How do you decide where to start your investing career?

New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes

Hi there, college student here projected to graduate in two years with an engineering degree to fund my investments. I am starting out early scoping out the scene trying to decide where I want to start my investing career. How does one decide where to invest? Does one simply invest where they want to live? As of now ideally, I want to move to San Diego post-graduation and use my VA loan to buy a house a year and house hack during the year saving for the next investment.

4 Reply

91 views

Most Popular Reply

Evan Polaski

Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes

@Kole Moore, it sounds like you know. You want to house hack and live in San Diego. That is your starting point.

As Twana mentioned, your best returns on a house hack will be in a 4 family, typically, since you are only taking 25% of the rent out of the equation. Ideally a 4 family that has 2-3 bed units, where you can not only rent the 3 units, but also another bedroom or two to friends.

Beyond strategy, the most successful real estate investors are the most frugal. So my advice is always to live below your means, save as much as possible, and build your reserves. Cash flow and reserves can get you out of most situations. Lack of capital is a the fastest way out of real estate.

4 Reply

See this reply in the discussion

38 Replies

Jump to latestLatest

Sort by

Twana RasoulBusiness Member
Real Estate Agent · San Diego, CA · Member since 2017 · 1k+ posts · 1k+ votes
6y
Educate yourself in the meantime and connect with local investors here. VA loan is amazing, make the best use of it and purchase a 2-4 unit property in a great location. Go big with the VA loan if you can, don't start small.
Compass5122 Reviews
Website View Page
3 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Twana Rasoul Hi Twana, thanks for the advice. I will definitely keep this in mind and start branching out more with others and their experience with their VA loan.
1 Reply
Kenneth Donaghy
Real Estate Broker · San Diego, CA · Member since 2016 · 355 posts · 195 votes
6y

@Kole Moore a deciding factor will be your budget, risk tolerance, and strategy which fits your personality. Having worked with many people with the engineer mindset. It will be important gather confidence to move forward from the analysis paralysis stage.
1 Reply
Evan Polaski
Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes
6y
@Kole Moore, it sounds like you know. You want to house hack and live in San Diego. That is your starting point.
As Twana mentioned, your best returns on a house hack will be in a 4 family, typically, since you are only taking 25% of the rent out of the equation. Ideally a 4 family that has 2-3 bed units, where you can not only rent the 3 units, but also another bedroom or two to friends.
Beyond strategy, the most successful real estate investors are the most frugal. So my advice is always to live below your means, save as much as possible, and build your reserves. Cash flow and reserves can get you out of most situations. Lack of capital is a the fastest way out of real estate.
4 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Kenneth Donaghy I completely agree. I wanted to start off buying turnkey investments.

0 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Evan Polaski Thanks for the advice. What exactly is a 4 family with 2-3 bed units? That does sound ideal, as I am not sure how much I will be approved for I was thinking a duplex which I believe still falls under multi family just not a 4 family is why I ask what a 4 family is. I agree on living frugal, I don't mind living below my means to build my investments. My end goal is to escape the rat race as quoted from Rich Dad, Poor Dad.
0 Reply
Anna Swartz-Lopez
CA · Member since 2020 · 63 posts · 62 votes
6y
Kole, anything under 5 units is classified as "single family," and anything 5 units or larger is "multi-family." So a duplex or even a four plex is still technically "single family." It's great if you can go big right off the bat, but don't be afraid to start small either. Buy the biggest property that you can afford. Your income from your W2 job will have to support your mortgage. It used to be that you could count the income from renting rooms in your home to qualify for a traditional mortgage, but those days are gone.
If there is a separate unit, like a duplex, that income can be used to support the mortgage, but if you buy a house and rent out rooms, that income will not count.

You are on the right track, just start the process and let your portfolio build organically.
1 Reply
Daniel Haberkost
Rental Property Investor · Colorado Springs, CO · Member since 2018 · 682 posts · 729 votes
6y
@Kole Moore you’ll hear differing opinions on this but I am very much of the mindset that you should go live where you want to live and build a business there (that’s what I did).
House hacking works very well in expensive markets as you’ll have far more people looking for non-traditional rentals. It’s amazing how quickly you’re able to progress when you eliminate your housing expense.
As a couple others have mentioned, sounds like you already know where you want to live/invest. I’d start saving as much money as you can while also learning/networking so you can really hit the ground running when you graduate.
-Dan
2 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
Hi @Anna Swartz-Lopez thanks for clarifying, so what is an example of a multifamily? I can only thing of apartment complexes.
0 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
That's what I wasn't sure on @Daniel Haberkost but I agree. I wasn't sure if everyone else was doing something else and I am the black sheep. I want to live and invest in San Diego I just was not sure if it is the smart thing to do. I don't think I would be comfortable living somewhere and investing out of sate or remotely for a long time until I am a seasoned investor.

1 Reply
Greg Dorn
Lender · Peoria, AZ · Member since 2018 · 77 posts · 25 votes
6y
@Kole Moore Congrats on almost being out of school. Just wanted to share our experience with VA and multi family. For terms 'Residential property' is anything from 1 to 4 unites and you can use the VA to purchase these kinds of homes (single family, condo, duplex, triplex, fourplex). My wife served and we used her VA benefit to buy our fist home together. Now we decided to do a Duplex because the lender was going to require 6 months in reserves if we did a triplex or four plex. Honestly this was the best thing we could have done. We did a live in renovation and our tenant covered the mortgage for the first year. After we finished the renovation we switched sides and my wife who is a stay at home mom has been running an airbnb out of the other side. Even with covid we have always exceeded our mortgage (which we refinanced and pulled 2x our renovation budget out after all costs) and covered the costs of the airbnb. On a VA first deal you do not need to 'go big or go home'. I would actually argue that it is best to make lots of small mistakes and try to simply minimize you cost of living to as close to zero as possible.
By covering our mortgage I was able to quit the job I hated and became a mortgage broker for AZ and CA and hope to triple my income because I am so much more passionate about real estate.
1 Reply
Ryan Howell
Rental Property Investor · Hendersonville, NC · Member since 2016 · 446 posts · 412 votes
6y
First, what are your goals - invest for retirement, build passive income, gain finanical independence by age XX, diversify you investments, etc? Get very clear on your goals and then think strategy. Goal setting should be independent of the "how", then align a strategy to fit those goals given your strengths, weaknesses and risk tolerance.
I also was in engineering for 13 years. An advantage is the W2 income makes you look great for the bank. So a strength would be the ability to leverage traditional financing. I would consider house hacking to start and consider the BRRRR strategy as you go as well. Maybe buy a 2-4 unit, live in one unit and rent out the rest. Good luck!
3 Reply
Whitney HuttenPro Member
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Kole Moore Before you decide where you want to invest, I would start with your why, goals, and investment strategy. Here is a good primer to follow. Then you can decide if your back yard makes sense.
It looks like you are in the Seattle area... I would suggest looking outside of that market for cashflow for sure! However, you might do really well getting started with a househack to reduce or eliminate your housing expense... that is always a great place to start.
Podcast Guest on Show How to Build Generational Wealth Without Losing it Along the Way
2 Reply
Brian G.
Rental Property Investor · Los Angeles, CA · Member since 2013 · 1k+ posts · 1k+ votes
6y
@Kole Moore house hacking is the best strategy to begin with imo and if you can afford to do it in San Diego I say go for it. You would learn much more by doing that vs turnkey and who wouldn’t want to live in San Diego!
2 Reply
Anna Swartz-Lopez
CA · Member since 2020 · 63 posts · 62 votes
6y
Hi Kyle, yes, anything with 5 or more units is multifamily, so an apartment complex, but you can have a large, medium, or small apartment complex too. It's just the dividing line between "residential" and "commercial" is 5 units.
1 Reply
Andy EakesPro Member
Property Manager · San Diego, CA · Member since 2020 · 205 posts · 162 votes
6y
@Kole Moore Welcome to the Real Estate Investing world! Sounds like mostly everyone else covered the main points but I will throw out there that you should become the master of the VA loan. It really is a great gift. The thing with the VA loan too is that if you get a property with the VA loan and refinance later on, turning it into a traditional loan at that point, you don't have to live there anymore (opening the door for renters to move in) and you gain the VA status back and you can use it on another property. You could build a portfolio that will support you financially just by doing it that way with ZERO money down. And in San Diego too?? It's a no brainer!

Good luck
1 Reply
Trevor HaneyPro Member
San Diego, CA · Member since 2017 · 49 posts · 33 votes
6y
@Kole Moore
Lot of variables. Probably the best place to start is picking your investment strategy. BRRR, fix and flip, house hack, turn key, etc.
I've used my VA loan twice (both in SD). Love the VA loan, but it does (somewhat) limit you because 1. The seller has to be willing to accept a VA loan and 2. The home has to pass the VA inspection.
Personal opinion, find a spot around SD where growth is expected happen and target that location.
1 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Greg Dorn Thank you. I did not know that Greg, I was trying to get a hold of a lender to pick their brain about what limits I have with a VA loan but that answers my question. I was set on Duplex until I got advice from others saying go big, but I might stick with a duplex to be safe. That's a great story, do you plan to continue to use your VA loan to buy more investments?
0 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Ryan Howell My goals are to build passive income, and escape the rat race. Thanks for the advice, I agree. I want to start with a 2-4 unit and work up to a BRRRR.
1 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Whitney Hutten thanks for the advice, always appreciate all knowledge.

1 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Brian G. I was going to house hack a turnkey duplex, isn't that the same as normal house hacking? Thank you.

0 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Anna Swartz-Lopez I see, that makes sense. Thank you for the response.
0 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Andy Eakes That does sound awesome and thank you! I knew I could use my VA loan more than once I just wasn't exactly too sure how it works. Thank you, every day I learn more about the VA loan beast. Do you happen to know the turn around rate? How long do I have to live at a investment before I can refinance and buy the next with the VA loan?
0 Reply
Kole Moore
OP
New to Real Estate · Seattle, WA · Member since 2019 · 39 posts · 16 votes
6y
@Trevor Haney Thanks for the response. Have you ran into a instance where the VA loan limited you? Is there any reason for a seller to not accept the VA loan? Also what is the difference from house hacking and turnkey? I thought I could house hack(live in the property and rent out the open rooms or unit) in a turnkey investment.
0 Reply
Account Closed
Rental Property Investor · Escondido, CA · Member since 2018 · 268 posts · 137 votes
6y
@Kole Moore, first off, good job starting to plan in advance and at a young age. To answer your most recent question, turnkey would typically refer to purchasing an investment property that is essentially rent-ready. In other words, you do not need to do any rehab work to have it ready to rent out. Often times, that term may go a step further to also mean you're buying a property from a business that provides that service. In other words they sell you a property that is set up, ready to rent. That service may even include existing property management and/or existing tenants. People's experiences and the companies providing "turn key" rentals vary widely, so I would definitely encourage you to read up and really consider if that is the route you are thinking.
House hacking is a term coined to mean some form of purchasing a property and then living in it while also renting out some portion to offset your mortgage payment. That could be anything from buying a 3 bedroom house and renting 2 rooms to buying a 4 unit property, living in 1 unit and renting the other 3. On a related note, I think there is some confusion about using the word "multifamily" vs talking about residential vs commercial loans. Technically, a duplex, triplex, and 4-unit are multi-family; however, those would also be purchased using a residential loan. Once you go above a 4-unit, you would typically be using a commercial loan which has a whole different set of terms to understand.
This is a great site to keep reading and asking questions.
1 Reply

Join the conversationCreate a free account to reply, vote on answers and follow this thread.