Hi, My name is Ronnie Stone. I am writing this post to ask for some advice. I have been reading all sorts of books about investing, personal/spiritual growth, business, and real estate since I was 16. I was having a hard time when I was in high school deciding whether to go to college or not. After making a long pros-cons list I decided that I was going to become a Union Ironworker like my grandfather, father, and 4 uncles. I have been working for 8 months now working 7 days a week for 10 hours a day saving up all of my money to put it towards investments and real estate. I have about $60,000 cash, and I am wondering what the person reading this would do in my position. I live at home with my parents with no need of buying a personal house, I have no bills, except for a credit card that I applied for to increase my credit which I pay off in full at the end of each month. I would like to own at least 4 rental properties before moving out of my parents house. The housing market in my area is extremely overpriced, such as a 950 square foot, 2 bedroom house with no garage going for around $155,000 in a small Indiana town. I am going to wait for the housing market to come down in price. I have been watching tons of bigger pockets podcasts, and YouTube videos. I have a couple of questions for the person reading this, and I would love to see all of the responses. Also what would you do in my situation?
1. Should I wait for the house prices to go down in my area before purchasing a investment.
2. Should I get some real estate licenses such as a agent license, real estate investment certification, property management certification.
3. Should I create a business plan for lenders so I get approved for a mortgage at a better interest rate.
4. Does my age matter for a interest rate and should I find a co-signer.
5. How big of a down payment should I put on a rental property, I know some people like to use OPM (other peoples money) and try to get the lowest downpayment they can get, or should I try to get a 30 year mortgage with 30% down or a 25 year mortgage with 25% down.
6. How can I make it to where lenders, clients, tenants, and agent look at me in a better way instead of some kid who wants to set the world on fire.
Thank You! Please let me know what you guys are thinking
- Ronnie Stone,
Some kid who is trying to set the world on fire.
@Ronnie Stone I commend you for the diligence and persistence at such a young age. I wish I were as motivated as you are now when I was 18!
I don't think you can be too young to start learning the business and investing if you have the right knowledge and people to guide you.
The first think you want to do is know your why in investing in real estate. From there, what goals do you need to establish to accomplish your why? Think about whether you want want to invest for cash flow or appreciation? Do you need cash flow now? What is your appetite for rehab?
Start practice analyzing properties today. This is an invaluable skill every investor needs to have. It is great if a real estate agent or wholesaler brings a deal to you in a nice package but you need to also run the numbers for your self. Trust but verify.
Through consistent practice analyzing deals, you will be able to start identifying your own investment criteria and what you want to look for and returns you need in a deal. Eventually, you will be able to recognize the bad, good, and great deals.
Consider taking on a mentor or partner who can guide you through the process of investing in a deal. This may help you avoid some of the early pitfalls of newer investors. Just realize mistakes will always happen and things frequently do not go as planned. However, don't allow this to stop you from jumping in. The great thing about real estate is, over time, many mistakes are be mitigated with appreciation, inflation, value adds, etc.
Have a great day!
im in indianana.....I would house hack....find a duplex to 4 unit....FHA.......live in it for one year.....then move back home after that one year and collect that cashflow......thats your first rental
Hey @Ronnie Stone
Congrats to you for your ambition! I work with a bunch of young aspiring real estate investors just like you (in a free online group), and I am willing to help you out with some advice or even chat on the phone if you wish. But first I recommend you read this article I wrote for Bigger Pockets titled How to Invest in Real Estate Before Turning 21. Once you've read it, let me know your thoughts and if you have any questions. I am a high school teacher in Colorado and I am always looking to help young people get started in real estate investing or help in any way I can. Let me know if you want to chat sometime. https://www.biggerpockets.com/...
I know you wrote that you want 4 properties before moving out, but I think it would make sense to try and house hack as an option (buy a 2-4 unit building, live in one unit and rent out the others). If you do that properly, you should have all expenses covered and live for free. You can do this strategy with less than 20% down. I have done it with 5 % down.
You can live in the property for a year or so, you refinance into a conventional loan, and then buy another one with the same 5% down payment. You can keep repeating this until you have your desired number or properties. I think someone in your position being fully employed, presumably no or little debt, and your best asset...your age!, you could do this strategy for your 20's, and be "retired" by 30.
It is a big leap to buy at an early age, but I think you can absolutely do it! I would keep in the forums and ask questions or seek out people who are doing wat you are doing. Another thing, don't let someone talk you out of investing if they don't themselves invest.
Hope this helps, Good luck!
I think it it great that you choose to be an iron worker, working hard and raking in the dough. You are playing your cards right by staying at home which helps in increasing your stack. I commend you for this.
Research and learn the business. Make a plan and then follow it.
Build your credit up with a credit card that is paid off every month, file taxes each year, and keep stacking money.
After a couple of years at your savings rate I am sure you will have great success investing.
Start analyzing props, but understand what you need or want to make first so the analysis has meaning. Also decide, at least initially what you want to do. My opinion is being a landlord is not for the faint of heart, especially in the lower tax bracket rentals where I have found they do not take care of your property, they expect MUCH MORE, and they never pay on time. I am not a fan of renting SFR. 2-4 units, I agree, is where you should look.
Also get it out of your head that Pricing are going to come down, that really only happens when there is a bad economic downturn, which unfortunately I think we will be facing shortly with the new administration. But my point is, there are "deals" everywhere, its more a matter of how you find a way to pull the funds out. I'll give you an example, I bought a house for $170k years ago, rehabbed it and bought a but load of tools all for around $22k. I sold it for $200k. Everyone said I was stupid. MAYBE.....but I got a lot of practice, I bought $5k+ in tools I still have and I rented mortgage free for 3 years @ $1350/mo. Do the math on that.....its over $30k profit. Point being its not about the price, its about how you decide to make money with it. And the possibilities are nearly endless.
I love the hustle , it sounds like you are a real go-getter.
I think you may be overthinking it a bit. From your post, it sounds like you have a decent job and enough cash saved up. I would encourage you to just jump in and figure it out from there. Real estate is very forgiving and its very unlikely that a asset you buy today will be worth 0 tomorrow.
Seems like you are a pretty smart guy and make educated decisions. I think the best thing for you to do is just go out and buy a property. Im not sure what your financing looks like but go talk to a lender and see what you can get pre-approved for.
I know this is broad advice and I did not necessarily answer all of your questions but feel free to shoot me a message and I would be glad to talk with you sometime.