San Diego, CA · Member since 2018 · 46 posts · 23 votes
Hey everyone! I’ve recently been stumped on this specific concept and hoping to get a few pointers from some successors. I absolutely love the idea of buy and hold real estate investment properties but I am a 19 year old college student with low finance. I just need to know if it’s possible considering my circumstances or if I should wait. I also just started reading “investing in real estate with no and low money down” by bigget pockets and have finished other books on real estate. Very excited to continue. Should I wait? Is it not my time? Is it still possible for me to create a niche through strategy? All and any help would be greatly appreciated!
-stevie
Good on you for thinking, studying and reading about REI so young, nice work!
I don't think age is ever a factor, but knowledge and self control will dictate everything. If I were in your shoes, I'd save up as much as I can until I have around 3.5% of whatever it is I'm looking to buy (I'd suggest a duplex, or a house you can rent to a bunch of buddies and you live in one room). In my area, I could get a starter 3 Bed home for $235k and rent out each room for $750. My mortgage (Principal & Interest) + Taxes & Insurance (Read "PITI") would be about $1500 with 3.5% down, so I'd be living rent free. Roughly the same numbers for a duplex, one side pays roughly the PITI and the other side you live in for super cheap or free, maybe even get paid to live there!
Keep on reading and studying. Save money. Stay Curious.
Good on you for thinking, studying and reading about REI so young, nice work!
I don't think age is ever a factor, but knowledge and self control will dictate everything. If I were in your shoes, I'd save up as much as I can until I have around 3.5% of whatever it is I'm looking to buy (I'd suggest a duplex, or a house you can rent to a bunch of buddies and you live in one room). In my area, I could get a starter 3 Bed home for $235k and rent out each room for $750. My mortgage (Principal & Interest) + Taxes & Insurance (Read "PITI") would be about $1500 with 3.5% down, so I'd be living rent free. Roughly the same numbers for a duplex, one side pays roughly the PITI and the other side you live in for super cheap or free, maybe even get paid to live there!
Keep on reading and studying. Save money. Stay Curious.
I wouldn't deliberately wait. Start now, even if the only thing you do is learn your market. Take this time to build your network, build your capital to invest and build your knowledge. No or low money down deals don't just jump out at you. You have to look for and negotiate them. The sooner you start looking the sooner you will find one.
However don't get frustrated, it is hard to find any good deal much less a no money down deal. But as long as you are moving down the path you are getting closer to your first deal.
Flipper/Rehabber · Lakeland FL · Member since 2018 · 18 posts · 11 votes
8y
I think the sooner you start to gain knowledge and to know your market the more successful you will be. It's never to early to get your feet wet. I'm in agreement with finding the people in your area that are doing what you want to do and pick their brain as much as you can. Also, building relationships is crucial to your success in finding deals. I'd also suggest you find a mentor in your area. If I was your age I'd save as much as I could and maybe even get a loan from a family member. Then purchase a single family home and rent out the rooms. Not only will you have a great experience with having your friends living with you but you will also have other people paying your living expenses and paying down your mortgage.
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Nate Burgher thank you very much! I do have a personal savings acount and will continue to save. I’ve read that my location is one of the worst areas to invest in real estate so I really have to think critically in how I am going to plan this.
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Ned Carey Very true. I must admit I have taken no action in looking for deals yet but I will explore the market and scout multiple properties. I would still consider myself naive though so there’s no doubt I eill be neck deep in books, articles, forums, and everything I can get my hands on. Thank you!
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Jerimy Justice I love that idea but I have a strong feeling my family will think I’m insane for even considering owning multiple rental properties. I also hear that banks are stubborn in loaning money to real estate investors because of all the expenses such as repairs. Is this true?
I would still consider myself naive though so there’s no doubt I will be neck deep in books, articles, forums, and everything I can get my hands on.
You are not going to learn everything you need to know with books forums, websites etc. You do not learn your market or get experience sitting behind a computer screen. You need to get out into the market. One of the best things you can do right now is hang out with experienced investors.
You have a lot of decisions ahead of you, and a lot of time ahead of you. Half the people on this site would kill to be in your situation, including me, but with one proviso, HAVING THE KNOWLEDGE AND EXPERIENCE THEY HAVE NOW.
Experience is going to take time served at the school of hard knocks. You'll get that eventually. Right now, though, here you are in college, studying. It's the perfect time to gain knowledge. You're right in stating that San Diego isn't the best place in America to acquire high cash-flowing rentals. And I would say that's fine for now -- you have neither the money necessary to put a down payment on a rental property nor the knowledge of how to run it/wisely delegate responsibility for running it. Some are born with the money. Absolutely no one is born with the experience.
I would most definitely use NOW to get into the habit of budgeting and saving. I struggled with it at your age. I regret this now.
So how about this, Stevie? Incorporate "The Millionaire Next Door" and "The Total Money Makeover" by David Ramsey into your reading program. Listen to all the Bigger Pockets Money podcasts. Schedule your studying over time. You'll get there.
A non-obvious book I would incorporate into your reading schedule is "How to Study in College" by Walter Pauk. I used it and did well, although I wasn't raised with good study habits. You can, too.
Keep reading real estate books steadily in, again, your scheduled time. Keep an open mind.
Lender · San Diego, CA · Member since 2012 · 54 posts · 34 votes
8y
You didn’t say if you able earning a wage while in college. Many students need a p/t job to support themselves while is school. Do you live at home, the dorms or with off campus roommates? Even with a low finances you might still be able to get into a home (sfr or condo) if you can get the support of family. I endorse @Nate Burgher idea of 3 ½% down and purchase a SFR or a condo using FHA financing. FHA allows a non-occupant buyers (parents or proven long-term family like relationship).
How do you do it?
Save or get 3 1/2 % down payment + cost (you save or co-borrower contributes 100%)
Parent or family-like relation is the co-borrower
Lender “blends” all debt and income for qualifying
All borrower must be credit worthy (if of you don’t earn income)
Benefits:
Parents stop paying your rent since you’ll get roommates
You’ll become an be aspiring investor that will pay back the down payment or partner with that family member in future endeavors
It’s a win-win situation which not only the foundation in your financial future but will strengthen the family as a whole as you’ll share more that just a familial relationship. The majority of 1st time buyers I work with are either getting a monetary gift, loan or financial advise from family.
@Nate Burgher thank you very much! I do have a personal savings acount and will continue to save. I’ve read that my location is one of the worst areas to invest in real estate so I really have to think critically in how I am going to plan this.
Historically San Diego has produced one of the best Return on Investment (ROI) for buy and hold real estate in the country (verifiable fact). The issue is that the initial cash flow is lower than most locations (and much lower than the virtually 0 appreciation markets). This does present a hurdle to RE investors when they are first starting out because most of these new RE investors do not have much excess cash to cover a large capital expense (or even a moderate cap expense). They need the cash flow to build reserves for WHEN the capital expense is needed.
I agree with the other posters that for young investors "House Hacking" (renting owner occupied property) is a great way to start. It is the one advantage that the new RE investor has over the experienced RE investor. The experienced RE investor likely has more resources (mostly money), better contacts, and more experience (experience evaluating properties, experience with various issues/repairs, etc). However, they typically cannot owner occupy. This implies lower LTV.
Leverage the high LTV owner occupied loan as your advantage to get started.
@Ned Carey I understand that but I know very little about all these investing terms. If i jump in cold turkey, I may end up losing a lot
i didn't say jump in and buy. I meant get in your car and drive. Look at properties, go to auctions, visit other investors deals and ask them to tell you how it evolved and what are the numbers. The first place to start in local investor groups. You can find them by Googling REIA or meetup.
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Jim K. Very well said and I love what you pointed out. I highly appreciate these recommended books because I honestly do believe the knowledge comes first and THEN apply that knowledge in real-life situations. Budgeting never came natural for me either but I’ve recently been picking up on saving habits but I’ve still got far more to develop. Thank you so much for taking the time to reply!
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Thom MacFarlane @Thom MacFarlane you’re right. I left out some crucial points. I’m currently unemployed but i recieve financial aid to pay for college. I stilI live at home with my Parents. ’ve considered having a part time job to accumulate savings but still trying to plan that out being a full time student. I love the idea but I feel like I’d need to be more informed about this topic in order to convince my family to lend me money for real estate. All in all, this is very helpful and I appreciate you replying.
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Ned Carey you’re right. I also didn’t mention buying. By you saying “jump into the market”, I took that as looking for the best deals, getting familiar with properties and sales, etc. All in which I know nothing about yet. Of course learning through experience is the best bet for anyone but none of it would make sense to me if I haven’t even scratched the surface. However, I did like how you mentioned hanging out with investors because Yeah, thats more reasonable considering where I’m a newbie and picking their brains can be of great use.
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Dan Heuschele I’ve read mostly about house havking and it does seem like the best option for me. I don’t expect t to be easy but I’m sure I’ll learn my way around the ropes. Thank you!
Insurance Agent · Thornton, CO · Member since 2018 · 74 posts · 51 votes
8y
Along with learning the market is the issue of credit which will be needed if you intend to use a loan at some point. If you don't have any credit yet (car loan, credit card, etc) a good place to start is getting a secured credit card with your bank, which should help you start building a credit report and score.
Wait a minute here, you're on financial aid and trying to figure out how to borrow money from your family to invest in real estate?
How's that work? The government and the school gave you some money and lent you some money at favorable rates knowing that your family couldn't contribute to your education. How is it that they have money to lend you to start investing?
You see, I went through college receiving plenty of financial aid and my parents weren't able to contribute anything to my education either, but they sure as s*** didn't have money to put toward my own future investment plans.
Rental Property Investor · Erie, PA · Member since 2018 · 6k+ posts · 9k+ votes
8y
@Stevie Delacruz
You don’t know if you desire to make the time to work????? lol my wIfe worked full tIme ,went to nIght schooL ,dId housework ,and helped raIse our boys
she got a PHD in Psychology and maIntaIned a 4.0 the entIre tIme . You can work kid !
Real Estate Agent · San Antonio, TX · Member since 2017 · 523 posts · 362 votes
8y
@Stevie Delacruz Welcome to BP my friend I can relate 200%. I read, jumped onto bigger pockets and started listening to podcasts. I'm in no way trying to brag but trying to be truthful with you. What separated me from 95% of the other young kids like me that wanted to be rich, and/or do real estate was I TOOK ACTION. I didn't just read, and sit behind my computer. I went to meet ups and talked with other investors, I drove around and looked at neighborhoods and properties, and I was active on BP and FB providing value where I could. I'm not trying to devalue reading, and learning, but I am saying if that's all you do it isn't going to cut it. Many of these other investors in the responses have given great advice. You definitely should be working and saving money for your first purchase. However in the mean time you need to be out meeting people, networking and learning the market and what stuff is selling for/being bought for etc. I ran into my mentor and business partner because I was brave enough to go to networking events and talk to people, despite being scared, not wanting to drive far, and feeling like I was wasting my time. If you really want it my friend you will make it happen. You seem like a smart kid so I'm sure you know what you need to do, I just hope you have the courage and determination to do it! Good luck!
Rental Property Investor · Durham, NC · Member since 2016 · 7k+ posts · 7k+ votes
8y
@Dennis M.
Give the guy a break. Although not all of us millennials are lazy. Granted I think technically the OP is a gen Z. Look at that, I’m getting old already
Give the guy a break. Although not all of us millennials are lazy. Granted I think technically the OP is a gen Z. Look at that, I’m getting old already
One good thing is he figured out real estate is the path to take for investing . Start early and you can afford to make mistakes . Once you have a family the stakes are much higher . I wish I was thinking this way at his age I’d be much further along
Give the guy a break. Although not all of us millennials are lazy. Granted I think technically the OP is a gen Z. Look at that, I’m getting old already
One good thing is he figured out real estate is the path to take for investing . Start early and you can afford to make mistakes . Once you have a family the stakes are much higher . I wish I was thinking this way at his age I’d be much further along
That is good advice rignt there. I’m glad I started when I did.