Down payment for first rental property

[Samuel Bob]

Hi everyone, I just turned 18 and I have been learning about real estate for the last 3 years. The only problem is that in the markets that I want to invest in, it costs between 20-40k for a down payment, and I have about 10k saved up right now from my job. How would you guys find the money to pay for it?

[Nathan Gesner]

You have to save up or find someone with money to partner with. I recommend against the latter because you're too young and inexperienced to really screen for a partner. One mistake and you can sour your taste for investments real fast.

You typically need less than 5% for the down payment. I don't know where you are, but in about half the country you should be able to find a four-unit property for under $400,000 which would require $20,000 or less to purchase. I bet I can find hundreds of cities with fourplexes for half that. So you can stay where you are and save up for an expensive property, or you can consider moving to an area that's more affordable to accelerate your start.

Dave Ramsey says, "Live like noone else today so you can live like noone else tomorrow." That means you don't go out partying often, make your own food and coffee, buy used clothes, bike or walk to work instead of buying a car, create some side hustles to earn money instead of playing video games on your $2,000 machine, read books instead of watching TV, etc.

There are 128 hours in the week. If you work for 40 and sleep for 56, that leaves over 90 hours of "leisure" time. Spend another 40 of those working a second job or side hustles and you'll have $20,000 saved up in no time.