Just starting out

13 Replies

Well this is my very first post! I'm learning as much as possible about real estate, as I'd like to get involved as soon as possible. While all my buddies are buying sports cars, I'm saving everything as a down payment for my first property. I will be going to college (freshman this coming semester) in Pensacola Florida. I am not sure if I will be starting my journey into real estate there, or back home here in new england. However, I am not sure exactly what route to take into real estate. Like everyone, I've seen all the discussions on SFH vs. Multiplex, buy and hold vs. Fix and flip. But more so on what to start out on with that, is how to start out. With about 20 grand in the bank by next summers end (with no debt) at age 18, what should be my first step? Being so young, would I even be able to get a loan? Should I purchase one unit at 80k (with 16k to put down as down payment) or a few units at a lower price, but same final price of 80k? With much more learning yo do, work to get done, and preparation, I am still a long way off. But I would love to be graduating from college in 4 years, with a semi stable income (as opposed to many college students it seems.) My hope is to either have more cash in the bank, or a property (preferably several) under my belt. Any help, advice and tips would be greatly GREATLY appreciated on how to start my venture! Thanks!

if I could do it all over again at your age I would buy a house to live in and rent the rooms out while going through college. Just make sure the house will be a good rental when you get done. 

Glad to hear you are saving instead of spending, that is rare these days. If you are going to UWF, that is a good area for a rental.

Excellent! Thanks for the help! I am thinking of doing that. Buying a multiplex, rent it out, and if nothing else changes, at least move in when I graduate. I will have it all ready to go when I am out!

@Caleb Brown  

BP is full of useful resources such as forums and blogs. Welcome to the Bigger Pockets community-be sure to check out all the awesome BP blogs under “Learn.”

My son went the route of buying a single family home, 3/2, set up so that the dining room could be closed off and made into a 4th sleeping area and still have plenty of space - easy in Florida because of the way they set up their houses.  Renting out 3 rooms, he lives free as that covers his rent payment to me and his utilities.   His rent payment to me includes $300 over the mtg.  So his buddies get an affordably place to stay, he lives free and I get passive income.  We paid $82K for this house - 1800 sq ft.  So don't ignore single family homes unless you don't like roommate situations.

@Caleb Brown

My recommendation is to do exactly what you said: buy a multi family unit (duplex, triplex, quad) and rent out the other spaces. This is called house hacking. I am new to REI as well and am trying to house hack a duplex potentially, which would be my first investment property. The advantage with doing that is a very low down payment (3-5%), and you virtually live there for free while getting paid to rent out the other ones. That's probably the best thing to do.

On a side note, props to you for getting started at such an early age! The fact that you are starting right now before college could pay dividends in the future, especially after you graduate. I just graduated from college, and I wish I would have gotten started when I began in college. Good luck to you and welcome to BP!

@josiahmosley 

Yeah! That makes sense. I think that would be awesome to graduate with a place ready to move into, with (essentially) no costs for living there. Thanks for the help!

@calebbrown

A house hack is when you get a owner occupant loan which gives you a lower down, interest rate and hopefully a discount on your property taxes (check with the county and your bank). If you are planning to move in after graduation, that is not a house hack. Check with the lenders regarding the difference between a owner occupied loan and a non O/O loan.

@Lisatroxel

That makes sense! So basically what you are saying is if I am living at the place, they will he treating it as a private house, not a real estate investment? And this can be done (please, correct me if I am wrong) up to the size of a quadplex, right?

Hey Caleb,

Congrats on having a great amount of savings and a willingness to learn. I can relate pretty close to your situation so hopefully I can help you out.  I have 10 years of age on you now but started house hacking to friends when I was 21 in a college town.

This might be a great opportunity to buy a foreclosure and get some equity/knowledge right away, then live for free while going to school. This option will be easiest to sell if you leave town after graduation. Try not to buy at full price and you don't have to fix it up 100% right away.

I can see multi family being a great option, especially in a college town. You can get traditional financing up to 4 units (3-5% down but PMI will bug you every time you think about it). One thing I've noticed is that banks will like your experience of running a multi unit when you're getting loans in the future. If you go this route make sure to run your numbers with Property Management so you're not put in a negative cash flow situation when you graduate. Keeping good records will make your life easier every step of the way.

There are many other options but you have your head in the right place. If you have any other questions just ask don't be shy.The podcast are solid gold for anyone trying to learn. Hope this helps and Good Luck!!!

Aaron

@aaronc

Wow, thanks for the help! That certainly makes sense! So I'll have around 12k this year (freshman year starting this coming September) are you thinking I should try to start right off this year but I get a foreclosure, as opposed to waiting a year to have more money in the bank? I know many people have many different routes, but it seems like the overall idea, in my situation seems to be the same. Thanks so much for the help again!

Tough for me to say if you should go after a foreclosure right away or wait. I think it depends on your comfort level, market conditions, and many more personal variables. At your age you have enough time if you hold off. Maybe sign a month to month lease and get a feel for the local market before jumping all in. Just my thoughts.

Alright! Well I will certainly see how everything goes. Keep doing my research. Hopefully I will start getting more active on BP, so at some point you'll maybe see what I do! @Aaron C.

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