At $25k, 21 years old, where do I start?

Member since 2020 · 8 posts · 9 votes

Hello reader,

I’m 21 working at Northrup Grumman in California and I’m closing in on $30k saved from employment and stocks combined. Looking to get into real estate the right way from the start. Advice?

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Lucas Miles

Rental Property Investor · Fairmont, MN · Member since 2019 · 184 posts · 123 votes

@Tristan Osborne coming to BP is a great first start! Start with education (podcasts, reading the forums, real estate books, network with local investors etc). If you interested in long term holds, starting out with a house hack (buy a small multi unit, live in one, rent out the other(s)) is a great way to go! Helps you to learn how to be a great landlord, and saves money on your personal housing expenses.

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Jody Roussel
Member since 2020 · 34 posts · 16 votes
6y
@Tristan Osborne
just wanted to say hi and welcome, Im fairly new myself with the same amount of investment.
read, listen and research all you can!
from what I hear for people starting out house hacking or brrr method on multi family units is the way to go!
wishing you tons of success :)
5 Reply
Manasa Kikau
New to Real Estate · Sacramento, CA · Member since 2019 · 5 posts · 9 votes
6y
@Tristan Osborne Awesome that you have your mind set on pursuing real estate at such a young age! I'm fairly new to the game as well.
Is there a specific niche you're interested in/want to learn more about? Flipping? Buy-and-hold? Wholesaling?
4 Reply
Tristan Osborne
OP
Member since 2020 · 8 posts · 9 votes
6y
@Manasa Kikau thanks for your response, but yes looking for buy-and-hold more or less with multi-family right off the bat!
1 Reply
Lucas Miles
Rental Property Investor · Fairmont, MN · Member since 2019 · 184 posts · 123 votes
6y
@Tristan Osborne coming to BP is a great first start! Start with education (podcasts, reading the forums, real estate books, network with local investors etc). If you interested in long term holds, starting out with a house hack (buy a small multi unit, live in one, rent out the other(s)) is a great way to go! Helps you to learn how to be a great landlord, and saves money on your personal housing expenses.
5 Reply
Jonathan Burmenko
Real Estate Agent · Oakland, CA · Member since 2019 · 37 posts · 40 votes
6y
@Tristan Osborne Good to see there are more 21 y/o with a good financial mindset.
Not sure where in CA you are located but I am in the Bay Area, and as you know it is an expensive market. Depending on the strategy I always suggest newer investors start with a house hack of some sort. Look into more affordable neighborhoods and make sure to analyze your deals thoroughly to make sure the numbers make sense.
You may want to look into wholesaling as well, to help you build more capital to confidently invest the right way with proper down payment and reserves. You may also want to look out of state as the money you have saved will go further in other states. You need to decide on a strategy and location that fits your investment goals.
Lastly, don't spend on liabilities and continue living below your means to save as much as possible.
Hope this gives you some ideas and a starting point.
3 Reply
Manasa Kikau
New to Real Estate · Sacramento, CA · Member since 2019 · 5 posts · 9 votes
6y
@Tristan Osborne Multi-family is a great way to go! I would highly recommend starting off with a duplex or fourplex to start and learning about the FHA lease option since that doesn't require to put down 20%. AND I would have to back up @Jody Roussel's comment about house hacking. The FHA loan will require your property to be owner occupied for at least 1 year but during this time you can rent out the other units and have your tenants pay down your loan! How to go about renting out units and managing the property will be something you need to consider.
I myself am interested in the same niche as you are and I've been learning as much as I can about it through books and podcasts! I am currently reading the Book on Rental Property Investing by Brandon Turner which gives valuable information and I always tune in to the BiggerPockets podcasts while driving. Lastly, the amount you have saved is a great start and you are definitely well on your way to generating money through real estate! Best of luck to you.
5 Reply
Matt Leber
Rental Property Investor · Orlando, FL · Member since 2015 · 353 posts · 269 votes
6y
@Tristan Osborne job transfer out to the Melbourne FL Grumman location and once you hit 35k savings put 20% down (plus closing costs) on a single family under $150k at the 1% rule in Brevard County. But seriously...
If you're out in CA, you may need a bit more savings to buy your first rental locally. You can either go the FHA route and owner occupy for a time or identify an out of state market to invest in. Not that it can't be done in CA but it will be done differently.
1 Reply
Flavia Brown
Redondo Beach, CA · Member since 2014 · 25 posts · 10 votes
6y
Tristan, Better to start small, like a 3/2 SFR or a duplex that needs cosmetic repairs (deferred maintenance). I'm a 16-year seasoned Realtor near Northrup Grumman. I live in Redondo Beach. homesbyflavia.com
0 Reply
Elise Marquette
Lender · Frisco, TX · Member since 2019 · 546 posts · 270 votes
6y
@Tristan Osborne messaged you
0 Reply
Joe Marquardt
Developer · Tewksbury, NJ · Member since 2011 · 12 posts · 6 votes
6y
@Tristan Osborne try to buy something you can live in and get a primary residence loan on a two to four family (you'll get the best rate/term/leverage). Rental income will help with DTI do you can buy more. Figure 5% down you can buy something in the $500ks, you could be living for free and then some income. Isn't real estate a wonderful thing, $30k gets you a $500k Income producing asset, and you live for free....and bonus..,major tax advantages.
Tenants pay your mortgage. Fix it up while you live there to increase rents incrementslly, once you increase rents and make improvements, refinance when market is good and before you move out to get another primary residence type loan. Keep the property even after you move out, it will cancel itself out in your debt to income or even add to your income when you’re ready to buy another. You’ll have it locked in a low rate 30 year fixed loan that your tenants are paying down and you will have likely refinanced and pulled out your initial investment and then some.
1 Reply
Flavia Brown
Redondo Beach, CA · Member since 2014 · 25 posts · 10 votes
6y
If you don't own a home yet, consider buying a duplex, living in one unit and renting the other unit. It's one of the best hedges against a recession. Landlords rule in this current market, at least in most of Southern CA because half of the adults can't afford to buy and there is still a housing shortage. Therefore, rent demand is greater than supply and it is expected to continue for several more years. And greater rent demand than supply drives up rent rates.
0 Reply
Jake Mires
Real Estate Agent · Redding, CA · Member since 2016 · 59 posts · 21 votes
6y
@Tristan Osborne Avoid CA. Head to TN, find an agent/property manager in Knoxville or Clarksville where the numbers make sense. What that money you can do a remote BRRRR, and get your money back out with a cash flowing rental, and recycle the money again. Head to the central US, or East coast. Tenant/landlord laws alone can kill you
2 Reply
Carlos Villalobos
Los Angeles · Member since 2020 · 88 posts · 36 votes
6y
@Tristan Osborne spend time on education and analyzing deals everyday. Pick a niche and pick a strategy to focus on. One specific is house hacking a multi unit, live in (rent out the rooms) & rent out the other unit as well. Best wishes on your journey.
Cheers,
Carlos
0 Reply
Twana RasoulBusiness Member
Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Tristan Osborne Hi Tristan, that amount is just enough to start house hacking here in LA or San Diego area. Start with a 2-unit property using fha loan you can lower your cost of living and have a great investment property once you move out down the road.
Great news is there is a new program out now where your 3.5% down payment will be covered by a grant even if you purchase a 2 unit and there is no catch and no income limit. Essentially you can purchase your house hack with no money down and save your 30k for reserves.

Definitely take advantage of this while the program still has funding. If you need a couple of contacts to get you more information on the loan feel free to PM me and I'm sure they'd be happy to help regardless of where in CA you may be purchasing.

best of luck to you.
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1 Reply
Alexander Reyes
Property Manager · Houston, TX · Member since 2020 · 14 posts · 5 votes
6y
@Tristan Osborne
Welcome! I’m also fairly new, 20 years old and started with nothing but $10K and all of it was scattered from Stocks, Bitcoin, ROTH IRAs to emergency fund. Honestly, just start by looking around, look on apps. I would first try to get into contact with an appraiser or a really good lender. Those are the people who can really hook up a good deal or tell you whether the numbers don’t make sense. Good luck!
1 Reply
Paul Ouellette
Property Manager · Bangor, ME · Member since 2014 · 12 posts · 4 votes
6y
@Tristan Osborne
Read a book entitled "Building Wealth One House at a Time" by John Schaub. Purchase the second edition. Best book there is on real estate.
1 Reply
Flavia Brown
Redondo Beach, CA · Member since 2014 · 25 posts · 10 votes
6y
Fastest way to hit the ground running is to find a mentor. Offer to help the mentor and the mentor will help you.
1 Reply
J Bess
Member since 2020 · 12 posts · 2 votes
6y
Make you're first home a house hack. I'm 34 and own a few rentals. Biggest regret is not house hacking my first primary residence.
0 Reply
Justin Johnson
Real Estate Agent · Lexington, KY · Member since 2020 · 13 posts · 6 votes
6y
@Tristan Osborne first of all congrats on taking the first step for setting up your family for life and creating generational wealth. It’s a marathon not a sprint. I’m 21 myself and have 2 rentals and almost done with my first successful flip. The biggest thing I’ve been able to do is network, it’s allowed me to reach capital that is nearly impossible to have at our age. Even if the person that wants to network with you has never done a deal, network with them and get their contact. This happened for me and I was able to reach out and he had a family friend that was willing to lend me 100k on my flip. Add value to other people’s life and they will bring you and show you the ropes.
To answer your question, I agree with most people here. If you’re not married or have anything holding you to a single family home right now. I’d go house hack duplex or quad plex. Duplex will allow the other tenant to pay your mortgage and you can save all cash from your employment. A quad plex allows one-two tenants to pay your mortgage and the other cash flows. The thing you have to worry about is simple things like vacancies and reserves for repairs. Also having your tenant next door can become annoying. Good luck in your future endeavors!
2 Reply
Lois Glass
Wilson, NC · Member since 2017 · 4 posts · 2 votes
6y
Congratulations you are at the very best place. Wish they were here when I started years ago. From the comments above I ditto Lucas Miles and Justin Johnson... house hack with a MF unit. It's the same advise I'm giving to my sons. As they say... stay hungry and humble and you will succeed.
1 Reply
Chris Leigh
Member since 2020 · 18 posts · 6 votes
6y
Hey Tristan!

Props to you man. First for saving up that cash and now looking to multiply it. Very mature move! I'm new to the platform, but this forum caught my eye. In the last 6 months I purchased a home and now rent rooms and live there for free. I actually make about $250 a month profit. I have a lot of great info and everything is obviously fresh in my mind from doing a house hack so recently. If you would like to chat, please feel free to reach out.

Cheers,
1 Reply
Syed H.
Developer · NY/NJ/PA · Member since 2018 · 758 posts · 935 votes
6y
Go work for a developer/value add buyer/flipper/etc etc. Work for whoever does what you think you might want to do later. Get paid to learn, then go out and do it yourself.
1 Reply
Tristan Osborne
OP
Member since 2020 · 8 posts · 9 votes
6y
@Joe Marquardt love this thank you Joe
0 Reply
Joe Marquardt
Developer · Tewksbury, NJ · Member since 2011 · 12 posts · 6 votes
6y
@Tristan Osborne
For bonus $....before you move out, but after you refinance into a long term (30 year fixed) loan as the house being your primary residence, get a HELOC, some smaller banks or credit unions in your area may offer a 90-100% LTV HELOC. Be careful with this because you have the ability to use all the equity in your house so make sure it's for the right reasons, but later on down the road, you're going to be very happy to be able to borrow easy money at a single digit rate. Beats private loans, hard money, or giving up equity on future deals. You have to get this heloc in place before you move out.
Don't worry about paying PMI at first, it's just cost of doing business to get into the RE game with very little money. When you up your rents and refinance into your 30 year loan while you still live there you'll get your equity up to 80% and the pmi will go away.
0 Reply
Sebastian Hernandez
Contractor · Morris County, NJ · Member since 2020 · 186 posts · 91 votes
6y
tristan,

As previously mentioned, the fact that you are posting here on BiggerPockets is a great start. I would recommend to read tons of books, BiggerPockets has a great selection of books that will give you a great foundation of knowledge. Also, take the BiggerPockets seminars as they show you different strategies you can use within real estate and give practical advice. Lastly, I will say network, not only here on BiggerPockets but talk to people in your community. You will be surprised to see how much people love to talk about themselves, their experiences as well as the real estate market. In conclusion, use of all the resources available and start networking.

While I do not know your market, it seems that you have a descent amount of capital to invest. In your journey learning about real estate, I would advice to think about your goals and how certain strategies can help you achieve those goals. For example, one's goal could be to achieve financial freedom, so rental property income can be a great option. Now, there is single family, multi family rentals, there is commercial rentals, etc. The point is, think about your goals and what real estate strategy can help you achieve them. Lastly, not all strategies are great in all markets, so identify which strategy can really work in your market.

Good luck!
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