Rental Property Investor · Ogden, UT · Member since 2018 · 6 posts · 1 vote
So I'm 19 almost 20 with about 17,000 in savings. I am a full-time student studying aerospace engineering at Mississippi State University. The real estate is okay here, and I have been doing some reading of Brandon's book and listening to the podcast for several months. I would love to start investing, but I don't know where to start or If I am too young. I know I want to create passive income via rental properties, and I would like to do this through BRRRR. Any advice on good real estate agents or how to get started?
In my opinion house hacking is the perfect place for a young college student to start. Use your savings to buy a house as an owner-occupant. Rent out the additional rooms to other students. If you have trouble qualifying for a loan there is something called a Kiddie Condo loan available through FHA. This allows your parents to co-sign for an FHA loan with you. They don't have to be used on condos but any 1-4 unit property. And you only have to come up with 3% down. https://www.mortgage101.com/article/fha-kiddie-condo-loans-first-homes-young-adults
In my opinion house hacking is the perfect place for a young college student to start. Use your savings to buy a house as an owner-occupant. Rent out the additional rooms to other students. If you have trouble qualifying for a loan there is something called a Kiddie Condo loan available through FHA. This allows your parents to co-sign for an FHA loan with you. They don't have to be used on condos but any 1-4 unit property. And you only have to come up with 3% down. https://www.mortgage101.com/article/fha-kiddie-condo-loans-first-homes-young-adults
What @Susan Maneck said! That is the best idea I think. Another thing to do is start building your team. You can start with a realtor. Find one that is specific to investors if possible. But before you start calling realtors, you'll want to have at least a basic idea of the market you're thinking about getting into. Will you be renting to other students, faculty and families, Air BNB for sporting events and graduation, Section 8, etc. So spend an open day looking at neighborhoods and houses for sale. After getting with a realtor, ask about property managers and who do they suggest.
Attend a local meeting if there are any in Starkvegas. Or find out when one is being held in an area that you're interested in and travel to it.
If you can meet someone who is doing well in Starkville, ask if you can contribute a certain dollar amount to be part of their next investment, and also do A LOT of free labor for them on the one property that you invest in. This way they are more likely to help you and give information when they see that you won't waste what they offer. This will push you in the right direction, and give you a ton of confidence for deal #2, which you will be able to do on your own. (Get a contract before $$ changes hands)
Do not be afraid to give way more work than you think you should. The learning experience is too valuable. Or you can do what I did, which is throw all of your money into your first deal, get way under water, charge less rent than the cost of the mortgage because you have no other choice, and then sell for a loss after many years. I haven't made a mistake like that since, and it was a very valuable lesson, but it hurt badly. Don't be afraid to fail. The faster you fail, the faster you learn.
BUT START NOW!!!! Don't wait. Don't make excuses. Get out there and make some equity happen!
When looking for a realtor be sure to find one willing to deal with HUD, Fannie Mae and Freddie Mac. In my experience, that's where the best deals are but a lot of realtors won't deal with them.
@Kiera Underwood Hey, sorry I get busy with school, but I'd love to house hack. Sadly I have already signed a lease for an apartment with some buddies. But, my senior I would love to look into it, and I have been looking around at Starkville. I'm not really sure though what would be good to house hack, so any information would be great! Also, thank you everybody else for the info!
Sounds good! Here are a few things that might help.
1) Go get approved for lending an FHA loan so you don't have to bring much to closing. If approval isn't easy for your situation at least talk to a lender and ask what steps you need to take to get approved.
2) Find an agent that specializes in investments in the area and work with them. Ask them what a good cap rate is in the area (the rental income-expenses/the price you pay). Then you can ask them to send you stuff that meets or beats that cap rate. If anything great comes up I'd make an offer before even seeing it. You can bust your offer during the inspection period if you go see it and it's not what the pictures seemed or if your inspection report shows that you have more to worry about than the seller will likely fix.
3) Run the numbers by the BP community or someone that knows about investing that isn't going to make money off of you, just to make sure you're getting a good deal and your agent isn't wrong/misleading. Make sure to do this before you inspection period is over so you can back out of your offer if your numbers aren't as good as you thought.
4) When you make your offer ask the seller to cover as much closing costs as legally possible so you won't have to have much savings. If the seller won't cover, ask that the seller raise the price by the amount you want them to cover, they shouldn't push back.
5) If inspections go well and you keep the property - get a home warranty. It's not expensive and will cover you if ac/heater or hot water tank goes out. Later when you have more cash reserves you can get rid of this.
@Christopher Owen Cote finish school and worry about real estate later. That’s my advice, engineering is hard enough (I did engineering to) you don’t want to add dealing with tenants to your already full plate