How would you start your investment career in my situation?

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How would you start your investment career in my situation?

Manuel A.
Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes

I'm broke as a joke. I'm a full time College student living off food stamps, pell grants, and partially my mom. I can maybe get $1,000 saved up in like... I'm not sure, but a long time, months. I don't have a job because I'm trying to focus purely on school, and I have about $5 in my bank account.

Besides wholesaling, what and how would you get into real estate investing in my situation? Like, rehabbing, renting, etc...

If you would be so kind point me in a direction, that would help me tons.

-Manuel

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Mindi B.
Real Estate Investor · Phoenix, AZ · Member since 2011 · 33 posts · 9 votes
14y

Wholesaling is a great way to get started in REI, especially with no money and no credit. That's what I would do if I was back in college.

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  • Jim M.
    Real Estate Investor · Charlotte, NC · Member since 2011 · 252 posts · 56 votes
    14y

    Look around for hard money lenders in your area. They will most likely want to see some skin in the game but who knows if you have a home run deal they might be inclined to lend or partner with you. Other than start small and find a local investor who will mentor you and go from there.

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  • Manuel A.
    OP
    Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
    14y

    Thank you Jim.

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  • James H.
    Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
    14y

    Your pursuit will depend on what you want ultimately, so I offer my opinion only.

    Concentrate on finishing school and don't be looking for distractions to slow your process to obtaining your degree. Borrow as little as possible to pay for school. Kudos on having the 5 grand. Don't spend it.

    Get a job and look to buy a duplex as soon as you can after you graduate so you can qualify for a home loan without the student loan payments factoring into your debt to income ratio (while they are deferred). Find a duplex you can afford to live in and pay for even if the other side is vacant. Make sure the overall duplex deal fits real close into the 50 percent rule. Look up 50 percent rule on this site and all the opinions about it.

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  • James Vermillion
    Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
    14y

    Manuel,

    I agree with a lot of what Brian said, specifically about concentrating on finishing school. I also completely disagree with what Jim said about finding a hard money lender. You have no savings and no income, and hmls typically charge high interests rates. What if something were to go wrong with your investment? You have no income or savings to help you get out of any bind you might find yourself in. I would say take this time to concentrate on your education and learning as much about real estate investing as you can. This way, when you graduate and get a job, you will be well prepared to jump start your real estate investing career with an education and financial backups (a job and hopefully some savings). I am all for getting started as early as possible, but I also like to see people stacking the odds in their favor and going in to investing well prepared and well educated. Good luck!

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  • Manuel A.
    OP
    Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
    14y

    Thanks Brian!

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  • Joel OwensBusiness Member
    Moderator
    Real Estate Broker · Canton, GA · Member since 2010 · 15k+ posts · 11k+ votes
    14y

    I would say look at your major in college and see if there will be a demand for it.

    Do you know how many people I know with college degrees that can't make squat?? A LOT.

    Instead they have massive student debt they can't get rid of through bankruptcy thanks to the government.

    Gaining debt with college is fine as long as you know getting out you are in a strong demand field with strong earnings over the years as well.There are many jobs that are in demand that don't pay much and have little chance to make any substantial money over the career cycle.

    You need to find the combo of great earnings and a strong demand field.

    If you don't have these elements you are wasting your money.Why have a huge debt if it doesn't pay off??

    So I would analyze what you are studying in college.If it doesn't have demand and great pay then red flags should be popping up.

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  • Mindi B.
    Real Estate Investor · Phoenix, AZ · Member since 2011 · 33 posts · 9 votes
    14y

    Wholesaling is a great way to get started in REI, especially with no money and no credit. That's what I would do if I was back in college.

    1Reply
  • Manuel A.
    OP
    Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
    14y

    Thank you all for your replies, really.

    What I'm wondering is more about what James concentrated on and that is what I should do. Not about College debt. I know you guys are in a sense looking out for me, but when you are as broke as I am, you get to be on a thing called a Pell Grant and it allows me to go to College absolutely free! And just in case anyone wants to know, I'm going currently to be a Nurse (only have a year left to be a Registered Nurse) because of the money! It's not my "thing" but I am acing every class and I'm sure I'll be paid well. Thank you guys for your kind words on wanting me to be careful about College debt, but it is not a problem. :)

    But for clarification, what you guys are basically saying is I should wait until I have a savings and a good, steady job until I can jump into this? If so, how much of a savings? 10k? I can get money from my family but would be way to scared to use their money with a chance I'll lose most of it.

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  • Curt DavisBusiness Member
    Flipper/Rehabber · Memphis, TN · Member since 2008 · 5k+ posts · 2k+ votes
    14y

    I am going to be the only straight forward one here and tell you that you are in no way shape or form ready to start doing any type of investing. Read and learn and finish college. If your in college you should be focusing on college. Real RE investing is a full time career and would suck up most your time. Good luck

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  • Manuel A.
    OP
    Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
    14y

    Thanks for your insight Curt.

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  • David Beard
    Investor · Cincinnati, OH · Member since 2010 · 1k+ posts · 928 votes
    14y

    If you have some time (you said you're acing your classes), you may consider getting on with a property management company leasing units. That should be eye opening. They'll have you photographing and advertising units, posting to web sites, taking tenant calls, screening tenants, showing units, maybe doing Section 8 walk throughs. All is great experience. While you're at it, get to know the property owners, contractors, and others in the profession.

    1Reply
  • James Vermillion
    Lexington, KY · Member since 2009 · 2k+ posts · 1k+ votes
    14y
    Originally posted by Curt Davis:
    I am going to be the only straight forward one here and tell you that you are in no way shape or form ready to start doing any type of investing. Read and learn and finish college. If your in college you should be focusing on college. Real RE investing is a full time career and would suck up most your time. Good luck

    I agree with Curt...although I thought I was pretty straight forward :)

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  • Chris Masons
    Investor · Union, NJ · Member since 2011 · 838 posts · 295 votes
    14y

    Hi Manuel,

    a great way to get started once you have a full time job and proper down payment is to look for a nice two family home that you can buy and live in one apt. and rent out the other.

    This is a great way to get your feet wet and see if you are cut out for this business. It will give you a chance to see how being a landlord is, dealing with one tenant, managing a small property as well as putting other people's money to work for you IE. having your tenant substancially pay down your mtg freeing up cash for you to do other things with IE. invest, save, pay off debt. etc. and finally be able to capitalize on some great tax advantages on your federal tax return.

    Owner occupying and managing a small 2 family is about as easy as it gets IMO and this will give you a taste of the business. And I am going to be honest it may leave a bad taste in your mouth or my leave you wanting to dive head first into your next deal :)

    1Reply
  • Jon Klaus
    Developer · Garland, TX · Member since 2008 · 8k+ posts · 4k+ votes
    14y

    I noticed on another thread that you have a keen interest in economics. Why not study that and get a job on Wall St where you could make bank and build cash for real estate? Especially since nursing doesn't sound like your passion?

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  • Mindi B.
    Real Estate Investor · Phoenix, AZ · Member since 2011 · 33 posts · 9 votes
    14y

    I was wondering the same thing. If you want to make a career of real estate investing, why are you bothering with a nursing degree? I would do a major in either Economics or Business.

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  • Craig Shute
    Landlord · Syracuse, NY · Member since 2011 · 120 posts · 96 votes
    14y

    I know exactly why he's getting a nursing degree. He's pretty much guaranteed a job when he gets out and registered nurses make good money. It's shift work you don't take home with you, so once he builds up some savings, he'll have time to do some real estate investing. I'm sure his goal is the same as a lot of people on here: Make REI a full-time job and get out of his current one eventually.
    What exactly does a bachelor's degree in economics qualify you to do? Be..... an economist?

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  • Manuel A.
    OP
    Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
    14y

    Hey! Thank you for all your replies!

    Chris, I think I'm going to follow your advice mainly, it seems fairly simple in theory anyway :D. But to everyone else, I want to get a nursing degree for the reasons Craig Shute gave. I'm sure I wouldn't make it in Wall Street for a second with my take and favor of the Austrian views of Economics either way.

    So, if you guys/gals would be so kind, how much do you think I should save before I start speculating further in real estate?

    And, just another thing about me, if I could pick any job in the world, I would be a mathematician. It's my absolute favorite subject. But, your almost guaranteed to be poor in that field, and my fiance just wont allow it, haha. Thank you all.

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  • Steve L.
    Investor · Rancho Cucamonga, CA · Member since 2008 · 1k+ posts · 684 votes
    14y

    One suggestion I rarely hear mentioned on here, but if you become a "leasing agent" for landlords.

    A lady in my area is very good at this... I listed one of my properties for rent on the MLS and she called me and said she has clients that would like to view it, those tenants rented it and now I emailed all my inventory and pay her 2.5 to 3% of the 12 month lease. So she makes $300-500 per lease for relatively simple work.

    It took me 2 or 3 rentals before I figured out what she does. She puts sign up around my property (not where my sign is) but one at the entrance of the street, and a couple in the area. She also speaks Spanish. So she basically works the same leads I do, but does a better job (she has more time) and I get what I want. The tenants delivered to me on a silver platter (they've seen property, they have the money, an application and income verification).

    In your case: you need no money, you would get to know the landlords in the area, you have little risk (only wasted time) and you will learn what tenants/buyers want in a property.

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  • Manuel A.
    OP
    Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
    14y

    Hey Steve L,

    Very interesting advice. I've never head of anything like that. I'll look more into it. Quick question from you, this "lease agent", does she get the full 2.5-3% up front upon the lease being signed? Thanks.

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  • James H.
    Investor · Fort Worth, TX · Member since 2011 · 1k+ posts · 450 votes
    14y

    I think Steve L. always contributes good things. However, in the context of your situation, I don't think the leasing agent thing is a great idea because you won't make squat doing that job - not compared to being a nurse.

    Figuring out leasing is not that hard. But you may want to do flips for all I know. I wouldn't recommend flips unless you are capable of doing most of the work yourself AND know others who can for a reasonable fee.

    I have found it takes about $20K to get into a working class rental. This covers DP and/or rehab plus some reserves. Bear in mind this figure varies depending on your strategy, but that has been pretty much the "magic number" for me. Its hard to let go of that cash after you have saved it, but if your investment is sound, you will be okay.

    I can't believe someone would suggest you change you major with only one year left in your program. Talk about wasting time and money...

    One thing about the duplex deal: they are harder to sell than a single family. You might be better off buying a really cheap SFH to live in so you can afford a second SFH to rent - if you intend to do rentals. That is what I did. I got my first rental a few months ago and it has gone well. I hope to acquire another one in a year or two.

    How soon I get another house depends on if I get a motorcycle or not before the next one. Hey, I am all for investing and building my portfolio, but I want to have fun in retirement AND today. Is that asking too much? haha!

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  • Rob Gillespie
    Specialist · Cleveland, OH · Member since 2011 · 1k+ posts · 852 votes
    14y

    Manuel,

    I love the drive to work to get more instead of becoming a victim. I know you said besides wholesaling, but that is the quickest and easiest way to make money fast without having any money or credit at risk.

    May I ask why you are opposed to the idea?

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  • Michael Seeker
    Investor · Louisville, KY · Member since 2011 · 1k+ posts · 1k+ votes
    14y

    Manuel,

    If you don't have time for a "part-time" job right now, then you won't have time to do much in the way of investing in real estate.

    I would recommend saving up about 5% of what a typical working class 3BR/2BA house goes for in your area. In my area this was about $5,000. I started saving the day I got a full time job and started looking as soon as I got close.

    Somebody mentioned a duplex earlier, if you can afford a 3/2 SFT, you should be able to find a duplex relatively close in the same price range. This would be a great way to go...if you want to rehab, you can live in one and rehab the other then switch it up. If you want to landlord, you can live in one and rent the other out. The best part is that when you're ready to move on to something else, you can still keep it as a rental and generate some nice monthly income.

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  • Manuel A.
    OP
    Rehabber · Albuquerque, NM - New Mexico · Member since 2011 · 283 posts · 38 votes
    14y

    Awesome replies everyone!

    Brian Hoyte, you're right. But I think it might take away some of my jitters to do something related to real estate even if it's only slight. I'll be getting my RN degree for sure though. No doubt about it. And thank you for giving me a number I can shoot for!

    To Rob,
    I don't oppose wholesaling at all. In fact I may start getting into it soon. I just wanted to hear about other paths there are into real estate before I choose one to settle with in my beginnings. It looks like wholesaling is it. Which is great!

    And Mike, thank you for your insights as well. On the note of me not having time for a part-time job, let me put it this way. Right now, I can't really work anywhere I'd want to work. No passion plus low pay. So I'd rather not make any money doing what I love and focus on my College which is coming along great. I'm a geek for knowledge of many things. Real estate is a passion for me. Although it is only theory right now... It interests me enough to keep going where others may quit. Do you get me?

    Thank you everyone.

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  • Account Closed
    SFR Investor · WY · Member since 2011 · 115 posts · 15 votes
    14y

    Manuel,
    I love your enthusiasm, and as a fellow nube to the real estate world, I am learning from your posts as well. I'm glad you are sticking with the nursing, there is so much variety in that field that you can change it up, all while getting a good steady paycheck. My daughter is also going to school to be a nurse, and she's watching the real estate world as well. She's thinking of having a nursing home eventually. (Her passion is nursing.)

    I want to encourage you to get your feet wet somehow. There's nothing like completing the first transaction to teach you so much, and give you perspective. You'll learn how you handle things under 'live fire' which is different than reading about it from a textbook. You pro'lly already know this from clinicals.

    OTOH, it sounds like you've got a good knowledge of how you learn and respond to situations though too, so you might not need the 'experiental learning' as much.

    Keep asking your questions- you are helping the rest of us out who haven't asked, and are contributing to the knowledge here.
    Jean

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