My journey to becoming a Realestate investor at 18

6 Replies

Hello all, 

For the past 9 months, I have been working my butt off to purchase my first rental property. The first deal I tried buying was a townhouse in Indianapolis for 120K the property was a short sale and needed to be repainted and spruced up. Approx ~ $3,000 in improvements. The property would have rented for $1500 a month. I offered list price with 20% down and to do the deal through the selling agent because I felt I was buying the property significantly under market (I valued it at $220,000 if completely rehabbed) and my mother hadn't been able to transfer her license to Indiana by then. Long story short 3-month later the bank refused the short sale and told me I would need to pay $165K because they received an appraisal for $165K. I cancelled after going through the entire mortgage process and being approved. 

Property #2 - The next deal I agreed to was for the purchase of 2 houses with 2 additional lots and a four-car garage for $138K with the same 20% down. I estimated the properties to rent for a total of $2250 a month. The property was listed as residential and according to the seller was owned with an FHA residential loan. Fast forward 2 weeks to my bank calling me to tell me that the property was in fact zoned as commercial and that I would need a different loan along with 25% down and several thousand in appraisal fees. This was obviously not going to work for me so I canceled the deal.

Property #3 - As cookie cutter as possible. At this point, I decided I was going to find the most boring property possible that still met my cash flow requirements of 1.5% a month. This property is located in Northwest Indiana about 30 minutes away from Chicago. We settled on $72,000 ($8,000 under list) with a 20% downpayment and the deal through selling agent. I estimate the property to need $3,000 in cosmetic work which I will do myself (LVP, Painting, Bathtub shower stall) and will rent for $1275 a month. Last week while looking through listings I realized that the market was hot with entering into spring and I now plan on flipping the property and putting in more work to do a new kitchen. I estimate it to sell for around a $25,000 profit. We are set to close in 2 weeks.

This property will cost approximately half of my savings for the downpayment and work. My plan is to use this profit along with the leftover savings to purchase a larger apartment building in the $400,000 to $500,000 range. I hope to buy an 8 to 12 unit building in the midwest in an area like Kansas City, Indy, Cincinnati, or wherever else a worthwhile deal presents itself that will make me around $3,000 to $4,000 a month.

This will be my career I have known that since I was 7 while going to the project sites that my parents run and hearing everything from the good to the bad (I will never forget going through 2009-2012 and the sacrifices my parents made). I am bored at college and don't feel challenged. Part of me really wants to drop out and find a job that I can do to help add to my savings ability to put back into real estate (even if it's a $12 or $15 an hour gig). I am enrolled in a 4-year college for construction management and see the value to this but also know I can work my butt off for the next 7 years and be very financially secure. At the same time, this is an incredibly difficult decision and one my parents would rather I not make. I do not know of anyone in this situation which is really hard for me because there isn't anyone I can really ask about my situation and I routinely get the "college is the best time of your life, stick with it" responses. I am introverted and while I do force social interaction through joining a fraternity and clubs the whole college partying, chill life isn't really my style nor do I find most classes more interesting than doing RE research. I'm used to working 40+ hours a week through various other business I've started and have never felt more unporductive in my life. My questions are:

For those of you with construction experience. Would switching to an associates degree at a community college that's close to home (allowing me to be a bum a little longer) while still receiving a construction management degree make sense?

How can I get more involved with other investors and build some sweat equity for deals? I do not want to wholesale. (But I would be open to just about anything else)

Anyone looking for the hardest working 18-year-old in the NWI or Chicago area to work for you and make YOU money?

Sorry for this being a rant but I felt this was the best way to provide a glimpse into my situation. I will greatly appreciate any advice offered. Thanks.

Hey, I'm not looking to make money off of you, but I'm involved with the Northwest Indiana scene. I strictly do flips. I'll add you on here so we can connect. 

Originally posted by @Michael Reich :

Hey, I'm not looking to make money off of you, but I'm involved with the Northwest Indiana scene. I strictly do flips. I'll add you on here so we can connect. 

Thank you. NWI looks to be a great area for rental. I haven't been looking at it from a flipping angle until recently. But lake and porter county seems to be a very good value especially amongst the lower end of the market.

Obviously you can be successful in real estate and happy in life without a degree.  I would advise you to try to do both though: real estate and a degree and stay on a track now, while you're young with a lot of energy.

Construction Management or something similar is an excellent choice in my experience.  However, if you really are introverted, you might not enjoy dealing w/all the contractors in Const Mgmt through the years.  However, I find that introverted people are happy to be outgoing and talkative when the subject or task is something they are interested in.

My 4 year Bachelor's degree was the hardest and worst time of my life - not the "best time" of my life -  (and I was in a fraternity too).  The $ I made with my job after graduation has helped fund my real estate down payments though.  Banks like W2 income when you're applying for a loan.  So a degree can be helpful to you in those ways and more.

If you strongly want to get away from full-time college, I get that.  Consider going to Ivy Tech Northwest at first and go part-time.  Maybe work at a big box hardware store and eventually with a builder.  Maybe first get an Accredited Certificate that can be applied to an Associate's degree.  The psychological boost you get on completion of a Certificate may encourage you.  Then complete an Associates degree at Ivy Tech.  There are several construction related degrees.  Even an Electrician or HVAC related degree would be helpful in real estate.  Then you can transfer the credits to a 4 year public university in Indiana if you decide to continue for a 4 year degree.  Ivy Tech has MUCH information about transferring those credits.

Also, maybe the property you buy could be a remodel house hack in which you live and work on while going to school?  Maybe you could rent rooms to friend(s) and enter the world of the Landlord.

These ideas may not fit your situation as you seem to be different than most 18 YOs if you're able to make a large down payment at this stage of life.  My idea overall I guess is to harness that energy that you have and apply it to both real estate and a related degree, both at the same time.

Originally posted by @Scott P. :

Obviously you can be successful in real estate and happy in life without a degree.  I would advise you to try to do both though: real estate and a degree and stay on a track now, while you're young with a lot of energy.

Construction Management or something similar is an excellent choice in my experience.  However, if you really are introverted, you might not enjoy dealing w/all the contractors in Const Mgmt through the years.  However, I find that introverted people are happy to be outgoing and talkative when the subject or task is something they are interested in.

My 4 year Bachelor's degree was the hardest and worst time of my life - not the "best time" of my life -  (and I was in a fraternity too).  The $ I made with my job after graduation has helped fund my real estate down payments though.  Banks like W2 income when you're applying for a loan.  So a degree can be helpful to you in those ways and more.

If you strongly want to get away from full-time college, I get that.  Consider going to Ivy Tech Northwest at first and go part-time.  Maybe work at a big box hardware store and eventually with a builder.  Maybe first get an Accredited Certificate that can be applied to an Associate's degree.  The psychological boost you get on completion of a Certificate may encourage you.  Then complete an Associates degree at Ivy Tech.  There are several construction related degrees.  Even an Electrician or HVAC related degree would be helpful in real estate.  Then you can transfer the credits to a 4 year public university in Indiana if you decide to continue for a 4 year degree.  Ivy Tech has MUCH information about transferring those credits.

Also, maybe the property you buy could be a remodel house hack in which you live and work on while going to school?  Maybe you could rent rooms to friend(s) and enter the world of the Landlord.

These ideas may not fit your situation as you seem to be different than most 18 YOs if you're able to make a large down payment at this stage of life.  My idea overall I guess is to harness that energy that you have and apply it to both real estate and a related degree, both at the same time.

I really appreciate the reply. This is exactly what I am thinking of in terms of Ivy tech and it would make my parents a little less weary. Plus by my estimates, it would only take a year for the associate. I'm just struggling with getting information from contractors about whether an associate will be enough to get in the door. House hacking is definitely something I would do but I'll be able to live with my parents for free thankfully... for a little longer in that event. 

I am going to try really hard to find a place to stay with the company I am interning at this summer and if that pans out then Ivy tech would be the best decision I can think of while still giving me the ability to transfer back down the road.

I am not advocating for leaving college or staying. All I am saying on that is if you want something so bad you can taste it, then don't let others concerns i.e. parents etc. set you off track.  A degree is great if you need it for the field you will work a 9-5 in while saving for your investments for example Dr., lawyer etc. 

I went to college and earned 3 associates and it was good times.  But I understand college is not for anyone.  I work a full time job now and I recently became a Realtor also, with hopes to get into investing soon.  If you ever want to chat business ( I am not selling anything) don't hesitate to reach out.  Best of luck investing!