One of the many benefits of investing in real estate is that the passive income can give you the freedom to travel. Learn all building a travel fund here.
What’s the problem with traveling? Costs. The most amazing places we want to visit make us by airfare to get there.
And those airfares aren’t getting more affordable. In 2022, airlines are raising their prices by 43% to compensate for a massive increase in fuel costs. That makes traveling difficult for people on an average budget.
So, you need a way to make extra money to fund your travels. One of the best options? Create a travel fund from real estate investing.
Here’s how you do it.
Build Your Travel Fund from Real Estate Investments
Your travel dreams can be a reality. Use your rental property passive income to fund even the most elaborate trips. With a little planning, you’ll be on your way!
1. Set Realistic Expectations
Don’t expect to jump right in and make enough money to travel the world. You’ll need to set some realistic expectations and watch your efforts build over time.
Plan to be patient, but set a goal for your first trip. This will motivate you!
Make a list of destinations you want to see and rank them. Set your goal for number 1! Plan for only one destination at a time to keep things realistic.
2. Build a Budget
Here’s where the real work begins. You’ll need to know your property’s budget before you can set aside any real money into your travel fund.
Look at expenses versus income. Take into account any money you owe on the property. Include your mortgage, liens, and property taxes.
Every property requires insurance. Make sure those expenses are in your budget.
Check out how much it costs to run the property. Do you pay any of the utilities or are these paid by your tenants? How about the costs of a property manager?
Look at miscellaneous expenses, too. Make a list of advertising, landscaping and any repairs you’ll need to make in the coming year. If you’re planning upgrades, put those in the budget.
Now, compare how much it costs to how much you make from rent. This is the amount of money you have available to work with.
3. Stay on Budget
Now that you have one, stick with it! Don’t overspend on advertising or property upgrades. You’ll cut into your travel funds.
Make an advertising budget for the whole year and stick to it. Use social media and online advertising to keep costs low.
Don’t do any extravagant upgrades on the property. Keep it clean, basic and focused on improvements that attract tenants. Look at flooring, lighting, and fixtures on the discontinued or clearance shelf.
Hire a handyman to do simple repairs. Many have general contracting licenses and years of experience. They are more affordable and have flexible schedules.
Be sure your handyman has the qualifications to do the necessary repairs. Remember that electrical and plumbing work need a certification. You’ll need to hire a qualified service technician for those.
4. Make an Emergency Fund
Before you start making reservations, there are a couple of extra things to think about. The first is an emergency fund.
There are bound to be problems that come up with the property. Like replacing a refrigerator or unexpected heating and cooling repairs.
Owning property means you’re prepared to fix it. It’s a good idea to set aside a bit of your money for emergencies. It will save you hassles in the long run.
5. Taxes Before Fun
The second thing to do? Set aside money for income taxes. Your rental property makes money. Uncle Sam will want his cut.
Check with a tax adviser about what percentage you need to set aside. But, do it. You do not want to owe taxes later on.
6. Start Your Travel Fund
You made it! There is money left over each month that you can earmark for travel.
Don’t wait. Figure out the percentage that’s left and start setting it aside!
Find the Right Bank
Make your money work for you! Open your travel fund account with a bank that pays interest. Let the balance build and use the interest to go further!
Since you’ll be traveling, security is important. Make sure your bank has fraud protection and 24-hour customer service. You might need to call from another time zone.
Invest Some of the Money
Got a little time before your next trip? Consider putting some money into a CD or fund that builds interest at a faster pace. Be sure you can access it in time to book your trip!
7. Schedule Time to Work
Don’t forget that real estate investing is a business. Even if you hire a property manager, there will be tasks you need to do. Set aside time to do the work.
Weekly and Monthly Tasks
Break tasks down into weekly and monthly assignments. Set a day out of the week for doing those jobs. It will become routine and ensure your property is well managed.
Always read your email, too. Your property manager or tenant will contact you when they need help.
Things change! Review the budget each quarter for accuracy.
Make sure it reflects what is happening with your property’s finances. Update the budget, as needed.
8. Build Relationships
Be serious about your job as a real estate investor. You build relationships with your tenants and property managers. But, they aren’t the only important people you deal with.
Be aware of how you interact with everyone from your handyman to your tax professional. Everyone who works with your property has a hand it how profitable it is.
Keeping your relationships strong helps keep your property under contract. Which keeps your travel money coming in.
Start Your Travel Fund, Today!
You can finance your travels with your real estate investments. You only need to put in the effort. Make a budget, manage your property, and gain profits!
Then, start your travel fund, today!
Looking for more information about real estate investing? We’d be happy to help. Contact us, here.