How Much Should You Save To Start Investing In Real Estate

You know This year I stopped being a home owner and next year I’m going to use that capital to buy my first rental property, so then the obivous question, how much money do you need to get started investing in real estate.

So in this video we’re going to break that down, and also give you a personal budget to allow you save more money for this goal.

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There are 3 ways to invest into Real esate

First is by using all cash, most of us don’t have 100k to buy a property in cash

Second is to buy reits, real estate investment trust, that allow you to buy fractional shares in reale staet and get paid dividend and to make money on aprprecaition

Third is to use other people money, which is what you usually hear the most

However all these ways have one thing in Common

They all have risk

But some have more risk than others obviosuly

So lets break down how much is requuired for all of them, so them we can talk about how much to save and how to save it

Take into acount, that your market and what you are willing to do will affect

So you have to do that research for yourself

Now lets assume that the average price for a house and is about 100k and I found me a good deal

How much money do I need to have to buy this property

Btw I also recommend that the property you buy isnt super far away from you, I wont being pout of state rentals until I have a lot more experience

Lets Assume the Property Cost 100k: Option A

I’m going to be doing a conventional loan that requires 20% down

Then I have closing Cost that could be 2-6% but lets say 6%

That’s really it ( but you also have other cost like staging the house, or remodeling something, but those cost vary so lets ignore them for now )

That means I need 20k for the down payment and $6000 for closing

To buy a 100k property I need about 26k

Option B: Lets say I want to house hack, so I’ll be living their and renting

I get an FHA loan I can get away with putting down 3.5%

And same closing cost and sometimes some programs even cover that cost but lets assume 6% again

That’s $3,500 down and $6000 closing, only about 9,500

Option C: Creative finance

You figure out a way to borrow the down payment also and the closing cost

And then you get in with 0% down

The Pros and Cons of the amount you put down

Pros:

You have no skin in the game really

You can use your money for another deal

Cons:

Your payments are hire

You have less equity

And you have more risk

Mortgage insurance

Overall, my goal is:

To buy properties for 20-50% what they are worth

And then to work on owning them outright as fast as possible

That way my risk is a lot lower and get all the cash generated by deal

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*Some of the links and other products that appear on this video are from companies in which Tommy Bryson will earn an affiliate commission or referral bonus. Tommy Bryson is part of an affiliate network and receives compensation for sending traffic to partner sites. The content in this video is accurate as of the posting date. Some of the offers mentioned may no longer be available. I’m an Accountant but I’m not your Accountant, always review information with your Accountant/CPA and your Financial Advisor.

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