Louis Conrad at Bigger Pockets has some tips for those wanting to become Los Angeles rental property investors. “Rental costs are rising nationwide, at a time when low interest rates are coupled with friendly lenders for home buyers. In short, it’s a prime market for first-time rental property investors to take that leap and buy their first rental property.
“Many people are interested in becoming rental property investors, but they feel like they don’t have enough money for a down payment.
If you’re in this situation and have no idea where to come up with that money, Conrad’s six tips for saving money might help you save enough for a down payment on your first rental property while the market is hot. Implement these money-saving strategies, and you’ll be holding the keys to your first rental home in no time at all.
- Create a budget. You won’t be able to save unless you have a goal. Establishing a budget is your first step towards saving the amount you want to put down on a property. The goal acts like a roadmap. You can’t get to your destination without a map.
- Open a separate savings account. If you don’t already have a separate savings account dedicated to your down payment, now’s the time to do it. Experts encourage having a separate savings account dedicated purely to the down payment for your new home. That means you don’t dip into that account for anything but the down payment.
- Save everything extra. Getting a tax refund this year? Deposit it directly into your dedicated savings account. Do you get a yearly employment or Christmas bonus? Put those funds and anything extra into your savings account as well. For the next year, anything “extra” should go directly into your down payment savings account. It may not seem like much, but all of that extra money adds up quickly. There may be items in your budget that are not top priority. End that spending and put the money into your dedicated savings account.
- Request gifts. In lieu of material gifts for your birthdays, the holidays, special celebrations, or personal events such as your anniversary, ask family members to donate gift funds to your down payment instead.
- Pull from your paycheck. Your paychecks are most likely your most reliable source of income. If you want to reach your savings goal faster, determine what percentage you can comfortably pull from each paycheck to put into your down payment savings account. If you can have it done automatically, you won’t miss it.
- Consider using an FHA loan. One common way for some rental property investors to qualify for their first few rental properties is to purchase a home as their primary residence with a low-money-down FHA loan, live in that home for one year, and move out after the year is up, then turning the home into a rental property.
Coal to Cash Homebuyers, Inc. is a cash buyer solution. We are here to help homeowners out of any kind of distressed situation. As investors, we are in business to make a modest profit on any deal, however we can help homeowners out of just about any situation, no matter what! There are no fees, upfront costs, commissions, or anything else. Just the simple honest truth about your home and how we can help you sell it fast to resolve any situation.
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