Getting your down payment together is one of the biggest hurdles when you’re starting out in real estate. I can’t tell you how many times people tell me they want to make passive income on real estate, but then they save no money for a down payment. Instead, I hear excuses as to why they can’t save up enough to buy their first property. I want you to understand, making passive income on real estate isn’t hard, but you do have to be resourceful. Now I can hear some of you saying, “Ken, I make just enough money to take care of myself and my family. There’s no way I can save money.” You know what I say to that? You’re not being creative enough.
I personally know of multiple examples of people who were earning minimum wage but were still able to save for a down payment. A young couple each working minimum wage jobs decided to rent a two-bedroom condo. They leased one room out for $500 a month, which enabled them to lower their rent and save money each month. They also each cut back on their spending for two years. At the end of those two years, they bought a two-bedroom condo in Austin. Even though they’d bought a place, they still kept the roommate and the $500 a month so they could budget for their second rental.
In another example, a twenty-four-year-old woman was barely making it between student loans and her low-paying job. She started dog sitting on the side and used that money to start saving for a rental. She became so busy overnight dog sitting that eventually, she didn’t even need an apartment. Instead, she paid her friend $100 a month to store her things and let her sleep there a couple of nights a month. Within two years she had enough for a down payment on her first home. She now uses it as a doggie daycare, which covers her mortgage each month. She is now saving for a second property.
In both of these stories, they didn’t have a lot. But they were determined, which made them get creative. They had to work really hard to save the money for their first property because they knew it wouldn’t fall in their lap. Now, they have cashflow from their properties, which they can use for their next deals. Getting that first down payment is the hardest part. Don’t get discouraged, but do get creative.