20 Yrs, 5k, Beginning, Need Advice

[Rosston Smith]

Hello, I'd like to get some advice on if I should consider getting started into an early real estate investment, and if so, how would you recommend I go about doing this? 

I have 5k available, 20 years old, making 30k/yr, I have two people ready to rent from me and am considering looking into using a loan to acquire a relatively cheap 3-4 Bd room house (20-50k) early on and using them to help pay it off. 

I want to get some advice from all of you on this matter. I need to learn a lot more about real estate and different kinds of loans and etc of course. I feel like this will help get me ahead earlier, because I imagine in 2-3 years I'll have a property paid off completely.

Please all thoughts are welcome!

[Matt Lefebvre]

Hi @Rosston Smith!  First off, welcome to BiggerPockets.  Its awesome that you're young and already looking for ways to build passive income.

If you are owner occupying an investment property (a multifamily specifically) you definitely can get some lower downpayment loan programs. If the property you buy is in relatively good shape, you could consider a FHA loan. Their downpayments are as low as 3.5% of the purchase price and allow "gifts" (meaning family members or friends can give you money) towards the closing costs. If the property isn't in as great shape, you could go down the route of a 203k rehab loan. This will allow you to lend money on renovations to a property in poor shape, as well as for a large fraction of the purchase price.

I would definitely recommend talking to a lender that deals with investors so they can best explain each program and its benefits to you.

In my personal opinion, I also find that multifamily, even owner-occupieds, are better investments than renting out rooms.  Renting out rooms usually means younger people (think, college age) living together and causing more wear and tear on the place.  If you have a multifamily, depending on the area, you have a much larger tenant pool.  

Just my thoughts :)