Travel Rewards 101 for Real Estate Investors: Your Guide to Maximizing Credit Card Rewards to get Your Dream Vacations
The world of travel rewards is an amazing place where you can take free vacations to the destination of your dreams. That’s right! You could take your family on an exotic vacation for free if you play your cards right.
While it is true that every consumer has the opportunity to take advantage of these outstanding perks, real estate investors are uniquely positioned to take these rewards to the next level. As a real estate investor, you likely have costly projects that come up on a regular basis. When you put those expenses on the appropriate credit card, you have the opportunity to fund your next vacation!
Let’s dive into everything you need to know about travel rewards, and how it benefits us even more as real estate investors.
Why consider credit card rewards as a real estate investor?
If you aren’t using credit card rewards, then you are essentially leaving money on the table. As a real estate investor who may have house hacked your way to success, leaving money on the table is just not in your nature.
As we start out in real estate, it is very easy to forgo fun vacations due to a tight wallet. After all, you are funneling a lot of your liquid capital into your real estate projects. Due to that, there is not much left over for vacations. However, travel rewards can change that!
When you accumulate travel rewards, you are simply being rewarded for spending that you already planned to do. You might be surprised at how quickly your spending can amass points for a free trip. So maybe the question should be, why wouldn’t you consider credit card rewards?
As long as you plan to use your credit cards responsibly (this means paying them off in full every month), then credit card rewards are just icing on the cake. Not only are you expanding your real estate empire, but also earning a well-deserved vacation without spending an extra dime.
As a real estate investor, you are uniquely positioned to take advantage of travel rewards. Although regular households might struggle to hit a spending requirement, you can likely easily hit that threshold in your routine business spending.
If you’ve just taken on a big project such as large scale renovations of a home, then you know that you will be spending a lot of money. Unfortunately, big project spending can add up quickly. You can easily spend thousands of dollars in a short period of time as you work to get the property ready for tenants or for sale.
If you have just started out on your house hacking journey, then your first property might need some small updates. For example, you might need to do some minor renovations like a new roof, or add updated appliances. Depending on the property, this could result in an upfront cost of a few thousand dollars.
Even if your property is relatively up to date, you might need to make some changes if a tenant moves out. For example, a simple turn with paint, and new flooring could cost around $2,000 to complete depending on the size of the property.
All of these costs are expected parts of running a real estate business. As your portfolio of properties grows, so will your expenditures. Although this spending can be a painful part of running the business, you can maximize this spending with credit card rewards points.
What are travel rewards?
So, how can you make free vacations happen without spending an extra penny? Use travel rewards to accumulate points for what you already spend. Once you accumulate a significant number of points, then you’ll be able to take a trip of your dreams. It really is that simple.
Let’s take a closer look.
What is the difference between points and miles?
If you’ve never experimented with credit card rewards, then you are likely confused by ‘points’ versus ‘miles. Luckily, the difference is very simple.
Miles are granted by airlines for airline tickets. For example, if you have accumulated American Airlines miles then you’ll be able to book an American Airlines flight with those miles.
Points can be used for travel in two different contexts. The first is hotel points which are awarded to loyalty program members each time you stay with that brand of hotel. You can redeem those points for a hotel stay with that brand on future vacations.
Credit card points offer the best of both worlds. You can accumulate points through your routine spending. Plus, you’ll have the opportunity to score lucrative sign up bonuses. Typically, you will be able to use these points to directly book travel. However, sometimes you will need to pay with your card and wait for the points to erase the purchases on your next statement. Either way, credit card points allow you to travel with a wide range of flexibility.
How to redeem points and miles
Once you have accumulated credit card points, you have many options. Many cards will allow you to book flights, hotels, and rental cars directly through them.
You might want to fly to Hawaii, stay at a hotel in Waikiki, and book a rental car for the week. All of this is completely possible with travel rewards. It is an incredibly affordable way to travel.
Other credit card rewards
Although travel rewards are the most lucrative credit card rewards, not everyone wants to travel. Even if you have no desire to leave your home, you should still consider credit card rewards. However, you can choose credit cards that reward you cashback and gift cards instead of travel points.
The value of travel rewards points
Generally, the value of a single travel reward point is around a cent or two. However, there is a wide range of point values based on the different brands that offer them.
As you look to redeem your points, it is critical to comparison shop your points. For example, if you transfer your points to a travel partner, you may stand to significantly increase the worth of your points. Check into the specifics of your credit card rewards program before committing to a redemption.
Here are a few of the most popular credit card rewards points and their values:
- Chase Ultimate Rewards. Chase Ultimate Reward points are arguably the most valuable on the market. With a wide range of redemption options and travel partners, you can make almost any trip a reality with these points. Each point has a potential value of 2.0 cents per point. However, this will depend on how you choose to redeem the points.
- American Express Membership Rewards. In addition to Chase, American Express Membership Rewards are a valuable reward to have in your pocket. Each point has a value of 2.0 cents. The American Express Gold Business card is one card that we will discuss more in a future article.
- Capital One Miles. Capital One Miles are worth 1.4 cents per point. The unique feature of these miles is that you have the option to ‘erase’ travel expenses with points instead of redeeming points upfront. That means that in addition to flights and hotels, you have the potential to cover other travel-related expenses such as theme park tickets and more.
- Barclaycard Arrival Miles. Barclaycard Arrival Miles are worth 1 cent per point. Although this is less than many travel rewards, it is still a worthwhile rewards program.
- Alaska Mileage Plan. The Alaska Mileage plan is a well-kept secret in the travel rewards community. Although these points can make your Alaskan adventure a reality, they offer many more routes. You have many redemption options to make this plan a priority. Plus, the points are worth 1.8 cents each.
- Frontier Miles. Frontier Miles are a great way to travel domestically. Typically, their routes favor passengers with a preference for the western states. The miles are worth 1.1 cents each.
- Marriott Bonvoy. Marriott offers an attractive rewards program to those that prefer to stay in high-end hotels. The points are worth .8 cents each. As the program continues to grow, you can expect great options from this rewards program.
- Southwest Rapid Rewards. Southwest is a convenient airline if you travel domestically often. They even recently added a route to Hawaii! The points are worth 1.5 cents each. Plus, they offer a Companion Pass if you accumulate 10,000 points. The companion pass will allow you to fly a designated companion for free with your ticket purchase! It is definitely a worthwhile opportunity for domestic explorers.
Best Ways to Maximize Travel Rewards Points as a Real Estate Investor
Once you have decided to pursue travel rewards, you need to make deliberate decisions to maximize your spending to suit your travel style. As a real estate investor, you have the opportunity to take advantage of your higher than average spending. Here is where you should start.
Sign up bonuses are key
When it comes to maximizing your travel reward points, sign up bonuses are critically important.
A sign-up bonus is when you are able to score a sizable number of points after spending a certain amount of money in a set number of months. For example, the Chase Sapphire Preferred credit card sign up bonus is 60,000 points after spending $4,000 on the card within the first three months. That equates to $750 of travel rewards for one card sign up. Imagine where you could go with that sign-up bonus alone!
As a real estate investor, you will have many opportunities to score big with credit card reward sign up bonuses. A simple real estate project to spruce up your investment could easily cost a few thousand dollars. If you put that money on a credit card, then you will be rewarded for that responsible spending.
Once you dip your toes into the world of credit card rewards, the goal will be to hit as many sign-up bonuses as possible with your current spending. This is when you can start to churn through credit cards to fund your travels. You can open a credit card to land the sign-up bonus, then close the account. You continue on to the next credit card without anything to hold you back.
Spending beyond the sign-up bonus
Of course, the rewards do not stop at your sign up bonus. You can continue to amass travel points through your everyday spending. Typically, these points are granted to reward you for different types of spending. For example, you might earn 1 point for every dollar spent at the gas station but 2 points for every dollar spent on travel.
Most credit card rewards programs have online shopping portals that could further stretch your spending. You will simply need to go to the rewards portal that you prefer and see what retailers are available.
For example, the Chase Ultimate Rewards portal offers extra rewards for shopping at Home Depot through their portal. You will still be able to buy everything from Home Depot that you might need for your renovation. However, you’ll snag extra rewards in the process.
The final way to earn points and miles is through actual travel. Make sure to sign up for rewards programs with various brands to secure these points.
Where to get started
As you get started with credit card rewards, it is important to be intentional. At first, every offer looks amazing. Over time, you’ll find that some travel reward points are more valuable than others.
That value will stem from a variety of factors including where you like to travel. For example, if you enjoy international travel then the Southwest Rapid Rewards program will not be an exciting prospect for you.
Find your best daily card for rewards
The first card you open should be your daily rewards card. You’ll need to take a closer look at your spending to determine which card is best for you.
Once you evaluate your spending, you’ll be able to match the card that best rewards your spending. It is important to look at a wide variety of cards to make sure that you find the perfect card.
We will dive further into this topic later in the series!
Run the Chase Gauntlet
Chase Ultimate Rewards are one of the most popular rewards programs on the market. With these points, you have seemingly unlimited options for redemption. Everything from flights and hotels to rental cars and excursions are fair game on this platform.
Due to the value of these points, many people choose to run the ‘Chase Gauntlet.’ Basically, you’ll churn through each of the sign-up bonuses offered on their various cards to amass a treasure trove of points.
Many start their journey with the Chase Sapphire Preferred credit card due to its attractive sign-up bonus.
If you are new to travel rewards, this is an exciting place to start!
Look for expenses to put on your credit cards
As you start to churn through cards, you will want to plan out your expenses. Although you can’t always predict a major expenditure in the real estate industry, it is possible to foresee many upcoming expenses.
For example, you might have an upcoming renovation that could score you multiple sign-up bonuses. Or you may have the opportunity to pay your property taxes with a credit card. Depending on where you live, this could allow you to score at least one sign up bonus.
If you plan your credit card applications around these major expenditures, then it is possible to amass thousands of points in a short period of time. With a little bit of planning, you could find yourself on a free trip to the other side of the world in no time.
What is the Downside to Travel Rewards?
With all of these benefits, you might be thinking that there must be a catch. I am happy to inform you that there is no gotcha associated with these cards.
Although many have an annual fee, the fee is often outweighed by the sheer number of points you have amassed. However, if you detest annual fees then you may be able to avoid them by churning through the card. As long as you cancel the card before the one year anniversary, you will avoid the fee after taking advantage of the points.
If you are worried that your credit score will take a direct hit with all of these new credit cards, don’t. Credit scores fluctuate based on a variety of reasons. Although your score may take a minor hit of a few points, a new credit card will not ruin your credit score. As long as your credit score is already in the good to excellent range, then you have very little to worry about.
The only reason to worry is if you cannot control your spending. If you do not pay off your credit card bill in full each month, then you can expect your credit score to take a big hit. This boils down to responsible credit card usage. If you cannot trust yourself to pay off your bill in full each month, the travel rewards through credit card churning is not a good option for you.
The bottom line
Real estate investors are uniquely positioned to take full advantage of travel rewards offered by credit cards. The market is full of worthwhile credit cards that can make your travel dreams come true without breaking the bank.
The most important thing to do is to take action. Find the best credit card for you and take the plunge into travel rewards today.
If you liked this article, be sure to check out the next article in our credit card reward series: https://fibyrei.com/types-of-rewards-credit-cards-that-every-real-estate-investor-should-know-about/