Graduating college, want to invest ASAP

12 Replies

I'm currently a college student about to graduate in Seattle. I just got a job as a financial analyst for the investment team at a commercial real estate management company. I'm an intern now, however it should turn into a job soon and I'm guessing it will pay a salary of around 50k. I have no money now, but looking to save up and invest in real estate as soon as possible. I'm thinking about living at my parents home as it will save me around 12k for the year.

I want to start investing asap, so I have these questions: (1) Is the 12k I save next year financially worth the hit on my social life as a 22 yr old? (2) What type of investment do you recommend for first timers (single family vs multi family)? (3) Any other advice? Thanks!

Updated over 2 years ago

Appreciate everyone’s advice! I just joined BP and am super thankful for all your support!

Evan,

I am 24 years old not much older than yourself.  The questions you are asking no one besides yourself can answer. 

You need to decide what our your goals for the year and don't let anything stop you.

MY goals for this years:

Own 4 houses by the end of the year

Visit 2 more countries

@Evan Anderson Welcome to BP! At this stage of the game for you, I would focus on banking as much money as possible and absorbing as much information as you can on real estate. Start networking with other investors and see how you can assist them and learn the ropes so that when it's time to jump in you will be ready.

With me personally owning apartments, I would recommend owning as many doors as possible because the economies of scale plays to your advantage. If you are serious about investing and building a great income producing business, this far exceeds a social life early on because you will be able to do and go where you want when you are older. My mentor always tells me, sacrifice now and reap the rewards in due time. Best of luck and set those goals high!

Hi Evan,

As to your first question, no one can answer that but you.  I think as a 22 year old you can get away with it without too much of a hit to your social life.  It seems to be becoming more and more common.  If you were in your late 20s/ early 30s, it might be different (but that is just my opinion, and everyone's situation is different).

For the second question, I think you should consider multi family (duplex, triplex, quad) so that you can house hack. You can get into a house fairly cheap, and if you find the right deal you might be able to still live for free but without the hit to your social life. Of course you can house hack with a SFR by, essentially, having a roommate, but personally I would want my own space especially if I owned the place.

Originally posted by @Evan Anderson :

@Jared Forman Are you mainly looking for market deals or off market deals? And how what are you plans with these homes? Flip or rent?

My focus is at on and off market deals. In my market ( Philedelphia) the off-market deals can be worse than on market deals. Today I am looking at a triplex with 2 units rented and 1 vacant. It currently makes enough to cover the expenses and would be a great house hack opportunity or a buy -n- hold. 

This is a place I have been chasing for months, and finally get to view. Sometimes the wait is worth it.

To speak in very broad terms, you will want to wait until you have a full time job, and a few paystubs under your belt before you consider anything. in my opinion, living at home would be worth it for 1-2 years to save that much money.

If I were in your shoes, I would save as much as possible, and possibly pick up a side job. Once you have a stable salary, invest in a 2-4 unit home and live in one unit as owner occupant. This gives your more favorable mortgage terms and rates, including lower down payment possibilities. If I enjoyed being a landlord at that point, I would stay in each house for a year (required of your lender), then purchase a new 2-4 unit every year until I hit a point that I felt ready to jump into bigger units or no longer needed to live in each one.

@Evan Anderson vaI’m not much older than you. I’m 23 (almost 24), and own 3 rentals. Will be 4 by end of summer.

1) is 12k enough for your social life hit?Well depends. I’ve bought a rental for about that much all in but then doesn’t leave any reserves. I would wait til you have 15-20k. To the original question yes it is in my opinion. My social life isn’t really all that expensive and I invest so I think you can do both.

2) I’d recommend you start with a single family or househack. Just easier to do then other forms

3) any other advice? Yeah focus on increasing your day job income, advancing in your career and keep an eye on the big picture. Give yourself 10 years minimum to really hit larger goals for investing

@Evan Anderson Just save money and invest in an S&P 500 ETF. At your age/income level, you should be 100% focused on learning about investing and aggressively investing your money into liquid assets. 

Real estate is a highly illiquid asset. In your market - Seattle - you'd be hard pressed to find anything decent. You can try to buy in a war zone or invest out of state but that is asking for trouble (at your stage). 

Crash with your parents as long as you. Learn, educate, invest in liquid assets to build your portfolio and go from there. 

Best of luck!

Evan, in my opinion, your plan to live frugally and save is so so so important at your age. If you ask people who've been in business for 10+ years, what they would tell their younger self, many will say they wish they started earlier! Live cheaply and don't let lifestyle creep set in. Once you save some money, a great transition into the business is by purchasing a small multifamily unit to be used as a primary residence. You can secure conventional financing, save money, and gain experience being a landlord. Save up your profits from the rental income and do it again. You're on the right track, don't let peer pressure from your friends compromise your financial future. Your future self will thank you!

@Evan Anderson Welcome! I am also 22 years of age, and been out of college for the past year. I did not know what I wanted to do in life, but then I found BiggerPockets and quickly realized real estate investing was the way to go. I have been living with my parents for the past year (maybe 14 months) and have saved close to 50% of my income,  roughly 15k. My goal in the beginning was to buy a duplex and house hack. My goals have changed these past couple months. Now I am a licensed realtor, and want to dedicate some time towards commission based sales.  Doing so, i feel as if i won’t have the time to deal with tenants. I am now looking to buy a single family home (10-15% below market value), and perform a live in flip in 2 years so that i may have the option to sell tax free gains. If i do not sell, i will look to refinance, take that cash and purchase a multi-family. 

When you are looking at on market listings, you will need to be quick. Wrap the property up by submitting a contract with contingencies (inspection, appraisal, etc.), and then renegotiate if needed. 

Off Market deals are where you may find a property with more favorable numbers, but will be much harder to find. Network with those here on BP and local to you. 

As mentioned above many times, find what fits your goals. If you aren’t positive what your goals are, listen to the BP podcast. The guests interviewed, cover just about every single niche in the real estate industry. Each episode has priceless information. 

Good luck! 

@Evan Anderson - what's that saying, "live like no one will so you can live like no one can"? I recommend a 4-plex for young, first time investors. Live in one unit, rent the others out. I hear what you're saying about no money but one option is to partner with your parents. For example, have them provide the funding to close on the 4-plex and while you're living there (rent free because you're managing the property for them) your social life isn't impacted. Once you move out of that unit, you receive income from those units (at a pre-determined split). Many ways to skin this, but I hope you are following. 

@Evan Anderson if you want to invest ASAP I would suggest kissing that social life goodbye grab a second side hustle and grind! Live frugally, stack cash, enough to invest in a Fourplex in Tacoma/everett and then continue that for a few years. “Live a few years like most people won’t so you can spend the rest of your life like most people can’t”. Took me about  6 years after college. I started with a 50k a year job too. Not that I am “there” yet but 40 units later I am living like most people can’t and starting to really enjoy the fruits of my labor.