Starting Real Estate as an 18 year old college student
Member since 2021 · 7 posts · 0 votes
Starting Real Estate as an 18 year old college student
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Rental Property Investor · Gilbert, AZ · Member since 2020 · 210 posts · 163 votes
5yHi @Nick DeLuca, awesome job getting started so early and identifying that you want to be in real estate. I'm curious how you landed on California to go school? The main downside of CA is that it's a high barrier to entry for real estate, whereas other midwestern or southern states would allow you to acquire property while you're in school. Not saying it's not possible in CA, just harder due to the upfront down payment requirements.
A couple recommendations:
1) Find a mentor, whether it's a family member, friend, local real estate agent that you ask to shadow for free, etc. You'll have the ability to learn a lot if you're able to hustle when you're young
2) Take advantage of the free resources you have to learn, such as BP, local REIAs, talk to your college's real estate or business student chapters, etc
3) If you have the opportunity, try to look at buying a property to use through college. Assuming that you're going to a 4 year college, you could buy a primary residence for 5% down and rent out bedrooms to roommates and live rent free while paying down your loan over that duration. You'd like need to have partners or have a parent co-sign the loan with you since.
4) Work through college - I worked through college full time and was able to pay off my student loan debt only 2 yrs after graduation. Student loan debt is a big hurdle preventing some people from being able to even get into real estate.
Good luck, you're in a good spot at 18!
14 Replies
- Rental Property Investor · Gilbert, AZ · Member since 2020 · 210 posts · 163 votes5y
Hi @Nick DeLuca, awesome job getting started so early and identifying that you want to be in real estate. I'm curious how you landed on California to go school? The main downside of CA is that it's a high barrier to entry for real estate, whereas other midwestern or southern states would allow you to acquire property while you're in school. Not saying it's not possible in CA, just harder due to the upfront down payment requirements.
A couple recommendations:
1) Find a mentor, whether it's a family member, friend, local real estate agent that you ask to shadow for free, etc. You'll have the ability to learn a lot if you're able to hustle when you're young
2) Take advantage of the free resources you have to learn, such as BP, local REIAs, talk to your college's real estate or business student chapters, etc
3) If you have the opportunity, try to look at buying a property to use through college. Assuming that you're going to a 4 year college, you could buy a primary residence for 5% down and rent out bedrooms to roommates and live rent free while paying down your loan over that duration. You'd like need to have partners or have a parent co-sign the loan with you since.
4) Work through college - I worked through college full time and was able to pay off my student loan debt only 2 yrs after graduation. Student loan debt is a big hurdle preventing some people from being able to even get into real estate.
Good luck, you're in a good spot at 18!
- Member since 2021 · 7 posts · 0 votes5y
@Brendan Miller Thank you so much for your response! I really appreciate your advice. I’ve always wanted to live in California, so I thought it’d be a good idea to head out there for college! I’ll be attending San Diego State in the fall. I will definitely look into everything you said though and start to take action once I make it out west😁
- 5yDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Originally posted by @Nick DeLuca:
@Brendan Miller Thank you so much for your response! I really appreciate your advice. I’ve always wanted to live in California, so I thought it’d be a good idea to head out there for college! I’ll be attending San Diego State in the fall. I will definitely look into everything you said though and start to take action once I make it out west😁
As was already stated the price of San Diego RE is high. However, living in a high occupancy house hacking situation is never easier than it is when going to school. Virtually all non-local SDSU students have roommates. They are willing to tolerate higher density housing when in college. My son is at UCSB and last year had 5 students in a unit that I guess was 600'.
How does this apply to you? I do not know what your ability is to get qualified co-signors and I am not a lender so do not know the issues with not having good income but having qualified co-signors. I suggest you start by understanding your loan limitations. Assuming that somehow you can qualify for a high LTV (Loan To Value) loan (meaning small percentage down) you can purchase a place not far from San Diego State (El Cajon and Spring Valley are working class areas that are fairly safe and about 15 minutes from SDSU) and house hack with some roommates. Ideally the PITI (mortgage, taxes, insurance) is fully covered by the roommates so that you are only on the hook for expenses. Expenses are higher than most newbies forecast so this still may be cash negative (i.e. the expenses will be higher than you would pay in rent for similar situation). I like the plan even though I believe it could be initially cash negative when accounting for all expenses.
If the property is cash flow negative (i.e. costing you more than renting in a similar situation) why do I think it is a pretty good plan? It is due to the appreciation. We have purchased properties at great times and poor times. Every property we have purchased (including the worse timed properties) has appreciated over $1900/month over the hold period (purchased 1992 for $167K, worth ~$820K today, (800-167)/(28*12) >$1.9k/month). Our best appreciating property has appreciated over $6.8k/month over the hold period. When a property appreciates at this rate, do you think the rents are not increasing? The rents go up fast. The cash flow situation typically improves every year (great Recession excluded).
Get a property no more than 15 minutes drive from SDSU. Have as many BR and Bathrooms that you can afford (i.e. get financing for). House hack placing 2 students in each BR. Recognize you may not start with positive cash flow when accounting correctly for all expenses. You may not even be positive cash flow 4 years from now when you hopefully are graduating (many serious SDSU students take 5 years due to difficulty getting certain classes, change of major, taking a few classes over, etc.). the possible negative cash flow does not matter. Long term the property will appreciate much more than any negative cash flow situation. 10 years from now history makes me believe that you will have experienced >$1900/month of appreciation. An SDSU student can easily do this math, but I will do it $1.9K * 10 year * 12 months/year = $228K of appreciation. Note this is the appreciation level of my worse property that was worth ~20% of today's values. If you experience the same appreciation rate as my initial property that $1.9K increase would be multiplied by 4.9. $228K*4.9 is over $1M of appreciation. Remember, I am using my worst appreciating property. Imagine doing this exercise for a property that has appreciated over $6.8k/month over the hold period (our best appreciating property).
The plan starts with determining whether you can somehow get financing with a high LTV loan and that you can come up with the required down. If you can get the financing, the plan is likely to work well.
I have my BS and MS in computer science from SDSU. My wife has her MBA from SDSU. We are long time SDSU basketball season ticket holders. I highly recommend you go to a big SDSU Aztec game (students get free tickets). There is not a better sporting event than a good Aztec basketball game (the arena can shake from the crowd). Before my son moved to UCSB, I had Aztec football season tickets. Wife does not like watching football, so we no longer have football tickets. Aztec for life.
Good luck
- 5yJonathan BombaciBusiness MemberReal Estate Agent · Lowell, MA · Member since 2019 · 1k+ posts · 1k+ votes
Hi @Nick DeLuca are you planning to work during college? My suggestion would be to get your real estate license and do that part-time or even just act as a leasing agent during college. Once of the best ways to learn the industry is to work in it. You're not really in a position to buy a property without a full time W2 Job and if you get started in real estate you will naturally find mentors. You'll have the unique advantage of working to learn the industry where the commissions will be an after thought. This will allow you to find and work for the best companies and likely find the type of mentors you'll be looking for.
This is what I did when I started out in real estate part-time while maintaining my W2. The fact the commission isn't your primary motivation will help you stand out amongst even the most experienced agents.Best,
Jon
- Member since 2021 · 7 posts · 0 votes5y
@Jonathan Bombaci Yes I do plan on working during college! Thank you for your advice though I really appreciate it and will definitely look into getting my real estate license. I’m unsure if I have to be a California resident to get that though
- Member since 2021 · 7 posts · 0 votes5y
@Dan Heuschele Thank you so much for your response, I really appreciate the time you took to answer and break it down for me. I’m very excited to attend SDSU sporting events and get to see what the campus has to offer. When I get to college I will keep all you said in mind. If I’m not able to make this all work out in college I still want to get my foot in the door.
- Investor · Charleston, SC · Member since 2021 · 263 posts · 122 votes5y
Take a look at this video from BiggerPocket's YouTube channel. I love their story, drive, and passion. Hopefully it will have some good tips for you in there too. https://www.biggerpockets.com/...
Best of luck at college!
- Real Estate Agent · San Diego, CA · Member since 2020 · 69 posts · 32 votes5y
Hi @Nick DeLuca,
That's awesome that you're getting into RE and learning as much as you can. I would say you should continue to dive into books, podcasts, etc. so when you're ready to jump in the game you have a good amount of knowledge. Another thing that you can do is get a job or intern for someone in the RE field. Whether it be an investor, lender, agent etc. they'll be able to teach you the ins and outs of their piece of the pie in the industry. Good luck Nick! Feel free to reach out whenever.
- Member since 2021 · 7 posts · 0 votes5y
@James De Leon Thank you! I will definitely try to get an internship somewhere while at school. I see you’re a real estate agent in San Diego which is where I’m going to school! I can’t wait to finally live in SD, it has so much to offer!
- Real Estate Agent · San Diego, CA · Member since 2020 · 69 posts · 32 votes5y
@Nick DeLuca You're welcome! Yes, that'll be a great way to get your foot in the door. That's awesome! You're going to love it here, SD is the best place to live. Good Luck and don't hesitate to reach out if you have nay questions.
- Residential Real Estate Broker · San Diego, CA · Member since 2015 · 44 posts · 27 votes5y
Hi Nick,
You said you weren't sure if you have to be a California resident to get a real estate license. The answer is No, you do not.
I've worked with people getting a license while living out of state. I've also worked with 18-year-olds - it's never too soon!
The CA DRE requirements to get a license:
Age: You must be 18 years of age or older to be issued a license.
Residence: If you are not a California resident, see Out-of-State Applicants (Each applicant must qualify for the appropriate written examination in California and meet all other requirements. Residency in the state is not a requirement to become licensed. California has no reciprocity with any other state to allow a waiver of any of the requirements to obtain a license.)
Honesty: Applicants must be honest and truthful. Conviction of a crime may result in the denial of a license.
Successful completion of three college-level courses is required to qualify for a real estate salesperson examination:
Real Estate Principles, and Real Estate Practice, and One Elective.Each applicant must qualify for the appropriate written examination in California and meet all other requirements.
Good luck! - Investor · Durham, NC · Member since 2020 · 1k+ posts · 691 votes5y
@Nick DeLuca You could start cold calling for a real estate investor. If you offer him leads, or your time through cold calling, you can learn sales skills, and the ins and outs of a single family real estate transaction. It's a grind, but it's worth it!
- Member since 2021 · 7 posts · 0 votes5y
@Gregg Watkins thank you so much for taking the time to answer! i really appreciate it
- Member since 2021 · 7 posts · 0 votes5y
@Jeffrey Donis Thank you for the advice! I will look into doing that.
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