How did some of you save money for your first property?
Jason R. BesanceneyPro Member
Member since 2022 · 18 posts · 18 votesHow did some of you save money for your first property?
Most Popular Reply
Bjorn AhlbladPro Member
Investor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes@Jason R. Besanceney it is all about savings IMO. Be patient REI generally requires money.
26 Replies
- 4yBjorn AhlbladPro MemberInvestor · Shelton, WA · Member since 2017 · 6k+ posts · 6k+ votes
@Jason R. Besanceney it is all about savings IMO. Be patient REI generally requires money.
- Lender · Member since 2022 · 74 posts · 50 votes4y
Have you thought about purchasing a less expensive home that's maybe a little further from where you are currently located if your market is too expensive? Around the 500k purchase price @ 3.5% down that is around $17,500 not including closing costs. So I'm not sure if you were planning on purchasing a higher priced property but 30-45k may be a stretch. You might be able to get into a property quicker if you get a less expensive property first.
I think house hacking is a great idea and is something I'm doing now. What's equally if not more important to having the funds for down payment is the ability to repay. Do you currently work and generate enough income that you think would qualify you for a 500k property?
Other quick ideas: Gifts are allowed with certain loan programs, liquidate a retirement account (if you have one), sell what you don't need, reduce your expenses (eating out is a big one for me), and lastly pick up a part-time job.
Hope this helps, but yes as Bjorn mentioned it will certainly take time.
- 4yTheresa HarrisPro MemberMember since 2019 · 15k+ posts · 11k+ votes
I bought a place while at university (grad school). The mortgage payments were cheaper than renting. I had saved my money while in school and my parents gave me a bit of money and co-signed the loan. I made all of the payments myself. It was one of the less expensive condos (this was in Vancouver BC where prices are high) and between what I saved and their money, we put 20% down. It was a 2 bedroom place and I rented out the other room. When I was finished grad school there, I kept it as a rental.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes4y
Working engineering
@Jason R. Besanceney work and live slightly below your means. Pick up a side gig (e.g. real estate agent, wholesaler, etc.)
- 4yAaron BreckenridgePro MemberTechnology · Dallas, TX · Member since 2022 · 490 posts · 312 votes
I had roommates after college and I rented rooms from friends. Did this for many years. That helped me eliminate my student loan debt quickly, which unlocked more $$ to put into savings. I also rented from individuals whenever possible rather than apartment complexes.
- Rental Property Investor · Edmonton, Alberta · Member since 2015 · 307 posts · 200 votes4y
Before knowing what we were doing, partner and I bought a $200k condo, with 20% down, and both worked full time as engineers and paid down the mortgage as much as we could. After 3 years we had enough equity in the condo, about $120k to buy 2 rentals. We learned about investing at the end of those 3 years so would we have done something different had we known what we know now? Yes, but what we did worked too.
- 4yAlicia MarksPro MemberFort Worth, TX · Member since 2020 · 1k+ posts · 2k+ votes
Are you looking at multifamily to househack? Lenders can often consider the average market rents, or whatever the lease in place states, and use 75% of that amount to help you qualify for the loan. That gives you more cashflow, less to put down, and you can still househack the unit you live in. If you have someone to cosign for you that would be helpful, you may also have someone you could partner with to bring the remaining funds and you share some of the profit and appreciation.
- Member since 2019 · 7k+ posts · 4k+ votes4y
Quote from @Jason R. Besanceney:
In some of my previous posts, I have mentioned that I am a college student and have asked about some of the ways I should get into real estate. House hacking is the most significant recommendation by far so looking into that it would still take roughly 30k-45k to get into a property with an FHA 3.5% down, where I am currently at is super expensive hints why there is a tough time entering the market. So in saving what have some of you done to build up Cash as quickly as possible whether that being scaling your income or selecting a type of job or something I could do to grow my income as fast as possible. I feel like I am at crossroads because of what I have found myself in at this stage of life. Any recommendations would be greatly appreciated, Thanks!
Many of us are even only immigrants and bring only zero dollars to this country, my friend. Some work at USPS and still can afford one million houses in CA.
What you need to focus on is actually: having good W2 jobs/salary , and/or having good business. - Member since 2022 · 18 posts · 18 votes4y
Thanks to all of you guys for the response. I have been living below my means and will continue to do so moving forward. I really like the idea of house hacking multifamily. Coming up with the 25% down will be tough because our average home price is around 1 million in the city I am currently living in but will look into slightly less expensive areas in the surrounding markets. Wholesaling interests me as well as getting my real estate license, any recommendations to where I can learn more, thanks again guys for all the responses. Should I look at seller finance deals as well or are those not as popular right now because of the current state of the market, thank you.
- Investor · Castle Rock, CO · Member since 2021 · 79 posts · 104 votes4y
Hey @Jason R. Besanceney, your first post was tagged in SLO. Are you at Cal Poly? When you say you're a college student, there's a lot that goes into that. Are you a freshman? A senior? Close to graduating? Are you going to stay in that area post graduation?
From my perspective, there's a couple of paths. If you're a few years yet from graduating and/or will be staying in the central coast area for a few years, do whatever you can to get into a house hack situation. Finding roommates in a college area should be pretty straightforward. Beg/borrow/but don't steal the down payment through whatever means possible.
The other path is if you're near graduating or don't have long term plans to stay in that area, captain obvious would say keep your rent expenses as low as possible through sharing an apartment, couch surfing, whatever and save every last penny until you know where you're going to land. There are a ton of areas around the country that are very affordable and while not as beautiful as SLO, give you the opportunity to invest sooner so you can get started.
- Member since 2022 · 18 posts · 18 votes4y
Quote from @Joe Garretson:
Hey @Jason R. Besanceney, your first post was tagged in SLO. Are you at Cal Poly? When you say you're a college student, there's a lot that goes into that. Are you a freshman? A senior? Close to graduating? Are you going to stay in that area post graduation?
From my perspective, there's a couple of paths. If you're a few years yet from graduating and/or will be staying in the central coast area for a few years, do whatever you can to get into a house hack situation. Finding roommates in a college area should be pretty straightforward. Beg/borrow/but don't steal the down payment through whatever means possible.
The other path is if you're near graduating or don't have long term plans to stay in that area, captain obvious would say keep your rent expenses as low as possible through sharing an apartment, couch surfing, whatever and save every last penny until you know where you're going to land. There are a ton of areas around the country that are very affordable and while not as beautiful as SLO, give you the opportunity to invest sooner so you can get started.
Hi Joe, I am close to graduating as I am entering my last year of schooling here. I plan on staying here for maybe a few years after to continue house hacking and build my portfolio because I believe so much in the area. Just looking to build up my cash as quickly as possible so I appreciate your input.
- Real Estate Agent · Southern California · Member since 2019 · 681 posts · 281 votes4y
Hey @Jason R. Besanceney I would say there are a few steps you can take. I also live in California and followed these steps to get our first rent by the room house hack.
1. A dollar saved is a a dollar saved. No taxes need to be paid because you already payed them once... Tightening my budget has been life changing to building a strong financial position.
2. A dollar earned depending on your current tax bracket may only be 75 cents! Still great to increase your earning potential but I always think creating a strong base of saving and spending far less than you make will be great especially when you make more!
3. Might need to move your market. I just checked Redfin and man is it stiff there! Maybe the city of Baywood or maybe the Nipomo area might be better. I can see some houses that you may be able to buy in the 750k range and rent out the spare rooms! I am not super familiar with that area but eliminating your housing expense after these first 2 steps will make you an unstoppable force!
4. Appreciate and give yourself some credit. A college graduate with a 10X in savings compared to peers your age and an interest in REI is something to appreciate!
You're on a great path and hope it works out!
- Member since 2022 · 18 posts · 18 votes4y
Quote from @Nicholas Coulter:
Hey @Jason R. Besanceney I would say there are a few steps you can take. I also live in California and followed these steps to get our first rent by the room house hack.
1. A dollar saved is a a dollar saved. No taxes need to be paid because you already payed them once... Tightening my budget has been life changing to building a strong financial position.
2. A dollar earned depending on your current tax bracket may only be 75 cents! Still great to increase your earning potential but I always think creating a strong base of saving and spending far less than you make will be great especially when you make more!
3. Might need to move your market. I just checked Redfin and man is it stiff there! Maybe the city of Baywood or maybe the Nipomo area might be better. I can see some houses that you may be able to buy in the 750k range and rent out the spare rooms! I am not super familiar with that area but eliminating your housing expense after these first 2 steps will make you an unstoppable force!
4. Appreciate and give yourself some credit. A college graduate with a 10X in savings compared to peers your age and an interest in REI is something to appreciate!
You're on a great path and hope it works out!
Hi Nicholas, thank you for the encouraging words, I will look at those markets as well as what you mentioned to me and try to put some of it into practice, thank you.
- Accountant · Lexington, KY · Member since 2019 · 100 posts · 66 votes4y
Quote from @Jason R. Besanceney:
In some of my previous posts, I have mentioned that I am a college student and have asked about some of the ways I should get into real estate. House hacking is the most significant recommendation by far so looking into that it would still take roughly 30k-45k to get into a property with an FHA 3.5% down, where I am currently at is super expensive hints why there is a tough time entering the market. So in saving what have some of you done to build up Cash as quickly as possible whether that being scaling your income or selecting a type of job or something I could do to grow my income as fast as possible. I feel like I am at crossroads because of what I have found myself in at this stage of life. Any recommendations would be greatly appreciated, Thanks!
Jason,
When I was saving for my first house hack, I decided to Uber around the Nashville area. I got two benefits from this, I earned extra cash for my downpayment and found what area of the city I wanted to invest in.
Maybe a bonus benefit was seeing people's faces when I told them that my day job was being a CPA!
- Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes4y
You're in one of the most expensive areas in the country. My honest advice would be to move somewhere more affordable as so many are doing.
I saved up money just from my day job to buy my first property. This was when you could buy a 3/2 single fam house in a great area for under 200k.
If I was starting out now....I don't know....sell a kidney? First time buyers are having a tough time!! I would probably have to venture out further from where I actually wanted to be, settle for a smaller house, do a house hack.
- Rental Property Investor · Arlington, TX · Member since 2022 · 21 posts · 9 votes4y
Marriage is an underrated, but powerful way to save money. If you live at or below your means you can save nearly all of one person's income living in a 1 br apartment for example. A roommate situation would be the second-best option. 1/2 rent on a 2br is more than splitting rent on a 1br, but both are better than paying for housing + utilities by yourself. My wife and I were able to save an enormous amount by doing this.
- Lender · Kansas City, MO · Member since 2016 · 142 posts · 71 votes4y
Buying properties that are value add (aka FLIP or BRRRR) allow you to skip having to save up a certain amount but even then you would need some 5k-10k or probably more for closing costs and usually even more because you need a down payment of some sort buying these properties there are lenders including myself that do not require any down payment though! I just don't service California. Someone else may be able to help. Really saving up 15k for your first property is very doable even if you weren't to do what I described above and just house hacked. You can do it!
- Financial Advisor · San Antonio Texas · Member since 2022 · 100 posts · 53 votes4y
Quote from @Jason R. Besanceney:
In some of my previous posts, I have mentioned that I am a college student and have asked about some of the ways I should get into real estate. House hacking is the most significant recommendation by far so looking into that it would still take roughly 30k-45k to get into a property with an FHA 3.5% down, where I am currently at is super expensive hints why there is a tough time entering the market. So in saving what have some of you done to build up Cash as quickly as possible whether that being scaling your income or selecting a type of job or something I could do to grow my income as fast as possible. I feel like I am at crossroads because of what I have found myself in at this stage of life. Any recommendations would be greatly appreciated, Thanks!
Jason, I help clients access retirement accounts to gather capital for real estate purchases. I used a VA loan for my first deal. I'll borrow against my retirement account for a second deal.
- Rental Property Investor · South shore, MA · Member since 2017 · 1k+ posts · 1k+ votes4y
The first thing I did was become financially responsible. Meaning, I would stop spending money on things that werent a necessity. I quit cigarettes, stopped ordering out, started making coffee at home, cancelled subscriptions, etc.
The second thing I did was start a side hustle. I would buy items from yard sales and clean them up and sell them on ebay (specifically vintage tools). Youd be suprised the value you can find in someone elses junk. One mans junk is another mans treasure. That helped me pay off my credit card debts and delinquent accounts.
All in all it took me about a year to be in a position to actually buy. But I had to think long term. In the meantime I would come on biggerpockets and learn as much as I could from my predecessors. Read a lot of books which helped me stay motivated.
You can do it, just buckle down. Goodluck! Hi Jason,
You could always go into the service and pick up a 0 down VA loan when you get out.
While you are in just live off the govt (food residence clothes, etc) 100% and save 100% of your money.
Then when you are out you have a pocket full of money and a zero down opportunity.
Maybe you can be something easy like a mess officer and pick up a skill as a restaurant manager along the way, then then you get out you have marketable skill as well as a degree.
https://www.youtube.com/watch?v=gMMW9M-VPQ4
https://quartermaster.army.mil/jccoe/operations_directorate/quad/menu/recipes/section_n/N80000.pdf
If you current savings are not enough.
A side hustle is great source of income as others mentioned.
But You can also potentially buy a property out of state for much cheaper that can generate cash flow.
This can supplement your income and hep you save faster.
Hi @Jason R. Besanceney, got a few suggestions for you.
1) how about how combining JV with house hacking? In other words, find some other beginner investors in your area with low capital and buy a place together AND live in it with them with a contract exit of maybe 5 years. If you just want to 'get your foot in the door' without wanting to become a fulltime investor in the future, then this is your only real option (considering your financial situation). I've never actually heard of anyone doing this, but I don't see why it's not possible.
pros: part of a deal is better than no deal, and if you're living in an expensive area then chances of appreciation after 5 years are very good
cons: You'll have to learn the details of JV'ing, and finding similar investors in your area will be challenging (maybe join/start a local investors group, or even on your campus)
2) I second @Jason R. Besanceney's idea of getting a side gig. Combine @Matthew Cervoni's Ubering idea with becoming a wholesaler, and literally drive for dollars :) Become the expert in your area, learn about: population & business growth, where developers/businesses are buying land/properties in the area, who are the best contractors/brokers/agents in the area, etc. Getting all this knowledge will help you when you're ready to buy, and it will make you an expert that other investors will want to talk to.The best bit of financial wisdom that I heard recently is that wealth from saving is finite (though important), but wealth from earnings potential is infinite. I've been a serious saver my whole life, having come from humble beginnings, and even I can see the power of that change in perspective. Saving is only good up to the point where it starts to feel like a burden, then you should focus more of your time on how to make more money, either from your current job (lots of 'Seeing Greene' episodes touch on this) or from new streams of income (the new 'On the Market' gets into this a lot).
3) Practice underwriting deals that you see on MLS and either just post them online for everyone, or send them to an active investor in the area with the only expectation that people will give you feedback about your underwriting. It'd great if people actually buy properties based on your analysis (as long as they tell you), because then you'll know you're on the right track, and you'll be building your reputation. You can't afford anything right now, so you're not losing out at all.
4) OPP - other people's money. Check out some podcasts - lots of 20-somethings are buying dozens or hundreds of properties using OPP (hard/private lenders). But first you'll have to build up your credibility (see #2 & #3)
Let me know if you'd like to discuss further.
- Lender · Member since 2022 · 7 posts · 0 votes4y
for years working and leaving below my means. Also alot of people I've seen tap their families to get some help on a down.
- 4yIrish A.Pro MemberRealtor · San Jose Bay Area Central Valley, CA · Member since 2020 · 28 posts · 15 votes
Hi Jason! For me, I tracked everything and saved roughly 50% of my income after taxes. I worked my way through undergrad + side hustles (sometimes working two or three jobs), up until I got a corporate gig. When I quit that, I found a job working for some investors and continued to save money that way. Also, I know someone who took out some student loans to help with their downpayment for a house in the Bay Area 5 years ago and they said it changed their lives - not saying this is something you should do, but it's interesting to consider :)
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