One of the problems of investing in Catonsville single-family rental properties can be saving up for your down payment. In general, you will need to have at least 20% of the purchase price saved up, plus a little extra for closing costs, insurance, and repairs. While gathering a lot of cash may sound like a challenging task, there are many ways to make saving up for your next investment property faster and easier.
One of the effective ways to start saving money for your next down payment is to prioritize saving money. It seems like basic common sense, and it is. But to practice prioritizing saving over spending can be difficult. Delaying unnecessary purchases and sticking to a budget can be difficult. Still, the only option to save significant amounts of money is to set specific goals, make a plan, and then stick to it. One approach to make this procedure simpler is to automate your savings.
Many employers will let you deposit part of your paycheck into multiple accounts. If yours does, it is better to think of opening a higher-interest savings account and then having a percentage of each paycheck deposited into it. By designating automatic transfers into your savings account, you are less likely to use the money for different things. Even 1% of the additional interest can add up over the long term.
Some other smart way to increase your savings is to pay off your existing debt. Another way to look at it is that each month you are making debt payments, you are not using that money to save for your next property. When all your debts are paid off, you may be surprised at the amount of your monthly income is left over when it is not being consumed by paying off debts and interest. Saying this doesn’t imply that you cannot use your credit cards. Many cards now offer cashback rewards for using them each month, which could help you save significantly more. Only make sure that you only spend what you can pay off each month.
If some of these other strategies don’t work for you, try reducing your monthly expenses. The most important thing to do is to eat out less often. Cooking your meals at home can save you hundreds of dollars each month, and also home-cooked meals are much more nutritious. You could also shop around for better rates on the internet and phone service, cable service, car insurance, and more. You may consider that you can switch to a lower-cost service or even lower the cost of your current services by calling your providers. The amount you save, even though it’s just a few bucks, should go directly into your savings account. The same is true for any unplanned or infrequent sums of money, such as bonuses, gifts, tax refunds, and so on. Every single bit of money will help you reach your savings goals just that much faster.
Lastly, probably the one thing you can do to save up for a down payment is to set short-term goals. While you may need $20k or $30k to buy your next investment property, using that number as your goal is not going to be as effective as creating smaller, achievable goals. Let’s say you begin by deciding to save a certain amount each week or each paycheck, even if it is $25 or $50. By focusing on the short term, you can not only develop your savings account but also your sense of accomplishment. Anything you can do to keep your funds on a plan is only going to benefit you and your investment portfolio in the process.
Talking about savings… if you have one investment property or several, Real Property Management Metro has a solution that fits your needs. Contact us online or reach us at 410-290-3285 to speak to our flexible management contracts today!
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