One Mindset Shift You Need to Launch Your Future in Real Estate
The one mindset shift you need to launch your future in real estate: start thinking of your home as an asset.
When you think of your home and where you live as an asset, you’ll have a different perspective when a decision needs to be made about the property.
Think of your 401K or your stock portfolio, the goal of those types of accounts is to fund it and forget it - knowing that someday, when you’re ready to retire, the growth in those accounts will support you as you step away from your career.
Every home you live in, can have the same goal and the same outcome if you think of it that way.
It’s a very simple, yet powerful mindset shift.
So, how can you set up this asset to make money now and / or in the future? Here are 3 ways you can start to think about your home as an asset.
1. Is there an opportunity to make extra money right now to help pay your mortgage, while you still live in your home?
Can you rent a spare bedroom?
When we bought our last house (we didn’t have kids and my husband worked on the road) we rented out one of our spare bedrooms for $600/month for about a year and a half. It didn’t cover our mortgage outright, but it certainly helped pay for it.
Is there a big event in your town every year where you can rent out your home on airbnb or vrbo?
Before turning our home into a full time vacation rental, we started renting it out for two weeks in the summer for the Sturgis Motorcycle Rally.
In those two weeks we made anywhere for $8-10K. It took some upfront costs to get it set up, but after that, it was easy for us to move out for two weeks to bring in that kind of revenue.
create additional revenue streams
There are booking websites for everything these days, and there’s a lot of opportunity for creative revenue streams.
Could you park a camper on your property and rent that out?
Could you rent out your home to photographers / content creators by the hour?
Could you rent your home on Furnished Finder if you have a trip coming up and you’ll be out of town for awhile?
The point is, your home can make you money *while* you’re still living in it.
2. What can you do to increase your home’s value for a future sale?
adding equity to your home vs. adding value for you
Who doesn’t love a good home renovation project? But before you dive into your next pinterest worthy project, take some time to think about how any improvements might affect the value of your property overtime.
There’s a difference between making an upgrade because it will add equity to your home, versus making an upgrade because it will add value FOR YOU while you live in your home
For example, we remodeled our previously unfinished basement. We added another bedroom, bathroom, and living space (with a bar and coffee nook).
Because of this, the value of our home has increased because the total finished square footage has increased. Tangible upgrades.
We also spent a lot of time and resources staining the concrete floor like upwards of 80 hours of work went into that labor-intensive process. We LOVE it, it’s funky and blue and rad.
Will our house sell for more because of it? Unlikely.
It might add to the intangible value of the home to the right buyer but there is no extra dollar amount that we’ll make back because we stained the concrete instead of just installing carpet or LVT.
There’s a difference between making upgrades for you as the person living in the home versus making upgrades for some future buyer that might pay more because of those upgrades.
You’ll probably do a little bit of both, but it’s important to know the difference before spending the money.
Are you going to get your money back on those granite countertops if no other homes in your neighborhood have them? Does it matter to you if you don't get your money back from them someday?
3. Can you use the equity in your home to buy a cash-flowing rental property?
Open a home equity line of credit (heloc)
This one is the most powerful strategy of home ownership and yet we so rarely talk about it.
Your home can act like a bank.
All that equity in your home can be pulled out and used with a HELOC (home equity line of credit) or by doing a cash out refinance (when rates are more desirable).
In the summer of 2022 we went to our bank and opened up a HELOC. They ordered an appraisal on our house, and plugged that into their formula (they’ll only offer a percentage of the equity you have) and offered us $200K.
(Banks are conservative mind you, using the equity in your home to lend against isn’t too risky for them.)
Now that money just sits in an account until we’re ready to use it. We used it to finish up construction on our personal home, and once we rolled into a mortgage we paid it off.
We could use that as a hefty down payment on acquiring another cash flowing vacation rental. Or we could use it to finance the construction on another spec house.
It’s something that very wealthy people do all the time, use this tax free money to acquire more assets.
How else could I have $200k sitting in my bank account that I didn’t have to pay taxes on?
When you make this simple shift and start thinking about your home as an asset, the possibilities really are endless.
I’m Emily and in 2018 I left my corporate engineering job to jump into entrepreneurship with both feet. It was a winding road with lots of pivots that allowed me to realize my ultimate goal: to build freedom in my life through empowered investing and aligned partnerships.
I want to help you find that same freedom.
Whether it’s buying your first home and analyzing the investment component of your purchase, or it’s saving up to buy your first investment property, I want to cheer you on, share my experience, and encourage more people, like you, to build freedom in their lives through empowered investing.
If you’d like support in any of these areas, send me a note and we’ll continue the conversation!
