College Student Looking to get started out of market

8 Replies

Hello, I am a brand new REI and am excited to get started.

I am a young guy still in college. I am studying to become a Software Engineer (and hopefully someday design software for REIs). I have secured a few internships and have saved about 25,000. Additionally I have a job lined up that will pay 105,000 per year as soon as I graduate.

I'm looking to get started investing but I am nervous to begin out of market. I feel like out of market is my only option for a rental property due to the high price of most California properties. I'm not sure how to find locations other than poking around on Redfin. I hope to set this up so that I can continue my investing by house hacking when I move to my new job location upon graduation and begin building my portfolio.

If anyone could provide advice for finding good property managers that are far away from me and locations as well. I originally planned to join meetup groups and get recommendations from those, but that doesn't seem possible when trying to find something out of market.

@Samier Mahagna I’m surprised no one has commented on this post.

When are you graduating? I’m also an engineer (Mech E) and now have 3 rentals out of state (Cleveland and Memphis). I can walk you through what I’ve done so far if you want, just PM me.

With your starting salary and savings, assuming you have little or no student debt, you’re going to be in a fantastic spot to begin. Depending where you’re working (cost of living taxes etc), and if you live average or somewhat frugally, you could likely buy 2-3 properties in an out of state market in one year.

Thank you for responding @Caleb Heimsoth . I am graduating December of this year (possibly in May depending on if the job will give me any incentive for taking an extra semester for learning big data). 

I have no debt and live extremely frugally (which is what led me to the investing path). I'm going to end up in a no income tax area but I think the COL is going to be pretty high. I'm confident in my ability to live pretty cheaply though.

I'll send you a pm right away.

I think that Set for Life is an awesome read for those just starting out and wanting to build up cash to invest in RE. Where is your new job? You may be able to get into something there-there are a lot of owner occupant loans with very favorable terms and they are not just limited to FHA. I started with out of state but I wish that when I was younger I had scraped together the cash to get started in CA. I didn't understand RE at the time so I never did. You can learn a TON investing in your local market and then take the knowledge when you go out of state.

Originally posted by @Samier Mahagna :

Hello, I am a brand new REI and am excited to get started.

I am a young guy still in college. I am studying to become a Software Engineer (and hopefully someday design software for REIs). I have secured a few internships and have saved about 25,000. Additionally I have a job lined up that will pay 105,000 per year as soon as I graduate.

I'm looking to get started investing but I am nervous to begin out of market. I feel like out of market is my only option for a rental property due to the high price of most California properties. I'm not sure how to find locations other than poking around on Redfin. I hope to set this up so that I can continue my investing by house hacking when I move to my new job location upon graduation and begin building my portfolio.

If anyone could provide advice for finding good property managers that are far away from me and locations as well. I originally planned to join meetup groups and get recommendations from those, but that doesn't seem possible when trying to find something out of market.

 Welcome to the site Samier.

James Wise, Real Estate Agent in OH (#2015001161)
216-661-6633

@Samier Mahagna you are in a FANTASTIC position and are setting yourself up to be extremely successful. Congrats on saving 25k and getting a 100k job right of out college! I am a few years ahead of you and would be more than happy to chat with you about my experience. As @Lee Ripma mentioned "Set For Life" would be a great book to read.

As far as choosing the right market... you can read several reports online (just search google for XYZ city real estate report). Marcus and Millichap have very helpful reports you can download for free. Look for areas with increased employment and population where vacancy rates are dropping. I would read several reports throughout the country and then pick the ones that have the best numbers/make the most sense for you.

Hope this helps and happy to talk further if you'd like!

@Lee Ripma : I am aiming at Seattle or Texas (a few areas), both have no income tax but Texas is obviously a much lower COL. It depends on what teams I'm offered at graduation. I agree that experience is the best teacher but I'm not sure what I'd be missing out on by not doing business locally. 

@Matt Nusbaum : Thank you for the kind words. I love your advice because I can take action on it today and take a look at some of those reports. I would love to talk further and gain from your experience.

Just wanted to say thank you for all the great advice. I downloaded "Set for life" and plan to get cracking on it today. I am glad the frugal habits my parents taught me have set me up for some exciting opportunities with investing.

Additionally, since making this post I have been messaged by many realtors. Does anyone have good resources for how I can discern which realtors are quality and which are not?

I am a big proponent of newbies investing local to where they are located. I realize Seattle has a fairly high entry cost but some of that can be negated by house hacking a detached duplex. As owner occupied you would have a significantly lower down payment percentage and a lower rate. In addition, Seattle has pretty good historical appreciation which can help with ROI. Texas has lower entry costs but property tax is severe in many locations and there are many locations that have significant foundation issues. Then there is the occasional hurricane. We owned an OOS property (Gulf Shores, Alabama) that got hit by 2 hurricanes in a short duration of time so it does happen.

The primary reasons that I am a big proponent of investing local are 1) the learning opportunity that comes with self managing a property.  This knowledge if so valuable.  As Rich Dad Poor Dad indicates the knowledge is priceless and there is no way investing OOS with a PM you obtain the same type of knowledge 2) requires less reliance and trust on others.  You are in control.  You will be much better prepared to build that killer team for OOS after you have acquired certain knowledge that is best learned hands-on 3) Local provides the potential for owner occupied which has better loan terms (lower down payment and lower rate).  4) Local provides you the best opportunity to be an "expert" on the area.

So if I were you I would wait until after I pick where I am going to live before purchasing.  I would then house hack a detached duplex acquiring as much knowledge as I could.  After I have a little experience I would consider if I was ready to take on the challenges of OOS RE investing.

Good luck.

@Dan Heuschele : The Seattle area take around a million to get involved in a multifamily home. That seems way too high for me at the moment.

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