Im wondering how the REI world looks upon younger adults when it comes to starting out. For example, im an 18 year old, but very knowledgable. I have a feeling that if I do begin this career as early as I am, then of course I will be successful at a young age, but I fear that my age will make people unserious towards me, esp hard money lenders, sellers, etc. Any opinions?
Some people may be cautious with you because of your age but that's more the reason to be on point and learn everything REI has to offer. Impress them with your knowledge and professionalism. Personally I wish I would have started earlier because that means I would have been investing for longer.
Any suggestions as to how to build my career while im this young still? Of course other than reading all I can and sticking around BP, how can I physically start prepping myself to begin this game?
I was you 9 years ago :)
We got prepared by setting ourself with a great W2 income. We started at 23 but had been peeping and researching for quiet a few years before that.
We got started with buy personals and than turning them into rentals when we were transfer. We fund our real estate by living frugally and processing in our W2 jobs. Our goal is to fund early retirement through real estate!
You might enjoy podcast 103. I had the opportunity to talk all about my style .
Dan you need to first research and learn. Learn everything you can about real estate and in particular the arena you want to invest in. Physically you can try to work for others in your arena and learn the business from them and/or get a good job, build up your credit, and save so you will be in a good position to invest after learning as much as you can. Crawl, walk, run, sprint! Good luck.
@Dan Losh I am much older now, but I bought my first home at 19, and I looked about 14 at the time! People will definitely judge you until you prove yourself, but just ignore people who are not wanting to work with you. There are thousands of lenders and private lenders, thousands of Realtors, thousands of properties, so just move on when you aren't getting what you want.
@David Oldenburg feels good to know someone as young as me had started at this age. How did your first year of investing look about? What were your main problems/worries? And how did you manage to buy your first house at 19 (hard lenders, savings, down payment?) and lastly what did you end up doing with your first home
Elizabeth Colegrove thanks for the comment:) and I will definitely check out the podcast
@Account Closed what do you mean by working with someone and learning off of them? What kind of jobs would that be? I have been debating to just go and get my real estate license for now to start off and learn, do you think it's necessary?
Originally posted by @Dan Losh :
David Oldenburg feels good to know someone as young as me had started at this age. How did your first year of investing look about? What were your main problems/worries? And how did you manage to buy your first house at 19 (hard lenders, savings, down payment?) and lastly what did you end up doing with your first home
I wasn't a real serious investor at the age of 19. I mean I didn't have a lot of money, so my main focus was paying bills and working a regular job. When I bought my first home at 19, I bought with an FHA loan, and my father co-signed. I got a 10% rate and had to pay a point to get a rate that good :-). I sold the house for a 50% profit about 2 years later. I got my RE license and began learning the industry, working as a lender and Realtor. This helped a lot, and also allowed me to make good money over the years.
Let me tell you the real secret to becoming a great real estate investor. Simply spend less than you make, and put everything in the bank. The main reason I have money today is not because I made a lot of money. I know lots of people who made a lot of money, and then somehow proceeded to lose it for one reason or another. I also know a lot of people who never made much money, yet they have money in the bank, they own their home free and clear and they have the ability to act when opportunity comes up. If you have no money, you will always be relying on others to loan you money, dealing with their terms, and allowing them to make decisions for you.
Another thing is to do a lot of research on each deal, and be picky. It's better to only do a few deals per year, but they are really good deals. I say "no" all the time, even when people are really pressuring me to do a deal, and telling me how much money is in it. Good luck!
@David Oldenburg good stuff, one question, what does it mean "points" on loans? And 10% rate on what? How did that work?
i started out young(er) I'm 28 now and started at 23. The most difficult obsticle was my age I'm a big man so i look older than I'm so that was a plus. What i found is probably the saddest thing and I am hesitant to say it. But everyone I was surrounded by respect one thing, money!!!
I would go to my local REIA and found that there were always the same kinds of people newbies, the local guru, the order investor who spoke very articulate, the cocky successful flipper who just shows up but does not really associate with people and the young investor who does not speak well, does not know much but some how manages to find great deals and sell them.
Everyone smarter looks down at him because they no more than him but have no choice but to be his friend because he has one thing they don't have, money!
The moral of the story is to have something that others want. It could be money, connections, systems, etc... separate yourself from the heard investors tent to flock to the latest trend and this is a business of once something becomes popular it becomes saturated quick.
We started young as well and definitely got some comments about it, some definitely unprofessional.
We paid it no mind. Money talks.
I bought our first house, alone, at a foreclosure auction and then evicted the previous owner when I was 24.
The bank saw two incomes and stable employment with no debt so they were happy. The loan originator is on commission, he could care less about your age.
Everyone spoke to us like we had no idea what was going on, from contractors to realtors, etc. Why tell them otherwise, then you might not be able to catch if they were trying to take you for a ride.
There is no age requirement for anything in this business. If you can brush off people's comments you will do just fine.
The years will pass anyway, get your knocks in early.
Buffett started when he was 11, Branson started a magazine when he was 15, Virgin when he was about 20. They were a decade ahead of their peers in time alone.
The more time that you give to compounding the better.
Originally posted by @Dan Losh :
David Oldenburg good stuff, one question, what does it mean "points" on loans? And 10% rate on what? How did that work?
A "point" is 1% of the loan amount. If you are getting a $100,000 loan with 1 point, you are paying $1,000 to the lender to get that rate. When lenders quote rates, they will quote them with or without points. The higher the rate, the lower the points. For example... If the rate today on an FHA loan is 3.5% with 1 point, it might be 3.75% with no points. I was talking earlier about my first home, and that I had used an FHA loan with a rate of 10% and 1 point. The rate I was talking about is the interest rate that I paid on my home loan. I got a 30-year fixed-rate loan at 10% interest, and I paid 1 point to get that rate.
@David Oldenburg so say I get a loan for 75,000$. If I get it at 3.5% with 1 point, that means I have to pay 750$ upfront to get that loan? And 3.5% would be the interest earned on that loan? 2625$ would be the amount Id be basically paying by the end of the 30 years from the interest? sorry about all the questions :) just figuring it out haha
@David Oldenburg and how did you pay monthly for your first home? Was it a high price? How would I be Able to figure out what Id be paying monthly with $75,000 at 3.5% and 1 point for 30 years?
@Dan Losh I started super young also. @David Oldenburg gave you the secret, spend less than you earn and save as much as you can. I would also suggest getting a starter credit card. The sooner you can establish a good credit history, the better. Credit history does penalize youth because accounts that have been open for many years are favored.
How I got started: I studied engineering in undergrad - a discipline where summer internships are both encouraged and offer great pay. With that in mind, I saved my internship money from each of the four summers of undergrad. During this time I studied and read books about RE investing. By my last year of undergrad I was set to purchase my first property in grad school. I bought my first property at 21.
@Richelle T. Nice! Saving is definitely a smart thing, but very hard for the typical 18 year old. 21 sounds like a good age for a house purchase, I hope to have my own house within the next 2 years. Im also looking for internships around my area concerning real estate / and or mortgage companies for RE. Hope to find something. But thanks for ur story!
Ryan A. Definitely bud, I don't even mind negative people, especially comments. People will always hate. But I definitely hope to get my portfolio up and running asap, even if I can't make it with my own money for now
@Dan Losh Here is some unsolicited advice. If I were you, I would focus on getting a steady income to show the bank as opposed to try to work FOR the bank or a real estate company. I think real estate is great but it's slow pay in the beginning. If you were to become an agent, for example, your pay would be spotty. Banks like to see consistent income. You don't have to study in school everything you are passionate about. Real estate is a great way to build wealth, however, at 18, I would focus on how to best set yourself up for a profitable career. (my educational bias is about to come out) Think: engineering, law, medicine, finance. You can build your portfolio when you have a career and steady stream of income. Then you can retire early.
@Richelle T. I agree about banks. How about with hard money lenders, not including banks? Wouldn't it be possible to start from bottom 0 and make profits from making a purchase from the money a lender can lend?
@Dan Losh If you want to take on that much risk you can.
I think you are missing the point I'm trying to make to you though. Go to school, study something profitable, save money, be conservative in your investing and the rewards will pay off. Don't use youth as an excuse to be reckless. I'm barely 10 years older than you but I've been in the game long enough to recognize that you can lose a lot of money in real estate. Tread carefully. Debt is to be respected and used wisely.
@Richelle T. Of course:) thanks for the advice
Welcome to the site
Great counsel on this thread
@Yvon N. Thanks pal! Wouldn't mind any other starter suggestions from the elder:) anything helps, (how you started, first purchase, financing)
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