really a non-issue that some people made into issue. 

    Your example of my 1995 acura integra. It was a hand me down, but I love it since it reminds me of my college car. Also, one of best made and reliable cars. Back in the day, it was a so called "pocket rocket", and most desirable. 

    Las Vegas great investment and great tax shelter. 

    Check out my link about investing in Las Vegas. I get a lot of inquires about LV.

    https://www.biggerpockets.com/forums/712/topics/50...

    Terry

  • Perris, CA · Member since 2017 · 20 posts · 15 votes
    8y

    Awesome! Thanks for the link the post on about Las Vegas.

  • Realtor · Scottsdale, AZ · Member since 2017 · 66 posts · 36 votes
    8y

    @Terry Lao I'm sorry that you're catching so much heat for starting a useful thread. I find it very valuable and admire many of the sacrifices, while trivial to many, that you have made and continue to make. They may not seem like big pieces to many, but when compounded over time, can certainly add up. I'm personally making an attempt to cut out some of the smaller "unnecessary" expenses in my life. 

    Thanks for sharing. Best of luck and keep at it!

  • Brooklyn, NY · Member since 2017 · 68 posts · 28 votes
    8y
    $2 lunch?
  • Jordan MoorheadBusiness Member
    Real Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
    8y

    @Brie Schmidt right on!

    I have an older car,  live for free in my duplex and cook for myself most of the time.

    On the other side I ride a Ducati in the summer, travel at least a month a year for pleasure and see family as much as possible!

  • Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
    8y

    I'm still frugal today, but trying to grow out of it.  Have had dozens of properties for over a dozen years and still frugal!

    All of my vehicles aren't worth $3k together I don't think. When I put my studded tires on my van, it doubles the value.  

    I wouldn't even know what to order at Starbucks and I've never purchased the latest gadget or i-phone. I don't have cable or a smartphone.  Haven't had consumer debt in years - no cc's, car payments, student loans, etc.

    But that's just normal to me, so not much of a sacrifice.  What I don't do is spend a lot of time or effort saving small money, like clipping coupons or driving across town for cheaper gas.    

    Here's the sacrifice I did do when starting out - I quit my cubicle career and moved three states away to buy a doublewide by the river for $14k cash.  Shelter cost all-in was less than $300/mo for a 1000sqft 3/2.   It was then we piled up down payment money and started buying houses and apt buildings. My mgt co 'office' was SP#65!

    Thanks for this discussion @Terry Lao! 

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    8y

    @Sean Bozigian

    @Gregory B.

    Thanks for the support, and kind words. I know that I'm not the only one that is " cheap " at times. Sometimes it is taboo or looked down upon for being cheap, and it is not like high school anymore. I am comfortable being who I am. 

    Yes, $2 lunch and under, if you bring your own lunch. I buy 8-10 fried chicken at local grocery store, Ralphs, for $1.99. Sale price because they could not sell all and lots of left overs, put out at close of deli. This comes out to .20 to .25 a piece.

    Here's more to my list.

    9. I find mail or online coupons for buy one get one free (BOGO) for fast foods. Carl's Jr is best know for these promos.

    10. Taco Tuesday at Del Taco gets you 3 tacos for $1.39

    11. Buy certain items in bulk and when on sale that is non-perishable. Like toilet paper, soap, detergent, etc.

    12. If you live in condo/townhouse, and have new neighbor, split cost of wireless internet. Can easily save 50%.

    13. When I go to Las Vegas for rentals, I pick up a rideshare on Craigslist, get about $35 each way for gas. 

    Terry

  • Brooklyn, NY · Member since 2017 · 68 posts · 28 votes
    8y
    So 1.99 fried chicken and 1.39 tacos doesn’t sound like the wisest investment in your health. If you end up with serious health problems early in life won’t that cost you more in the long run? Not to mention shorten your life span and the amount of time you can put it? Furthermore, how much time do you have to spend each week purchasing food, peeping it etc? If you’re saving $35 a week and eating unhealthy wouldn’t you be better of working those extra hours to purchase food, prep either in your investing or at your day job/ craigslist gig? It doesn’t make sense to decrease minimum expenditures when you can increase income at a much higher rate
  • Contractor · Loganville, WI · Member since 2015 · 65 posts · 44 votes
    8y

    I sold my suv to fund fixing up our first rental (shown in the profile pic).    

  • Joe SplitrockPro Member
    Moderator
    Rental Property Investor · Sioux Falls, SD · Member since 2015 · 9k+ posts · 18k+ votes
    8y

    @Terry Lao

    If you get a Costco credit card, you get 4% back on gas. Still, I am trying to understand how shopping at Costco is a sacrifice. Mine is pretty nice, so I actually like going there.

    I think it is great you have found ways to cut spending, but noticeably missing from your list is sweat equity. In my life, my biggest sacrifice has been time. I save thousands doing my own repairs, plumbing and managing my own properties. You are saving a few dollars here or there, when you could be saving so much more.

  • Warrington, PA · Member since 2017 · 15 posts · 5 votes
    8y

    earning more money >>> saving

    scrimping and saving is over-rated imo. especially if it involves a lot of energy (i.e. researching something simple you're gonna buy to save a few bucks...just like a blender for example) or time. 

    you can only focus so much energy a day on things. can't save your way to wealth.

    not saying you shouldn't try to save here and there, but limit it to the most important big ticket items, or things you buy repeatedly. otherwise it's overrated imo

  • Rental Property Investor · Everett, WA · Member since 2013 · 389 posts · 222 votes
    8y

    I love this topic! Gets me back to my roots of saving for my first few properties. I am like @Account Closed where this day in age I focus on the "big three" of food, shelter and transportation. But when I started it was about saving every penny because in the Seattle market, even in 2012, a down payment was $80,000. I lived in the cheapest apartment I could find (within bike riding distance to work), ate a lean cuisine for lunch 5 days a week and shopped at Nordstroms Rack for work clothes. 

    Five years and 35 rental units later, my net worth and monthly income have increased drastically but I still drive a 2000 purple Ford Ranger and don't wear extravagant clothes. My wife and I do have a decent house but were able to keep our mortgage under the $2,000 level we budgeted. I definitely spend a lot more on food and travel these days.

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    8y

    @Gregory B.

    @Joe Splitrock

    Varying ways to health, food is one, and fried chicken is one of my favorites. If I could save a few years on life, and sacrifice a steak or pizza, no thanks. I think genetics has a bigger say, so here's to my dad living to 90, and my grandmother to 89.

    Costco is my favorite store. Maybe the sacrifice is the long lines that one must wait. I do repairs on own home, or rental when I can. My second favorite store is Home Depot.

    There was a motivational speaker, Zig Ziglar, said that " the harder you are on yourself today, the easier it will be in the future". Now, this makes sense and is logical. The reverse doesn't seem to make sense. So, this stuck. 

    Point is, most save in various ways for their down payment. It could take shorter or longer depending on one's habits. I'm actually doing okay for myself. When I got married, and my wife's finances were not good, I had to take action, to hit the desired target. Real Estate seemed to be the obvious choice.

    Terry

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    8y

    @Gene Fish

    "can't save your way to wealth" . My brother started saving early like 15% in 401k, now over a million. Doing it in bay area.

    Terry

  • Investor · Post Falls, ID · Member since 2016 · 606 posts · 699 votes
    8y

    Good for you, Terry!  I come from a modest background and learned at an early age that it is not how much you make,  but how much you keep.  I was lucky to read a book written by Andrew Tobias in the 1980s -- The Only Investment Guide You Will Ever Need -- that changed by life.  The chapter on spending/saving  opened my eyes to the cumulative positive effects of  living below your means.  His second book, also written in the 1980s -- Getting by on $100,000 a Year (when the average income was $15K a year) -- changed my perspective on consumerism.  The people with the new fancy cars, trendy clothes, and a $300 a month cappuccino habit are no happier than you or me, and actually may have MORE financial stress.  

    What have I sacrificed?  NOTHING of importance, when I look back.  I did two international adoptions, foreign travel, always lived in secure neighborhoods and drove dependable cars,  enjoyed skiing and vacations, and gave to my church.  Drinking the free coffee at work hardly qualifies as a sacrifice when I look back at my life.  But I have way more money than I ever dreamed I would have.

    You are on the right path Terry.  Keep up the good work.

  • Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Terry Lao:

    @Account Closed

    I don't get comped. I don't play large enough to get anything. Now, I go to Las Vegas to take care of rental business. Last time was for HOA meeting. If I had time, I would go bet and watch football games.

    Terry

     Message me I'll show you a secret for vegas...

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    8y

    This topic is posted in the " Starting Out" forum. The single question I hear most often is " How do I start". There are many ways, and paths towards the down payment. However, like the old saying, " a journey starts with a single step", well, the saving for a down payment starts with a single sacrifice.

    To those who have not purchased their first piece of real estate, how bad do you want it?

    Terry

  • Professional · Anaheim, CA · Member since 2017 · 1k+ posts · 686 votes
    8y

    Today, went out to lunch with co-workers, spent $15, and blew my whole weeks budget ($2 a day).

    Terry

  • Walnut Creek, CA · Member since 2015 · 3k+ posts · 2k+ votes
    8y
    Originally posted by @Terry Lao:

    Today, went out to lunch with co-workers, spent $15, and blew my whole weeks budget ($2 a day).

    Terry

     You need to up your work lunch game.... come on.

    Be the guy that goes to get peoples food, get loyalty cards/buy one get one coupons. Enjoy your free lunches and reinvest your 2/day savings into your dinner budget.

  • Penny ClarkPro Member
    Sacramento, CA · Member since 2014 · 513 posts · 319 votes
    8y

    Hi Terry,

    We were able to accomplish our dreams of investing in real estate by replacing expensive vacations with staycations, driving beater cars rather than dump cash into new vehicles and vowing to never put money into depreciating assets unless we could absorb the financial impact with ease. 

    The tips you provided in your post are invaluable to newbie investors who desire  being financially independent through real estate. But the flip side of Desire is discipline and it is what turns that dream into a reality!

  • Investor · Oakland, CA · Member since 2016 · 89 posts · 50 votes
    8y
    I took a job in another region, lived out of motels, set fire to many of my friendships "acquaintances" at the time. To collect the money needed for my second property. Didn't eat out for 7 months.
  • Mark S.Pro Member
    Rental Property Investor · KY · Member since 2013 · 1k+ posts · 537 votes
    8y
    This guy needs to listen to the GRE podcast. World of abundance.
  • Dave Van HornPro Member
    Fund Manager · Wayne, PA · Member since 2009 · 1k+ posts · 1k+ votes
    8y

    I did repairs on a house that I didn't even own yet. 

    Okay, let me elaborate: For my very first investment property, I found a duplex that needed work. Normally, it wouldn't qualify for an FHA mortgage since it was in need so many repairs but I decided to do something unconventional.

    I agreed to personally pay for half the repairs up to $5K (so $2,500) before purchasing the property so as to still be able to obtain FHA financing. The owner agreed to pay the other half in order to sell the house as soon as possible. And because I was a contractor at the time, I creatively sacrificed my time and work to complete all of those repairs myself saving even more money. Bartering as a contractor isn't unheard of but it definitely can be a creative use of your abilities when it comes to investing.

    Normally, a duplex like the one I acquired in quality condition that cash flowed the same amount would be out of my price range. But since I did this before I even bought the house, I was able to get one of the best deals of my career. I even still cash flow from the property today!

  • Real Estate Investor · Peabody, MA · Member since 2013 · 304 posts · 91 votes
    8y
    I sacrificed by living with parents until 25 while saving and bought my first fourplex. I continue to sacrifice by living in one of my now 11 units instead of a single family. It's not all powdered milk though! I do have a 28' boat.
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