Real Estate Investor · Waterbury, CT · Member since 2013 · 12 posts · 2 votes
I'm old...23 to be exact. I am a case worker with juvenile parole services and have my Been saving money. In my field money could be good but ultimately is like to become an investor full time someday. I'm looking to begin investing in my city in real estate. What would be my best bet as to start up money or money up front ? I know first home buyers will allow me 3.5'% down on a home. As well as Any tips on where I should begin In general? Thanks. -CT gentleman
First of all, get out of here with your "I'm old" BS!! Haha.. 23? You are at a perfect age to start. If you say you make a lot of money in your job, then save as much as you can and maybe start off either doing a flip or wholsale just to gain more capital. Master that, then get into the buy and hold world. That is the route I'm taking so it is just my opinion! Good luck with everything, youngin!
If you have the funds to buy a house there are a lot of proponents around this website that like the idea of buying a duplex or a home with a rentable basement or something. You can purchase a personal residence and have someone pay it off for you. Wholesaling is also another good option for someone with limited funds to begin investing. I suggest you browse the site here and just invest in your education and soak up everything you can. Eventually, something will call to you and a light will go off. Then the rest will be history! Good luck.
one thing I failed to mention, I'm getting married in August 2014 lol good ole ball and chain. I don't think it will affect my decision to invest . My fiancee knows about my goals and ambitions
1. Do you currently own a home? If you don't, I would recommend starting out buying a duplex and living in part of it (so that it's a tax right off) and renting the other half for the experience.
2. Join a local REI group. It will be invaluable to know people in your area and to make friends with people who know your market inside and out.
3. Save LOTS of money. I'm from Indiana were we can buy good houses for $20,000-$25,000...which means for a bank loan I only need $5,000 in most cases. You need to figure out what numbers in your area look like.
Getting started is the biggest thing. Research but have people around you who can help push you to that next step when the time is right. My mom pushed me way before I was ready (except I was ready) and although I didn't understand the whole picture or even the next steps I followed trusting my mom and have bought 2 houses a year for the last 4 years.
I also started when I was 23, when I bought my first two houses I thought that this was the SLOWEST thing ever. Now four years later I see how slow and steady can win the race. These stupid analogies that people tell you really DO seem to be true!! haha, good luck!
Welcom to the BP family. Listen to the podcasts and read articles from the learn library. You have many choices and you can reflect from the information you receive from other forumn members. If you have the temperment to be a landlord then that may be the way to go. Starting out as you are your timing is excellent, make sure you include the other half in all of your decisions. Have a happy, healthy and profitable New Year.
Would 100% agree with @Elizabeth S. the biggest hurdle is jumping in. While I've never jumped into the realm of multi's (own all SFH) our account here just bought his first duplex and is living in one half and renting out the other. It's a good start and will give you invaluable experience into what being a landlord is all about. It'll either scare you away or motivate you and I hope it's the latter. Happy investing!! And if you have any questions you are in the right place that's why I love this site learn something new everyday!
Welcome @Ollie Gray IV. I would very strongly encourage you to consider a 2-4 unit building to start with. Live in one unit and rent the rest. That will give you a taste to see if you enjoy being a landlord. In addition, you will either learn skills while fixing the unit you're living in, or you will work on your network of professionals to work in your units. That will pay dividends in the future. If I could go back to when I was 23 and bought my first house, I would not buy a house, but rather buy a multiunit.
Cash is important, but it's certainly not a stumbling block. There is more cash floating around in the world than you know. I own three buildings, and I have not put $1 of my own money into the units. (I've put a lot of time and shoe leather) My first purchase was 100% financed through some personal loans from friends; second and third purchases were from my HELOC. My residents are paying all of those loans and leaving cash flow for me.
@Ollie Gray IV it sounds like you're on the right track and there is some great advice in the above posts. Even thought the "live in one side and rent the other" strategy does work for people, I would think that may be a big step with a new bride. The last thing she [probably] wants to deal with is the tenants next door. I would, however, at least buy something ASAP. I doubt we will see prices this low in our lifetime again [you might, since you're so old!].
Having your spouse on board can help a lot. My wife & I attended a 3 day Rich Dad Education workshop and it clicked for her and now I rely on her "intuition" regularly [of course it took me 15 years to realize this].
I always recommend reading and/or listening to as much as you can.
If you haven’t already, please read/listen to these books ASAP!
@shawn holsapple thanks I've read rich dad poor dad but I explained to her her the idea! It's about investing in the future lol the house may not be paid off for 15-20 years but a little cash flow will come, we will eventually get 100% cash flow after the mortgage is paid off, move out and hold on. Any advice ?
@shawn holsapple thanks I've read rich dad poor dad but I explained to her her the idea! It's about investing in the future lol the house may not be paid off for 15-20 years but a little cash flow will come, we will eventually get 100% cash flow after the mortgage is paid off, move out and hold on. Any advice ?
With a current W-2 job, getting loans is much easier than us 1099 employees. If you have the discipline and stomach for it, I would [and am] get as many loans as possible [good debt]. I know at your age it's tough not to buy shinny things [Do Dads]. I was VERY bad at that age. I can hear the fans of debt free investing growling now...
Most banks will give you a signature line of credit just for fogging up a mirror. You should be able to at least start off with $10k-$20k. Pull the money out once a month for a few days and put back. After six months, call the bank and request an increase. Rinse & repeat. Before long you have enough to buy a small flip or rental project.
I've found that local State Banks & Credit Unions are the most eager to lend for investing. One that I use doesn't like to lend for rehabbs. So, I buy with [private] cash and rehab to move-in ready condition. Then the bank will lend on the appraised value, which is always much more than I have in the project. I can usually get all my seed money back plus some equity for the next project.
My suggested short term goal for 2014: find a great local agent that owns properties, have them find you a REO in an area that you would live in. Buy it, fix it up, live there for at least a year to avoid capital gains tax and then flip it. In the mean time, join the local clubs and network like crazy.
@Shawn Holsapple I'm leaning towRds living in and renting our. Would I let itt pay itself off ? Or try to pay it off? I don't need shiny things lol but I really wanna figure it out ! I don't know if living in the home I'm renting out is what I wanna do for years. Should I live in for a certain amount Of years
That's how I started out. Actually bought an REO using the FHA 203k loan program, it pays for the property and repairs and still only requires 3.5% down of total so I was still able to create equity by doing repairs.
Welcome to the site! You have many options and personally I think your best choice depends on your market. What has the best returns and what is available. I like SFR because I get better returns on them than multi in my area. That's not true everywhere.
@Ollie Gray IV - ideally, if you can secure a low interest, fixed APR, loan on a property in a good area - you will never sell it...
I saw Robert Kiyosaki speak a few years ago and one of my favorite quotes was " Buy Forever, Sell Monthly".
If you do sell, like @John Horner said, you need to hang on to it for at least 366 days to avoid paying a higher tax. Of course, if you can make a substantial amount of profit to reinvest before then, selling is still okay. That's how I was able to step up from the low-end properties [which I don't recommend] into some much nicer units now.
Also, a "Quick Tip" is not to deal with properties with a too low rental amount. For my Indianapolis area, I've found that to be $700 per month - period. I've tried [too many times] to work with tenants under that price range and it always ends badly.
Buy a house(HUD houses can be some great deals occasionally), fix it up while you live there for at least 366 days to be in long term capital gains OR live in it for 24 full months as your primary residence and you can sell it tax free up to 250k (500k married). Meanwhile, build up your cash reserves by living smart.