Any tips for the young investors?

Real Estate Investor · Rhome, TX · Member since 2014 · 13 posts · 0 votes

Hello,

My name is Stormy Hollingsworth and I will be graduating High school in the summer , and also getting my real estate license. I am very interested in getting into positive investments fairly quickly and was wondering if any of you could give me some tips or advice on the subject of investing. I read into some types of investing last night about buying a property, renting it out, and repeating the process?

Thanks, Stormy H.

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Jenna Stonecipher
Real Estate Investor · Memphis, TN · Member since 2013 · 100 posts · 34 votes
12y
@Stormy Hollingsworth

@Stormy Hollingsworth

The first thing I would recommend is that you do quite a bit more research. BP is filled with hundred of book recommendations. Read as many as possible. Listen to the podcasts. Attend REIA meetings. Once you get deep into the information, then you'll be able to ask for good advice. Take your time before jumping in. Mistakes that you make could cost ALOT of money. You want to position yourself well when starting out.

Here are a few things that I tell young folks (as if I'm not...) who are interested in REI.

At 19, I was bragging to my uncle about my high credit score and he told me, "you just haven't had enough time to mess it up yet." That always stuck with me. Watch your credit and your credit debt ratio. You will rapidly grow in your 20s, and so will your salary, but if you learn to live efficiently then it can be a great boon to your investing.

Also, manage any student loan debt that you may have or may acquire. If you don't need it, don't borrow it--not matter what anyone tells you. You will also qualify for more if you purchase a home any time up to 6 months before you are set to pay your student loans off <--messed up my first deal.

The best advice I can give you is to purchase a multifamily as your first property and live in part of it. I did this with a triplex, which is considered commercial property here. If I had done it with a duplex (as an owner occupant) my taxes would be cut in almost half. You can do all of it with an FHA loan and 3.5% down, btw. $7k covered my down payment and closing costs. Now, my tenants pay my mortgage and I was able to save up $$ to buy another property 6 months later.

Best of luck to you.
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Kerry Edwards
Real Estate Investor · Carmel, IN · Member since 2013 · 44 posts · 8 votes
12y
Congrats on getting into real estate early @StormyHollingsworth.

A few things I would do if I was starting out in my 20's
1. Buy + Hold!!
2. Learn how to do minor repairs and rehab
3. Don't get in a hurry to build portfolio. Buy the right properties at the right time.
4. If financing, pay down debt
5. Network with other investors and don't be afraid to ask questions
6. Read, Learn
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Stormy Hollingsworth
OP
Real Estate Investor · Rhome, TX · Member since 2014 · 13 posts · 0 votes
12y
thanks for the reply @Jenna Stonecipher !

Thanks for the advice and, Sorry to hear about your first deal.

Like you said I am very young so as for education,

Do you recommend going to a college for real estate?
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James Vermillion
Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
12y
Welcome to BP Stormy. First off congrats, if you look around, most people do not even begin to start thinking about real estate investing (or any other type of investing) until much later in life, which gives you an incredible advantage if you stick with it. I thought I started out young (started a few years ago at age 23), but you are in a position to really get started at a young age.

One of the advantages of real estate is the abundance of options. While that is a very good thing, it can make learning about real estate a lot more difficult and be more confusing than it needs to be. Take some time to learn a little about the various real estate investing strategies out there and figure out which one will suit your personal situation. Once you have an idea of how you want to proceed, you can start to hone in on learning the specifics and forming a plan.

While you are figuring out how to proceed, save money! The more money you have to start, the better off you will be. Doing some real estate agent work in your spare time could be a great way to boost your savings while learning more about your local real estate market, so I believe that is a great idea. Additionally, when you are ready to make that first investment, you will not have to blindly trust an agent to help you find the property.

Don't get discouraged! When you are getting started not everyone will take you seriously...that's ok, I can assure you they will once you have a few successful deals under your belt. Until then, find people who will work with you, and go with that.

Good luck!
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Jenna Stonecipher
Real Estate Investor · Memphis, TN · Member since 2013 · 100 posts · 34 votes
12y
@Stormy Hollingsworth

Personally, I recommend going to college, period. I'm not one to put all of my eggs in one basket. So, I went to college and began a career--and I invest on the side. Hopefully, I'll get big enough to invest full-time at some point. For the time being though, my full-time job is great for helping me to fund my investing and also for making contacts that will benefit my investing. If I ever lose my job, I still have funds coming in from my investing. If something happens to my properties, I have a job to fund the repairs.

I'm not telling you what to do, every person and all circumstances are different...not everyone should go to college. I wouldn't go to college for RE though (I know people who have). Everything I've learned has come from reading, listening, trying and asking questions along the way. If you get your RE license, you will receive a good bit of information that is offered in college classes. Also, your local REI may host monthly seminars or classes for REIs. I've attended several of those and learned quite a bit (for much less than a college course).
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Stormy Hollingsworth
OP
Real Estate Investor · Rhome, TX · Member since 2014 · 13 posts · 0 votes
12y
@Kerry Edwards I do not have any debt to pay down. My schooling is completely paid off.

And how can I buy and hold with no credit and little money?
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Stormy Hollingsworth
OP
Real Estate Investor · Rhome, TX · Member since 2014 · 13 posts · 0 votes
12y
so you do not need your license to start investing at all? multifamily or rentals?? @Jenna Stonecipher
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Marcus Johnson
Investor · Apple Valley, MN · Member since 2013 · 281 posts · 94 votes
12y
Personally, I don't think college is for everyone and to me the worst thing you can do is go to college to find yourself. Seems like a very expensive adventure. You don't need a college education to be a realtor is that's your passion. As for investing in real estate, I would make sure you have no debt and 20% to put down, plus an emergency fund in case the walls decide to cave in. What I did to speed along the process of saving money for my first offer on an investment property was to start a handyman business which paid quite well with no overhead. So work has afforded me the means to invest. good luck!
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Stormy Hollingsworth
OP
Real Estate Investor · Rhome, TX · Member since 2014 · 13 posts · 0 votes
12y
@Marcus Johnson

Thanks for relying.

Question, do you need your license to invest in anything?
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David C.
Real Estate Professional · Mechanicsburg, PA · Member since 2012 · 319 posts · 167 votes
12y
@Marcus Johnson

I agree that going away to an expensive college is a bad and expensive way to 'find yourself'.

However, its often very hard for people to 'go back' to school, so I'd push anyone I know who's unsure of what they want from college to at least go part-time to a local community college, taking basic courses that transfer well.

You keep yourself in the 'student' mindset. You are surrounded by students and teachers. You get to 'find yourself' and 'work' at the same time.

If you are a really terrible student and school it hell for you, only then would I say to bag out of college, but I would hope that you learned some skills(like your handyman example) that will get you better than 'part-time unskilled labor). Hopefully your high school did not 'college track everyone' blindly. That's a sad situation for students who just 'don't fit in school' who would be best served learning carpentry, or electrical wiring, or welding.
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Account Closed
Real Estate Investor · Houston, TX · Member since 2013 · 18 posts · 2 votes
12y
Welcome to the forums! I thought I was the youngest person on here and I just graduated college! Just moved to DFW from Florida, looks like you're in the same area as well. There are a ton of very experienced DFW investors who are eager to give advice. I'm personally a newbie, but can't wait to get started.

Like others have said, everyone's situation is different. I graduated, got a job, and definitely wouldn't have done it any differently if I had a change to go back in time. I learned an unbelievable amount in college, in and out of the classroom, and the person I am at 23 is unrecognizable compared to the person I was before college at 18.

Also, having a full-time job that pays well and has great benefits will help to fund my future investments. Having a job has given me options.

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Jon Klaus
Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
12y
Originally posted by @Stormy Hollingsworth:
@Marcus Johnson

Thanks for relying.

Question, do you need your license to invest in anything?

You do not need a license to invest in real estate. You do need a license to broker real estate for others.
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Engelo RumoraBusiness Member
Investor · Toledo, OH · Member since 2013 · 4k+ posts · 2k+ votes
12y
@Stormy Hollingsworth

Hi Stormy,

I will short and sweet lol

Ask questions of people who are where you want to be and who have achieved what you want to achieve.

I am sure you will gain much from the answers provided.

Thanks and have a great day.
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Jenna Stonecipher
Real Estate Investor · Memphis, TN · Member since 2013 · 100 posts · 34 votes
12y
I agree wholeheartedly with @Account Closed

@Stormy Hollingsworth you do not need a license to invest in real estate. You need a license to be a Real Estate Agent. Do some more research and come back with better questions. Good questions, rooted in research and action, will help you to find a mentor.
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Stormy Hollingsworth
OP
Real Estate Investor · Rhome, TX · Member since 2014 · 13 posts · 0 votes
12y
@Account Closed what did you major and minor in?

Thanks for replying!
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James Wise
Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 30k+ posts · 20k+ votes
12y
Not saying you should or should not go to college. But I will say that you do not NEED to go to college to invest in Real Estate. If you want to go to college I'd recommend going for something else that interests you so if later on in life you decide you want a change you have a back up plan.

Most important thing is for you to get some money behind you. I assume you live with your parents so save everything you can while living there.

If I were you my 1st purchase would be a multi-unit home as an Owner Occupant. You can get an FHA loan so your down payment will be small. 3.5%. If you get licensed as an agent most banks will want you to have done it for at least 2 years before they will count your income (as agent work is 100% commission) for the loan.

Good Luck.
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Marcus Johnson
Investor · Apple Valley, MN · Member since 2013 · 281 posts · 94 votes
12y
@Stormy Hollingsworth

No, you don't need a license. Money and who you know is what talks in Real Estate.
0 Reply
Colin L.
Architect · San Diego, CA · Member since 2013 · 244 posts · 101 votes
12y
if you do get your RE license i think a great way to learn would be to work under an experienced agent or agency, particularly one that works w/ a lot of investors.
1 Reply
Ryan Boyce
Flipper/Rehabber · Virginia Beach, VA · Member since 2014 · 74 posts · 31 votes
12y
@Stormy Hollingsworth

Welcome to BP and its amazing that you have decided to start at a young age. I would recommend college or a community college and going into classes that would benfit you as an investor. Finance or Buisness management is a good place to start. See if you like it, if you do then pursue it, if not then study BP forums, read books, litsten to the podcasts. The wonderful thing about this site and the internet is you can get a wealth of knowledge very fast. So Soak it up and the biggest thing I would say is ASK QUESTIONS! The more you ask the more you will learn. Best of Luck

Ryan Boyce
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Jenna Stonecipher
Real Estate Investor · Memphis, TN · Member since 2013 · 100 posts · 34 votes
12y
I'm going to play the devil's advocate with @Ryan Boyce here :)

I would recommend going to college for something that interests you separately from RE...unless finance or business management is something that you would go to school for anyway. If you take classes you enjoy, you will do well in them. Plus, you want a job that you will love--especially if you change your mind about REI.

And while yes, everyone here can agree that asking questions is the key to success, don't ask every question that pops into your mind. If you can find the answer out yourself, then do that first. People won't mind spending their time mentoring you if you bring questions of value. Otherwise you're just wasting someone else's time. This is incredibly important since most seasoned RE investors value their time more than anything.

PS: Tim Pommett graduated from the University of Florida with a Mechanical Engineering bachelors on May 2013. That information is on his profile.
1 Reply
Brian Gibbons
Investor · Sherman Oaks, CA · Member since 2008 · 6k+ posts · 3k+ votes
12y
There are non profitable majors such as art or psychology, which I have a Psyche degree! lol

RE is a life long hobby or job or passive income source or all 3!

Find happiness in what you do, then find happiness in REI, as all REI is not the same. Wholesaling vs Seller Financing vs Multi vs Private Lending vs...

@Jon Holdman always gives great advice on this "Get Started" topic.
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Christopher Giannino
Real Estate Agent · Hamilton, NJ · Member since 2013 · 464 posts · 311 votes
12y
Welcome to BP! I am a young investor as yourself. I think as many people already pointed out, many investors start by having a full time job and do real estate investing part time. I think that college is a great idea. Start with a community college where it's cheaper and your not wasting thousands and thousands of dollars on your general education classes. I went to school for accounting and a lot of things make more sense because I have that business background. IMO I wouldn't major in real estate but I think if you want a leg up on others I would major in business or a niche within business. From my understanding, owning rental properties is like running a business so if you understand the concepts of business it might be easier. I am not saying that you won't be successful with a background in business but I think it's helpful. I think the biggest obstacle to overcome for us younger investors is people not taking you serious. For me, I've noticed by having excellent credit and a fair bit of savings allows people to realize that investing is feasible despite your young age. I would work on establishing credit and create a nice "nest egg" of savings. I would make sure that this is your main focus starting out because that has helped me in my short experiences with real estate so far.
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Giovanni Isaksen
Investor · Bellingham, WA · Member since 2010 · 308 posts · 230 votes
12y
@Stormy HollingsworthAs others have said becoming a real estate agent is a very good way to learn the business of real estate investment and I would go one step further and say that if you want to own commercial multifamily properties (with more than five units) focus on becoming a commercial real estate broker. That way you will be swimming in the deals you're looking for and will get to know all the players in your market.

As far as whether to go to college for real estate I would say not to unless you want to become an analyst for for a large private equity or institutional real estate company. If so you'll need a real estate MBA, preferably from an Ivy League school and it will cost $200,000 or more to become an employee at a company that expects you to work 60 hours a week (or more) on their deals and not yours.

If you go the commercial broker route I recommend pursuing your CCIM designation (http://www.ccim.com/about-ccim) which will include learning to do the same type of investment analysis as is taught in the RE MBA classes, but for a much lower cost.

Whether to go to college at all is a different question and I would answer it this way: The point of investing in income producing properties is to have the cash flow from your properties that provides your income. When you have acquired enough properties to provide the income necessary to live completely from their cash flow you have achieved your financial freedom. Once you are financially free you will have the means and the time to pursue any type of education that interests you.

Yes someone in your position could go to college and do real estate 'on the side' but the time, effort and cost of college would slow the process of becoming financially free. Imagine four years have gone by and maybe you have a small property or two but you need to get a j.o.b. to pay off college debt which would take even more time away from creating your financial freedom.

If I was in your enviable position knowing what I know now I would start by becoming a commercial real estate broker, even if that meant starting as an assistant to a more experienced broker. I would also make it a goal to acquire a small apartment building within one year of graduation. A goal with a deadline like that will motivate one to quickly learn everything they need to accomplish it with a focus on actionable knowledge instead of lofty theory. Once I had achieved my financial freedom I would continue to pursue my education by studying the subjects my interests lead me too.

Congratulations and good hunting-
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Joe Fairless
Investor · Cincinnati, OH · Member since 2013 · 2k+ posts · 1k+ votes
12y
@Stormy Hollingsworth - keep reading books before taking any action. Here's a good book list:

http://www.biggerpockets.com/renewsblog/2013/04/14/best-real-estate-books/

Then pick a type of investing (flipping, wholesale, buy-and-hold, etc.) and focus intently on learning it. Ask people in your city about it and see who is doing it successfully and learn from them.
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Kerry Edwards
Real Estate Investor · Carmel, IN · Member since 2013 · 44 posts · 8 votes
12y
Originally posted by @Stormy Hollingsworth:
@Kerry Edwards I do not have any debt to pay down. My schooling is completely paid off.

And how can I buy and hold with no credit and little money?

My apologizes Stormy. The debt that I was referring to would be mortgage/financing debt. Some investors get themselves in a poor position by leveraging one property against another and so on and so on. Then when they face some headwinds they don't have the flexibility to maneuver, liquidate, borrow, sell if need be.
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Any tips for the young investors?

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