Congress finally approved a second stimulus package, and many Americans have already received it. Though the checks amount to just half the benefits seen last March ($600 versus $1,200 per person), they're still helpful nonetheless. And if you have dependents, you can expect even more in your bank account.
For real estate investors, these funds can offer a much-needed boost as we head into the new year. Use them to improve your short-term rental, increase the value of your next flip, or even whittle down that mortgage debt if you have it.
Not sure how to best use your stimulus check? Here are five smart strategies to consider.
Do you have a 15- or 30-year mortgage on one of your rental properties? Still have a mortgage on your own primary residence? You can use your stimulus money to make an extra payment (or two) on your loan.
You'd be surprised at the difference just a few extra payments can make. On a $200,000, 30-year loan at a 3% rate, making a single additional $1,000 payment would actually save you nearly $1,500 in long-term interest. It'd also shave three months off your repayment timeline.
2. Update your short-term rental -- and make it more COVID-19-friendly
If you have short-term rentals, consider using your funds to revamp the properties. Add an extra bed or two (a bunk bed, perhaps) and adjust your nightly rate accordingly. You could also install a deck or fire pit for some after-hours entertainment or upgrade the locks and thermostat to smart versions.
Another option? Make the home more COVID-19-friendly. These days, many people are traveling to get away from the confines of their homes and just change up their scenery. They're still isolating but doing it elsewhere. For these reasons, they want properties that offer it all: a clean, sanitary, and comfortable environment; great spaces to cook, eat, and sleep; and entertainment for all ages -- smart TVs, gaming systems, board games, etc.
You should also up your Wi-Fi speed if you haven't already. With many travelers working remotely, they'll need reliable, fast connections in order to have a satisfactory experience.
3. Add another renovation to your next flip
In the midst of a flip? Use the funds to make the home even more marketable. Add a home office and install soundproofing for those remote workers, upgrade the sinks to touchless faucets, or add a backyard deck or patio (Remodeling's cost-vs-value report says wood is best).
Just make sure you choose the projects carefully (some can actually take away from your home's value), and don't overimprove the home. You want it to look great, sure, but it should also fall in line with the other properties in the neighborhood. Otherwise, you'll have a very difficult sale on your hands.
4. Invest more into marketing -- or just more help
Spending your stimulus money on marketing can be smart, too. Use the cash toward direct mailers and snag some pre-foreclosure deals in your neighborhood, or invest a few dollars into Facebook (NASDAQ: FB) and Google (NASDAQ: GOOGL) advertising to bring in more leads.
You could also use the funds to do a little outsourcing. Bring in a property manager, hire an accountant, or just find a virtual assistant who can help with overflow tasks. Freeing up your own time will allow you to be more productive and successful in the long run.
5. Use it toward a new investment
Finally, if you're thinking of expanding your portfolio this year, use the stimulus money for that. Put it toward the down payment or closing costs on a new property, or use the funds toward a real estate stock, real estate investment trust (REIT) purchase, or crowdfunded deal.
There are dozens of ways to invest in real estate, and a nice infusion of cash -- even just $600 of it -- could help get your foot in the door for any one of them.
The bottom line
Those stimulus checks may not seem like much, but if used the right way, they could help you grow your business -- and your profits -- in the new year.
Still not sure where to put the money? Here are 10 strategies for investing in real estate.