I am a high school senior looking to start investing in real estate. My mom is a real estate appraiser in northern Indiana and southern Michigan. I've always been interested in real estate and this seems like a great thing for me. I currently have an eBay store where I buy and sell apple products and turn a profit so I already have the "buy low, sell high" mentality. I know there is a lot to learn, but I was wanting to know how to start and what I need to know. Thanks!
@Micah Cook sounds like you're on the right path. Accumulate cash, don't take on new "bad" debt (car loans, etc.). Once you have a pile of cash, decide what you want to purchase. You might want some rentals in order to generate monthly income, or you might want to flip properties to make lump sum cash. Rentals usually require less cash because you can finance the purchase, whereas some flips you'll need to purchase the property using all cash.
Bottom line - no bad debt, acquire cash, start investing. Read, read, read some more.
Best of luck.
Welcome to BP!
Here are my Quick Tips (If you're listening to the Podcasts, you'll understand the reference. If not...see Tip #2!!!)
1. Get involved in the forums. Offer what you can and absorb what everyone else offers.
2. Listen to as many Podcasts as you can. I am listening to all of them, some of them more than once. There has not been a single broadcast that has not provided me value or that I felt was a waste of my time. Great content!!
3. Download and read the free How-to-Guides, starting with the Ultimate Beginner's Guide to Real Estate Investing. You could pay thousands of dollars for this information BP offers free. (I almost did!)
4. Set up some keyword alerts. It will keep you engaged in valuable discussions, while you're getting plugged in.
5. Get involved with your local REIA's. Real Estate is, as I'm learning, all about relationships and networking. Make it work for you!
The BP community is awesome, and you've taken a great first step!
I'll disagree with @Mark Gallagher
While I don't like debt in general, real estate debt is different in that it's secured by a real tangible asset. Leverage in real estate investing is a very valuable tool, when used properly. The key is to not over leverage yourself, so that any blip in your plan - such as an unexpected, prolonged vacancy of multiple units, etc. - doesn't wreck you.
Learn about the time value of money, net present value and internal rate of return. You'll find that there are many times when, particularly on longer-term investments, using your own liquid capital simply doesn't make good financial sense.
You're starting off very young...good for you. Figure out what your end game is...do you want to cash flow $20k per month? Do you want to have a $10 million portfolio? Is it about the size of the portfolio or financial freedom? The answers to these questions determine how you approach your REI career, including how leverage will play into that career.
@Hattie Dizmond I just edited my post.. certainly didn't mean asset-secured debt. Thanks for pointing that out.
Just wholesale your first property. Its an experience I wish I could do again. Like a virgin. lol
I now totally agree with @Mark Gallagher !!! :-)
My son is a senior in High School. He is saving his money to buy a condo or small home after he graduates. He is planning on renting extra rooms out to room-mates while he goes to college. His living expenses will basically be paid for. When he graduates from college he can either sell the property to make a downpayment on a larger property or he can keep the original property as a rental.
You are smart to start out young. Just don't bite off more than you can chew. I am listening to "Success Principles" by Jack Canfield. It is available on audiobook via You Tube. I told my son he should listen to it. The author is big on goal setting. I wish someone had given me this same advice when I was young.
I would recommend asking your mom, if you can follow her on some of her appraisals.
It will give you a good understanding of how after repair value(ARV) is created, and how market values are dictated.
I would also look for a investor that you could possibly volunteer to help or someone in construction, so you can gain that understanding.
In addition listen to all the podcast you will gain so much knowledge from others experiences (good and bad). This will help you gain an investor's perspective and will introduce you to a diverse amount of strategies that exist in real estate.
In closing take time to learn the neighborhoods, where you would like to invest.
I would walk them, drive them, evaluate what the standard home in that area usually sale for, rent for, and what is the standards for that area(amount of bedrooms, baths, square footage, years built).
Welcome @Micah Cook !
It sounds like you are on the right path, and at an early age. I'm jealous - it took me about 40 years to realize real estate and passive cash flow was the way to go!
I would suggest buying a small, low cost, project ASAP and go through the process of buying, rehabbing and selling [or renting]. You will learn a ton of skills and information like this.
Then you can move forward from there.
- it's always good to see another Hoosier utilizing this great site!
Of course, you need to read The Ultimate Beginners Guide to REI here on BP
If you haven’t already, please read/listen to these books ASAP!
http://flip2freedomacademy.com - free e-book
Flip2freedom episode 77[http://www.flip2freedom.com/a-3-step-formula-to-a-successful-balanced-and-insanely-profitable-2012/] - podcast - LISTEN TO THIS TODAY!
Wholesaling101 You Tube Channel
Kent Clothier – You Tube Memphis Invest channel
Your in high school and hopefully planning on going to college. There will be plenty of time for real estate once you graduate ( from college if you go ). Keep reading and learning as much as you can.
Understand that a lot of people dont make it in this business so dont stray from other plans. Good luck
College!! Enjoy life right now... Learn as much as you can in the meantime..
@Micah Cook depending on what your next step in life is, if it is college be very careful about student loan debt. Looking back, I certainly didn't understand how money works. My parents told me they couldn't afford to pay for me to go to college. I took out loans to pay for all 4 years at Penn State. I remember sitting in junior year finance class at PSU, estimating how much I would be making when graduating college, and how much student loans would be taking from me. I wouldn't even be able to rent an apartment; student loans would cost me $500 a month! 9 years later, I'm still paying those loans (almost finished!). Imagine what I could have been doing with $500/month for 9 years!!! I have an accounting degree yet I make much more doing what I do now in Real Estate than I would probably ever do in Accounting. Be sure to give your next step a lot of thought, it will shape your future.
While I do not want to discourage you from going to college. I went merely as a back up plan if my businesses failed so I could go work that normal 8-5 job. Now I have a nice looking degree hanging above my office desk which I have never used. If you have found your passion at such a young age go for it. Read all you can (self-educate), network with local investors in your area and I would recommend asking one of them to mentor you. In exchange you would do manual labor task, pick-up materials, do office work, pass out flyers, etc. BEST OF LUCK!
Thanks for all of your responses! About how much money is need to start? What is the best way to start?
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