Moving... What can I do to get a head start?

Question

After reading a lot on RE (thanks BP) over the past year, I have decided to move to Austin (90% sure) to pursue REI sometime this year, as it is currently impossible to do here in Japan (I am a US citizen).  A little background.  26 years old.  No actual experience, just a lot of reading.  I have a good monetary cushion (don’t want to say the amount, but it is more than enough to live on for at least a year without a paycheck) that I plan to use to get settled and begin investing.  Since I have no real experience, I don’t know what type of REI I want to pursue.  Buy and hold, flipping, mobile homes, etc. all look interesting and I’d be open to any of them.

I guess I just wanted to ask you guys what I can do right now before actually moving, other than continuing to educate myself.  I was thinking of getting my RE license to save on closing costs as well as get MLS access.  Is it possible to get study materials from abroad?

Also, once I get there I will need to get some kind of job, but would prefer to get a job in the RE field so I can support myself as well as get educated at the same time.  What jobs are available for someone like me with no experience (I have a degree in math with some actuarial experience)?  I was thinking working for a property management company or something.  Is this feasible?

That’s all I can think of for now.  There will probably be more later.  Of course any other advice would be appreciated as well.  Thank you!

Andrew Jones · Answer

A good paying job can really help with getting loans, but they usually want two years of proven income. Also this isn't the only way to get good financing. You can go after owner financed deals which is often a win win situation because the seller a better rate then a savings account.

Bryce Y. · Answer

Lynn - Thanks. You bring up some really good points.  I wasn't aware of the whole income after expenses thing for self-employed person.  As for finding a good loan officer, my best bet would be small banks and credit unions, correct?

Michael - If I change my mind and come out to Kentucky I'll be sure to let you know!  Sounds like you work for a pretty awesome company.  I did health and welfare before and I'd be lying if I said I didn't hate it.  Just so monotonous, not to mention the time outside work to study for exams.  I'd love to chat with you, but it says I can't send a PM until we're colleagues.  How do you become colleagues?

Michael Seeker · Answer

Side note - The job market is great right now.  I get calls from head-hunters every 6 mos or so.  There is huge demand in the health industry, but if you're experience is in pensions you might struggle to find something in that area.  I know if you wanted to move to Louisville, KY I could probably score you a job no problem :)

Michael Seeker · Answer

Seriously??  You sound like my twin.  I'm currently a 26 yo actuary working for a health company in KY.  I fully appreciate your desire to do something in RE instead of actuarial.

It's good that you have a nice bit of capital built up.  Unless you have enough to pay all cash for a couple of good places, I would suggest getting a job for a little while just so you can easily get financing.  As much as I hate the "grind", it makes investing in RE SOOOO much easier.

If you are going to work, I would try to find an actuarial job that is not consulting.  My current job is excellent as far as flexibility.  You could even let them know in the door that you have some prior commitment that may require you to leave at random times or take days off unexpectedly, but you won't let it affect the quality or amount of work you do.

If you have the drive to learn about RE, you can do it regardless of what your daytime job is.  I would love to get an RE license and learn the biz first hand, but it would require me "studying" for 6 mos to a year and then taking a huge pay cut, so I'm content with my current job.

Feel free to PM me if you want to chat sometime.  I would love to pick the brain of somebody who has a similar life path thus far.

-Mike

Lynn McGeein · Answer

If your job is in the same field as your current job or your recent college degree, 2 paychecks works fine, at least in my experience.  If you stopped working in your field and became a self-employed real estate agent, for example, I believe they want at least 2-years tax returns for that field, and even then, it's difficult as you don't show much income after expenses as a self-employed businessman, a benefit in any way except qualifying for investment property.

And unless you plan on working 80 hour weeks, you'll have plenty of time to research, learn, even get your real estate license and work part-time for a firm as that business seems to be very busy nights and weekends when people aren't working.   My husband and I have bought our properties, picked a Thursday to close, work on it all weekend and, with the right planning and workmen scheduled, have it ready to rent out by Monday.  You can probably even do lots of research & viewing property on your lunch breaks.   I guess all I'm trying to say is I think the smart thing to do is use the field you know now and can get paid well for, even if it's boring, just for a few more years until you've at least got a few properties in your name and build a net worth and two years of rental income so it can help you qualify for mortgages once you are self-employed.  And maybe it will be less boring if you see it as part of a master plan you've chosen for yourself to get ahead, an answer to a problem so you'll be sure to succeed in the business you really want to be in.

Maybe your next step is find a good loan officer and talk to them about what actually is required to qualify for mortgages and how hard it is these days to get a cash-out refinance of a rental property that you've paid cash for.  It's not as easy as it used to be.

Bryce Y. · Answer

Thanks.  Yes, actuarial work is extremely boring to me, especially since I don't want to do it as a career.  I haven't really kept up with the job market, but it is something I will look into.  Do you think the benefits of getting a "good" job to get cheap financing outweighs the benefits of learning faster (with a job in the RE field)?

Also, do most banks require you to be working at your current job for a minimum amount of time before they will feel comfortable lending?  Can you just pop into the bank after you get your first paycheck and request a loan?

Lynn McGeein · Answer

Bryce,  Full disclosure, I have a son your age so my opinion is skewed.   Highly recommend starting to build your real estate portfolio at your age, wonderful idea and shows you are on the right path.  However, please think very carefully about full time vs part-time.  If Austin is where you want to be, and I'd research all markets as you are young enough to establish yourself anywhere, start looking now for a job using your degree in the same area where you want to invest.    I imagine the actuary field, however boring you think it may be, pays very well, and nothing helps with qualifying for financing more at your age than a good paycheck.   If that is too boring, there are so many well-paying opportunities for someone with a math degree, but stay out of the field too long and you will find it more difficult to get back in later.

You will find it very difficult, no matter what your downpayment, to find a loan as a newly self-employed real estate agent, and there is no reason to pay cash, even if you can, when financing is so cheap and you can get 30-yr-fixed at 4.5% or less.  Think of your math degree as a golden ticket to purchase real estate.  It should not be wasted, even if you only plan on 3-5 years more of employment until you qualify for all the financing you want.