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.
Specialist · Austin, TX · Member since 2018 · 18 posts · 6 votes
8y
@Stevie Delacruz Well, I'm not in college anymore. Graduated at 20 years old. Can't say that investment is still paying off--I got out of the stock game because of an intuition that it wouldn't last. Big believer in quitting while ahead, for better or for worse. I'm actually the worst person to gamble with. I infuriated my mother on a cruise ship once because she gave me a few hundred bucks to spend at the casino...I played two rounds of three-card, won, and walked away! Haha.
If you're in college, you have TONS of networking opportunities. I'd also recommend checking out local meet-ups and connecting with investors in your community. Being here on BP is a great start though! As for information, one of the things that's part of the learning process is figuring out how to vet information sources. Be aware that everyone has their biases, and that can be based off of all sorts of things from background to professional experience to simply what has worked for them. What works for one investor may not work for another, but it's all good stuff to take in. The BiggerPockets blog is a great starting point as well for just hearing from many different kinds of experts and investors. I believe a piece from one of my colleagues is on the front page today.
Property Manager · Jacksonville, FL · Member since 2018 · 514 posts · 470 votes
8y
@Stevie Delacruz Yes I think house hacking would be great for you. For anyone actually. I'm dying to do it but I live in Brooklyn and it's extremely overpriced so I'm just investing out of state in Florida.
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Lauryn Meadows very useful information! Thank you. I will sure be on top of gaining the knowledge and learning the material for rei. Also, do you recommend any books I can read on understanding the many things of business like the terminology and all those things relating to financial planning and saving? I’m completely oblivious when people mention 401k and FHA financing
Fort Campbell, KY · Member since 2018 · 46 posts · 12 votes
8y
@Stevie Delacruz
Hey buddy! I’m Chris and I’ve pondered that question quite a bit. And I’ll tell you what I tell everyone. There’s no better time then now.
I don’t wanna get too into the weeds into the post with my limited experience, but from what I have read and experienced there really is no better time then now. You are only goIng to set yourself up earlier then everyone else. I’m 27 and just getting started. That means that by the one your my age you have a huge potential. Even if you can buy just 1 door a year, you’ll have 6 by the time your my afar and I just got my first.
I’d also say yes because although you have limited finances, you also have the least amount of personal expenses you’ll likely ever have in your life. Cell phone, car insurance, and maybe a budget for gas and food. So, if you can learn and practice solid principles and small scale, then later you’ll just be able to scale up. On top of that, have to work harder to find deals that works for your number as well as finding money instead of having a big bank account will only have you put together bigger deals faster. Just my thoughts though.
Feel free to message me, I can talk investing and real estate all day.
Ironton, OH · Member since 2015 · 104 posts · 31 votes
8y
@Stevie Delacruz literally set aside 2 hours a day with a notebook and listen to the podcasts. Take notes. I tell everyone to start with reading 'Rich Dad Poor Dad.' All of the books that BP has published are FULL of content. Master this content and you will feel confident in your investments. You'll never know everything and you'll learn the best from personal experience but I do recommend knowing enough to be dangerous before jumping in with both feet. Read all of the BP books and podcasts and you'll have a great foundation to start. Long Distance REI by David Green is packed with terminology content. A great read!
Specialist · Easton, PA · Member since 2018 · 136 posts · 48 votes
8y
Stevie, to clarify my first paragraph above, you have two families of retirement accounts....traditional or Roth. IRAs, 401(k)s, and others can be categorized as either one of these.
With a traditional account, you put money in before you pay your income taxes. When you take the money out at retirement, you then pay taxes at whatever income tax bracket is applicable. If you take money out early, there is generally a 10% penalty (since you are not of retirement age) plus the taxes at your current rate.
With a Roth (named for senator Roth who passed the bill), you pay taxes first, then the money goes into the account. When you take it out at retirement, you do not get taxed on it. Like traditional, there is a 10% penalty if you were to withdraw any growth (interest or other cash growth) from the account before retirement age. However, any principle (the cash you contribute) has already had the taxes paid on it and is not restricted to the age penalty. As such, you can withdraw principle at any time without it costing you anything.
The question you need to ask yourself when choosing traditional versus Roth is fairly simple....do you expect your taxes are higher now or will be higher when you hit retirement age? Factors to consider are how much earned income you may have, which state you live in (some states do not have income tax), etc.
My IRA is Roth. Not only do I expect that taxes will be higher in the future (our politicians love to spend money we don't have, social security is going broke, and all kinds of other financial ugliness is on the horizon), but I also expect my income to continue to rise through most of my life. If you are on BP, I presume the same for you. Being a student and making peanuts, you are currently in the lowest tax bracket you will ever be in throughout your life, so a Roth probably makes the most sense for you. I hope this helps you.
New to Real Estate · San Diego · Member since 2018 · 35 posts · 19 votes
8y
@Stevie Delacruz Welcome to BP! Many people here suggest spending time trying to network and connect with more experienced real estate investors. There's actually an opportunity for you to do just that here in San Diego if you're interested!
There's a San Diego REI Social Meetup on Friday, 9/7/18 at Ballast Point in Miramar. Unfortunately, you won't be able to buy a drink since you're only 19, but at least you'll be able to meet some awesome and knowledgeable people!
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Joe Tomko it definitely helps. Thanks for the clarification. You explained a lot in a simplified form. Roth does seem like a better plan for me but I will still continue to research both of them
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Jared Aquino Im completely up for that. However, I don’t have a license or car yet so I will try and find a ride or even take a bus if I have to. I really want to meet other investors and see what they can offer
Real Estate Broker · Commerce City, CO · Member since 2018 · 107 posts · 55 votes
8y
@Stevie Delacruz First I think it's great that at your age you are already thinking about REI, and wish I did at your age. I think everyone's advice about doing a house hack with a 3.5% FHA loan is sound advice. If I were you I would find a part time commission sales job. This gives you huge upside to make a larger paycheck in shorter hours worked. I did this through school and would make $40k/year working 20-25hours per week.
Fort Campbell, KY · Member since 2018 · 46 posts · 12 votes
8y
@Stevie Delacruz
The principals I’m talkin about are fundamental thing everybody tend to end up doing to be successful. For example a lot people specifically talk about times and amounts of money to say and when to spend it. I’d say that’s a pretty easy thing to understand any apply. Same goes for levels of income to save. But it’s also all subjective to what levels you set things at.
But while your in college you have a lot of wiggle room to make mistakes and bounce back, like I was saying in my original post. So if while your in college along the way you pracrice the principals I was talking about above (fiscally responsible, reasonable rational decisions) then when it comes time to actually starting to invest you have good decision making skills
Specialist · ID · Member since 2015 · 121 posts · 53 votes
8y
@Stevie Delacruz
It's probably been said already,
But there is absolutley no age limit to success. You need to remove that from your head ASAP because thats whatlll hold you back and your lack of confidence will show.
Rental Property Investor · Seminole, FL · Member since 2014 · 85 posts · 68 votes
8y
@Stevie Delacruz
If you were as broke as I was when I was 19, I'd probably try to house hack (and not in the traditional sense). I'd rent a 3 or 4 bedroom house and lease out the other rooms (if your allowed to sublet). Then, I'd save every penny and roll that into a down payment for a small multifamily.
Good luck! You got this. Starting early is very forgiving even if you mess up.
Developer · Buffalo, NY · Member since 2018 · 13 posts · 17 votes
8y
@Stevie Delacruz I started working in real estate when I was 21. (I’m 32 now) and didn’t buy until 25 although I could have. I’m glad I waited a little bit because I knew what liabilities were there but was also excited AF and got a lot of really strange deals done that I wouldn’t normally jump at now. Some of my best deals because I was young and scrappy.
My advice is to get a job at a property management company - learn ALL THE AREAS including maintenance basics. Then in a few years - buy!
Charlotte, NC · Member since 2016 · 82 posts · 41 votes
8y
@Stevie Delacruz I don’t think you’re too young IF you’re able to set up some pieces to invest. For example you do need “some” cash to begin investing. I think the best thing to do right now is to find ways to save money. That will only help you. And you’re doing good by investing in your EDUCATION. Extremely important. I like the quote “Work to learn before you work to earn”.
San Diego, CA · Member since 2018 · 46 posts · 23 votes
8y
@Bernice Radle that sounds like an awesome idea and I would love to work for a property managament company. I see all these options for work but yet, I have no experience with any
Investor · Sacramento, CA · Member since 2017 · 15 posts · 6 votes
8y
@Stevie Delacruz
Hey Stevie,
I can tell you that I had very similar thinking at your age. At that time I was 18 and the market was at its peak. Once it dropped I was very discouraged. I ended up saving and buying at 23 with an FHA 3.5%. Rented out three rooms and my buddies covered everything, I also walked away with a hundred bucks in my pocket. At the time, I did not realize what I was doing. I just wanted more $$. Now my friends with degrees(I dont) are scratching their heads at how I have the aility to have 5 properties before 30. Anyway my advice...get your education up on current market conditions in your area and save up some money, hold a job for a couple years to qualify, build some credit. Make a calculated move on your first and second buys. Enjoy the house hunt and don’t feel pressured to buy something that doesn’t make sense. My realtor at the time was nice and I felt bad we looked at probably 50 homes. But when we found my first home(4 bed 2 bath home, 1140 sq ft for 120k, not the best area but lots of parking, shopping accessible, near downtown, no major problens to fix myself). She and myself were both shocked at the deal we walked into! I pounced on it like an lion👍🏽👍🏽good luck my man