One of the drawbacks of investing in Fort Mohave single-family rental properties would be saving up for your down payment. It is common practice that you will need at least 20% of the purchase price saved up, plus a little extra for closing costs, insurance, and repairs. Even if gathering this much cash seems difficult, there are a lot of techniques available to make saving up for your next investment property faster and easier.
A good way to start saving money for your next down payment is to make saving money an immediate concern. It may seem like basic common sense, and it is. Prioritizing saving over spending can be difficult. Delaying unnecessary purchases and sticking to a budget can be a struggle, and the only way to save significant amounts of money is to set specific goals, make a plan, and then stick to it. It would help if you automate your savings.
Many employers will let you deposit part of your paycheck into multiple accounts. If your company is practicing this, try opening a higher-interest savings account and then having a percentage of each paycheck deposited into it. By simply designating automatic transfers into your savings account, you are less likely to use the money for unnecessary things. Even 1% of the additional interest can add up over the long term.
Another approach to increase your savings would be to pay off your existing debt. Whenever you are making debt payments, you are not using that money to save for your next property. When your debts are paid off, you might be surprised at how much monthly income is left with you when it is not being consumed by paying off debt and interest. That is not to say that you cannot use your credit cards. Many cards now offer cashback rewards for using them each month, then it could help you save much more. Always keep in mind to only spend what you can pay off each month.
If some of these other methods aren’t available, try reducing your monthly expenses. One of the simplest things is to eat out less often. Cooking your meals everyday can save you hundreds of dollars each month. You could shop around for better rates on the internet and phone service, cable service, car insurance, and more. On top of those, you could 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 dollar, 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 bit of these will help you reach your savings goals in no time.
Lastly, one of the most effective things you can do to save up for a down payment is to set short-term goals. Whereas 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 instance, you can start by planning to save a certain amount each week or each paycheck, even if it is $25 or $50.
While focusing on the short term, you can enlarge not only your savings account but also your sense of accomplishment. Everything you do to keep your saving goals alive will benefit you and your investment portfolio after.
Speaking of saving money… It does not matter if you have one investment property or several, Real Property Management Northern Arizona has an answer that fits your budget. Contact us on the web or ring us at 928-757-7368 to be aware of our flexible management contracts today!
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