Whether you’re solo or with a business partner, saving before investing in a property will help when you eventually need to deal with sudden financial woes like property taxes, repairs, and more. Depending on the property you’re investing in, you’ll want to make sure that you’ll have the cash to make that important purchase and future upgrades. That being said, here are 4 steps you can take to start saving for that future investment.
1. Understand your goal
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Before you start your saving journey, understand what your goal is and try to save a little extra each month. According to Fidelity, you should also consider what additional fees you will be paying such as a down payment, closing costs, and more.
If you’re investing with a partner or an established business, understand what their goals are, the terms of the partnership agreement, and exit strategies.
Tip: Investopedia has a calculator to help you assess your goal as well.
2. Saving strategies
There are a few ways you can save a little extra each month to meet your goal quicker. For example, reduce your spending on unnecessary expenses such as eating out too often, online shopping, and more. Remember, going over budget can happen easily when you’re not being mindful.
Another strategy is a side hustle or extra income to help offset any additional expenses you may incur while saving. Simply selling unwanted items or doing freelance work can make a big difference in your savings journey.
3. Invest in your money
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If you want to set aside some money to grow even faster, invest in your money! Investing in certificates of deposit (CDs), a money market account, or a high-yield savings account can be beneficial for you if you don’t mind leaving your money alone for a few months.
4. Loan considerations
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Depending on how soon you may need the money or if you’re short by a few hundred or thousands of dollars, you may want to consider getting a loan. There are many considerations to make before deciding on a loan such as the interest rates, fees, and overall flexibility of the payment plan.
There are many loans available for investing so it is important to choose the best one for your needs and financial situation. One example is taking a loan from your retirement plan and paying it back. That’s how I was able to buy my first out-of-state investment property.
Conclusion
Before you start your investing journey, be sure to develop a comprehensive goal of how much the investment will be and how you plan to save or reduce expenses each month. In addition to saving or reducing expenses each month, you should consider getting extra income by investing in a high-yield savings account, certificates of deposit (CDs), or taking out a loan.
For more insights on real estate investment, tune in to my podcast, Black Real Estate Dialogue, available on YouTube, Apple Podcasts, and Spotify.
Freebies
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The Creative Financing Playbook - https://www.outofstatemoney.com/creativefinancingplaybook