Real Estate Before 18?

Question

Hey BP! I'm 16, turning 17 in a few weeks, and I was wondering what my best course(s) of action would be up until I leave the nest so to speak when I graduate in June 2022. Are there any books, blogs, podcasts tailored towards younger, new investors? Does it really even matter how young I am? I've done some research, and it seems as though house hacking a multi-family property (I was thinking a triplex) off of a FHA loan would be best for me. If any financial information helps, I'm currently making 15k a year, and at that same job I'm set for a management position when I'm 18 which would bring in close to 65k. My market would be in the surrounding Denver/Aurora area, I plan on using extra money from this job to help me get started. Any advice would be appreciated so much!

Dan Sheeks · Answer

Hey @Michael Bultena Jr.

Congrats to you for your ambition! If you are looking to connect with someone for some guidance or advice, feel free to reach out. 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/..

Jody Sperling · Answer

@Michael Bultena Jr., what makes mortgage insurance so bad is that it's a cost you can never recoup. Insurance and taxes are necessary, but finding safe, legal ways to avoid them is one of the most future-lucrative investments you can make. PMI won't cover a claim if the house is damaged. It's not your insurance, it's insurance for the bank because you're a riskier borrower on an FHA loan. You pay for their comfort, in that case, and that's a bad deal.

@Joshua Noth said it best, $1 saved isn't necessarily just a dollar. Don't do the bank any favors.

Brian G. · Answer

@Michael Bultena Jr. I think a multi-unit house hack is a great way to begin, possibly the best. Even buying a large house and renting out bedrooms to roommates is a great idea during early adulthood. Also, Read the book Set For Life. Take advantage of any offer others made by others to provide guidance, ideally you will find a mentor to help you. Many RE investors actually love to help young men/women invest in RE believe it or not. It’s true! Jack up your income then Increase your savings rate. Invest wisely and over time you will have success. Good luck young man!

Antonio Cucciniello · Answer

@Michael Bultena Jr. Great that you want to start so young! You can really take advantage of the money compounding for you.

I think house hacking a small multifamily would be a great idea, but just make sure you are accounting for the what the cash flow will be while you own it (if any) and the cash flow once you move out.

While you are there, you can save a lot of money and reinvest that cash into a new property.

I think the best thing you can do right now is do location research to find a town nearby that will best allow you to get cash flow while living there.

Joshua Noth · Answer

Welcome to BP @Michael Bultena Jr.!

Kudos on looking into this so early! It will really help you in the long run. Your biggest setback (legally) is your age, so you have time to prepare for when you are old enough.  As everyone else has alluded to, doing research and saving money will be your two biggest steps.  Research markets around you, out of state, etc. that meet the goals you are looking for.

In terms of saving money: something that helps me save is to remember that 1 dollar saved does not equate to 1 dollar of spending power in REI.  It can be 5, 10, 20 times the amount (depending on the type of loan and down payment you use).

Best of luck to you Michael! Looking forward to hearing how well your investments pan out

Jody Sperling · Answer

You can't legally be the sole signer of a contract yet so that's going to be your biggest setback. Also, avoid FHA loans as they require you to carry mortgage insurance for the balance of the home loan.

If I had found and determined to use real estate investing at your age, I'd be a millionaire many times over now so kudos on you for thinking about this so early!

I imagine you live with family. Use the time to save every penny. If you make 15k, learn to live on 5k. Save the difference. If you have any debt, especially car debt, sell the car, get something you can buy in cash. At 18-yo. you can buy a property, and if you save aggressively, you could have as much as 20k, more if you learn to take gig work online.

Use that money at 18 to buy real estate out of state because Colorado is too expensive for your budget. (I'm a native Coloradan, so deeply familiar with everything from Co. Springs to Ft. Collins and between.)

Since you have 13+ months to learn remote real estate investing, read David Green's book and watch every YouTube video you can find on remote investing. Get so comfortable with it you can't imagine another way. Best of luck to you!

Stanley Huertas · Answer

@Michael Bultena Jr. use your fha wisely with a multi family

Michael Bultena Jr. · Answer

I'll be reaching out for sure, thank you so much!

Michael Bultena Jr. · Answer

Thanks so much for the advice! This may seem like a very basic question, but what makes carrying mortgage insurance a bad thing? And would you not have to do these on a remote loan?

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