Recent Post-Grad Starting Out

Member since 2022 · 9 posts · 8 votes

Hi everyone - I'm about to start my first job after college (in the DC area) and have recently started to learn about real estate investing as a side project. I'm curious as to what % of my income I should look to set aside for a down payment. I'll be making ~$30k above median income for my city next year and would really like to pull the trigger on something within the next 12 months once I learn more. I'm looking into buy and hold properties but not sure what niche is most appropriate yet for my area and situation.

In addition, is it typically common for newbies to outsource property management? Or is this something that's not really affordable until later on in the game? Ideally I would like to be as hands off as possible, is this unrealistic for someone just starting out? Thanks a bunch and I'd really appreciate any advice/tidbits.

3 Reply

54 views

Most Popular Reply

Nicholas L.Pro Member

Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes

@Matthew Banks

as others have said, you're in a great position. there's no need to rush. and i would strongly encourage you not to use hard money or something else non-conventional on your first deal.

wait, save, house hack, repeat.

2 Reply

See this reply in the discussion

29 Replies

Jump to latestLatest

Sort by

Rene G.
Real Estate Coach · LandlordSkool.com · Member since 2017 · 110 posts · 88 votes
3y
Quote from @Leo R.:
YES! @Matthew Banks if you want to be a successful real estate investor, self-managing your own properties (for a while) will give you invaluable experience--and without that experience, it will be very difficult to become a successful real estate investor (with or without PMs).
YES! Think of it this way: trying to manage a PM (or team of PMs) without any property management experience is a bit like trying to manage a car repair shop with zero experience fixing cars, or trying to coach a team to an NBA championship with no basketball experience, or trying to manage a law firm with no legal experience. In order to successfully manage a PM, you need to know how to manage properties yourself--and the only way to thoroughly understand property management is to manage properties. Sure, you can learn a lot from forums, books, podcasts etc., but those things cannot replace experience...you can read every book on earth about swimming, but the only way you'll learn to swim is to jump in the pool.

DOUBLE YES!
1 Reply
Mohammed Rahman
Real Estate Broker · New York, NY · Member since 2020 · 2k+ posts · 1k+ votes
3y
Hey @Matthew Banks - all your questions can be answered with this: it depends.
I'm an investor & realtor, and what's worked for me, might not work for you, a bad deal to one, is a good deal to another, and all the other sayings you can possibly think of will fit here.
1. I personally don't think you need a property management company. They'll take around 8-15% (depending on the size of the property) of your monthly rent, and don't give you the chance to learn more about REI directly hands on. However... it depends. What do you want out of it? Do you see yourself becoming a long term RE investor? If so, it might be a good idea to manage on your own. But if you want to be totally handsoff and would rather invest in REITS or RE funds (Fundrise, etc.) then a prop. mgt. company is better suited for you.
2. The % downpayment doesn't come from your total income, it comes from what you can ultimately afford AND what your goals are. For example, if you know your end goal is property appreciation, maybe you'll be ok with less money down... although it eats into your monthly cashflow with a larger mortgage payment, your goal is to sell in a few years and take the profit appreciation. It depends, again, on you.
3. My $0.02 would be to attend a local REI event just to meet other likeminded people. Right now, you might be in a silo and that makes you susceptible to information overload and believing advice that might not apply to your situation.
Good luck!
0 Reply
Paul Meyer
Contractor · Virginia Beach, VA · Member since 2021 · 82 posts · 35 votes
3y
@Matthew Banks do some flips and pay off all your debt then get into passive income like rentals or notes. It doesn't make sense to pay high interest when making very little income on rentals starting out.
0 Reply
Dave Skow
Lender · Seattle, WA · Member since 2014 · 2k+ posts · 899 votes
3y
@Matthew Banks- thanks ...1) if buying 1st property as your primary residence - you should target 3-5% down payment for whatever your price range will be .....keep in mind you will also need to have funds saved for the new loans loan fee/ closing costs / prepaid taxes insurance and interest .....you are allowed to ask the seller to provide a credit that can be used to cover some of these items .....get pre approved so you can learn the process and understand the numbers ...good luck
0 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.