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?
@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.
@Matt Leber Love your idea. Brevard is a sleeper market. I will be connecting with you Matt. @Tristan Osborne There is probably a ton of information getting suggested at one. You got this. I would also say the FHA opportunity is a great option. You will be trading cash for equity and cashflow. There are pros and some tradeoffs. So just also be ok with the opportunity cost. I'm very excited for you and this journey!
@Tristan Osborne start small and learn the process. I bought my first place at 23 with an FHA loan with only a $7k total investment. I painted it myself and rented the second room to my buddy for what the interest, pmi, hoa, and insurance cost me. Basically I was paying my own principal every month. Other than paint and basic maintenance I didn't do much to the place.
After 3 years I sold my place and took the cash out to buy a multi family and lived in half. I kept growing from there at a manageable rate. I don't think I could have bought the multifamily without having gone through the condo first.
@Tristan Osborne You’ve started off at a great place! Bigger pockets offers a lot of resources and a way to network. I’d say figure out your niche through YouTube videos explaining them and listen to some bigger pockets webinars. Research and networking are important at the early stages. Through networking you can connect and maybe find a mentor to help you through the process. Finding a real estate agent who is aware of your goals and invest themselves could be helpful too. If you have any other questions I’d love to help. The bigger pocket books are helpful too, but don’t be afraid to ask questions and stay busy on this platform.
@Jake Mires is there a reason why you like the TN market?
Numbers. Nashville is blowing up, larger cities show positive population growth. Where there’s population growth, there’s appreciation. Simple supply and demand. I’m bullish on TN simply from a numbers/growth perspective. It’s very cost effective to invest there and I believe the coasts are moving inward, people who can afford to live on the E or W coast will move in and look for opportunities in an affordable market. Tenant/landlord laws are favorable for landlords and property taxes are extremely low
@Tristan Osborne good luck, it's amazing you start thinking to invest! I love real estate and started with SFR, because I am in Texas and the market here is great. I believe if you are learning and what to have ROI between 10-12% (could be more, depends on a market and a deal) you should start with Single Family. Its straight forward and there are a lot of people will take you as a partner or you can do it by yourself. MF is very attractive from tax prospective but maybe complicated to control or understand, and in most cases you will be a passive investor and be with other people in syndication, so you have to be very careful to select the right people.
I myself am 20 years old, so we are very similar in age and can relate to your current situation, so perhaps I can help with some advice. I also live in California and I can say that finding deals to flip, rent, wholesale or house hack will be rather difficult, although, your specific area may differ from mine.
First, you should decide what peaks your interest the most, whether it be flipping properties, building a rental portfolio for passive income, or wholesaling deals. Now of course there are other avenues of real estate, but these three are the most common and are usually the beginning of most real estate investors.
Second, you have to decide where you want to invest. As most know, California is much more difficult to find good deals and they also require much more capital due to California prices, even with HML. Now you can decide to stick with California, but out of state is your best choice and that is what I personally decided. If you do go the out of state route, you will now have to pick which market(s) to dive into. This can be decided by researching jobs being created in a market, unemployment rate, median income, or even if you lived there before or even have family that live there.
To add on to that, due to being new to real estate, it will be a bit more harder to find lending or to obtain good lending terms from hard money lenders due to not having any experience. Because of that, it might be a considerable option to look into finding a partner/JV who has the experience and connections to aid you in your RE journey. Through that partnership/JV, you can lend your capital or put it into a deal where you would ideally earn a good return on your investment. Meanwhile, you can also learn the process of flipping, buy and hold or wholesaling while not have the 100% risk if you were to have done it yourself. Which in the long run saves you time, money, headaches and from burnout.
If you have any questions do not hesitate to reach out to me through pm, I am here to help.
If I were just starting out, and with limited funds, I would buy any type of affordable property. Let's say you can afford only a $400k condo, but the only areas where condos are for sale in that price range are in somewhat undesirable, and you are accustomed to living in a more upscale city. Here are two solutions: 1) Accept living in the undesirable neighborhood, or 2) if you don't want to live in an undesirable neighborhood, find a good renter for your new condo and continue renting in your preferred city. Therefore, you will become a homeowner AND a landlord. At the same time your new condo will appreciate in value and you will have a sizeable tax deduction. Solution #2 is one of the best hedges against a recession.
@Oksana Patrick is very right about picking the right partners. If you elect to go down the road of syndication you will want to make sure that you vet both the operator and the project. If you take on partners in a local deal, make sure to vet, get referenced, don’t just jump in.
Generally starting out house hacking is the foot in the door. You have access to incredible bank financing (fha), yes you will have to pay mortgage insurance to start, but that comes off after 2 years. Well worth it to buy the largest house you can budget and fix up and rent rooms out. All the while keep saving money. Appreciation is a real thing, if you buy a larger asset and do more with it, the appreciation you receive from holding on is greater.
I started out with a house hack and quickly got into SFR. 13 years later we just finished up a renovation on a 9 unit and a 13 unit at the same time with another 11 unit almost in contract. Real estate takes time, and you're at a huge advantage starting young!