One of the issues of investing in Milton’s single-family rental properties can be saving up for your down payment. In general, you will be required to have at least 20% of the purchase price saved up, plus a little extra for closing costs, insurance, and repairs. While assembling a lot of cash is your problem, don’t worry much because there are many ways to make saving up for your next investment property faster and easier.
One of the practical approaches to start saving money for your next down payment is to prioritize saving money. It would seem that basic common sense, and it is. But in practice prioritizing saving overspending can be difficult. Delaying unnecessary purchases and sticking to a budget can be tough. Still, the primary choice to save significant amounts of money is to set specific goals, make a plan, and then stick to it. One way to simplify this process is to automate your savings.
Many employers will let you deposit part of your paycheck into multiple accounts. If yours does, it is smarter to consider 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 brilliant way to increase your savings is to pay off your existing debt. Another approach 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. Once all your debts are paid off, you might be shocked 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 mean that you cannot use your credit cards. Many cards now offer cashback rewards for using them each month, which might help you save even more. Just make sure that you only spend what you can pay off each month.
If a portion of these different methods doesn’t work for you, maybe you need to try reducing your monthly expenses. The most useful thing to do is to eat out less often. Cooking your meals at home can help you to plan on saving money because cooking your food is cheaper than eating at restaurants, it can save you hundreds of dollars each month, and also home-cooked foods are much more healthy. You could also shop around for better rates on the internet and phone service, cable service, car insurance, and more. You should consider switching to a lower-cost service or even lower the cost of your current services by calling your providers. The amount you save, although it’s just a few dollars, 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 amount of cash will help you reach your savings goals just that much faster.
Finally, most likely, 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 start by choosing to save a certain amount each week or each paycheck, even if it is $25 or $50. By focusing on the short term, you will not only improve 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.
Discussing savings… if you have one investment property or several, Real Property Management Associates has an answer that meets your requirement. Contact us online or reach us at 508-509-4485 to talk to our flexible management contracts today!
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