Starting from Scratch: How to Find the Capital for Your First Investment Property

by Carol McCullough Relocation Certified 05/03/2020

Photo by Jonathan Rolande via Pixabay

Dipping your toes in the real estate investing waters can feel intimidating--especially when it comes to making a large up-front investment. Although there are ways to get started in real estate with lower up-front costs (low- or no-down payment VA and FHA loans, for instance), it's smart to have some savings to cushion your first year. Here are a few ways to find the money for your first investment property--even if you're operating on a shoestring budget. 

1. Make Some Sacrifices 

Think investing should be sacrifice-free? It's a thought popular with the Instagram philosophers of today--you know, just secure the right mindset and the money will follow. Unfortunately, real life--at least, the real estate investing life--doesn't work that way, especially at first. Cut back your discretionary spending and earmark it to begin your investment portfolio. Your side hustle might be the springboard you need to save up a down payment for your first property--if you're willing to do the work. Tighten your belt until you close on your first property, and you'll reap the rewards in the long-term. 

2. House Hack Your Existing Property 

Already own your home? Consider renting out a room, or setting it up as an AirBnB. If you have a partially-finished basement or mother-in-law suite, you could even renovate to create a true ADU (additional dwelling unit). Et voila! You're off and running as a real estate investor, improving your monthly cash flow scenario in a way that allows you to save for a larger investment down the road. 

3. Know Where Your Money is Going 

If you don't already have a budget, get one. No matter what system you use, you need a system--whether it's Dave Ramsey's envelope system, an online program like YNAB or Minted, or an Excel spreadsheet of your own design. It's also smart to talk to a financial advisor and/or accountant as you set goals and adjust your budget to fit your needs. No matter how much capital you are (or aren't) working with right now, an advisor can help make sure you're taking big strides in the right direction. 

You'll find that if you're dedicated to your goals, it's incredible how quickly you can stack up enough savings for a down payment on your first property. Impatient to get started? While you're saving, learn everything you can about the market in your area. The time you spend saving and educating yourself will change your life. 

About the Author
Author

Carol McCullough Relocation Certified

As a Fairfield resident with a family commuting daily on Metro North, and our children graduating from Fairfield public schools, I look forward to sharing many of the great attractions in a wonderful community and county! Over the past 18 years with Berkshire Hathaway Home Services New England Properties, I have helped hundreds of buyers and sellers compete their home search and close on the sale of their property. As a Certified Relocation Specialist, my production results rank in the top 4% nationally while delivering exceptional customer service to my clients and their welcomed referrals. Real Estate is one of the most exciting investments you can make. It should be a fun and rewarding experience. Confident with your home marketing decisions and comfortable with the home marketing process is my commitment to you! I am excited to share several new marketing strategies successfully implemented in Southern Fairfield County! Regardless if you are looking to buy, or about to list your current home, you will soon BE AT HOME when working with Carol! *Connecticut Magazine 2017- Award Winner- 7th consecutive year scoring highest in overall customer satisfaction.