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.
Rental Property Investor · Honolulu, HAWAII (HI) · Member since 2011 · 4k+ posts · 2k+ votes
8y
Stack Mr. Rebates shopping portal and Groupon discount codes with gift cards purchased from eBay or Safeway with more gift cards and Mr Rebates shopping portal.
Take a shower at work to save on utilities, water, and electricity
Go to the gym more often (do your 3S’s there, ****, shower, shave)
If you work in a startup company that cater’s food, it’s a no brainer--- eat at work and bring food home. Maybe you can even befriend someone that works there and join them for lunch from time to time
Wash your car in the rain. No mineral deposits left while it dries. https://youtu.be/kZkYnkXOI7Q
Costco leasing to own program
Buy a powerbank and charge it at work. And always take a pee before leaving for the day.
Try to poop at the same time everyday while at work… get paid to poop. Time is money and flushes cost 10 cents.
There are soft drinks available at restaurants?
Why are you eating at a sit down restaurant.
If you must, save your left overs and take them to go instead of wasting food
Wear clothes with the tag on it and return it. Also buy snorkel from costco to go to Hanama bay while visiting Hawaii to return it.
Use an app like GasBuddy to find the cheapest gasoline station, better yet, double stack your Costco credit card (4% cash back on gasoline) and the Costco gas
Cash flow, cash flow, cash flow. Also, see uncle Kohlers team for tax optimization (easily the single largest expense in your life)
http://keystonecpa.com/~keystone/images/5_Cash_Flow_Strategies_for_RE_Investors_eBook.pdf
This one is a bit morbid, but an important one. Set up a revocable living trust with your lawyer to avoid probate expenses following the death of your family members
Susie Orman’s advice - - - make coffee at home and save yourself the $5 extra large Sbucks Vente frappucino
FAST (intermittently, not forever)! Skip breakfast daily (work yourself up gradually) and when you’re ready to get to the big leagues, attempt to fast for an entire day (no breakfast, lunch or dinner)
For all the health benefits under the sun that come with fasting, see Dr. Manny Lam
Solar panels (maybe?)
Free (coffee) money, this one’s really easy ($25/quarter or $100/yr) w/ BofA and Amazon
http://www.magnifymoney.com/blog/consumer-watchdog/better-balance-rewards-card
Maximize and optimize what you’ve got
BankPurely has a 1.30% APY since April (not sure if promo rate?) but most banks have 1.0+% (which is 10x the 0.1% APY rate given by most conventional brick and mortar banks like BofA, Chase, WellsFargo)
https://www.depositaccounts.com/savings/
Become an Uber driver or deliver post maters? (not a big fan)
If you have a spare room not in use, AirBnB it from time to time
Check out EvenBrite or other social event platforms for free lunch/dinner/drinks
Blaze/custom pizza/Mod pizza mega salad for $11.27. Dinner for days.
Paid online surveys (not a good use of time)
Coupons (think http://www.freestufffinder.com/)
Use www.bensbargains.com or slickdeals.net before buying anything online
Use Honey or Ebates or other discount portals for Amazon/eBay or other internet purchases to save a few %
Certain credit cards provide 5x bonuses (Chase Freedom has rotating categories) and Chase Business cards are good for auto-pay things like internet with extra bonus categories
Make a Ghetto Latte at Starbucks and other fun
Rental Property Investor · Klamath Falls, OR · Member since 2016 · 146 posts · 213 votes
8y
We started off following the Dave Ramsey mantra in all areas of our life. For 8 years we sacrificed by eating out only on birthdays, no coffee, $1000 max budget for Christmas (family of 5), driving my 2001 Acura MDX for going on 12 years, and zero vacations. We did this with a single income. I pushed hard during that time with my Ebay Sales and accumulated enough to buy our first multi-unit (BRRRR) in 2015. Since then I've learned the art of leveraging and we are now accelerating our investments. We bought our second multi-family this year (BRRRR) and are now financing out to both properties to buy more in Jan/Feb. By far the hardest sacrifice is time. I am pushing $2,000,000 in Ebay Sales and that's not easy to do. When I looked at how much I was making compared to how much time it took, Real Estate is a much better strategy. We're set to hit $1,000,000 in net worth in the Spring, so sacrificing is definitely worth it, but after the first million, my time will be worth more than the money.
Sacrifice means different things to different people. The key is to increase earnings and decrease expenses at whatever level you can. To indirectly quote Dave Ramsey, your income is your "biggest wealth building too"l so it's the size of your "shovel" that matters. Cheers!
Real Estate Agent · Cupertino, CA · Member since 2016 · 4k+ posts · 1k+ votes
8y
An Italian Stanford phd who was CEO, COO of several well known public companies and have served as advisor for former president of US shops at Good Will. It is the way she was brought up. Being frugal does not imply she is stingy. She gave generously. I am sure she is doing fine on money matters.
That goes with Zukerberg. He drives a Golf, and gave deed 99% of their fortune. Before they bought a modest older home looks like any ordinary home in East Coast. He was a renter.
Investor · Sewell, NJ · Member since 2016 · 68 posts · 48 votes
8y
In the summer of 1976 I was a schoolteacher. I had enough money to go through the summer comfortably and feed my family. Porten instead I chose to work six days a week I don’t warehouse loading trucks and five nights a week bartending. I saved enough money to put down the $3000 down payment, and take out a second mortgage for $6000, and a first mortgage of $21,000. I had my first triplex.
Sunnyvale , CA · Member since 2017 · 373 posts · 362 votes
8y
No sacrifices made and don’t think I will. Life is too short to be brutally frugal and not enjoy it. I for sure :
1) Don’t waste money
2) Do bad investments
3) Engage with shady people
4) Have bad vices
5) Focus on making as much money as I can
6) Respect my relationships
7) Let greed get the better of me
8) Ever Do fraud or lie or want to make a dime at the expense of another person
Those are enough to keep me out of trouble and help me lead a fulfilling life. I am personally not a fan of driving poor or eating poor so that I can accumulate assets I don’t use. I prefer a balance.
Homestead, FL · Member since 2015 · 36 posts · 8 votes
8y
I started pressure washing roofs on the weekends to make extra cash to pay off credit card debt. I wasn't making a dent so... I'm not sure if it's considered a sacrifice or giving up something but just recently I moved all my retirement money from a traditional IRA to a solo401k and then borrowed from my solo401k to pay off all my credit card debt (this is where I am today).
My plan moving forward is to get my credit score where it needs to be and then pull a HELOC on my home to use for down payment into my first investment property using a FHA/Fannie Mae loan, a hard money lender or private money. And apply the BRRRR strategy where I see fit.
Thanks for your post. I hope it helps others like me just starting out put things into perspective. And learn from others examples of how they got started. I can only hope to come back on here soon and share my success story and more of what I had to do to make it!
Investor · Shakopee, MN · Member since 2017 · 102 posts · 60 votes
8y
One of my favorite podcasts/blogs is Afford Anything by Paula Pant, and her motto is that you can afford anything, but not everything. Generally, we make choices of what we want to afford and don’t want to afford — and a lot of times the statement “I can’t afford it” really means “I don’t want to pay for it because I’d rather use the money for this other thing.”
I love this philosophy — and Paula’s material — because it’s very positive.
There’s a lot of hostility in this thread and from my POV, it’s because there’s a lot of judgment going on over what people have chosen to afford or cut back on. The way the conversation began had a somewhat judgmental framework so it’s no surprise the post took such a turn, but in taking a step back, it’s all the same message — we can’t buy everything we want all the time, so we make choices.
(Of course, these choices are only available to those with the luxury of having enough money/time left over to get to make the choice — but that’s a separate topic from the concept of choosing where to cut costs.)
I cut costs in places many people I’m close with couldn’t imagine doing without. Similarly, I spend more on things they wouldn’t /dream/ of spending money on. None of our choices are wrong! We just value different things, that’s all — and as long we’re able to achieve our financial goals, it doesn’t matter where we saved the money to get there.
Rental Property Investor · Buffalo, NY · Member since 2017 · 257 posts · 130 votes
8y
@Terry Lao Great post! I was so surprised to read through the comments and see all the people it triggered, lol! Although, I missed out on what the one person had to say that apparently was trolling you and got their account closed.
Well one thing is for sure, some people are the frugal type, and others allegedly live life to its fullest and don't sweat the small stuff, lol. Not sure why some of those need to leave angry comments about how much they enjoy themselves because of their free spending, but lets not speculate. I for one have always been frugal, and contrary to popular opinion, I enjoy being frugal, because the money I save goes to the things I truly value which makes me much more happy then if I wasted my money on things I didn't need to waste it on. My frugal nature was the very thing that led me to real estate investing. I was 25, just graduated from nursing school, had a decent job, was engaged to a girl that wanted lots of kids and to be a stay at home mom, wanted a house, and this and that and a little of that too. And I was looking at my future bills thinking, this isn't going to work! Then the idea of buying a duplex came to mind and the rest is history (including that fiance). I have many of the same sacrifices as you (am I still allowed to use that word?). It really boggles my mind that people will wait in line and pay $3 for a cup of coffee that costs $.20 to make at home, but I digress.
So, I househacked and worked nights in the hospital for the extra 10%, and sometimes my tenant's kids would do jumping jacks directly above my head while I tried to sleep. And sometimes I think they had furniture moving contests? Then I really started investing in real estate and had to switch back to dayshift. I've never gotten rid of a vehicle unless I totalled it on a deer, or some other catastrophic failure. Vehicles are the 2nd biggest expense people have so I plan to run my 50mpg Prius into the ground, as well as my 2005 diesel truck. Each year I will do my best to keep the salt from the snowy roads from rusting the vehicles. I get on my back underneath the vehicles with spray paint and fluid film. I will probably never get a nice vehicle for myself (my wife will get a nice Lexus some day, hopefully sooner than later), lest my tenants think I'm getting rich off them. I got rid of cable, and use the antenna, as well as the fire stick. I will continue to do most of the high dollar maintenance on my properties up until point where it doesn't make financial sense. I'm going to continue to buy properties in the most run down areas of the city because a good deal and good tenants can get you 70% ROI, and the the potential sacrifices of that type of investing will get me out of the rat race sooner (if I don't get shot, of course). Oh and here's a good one, intermittent fasting. I eat one meal a day, and feel better than I ever have! And all that unnecessary weight is gone.
Thanks for noticing and commenting on the negative tone this post took in the beginning. I was questioning whether it was something I said or the word " sacrifice " that some did not like. It was the oddest thing. However, I kept saying it was my choices.
Down payment for most is not easy hurdle to overcome. It is either make more money or cut expenses. Should I start a post entitled, " how to make more money ?".
Thanks for replying and adding your experience on this post. Your story affirms me that I am on the right path. Every investor has a story. Bigger pockets usually has the end of the story where one sells and makes $10k, $100k, $500k, etc. However, there are no details where one struggles to save for the down payment. Most real estate purchases are a story, and even when you purchased the property, the story continues with repairs, tenants, more struggles, etc.
I saw your comment on $.10 per flush. Not sure if that one is true. My pool guy told me it costs about $20 to fill up small to medium pool.
Also, today I went to lunch with co-workers and spent $15, which is more than my whole week budget of $2 per lunch. In my defense, I had to go because my manager asked me and need to build repoire. So in a way, it was an investment for job stability and advancement opportunities.
So tomorrow, may I suggest chicken instead of turkey. And better to go someone else's house and not host, if possible.
Coral Springs, FL · Member since 2017 · 39 posts · 10 votes
8y
I’m currently saving right now for a conventional loan since I’m going to school with my Post 9-11 bill and considered a full time student. I get my housing allowance from the military which is enough to support my family but it is not considered as active income. The only thing I have to count as income is my VA disability and my Reserves pay. I limited my expenses by eating at home instead of eating out. When I’m at school, instead of buying my $4 Cafe con Leche which I very much enjoy, I buy a $1.30 Colada (South Floridians know what I’m talking about) to get me going through the day. If I have time I’ll make it at home and make enough to last the day. I opened up two bank accounts other then my checking and savings and immediately put 200 in each month and forget about it instead of buying performance parts for my car like I used to back when I was younger. I limit my commute to school. I buy Walmart food for my dogs instead of going to Pet Supermarket. Instead of buying Protein Milk at the gym, I bought a tub of protein for $90 dollars and make a protein shake after a workout. I used to save on a gym membership by going to the gym at school but since I live too far away from it now, 1hr, I used the local gym (planet Fitness) every morning at 5am. If we have no time to cook because of school, we buy McChickens or the 4 for 4 at Wendy’s to eat for dinner instead of spending a ton of money on a restaurant and we ended up cutting out alcohol as well. My wife buys things in bulk to and stay within our budget. We are conservative in what we spend our money on especially since she’s in her Masters program. I’m trying to be as frugal as possible and once I’m done with my RN nursing program, I will continue to be frugal to use that extra income to further my career. Majority is temporary but there’s a reason to do it and that’s to provide a better life for my son then what I’ve had. I’ve spent money here and there but it’s a big change on how I used to live before and it’s not bad because I’m determined on getting what I want. Some expenses stay or come especially having a family but I try to get the lowest price for right now to make things work.
Lender · Berkeley, CA · Member since 2017 · 1k+ posts · 549 votes
8y
In San Diego, San Leandro and Memphis there are Nike clearance stores. They only 3 in America.
All items start at around 50% off and then there are larger sales thu-sun.
On avg I paid $35 for $125 sneakers, and many other items.
Remember that if in those areas.
These aren’t Outlet Stores. They’re CLEARANCE STORES.
thanks for the nike info. i'm in Orange County, and there are Nike outlets, but I would only buy if 50% or more off retail price. I usually pay about 40-50 per pair.
I will check out the Nike clearance when i'm in SD. I have a feeling clearance might not have my common shoe size. Usually the last to go are the basketball player sizes.
I have a saving habit since I was very young.
I’m not a big spender anyway.
I didn’t sacrifice anything for down payment, because I would save the money anyway regardless I buy houses or not.
I started real estate game late. I was working hard and had well paid W-2 jobs since I was in graduate school many years ago. When I started the real estate game, I used the saving from previous years as down payment to buy “n” number of houses (more than one).
The down payment “was” there already from my previous years saving when I decided to begin the real estate game.
After it, to “get” more money for the down payment to buy more houses, I spent a lot of time looking for all different types of lending options. 10 conventional loans, then hard money loan, then portfolio loan, mix with 0% credit card interest rate sometimes in between.
What I am doing is, cash-out refinance, refinance, and refinance. Leverage, leverage, and leverage, to expand my portfolio.
I use the money from others (lenders) to build more money. Therefore, I don’t need to sacrifice anything except a lot of time to research and prepare all the loan documents.
It is not just one loan. It is many loans. After one loan is done, I buy more properties, then try to get another loan, buy more, another loan, buy more, and another loan. Never end...
@Terry L
If you want to buy more properties, have cash-out refinance on your existing 4-plex, then you can use the cash-out to buy more properties.
Faster way to get down payment.
Rental Property Investor · Mechanicsburg, PA · Member since 2017 · 47 posts · 27 votes
8y
My wife has been asking for new flooring and a bathroom since we bought our house six years ago.
In fairness the carpet was disgusting when we bought it and now we have a young son who crawls all over it. We had the carpet professionally cleaned and I figure I can get another year or two out of it.
The bathroom hasn't worked since we bought the house because the grout cracked and the galvanized pan under the shower rusted out. We have another bathroom so it hasn't been a high priority for me.
We got the house appraised and got a $50k heloc. Instead of doing work on our house I used the money along with some money I had saved to buy two rental properties. My wife still wants work done on our house but she is on board with investing so we can obtain financial freedom.
Rental Property Investor · Albany, OR · Member since 2015 · 312 posts · 136 votes
8y
My wife sold her Harley and I’m trying to sell mine now. We enjoyed them but we know a little sacrifice now and we can achieve financial freedom even earlier. I will buy another motorcycle again, but it won’t be brand new and it will be once I have the passive cash flow to cover it.
Rental Property Investor · Anchorage · Member since 2016 · 28 posts · 30 votes
8y
I agree with @Christopher Brainard, where focusing on sacrifices, to whatever degree that may mean to you, isn't the ideal path to success and wealth. Now don't me wrong, drinking starbucks, eating out and paying for cable every day/month is a sure way to burn a hole in your pocket and hurt your over all net worth over years and years. So cutting back on little stuff like that definitely helps. But increasing income streams and figuring out ways to earn more money really accelerates things. For exampleI try to live well below my means meaning wearing the same pair of shoes for years, packing my own lunch, not impulse shopping, and not give in to social pressures to spend money just because that's what the "norm" is. At the same time I have a full time salary job, I have a part time job which I also get a decent amount of tips (delivering pizza, best side gig ever!!!), I donate plasma which earns me $300 a month, and I'm seriously looking into renting my car out to turn that into an asset instead of a liability. My whole mind set is to work my *** off the first half of my life so I can have a truly relaxing retirement doing exactly what I want the last half of my life. The take away: sacrifice a little more then the average person, work a bit harder then the next guy and you'll be alright:)
I personally wanted to sell one of my kids when I was starting out, we had an extra one, but unfortunately like many new investors I had difficulty getting my wife onboard.
In hindsight we could have given them away and been much farther financially ahead today. Hate to say it but I told her so.
For those starting out if you really want to make a major sacrifice that will pay the greatest dividends don't get married.
Unless they have inheritance coming or money of their own or are earning a big paycheck and are willing to continue working and contribute to your investing plans. You can fall in love with anyone, choose one with money or don't bother.