Skip to content
Starting Out

User Stats

1
Posts
1
Votes
Ramsey Scott
1
Votes |
1
Posts

18 years old and very interested in real estate investing

Ramsey Scott
Posted Dec 11 2022, 07:20

I have been researching and reading about real estate investing for a couple of months. I have noticed many different paths you can take and I am trying to find the best one for me. I am 18 so should I save for a down payment and buy as soon as the time is right, or should I wait a couple more years until I have a secure job that I can work until I have enough units?  Also, I live in an area that is one of the fasted growing areas in the country (Cary NC) and although it would be great to buy here, prices are pretty damn high and the cheapest multifamily I can find is 500,000+.

User Stats

737
Posts
553
Votes
Taylor Dasch
  • Real Estate Agent
  • Temple, TX
553
Votes |
737
Posts
Taylor Dasch
  • Real Estate Agent
  • Temple, TX
Replied Dec 11 2022, 09:02

If you can get a loan then I'd buy a SFR and live in it, then plan to move out in a year and use it as a rental assuming it cash flows well. Can you afford a MFH outside of your market but close enough for you to be able to commute to work / school? If so that may be the best option.

Other than that, learning about it and then making calls and getting experience is the most important thing. I lean more towards taking action/ buying first because that will give you the experience needed to find deals and find what exactly would make a good deal. If you base your plan around taking action you will probably make a few big mistakes but the lessons learned will pay off in the future. Where if you just learn and keep learning and never jump on anything, you run the risk of doing that when you should be buying!

User Stats

574
Posts
656
Votes
Leo R.
  • Investor
656
Votes |
574
Posts
Leo R.
  • Investor
Replied Dec 11 2022, 09:14

@Ramsey Scott how about house hacking a single fam or small multifam property?

In my opinion, house hacking is the single best way for people to get started in real estate investing.

Why? Because, house hacking can produce great financial returns, it teaches you essential RE investing skills, but (compared to more advanced strategies like BRRR'ing or wholesaling), it is comparatively lower risk, simple and beginner-friendly (and therefore has the highest likelihood of success).

More specifically:

1. A HH can produce great financial returns. A HH can substantially lower your living expenses, while creating cashflow, appreciation, mortgage pay down, and tax benefits. A HH can also involve opportunities to force appreciation and/or rent (e.g.; by adding an extra bedroom in a previously under-utilized space). When executed correctly and repeatedly, house hacking can be very lucrative, and there are multi-millionaires who built their fortunes on repetitive house hacking! Although it's a strategy that's good for beginners, there are plenty of very experienced RE investors who continue to HH, because it's such a powerful strategy.

2. A house hack will teach you the essential skills you'll need to succeed in RE investing. With a HH, you can learn how to analyze properties & markets, how to find an investor-friendly agent, how to spot value-add opportunities at properties, how to engage in a strong due diligence process, how to screen tenants, how to manage the property, how to build a network of contractors, plumbers, electricians and other pros, how to manage the book keeping of the property, etc., etc., etc. If you want to succeed in RE investing, getting this experience will be critical! In my experience, a HH can provide incredibly valuable lessons that no mentor, real estate course, book or podcast could ever teach (though, I'd still highly recommend reading up on relevant RE resources, listening to podcasts, etc.).

Plus, if you decide to do one of the other strategies in the future (such as BRRR'ing or out of state investing), you'll be much more prepared to do it if you have a few HH's under your belt--a ton of the lessons you'll learn from a HH can be used to succeed in other areas of real estate ...in fact, I'd say that a HH should be a necessary prerequisite to the more advanced strategies (like flipping) for most folks!


3. Compared to other strategies (like flipping, wholesaling, etc.),
HH is relatively simple and lower-risk, and therefore has a higher chance of success. I always use this analogy: would you tell a beginner skier who has zero experience to ski a double black diamond (the most advanced terrain) for their first run? (obviously, no; a beginner could easily get themselves killed on double black diamond terrain!). Beginners should start off on beginner terrain, where they actually have a chance to learn and succeed. A house hack is like that beginner run (but BRRR'ing, wholesaling, and out-of-state investing are more like double black diamonds).

The fact of the matter is: real estate is often a high-stakes endeavor, and the more advanced strategies (like BRRR'ing, wholesaling, flipping, out of state investing, etc.) can easily bankrupt a beginner when they're executed poorly.

Plus, HH'ing is an ideal strategy while you're young...when you're in your 20s/early 30s, it's pretty common to live with housemates (or to live in a duplex next to your tenants), but this arrangement becomes much less feasible once you get further into your 30s/40s (especially if you start a family).

Now, having said all that, house hacking is not necessarily easy (if it were, everyone would do it!)...it's just easier than the more advanced strategies...House hacking still takes significant due diligence, skill in analyzing the market and the property, time and effort to learn about tenant screening and property management, the ability to anticipate appreciation/depreciation trends, etc., etc., etc....and even with lots of skill and preparation, things will still go wrong (vacancy, plumbing leaks, bad tenants, etc.)--but that's the nature of the game. As James Brown sang: you gotta pay the cost to be the boss.

Good luck out there!

PropStream logo
PropStream
|
Sponsored
Nationwide property data Use our robust, multi-sourced data to find off-market properties and close your next deal.