Recent College Graduate Looking to Invest

[Brandon Kowalski]

Hello All, I am a recent college graduate looking to get into REI and am looking for a advisor/partner to do deals with and take me under their wing. I am eager to learn and have some background knowledge with the industry but still have a lot to learn. I have been looking at small multifamily's in Illinois but quickly realized that with the property tax and interest rates being where they are, it would be hard to make a decent return. This has lead me to looking OOS as I have a solid amount of capital saved up to invest with. I've been considering turnkey (RTR) since I want something more passive as I am working full time in accounting but don't know if it is the way to go for my first deal. If there are any investors that have any advice on how they initially got their feet in the industry or would like to take a rookie under their wing, please reach out to me.

[Nicholas Coulter]

@Brandon Kowalski I would suggest starting with a room rental house hack. Low risk and high profits while teaching yo to be a landlord on training wheels!

[Aj Parikh]

Hi Brandon, One of the easiest ways of scaling in real estate today is to invest in turnkey properties out of state. If you have a busy 9-5 routine but have the money to get started and don't have enough time, turnkey companies provide some of the best resources to scale your portfolio. I have used that strategy so feel free to reach out if you want to discuss.

[Zach Lemaster]

@Brandon Kowalski

Welcome! TK is a great way to get started working with an established team, especially if you are considering investing OOS for better returns. We work with many newer investors that get started & build their confidence with TK that end up doing some pretty awesome things in the REI space across multiple markets. It's all about getting that first deal done, and then focusing on the next to consistently grow your portfolio. I've invested in many parts of IL for about a decade & agree with your assessment. I believe there to be much better markets out there from a tax, legal, appreciation & cash flow perspective. Happy to connect to share more thoughts.

We appreciate the interest in RTR.  Here are some more resources with other investors sharing their experiences that might be useful to read:

https://www.biggerpockets.com/forums/92/topics/518583-feedback-on-renttoretirement-and-zach-lemaster

https://www.biggerpockets.com/users/ZacharyCole/references

https://www.biggerpockets.com/forums/92/topics/765347-rent-to-retirement-review

https://www.biggerpockets.com/forums/44/topics/1058814-first-time-with-new-construction-cape-coral-fl?highlight_post=6055029&page=1

https://www.biggerpockets.com/forums/850/topics/895660-my-first-investment-property-an-out-of-state-deal

[Jake McVey]

Quote from @Brandon Kowalski:

Hello All, I am a recent college graduate looking to get into REI and am looking for a advisor/partner to do deals with and take me under their wing. I am eager to learn and have some background knowledge with the industry but still have a lot to learn. I have been looking at small multifamily's in Illinois but quickly realized that with the property tax and interest rates being where they are, it would be hard to make a decent return. This has lead me to looking OOS as I have a solid amount of capital saved up to invest with. I've been considering turnkey (RTR) since I want something more passive as I am working full time in accounting but don't know if it is the way to go for my first deal. If there are any investors that have any advice on how they initially got their feet in the industry or would like to take a rookie under their wing, please reach out to me.

 Hi Brandon, I'm not sure what your current living situation is- but I advise young new investors to always start there first to make sure their personal living expenses stay low.  Whether that's house hacking or buying a fixer upper to live in for cheap with the plans to later turn it into a rental (that's how I started).  If you can live way below your means long term, you can continue to build up capital and place it into other properties. Let alone, when you get into home ownership you learn a lot more about the maintenance that is involved owning a home and have a better idea of what surprises may come your way in an investment property.  

I'm an investor and agent right next to you in Bolingbrook- feel free to reach out to talk real estate anytime!

[Nate Sanow]

I think when young and starting, it's really key to run a marathon and not a sprint. I REALLY am a big believer in doing whatever you can to be around a higher volume of real estate transactions. If you had time that means working in a title company, mortgage company, wholesaler or realtor team, or even a contractor / remodeler team…anything that lets you see lots of buying and selling of RE. If working full time, that is harder, yes, and might need to be done vicariously through someone you know or get to know - but if you can find a local meetup and find out who is buying in volume, see if you can go walk properties with someone in acquisitions mode. If that doesn't work, find a realtor who is patient and willing to show you a variety of houses and be upfront with them, you need to see a good handful….I know this is so elementary but I find that if you don't do this, one crazy inspection report on a property can scare you away from pulling a trigger. You need to see a lot of problems, a lot of difficulties, a lot of challenges as soon as possible. Run towards the headaches and not from them…. "Turnkey" is to me becoming a BS term as it does NOT mean you never get hit with maintenance…I know people who have bought turnkey and sometimes are desperate sellers wanting to offload that nice and easy "stress free turn key" property is just as much a headache as anything else. And…that is OKAY! I am just trying to say this REI thing is a rollercoaster ride it goes high and then low, really fast, the trick is to get on the ride and not fall off. I wish you well.

[David Meister]

Brandon, Jake's response is probably the best. I'm trying to get my son to do this (Buy and not live in it). I had a good deal for him and knew it wouldn't last, but he was too busy. Needless to say, the property went under contract within 48 hours. Being local as well, and seeing that you are young and (Assuming) inexperienced, this can be a tough industry to learn in. I would start by finding a local investing group. There are some on Meetup. I must warn you though, you need to make sure it's a group that will help and educate, not try to get you to buy some program or a membership with promises of grandeur! Then look for a 2 flat, live in one, rent the other. Are you looking for turn key or BRRRR? I do complete gut remodel jobs (You get your best deals on the ugliest houses).

[John Warren]

@Brandon Kowalski welcome to the forums! You have had several very thoughtful responses here, but I figured I would share my perspective. I ended up investing out of state in Indiana when I started my investing career. The state was way more landlord friendly, the taxes were cheaper, and the expenses were cheaper. The main issue is that the rents were also cheaper, and I couldn't find good management or labor. This amazing deal that I bought required constant interventions to keep it on the tracks which ended up involving me driving there from Chicago in person with contractors in tow. 

I sold that property and focused in on investing in my own backyard, and that has been infinitely better. We have such incredible inventory here in the Chicago area, and we are in a primary market. Being in the 3rd largest market in the US, means you can find ample contractors, attorneys, realtors, managers, accountants, etc. I would at least take a pass at Chicago before you look at all that green grass on the other side of the fence. 

[Paul De Luca]

Quote from @Brandon Kowalski:

Hello All, I am a recent college graduate looking to get into REI and am looking for a advisor/partner to do deals with and take me under their wing. I am eager to learn and have some background knowledge with the industry but still have a lot to learn. I have been looking at small multifamily's in Illinois but quickly realized that with the property tax and interest rates being where they are, it would be hard to make a decent return. This has lead me to looking OOS as I have a solid amount of capital saved up to invest with. I've been considering turnkey (RTR) since I want something more passive as I am working full time in accounting but don't know if it is the way to go for my first deal. If there are any investors that have any advice on how they initially got their feet in the industry or would like to take a rookie under their wing, please reach out to me.

 Since you need somewhere to live anyway, I recommend buying your first property as house hack. Get in the game with a minimal down payment, learn to be a good landlord, keep building up your capital, and then if you're serious about investing OOS identify the right market for you and build a team there. It can be a daunting task to jump right into OOS investing because there are SO many different markets that you can consider and time consuming from a research perspective. 

Ultimately, you can both house hack AND invest OOS.

[James Wise]

Quote from @Brandon Kowalski:

Hello All, I am a recent college graduate looking to get into REI and am looking for a advisor/partner to do deals with and take me under their wing. I am eager to learn and have some background knowledge with the industry but still have a lot to learn. I have been looking at small multifamily's in Illinois but quickly realized that with the property tax and interest rates being where they are, it would be hard to make a decent return. This has lead me to looking OOS as I have a solid amount of capital saved up to invest with. I've been considering turnkey (RTR) since I want something more passive as I am working full time in accounting but don't know if it is the way to go for my first deal. If there are any investors that have any advice on how they initially got their feet in the industry or would like to take a rookie under their wing, please reach out to me.

 Welcome aboard Brandon.

[River Sava]

Hey Brandon- As others mentioned, TK properties are a great way to jump into REI. We work with new investors frequently and would love to help you out here and offer insight!

[Mitchell Roadruck]

Quote from @Brandon Kowalski:

Hello All, I am a recent college graduate looking to get into REI and am looking for a advisor/partner to do deals with and take me under their wing. I am eager to learn and have some background knowledge with the industry but still have a lot to learn. I have been looking at small multifamily's in Illinois but quickly realized that with the property tax and interest rates being where they are, it would be hard to make a decent return. This has lead me to looking OOS as I have a solid amount of capital saved up to invest with. I've been considering turnkey (RTR) since I want something more passive as I am working full time in accounting but don't know if it is the way to go for my first deal. If there are any investors that have any advice on how they initially got their feet in the industry or would like to take a rookie under their wing, please reach out to me.

 Hey @Brandon Kowalski, I would consider Northwest Indiana. The rents may be lower than Chicago but the units are far more affordable. Expenses are significantly lower and IN is far more investor friendly. I would also advise you to be open to managing at least your first door by yourself. This will help you understand the process. If you are interested in Northwest Indiana I would love to connect with you.

[Nicholas L.]

@Brandon Kowalski wow, lots of long answers here.  I'll simplify:

-Don't partner on your first deal - there's no reason to

-Go to REIA meetings and network - don't look for mentors, look for colleagues, friends and references

-Go turnkey if you want, but know that turnkey isn't passive - you own the property, you manage the managers, you own the decisions that get made

-House hack

-Refi your house hack, and house hack again

Reactions welcome

[Crystal Smith]

Quote from @Brandon Kowalski:

Hello All, I am a recent college graduate looking to get into REI and am looking for a advisor/partner to do deals with and take me under their wing. I am eager to learn and have some background knowledge with the industry but still have a lot to learn. I have been looking at small multifamily's in Illinois but quickly realized that with the property tax and interest rates being where they are, it would be hard to make a decent return. This has lead me to looking OOS as I have a solid amount of capital saved up to invest with. I've been considering turnkey (RTR) since I want something more passive as I am working full time in accounting but don't know if it is the way to go for my first deal. If there are any investors that have any advice on how they initially got their feet in the industry or would like to take a rookie under their wing, please reach out to me.

We started out with turnkey at the beginning but found we had very little equity & then there was a market turn.  The properties still cash flowed but we were underwater on a few.  We then switched strategies and focused on purchasing distressed; renovated, rented then refinanced with the goal of making sure we had at least 35% equity.  With that said there's nothing wrong with turnkey, just make sure you're not purchasing at the top of the price point.

There are a few turnkey companies I can recommend and you may find that you don't even have to go Out of State.  I'll send you a DM.

[Ryan Thomson]

House hack it man! B/c you only have to put 0-5% down the ROI is incredible.

1. I would keep in mind that if you get a duplex, triplex, or quad you are going to have to put 15% down with a Conventional loan. So sticking with an FHA might be better if you can get it for only 3.5% down.

2. For resources I really like the following House Hacking episodes on Bigger Pockets Podcast: #352, #252, #350, and #249. 

3. Happy to talk if you want any more advice.

[Sam McCormack]

@Brandon Kowalski

Hey Brandon, like most people recommend, I would start househacking, and move from there. Creative financing would also make a lot of deals now look better, including seller financing where you can make any terms you want. I am not sure if you want to move out OOS, but househacking in an area like Cincinnati or Columbus wouldn't be too bad if you don't care to move. Let me know your thoughts!

[Patrick Drury]

@Brandon Kowalski
If you are investing out of state I would definitely recommend Columbus OH. It's a solid hybrid market of cash flow and appreciation. Columbus has lots of job opportunities and population growth.

[John Warren]

@Brandon Kowalski one of the biggest misconceptions out there is that out of state is easier somehow. The expenses are always too high on most properties, and every state has property taxes. I first began investing out of state, and I quickly pivoted back to the Chicago area. I was in Indiana which is a very business friendly state. The taxes were cheaper, and the costs were lower, but I quickly realized that the grass isn't always greener! Now I focus in my own back yard where I have more control, and it has worked much better. 

[Eliott Elias]

Best advice I can give you is start hunting for deals relentlessly and get a better idea of your market. Hearing what other people think about your market can give you a lot of clarity 

[Tyler Lingle]

Quote from @John Warren:

@Brandon Kowalski welcome to the forums! You have had several very thoughtful responses here, but I figured I would share my perspective. I ended up investing out of state in Indiana when I started my investing career. The state was way more landlord friendly, the taxes were cheaper, and the expenses were cheaper. The main issue is that the rents were also cheaper, and I couldn't find good management or labor. This amazing deal that I bought required constant interventions to keep it on the tracks which ended up involving me driving there from Chicago in person with contractors in tow. 

I sold that property and focused in on investing in my own backyard, and that has been infinitely better. We have such incredible inventory here in the Chicago area, and we are in a primary market. Being in the 3rd largest market in the US, means you can find ample contractors, attorneys, realtors, managers, accountants, etc. I would at least take a pass at Chicago before you look at all that green grass on the other side of the fence. 

 I'll second Indianapolis. It's in Chicago's backyard and getting a lot of relocation from Chicago actually. I invest in Indianapolis because A) it's affordable ~220k median price B) it's landlord friendly and C) there is a lot of pro-local-government support of capital investment in Indianapolis as it transitions into a larger more built up city, leading to further appreciation. I'd be happy to chat.

[Alex Evans]

Hey @Brandon Kowalski

Welcome to BP and congrats on graduating. I also got into real estate right after I got my MBA in Finance. One of the best ways to get started in real estate is to invest out of state where your dollar brings more value. I definitely recommend reaching out to a few fully integrated turnkey companies to see if they ae a good fit for you! 

[Jonathan Klemm]

Hey @Brandon Kowalski - I highly suggest looking here in Chicago and finding a partner.  I found that partners are by far the fastest way to scale.  

We love working with newer investors that are willing to put in the grind and effort to get going.  Nothing we do in life starts easy, but it will always get easier over time with experience.