Just like what the title said, in this post, I’ll show you some of the ways you can use to save up some money.
The first thing you need to do is to determine the size of your down payment. This is important because if you’re unaware of how much you’ll need to set aside in order to make a reasonably sufficient down payment, you don’t have a direction. From my experience, I would say that typically you need around 15 to 20 percent down payment for a single-family home, and to qualify you to need to have a credit score of 720 or higher Moving on if you’re multifamily the safe range would be at 25 percent of your purchase price.
The rules may be slightly different for a rental property that you live in. Regardless of what the lender requires, it is better to put down at least 20 percent, which will allow you to avoid paying private mortgage insurance (PMI). Typically, PMI will cost you 1 percent of the total loan amount per year.
How to Save a Down Payment
With 20 percent down as your goal, here are some practical ways you can save up enough money to buy a real estate investment property for yourself.
- Create a Budget
Many people fail to see the importance of creating a budget which is why most of them overspent on things that they don’t need. What you need is to create a budget list/table for yourself. This way you get to track on what you spend and your spending limits. It’s better to save more and stay on track than spending on things that pull you back.
- Cut Expenses
Now that you’ve got your budget done. I am sure you may be shocked by how much money you’ve been bleeding on unnecessary expenses. I hope this wakeup call can help you learn how to properly manage your finances from now on.
According to an Interview done by Forbes with a financial counselor, he said that “I think people need to get laser focused and remember their value system with every purchase.” He adds on “Every time they make a purchase, they need to realize that the foolish purchase is making their goals get pushed further and further away. They need to make their spending a reflection of their value system and put that down payment at the very top of their value list.” I couldn’t agree more with what he said, I wish that there was someone there to tell me this when I first started but sadly I have to learn it the hard way. Don’t be like me if you have the privilege to read this, take action on it.
- Sell Items
Go through the things that you have and see if there is anything that you don’t need or use anymore. Selling it away is better than throwing them. If you have a huge collection of watches and jewelry in your safe box and you’re looking to sell them. You can take it to a local jewelry buyer, and get an estimate
- Take on Extra Work
There are many things you can do in order to save up for that down payment. Taking on extra work can simply mean that you work an additional part-time job on top of what you’re doing today to gain additional money to set aside. You can easily start flipping items online for profit, how this work is that you look for what is hot on Ebay and find it somewhere the same product which is sold at a much cheaper price and you flip it at a higher price to gain the profit in between. It doesn’t have to be a huge sum of money, even a small amount like $100 per week can really make a dent in your savings goal over the course of a year.
My advice to you, avoid trying to rush into a real estate investment prematurely. If you don’t have enough cash on hand to make a 20 percent down payment, it’s probably an indicator that you aren’t financially prepared to make an investment of this magnitude. Making sure that you have the proper knowledge is also an important process. If you need a place to learn about real estate investing, I would recommend you to come to our blog here. We provide good advice for beginners and a good recap for professional as well.
Take your time, diligently work toward your savings goal, and begin investing when the time is right.