Advice for CA college student starting out with $50,000?

Question

Hello, my name is Brandon Beardt and I am relatively new to the Bigger Pockets group. I am a 21-year-old college student beginning my final year at California State University, Northridge. I plan on graduating next spring with a degree in Real Estate. After reading books by David Greene, Brandon Turner, and Scott Trench, I realized that real estate can provide a tremendous amount of financial freedom to whoever is willing to put in the work for it. I am fully invested in the stock market at the moment but want to pull it out and start investing in real estate. If pulled out, I would have about $50,000-$60,000 to work with. I have an interest in buying, fixing up, and holding SFH and multiplexes for cash flow, but Los Angeles prices seem too high for me starting out. I understand that out of state investing may be harder for someone first starting out, but perhaps it’s one of my better options? I guess what I am asking is, what would you do in my situation? Any advice would be great as this is my first forum post. Thank you to everyone who replies!

Ben Stoodley · Answer

@Brandon Beardt great foundation to begin investing with! I had a mentor when I started and he would constantly say... “dont worry about the money, worry about learning.” While house hacking is a FANTASTIC way to start, I don’t believe it’s your fastest way to start. I was in your position as well, but San Diego four plexes were too expensive for my $50k to take advantage of with the FHA loans. If you spend all your money on one long term play, it’ll be a very smart, but slow process. My suggestion would be to partner up with someone local to LA and learn from them. Put your $50k with them in 1-2 projects this year. Do all the work for them or with them. Learn learn learn. If you have income - from selling RE like you mentioned or other - then I would continue stacking that capital. We are at the HEIGHT of the market right now, don’t rush to buy.

Account Closed · Answer

Hi Dylan, thanks for the welcome! I would probably prefer a multi-plex over a SFH with roommates mainly because of the privacy, but I understand that that privacy comes at a cost. Thank you very much for the advice!

Nabil Suleiman · Answer

Account Closed

Also CSUN Alum, and agree with @Ellis San Jose. If you want to connect at a job site in LA, would be happy to chat ideas on what you can do. Also remember to calculate taxes when cashing out stocks so you know exactly how much you will have and how much you will need to pay come tax season.

Charles Cooper · Answer

@Brandon Beardt

I would also say you can buy a something you can househack, like a SFR or duplex. Take advantage of the first time home buyer program with a low down payment, don’t go FHA, lots of fees in the back end that people are not aware. There are other non FHA low down payment (5%) programs. Learn to do the work yourself or have friends and family help you out with remodeling. If you rent out the rooms in the SFR or buy a duplex, you will learn how to manage tenants.

Caleb Brown · Answer

Start local and house hack with an FHA loan. Whether it is a multi or renting out single family room by room. As being as young as you are you have the flexibility of not a lot of responsibility. You can always start out of state but most markets you'll be in a D/C- area with that price point. Unless you have a great team and you are prepared for all the hassle that comes with it. Also what do you plan to do after college? You mentioned a degree in Real Estate.

Ellis San Jose · Answer

Congratulations on the beginning of your journey. I am a CSUN alumni with a degree in Real Estate. I would discourage out of state to be your first entry to the RE market. Try to work close to where you want to live. Work for/with an investor group where you can learn the ropes & get paid.

Damian Ramirez · Answer

Hey Account Closed

I agree completely with @Ben Stoodley. You can definitely look for a multi-family here in Los Angeles/SoCal, however, you would quickly run out of your capital and would have to wait until you can either save up that amount of cash once more or cash-out refi. I would say to look into out of state markets to invest in and find a group of investors/mentors to learn from and work with.

I'm actually in the same age range as you are and have been investing in the Cleveland market and wholesaling here in SoCal. The choice to invest out of state has been the best decision I've made as of yet and it has treated us well with the opportunity to acquire and close on 6 properties in these past 2 months.

I hope this helps you in the long run. Let me know if there is anything I can help with.

Dylan Vargas · Answer

Account Closed Welcome! Can you handle roommates or prefer a duplex, triplex 4 plex? This is a good option. You need a place to live, down payment is nominal (because of your savings/stocks), ease of entry into the market and local. If i were in your position I would consider this if in the greater LA area. Another option is to keep renting, start selling real estate and find a deal while in the business and having the market knowledge to make a good decision on a property. Good luck and keep us posted.

Account Closed · Answer

Hi Caleb, I have put some thought into house hacking and think it's a great way to start. I'm not exactly sure what I plan to do after college. I plan on getting my license in September and hope to use it to my advantage. Thank you for your advice!

Account Closed · Answer

Hi Nabil, I would love to connect at a job site and chat!

Advice for CA college student starting out with $50,000?

Advice for CA college student starting out with $50,000?

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