How long did it take you to save up for your downpayment?

13 Replies

Hey BP!

Right now I am in the savings phase of my journey and I'm about 1/4th of the way there. I'm taking the basic route which includes budgeting and living frugally to save up for my downpayment/closing costs/cash reserves. I am curious to find out how did you guys get the money for your first property? Did you have a side hustle to supplement your W-2 income? I am trying to think of some ways to make some extra money. So far, all I got is selling some old clothes. I thought about uber/lyft but I already have a long commute to work so I don't want to completely beat up my 2005 Chevy. Any creative suggestions? How much did you ultimately save up, how did you do it and how long did it take you?

@Marsha F. . Maybe others have experience with lift or Uber but my experience (albeit limited as a driver) was you’ll spent a lot more time driving around, wasting gas and putting miles in your car then actually making money. Your per hour wage will be low.

To answer your question about how long it took me? About 10 months. Started working in June, saved til April and bought something. That was about 3 years ago, and it’s been an interesting ride ever since

@Marsha F. I used my tax return to buy a foreclosed FHA property back in 2011...purchased at $77,000, did a live in rehab of $7,000 and it appraised at $126,000...after the year occupancy I used the property as collateral to do a construction to perm project...then flipped some more...then re-fi'd to an ARM...then pulled a HELOC...then bought some more property....and on it goes...

Still own that one today and it rents at $1,200/mo...worth $145k today conservatively and has a solid equity position.

I think living frugally to the point you cannot enjoy life is a poor choice...very successful people are not successful because they cut back on latte's. 

@Marsha F. Thanks for starting this thread. I'm in the same phase and have been saving W2 income since the beginning of November. I also considered driving for lyft/ uber but kind of going off of @Brandon Sturgill 's point, I don't want to sacrifice my personal time to making a marginal amount of extra cash. I also created a budget that I stick to pretty strictly but I don't cut out the things I enjoy, instead it's just been worked into my budget. I'm almost to the point where I can put my FHA down payment in for a $300-400k multi family. Instead of dunkin donuts I get the gas station coffee, instead of ordering out I try to see what I have at home, and any purchase decision I have to make is made knowing that I'm saving for a down payment and how bad I want to get into this game. It really all comes down to your income how long it will take but Scott Trench's Set for Life talks about reducing your expenses to about $2k a month and within a year if you earn a median salary of 50k you're going to have 25k to deploy.

Quick tip: Using your budget and your paychecks (once you've factored in $ for your pleasures) you should be able to set up a spreadsheet that can predict when you'll have enough for that down payment. I've forecasted out to the end of the year what I will have in savings so I know when I'll be able to afford that first deal. Check off the amounts as your savings account grows and try to beat your forecast! It's a fun/ interesting way to get good at saving.

@Mike Bean It's comforting to know that there is someone doing what I am doing and it's been working. I've been using a spreadsheet to keep track of all my spending. This month so far I have gone a little over ($200) because it was my birthday last weekend. I'm totally overreacting here but I'm starting to feel behind in my trajectory. I started saving last December and projected that I would have my FHA downpayment for 400k house by the end of the year. I've been doing all that you mentioned. I don't drink coffee but my money waster is drinks and food so I limited outings to once a week with $50 cap which includes drinks so that's $200/month. As I am writing this I'm thinking to myself "maybe I should cut that down too."I bring lunch to work and go grocery shopping to eat at home (using tons of coupons). Not going out so often has helped me save gas. You are the third person this week to talk about this book "Set For Life" so I just got the PDF. Maybe it will create a mindset shift.

@Brandon Sturgill My tax return did not come out to be alot this year but I did saved every penny of it. Boy do I wish I learned about REI during the years following the crash! Did you get the rehab money included in your mortgage?

@Marsha F. I think one of the main things is to keep a positive attitude and don't let yourself feel that way. As I said, how long it takes comes down to your salary because regardless how much you cut back, it's going to take longer with less income. (another topic touched upon in Set for Life) You seem to be doing all the right things in my opinion and I think reading that book will give you some more ideas on how to be financially responsible. Even though you're not where you want to be, you are likely better off in terms of a savings account balance than 70% of the country. Everyone is materialistic and rushes to spend their dollars while you are thinking of the bigger picture and seeing how you can grow in the long term. Saving up 15k while dealing with every day life is a TOUGH task but you have to be focused and committed. There is no set timeline for these things and you will get there eventually. What do you do for work? try to find a side hustle that matches up with the type of work you do or with a skill that you have. I've been considering offering some basic financial advice/ budgeting for folks in my area by posting on FB because I'm doing accounting and my strength has always been numbers/ finance.

@Mike Bean I think for me keeping a positive attitude about where I am in the process has been the toughest part about going through this but I do have to say:  I appreciate everyone (yourself included) on this forum because it has helped me stay motivated. I always get that feeling that I'm behind but I'm reminded everyday on these forums. For a while, I kicked myself for not pursuing this when I first read Rich Dad, Poor Dad when I was 21 (I'm 27 now) but I understand now that the timing wasn't right. It is SO TOUGH. I've been declining so many invitations to vacations, outings, etc which have been sooo tempting because in the past I would've said yes, yes and yes again. 

I almost didn't answer your questions. I'm basically the person that manages a system similar to ADP at a media company. I have my payroll certification so I guess I could do some HR work for small businesses...I actually never thought about that so thanks for the suggestion! 

I think the answer is all relevant based on your current income, expenses and cost basis for your property.

Good luck!

Mainly savings for all my properties, except last one using 401K early distribution, just closed on that one yesterday. 

So here's how I see it.

Very few of us generate enough income to consistently be able to save for down payment; especially when we first start out. So - why bother...?!

There are creative ways to do this not requiring a down payment from you. If you spend the time to learn this side of the business, you end up with a skill-set which is much more sustainable.

Basic math - you have a little bit of money. But, there is sooooo much money out there. Learn to use OPM.

@Marsha F.

A lot of the time frame depends on the amount of house/area of NJ you are in. Jersey isn’t cheap unless you buy in D class.

I bought my first home (to live in) in 2000 in NJ. It was on a whim, I was always kinda frugal so there was no waiting period for down money. C class neighborhood, I paid $45,000. Fixed it up a little bit and sold it in 2002 for $89,000.

Good luck and keep saving! It’ll pay off in the end.