One of the most intimidating parts of investing in real estate is the looming down payment.
It’s HUGE. Most people don’t have $30 – 50k hidden between their couch cushions.
How To Save Money For A House
Not only is the down payment intimidating but the timeframe to save up for the down payment can seem daunting. For instance, if you give me a penny-pinching savings plan that takes me 5 years to buy one property… and then say I have to invest it all just to be broke again?… I’d call you crazy!
What about taking vacations? Splurging on a pair of shoes? Eating out every once in awhile?
You have to have some balance in life (although I didn’t for the two years leading up to my first property).
On that same token, you NEED to have money in order to buy real estate. You just have to. There’s no getting around it.
Have you ever heard this pitch: “No money down real estate”
I wish they would call this what it actually is.. This should properly be called “None of YOUR money down real estate.”
People aren’t just out here giving away houses! And because with this strategy you use other people’s money, making a profit for yourself is even harder. You’ll only keep the leftover profits (if there are any) after the person whose money you borrowed gets paid.
If you’re a newbie, good luck with that.
Micro-invest your way up to a down payment.
Here’s what I mean.
Let’s say you are able to save $100 per month. After 10 months you will have saved $1,000 right?
Now, let’s say you invest $100 today (in education, investment accounts, etc) to up your earnings potential and now you can save $120 per month.. After 10 months you will have saved $1,100. ($120 x 10 = $1,200.. and $1,200 – $100 investment = $1,100)
Does that make sense?
Society has tricked us into thinking that we need to be in Save mode 24/7 when the reality is you should only save enough to invest in your next venture. This could be to save up to purchase real estate, start your own business, or fund your education.
It even means only saving up as far as to make that next investment that will propel you into the future, no matter how small.
Here’s how to save money for a house:
1. Invest in an Auto-Investor
I only invest my money in the stock market if I can pull that money out at any time. This excludes things like 401k’s and IRA’s which trap your money until you’re 65.
Wealthfront allows you to invest small amounts of money (in $100 increments) into a cash trading account that allocates your funds over multiple stocks. You don’t have to actually do anything. It’s totally passive.
I use this one and I love it.
The beauty is, you can get that cash out whenever you want! (there is a three day lag for them to sell your positions and pay you out at market value)
So let’s say you invest $1,000 and in two years this has grown to $1,150. At that point you can choose to have your money paid out to your bank account.
The only problem with this strategy is the risk.. Sure you may invest money and the stock market may go up, but it doesn’t always go up. You might find that after 2 years your account is worth $870.
Chances are your investment will go back up in the future but it’s possible for this to mess up your timing. So, take that into consideration before you place your entire savings there.
2. Start a side-hustle
There are a few pretty cool ways that you can make some extra money no matter what your predicament.
Stay at home moms, corporate suit-and-ties, bartenders… and everything in between can create a side-hustle.
Strategies range from getting a few cents for scanning you grocery receipts to potentially starting a business that makes you rich or at least retired sooner than you think.
Here are a couple ideas to get you started on a side-hustle. These can both make you some serious money:
a. Teach something, anything, that you know pretty well
Online education is booming. Traditional education methods are failing as people start looking for ways to make income outside of working in a cubicle. Nobody wants that anymore and quite frankly, that’s mostly what colleges teach.
The dream of working one job, for one company, living in one house… are long gone.
Udemy offers a platform for you to build a course and provides great resources and instruction for how to do so. These courses are in demand.
I’ve seen courses on there charging $149 just to teach someone how to use Pinterest. That blew my mind.
Make a course for anything you find valuable and start charging for it. Once the course is made, you can forget about it and if it’s good enough, make money from it for a long time.
b. Create a blog
Yes, you can make money blogging.
Here’s an awesome video to show you how the whole thing works.
I wrote a review on an education/mentor service called Wealthy Affiliate that I put my stamp of approval on. It’s just a legit community of other online business owners that learn from courses and each other.
They teach everything you would want to know about making money online. They’re transparent and aren’t gimmicky.
- Building a website
- Creating content
- Monetizing (making money from) your website
This is just the tip of the iceberg. They walk you through every single one of these steps (with video) to ensure that you become a success.
I’ve leveraged the community there to help me with this website. 🙂
That’s how to save money for a house!
I know it might seem backwards that in order to save money I’m recommending a couple ways to invest money. However, I do believe that investing in the market and more importantly yourself, will pay off long-term way more than simply putting your money into a savings account.
In order for things to change, your actions need to change. Time to start thinking like a rich person and consider ways to make your money work for you, whether that be micro-investing or investing in yourself.
If you have any questions or ideas for what could be added to this list, please leave a comment.
Don’t forget to find me on social media. Introduce yourself and say hello!