Young 20's investing - What are my advantages?

68 Replies

I agree w Andre, one of your biggest advantages is you have time. You can even make a mistake and recover. I'd say grow slow, learn all you can, and don't go to any of those $1000 weekend seminars, lol. 

@John Hunt I think it's great that you're enlightened about the path to FI via REI but it's disappointing that you've already determined you won't be happy in a career you've not yet started although that very career has incredible opportunity to not only provide a level happiness but most importantly expedite and elevate the level of your ultimate financial independence.

With that said!  I peaked at your LinkedIn and what I would recommend:

  • Take your engineering background and go to the field.  Go be a construction field engineer, work on exciting and challenging projects, learn construction (applicable to real estate investing), work 60+ hrs/week, get paid per diem, earn $100-150k+/annual.
  • Invest these funds in RE.
  • Leverage your high income to secure long term, low interest debt on cash-flowing assets.
  • After you get some experience in the field, you can pick and choose your W2 assignments.  Go overseas, make $200k+, travel the world, do fun ****.

There's so much opportunity out there for someone in your position, more than you can imagine.  

A lot of people talk about FI and how great it is.  But let me tell you...working a fun W2 gig while FI is even better.

I'm happy to answer any questions/provide more direction via PM.  Good luck.

You are in a great spot, just don't get distracted by the "real world"  and forget about investing . 

My practical advice is to buy a house or duplex as soon as you possibly can. Down payments start around 3% and gift funds are almost always OK. 

Rent out the empty rooms and keep that housing expense as low as possible, this will allow you to save quickly for the next one, regardless of your income level. 

@John Hunt I think that being young is an asset. I bought my first flip a year and a half ago when I was 20, and it was incredible to see the amount of seasoned professionals that were wanting to help. There are so many people out there that are excited at the idea of helping a young person get started in this industry. I often get "I wish I would have started at your age" and it reminds me that I made the right decision by not waiting to get started. 

Hope this helps!

Your biggest advantage is youthful energy.  If only I had the resources I have now when I was 20 and able to work 18 hour days 6 days a week...

You have plenty of time to make up any losses so spend as little as you can in order to save/invest as much as you can, work hard and invest defensively so no one bad outcome can knock you out of the game.  Your goal should be lots of "base hits".

As others said, there's a risk of fraud at any age, but compared to 30 years ago, today it's much easier to check up on people, look up their reviews, look up their court records, property records... Travel is cheap, go look at their work, look at their deals, meet in person, get referrals.

Yes, buying a 2-4 unit first so you can get it for 3-5% down and start living CF positive asap.

Bonus pro tip: Assume in the future you will have an income so high that you can't legally contribute to a ROTH IRA anymore, consider starting one now while you still can.

Time is your greatest ally! Adding a spouse and kids are great, but your time for REI will shrink and shrink.

Also, the younger you are to start, the more exponential growth will amaze you with its returns.

Last thing - keep your college budget when you leave school. It’s much easier to maintain your current lifestyle than to contract a bloated one.

@John Hunt

Just start small first when you get enough confidence move to big deal. You can network with some others older investors who is still on the game who can point out why the deal is bad

Time.  Time is your biggest advantage.  I graduated w/a engineering degree also. That W2 job is another advantage.

Have you ever heard, "Don't wait to buy Real Estate.  Buy Real Estate and wait."  ? The point is that in time the value of the asset normally increases.

In exchange for a decent place to live your tenants will pay for properties for you as the days turn into weeks and the weeks turn into months and months turn in to years.

@John Hunt

Honestly, if you haven’t even graduated yet and are convinced that “w2 9-5 isn’t for you” than real estate probably isn’t for you either. It’s harder to make the same money you could in a corporate job in the short term and if you don’t like doing what you don’t want to, it’s unlikely that you’ll get to the good part. Advice is get a w2 job, learn and save. Then get into rentals to see if you like it and make the transition full time if you do and are good at it. Be realistic.

@John Hunt Welcome to BP, John! I'd suggest you start as soon as you have an income & some funds for down payment which would qualify you for a mortgage from a conventional lender. I know of other investors who purchased their first property while still in university, myself included, and leverage the equity for the next and next...

I'll add my vote to the others; time is a big advantage. I was 21-year-old student when my husband and I bought our first property and everything snowballed from there. Now at 26 I think it would have been cool if we'd started when I was 18! Haha. Some other advantages I've observed from starting out young:

  • Having a higher tolerance for risk
  • Not being completely set in your ways of thinking, i.e. being willing to take unconventional approaches to common challenges
  • Being in a position to not only learn from others who are ahead of you in age/experience, but to have ample time to implement what you've learned from those people and to iterate upon it
  • Being able to build a solid career in tandem with your investments and using that career to bolster your network, find new investing opportunities and to build partnerships with others

I think it's exciting to get in the game early! I'm sure you'll learn a lot and have some great experiences. 

I’d like to thank everyone to everyone who has taken the time to reply to this post, I did not expect so many well thought out answers and am trying to absorb and filter all the advice!

It’s definitely encouraging to hear from so many people how possible it is to find success in real estate.

I will continue to learn all I can about real estate investing while in school and you can expect to be hearing from me on the BP forums in years to come. Thanks everyone!

Originally posted by @Michael Ealy :
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.

I couldn't have explained it better. I, too, thought that I wouldn't be taken seriously. But, I have been very successful so far (I'm not that far into it, yet). Get yourself some knowledge about what you're doing and take a minimal-risk strategy because you have the liberty of time.

I would agree with everyone above me. House-hacking is the way to go. You live rent-free and work your arse off while you can.

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!

Hi, John,

I agree with those who say your youth puts you in an enviable position, although that may be dampened a bit by student debts. Water under bridge at this point.

You will need some REI education unless you've had some exposure to RE and REI.

A low-cost start might be to take your state's real estate agent / broker classes just to learn the business of Real Estate and some of legal aspects. That will provide some basis, though it won't teach you how to be an investor.

There is some non-guru education available which you may find quite useful. You could do the state class first then these classes, or start with them. I've seen local folks do it both ways.

One of the most important skills you can learn at this point is how to raise money for deals. If you've had any exposure to retirement savings options, you might be interested to know that if you can learn how to attract people who need to grow their retirement savings without the risks and volatility of Wall Street you may very well find that you can gain access to more money than you can find deals for. One of my local mentors is a life-long broker who has a "stable" of private lenders such that he's having trouble finding enough deals to satisfy their needs to grow their money. He also runs a property management company with some 300 doors under management - in fact, he's my current landlord. I find him a well-spring of information, although getting that information out of him often makes me wish I'd studied dentistry, if you take my meaning :-) .

Yes - "house hacking" can be useful if you can swing the acquisition. Having tenants pay your own housing expenses can be a comforting position.

Hope this helps ...

@John Hunt being young is actually your biggest advantage. Two things - buy a two family and immediately remove any overhead for a roof over your head and getting your real estate license and into sales.

The greatest advantage you should have at your age is having nothing to lose. Assuming you are single, not engaged, no children you can lose it all and still recover. 95% of those in your position fail to start or fail with their first investment. Those on here giving advice are in the 5% group. Do not lose site of the fact that investing is very high risk and hard work starting out.  Assuming you can go at this with the realisation that you can lose it all and still recover financially is a major advantage of starting young.  

@John Hunt I was thinking about your post today. And I'd like to add... I witnessed someone have a huge real estate fail this year. Long story short it was a single family flip that was purchased and sold in a 2 year time period. Yes it took 2 full years to rehab and sell.

Looking forward when you run into obstacles what I've learned from a failed investment like this, is to have your biggest failures fast. In other words, if you run into an investment that seems to be a bad deal it is better to move on with the possibility of breaking even or even taking a small loss. Because the biggest loss on the project was not the money, it was the 2 years of time wasted. 

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