How to get my first property out of college

Question

Hi my name is Julius and I’m currently 20 about to be 21. I will be graduating from college this upcoming spring of 2022 and I’m looking to get my first house hack as soon as possible. I’ve been interested in real estate and the concept of house hacking since early high school, so now that I’m actually getting to the point where I’m getting serious about getting my first property, I wanted to ask a question that I’ve had and have been looking into recently. So in terms of my financials, I don’t really have a steady income considering I’m a college student, also because my work in the summer now just consists of my power washing business, which is mostly cash and is also a seasonal business here in NY. So my question is, for someone like me looking to get a loan on a home or any kind of funding for my first property, what would be some good options? I don’t have any debt and I do have a credit score over 730. I just wanted to here some potential options from people with experience. I really appreciate it thanks!

Dan Sheeks · Answer

Hey @Julius Marchi

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 also recommend you read this article I wrote for Bigger Pockets titled How to Invest in Real Estate Before Turning 21. Even if you're already 21 or older, it has some great advice for getting started. 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/

Ian Walsh · Answer

Try to figure out where you want to be in 10 years and see if buying a property is part of that plan.  You might want to be a Realtor, wholesale etc.  It depends on your goals.

Raymond Cazis · Answer

To get an FHA loan, it usually needs to be a debt-to-income ratio of 43% or less.

Damian Bialonczyk · Answer

@Julius Marchi

House hacking is a great way to get your foot in the door with real estate investing. It'll be difficult to finance any property with a conventional loan if you don't have any documented income or tax returns, though. If I were in your shoes I'd probably spend the next year focusing on learning as much as possible about real estate and making sure you land a decent job with a steady income. The market has been extremely hot over the past several years (at least in my area) so you might even benefit from waiting a couple of years!

Alternatively, you could try to find a property with a seller that is wiling to finance the deal for you (ie seller financing).

Kevin Stier · Answer

Hey Julius,

I’m in a similar position. I would suggest reading a few books, but don’t go overboard. You receive diminishing returns over time and you’ll find the best value in doing things that are concretely moving you toward your goal. If you already know where you want to invest, start scraping MLS data into a spreadsheet analysis to get an understanding of the market. Start doing information interviews with people on BP, lenders, realtors, etc. I’d also recommend joining a few REIA’s and Facebook groups - these are places just like BP where you can throw out any question and get a genuine response from someone.

Julius Marchi · Answer

@Dan Sheeks thank you so much I appreciate it! I will read it now 👌

Julius Marchi · Answer

@Raymond Cazis that’s awesome you invest in NY! I’m in Westchester so it’s not far from you if your in NYC or on the island. Do you know how much banks want to see you making around in income, in relation to the size of the loan you’d be asking for? Thanks for the help!

Raymond Cazis · Answer

@Julius Marchi, great job on graduating college debt-free and with a healthy credit score! You're already a step ahead. I bought my first rental while I was in college back in 2014. I worked through college full-time to save $20k, and I borrowed another $20k from my grandparents to purchase my first home in Long Island (I notice you're in NY also) for $170k with a conventional 80% LTV loan. Getting a job with steady income is key in getting a bank to approve you. With some disciplined saving, you can get there!

Julius Marchi · Answer

@Damian Bialonczyk thanks for the input Damian! Yeah I’m not looking to buy right now per say, especially because of the market, but I will continue to do my research for sure.

How to get my first property out of college

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