Investing with a Holding Company

5 Replies

Hello, I am 20 years old and have been recently, as of these past 3 or 4 months, been informing myself about real-estate by books, podcasts, etc. I was fortunate enough to be gifted $10,000 by my grandpa and have been looking for ways to invest it. Moreover, one of my close friends is house hacking a duplex and he asked me if I would be interested in opening up a holding company with him. He briefly explained it to me over dinner, but I didn't understand one thing he said.

He mentioned something about selling part of the company as if it was stocks or bonds to help funding I am guessing, but to be honest I have no idea why that is necessary. If someone could explained that to me that would be very helpful. (Maybe I completely misunderstood what he was talking about, who knows.)

Also, just a General question, I'd love to know what would be the best investment as a college student who is still living in dorms (which means probably not house hacking), with $10,000-$20,000 to invest with in the state of Texas, around San Antonio and Austin market. 

Thank you.

@Eugenio Valladares no. Buy a duplex to househack. Why do you want to own shares in someones company of nothing? Househack when you get out and put the money in the highest interest savings account you can for now. I see a lot of hair brained ideas lose money. Get rich the boring and dependable way.

The idea of investing in someone else's house hack sounds pretty suspect to me. The typical purpose of a house hack is 1. to invest with the best terms and smallest down payment possible, and 2. to offset some of your own costs for shelter. House hacks generally cash flow very little to nothing. Why would anyone want to "invest" in that?

What your friend is getting at is called syndication - raising money from passive investors for the promise of a return on their money. You can read all about that on this site.

For you, I would recommend to keep living below your means and saving your money until you can afford your own house hack (or other investment property).

1. Don't invest in anything you don't understand.

2. "investing in a holding company" sounds like a syndication, and that's a security regulated by the SEC.  Unless you have a massive trust fund hidden somewhere, you probably don't qualify as an accredited investor.

3. Keep your money in the bank. You need to learn about real estate investing and building a network. Pod casts, books, and BP are great sources. Networking is hard in quarantine, but not impossible. Zoom meetups, etc.

4. ATX and SA are still viable, just have to pick an area, pick a niche and get good at it.

@Eugenio Valladares

No, his holding company does not sound like a good idea, based on the limited info you shared.

With that amount of money and the inability to house hack, you are probably best off waiting and learning the ropes on here to RE investing.

That is still enough in most markets to get started, but educate yourself first. The podcasts and books on here are a great start.

Good Luck!

I would suggest waiting until you can go out and do this on your own. You could househack a duplex yourself, or consider taking on some value-add single family or small multi deals.San Antonio is great for this.