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

by Karen Montgomery 01/05/2020

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

Karen Montgomery

Karen enjoyed her childhood and teenage years living on Boca Grande. Now, Venice is what she calls “home.” After a rewarding career in Nursing including Administration, she wanted to spend more quality time with her three children and found her way into Real Estate. Karen states, “I still feel like I still can take care of people as a Professional Realtor.” In addition to a degree in Nursing, Karen has earned an MBA. Since the beginning her Real Estate career in 2005, her clients testify she is informative and friendly and that’s why they return to her with their real estate needs. Her creativity and dedication are why her customers refer their friends, co-workers and family members to Karen when they need a Professional Realtor. Karen works hard for her clients and prides herself on being detailed oriented, keeping current with market conditions, finance programs, and future Sarasota County growth & development. Karen feels strongly that “It’s not just about a customer buying or selling real estate, it’s about assisting customers to make well-informed decisions.” Karen focuses on providing customers with the best experience possible in residential sales and rentals. Karen is a member of the National Association of Realtors and Florida Association of Realtors. You may contact her with your Real Estate needs on the Island of Venice at Anchor Realty of the Gulf Coast 941-786-9912 or [email protected]