You have discovered the power of real estate. Capital preservation, cash flow, appreciation, tax benefits—all words that are music to your ears. And you are ready to dive in! Then you check your bank account and realize you aren’t really sure how much you need for your first investment.

Not knowing the answer, you turn to the BiggerPockets Forums and post your questions, only to get a series of responses ranging from $0 to $100,000 and everything in between. What’s worse, most statements begin with the words, “It depends…”

Where do you start? Who is right?

Well, it depends.

Why Padding Your Savings Is Critical

While it’s true that you can get started in real estate for no money down, I often advise people to have at least $50,000 saved up. Not that you need $50,000 to buy that first property (you may need far less), but more importantly, so you can have a shored-up financial foundation and invest from a position of strength.

I call this having a financial moat. This financial moat generally consists of saving up a minimum of three months of personal expenses (I prefer having six to 12 months of expenses myself) and any deductibles in cash.

This cash pile can help you navigate a job interruption, broken-down car, or health crisis, or buy you time to figure out your next steps financially should life throw you a curveball (like a pandemic!).

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