It seems impossible to save the deposit when renting. After all, rent is very expensive! And it was not cheaper. The national median rent for a two-bedroom apartment is $1,358 in the summer of 2022.1 So how the hell can you save big enough upfront to buy a home when it’s a lot of money? Will you still be spending on rent each year?
THREE REAL ESTATE TIPS.
1. Real Estate Tips for Budget compliance.
Budgeting shows who is in charge of your money (you). It gives you the ability to tell where your money is going, instead of wondering where it went. Budgeting is how you achieve your financial goals, such as saving upfront.
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Here’s how budgeting really works:
Write down your monthly income.
List your monthly expenses, including your monthly upfront savings goal.
Subtract expenses from income.
Track your expenses (all month). Make a new budget before the start of the month.
If you’re new to budgeting, it can take months to get it right. But wait there. You will soon become a budgeting expert. And you’d be surprised how much you can set aside each month to hit your down payment savings goal.
2. Pay off debt.
On average, 30% of Americans’ monthly income is used to pay off unsecured debts (such as credit card bills, car loans, and student loans).
That’s almost a third of income. Your income is wasted on paying for things in the past instead of going toward your future. residence!
Let’s say your monthly take-home pay is $5,000. Statistically, the debt will swallow $1,500 per month ($5,000 x 30%). Instead of wasting your money, what if you were super aggressive and quickly paid off your debts? You can then use that $1,500 to save on a monthly upfront payment, which is $18,000 for just one year!
Trust us, you don’t want to buy a home while in debt. Adding a mortgage to your debt and property costs will make your life a real nightmare. Instead, be patient and keep renting until you’ve paid off 100% of your debt and saved up enough emergency funds (3-6 months of living expenses). Only then can you save for the down payment on your home.
3. Find roommates.
Real Estate say you are single and are renting an apartment while saving up to buy a house. It looks like a two-bedroom apartment won’t be much more expensive than your one-bedroom apartment. For example, remember that the national median rent for a two-bedroom apartment is $1,358 in the summer of 2022.
Meanwhile, a one-bedroom apartment is $1,1853. That’s not even a $200 difference! So why not upgrade to a two-bedroom apartment, find a roommate and halve the rent? Or let’s say you are married and rent a townhouse with your spouse. You can invite a close relative or friend (whom you and your spouse get along well with) to live in your spare room for a season.
For either of these scenarios, let’s say you pay $1,500 in rent plus utilities without additional roommates. But after adding a roommate, you’ve cut those costs in half. This frees up an extra $750 per month, or $9,000 per year, to add to your upfront savings!