One of the main hindrances of investing in McFarland single-family rental properties can be saving up for your down payment. You should have already had at least 20% of the purchase price saved up, plus a little extra for closing costs, insurance, and repairs. While collecting this amount of cash may be arduous and difficult, there are a lot of alternative ways to make saving up for your next investment property faster and easier.
A great approach to start saving money for your next down payment is to put saving money first on the list. It may echo basic common sense, and it does. But in practice prioritizing saving over spending can be difficult. Delaying unnecessary purchases while religiously sticking to a budget can be rough at times, but the only strategy to save significant amounts of money is to set specific goals, make a plan, and then stick to it. An effective way to make the process effortless is to automate your savings.
Many employers will let you deposit part of your paycheck into multiple accounts. If this applies to you, consider opening a higher-interest savings account and then having a percentage of each paycheck deposited into it. Simply designating automatic transfers into your savings account, will make you less likely to use the money to buy other stuff. Even 1% of the additional interest will add up over the long term.
An alternative way to increase your savings would be to pay off your existing debt. Keep in mind that every month you are making debt payments, you are not using that money to save for your next property. When the time comes that your debts are paid off, you will start to realize how much more of your monthly income is left when the money is not being consumed by paying off debts and interest. This does not mean that you cannot use your credit cards. Many cards now offer cashback rewards for using them each month, which in turn could help you save all the more. Be conscious that you only spend what you can pay off each month.
Here is another thing you can do, try reducing your monthly expenses. Eat out less often. Cooking your meals at home can save you hundreds of dollars each month. Also, you could shop around for better rates on the internet and phone service, cable service, car insurance, and more. You may discover 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 if it is only 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 little bit will help you reach your savings goals just that much faster.
In conclusion, one of the most reliable things you can do to save up for a down payment will be to set short-term goals. Even if 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. Case in point, you could save a certain amount each week or each paycheck, even if it is $25 or $50. While you are focusing on the short term, you are building not only your savings account but also your sense of accomplishment. Whatever you accomplish with regards to saving is only going to benefit you and your investment portfolio afterward.
Is savings a problem? Whether you have one investment property or several, Real Property Management Greater Madison Metro always has a custom-tailored solution to fit your budget. Contact us through the web or buzz us at 608-310-1290 to know more about our flexible management contracts today!
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