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.
No, other than emotional there is no positive return on children. Chances are they will stick you in a seniors home (or worse....rent you their basement apartment), never visit and simply wait for you to die so they can inherit their retirement fund.
I was working very hard my first half of life, 60 hours plus per week for many years.
My second half of life, now, kind of relaxing and enjoy the free time, but still busy at finding deals, analyzing deals, negotiate deals, borrow loans from all different lenders, renovations, maintenance, evaluate rental market to raise rent on all units etc. etc.
I don’t understand the egos in this post. Arguing about the definition of poor and sacrifice. I admire anyone who has the motive to grow financially regardless at whatever level they are. Kudos to all who experienced growth.
I didn't have much to sacrifice when I decided to invest in real estate. I was already very frugal. Before I decided to invest I was making double and tripple payments to my student loans. when I decided I could make more money investing that I could save by making extra payments I funeled that extra money into my savings and stopped contributing to my 401k. My 401k has never preformed well anyway.
I have never had an auto loan and I never carry over a balance on a credit card.
I did negotiate a lower rate on my satellite tv but I was able to keep the same channels so it wasn't really a sacrifice.
Terry Lao this is one of the most interesting topics on BiggerPockets. I agree with you on most of the things you stated as sacrifice, but not $2 per day for lunch. I’ll not let you marry my sister because you’ll starve her to death.
By the way, l have a property in Vegas, so l’ll PM you to see if we can carpool at times when going to Vegas. Give me a shout any time you happen to be in the Antelope Valley area for us to have a lunch (don’t get scared because l’ll pay for the lunch).
Happy Thanksgiving,
David
thanks for the offer, might take you up on it. hard to resist free. Can't marry your sister due to have wife already and she is expensive, so two wives, twice as expensive.
I looked at Palmdale as investment when Northrope Grumman got huge recent government contract.
Terry,
Nothing good in this life comes without some degree of sacrifice, whether us or someone else who is kind.
I like this thread, especially, how saving is a lifestyle. So is increasing net worth. Paying attention at small expense levels prevents our standard of living from overly increasing whenever we see financial progress in our lives.
I am 23 and haven't bought real estate yet, but I just got 2 part time jobs and bought a '95 maxima for 1k to save money and drive it into the ground.
Great thread.
Nursing is a great job that lends itself well to RE investing and property management. With 12 hour shifts, 3 days a week, you can work full time and still have plenty of time for rehabbing properties. It is easy to pick up extra shifts or agency work to bring in extra money to save for down payments. You are wearing $20 scrubs -- not wasting money on expensive work wardrobes. And talk about free coffee and free ghetto mochas (and graham crackers)! At one time, in my younger years, I lived on my over time and banked 100% of regular earnings. That was year I put 20% down on a new house, kept the old as a rental, and paid for grad school.
Whenever I am doing a lease signing with a new tenant, I get flashbacks to giving discharge instructions to patients. It is such a similar process. You are telling the tenant what is important, they are just nodding and agreeing with you as they take it all in.
Keep up the penny pinching and keep the goal in mind. This post was to help inspire you and let you know that there are others, including myself, that have walked this path.
The funny thing that I discovered was that the regular posters, who done many deals, and own 50+ unit apartment buildings are the one's who penny pinch the most.
I love reading this post. Lots of ideas about where people find the most value and some ideas for ways to cut costs. Some people enjoy spending on certain things, while others enjoy frugality, even frugal pooping... I needed a good laugh. Thanks for this thread @Terry Lao!
I enjoy living on the frugal side of life. I make enough to have a choice, but I think it's fun challenging myself to spend as little as possible on what I consider to be wasteful or environmentally irresponsible. Here are a couple of things that help me save and also, I think, challenge me to live a tiny bit more lightly on the planet.
1. Buying in food in bulk and buying produce in season. Forces us to eat more locally and I feel healthy and enjoy cooking new things.
2. We drive old cars. They look bad, but when we put up one of our units for rent, the tenants always have nicer cars than we do. Priorities...I am amazed at how much people pay monthly for payment, insurance, and just the stress of dealing with a new car. I have the lowest insurance because I don't give a crap if something happens to my car. Hell, it might look better with a nice dent on the side.
3. Since I teach, I have the luxury of spending lots of time in a place when I travel. We tend to travel to places that are interesting and low cost. The cultural experiences are so rich when we travel on a budget. Travel in Africa, Southeast Asia, and Central and South America are amazing and super inexpensive. Snorkeling and boating on a dhow in Africa, so incredible. Trekking in Colombia and getting stuck in the rain. Riding a crazy train in Mexico. Yes please.
4. This year, we are taking a long trip and we have challenged ourselves to not make any purchases of new items. This includes plastic crap of any type, dishes, phone, linens, junk on Amazon, etc. until we leave on the trip. I am surprised at how much junk I normally buy, and how unnecessary most of it is.
5. We only have internet only and no cable. If we want to watch something on cable, we have to go over to a friend or family member. It's kind of nice!
6. We rented a room in our house out to someone we vetted well. We are saving a ton of money, and we really enjoy having her around. It's not a sacrifice, but a nice addition to our home life. We are older, and thought it was a weird idea to get a roommate at this point in our lives. But it's been a win win for all of us!
7. We reuse as much as possible. We try to repurpose items that we used to throw in the recycle bin. Glass jars, food containers from takeout places, bags, clothing repurposed into rags, etc. It's also fun to us to see how little waste we can produce. It may save a little money, but it also feels good to reuse stuff.
I find that none of this takes any more time than what I used to do, and I still have enough time to look for new opportunities, go to REI meetings, and find ways to make my money work a bit more for me. I think that even if I were rich, which I'm not!, I'd still be trying to live frugally. It's fun to me and matches my goals.
"wtf good is having money if you live like you don’t have it"
The overwhelming number of successful investors and business people know it is never about having money. Pleasure is derive from the challenge of making money not spending it. The drive is to work, money is only a way to keep score. There personal lifestyle has little to do with money.
Ask any successful person if they have enough money and the answer will always be the same....the more they have the more they feel they need. It is not about having money if it were then investors would know when they had enough.
@Bettina F. yeah at the time the pay for me was only decent, now it's much better! I work at the VA hospital in Buffalo and at the time the union forced them to do a locality pay study and found that we were one of the lowest paid nurses in the area so they bumped the pay up quite a bit. I agree, this job is perfect for working full time and real estate investing...I wish I had the three 12 hour shifts per week...best we can do here at Buffalo VA is 3-3-4 in a three week period which adds up to 120 hrs over 3 weeks. I also get $20/month tax free for uniform allowance and not complaining about the 5weeks of vaca.
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.
Terry
Correct. They're not Outlet. They're CLEARANCE.
THREE IN AMERICA.
Clearance has every single shoe size, and everything weird. They just don't have like 4 pairs in the same size. It's all random.
It's the Ross for Less of Nikes, and it's the best place ever.
"WTF good is having money if you live like don't have it"
Would you say that to Warren Buffet who still lives in his original home in Omaha? Bill Gates drove around in a beater pickup truck when he didn't have to.
I recognized some people (names) who replied on this post. These are people who own 50-100+ apartment buildings and post things like " take a pee before you go home". I would even say they are multi-millionaires who are still frugal today, even when they don't have to.
@Terry Lao
Don’t let the negativity get to you, I do get your point of view.
You made some good suggestions in your original post, the way I see it you make the little sacrifices or (changes in lifestyle) at first and in the future once you reach financial independence you don’t have to.
Your discussion went from making sacrifices to you not understanding the poor class., that’s quite a turn.
It’s interesting how members interpret discussions .. When I read your original post, Poor/ middle class topic did not cross my mind.
Terry Lao great post and thanks for sharing your experiences and sacrifices.
One of the best things about REI is that I have learned to focus on what truly matters. I still spend money on good beer... but I dont go out to lunch nearly as often. Rather than going out to lunch or a movie the same satisfaction can be achieved by hanging out at home and cooking as a family.
To answer your question on what expense have I reduced its 401k savings ($400 mth), eating out ($100-200 mth), and whole life ($300 mth) insurance. The spread allows me the extra money for gas (property mgmt) stamps (direct mail) and to pay back my line of credit.
When I originally made this post, it was to help those starting out, and give ideas to save up for down payment. Some experienced investors chimed in with their sacrifices that opened my view. REI has turned into a lifestyle, which originally was for the income, and once they past the point of financial security, they just continued.