19 y/o with $20K saved.

[Jackson Tackett]

I’m 19, in Ohio, with a solid W-2 job but the job isn’t the goal. I want financial freedom and, more than that, a business my son can eventually inherit. My wife’s a stay at home mom whos fully behind me on this. I’m renting, have $20K ready to invest, good credit, and a background in construction with a lot of contractor connections. I’m eager to start, but I won’t lie the risk scares me. Failing in front of people and putting my family in a tough spot is a real fear. If you were 19 with $20K, solid credit, and construction connections, what would you get into first? Looking for a strategy to move fairly quickly while still managing risk, and to start networking with people ahead of me on this path. Appreciate any advice or hard truths.

[Kevin Sobilo]

@Jackson Tackett, a few thoughts:

1. I appreciate the self awareness of the difficulties and risks associated. Better to go into something new with eyes wide open. 

2. I wouldn't worry about the end goal of a business your son can inherit. That is WAY too far into the future for you at 19 to worry about. Its a pleasant vision to have, but not something to affect your decision making at this point IMO. 

3. I would say the obvious choice for someone in your position would be a "house hack". 

Currently you RENT. You want/need experience. You have a w2 job. You have a down payment. That is a lot of things you already have to make a house hack make sense!

4. So, with a house hack, you would probably look for a small multifamily home that is live-able but needs some work. I used to refer to it as "Grandma's House". A house that is VERY dated, but functional. 

5. By targeting a functional house you can qualify for regular conventional financing options for a primary residence. You may NOT be able to use options like FHA loans because many of these houses will have some issues because they are dated and have some deteriorating conditions, but regular conventional loans are likely to fit the bill.

6. With a house hack you would buy, live in 1 unit, and perhaps rehab and rent out the other unit. Likely a cosmetic rehab mostly. So, you get experience as a landlord. You get to do a MODEST rehab and you get to live in a place you own for a while. 

7. After a year or 2, you could look to move out and rent the unit you were living in and go on to something else, perhaps even another house-hack. 

8. What I would be careful of is "pie in the sky" thinking. You aren't building the Taj Mahal. When developing your rehab plans look at what other rentals are like and use that to temper your plans. Its easy to want to OVER improve things to make yourself feel good. 

Feeling good, doesn't put money in your pocket especially with rentals which IMO are more about function than form.