One of the biggest stumbling block many aspiring Real Estate investors have is their inability to come up with enough cash for their very first deal. Depending on where you live and depending on the Real Estate Strategy you choose, you might be asked to put down somewhere between $20-$40k for your first deal. This amount can be overwhelming for new investors and it could discourage them from even getting started. Below are some ideas on how you can come up with money.
- Ask for additional hours at work. Talk to your boss, ask them if you can work extra hours for extra pay. Do not just ask one time. Try asking in regular intervals, in case some life events might have changed the situation at work (someone might have quit, gone on vacation, ... etc).
- Ask to work a different shift. If your company offers 24/7/365, then there is a big chance that it has a hard time finding people willing to work second or third shifts. These shifts pay a little more, but require to work inconvenient hours.
- Find a part time occupation. Because of the current low unemployment, the job market has been quite tight. Plenty of companies would be glad to have someone helping them, even if it is only part time.
- Find a week-end gig. When I was trying to save money for my first deal, I learned that the youth soccer leagues in my town were looking for soccer referees on the Saturdays and Sundays. I quickly did my referee license and was in high demand every week-end. I'm sure there are plenty of opportunities out there in whatever area you might be interested in. Ask around, you will find something.
- Borrow money from your 401k. If you have a 401k at your current job, chances are you can borrow money from it. Make sure you educate yourself on the conditions of borrowing by speaking to your plan administrator. Also make sure to understand the conditions for returning that money, if you were to leave your job voluntarily or if you were fired.
- Ask Family and friends: If you know people in your family and/or friends circle that can trust you with money, feel free to ask them for help to get started. Make sure to repay them appropriately and as agreed upon.
- Down Payment Assistance Program. I recently only learned about Down Payment Assistance Programs. Click on the link to see if this might be of help to you.
- Leveraging the Shared Economy. The shared economy allows us to reduce some of our daily costs by sharing some of our expenses. Depending on where one lives, sometimes it is more economical to not own a car and use other transportation means. You should investigate if it makes sense for you to get ride of your vehicle and use Uber/Lyft instead.
I hope that I have been able to provide you additional ideas on how to find money for your first down payment. I remember that for me, it was a real scramble to find the funds. In addition, I wasn't comfortable, since I never had to deal with such amount of money.
Remember that as you start this Investor journey, it is key that you change your mindset. There will be obstacles. There will be challenges. You need to persevere, you need to reach out to others for advice. You need to be creative in finding solutions and removing road blocks.
Whether you decide to invest in Real Estate or not, please leave me a comment below and let me know what argument persuaded you the most. If none of these were able to convince you, share your thoughts as well.