That constant urge that we need to save money never leaves us. It’s all about making money and spending it in ways we see fit. On the other hand, is what we see as best fit in our daily lives really the best way to spend our money? If not, what are money-saving habits you need to take on in order to buy an investment property?
Buy an investment property by this time in 2019 through these habits
Save money every day (no matter how much)
It really makes no difference whether you’re saving up to buy an investment property or saving up for that coat you’ve been eyeing on your way to work every day. At the end of the day, you go home still feeling that something is missing! The only thing you can do to save money and project the feeling that you’re doing the right thing is saving a little bit every day. No one said anything about saving $50 a day. We’re talking about saving whatever you can in order to feel that you’ve moved an inch closer to something you desire.
Think about it like this: What’s more important to you, to be able to buy an investment property in the next year or buying a depreciating automobile that’s just going to end up costing you a fortune down the road? It’s not really about how much you save, it’s about obliging yourself to save a dollar, knowing you can spend it on mortal goods.
Saving money doesn’t end when you buy an investment property. Closing costs can be a money drainer. Read this blog post to help you through the process: How to Save Money: Negotiating and Reducing Real Estate Closing Costs.
Look at your savings account
Humans are visual beings! We like what we can see and through that, our admiration grows along with it. If you’re saving up to buy an investment property, you can simply name your savings account (and many banks offer that service) new property fund! Additionally, many real estate investors have sworn by automating their savings account. By doing so, you are setting aside a budget for saving above all!
The art of budgeting!
Budgeting is something you probably saw your mom and dad doing after each paycheck on the dinner table. It’s nothing to be afraid of, you beginner real estate investor you! Budgeting is basically setting a predetermined amount of money for each bill and cost that comes your way. Think about it this way, if you’re going to buy an investment property, you need to save the cash for a down payment. In order to do so, real estate investors set a budget for everything in their daily lives and stick to it!
Looking to learn how to budget to buy an investment property and after your real estate purchase? Read this blog post: How to Budget for an Investment Property and Cash Flow.
Pay liabilities on time
Saving money means not allowing space for extra costs. And that’s what happens when you procrastinate paying bills and end up with an undesirable late fee. This includes credit card bills, utilities, and even mortgage payments. If you look closely at the bills you’re paying, everything comes with a late fee. So, you might as well just pay them on time and eliminate the obligatory late fees.
Always pay cash, never installments!
We’ve all done it! We’ve financed cars and bought things that we haven’t earned the money for yet. By paying in cash, no lender or seller is going to charge you installment fees. In any case of paying in installments, you are paying an interest on financing that item. Let’s take a practical example to demonstrate. If you have $5,000 and you need to buy a new car, why not find a $5,000 car and save yourself the interest fees that come with a $10,000 car. After all, a cheaper car may not be your fantasy of a ride but it can definitely get the job done just as well!
This can be applied to real estate investing and financing options. Keep in mind that a real estate investor will have to come up with a down payment but make mortgage payments over a number of years. This brings leverage into play and it’s a tricky part for beginner real estate investors. Read this blog post to learn more about leverage in real estate: Real Estate Investments and Leverage- All You Need to Know.
Save your extra income
Becoming a successful real estate investor is not only about the extravagant lifestyle! It’s about finding the right method to save your money to pour it down the same saving drain. Marking another common financial mistake that real estate investors often do- it’s spending your extra income. It’s such a mistake that it should be illegal!
When getting that bonus check at work, or even a holiday bonus, the first thing most of us think of is “How can I spend that money?” BIG MISTAKE! Saving your extra income can give you that boost to buy an investment property sooner than you think. So, the next time you find yourself with extra income, don’t go on a shopping spree! Instead, save more money until you find something valuable to do with it, AKA buying an income property. Accordingly, even after you buy a rental property, making money in real estate is about saving that extra income for other investment ventures. It’s a cycle that you shouldn’t break.
Keep a money journal for a month
Tried and proven! Keeping a spending journal for a month can help you spot those bleeding spots you have and correct them in the month ahead. Moreover, many beginner real estate investors have managed to monitor spending habits through this basic money journal strategy. Not to mention the endless positive impact that it has on your self-awareness!
If you’re looking to buy an investment property and wish to make the best real estate investment decisions, we can help you! Click here.
Give a no-spending month a shot!
We’re not trying to throw you over the edge by becoming another penny pincher. This no-spending month can teach you discipline and can help you appreciate what you already have without the constant need to purchase non-essentials.
A no-spending month can start with cutting out shopping sprees, dining out, and even buying gifts. You can simply start making your own food at home for a fraction of the cost and you’ll save more money than you can predict!
Have the right money thinking!
What makes you different from the most successful real estate investors and self-made millionaires out there is your thought process regarding money! Money can do wonders for your life when spent on the right investment. Let’s say you have $100 in your wallet. The chances it will grow to $200 the next week are very slim! It’s more likely the $100 is going to turn to $50, then $20… You get the point.
Having the right attitude towards money is what makes millionaires. In any case of real estate investing, you want to go for an investment property that will make you even more money. Why not adopt that thinking in any cash you have in your bank account!
If you’re saving money in order to buy an investment property, read this blog post to help you spot good real estate deals: Where to Invest in Real Estate for Affordable Investment Properties.
Another application of the right money mindset would be going for positive cash flow income properties instead of counting on real estate appreciation to build momentum for negative cash flow income properties. Make sure to spend your hard-earned cash in the right place!
When buying an investment property, real estate investors need to be more like sharks to spot a deal from a hundred yards away! Keep in mind that the art of saving money and adopting such habits should not only be pursued until you buy your first investment property, it should go on until you build a real estate investment portfolio that can sustain your lifestyle through rental income!
If you have any more saving habits to help you buy an investment property in 2019, please share them with us in the comments section below!