Real estate investing is like any other business: You need to manage expenses and reduce your overhead to make sustainable profits year after year. This article discusses a few things you can do to cut costs and make your real estate business more profitable.
1. Borrow Smartly
As a real estate investor, you’ll constantly look for properties to invest in. And if you aren’t operating with a large amount of personal capital, you’ll have to borrow to finance purchases. You should know that bank loans can be expensive, and applying for one can be time-consuming. And if you can’t get funding, you won’t be able to close a lucrative deal.
Instead of relying solely on bank loans, consider using other popular funding options, especially if you’re doing a wholesale real estate double closing. Connect with the best transactional funding provider near you to get affordable funding fast.
2. Reduce Your Technology Expenses
There’s no denying the adage: “You’ve got to spend money to make money.” As a business owner, you’ll must invest in the right technology to scale your real estate investment business. That said, you shouldn’t break the bank paying for technology.
For example, instead of providing your employees with the latest iPad, consider purchasing high-functioning but slightly older iPads, as these are cheaper. Similarly, you can buy a standard laptop instead of spending thousands on an expensive MacBook.
3. Don’t Shy Away From Free Tools
You’ll need suitable hardware and software for a successful real estate investment business. The good news is you can use many free tools to upgrade your business. For example, you should use free Word-processing software like Google Docs instead of purchasing an expensive Microsoft 365 subscription. Here are a few popular tools that are available for free:
- File sharing and cloud storage: Google Drive
- Marketing and promoting: Create a free business page on Facebook, Instagram, and Google My Business
- Poster designs: Canva
- Project management and work organization: Trello, Freed Camp, or Slack
- Use Tax Breaks To Your Advantage
There are several tax breaks that real estate investors can take advantage of. While we can’t provide an exhaustive list here, a few well-known ones are:
- Deductions: All expenses related to your real estate investment business can be deducted. This includes office expenses, mortgage payments, and interest paid.
- Depreciation: If any property you own decreases in value, you can subtract the loss in value from your income.
Make sure you discuss tax benefits with your accountant so you won’t miss anything.
4. Make Use Of Cheap Labor
Labor is one of the most significant expenses for any business, and labor costs are especially relevant when running a real estate investment business. You can hire interns when you need cheap labor, as they’ll handle the grunt work in exchange for experience. You can also use social media pages to attract qualified buyers; interns can run these pages. Also, consider investing in automation tools to reduce your staff’s overall workload and boost efficiency.
Final Thoughts: Be Prudent To Maximize Profits
Just because you’re dealing with expensive assets doesn’t mean your business has to overspend. You can maximize profits if you take advantage of these simple but effective cost-cutting tips.