Young 20's investing - What are my advantages?

68 Replies

This fall I will be starting my final year of college and plan on graduating with an engineering degree. Over the last year and a half I have become very interested in real estate investing, particularly rental properties and house hacking. At this point in time I do not have time or money to begin investing but upon graduating I plan on beginning investing in real estate.

I have learned from internships and jobs in college that a 9-5 W2 life will not be satisfying for me and am looking to find financial freedom as quickly as possible. I plan on finding a W2 job in near a large city to pay the bills and begin saving for investment. I figured house hacking would be a good entrance into the real estate investing world and an easy way to build equity while also paying off student debt(Not a huge amount because of scholarships).

With all this said now to the question. I'm worried about my lack of age and experience hindering my ability to find deals and leading me to get taken advantage of. What are some advantages I have as someone new to investing and relatively young? Is house hacking a smart route to go to gain experience? 

Thank you for your answers!

You’re biggest advantage is, in my opinion, your biggest worry...lack of age. You’re at an age where you can soak information and knowledge very easily. Furthermore, building wealth takes time; time to compound, time to build capital, etc. the sooner you begin, the higher your potential will become. 

Regardless of age, we are all susceptible to mistakes and being taken advantage of.

Your biggest advantage IS your age. I started at 28, before that I wasted a lot of time doing a whole lot of nothing. Looking back, if I was 20 doing the things im doing now, I would be in pretty good shape financially. Instead, I was racking up credit cards and destroying my credit over a $650 necklace, and a $500 laptop. Stupid.

You are already on the right track.

My point is, you need to start somewhere. Age doesn't matter, just your perspective, your maturity and what you are willing to learn/do. Im 31, but sometimes I feel 20 mentally... The only thing that has changed over the years is my courage.

@John Hunt

Advantages: Youth, time, freedom

Disadvantages: Experience, money

Your advantages far outweigh your disadvantages at this point. Assuming you are single, you can choose to live and work where you please and set up shop in the form of a house hack in an area that will allow you to get deals without having a large amount of capital.

If I were in your shoes, I'd look into house hacking and securing down payment assistance. Combine that with finding a great realtor who can help you get that first deal going, and you could theoretically get into a property with little-to-no money out of pocket (assuming your closing costs are covered by the seller).

Find a good realtor that knows a good lender who can help you with the down payment assistance programs in your area. Explain your situation to the realtor and exactly what you're looking for. If you cannot locate a realtor on your own, ask for references from other investors in your area and attend REIA meetings and local meetups. I'll guarantee that you'll find an agent from these meetings at some point.

Best of luck going forward.

@John Hunt my husband and I are in the the first year or so of our first "real jobs". I did my masters immediately after undergrad because it was inexpensive. We bought our first house hack at 23 and after a few renovations are moving in this weekend. While there are moments where I think "what are we getting ourselves into". Overall it has been so worth it. I think a disadvantage of being young is lack of experience and knowledge but you'll only get that by just jumping in and learning all you can and just doing it. If you are worried about being taken seriously by lenders, agents, brokers, etc. just making sure you only work with people who treat you with respect . One of the reason I chose our lender was that he treated me with so much respect and made himself extremely available to me and was willing to answer my questions. Working with people who see you as valuable too is important because if you're going to keep investing you want relationships. 

I personally have felt like house hacking is a great way to get started. It has been fairly risk free for us. It feels so much safer because if something goes wrong or other unit is vacant for a few months (hopefully this will never happen) we could afford to foot the mortgage without the other sides rent. It has also been nice to learn how to be landlords with little effort since the unit is right there. For us it was also an "upgrade" of living conditions with more space and better finishes than our previous apartment. 

@John Hunt First off, I started when I was 24 and if I were to do it all over again I would do it the same way in which I believe still today is the best way. Let me explain, I saved up as much money I could and bought my first property distressed with all my own cash. I lived in it after I repaired the property with my own cash. Then when the market improved I refinanced the property and repeated the same process several times. AKA the BRRR Strategy. However, I believe when I started off the BRRR strategy the first part before the 'B' should be "S" for save. As this will act like your cushion for the newbie mistakes.

I like this approach best because you can scale up very quickly versus just putting 20% down. Personally, I hate buying investment properties the traditional way. Get the cash and going to court auctions and bank auctions allow the best deals. No matter if its a rental property or a flip, typically you will make the biggest move on the investment when you initially buy in. This will all make sense when you start investing .

Success in REI (and in life in general) is based on never stopping to learn.

Your biggest advantage?  You are still mentally in learning mode.  Never leave it.

@John Hunt time and lifestyle. Don't let lifestyle inflation creep in when you start your career and start earning real money. Keeping your lifestyle simple and low cost will greatly help you pursue your goals in REI. The time advantage speaks for itself. I started at 23 and wish I started even earlier.

You are young and can take risks and have no real commitments.  You can make mistakes and plenty of time to recover.  Man, when you hit your 30s you will be so ahead of everyone.  All your friends that are slackers will be in pure envy.  Don't waste your 20s partying.  That's garbage. Partying in your 30s with money is the next level. Trust me.  

@John Hunt I started at 22 right after college (also engineering). So far so good and that was 3 years ago. In my opinion you’re best starting now because you have time and the energy to do this. It will require both. Now I’m working on my second degree in engineering. Feel free to reach out if you have any questions

John,

Your advantage, in addition to your youth, is that you know the direction you want to head in life.  You're graduating with a strong degree where demand > supply.  Though you may not want to work a 9-5 job, that job will help you obtain the seed capital you need to get your real investment going.  Use your energy and enthusiasm to study real estate and how to make the numbers work.  You've got fire in the belly so turn it into something.  It won't take long.  

When I was 25, I worked as a financial analyst for a year and I used almost all my salary to buy investments or purchase advertising for my business.  There was no guarantee any of my efforts would pay off, but I was determined not to have to work a job and sit in a cubicle all day long - not when the weather outside was so beautiful and inviting.  The day I left my cubicle job, I took a trip to Honolulu with my best friend and my younger brother.  Will never forget the feeling.  

@John Hunt

Time. Most people start investing after they accumulate tens of thousands in their 401ks or when they get sick of their corporate life...so 35-45 I would say. Of course, there are outliers and some start older and some start younger. Your advantage is the decade of experience you’ll get knowing this information and implementing now versus your average investor. Don’t let anyone deter you, now is the best time to get into investing. It’s easy to get money, it’s hard have years of experience.

Read "Set for Life" by Scott Trench. It was written for you. Good luck to you!

Originally posted by @John Hunt :

This fall I will be starting my final year of college and plan on graduating with an engineering degree. Over the last year and a half I have become very interested in real estate investing, particularly rental properties and house hacking. At this point in time I do not have time or money to begin investing but upon graduating I plan on beginning investing in real estate.

I have learned from internships and jobs in college that a 9-5 W2 life will not be satisfying for me and am looking to find financial freedom as quickly as possible. I plan on finding a W2 job in near a large city to pay the bills and begin saving for investment. I figured house hacking would be a good entrance into the real estate investing world and an easy way to build equity while also paying off student debt(Not a huge amount because of scholarships).

With all this said now to the question. I'm worried about my lack of age and experience hindering my ability to find deals and leading me to get taken advantage of. What are some advantages I have as someone new to investing and relatively young? Is house hacking a smart route to go to gain experience? 

Thank you for your answers!

John,

Age does not matter in real estate investing. As long as you're legal age to sign paperwork (in most states that's 18 yrs old), then you're good to go.

To answer your questions:

1. House hacking - Start where you can.  Since house hacking does not involve a lot of money, if you can buy a duplex or a 4-unit in your area, then do so. Live in one of the units rent free and learn property management on a small scale.

2. Advantages of a 20-yr old - you understand the Millenials because you are one. Millenials due to the HUGE student loan debt will be renters for quite some time. So you can understand your market better than old guys like me. You are more up to date with regard to technology. You can utilize that to your advantage. Your youth gives you more energy and enthusiastic. Assuming you're single and have no kids yet - you can outwork guys like me with a wife and kids. If I were you, I will work 60-hour weeks buying, renting and selling real estate for the first 5 years after college and put $1 MILLION in the bank and have $20,000 a month passive income.

2 words

compound interest

@John Hunt Also a young investor here (mid 20s). Like everyone said your age is your biggest advantage here and you are correct that house hacking will be a great first step for you. I purchased my first house hack about a year ago after working at my current first job for about 6 months and the knowledge you gain just from going through the process yourself is incredible. Here are some action items I wish I had take right out of the gate and have been taking this past year and a half that have helped me enormously.

1. Read Set for Life by Scott Trench before you graduate (A previous poster also mentioned this and I 100% agree)

2. Keep living a frugal college student lifestyle, even when you land your first "real" job. Don't let lifestyle creep get the best of you. Find roommates, live modestly, and don't go crazy with your first paychecks.

3. Start networking with other BP members, attend local meetups, DM people that are in your area and ask to meet for coffee or lunch or something. 

4. Start running theoretical deals so that you get a knack for using the calculators BP has available so that when you have the capital ready you are good to go

5. Absorb as much information as possible, BP has a ton of great book recommendations. I'd also recommend you start listening to the podcasts if you don't already.

6. Keep your credit good (or build credit if you haven't already). Don't carry a balance over on any of your cards. If you have student loans begin reading Total Money Makeover by Dave Ramsey and begin creating a plan for how you'll pay off your loans.

Best of luck and can't wait to see what you do within the next couple of years!

@John Hunt your biggest advantage is your age. When I was 20 I pulled out mortgage for 2 condos. I had no idea what I was doing, just found the cheapest and not renovated ones. Then I paid it with tenants money. 10 years later sold it for over 500k. So at my late 20s I had funds to invest. The life is limited and you have more time to invest than those that start later.

I think your biggest advantage is your engineering degree. While it has been observed by many that sometimes engineers can get in their own way - lol - it is also true that engineering pays really well. I dunno...I might suggest getting the best job you can in the least expensive place possible to maximize your saving potential and eventually purchasing power.

I often think on how I wish I had started this at 20. I also know that a lifetimes experience has helped too - mostly with attitude and perspective really.

Go get that job. Make some money. Don't spend it. Lurk around here and learn. Start studying your market. Play with it on paper. Frank said partying at 30 with money is more fun than partying at 20 without money - so true.

I think a house hack is a fantastic way to start all this.

@John Hunt You seem to remind me of myself when I just started. I’m 21 years old and just went for it and bought a single family that I’m transforming into a 2 unit. Don’t worry about being taken advantage of. Business is business and if you see someone not respecting you just because of your age then move on and find another agent, contractor, etc. I’ve had problems I ran into when hiring out contractors who would bid me ridiculous prices for drywall work haha but that’s when experience comes in handy. Just go all into real estate investing and leave those unimportant worries behind. You’ll do great!

Don't worry about your age, and most people getting into this industry lack experience. None of us were taught it in school. Being younger is great--you're going to be more creative, your brain is already set for learning, you'll pick up things faster, and you have way more time and opportunity to make mistakes (which are kind of inevitable in REI).

What kind of engineering? I used to be aerospace.

@John Hunt

I am starting out pretty young myself!

I think one advantage is the motivation you currently have. Being on this forum and searching for information is great. Most investors and property owners never even make it to this step! Keep learning and you will do better than most!

Additionally, keeping up with technology is also important. You are advantaged in that you know how to do the simple things that most old timers don’t. I was stunned to learn an investor I know wasn’t aware local property tax info was available online! And those that can’t send a contract via docusign and rather use snail mail will always be slower than me!

@Ali Boone thanks for your response! I’m studying Metallurgical and Materials engineering, but actually hope to end up with a job somewhere in the aerospace industry.

Originally posted by @John Hunt :

@Ali Boone thanks for your response! I’m studying Metallurgical and Materials engineering, but actually hope to end up with a job somewhere in the aerospace industry.

I have NO idea what metallurgical means, but I know materials :) I might be biased, but I think the aerospace industry is awesome!! No shortage of really cool things to work on...

@John Hunt time. I’m 25 and I started a year ago. I literally cannot wrap my mind around where I would be if I started 5 years ago.

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