When my husband and I found out we were having a baby, one of the first things we did was map out a budget to account for our soon-to-be growing expenses, like diapers and daycare. And now that my kids are older, I can say with certainty that through the years, we've spent a lot of money on things like summer camp, after-school activities, food, clothing, and the many other expenses that come with having children. And also, if I'm being honest, having children did force us to put our real estate investing plans on hold.
My husband and I have long wanted to own a vacation home -- a property we can use when we want but also to rent out as another income stream. At this point, we actually do have enough cash socked away for a down payment on a second home, but we're holding off on buying due to inflated prices and very limited inventory in the area where we want to own.
Now I'm sure we're not the only parents who have the goal of investing in real estate. And if you're in a similar boat, you may be wondering how on earth you're supposed to scrape together a down payment on an income property when every other day there's an added expense to grapple with stemming from your kids.
But worry not -- you can dabble in real estate even with kids in the mix. Here's how.
1. Commit to the goal
As is the case with any savings goal you set, the sooner you commit to it, the more successful you're likely to be. Set yourself up with a budget that carves out room for investing dollars so you're able to slowly but surely scrounge up the cash to buy an income property.
2. Choose your expenses wisely
As a parent, I've learned to be judicious and frugal with my money. I won't spring for nicer clothes for my kids because I just know they'll either get outgrown or destroyed within weeks. Instead, I buy budget t-shirts and such. If your goal is to get into real estate, you'll need to learn to say no to certain kid-related expenses. That could mean limiting your children to one extracurricular per semester or refusing to buy fancy electronics that are apt to get lost or broken quickly.
3. Be honest about your capacity as a landlord
You may have the goal of owning an income property or short-term rental. But if you're a parent, your free time may be limited. Think about how many hours you can really afford to sink into managing a home other than the one you live in, as that could guide your investing decision.
4. Choose an investment property that can double as a family vacation spot
Taking vacation with my family is important to me, and so my goal in buying an income property is to also get to use it myself. You may want to take a similar approach, because if you can save on vacations by not having to pay for lodging, you'll carve out more money you can use to build a real estate portfolio.
5. Think outside of physical properties
Coming up with a down payment on an income property is no easy feat, especially when you're spending a small fortune on the cluster of tiny humans you've created. Similarly, you may not have the time to spend maintaining another property and managing guests. If that's the case, fear not -- you can still invest in real estate in other ways. One option, in fact, is to buy real estate investment trusts (REITs), which don't require you to own physical property at all.
There's good money to be made in real estate investing, and as a parent, you could probably use some. With any luck, these tips will help you meet your goals -- and allow you to generate the extra income you're looking for.