Investing in single-family rental properties can be a bit demanding especially when it comes to saving up for the down payment. You’ll need at least 20% of the purchase price saved up, plus a little extra for closing costs, insurance, and repairs. Nevertheless, don’t fear; there are many proven action plans to make saving up for your next investment property faster and much lighter, and I’m quite happy to help you check out those options more closely.
Quick Start to Saving for a Down Payment
One of the best approaches to hit the ground running with saving money for your down payment is to prioritize saving over spending. While it is a matter of fact that it sounds like common sense, it can be tough in practice.
Saving money can be rather tough, exactly when it entails putting off some of the things you really hope to buy. Although, if you want to save up a significant amount of money, it’s critical to create specific goals, have a plan, and then follow through with it. Deem automating your savings to make this process manageable. Have your paycheck split between accounts, or set up automatic transfers.
If you strive to increase your savings, paying off any debts you may have is the best approach to set up. Think about it this way: Every month, you’re putting money towards paying off debts instead of saving for your future property. Once your debts are cleared, you’ll be flabbergasted at how much more money you have left over at the end of each month.
No more worrying about debt and interest payments dissipating your hard-earned income. If you use credit cards, only spend what you can pay back each month. Several credit cards offer cashback rewards that will help you save more; this can be a favorable advantage for responsible credit card users.
Assess the Cost of the Desired Property
To embark on this process, research the real estate market in your preferred location to understand current property prices. Be clear on the type of property you want (such as a single-family home, condominium, or multi-unit building) and what attributes matter most to you (size, amenities, and location).
Once you’ve found a lot of potential properties, be mindful of their listing prices and any extra costs that come with buying a home, like closing costs, taxes, and fees. Remember to closely examine potential ups and downs in the market and any unexpected expenses that might materialize during the buying process. Take note, it’s better to be ready than surprised.
Set Reasonable Savings Goals
Creating clear short-term goals is one of the most efficient ways to save up for a down payment. Instead of obsessing over the large sum of money you need to purchase your next investment property, focusing on smaller, highly achievable goals is better.
By way of illustration, you can kick off this process by planning to save a specific amount each week or each paycheck, even if it is just $25 or $50. By paying attention to the short term, you can build your savings account and grow your sense of accomplishment.
Whatever you do to keep your savings on track will only benefit you and your investment portfolio after some time.
Whether you have one investment property or many, Real Property Management Deluxe has a solution that suits your budget well in Baxter and nearby. Contact us on the web or ring us at 218-454-7368 to be aware of our flexible management contracts today!
Originally Published on March 27, 2020
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