14 FIRE Movement Strategies to Retire Early with Real Estate
Who else wants to retire early? Here's how to reach your retirement goals faster by using proven Fire Movement strategies and real estate.
Retiring early is a goal for a lot of people, and most assume that it’s a pipe dream. However, what if retiring early was not only possible, but also easily achievable? Obviously there’s a few ways this can be done, but today we are going to discuss how investing in real estate can help you achieve your goal of financial freedom and even early retirement if you so choose.
What is the FIRE movement? Simply put, it stands for “Financial Independence, Retire Early”. Pretty straightforward, right? And luckily, there’s no caveat or catch here. It really can be that straightforward, you just have to be willing to work for it. Tiffany Thomas, an outspoken promoter of the FIRE movement, shares tons of advice on her YouTube channel on how to follow in her footsteps and retire at age thirty-seven (you read that right- she easily retired before forty!).
Let’s take a look at these tips and tricks:
Table of Contents
- 1. Keep your housing costs low
- 2. Hardly ever go out to eat
- 3. Never pay credit card interest
- 4. Know your priorities
- 5. Drive the same vehicle as long as you can.
- 6. Invest in the stock market
- 7. Look into what simple renovations can be done to your property to increase value
- 8. Rent out by the room instead of to a single family
- 9. Don’t just leave your money in savings
- 10. Invest in long-term properties
- 11. Do your homework
- 12. Find a mentor
- 13. Take small steps
- 14. Set a financial goal
1. Keep your housing costs low
Tiffany bought her first home at age twenty-five, putting down just $6,500 and getting a bank loan for the rest. While twenty-five may seem young to start investing in real estate, there’s lots of ways you can start small from a young age, and Tiffany shares her biggest tip for starting out: keep those costs low!
Aside from the low initial payment Tiffany put down, she offset even more costs by getting two roommates to help cover the cost of the mortgage. Think about it: many people in their mid-twenties still live with roommates, all pooling their income together to pay rent to a faceless rental company. But what if you were the landlord your roommates paid rent to every month?
2. Hardly ever go out to eat
While this one might seem a little too simple, it really can be that easy. Of course, the whole “don’t overspend on food” mantra has been one tirelessly repeated in money-saving seminars and advice books over the years, but there is a reason for that! Try not spending any money on lunch for a month, and see how much money you’ve saved. Tiffany explains that she saved $2,600 a year by bringing lunch from home every day- almost half of what she spent on her first down payment!
3. Never pay credit card interest
This one also may seem super simple and straightforward, and it is. If you’re one of the 78% of Americans who currently has an active credit card, chances are you’ve at some point had to pay interest on your card purchases. However, if you do what Tiffany did and pay off all your debt within thirty days of your purchase, you’ve effectively eliminated the interest you would normally owe and have saved yourself a ton of money.
4. Know your priorities
Now, just because you brown-bag your lunch and avoid overspending at Target doesn’t mean you can’t have fun! Sit down a make a list of the things you feel as though you need to live a full, happy life: whether that be travel, a steady gym membership, or high-tech stereo equipment, know what your priorities are and quickly you’ll realize every other frivolous purchase is just that- frivolous and unnecessary!
5. Drive the same vehicle as long as you can.
Do you love your car? Hopefully so, because that brings us to our next tip: drive that thing as long as you can. By taking care of your car and keeping up on your payments, you’ll not only raise your credit score (another plus!) but you’ll make those car payments eventually disappear, meaning you can drive for free- after paying for gas, of course.
6. Invest in the stock market
While we typically discuss real estate investments here, don’t forget that stock market investments can also be beneficial to your portfolio! Be sure you are picking stocks that you believe will grow over time- long-term investments will always be better than short-term ones. Tiffany also recommends looking into a Roth IRA, which allows you to withdraw money at any time and avoid paying penalties- and using this money she was able to buy three more properties over the next three years!
Now, we’ve taken a look at some of the simplest ways to save money when you are looking to invest in real estate. Once you’ve invested and own multiple properties, what else can you do to help increase both your cash flow and net worth? Let’s check these next few tips out:
7. Look into what simple renovations can be done to your property to increase value
Tiffany’s third property was a family home with an unfinished basement. Seeing the potential in the basement, Tiffany renovated it and then moved in herself, freeing up a space in her original property for an additional tenant. These simple renovations, combined with Tiffany living in the property herself (always a great idea for real estate investors), really helped increase her cash flow.
8. Rent out by the room instead of to a single family
Just because a house is listed as a “single family home” doesn’t mean it has to stay that way! In a four-bedroom home, renting out each room to a single or young professional can exponentially grow your cash flow as opposed to renting out the entire home to one family or group. Renting out each room for say, $900 a month, will net you much more income than renting it out to one family for $2,000 a month.
9. Don’t just leave your money in savings
While having a strong savings account can help you initially with down payments on homes, once you have multiple rental properties, don’t just let that money sit there! Instead, looping back to tip #6, take some of those savings and invest them back in the stock market, passively growing your income while you also make money on your rental properties.
10. Invest in long-term properties
The practice of buying houses, renovating them, and then selling them quickly at a profit- which most investors refer to as “flipping”- is a good way to make quick money. However, in order to grow your net worth and hopefully speed up your chances of retiring early, look instead at good properties in prime locations that you know will appreciate of the years, so instead of a quick sell you are looking at a long-term source of income.
11. Do your homework
This one, like many of the other tips, is just a straightforward as it sounds. Make sure that you know right off the bat how much money your mortgage will be, what your HOA expenses are, and (roughly) how much your maintenance expenses will cost over time. This way, you can make sure that you are putting enough down initially to where your mortgage will be as low as you can make it and staying low over time.
12. Find a mentor
Like with most endeavors, you won’t know everything right away (or even over time). When entering a new career path in life, the best thing to do is to find a mentor who knows what they are talking about and learn from them. Whether it be a flesh-and-blood person or simply online resources, gather as much information as you can and don’t get afraid to ask questions!
13. Take small steps
You might notice that Tiffany’s first property wasn’t necessarily an “investment”- she simply bought a house and lived in it with some roommates. The best way to start is small. Don’t immediately try to go for a large, expensive property before you know what you are doing- make sure you are taking little steps to eventually achieve your goal. Over time, you can create positive cash flow and work your way up to a bigger property.
14. Set a financial goal
In other words, know what you are looking for. Don’t go into investing blind without knowing what you want to achieve. Realistically set goals for money, time, and effort spent on properties and know the kind of properties you’d like to buy. Knowing a concrete amount will make it a lot easier for you to save money towards your goal.
Now that it’s all been laid out, investing in real estate with the goal of retiring early and gaining financial independence doesn’t seem so hard, does it? You may have previously thought that the idea of retiring before age forty was something only professional athletes or superstar inventors like Mark Zuckerberg were capable of. However, these tips and tricks really lay out how easy it can be to start investing and working towards your goal. Don’t be scared; you will make mistakes, it will take time, and it may seem a little nerve-wracking to take that first big jump into investments! But as long as you follow these rules of starting small, setting goals, and knowing your priorities, the rest will be a breeze!
Learn more from Tiffany:
YouTube Attribution: https://youtu.be/QEDD5uDP6yQ
Charles is the founder of infoSpike.com. He enjoys real estate investing, marketing, and personal finance. Read more about Charles here.