I am receiving a settlement of almost $120k at age 21 due to a personal injury lawsuit when i was younger. I am looking into receiving the settlement when i turn 18 so that I can buy a duplex/triplex/fourplex with an FHA loan and live in the smallest room and rent out the more expensive one(s). I'm going into my bank today with my mom to get a secured credit card so I can get my credit built up. I'm going to start working at starbucks to make sure i have steady income. I have a recently started business as well that makes me an extra $200 a month. Should I consider other loan types? Would it be smart to buy with cash? (Maybe a $70k-$90k duplex and put some work into it). I live in Sonora, Ca and would be willing to relocate so long as I'm near a larger city with somewhat desirable weather. Also, how big of a loan would i be approved for if i earn ~$20k a year at starbucks combined with the rental income?
That's great that you're looking into this at your current age. I went to the Marine Corps at 17 because I had no vision. You mentioned getting the settlement at 21 but then said you're looking to get it at 18. Can you explain? Will you get it at 21 or 18?
The settlement has a scheduled payout for my 21st birthday but im pretty sure its possible for me to get it earlier so long as i dont want to use it for something dumb like a car.
That makes sense. If you believe you can get one for 80-100k and put 20-30% down, AND have had your job for a while, I think you won’t have a problem qualifying for the loan. Definitely continue to work on your credit score, do some research for what all goes into it. I’d also recommend using the Rental Calculator in Bigger Pockets. Get solid estimates for the property you’re looking for and plug the numbers into the Rental Calculator to see how much cash flow you should get. You’re on the right track.
@Terry N. Thanks for your reply. About how long do i have to have the job before lenders will even consider giving me the loan? Would it be far fetched to go for a $300k triplex or fourplex? I’m currently reading about real estate laws my brother in law gave me two big ole books for it. So I’ll be furthering my knowledge and understanding as much as possible up until the point where i can snag a good deal.
Some of the more seasoned people here can give better advice than I on financing. But my opinion is you’d have to get really creative and calculated to make that happen. Making only $20K a year, you’d really be in a rut if the renting didn’t work out as planned. It’d be difficult to make that happen without a track record of success and solid credit score. I lean more towards conservative business practices. For this reason, I’d recommend something under $100k as your first purchase. Heck, you may not even like investing in real estate as much as you thought you would. You wouldn’t be in that big of a hole with a $100k piece of property.
Good way to look at it. Thanks.