From Deckhand/Stewardess to Landlord
How to Save for Your First Rental Property
Dear readers,
Howdy fellow yacht peasants,
Life at sea has its perks: adventure, tax-free income (if you’re savvy), scurvy and a chance to save big. But what if you could put those hard-earned dollars to work on land by owning your first rental property? Let’s chart a course from the deck to landlord status.
Before we dive in: check out our full website & service catalogue
I know I can do better than this but AI pics crack me up so deal with it.
Why Invest in Rental Property?
Owning a rental property can provide steady passive income, potential tax benefits, and long-term appreciation. It’s a great way to diversify your investments and start building wealth off the water.
Step 1: Determine Your Property Goals
Before diving into real estate, get clear on your goals:
Location: Where do you want to buy? A familiar area or an emerging market?
Property Type: Single-family homes, apartments, or vacation rentals?
Investment Strategy: Long-term rentals for steady income or short-term rentals for higher returns?
Example: You’re eyeing a $400,000 property in Florida that rents for $2,500/month.
Step 2: Calculate How Much You Need to Save
Rental properties often require a down payment of 20% or more for investment loans. Use this formula:
Down Payment = Property Price x 20%
For a $400,000 property:
$400,000 x 0.20 = $80,000 down payment
Don’t forget additional costs like closing fees, repairs, and an emergency fund.
Closing Costs: Around 2-5% of the property price ($8,000-$20,000)
Repairs: Budget 1-3% of the property price annually ($4,000-$12,000)
Emergency Fund: At least 3 months of expenses ($6,000)
Total savings needed: Around $94,000.
Step 3: Create a Savings Plan
Use your yachtie income to build your property fund:
Set a Timeline: When do you want to buy? Let’s say in 3 years.
Monthly Savings Goal:
$94,000 ÷ 36 months = $2,611/month
Example Case Study: Sarah the Stewardess
Sarah saved $94,000 over 4 years while working as a yacht stewardess. She bought a $400,000 property, generating $2,500/month in rental income. After covering her mortgage and expenses, she nets $500/month—a solid start to her real estate journey.
Step 4: Cut Costs and Maximize Savings
Saving on a yacht is easier than on land, but it still takes discipline:
Automate Savings: Set up a dedicated property fund and transfer money monthly.
Limit Spending: Reduce unnecessary purchases like gadgets and luxury items.
Side Hustle: Use downtime to earn extra cash (e.g., freelancing or selling photos).
Step 5: Build Your Credit Score
A strong credit score will help you secure better loan terms:
Pay off credit card balances.
Keep old credit accounts open.
Avoid taking on new debt.
Step 6: Research Financing Options
Explore different mortgage options:
Traditional Bank Loans: Require high credit and steady income.
FHA Loans (US): Lower down payments but for primary residences only.
Private Lenders: Flexible but with higher interest rates.
Step 7: Start Small and Scale
Begin with a single property to gain experience. Over time, reinvest rental income and savings into more properties to grow your portfolio.
Final Thoughts
Becoming a landlord takes planning, but it’s achievable with the financial discipline you’ve honed at sea. With a clear goal, a solid savings plan, and smart investing, you’ll soon turn your yachtie income into a land-based income stream.
Buoy’s , Balance & Banter
Your weekly dose of ideas to keep you steady, inspired, and smiling—whether you're charting your financial future or just riding the waves.
Good Read of the Week
📖 Article: Why Experiences are Better than Things
The article "Why Experiences are Better Than Things" emphasizes that experiences foster lasting happiness by creating enduring memories, enhancing social connections, and broadening perspectives, whereas material possessions often provide only fleeting satisfaction.
Engaging in activities like travel and volunteering can lead to personal growth and a deeper sense of purpose, offering fulfillment that material goods cannot match.
For a deeper dive into this topic, you might find the following video insightful:
Words to Live By
💡 Quote: “Do not save what is left after spending, but spend what is left after saving.” — Warren Buffett
Just for Laughs
😂 Video: Inspired Unemployed