21yr Old...$220k in cash, don’t know where to start.

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21yr Old...$220k in cash, don’t know where to start.

Sam Trulli
Rental Property Investor · Ocean City, NJ · Member since 2019 · 15 posts · 14 votes

Hello everyone,

I’m 21 years old and currently live with my parents here in New Jersey. I have my associates degree and work a seasonal Restaurant Job making $30k a summer. I also have my Real estate license but I’ve completed 6 deals so far and I’m starting to realize I don’t like being an agent. But I do have a huge passion for investing in RE.

I’ve been able to save a good chunk of cash over the years ($220k) and I’m wondering if anyone here could give me some investing or career advice. I really want to get my feet wet with investing in rental properties but I realize you need a steady income to borrow from the bank.

Any opinions or advice would be greatly appreciated!

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Bruce WoodruffPro Member
Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
5y

Congrats on saving that much at such a young age! Some people never get that much in their savings.... :-)

Is it possible for you to buy anything with cash where you live? Or would you be interested in moving or investing OOS?

I think your future looks pretty bright. Don't get married.....

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  • Jaron WallingPro Member
    Rental Property Investor · Indianapolis, IN · Member since 2018 · 4k+ posts · 4k+ votes
    5y

    @Sam Trulli Start networking and connecting with other companies. Find a new line of work related to real estate and learn as much as you can. If being an agent isn't for you make a change. Step out of your comfort zone, keep working, but continue to "mind your own business", as Robert Kiyosaki says. I'm an investor and have no desire to get a license. It's a task I'd rather pay an expert for (an agent friend of mine). REI is more about relationships than anything else.

    Notice I didn't mention spending that cash? Without experience, market research, niche, or a strategy spending that money is risk. Take advantage of your situation and crawl before you walk. You'll find a good DEAL and start moving in the right direction. 

    3Reply
  • Peter Vander Valk
    Lender · Bloomfield, NJ · Member since 2016 · 65 posts · 36 votes
    5y

    Hey Sam, welcome to BP! $220k is a great amount of money to have saved by 21! Like you said, to qualify for a conventional loan you need 2 years work history in the same field. There are other types of loans you can get without showing any employment income (DSCR/No Ratio), but those will come with higher interest rates, lower LTVs and less favorable terms. Figuring out what you want to do as far as your work situation first would probably help you create a more realistic path toward achieving your investment goals.

    Other than being an agent, is there anything else you might like to do in the RE field? As a loan officer, I get to run my own business, talk RE every day and help people achieve their goals. I love it! There are a lot of career paths in this industry to think about, and maybe staying in the industry, just not as an agent, would be something that would keep you engaged in real estate and give you better insight into investing. If you ever want to talk about being a loan officer, I would be happy to share my experience! Either way, I wish you the best of luck in figuring out what you want to do and how you want to do it.

    2Reply
  • Bruce WoodruffPro Member
    Contractor/Investor/Consultant · San Diego / Phoenix · Member since 2021 · 12k+ posts · 15k+ votes
    5y

    Congrats on saving that much at such a young age! Some people never get that much in their savings.... :-)

    Is it possible for you to buy anything with cash where you live? Or would you be interested in moving or investing OOS?

    I think your future looks pretty bright. Don't get married.....

    4Reply
  • Joseph Guzzardi Jr
    Rental Property Investor · Member since 2019 · 411 posts · 148 votes
    5y

    @Sam Trulli clearly your a hard worker and disciplined to save and make that $$. Now channel that thru the education route. Learn from people who are ACTUALLY DOING WHAT YOU WANT TO DO. Also you need to figure out what your goals are. Build a portfolio of properties? How will you accomplish that? Looking forward to any further discussion to assist.

    1Reply
  • Sam Trulli
    OP
    Rental Property Investor · Ocean City, NJ · Member since 2019 · 15 posts · 14 votes
    5y

    @Peter Vander Valk

    Thank you Peter! I do actually have 2+ years of income the problem is I get mostly cash tips at my job so I do not claim a whole lot. Maybe about 10k a year. But I don’t have any debt whatsoever I live with my parents and I have a 793 credit score. Any tips?

    And that’s interesting I never considered being a loan officer. What type of schooling do you need for that?

    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    5y

    @Sam Trulli house hack.  Keep as much of that cash as you can.

    3Reply
  • Derek Levine
    Investor · Member since 2021 · 9 posts · 3 votes
    5y

    Anything is easy IF you can do it, and do it consistently. You have hustle and frugality, apparently. You already know you have drive and you can save. Now, consider putting yourself in a better environment to meet your objectives. Maybe Florida or Tennessee or Texas. You have saved money staying with your folks but you may grow even faster if you throw yourself out of that nest and land somewhere that is full of potential for REI. It could be beneficial to begin your realty journey someplace where living is affordable, decent income is possible, and overall growth is likely (oh, and freedom may be important as well - and the US is becoming very segregated in that respect). Others have already commented about leveraging - no need to spend much of that savings. And although you don't have that two-year work history (?) yet, it is easier to borrow money when you already have money. Remember, almost everything is negotiable. If a lender says "no," ask why and how you can turn that no into a yes. Same goes for sellers. There are a million little details to learn, so watch and read and ask with all of your free-time.

    1Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    keep in mind if you dont like being an agent you may not like being a landlord.. lots of time lots of options.

    I am in the house hack camp though for those starting out.. use your low down payment low interest loans to buy a duplex 4 plex live in one.. rent the others  see if you like being a landlord . etc.  but that is a great first step.
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  • Peter Vander Valk
    Lender · Bloomfield, NJ · Member since 2016 · 65 posts · 36 votes
    5y

    @Sam Trulli your debt to income ratio will likely be your biggest factor for conventional financing. At $10k/year, that works out to about $833/month, and conventional underwriting guidelines suggest (I say suggest because you can technically go higher with compensating factors) your housing expense should not exceed 36% of your monthly income. That leaves $299/month for a mortgage payment. There are options for people who don't claim a lot, but they can come with less favorable terms.

    As far as getting licensed, you need 20 hours of federal education, 4 hours for NJ state education, pass the exam, get finger printed, background check, etc. It's a process. And then you need to actually learn how to do the job, because the education doesn't really get too deep into that. But if you are interested, I would be glad to talk to you further about it!

    0Reply
  • Joseph Harris III
    Investor · Wilmington, NC · Member since 2015 · 29 posts · 16 votes
    5y

    @Sam Trulli you should invest into a mentorship program such as Pace Morby's SubTo program or Vena Jones-Cox's Wholesale School. Those are 2 good ones. Also check out Bill Bronchik's mentorship program and see which one would be better for you.

    Have you thought about investing in someone else's deal as a private lender to get your principal plus interest returned to you? That could be an option as well as one of the mentorship programs.

    0Reply
  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    5y

    Keep the money in your bank account and learn to make it in this business with under 15k.  

    4Reply
  • Casey Caton
    Investor · Member since 2017 · 69 posts · 65 votes
    5y

    @Sam Trulli

    That's awesome Sam! If I had that amount now, I would pursue some good BRRRR options so that I could keep recycling that money and make those dollars work hard. If you haven't read @David Greene book on BRRRR investing, go ahead and start there. If you do it right, you could keep reusing that same cash again and again and again!

    2Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Peter Vander Valk:

    @Sam Trulli your debt to income ratio will likely be your biggest factor for conventional financing. At $10k/year, that works out to about $833/month, and conventional underwriting guidelines suggest (I say suggest because you can technically go higher with compensating factors) your housing expense should not exceed 36% of your monthly income. That leaves $299/month for a mortgage payment. There are options for people who don't claim a lot, but they can come with less favorable terms.

    As far as getting licensed, you need 20 hours of federal education, 4 hours for NJ state education, pass the exam, get finger printed, background check, etc. It's a process. And then you need to actually learn how to do the job, because the education doesn't really get too deep into that. But if you are interested, I would be glad to talk to you further about it!

    the Federal NMLS test is MUCH tougher than the real estate agents tests at least for me it was.. As someone with no back ground in conventional lending JUST HML .. I passed first time but it was not my normal never study take the test first one done and kill it..

    Lending though is something you can do for a lifetime and those that have really good realtors feeding them deals make bank do doubt. U dont need rentals if your making consistent referral income.. I mean you can have them as an investment but the cash flow starting out is a pittance compared to what you can earn in commissions.. With little to no financial risk .. 

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  • Peter Vander Valk
    Lender · Bloomfield, NJ · Member since 2016 · 65 posts · 36 votes
    5y

    As @Jay Hinrichs mentioned, the test is not easy, and shouldn't be taken lightly. I think it's somewhere around a 50% pass rate. There are some great study tools that can help you retain the material, but you do need to make a commitment and put in the effort to prepare. I took about 3-4 weeks just to study after I completed my education and passed on the first try. There are laws, math questions, and even meta questions about the licensing process and keeping your licensing current. It is all multiple choice, at least.

    If you want to test the waters before becoming licensed, you could look for work as a loan officer assistant, but you would eventually probably want to make the move into being a loan officer if you choose that career path. Alternatively, you can look at becoming a registered loan originator with a bank, but I can't really speak to that procedure.

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    5y
    Originally posted by @Peter Vander Valk:

    As @Jay Hinrichs mentioned, the test is not easy, and shouldn't be taken lightly. I think it's somewhere around a 50% pass rate. There are some great study tools that can help you retain the material, but you do need to make a commitment and put in the effort to prepare. I took about 3-4 weeks just to study after I completed my education and passed on the first try. There are laws, math questions, and even meta questions about the licensing process and keeping your licensing current. It is all multiple choice, at least.

    If you want to test the waters before becoming licensed, you could look for work as a loan officer assistant, but you would eventually probably want to make the move into being a loan officer if you choose that career path. Alternatively, you can look at becoming a registered loan originator with a bank, but I can't really speak to that procedure.

    Loan officer for bank does not need NMLS unique identifier..  so no test necessary.. but then your on salary.. And maybe some performance bonus .. but no way do you have the earning opportunity as a NMLS licensed MO  .. in my case I am a Mortgage Banker which allows ever more flexibility with income potential as I can work for multiple outlets at the same time.. Although I am currently in active but i keep up all my CE so If I want to buy a mortgage company or start one I can just get it going very quick. 

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    0Reply
  • Robin C.
    Investor · Atlanta, GA · Member since 2016 · 112 posts · 25 votes
    5y

    If you want to make passive income without all the labor and headache of flipping, think about becoming a private lender. $220K is a nice chunk of change to get started.....do your due diligence before any investment! Good luck!

    1Reply
  • Sam Trulli
    OP
    Rental Property Investor · Ocean City, NJ · Member since 2019 · 15 posts · 14 votes
    5y

    @Robin Cornacchio

    Hi Robin, would you mind explaining a little deeper? how would I get started with this?

    Thanks

    0Reply
  • Shawn McenteerBusiness Member
    Realtor · Boonton Township, NJ · Member since 2013 · 2k+ posts · 1k+ votes
    5y

    @Sam Trulli be committed to it. You have plenty of money to get into investing, figure out what it is you want to do. Stay active on BP. When first starting out I was not sure what direction i wanted to go with REI, fortunately I committed time to BP, networking events, etc until I figured it out.

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  • Matthew Reid
    Rental Property Investor · Jonesboro, AR · Member since 2019 · 105 posts · 59 votes
    5y

    @Sam Trulli  I would say if you have that much money look into joining a mastermind!!!  There are a ton out there.  They cost $$ but holy moly you can surround yourself and be on calls daily (if it is a good mastermind) with guys that are doing it big.  You can look and see what everyone is doing, pick and choose what you like and apply it to your business. I'm telling you since I have joined a mastermind my mindset has completely shifted from only thinking I can do smaller deals to buying Apartment complexes.  We have our second Apartment complex under contract within 3 months.  We are partnering with some syndicators that we met in one of the masterminds we are in.  


    That's another thing, these guys and gals in these masterminds are doing it.  If you have that much money you can do several things.  1. Get to know who is running an operation that aligns with your values.  (You can tell pretty quick after listening to them on the calls)  2. Reach out to them and let them know you have some money and would love to work/invest/learn from you.  

    Masterminds aren't for everyone but I'm telling you our business has exploded because of our mindset shift.  GO GET IT!!!!!!

    1Reply
  • Arturo Ceballos
    Yuba City, CA · Member since 2019 · 5 posts · 1 vote
    5y

    @Sam Trulli

    Leverage, Leverage, Leverage. That's good seed money. I'd start off with a few BRRRR's. If done correctly, you should still have a good chunk of that money when it's all said s done.

    0Reply
  • Chris Pasternak
    Real Estate Broker · Pueblo, CO · Member since 2013 · 368 posts · 303 votes
    5y

    We're suggesting a 21 year old that lives with his parents with 0 deals done be a private money lender?  Huh?

    First, find a place to rent.  Yea I said it.  Rent a place.  You'll make great strides personally by living on your own.  Paying your own bills, getting your own food, living on your own budget.  Don't reply and say you pay rent to your parents it's not the same thing.  

    Next, you need to work on your income.  Why isn't the real estate agent working out?  You did the hardest part which is start and get one deal done.  Of course there are other opportunities out there to make money. The restaurant business you're in is a stepping stone.  What's your associates degree in?  Why did you get it?  Why don't you get a bachelor's?  The best real estate investors are patient.  Focus on moving out, living on a budget and tripling your income.  

    1Reply
  • Jabbar Adesada
    Rental Property Investor · Beaufort, SC · Member since 2020 · 119 posts · 98 votes
    5y

    @Sam Trulli

    Hey Sam I have read some of the comments and would really stress like others said using very little if not none of your money to get started in real estate. I bought my first property this February at 19 y/o and it’s been amazing for me under contract on a second one, and trying to lock in a third before the end of this year if not the VERY beginning of next year. I started with house hacking and that was by far the best decision and it will get you some experience under your belt to decide where to go next. The second deal I’m buying when it closes I’ll buy with none of my own capital because I leveraged deal finding abilities, (non family) relationships, and experience/knowledge, the third deal I buy will be done in the same manner if not probably with the cash flow from my 1st deal. So house hacking or the $22k I was all in on that first house will lead to more. I stress this to you because it is very easy overpaying, being careless, or rushing into things when you think you have a lot of money and I observe this quite often. It is pretty common in some areas to get a very high COCROI from house hacking because theoretically you are putting very little money into the property. What I did to learn was I started at episode 1 listened to every BP real estate podcast, read all the how to books BP provides and got on the forums and learned/built relationships with investors in the markets I was thinking about investing with. I am not saying this is the best way just what I did to get started. I hope this can help give you a sense of direction. You don’t have to listen to every podcast or read every book just enough to where you really understand and have a full grasp of the concepts needed to accomplish your goals. OHH, and figure out what your goals are, they will change, but listening to the podcast will help you figure out what is even possible.

    2Reply
  • Jabbar Adesada
    Rental Property Investor · Beaufort, SC · Member since 2020 · 119 posts · 98 votes
    5y

    @Jabbar Adesada

    Also as far as how you can house hack, be creative and resourceful. You can get a non owner occupant coborrower on an FHA loan and I believe it is even more liberal with who can co borrow with you on a conventional loan. Also DSCR loans although they usually require 20% down and have less than favorable terms if the numbers work I wouldn't bat an eye, I've seen 4.5-5% interest on DSCR loans 20% down and a 30 year fixed. I think a lot of people are spoiled with these low 2.25-3.5 rates we have been experiencing, it isn't normal and 4.5% was consider low a few years ago. Anyways you have options to start REALLY soon if you wanted to it is on you to do the education, personal growth/development, and build the relationships needed to put the dream into the history books. Good luck!

    2Reply
  • Jeff S.
    Specialist · Portland, OR · Member since 2010 · 3k+ posts · 1k+ votes
    5y

    @Sam Trulli that is great you have an angle there living with folks and saving. This is a great time to learn, learn, and learn. You have experienced being an agent and I know being an agent at a young age is hard to gain credibility. Like others have said there are many different ways to skin a cat. Figure out what your strengths are and capitalize on them. Saving that much money is a special feat in itself and maybe living frugally is the way you will make your mark. Read the millionaire next door. Stay away from expensive girls. 

    0Reply
  • Stephanie P.Pro Member
    Washington, DC Mortgage Lender/Broker · Member since 2016 · 4k+ posts · 2k+ votes
    5y

    @Sam Trulli

    If you really want to be a successful real estate investor, stay in school and learn a trade.  You've already got two years down, so complete the next two.  Get a degree that matters in this field like accounting or even digital marketing and then take just a little more time and learn how properties work.  I can't tell you how many real estate investors waste money on things that they could do themselves (minor carpentry, electric or plumbing can cost a fortune).  Learn those skills along with the business side of things and you'll be unstoppable.

    Some suggest you move out.  I say stay home as long as you can and continue to save.  Help your Mom and Dad out with the bills and chores around the house and carry your own weight with food, bills etc..., but don't contractually obligate yourself to a lease or a mortgage until you've gotten your school out of the way.

    One girl's opinion.

    Congratulations on your current successes

    Stephanie

    0Reply
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