One of the hardships of investing in East Rockaway single-family rental properties is often saving up for your down payment. In certain circumstances, they would demand at least 20% of the purchase price saved up, plus a little extra for closing costs, insurance, and repairs. Even though accumulating so much cash may seem like a difficult task, don’t feel stressed. There are so many methods to make saving up for your next investment property faster and easier.
The ideal method to start saving money for your next down payment is to make saving money as your priority. It seems like 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 hard, but the main strategy to save significant amounts of money is to set specific goals, make a plan, and then stick to it. One way to make this method successful is to automate your savings.
Many employers will let you deposit part of your paycheck into multiple accounts. If yours does, think about opening a higher-interest savings account and then having a percentage of each paycheck deposited into it. Through designating automatic transfers into your savings account, you are less likely to use the money for other reasons. Even 1% of the additional interest can add up over the long term.
Another smart way to increase your savings is to pay off your existing debt. One way to look at this is that every month you are making debt payments, you are not using that money to save for your next property. When your debts are paid off, you may be surprised by how much of your monthly income is left over because it is not being consumed by paying off debts and interest. That doesn’t mean that you cannot use your credit cards. Many cards now offer cashback rewards for using them each month, and with that, it can help you save a lot of money. Only keep in mind that you only spend what you can pay off each month.
For some situations, if these other methods do not work for you, try reducing your monthly expenses. Probably the most effective way to do so is to eat out less often. Cooking your meals at home will take time, but the benefit of that is it can save you hundreds of dollars each month. You could also shop around for better rates on the internet and phone service, cable service, car insurance, and more. You may notice 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, regardless of whether how much it is, 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. Even tiny amounts will help you reach your savings goals that much faster.
Finally, one of the best things 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. For example, you may plan 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 build not only your savings account but also your sense of accomplishment. Anything you can do to keep your investments on track will eventually benefit you and your investment portfolio.
When it comes to investing… regardless if you have one investment property or several, Real Property Management Innovation has a strategy to match your plan. Contact us online or call us at 516-570-9275 to chat about our flexible management contracts today!
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