Real Estate Investors catch a bad rap as it is. They’ve been classified as vultures, scavengers, heartless business people who don’t care about the common homeowner.
In most cases, the opposite is usually closer to the truth. If you’re here on BiggerPockets, then you probably understand the labor, devotion and capital it can take to actually get, turn, or keep deals. Working as a real estate speculator or investor is just like any business, and comes with a failure rate like any other start-up.
What if you’re getting started, ramping up, or in an ultra-competitive market? What’s another trick in the bag to grease the wheels of your operation without being underhanded or unlawful?
Besides out hustling, buying every billboard in town, or having a massive team, the lowest thing you can do to get, keep, or sell more deals is your personal overhead.
The 20 Best Books for Aspiring Real Estate Investors!
Here at BiggerPockets, we believe that self-education is one of the most critical parts of long-term success, in business and in life, of course. This list, compiled by the real estate experts at BiggerPockets, contains 20 of the best books to help you jumpstart your real estate career.
Sensationalism has it’s sex appeal. Who doesn’t want to roll Sean Paul style in a $100,000 car to “really” prove how successful you are? After all, the pinnacle of achievement is the acquisition of depreciative assets, right? Check your ego and question which is more important…the lease on the Lexus or the ability to build you financial future. I know, I know, I’m quite the dud. But if you’re truly looking to become a millionaire, I suggest you pick up the book The Millionare Next Door and see how your wealthy neighbors are actually living; there’s a lot less “poppin bub” in Escalades then you think.
If/When you’re able to, pay your car off, and maintain it until such a time the expense of purchasing a new(er) car is feasible. Having a run of the mill car may actually put you more in touch with your customer base, and may keep your friends from thinking you’re going to be picking up the tab every time you’re “up in the club.” Mission accomplished.
Whether it’s $200 – $800 a month for a car payment you could save, equate what that savings could do for returns on marketing. If a mailer costs you $1, you send out an extra 200 a month, get 5 calls, 2 people interested, and 1 extra deal at an average of even $5,000, your $200/month could turn into a potential $60,000.
Now tell me that isn’t sexy.
Everyone needs a place to live, and if you’re serious about your real estate investing career, than you should be mindful of your own arrangement.
If you’re single or have an understanding family, you could purchase a 4 plex with residential financing, live in one unit, and rent out the other 3 and live (most-likely) for free. Plus, the other 3 tenants are paying down the mortgage, and you save on management expenses.
Alternatively, you could also purchase a home as a primary residence, and have a roommate to help subsidize the mortgage payments. What the goal is, is to capture the tax advantages of owning your own home, without it eliminating your potential to purchase more homes. Ideally, you would be paying less out of pocket every month than what it would cost you to rent in the same area.
Just because you qualify for a $250,000 home doesn’t necessitate you maxing your credit to the hills. With square footage comes utility bills, taxes, insurance, incidentals, furniture, etc etc. If you can keep your living expenses below what you can really afford, the extra savings can go towards your real estate business.
Although what could be taken as a request to live like a cheapskate, is really not the case. There was a time when a had a heart to heart with an excel spreadsheet every month and my bank and credit card statements. The type of “there’s more month then there’s money” realization that had me penny-pinching, waiting tables, and wondering how the hell I was going to get out of this trap. If you’ve been there or are there, you know the mantra: DEBT SUCKS.
When you have no plan, than you’re planning to fail. If you’re in debt (and by that I mean “bad debt”, consumer debt that’s not for your financial betterment) than you’re giving yourself more of an obstacle in your real estate career. Getting out of debt will make you will behave differently, think differently, make different decisions, and critically, give you more opportunities.
You can actually live quite comfortably and still be mindful of your expenses. In fact, there’s a freedom in knowing you can afford (the new car, a bigger house, that $10,000 watch), and sitting in the fact you really don’t need it (OR that you can afford it without going into debt!) My point is, going out to dinner 5 nights a week, paying retail for everything, buying things you don’t really need, these types of things will deteriorate your income and leave your ability to do more in your RE business quite wounded.
Listen, there very well may come a time in your real estate investing operation that a bigger house, a new car, and a Patek Phillipe actually don’t affect your bottom line much anymore. Everyone’s situation is different, and I certainly don’t judge. However, there is a pervasive expectation that we as RE investors should be like the characters we see on the reality TV shows, and be egomaniac hummer-driving a***oles.
If you’re looking to take your business to another level, or even get off the starting block, one technique that can help you get lightyears ahead that others may not be willing or able to do is live below your means to help you achieve your goals.
It’s the lowest thing I’VE ever done to get deals, and I hope the insight helps someone else out there even just get one more deal this year or next!
What do you think? Did you chop expenses when you got started, drive a beater car until you struck it rich, or get a second job to help pay for marketing? I want to hear what you guys have done to get an edge on your outlay and a leg up on the competition!