Starting Out While In Grad School (Advice)

6 Replies

Hello BP!

Recently, I got accepted into the University of Maryland MBA program. I am incredibly excited and will be moving back into the area after I get out of the military (April) and want to begin my travel towards financial independence. However, a few concerns I have are:

-Limited time frame in the area (2 years for grad school then possibly a big move)

-Expensive area (MD / DC area is incredibly expensive) 

-Seller's market

-From initially looking, there are not many multifamily deals which is where I want to head with landlording

-Limited income during grad school making mortgages tougher to get

I want to find the best possible solution for my situation and still move forward with my goal of financial independence. From my initial consideration, I think some of the best options would be:

-Simply save and study for after grad school while finding the cheapest rent.

-Wholesale? Although this isn't where I want to head with my investing, it would develop some much needed skills and could potentially be done when not in school.

-Buy and force appreciate then sell after my completion of my MBA allowing for no capital gains. 

I would love to hear your feedback on what might be best for someone in my position to move forward and not just delay my start to financial independence during grad school. Any advice would be very much appreciated.

In addition to this, I will be using the GI bill so tuition will be covered along with getting a moderate 2400 in allowance for housing when school is in session. I will have about 20k in a cash reserve and my wife will be working as well.

You are correct about multifamily housing in the area. The DC region has the smallest number of multifamily properties of any major metro area, and it isnt even close.  In 2017, 218 multifamilies sold, and about 170 so far this year...and that is out of roughly 100,000 home sales per year.

But, while the DC area may seem expensive, (It is on a dollar amount the 5th most expensive market) it is actually quite affordable due to the high incomes of the area.  DC housing trades at roughly 4.5 times the median household income.  So when controlling for income, we are only about the 20th or so most expensive market.  San Francisco and LA both trade at roughly double our prices for instance at 9-10 times their income.

If I were you, Id consider using your VA loan to buy a primary residence. You have a $2400 a month housing allowance which can go pretty. That gives you the buying power of roughly $400k. There are tons of great properties at that price point or lower in College Park, Silver Spring, Hyattsville to name a few. Then if you throw some roommates in the house with you and charge them $800 or so, now you are making profit. The $350-$450k price range in those areas are my bread and butter for my rentals. Im typically doing 20-25% down, But I love these mid $400ks properties that rent in the $2700-3000 price range, where my rents go up on average $100 a month every year.

My suggestion would be house hacking in one of the suburban areas outside of Baltimore/DC. You could even commute from 45-1 Hr away and house hack a small multifamily. Something to think about.

MARC Train from Baltimore area <---> College Park if you are really into multifamily or lower prices.  There are a LOT of jobs in the greater DC area, so may not be as likely as you think you'd leave after school, unless you wanted to.

I worked a full time job as Chief Software Engineer making 160K, sold a house,  bought two more houses, and had four units tenants turnover ALL while I was in grad school full time. Graduated with a 3.5 GPA to boot at a top ranked program.

Time management, you can have income if you work for it. It's doable, you don't have to just go to school full time only.

@Robert Bodmer . Will you stay in the area after graduation? I wouldn’t bother with real estate while in school. Focus on school. Get a good gpa and get a good job coming out. If you want to ignore that advice, I would definitely not entertain the idea of wholesaling. Probably buy a primary house and find a way to add value or force appreciation to it. But again, I personally would just wait til you’re done with school