I am a 22 year old graduating senior in college this upcoming May. I'm stuck between after graduating going to get my license to become an agent or to find a corporate job to help fund my future investment goals in Real estate. My ideal thinking of a young agent is that many people won't trust me compared to older agents as well as it could be MONTHS before I even get my first check. OR I could get a job in my major of business and begin saving towards my future REI goals. I'm stuck between the two, any suggestions?
Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
6y
I think becoming an agent is great, but the beauty of that is that you can do that on the side of whatever corporate job that you get. If you become an agent you will be considered "self-employed" in most scenarios. This can be great, but it makes qualifying for a loan extremely difficult. Most banks will want to see two years of consistent income to be considered for a loan as a self-employed worker.
If I were in your shoes, I would do the W2 job first and start up real estate as a side hustle. Take full advantage of being easily bankable and getting consistent W2 income. I would build up funds for investing as well as a year of living expenses. I would also try to get into a house hack if you can. This way, when you do take the plunge into full time real estate, you don't have to stress about your income.
Rental Property Investor · Edmond, OK · Member since 2017 · 1k+ posts · 1k+ votes
6y
I think becoming an agent is great, but the beauty of that is that you can do that on the side of whatever corporate job that you get. If you become an agent you will be considered "self-employed" in most scenarios. This can be great, but it makes qualifying for a loan extremely difficult. Most banks will want to see two years of consistent income to be considered for a loan as a self-employed worker.
If I were in your shoes, I would do the W2 job first and start up real estate as a side hustle. Take full advantage of being easily bankable and getting consistent W2 income. I would build up funds for investing as well as a year of living expenses. I would also try to get into a house hack if you can. This way, when you do take the plunge into full time real estate, you don't have to stress about your income.
You won't be strapped for cash while you're looking for deals or building up your clientele.
Also, having a good W2 will help you qualify for loans (it helped me a lot when I first started). Your inconsistent income as an agent is not desirable for most banks.
@Cameron Tope Thank you and @Cassi Justiz. I will definitely consider that route instead, definitely don’t want to be trapped in the corporate world for long though.
Real Estate Agent · Houston, TX · Member since 2017 · 159 posts · 161 votes
6y
Most definitely take the W2 job to start. I'm getting my license after working for 6 years at my W2 job (not saying you have to work 6 years) and I feel a lot more confident as an investor. I also have a network of all my coworkers, past and present, over the years that has grown organically. Also take advantage 401K match by your employer
Main point being give yourself time to grow and mature. The way I thought at 22 is night and day to how I think now
1. First, as realtors I presume that (i) you are self-employed; and (ii) you do not have any full-time w-2 employees (i.e. working 1000 hours or more per year) working for your self-employed business or otherwise working for you. Given this understanding, you would be eligible to establish a self-directed Solo 401k which allows for investing in real estate.
2. If you are self-employed with no full-time employees, you can set up a Solo 401k through a 401k provider which allows for investing in real estate. In that case, you can simply have the account at a bank or brokerage where you will have direct checkbook control.
3. All of the income and expenses will need to flow in and out of the retirement account.
5. You can't live on the property or otherwise use it for personal use.
6. You can't work on the property as it must be a passive investment (e.g. you must hire someone to fix the toilet and can't pay the expense with non-retirement funds).
7. You must purchase/sell real estate from/to an unrelated person and the real estate can't be titled in your name personally (e.g. in the case of the 401k, it would be titled in the name of the 401k and you would sign as trustee of the 401k).
8. You should verify that you are eligible to transfer the funds from your existing retirement account (e.g. if the funds are in your current employer 401k, you will likely not be able to transfer until you quit your job).
Real Estate Broker/Owner & Property Manager · Sugar Land, TX · Member since 2013 · 660 posts · 459 votes
6y
@Tyus Foster It's good confusion to have. I have started RE as my side gig and I am still doing it as side gig but as a 2nd job. Yes, I started 10 years ago to diversify my skill set to dodge the great depression job cuts. It has helped so much and now I am broker with 10+ agents and still doing my consulting job full time. My plan for my son who is 8th grader is to get him to learn the ropes and when he finishes college I want him to get license to do RE on the side. BTW, that will be suggestion to him :-)
Time is money and Relationship is business in Real estate. You create relationship by connecting with people and having job helps you tremendously including having steady income to pay your bills and get your credit score going...
As few other said, don't hesitate to try RE as your side gig until you can replace the commission with your full time job.