{"id":37595,"date":"2021-03-02T09:30:36","date_gmt":"2021-03-02T16:30:36","guid":{"rendered":"https:\/\/www.biggerpockets.com\/renewsblog\/?p=37595"},"modified":"2023-03-29T09:50:54","modified_gmt":"2023-03-29T15:50:54","slug":"start-investing-real-estate-young","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/start-investing-real-estate-young","title":{"rendered":"How to Start Investing In Real Estate at a Young Age (or a &#8220;Young at Heart&#8221; Age)"},"content":{"rendered":"\n\n      <iframe loading=\"lazy\" frameborder=\"0\" height=\"200\" scrolling=\"no\" src=\"https:\/\/playlist.megaphone.fm?e=BIGPOC2896585833&#038;light=false\" width=\"100%\"><\/iframe>  \n\n\n\n<p>I don\u2019t want to get old.<\/p>\n<p>I\u2019m not looking forward to hip problems, my eyes getting worse, or needing to take &nbsp;pills just to use the bathroom correctly. I don\u2019t want the \u201cold person\u201d smell, the heartburn, or the desire to drive fifteen miles under the speed limit. The thought of that life terrifies me.<\/p>\n<p><a href=\"https:\/\/www.biggerpockets.com\/guides\/first-time-home-buyer?itm_source=ibl&amp;itm_medium=blogad&amp;itm_campaign=guide\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-127803 size-full\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/04\/first-time-home-buyers-guide.jpg\" alt=\"\" width=\"706\" height=\"125\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/04\/first-time-home-buyers-guide.jpg 706w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/04\/first-time-home-buyers-guide-300x53.jpg 300w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2020\/04\/first-time-home-buyers-guide-702x125.jpg 702w\" sizes=\"auto, (max-width: 706px) 100vw, 706px\" \/><\/a><\/p>\n<p><em>Just thinking about buying a home for the first time brings waves of emotion. It\u2019s both an exciting and frightening concept for most people. First and foremost, know you\u2019re not alone! Over one-third of all Americans are considering buying a home in the next five years. Our <a href=\"https:\/\/www.biggerpockets.com\/guides\/first-time-home-buyer?itm_source=ibl&amp;itm_medium=blogad&amp;itm_campaign=guide\" target=\"_blank\">First Time Home Buyer&#8217;s Guide<\/a> prepares you for the road ahead.<\/em><\/p>\n<p>Perhaps, though, I&#8217;m looking&nbsp;<em>least<\/em>&nbsp;forward to no longer being the \u201cwhiz kid.\u201d Because I started investing in real estate when I was so young, I\u2019ve always been the one in my social circles who \u201cis going somewhere.\u201d It\u2019s a good feeling\u2014but I haven&#8217;t done anything remarkable, really. I simply did something remarkable&nbsp;<em>for my age<\/em>. A significant distinction, but an important one. When I get old, I\u2019m not longer doing remarkable things. I\u2019m just doing my job.<\/p>\n<h2>Why investing at a young age rocks&#8230;and is hard<\/h2>\n<p>The sooner you get into the real estate game, the sooner you can succeed. Rental properties build equity over time\u2014and the more time they have to appreciate, the larger your portfolio will be. After all, passive income is key to life-long wealth. You can then use that equity to buy additional investment properties, accumulating cash flow&nbsp;<em>and<\/em>&nbsp;appreciation. If you want to build wealth through rentals or other long-term real estate investments, the more time you have, the better.<\/p>\n<p>I still have a few good years left to be \u201cremarkable\u201d\u2014but \u201cold\u201d is creeping up on me. Unfortunately, I have some bad news:&nbsp;<strong>Y<\/strong><strong>ou are getting old too<\/strong>. Sorry. That means it&#8217;s time to get started building&nbsp;<em>your<\/em>&nbsp;wealth. But being young comes with a few significant disadvantages.<\/p>\n<ul>\n<li><strong>Very little money.<\/strong>&nbsp;Let\u2019s face it\u2014most young people are pretty broke. Maybe you\u2019ve got a good job and have so much disposable income you don\u2019t know what to do with it, but chances are you\u2019re living pretty close to paycheck-to-paycheck.<\/li>\n<li><strong>Very little life experience.<\/strong>&nbsp;When I was 21 I thought I knew a lot. I didn\u2019t. I didn\u2019t know anything.<\/li>\n<li><strong>Video games are so appealing.<\/strong>&nbsp;Sometimes all we want to do is play some video games, hang out on Facebook, and watch TV.<\/li>\n<li><strong>Chasing girls (or guys) or chasing kids.<\/strong>&nbsp;From the moment puberty hits, most boys and girls have a strong need to find that \u201cspecial someone\u201d and spend all their time together. After that, comes the kids, who need you every waking minute. That doesn\u2019t leave a lot of time for investing.<\/li>\n<li><strong>Poor credit.<\/strong>&nbsp;College and the first years in the working world can be rough for young people, especially during recessions. Schools do a terrible job teaching about financial intelligence&#8230; or perhaps we just didn\u2019t listen. Either way, most of us have waded through the credit card years and spent many years recovering.<\/li>\n<li><strong>No like-minded social group.<\/strong>&nbsp;I don\u2019t have many friends who read my writing. It\u2019s not that they don\u2019t like me, or care about me\u2014they simply don\u2019t care about real estate. That\u2019s fine. It makes it tough, however, to find motivation to invest in real estate when you don\u2019t have a community that fosters financial education and growth.<\/li>\n<\/ul>\n<p>So what&#8217;s a person to do? Here are the lessons I have learned.<\/p>\n<h2>Harness what you&#8217;ve got<\/h2>\n<p>Now that I\u2019ve made you feel bad about all the things that are&nbsp;<em>not<\/em>&nbsp;going well in your life, let\u2019s talk about the things that you do have.<\/p>\n<ul>\n<li><strong>Motivation.&nbsp;<\/strong>You\u2019ve already read 600 words of this blog post about real estate investing, so you are clearly motivated. Use that. As people get older, they seem to get more complacent in their situation and no longer shoot for the stars.<\/li>\n<li><strong>Technology.<\/strong>&nbsp;You understand how the internet works, how to handle social media, and how to make a spreadsheet. Even if you can\u2019t do everything, chances are you\u2019ve got a friend (probably on Facebook) who can get it done for you.<\/li>\n<li><strong>Resources.&nbsp;<\/strong>Our parent\u2019s generation didn\u2019t have BiggerPockets&#8217;s wealth of knowledge and community\u2014but we do. Jump into the&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/forums\" target=\"_blank\">Forums<\/a>&nbsp;and ask question. Ask contributors questions on the&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/blog\/\" target=\"_blank\">BiggerPockets Blog<\/a>. Technology can be a force for terrible time-wasting&nbsp;<em>and<\/em>&nbsp;for terrific growth.<\/li>\n<li><strong>Time.<\/strong>&nbsp;Finally, you\u2019ve got the most powerful force in the universe: time. You aren\u2019t looking at forced retirement in five years. You\u2019ve got the next twenty or thirty years to crush it. If you create a solid plan now, you&#8217;ll have to work hard&nbsp;<strong>not<\/strong>&nbsp;to retire a millionaire.<\/li>\n<\/ul>\n<p><em>Of the 7 billion people on earth, less than 20 million are millionaires. That\u2019s far less than one percent. This ultimate guide explores the only three ways anyone becomes rich\u2014and demonstrates how anyone can reach millionaire status if they only follow a few simple rules. Follow <a href=\"https:\/\/www.biggerpockets.com\/guides\/millionaire-guide?itm_source=ibl&amp;itm_medium=blogad&amp;itm_campaign=guide\" target=\"_blank\">How to Become a Millionaire: The Ultimate Step by Step Guide <\/a>to&nbsp;make sure you become a millionaire sooner rather than later.<\/em><\/p>\n<h2>The best investing strategy for beginners<\/h2>\n<p>Obviously, your first investment depends on your situation. Besides investing in yourself through books, podcasts, blogs, and forums, I believe that most people should start with their primary residence. As I see it, you have two great options:<\/p>\n<ol>\n<li><strong>Live-in flip:<\/strong>&nbsp;With this method, you live in a single-family home while you fix it up to sell. The beauty of this method is that you have to pay to live somewhere anyways\u2014but there are effectively no holding costs. You could take three months or three years to sell it, but in the end, you&#8217;ll profit. Additionally, if you buy with a fixed rate mortgage via a traditional lender\u2014which you should\u2014your payment will stay fixed for as long as it takes. You can even try &#8220;house hacking,&#8221; where you rent out a room for additional income.<\/li>\n<li><strong>Small multifamilies<\/strong><strong>:<\/strong>&nbsp;I&#8217;m a huge fan of multifamily properties. The second property I bought was an ugly little duplex that my wife and I lived in for a year while renting the other half out. This enabled us to live rent-free and pay down the mortgage with the help of our tenant&#8217;s rent\u2014plus, I could quit my job and get into investing full-time. After you leave, those apartments become the first in your investment collection. Additionally, you&#8217;ll gain landlording experience that will help for the rest of your career.<\/li>\n<\/ol>\n<h2>What about money?<\/h2>\n<p>Yes, real estate costs money. However, both options above allow you to start with a low down payment. In the United States, an FHA loan allows homeowners to buy a property with just 3.5% down payment. On a home with a $100,000 purchase price, this equates to just $3,500 plus closing costs. Can you come up with $5,000 to get started on your financial future? That&#8217;s one more benefit of being young: the ability to get out there and hustle.<\/p>\n<p><strong>How can you make $5,000 over the next five months?<\/strong><\/p>\n<p>Even better, the FHA has another program called the 203K loan, which allows you to incorporate needed repairs into the loan itself and still only pay 3.5% of the total loan amount. In addition, you can use the 203K loan on small multifamily properties as well, combining the benefits of the live-in flip&nbsp;<em>and<\/em>&nbsp;the small multifamily strategy into one feasible plan.<\/p>\n<h2>Start building relationships<\/h2>\n<p>I\u2019m going to tell you a secret: Old people like ambitious young people.<\/p>\n<p>It\u2019s true. Just ask any of the old people on BiggerPockets&#8230; just don\u2019t tell them I called them \u201cold.\u201d There is something truly rewarding about helping an ambitious young person achieve their goals. I think a lot of it has to do with \u201cI see myself in their shoes\u201d or \u201cif only I had started back then!\u201d<\/p>\n<p>Whatever the reason, it is a fascinating and powerful phenomenon. Use this to your advantage! Build relationships with older investors who have graduated from the school of hard knocks. Let their failures teach you how to avoid or fix your own.<\/p>\n<p>You&#8217;ll also want to build relationships with local real estate agents, property managers, and contractors, who will be invaluable as your business grows.<\/p>\n<p>There are two great places that you can start building these relationships today: locally and online.<\/p>\n<ul>\n<li><strong>Locally<\/strong>, there are probably dozens (if not hundreds) of old-time landlords and real estate investors in your area who may take you under their wing to help mentor and train you. These relationships are often simply a friendship, built over many cups of coffee and errands run for the investor.<\/li>\n<li><strong>Online<\/strong>, these relationships are built everyday in the&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/forums\" target=\"_blank\">BiggerPockets Forums<\/a>, where investors from across the country get together to help answer questions, build relationships, make deals, and improve the lives of everyone involved.<\/li>\n<\/ul>\n<h2>What about wholesaling?<\/h2>\n<p>Wholesaling gets a lot of publicity because gurus love to talk about how easy it is and how you can make hundreds of thousands of dollars in your spare time with no money.<\/p>\n<p>Look. Wholesaling is a real thing. I\u2019ve done it successfully, as have a lot of other BiggerPockets members. But here is my problem with wholesaling: It\u2019s too easy to quit. Most people never make a dime. They jump in because it looks easy, but quit soon after beginning because it was too hard. Or they didn&#8217;t make any money\u2014or there was a shiny new object.<\/p>\n<p>Wholesaling is a business. Granted, it\u2019s a business designed for self-employment, with flexible hours and low investment. It\u2019s still a job, though, and requires time, dedication, motivation, and marketing money.<\/p>\n<p>If you can get started investing in real estate by wholesaling, that&#8217;s great! Just realize that most wholesalers never get past their education. It\u2019s much more difficult to walk away from a duplex that you just bought than to walk away from a wholesaling career.<\/p>\n<h2>Where do I go next?<\/h2>\n<p>Time is ticking.<\/p>\n<p>You are getting old. Fast. You aren\u2019t going to be the \u201cwhiz kid\u201d for long, so it\u2019s time to start. Evaluate where you are, where you want to be, and the path you need to get there. If you are unsure of any of that, it\u2019s okay. Go post your questions, fears, and troubles in the&nbsp;<a href=\"https:\/\/www.biggerpockets.com\/forums\" target=\"_blank\">BiggerPockets Forums<\/a>. Start connecting with some of the brilliant real estate minds here on BiggerPockets.<\/p>\n<p><a href=\"https:\/\/store.biggerpockets.com\/collections\/all-books\/products\/how-to-invest-in-real-estate\" target=\"_blank\"><img loading=\"lazy\" decoding=\"async\" class=\"alignnone wp-image-103039 size-full\" src=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2014\/08\/How-to-Invest-Banner.jpg\" alt=\"\" width=\"700\" height=\"190\" title=\"\" srcset=\"https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2014\/08\/How-to-Invest-Banner.jpg 700w, https:\/\/www.biggerpockets.com\/blog\/wp-content\/uploads\/2014\/08\/How-to-Invest-Banner-300x81.jpg 300w\" sizes=\"auto, (max-width: 700px) 100vw, 700px\" \/><\/a><\/p>","protected":false},"excerpt":{"rendered":"<p>Whether you&#8217;re young\u2014or young at heart\u2014it&#8217;s time to start investing in real estate. Begin building your empire now with this comprehensive guide.<\/p>\n","protected":false},"author":710,"featured_media":135753,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":""},"categories":[5524,7119],"tags":[929,7209],"class_list":["post-37595","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-real-estate-investing-for-beginners","category-biggerpockets-daily","tag-getting-started","tag-newbies-advice"],"acf":[],"comment_count":0,"_links":{"self":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/37595","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/users\/710"}],"replies":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/comments?post=37595"}],"version-history":[{"count":0,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/posts\/37595\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media\/135753"}],"wp:attachment":[{"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/media?parent=37595"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/categories?post=37595"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.biggerpockets.com\/blog\/wp-json\/wp\/v2\/tags?post=37595"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}