What can a broke college student do now?
New to Real Estate · Louisville, KY · Member since 2019 · 127 posts · 86 votes
Hey guys! Just thought I would throw this out there and see if anyone has advice for me, I am VERY fascinated by house-hacking, and have been watching / listening / reading everything I can about it for multiple years now (I am only 20, so that is pretty much all of my adult life thus far). However, because I am in school, I obviously don't have enough time to make an income that would even begin to approve me for a loan on a house, especially in the area of my school (Boulder / Denver, CO). But I would rather not spend my time in school just waiting to be out so that I can begin working and start investing in real estate, because all signs seem to tell me that the earlier you can get started, the more it pays off down the line. Does anyone have recommendations on what I can be doing while in school for 2+ more years?
Any advice is appreciated, and obviously I still have a lot to learn before I actually begin investing.
Thanks in advance!
- Isaac
Since you're looking at a two-year period that will likely be 'inactive' with respect to real estate, you should discover what kind of investment strategy you're interested in. If you're interested in buying and holding or flipping, perhaps you should jump on a contractor's crew to learn some basic rehab skills. Those skills will be useful in either of those strategies but will also be useful in your personal life.
Beyond that, perhaps you should consider an internship with a real estate agent or property management company. I know on a lot of occasions that property management companies that manage school rentals give out free rent to their employees. That's a pretty good deal because you can minimize your expenses while on limited income while also learning how to manage properties.
In the meantime, you should definitely link up with your local Real Estate Investors Association meetup as well as any BiggerPockets meetup. Networking is something you want to do so you can ease different kinds of burdens down the line. One issue that folks have, for example, is finding a reliable contractor. However, if you're able to network with folks that have been in the business, you'll be able to extend your network to include reliable sources. Good luck with your schooling.
Since you're looking at a two-year period that will likely be 'inactive' with respect to real estate, you should discover what kind of investment strategy you're interested in. If you're interested in buying and holding or flipping, perhaps you should jump on a contractor's crew to learn some basic rehab skills. Those skills will be useful in either of those strategies but will also be useful in your personal life.
Beyond that, perhaps you should consider an internship with a real estate agent or property management company. I know on a lot of occasions that property management companies that manage school rentals give out free rent to their employees. That's a pretty good deal because you can minimize your expenses while on limited income while also learning how to manage properties.
In the meantime, you should definitely link up with your local Real Estate Investors Association meetup as well as any BiggerPockets meetup. Networking is something you want to do so you can ease different kinds of burdens down the line. One issue that folks have, for example, is finding a reliable contractor. However, if you're able to network with folks that have been in the business, you'll be able to extend your network to include reliable sources. Good luck with your schooling.
I think all of those are good ideas, but I want to emphasize reading! Read every bigger pockets book by the time you graduate college. Also, you could consider renting out an entire house and then sub-letting the rooms, saving yourself some money in the middle and living for free (or less).
Since you're looking at a two-year period that will likely be 'inactive' with respect to real estate, you should discover what kind of investment strategy you're interested in. If you're interested in buying and holding or flipping, perhaps you should jump on a contractor's crew to learn some basic rehab skills. Those skills will be useful in either of those strategies but will also be useful in your personal life.
Beyond that, perhaps you should consider an internship with a real estate agent or property management company. I know on a lot of occasions that property management companies that manage school rentals give out free rent to their employees. That's a pretty good deal because you can minimize your expenses while on limited income while also learning how to manage properties.
In the meantime, you should definitely link up with your local Real Estate Investors Association meetup as well as any BiggerPockets meetup. Networking is something you want to do so you can ease different kinds of burdens down the line. One issue that folks have, for example, is finding a reliable contractor. However, if you're able to network with folks that have been in the business, you'll be able to extend your network to include reliable sources. Good luck with your schooling.
I like this a lot! Thank you James! I have had some experience with rehab, but it was only for a few months so it would be a great idea to get more experience there. I also had not considered interning in real estate at all, that is a great idea! I will have to look into that much more. All good advice, thanks again!
I think all of those are good ideas, but I want to emphasize reading! Read every bigger pockets book by the time you graduate college. Also, you could consider renting out an entire house and then sub-letting the rooms, saving yourself some money in the middle and living for free (or less).
Is what you are talking about considered Rent-hacking? I have not actually looked into this (I heard / read a bit about it, but otherwise it has slipped my mind) I will have to look into this as well, thank you! And yes, I still have much to read, I have only read a few of the BP books. Great advice!
Save as much money as you can and become comfortable with the idea of living a lifestyle on a limited budget far stricter compared to your income than what most people adhere to. You can't really make or lose a lot of money as a broke college student, so now is really the time to get your financial house in order. Now is the time to start learning about important concepts like lifestyle creep and hedonic adaptation that keep so many people broke all their lives.
Many young people who grasp the financial necessity of investing early on in their lives still often never manage to get it together. For many, the reason is that they fail to find the right life partner to go on a long-term financial journey with. Too men and women get trapped into marriage with spouses who will have no interest in saving and investing money over the long haul. This actually happens more frequently for women than it does for men. Pick your partners carefully.
Make a commitment to read at least one book on personal finance every year for the rest of your life. I would start with reading Set for Life by @Scott Trench. Much of Scott's money came from househacking. The big four books that I recommend to everyone with similar interests to yours are: Rich Dad, Poor Day by Robert Kiyosaki, The Total Money Makeover by Dave Ramsey, The Millionaire Next Door by Stanley and Danko, and Your Money or Your Life by Robin and Dominguez. There are many more.
None of this advice is going to help you if what you're really looking for is a way to buy a McMansion and a Lambo before you're twenty-five.
Got to agree with @Jim k. Learn to budget now. Start saving up as much as possible. Pickup a part time job if you dont have one already. Learn as much as possible. Learn a skill that provides value towards real estate investing.
Unfortunately even house hacking should have a cash reserve. You'd generally need at least 3.5% downpayment. Closing cost can be pretty expensive on top of the down payment. Also dont forget about repairs, vacancies etc.
@Isaac Pyle - The first thing you need to do is educate yourself. I recommend reading the BiggerPockets books, listening to the podcast, watching the webinars, and continue to be active in the forums.
While you are educating yourself, pinch your pennies and start saving! In the greater Denver area you will likely need at least $20,000 to comfortably get into your first house hack. First step is always to save and educate.
If you hit your $20,000 mark before you graduate, there is NO REASON why you couldn't get started early. Maybe try to find a place in Longmont, Lafayette, Eerie, Superior, or one of the other towns outside of Boulder to get your first house hack.
First- Read, read as much as you can! The more you learn before you start, the easier it will be.
Second- Go to the local meetups, and see if you can help anyone with their rehabs and work for free. It will give you experience, and if they can teach you how to do stuff (ie: change outlets,locks, install toilets, etc), it will help you tremendously when you get your own house. Experience is invaluable, if you can learn how to do things yourself, it will be a huge help when you get your own! Also, if you're working for free, the investor will likely be inclined to help you and share contacts!
Save as much money as you can and become comfortable with the idea of living a lifestyle on a limited budget far stricter compared to your income than what most people adhere to. You can't really make or lose a lot of money as a broke college student, so now is really the time to get your financial house in order. Now is the time to start learning about important concepts like lifestyle creep and hedonic adaptation that keep so many people broke all their lives.
Many young people who grasp the financial necessity of investing early on in their lives still often never manage to get it together. For many, the reason is that they fail to find the right life partner to go on a long-term financial journey with. Too men and women get trapped into marriage with spouses who will have no interest in saving and investing money over the long haul. This actually happens more frequently for women than it does for men. Pick your partners carefully.
Make a commitment to read at least one book on personal finance every year for the rest of your life. I would start with reading Set for Life by @Scott Trench. Much of Scott's money came from househacking. The big four books that I recommend to everyone with similar interests to yours are: Rich Dad, Poor Day by Robert Kiyosaki, The Total Money Makeover by Dave Ramsey, The Millionaire Next Door by Stanley and Danko, and Your Money or Your Life by Robin and Dominguez. There are many more.
None of this advice is going to help you if what you're really looking for is a way to buy a McMansion and a Lambo before you're twenty-five.
This is fantastic advice! I have to say, I am already working hard to live on a limited budget (My rent is around $825, which is cheap close to campus, but my total monthly expenses are around $1000). I did read set for life, it was a fantastic book! I have yet to read the other 4 that you mentioned, but I will add them to the list! I appreciate the time you took to write this, thank you!
@Isaac Pyle - The first thing you need to do is educate yourself. I recommend reading the BiggerPockets books, listening to the podcast, watching the webinars, and continue to be active in the forums.
While you are educating yourself, pinch your pennies and start saving! In the greater Denver area you will likely need at least $20,000 to comfortably get into your first house hack. First step is always to save and educate.
If you hit your $20,000 mark before you graduate, there is NO REASON why you couldn't get started early. Maybe try to find a place in Longmont, Lafayette, Eerie, Superior, or one of the other towns outside of Boulder to get your first house hack.
Craig- first I have to say, thanks for reading / posting! I actually just ordered your book on house-hacking, so I was surprised to see you post here! I also came up with a starting number of about $20k give or take, but I think that the main issue is that I wouldn't be approved for a loan without a stable, decent paying income. Do you know of a way to start house-hacking without this? I know that I could claim some of the rent from the home as income to increase my approval amount, but that's not going to get me anywhere close to what houses in these areas cost.
First- Read, read as much as you can! The more you learn before you start, the easier it will be.
Second- Go to the local meetups, and see if you can help anyone with their rehabs and work for free. It will give you experience, and if they can teach you how to do stuff (ie: change outlets,locks, install toilets, etc), it will help you tremendously when you get your own house. Experience is invaluable, if you can learn how to do things yourself, it will be a huge help when you get your own! Also, if you're working for free, the investor will likely be inclined to help you and share contacts!
This is a great idea, thanks Linda! I do have a limited amount of experience with construction, but it would be a good move to begin new projects again, and use that to network!
@Isaac Pyle - Always happy to help house hackers (and aspiring house hackers)! I hope you enjoy the book. You'll have to let me know what you think.
You are right in that you won't be able to qualify unless you have a steady job. However, your parents may be able to co-sign for you if they are willing to do that? That's a way around that.
@Isaac Pyle If you're not HYPED ABOUT REAL ESTATE INVESTING get more HYPED!! Colorado is still the wild west for investors and smaller cities still have opportunity.
Maybe you can work a job during school and save for a down payment. I had a part-time job throughout college. You only need 3% for a conventional loan, owner occupied, with good credit. Are you building credit? That's an easy thing to get started on during college. Make friends with like minded people. I can't stress that enough. I waited 5 years after moving to Indianapolis before getting into investing. I watched deal after deal pass me by in my own neighborhood.
@Isaac Pyle "However, because I am in school, I obviously don't have enough time to make an income that would even begin to approve me for a loan on a house, especially in the area of my school (Boulder / Denver, CO)."
In my opinion, this is the problem. I worked full time throughout the last several years of college which allowed me to buy my first house-hack before even graduating. Now that was pretty extreme and I wouldn't necessarily recommend that but you should absolutely have a part-time job at least.
I'm glad I worked while getting my degree because college does absolutely nothing to teach you about the real world, the main reason I've had success since graduating is because I learned how to run businesses and through my jobs throughout college.
My friends who did not work throughout school put themselves in a terrible position for graduation because they had no life experience or useful skills. I'm not sure what your degree is in but this is ESPECIALLY true if you're getting a business/liberal arts/psychology degree. Most definitely continue to read, listen to podcasts and network with experienced investors but I would find some sort of job within a business that will give you useful experience and allow you to start saving.
@Isaac Pyle - Always happy to help house hackers (and aspiring house hackers)! I hope you enjoy the book. You'll have to let me know what you think.
You are right in that you won't be able to qualify unless you have a steady job. However, your parents may be able to co-sign for you if they are willing to do that? That's a way around that.
They actually did offer to co-sign with me, but I don't know how I feel about that. Maybe I would be more confident with more information and after reading more, but I don't want to be in a position where there is any uncertainty in what I am doing, while simultaneously not being responsible for all of the consequences. It is definitely an idea worth pursuing and learning more about, though. Thanks again!
@Isaac Pyle If you're not HYPED ABOUT REAL ESTATE INVESTING get more HYPED!! Colorado is still the wild west for investors and smaller cities still have opportunity.
Maybe you can work a job during school and save for a down payment. I had a part-time job throughout college. You only need 3% for a conventional loan, owner occupied, with good credit. Are you building credit? That's an easy thing to get started on during college. Make friends with like minded people. I can't stress that enough. I waited 5 years after moving to Indianapolis before getting into investing. I watched deal after deal pass me by in my own neighborhood.
I definitely am quite hyped! It pains me to know that it is still probably a ways down the line before I actually begin making offers and fixing up houses, because I would love to be in this process now. Colorado's market is crazy, and I think I am in a good place to have decent appreciation given enough research into the right areas. I have been building credit for about a year and a half now, but it is only in the form of one credit card. Maybe I should consider other ways of building credit? And I think I am going to find an association to join near me for investors, so that should help to make friends with like-minded people. Thanks for the reply!
@Isaac Pyle "However, because I am in school, I obviously don't have enough time to make an income that would even begin to approve me for a loan on a house, especially in the area of my school (Boulder / Denver, CO)."
In my opinion, this is the problem. I worked full time throughout the last several years of college which allowed me to buy my first house-hack before even graduating. Now that was pretty extreme and I wouldn't necessarily recommend that but you should absolutely have a part-time job at least.
I'm glad I worked while getting my degree because college does absolutely nothing to teach you about the real world, the main reason I've had success since graduating is because I learned how to run businesses and through my jobs throughout college.
My friends who did not work throughout school put themselves in a terrible position for graduation because they had no life experience or useful skills. I'm not sure what your degree is in but this is ESPECIALLY true if you're getting a business/liberal arts/psychology degree. Most definitely continue to read, listen to podcasts and network with experienced investors but I would find some sort of job within a business that will give you useful experience and allow you to start saving.
These are very valid points. I quite possibly could have a part-time job right now. I have had a summer job at a restaurant in my hometown for the past 7 years, so I guess I have always considered the summer to be the time to work and the school year the time to learn. Maybe it's really all just the time to work.. haha!
I am getting my degrees in Computer Science (possibly engineering, they are re-working the program at the moment) and in Physics. I know that I will likely not pursue a job in physics, but it fascinates me, and I know that I won't regret learning that. I am double majoring, which makes me hesitant to also try to work a job, but it would be worth looking into. Thank you for your long reply!
@Isaac Pyle Credit cards are great. You're building credit history which is really important. Credit utilization (keep it low) is another important factor. You're in a great market. I'm jealous quite frankly but I'm older now and should capitalize on opportunities in my market.
I'd second what Harry said above. Have you looked into renting out an entire house and subletting the rooms? I did this through college and paid as little as $75 per month in rent. That wasn't in Colorado, but knowing what I know now I probably could have made money if I knew what house hacking was and was more strategic in college.
@Jake Simon This sounds like a great idea, I haven't looked into it that much but I certainly will now! And it seems to me that this strategy should work just about anywhere, as the rent per bedroom would increase as the rent for the entire house increases, so really I should be able to at least pay much cheaper rent with this strategy.. Thanks!
@Jaron Walling Thanks for the advice! If I would likely start by co-signing with my parents, would my personal credit score be factored into that? Or would the bank be looking at theirs because their income would be the one being used to determine the amount we would be approved for?
@Isaac Pyle Yeah it's hard to strike the right balance. I worked so much I had no life at all for a couple years which I definitely don't recommend but in my opinion obtaining real-world experience is very important.
That's a very useful degree too which is positive, at least you're not getting a bachelors in psych!
To your original post, house-hacking is such a great way to get started (and easy relative to other RE moves) that I would most definitely start with that once you're able to figure out the financing!
@Daniel Haberkost I agree, I think the next step in the process is just acquiring more information about the areas / types of deals that would work, and determining the best way to go about financing. I definitely don't want to no-life it for multiple years to get started sooner, but I can definitely be getting more experience outside of school. Thanks again!
@Isaac Pyle
Hey man! House hacking is a fantastic way for new young investors to get started. Do you currently rent or live in dorms? When I checked my dorm rates at my school it ended up costing significantly more than what a mortgage on a small house hack investment would be. Compare your rental or dorm rates to what the typical mortgage would be around your campus. If the numbers make sense there's plenty of ways to get a loan for it. Maybe look into having family members co sign on it since you don't have income.(that's what I'm looking to do). Also there's seller financing and PML and HML that isn't exactly traditional and conventional but it's something you can look into depending on your goals and situation. Anyway good luck on your investing journey!
@Kobe Xin I currently rent a room in a house just off campus. It costs me about half of what the dorms on campus cost, which is insane. I will definitely look into seller-financing, as I have only heard of that but have no idea what it is yet. I am skeptical about either PML or HML to start with, just because I know that I would likely be looking at a 203k FHA loan to start with so that I can BRRRR and house hack at the same time. We will see though, thanks for the post!