18 year old Real Estate Investor

10 Replies


First off I’d like to say thank you to you all for the information that is posted in here! I have found a lot of very useful information and I’m grateful that I found this site.

On to the background and questions.

I am a 18 year old freshman in college at the University of Kansas in Lawrence, Ks and am on track to graduate in 3 years. I have been interested in the business side of things since the beginning of high school and the real estate market for a couple of years now. I have now finally been put into a situation where I can take action. Throughout the last 4 years I have been fixing and flipping dirtbikes, ATVs, boats and other toys. This job/hobby has allowed me to profit more than $20,000 in which I have saved/invested for the future. I am now planning on using this as a down payment for a house hack and possible investment properties in the Kansas City area.

Lawrence is a very tough market with high prices and hard to find cash flowing properties but Kansas City is a great market if you find the diamonds in the rough.

My question is... should I still look into a house hack in Lawrence or just focus on finding an investment property in Kansas City.

It’s hard for me to come to a compromise with paying rent when I know there’s ways to let my money work for me instead of “giving it away” to the landlord.

Any suggestions and advice would be much appreciated. I’d love to meet with anyone in the area as well. Thank you.

I'd like to add that I have talked to several local banks, credit unions and have been almost "pre-pre-approved" for a 3.5 FHA loan as well as a 20% down conventional loan. With the help of my decent credit score and my parents as non-occupying co-borrowers (to increase my debt to income ratio).

Hi Cade!

I am not in your market area but might be able to shed some light and at least give you my experience. I am now 22 years old and I purchased my first "investment" property last year when I was 21. I had roughly 25k in the bank that I had managed to save up for a few years. When I took a look at everything I was needing a place to live and wanted the investment. I ended up buying a 4b/2b on a USDA no money down loan with less than 10k out of pocket. I had already "pre-sold" each of the other 3 rooms for $600/m giving me a check for $1800/m and my mortgage is right at $1600. After utilities and all that, I am about at a wash but I still live for free while my bank account stock piles higher. The other added advantage of doing a low/ no money down loan is it keeps your CASH in your pocket "cash is king", I will leverage money for the rest of my life. With the cash I was able to keep in my pocket I was able to fix up the property some and "add" value.

Since that time I was able to save up more money and purchase my first fix and flip at the beginning of August last month which was exactly 1 year after my first purchase and we will be listing it tomorrow.

I do not know your market, but if a good deal is tough to find, I would just have an agent scower or set keyword searches for any kind of "Distressed" listings and then when you find it just house hack it but certainly keep in mind that any sort of traditional financing, for the most part, will require that the property be in what's deemed "livable condition"

Hope this helps and if I can ever be of any assistance or advice feel free to reach out to me!

Hey, Cade I say your on the right track especially for starting at your age. Jake made some good points, honestly it depends on your overall goal or exit strategy. Is your goal cash flow, living rent free while in school (both) or is it just to house hack to get that first investment under your belt and then you can cash out refinance. Either way like I said you can't go wrong with taking action at 18 you will learn a lot. I'm a Investor friendly agent in the Kc area I would love to connect, I'm here to help with any questions and I wish you nothing but success.

@Jake Denning @Marc Edwards

Thank you for your advice! But yes, I'm looking to house hack until I'm out of college with the intent of living rent free, with any extra cash flow as a positive. I would love to buy a house that needs a little bit of updating and using the the time in college to build equity in the house. My concern is how much updating will FHA allow and still finance. Secondly, should I focus completely on the house hack in Lawrence (where I'd be living) or also attempt to build my portfolio in KCMO while house hacking. My plan is to buy in the upcoming months- getting closer to winter where I'll have a little more leverage in the market.

Thanks again!

-Cade Zerr

@Cade Zerr One option: buy a 4-5 bed house and rent by the room to college students.  Would be an excellent way to make friends, live for free, and make a bunch of money while still in college.  The experience you gain as a 'landlord' will translate well to whatever you end up doing when you leave Lawrence.

Side note: your market is pretty reasonably priced.  There are a lot of affordable options that will make you a lot of money if you rent by the room.

Hi @Cade Zerr , welcome to Lawrence.  I'd be happy to meet with you If I can be of any assistance to you as you get started.  Just let me know.  I've been doing some seeking out of off market sellers and they are out there, but Lawrence can be a pricier market.  

@Derek Felch @Spencer Cornelia

Yes! That’s exactly what I was planning to do, rent out each room separately. How would you suggest finding rent comps for something like that?

Thank you Derek! I’d love to connect sometime. If you have any suggestions to local real estate agents, brokers, or lenders that you’ve had good experiences with that would be much appreciated.

@Cade Zerr   I messaged you.

Brian McFall at Landmark Bank is a great resource for mortgages.  Landmark is an extremely conservative bank, but as a result loans don't seem to cost as much.

Chad Knudson with Keller Williams is a real estate agent I work with.

Those are who I use, there are others I can recommend if you want them.  

If you are interested in a 3 bedroom fixer upper I may have a lead on one or two that should qualify for financing.  I currently am working on 2 flips, and probably can't stretch out a 3rd one at the moment.

@Cade Zerr to answer your question for @Spencer Cornelia , there are multiple resources you can use for rental comps. I like to use Zillow, Rentometer, and Padmapper. These platforms will bring up comps for both single-family and multi-family properties (apartments). If you know the potential rent that a property can get, divide this by the number of rooms. I would charge more rent on a per room basis because potential renters would still pay less money than renting out a 1 bedroom apartment. I'm here to be a resource to the BP community so feel free to reach out if you have any questions.

Had a friend in Lawrence once that bought a tri plex.  He occupied the tiny one and rented out the two larger units.  Rent from the two units supported him.  Another friend bought a large house and rented out the 3 extra bedrooms to pay for the house.  

And you might also check into co living arrangements where you have a really nice place with several bedrooms where you rent out by the room and they share common areas.  Offer premium services like utilities, cable, internet and weekly maid service.  They pay a premium rent, all those parents cosign, you don't have to chase rent too much.  And with the weekly maid service , you have someone making sure the place gets cleaned 4 times a month.