What is the best way to fund 1st investment (beginner)

Question

Hello,

I am a 22-year college student with continuously increasing debt and a hunger for success. I am currently majoring in civil engineering and although my internship has been amazing, I cannot see myself working an office job for the rest of my life. Six months ago I began researching other careers and stumbled on the BiggerPockets podcast. I fell in love with the idea of real estate and have done all the research and read all the self-help/real estate investing books. I know where and how I would like to start but I am stuck figuring out the initial financing of my first investment. As I said, I am a broke college kid with no past experience under my belt.

What are some ways I can fund my first investment and get my foot in the door of real estate?

Thank you!!

Luke Trovinger · Answer

Hey @Dylan Jongerling! House hacking is a great way to get started! By living in one unit/room and renting out the others, this can lower or even cover your living expenses. This will help you save the downpayment for your next investment even quicker. Depending on your market, there are several iterations to do so. If you're in a more expensive market, renting by the room is likely the best way to get the cashflow you'd need to cover your expenses. If you're not, an FHA loan can be used on up to four units. So you could purchase a duplex, and live in one while renting out the other! Same thing up to four units. There are a lot of great resources on the site that describe this in greater detail, so I'd definitely recommend searching the topic.

Regarding your direct question on funding, you can get financing with a low downpayment if you owner occupy the property, which is the reason house hacking is such a great way to get started. You can get into a property via an FHA loan with as little as 3.5% down, and there are other conventional options that go as low as 3% down. I'd recommend reaching out to a local lender and see what loans make sense for your situation, and if not now, they can help you with recommendations that will allow you to qualify for the loan in the near future!

Good luck in your search!