Is It Really Possible To Save For Your First Real Estate Investment In Just One Year?

Real estate investments are often painted as easy get-rich schemes, and to some extent, they are. The best investment in the right market could fast buy you a livable income that’s relatively free of risks like stock market variations. But that’s not to say you’ll be able to jump right in and find real estate success straight away.

In truth, getting started means having money in the bank and making wise gambles, just like in any other investment spheres. However, it can come as a relief to know that you needn’t start toying around with full-property prices to make your name here.

It’s actually possible to start investing in real estate for a surprisingly small amount of money if you know where to look, meaning that you may be able to save up and start towards this dream in as little as a year (or less!). Keep on reading to find out how.

# 1 – Have a Ballpark Investment in Mind

If you’re saving with a vague dream of real investment, then you’ll probably never reach your goal. You certainly won’t achieve your desired outcome in a year! Instead, you need to get a little more specific about the level of investment you’re working towards and the budgeting skills you’ll need to reach that goal.

As a general rule, real estate developers tend to save towards three distinct investment thresholds, which include –

• Low capital investments: Investments of between $1,000-$5,000, such as REITs and crowdfunded projects.
• Moderate capital investments: Investments of between $5,000-$50,000, such as direct property ownership and property flipping.
• High capital investments: Investments of $50,000+ for complex ownership, luxury flipping projects, etc.

If you’re giving yourself a year to save, then low capital is an obviously easy ballpark. However, you may find that aiming towards a moderate capital investment is better for your portfolio prospects if you can manage it.

# 2 – Select Your Most Achievable In-Point

It’s also important to remember that investing in property up-front isn’t the only way into the real estate world. In fact, it’s one of the most unattainable in-points you could pick, and it’ll be a pretty tough goal to reach in just a year.

It may be far more attainable to start building your portfolio with an alternative like a real estate investment trust (REIT). These are companies that own income-producing real estate like apartment complexes or office buildings, which they sell to investors via shares on the stock market.

While an REIT doesn’t provide literal property ownership, it does give you a real estate in-point for as little as $1,000 in some cases. A lack of property management responsibilities and the chance to invest in a diverse real estate portfolio can all further your wealth, making moderate investments more likely down the line.

Other achievable beginner goals that could be yours within a year or less include house hacking, where you live in your initial investment to reduce your living costs, or partnerships where your partner handles expenses, and you manage maintenance and general operations.

# 3 – Get Wise to Potential Savings

Getting wise to the savings you could enjoy across your real estate journey could also bring this goal within easier reach across a shorter timeframe. After all, real estate investments are often eligible for certain costs or tax deductions.

The most notable of these include the ability to deduct mortgage interest as a business expense, as well as other itemized expenses, which could include real estate agent commissions, property repairs, and even advertising. Depreciation, such as general property wear and tear, is also deductible, and can be particularly lucrative with the help of cost segregation services that help to reduce your taxable income by identifying and re-classifying your fastest-decreasing assets. 

In each instance, you can reduce the amount of money required both upfront and across daily real estate handling. Both of which could see you having plenty in the bank after just a year of preparation.

# 4 – Budget Like you Would for any Other Purpose

It’s easy to get caught up in lofty ideas and grand schemes when you’re thinking about real estate. But you can also secure enough in the bank in a shorter period by simply budgeting for real estate like you would any other purchase. We’re talking simple steps, like cutting unnecessary expenditure, putting aside set amounts each month, and generally making sure that you keep your eye on the ball for the coming year, and many more successful years to come!