Buying A House At 22. Am I Doing The Right Thing?

18 Replies

I'm 22 years old with a good job in a growing field, have about $7,000 saved up for a downpayment living in coastal Florida. The average price for a 3bd/2ba 1,300sq ft house is about $160,000 from what I'm seeing in my area. I want to buy something that needs a little work as a live-in flip. Am I crazy or rushing into this? I'd appreciate any feedback or tips.

I don't see anything crazy about purchasing a home if you can afford to live in it without over-extending yourself. At 22, it is even better as time is the most valuable resource in the world and the earlier you can get started, the more you can earn over time. Just make sure you do your research and have a plan and aren't doing it because it's the thing to do or someone told you to do it.

Yes = one word answer is all you need lol. "Yes"

@Matthew Kafami At age 22 this is a great idea however it will impact your life in many ways. It is a lot of responsibility and a lot of added stress to your life...if you are willing to sacrifice "going out" and if you are willing to stay in on weekends and dedicate your spare time to this house then no it is not crazy.

I am 24 and I am doing this exact thing right living in my own 4-unit complex while working full-time.

It is not easy but I am willing to put in the time and make the necessary sacrifices.

Good luck and PM me if you have any questions!

Yes. Stop renting and start owning.

Also, you can buy up to a four unit property and it is treated the same as a SFH from the bank as long as you reside there.

So, you can buy a small apartment building with four units, live in one and rent out the other three. If you buy a good property with cash flow you can not only eliminate your house payment but put a few dollars in the bank as well.

Provided your intention is to flip it can be a good idea assuming you know and understand how to buy right. If you do not it could be a major money pit that will put a end to your investing.

If you are buying it only as a personal home, to avoid paying rent, it is a major mistake. Personal homes cost far more than renting and do not financially work as a investment.

Do you have the money to carry the cost of a home and do the renovations at the same time. If not don't do it. Carrying the home will be much higher than your present cost of renting.

Only buying for investment purpose, such as rental, house hacking, etc...otherwise, buying a primary residence at such a young age is more of liability, it limits your flexibility and mobility, and creates lots of expenses.

I bought my first house at 24. It wasn't a flip though. Wish I had thought about investing in real estate at that age.

do it! 

I purchased my first home (townhouse) 6yrs ago when 24yrs old; one of the best decisions I've ever made as it snowballed into where I'm at now. 

If I were to give my past self advice it would be that when you analyse the deal to buy, make sure it will make sense as a flip in a couple years and also as a rental in a couple years. Being young you want to be flexible; a girl or job can take you across the country quickly. 

I’m 23 and own two rentals so no you’re not renting. You just have to have realistic expectations and a lot of self discipline.

Take it from someone who experimented with other kinds of “side hustles” from MLM and driving for Uber, real estate is by far the best.

Suggest you only use your FHA mortgage slot to buy a 4 plex at your age in that location its about doors.

@Jessie Niu   disagree .. just depends on where you live.

My first house at 19 was in Milpitas CA..  I parlayed that one Bay area house into 2 homes in Palo Alto.. if you know anything About BAy area real estate you know where I am going with this.. the 500k tax free exemption when you move is the single best tax treatment we have as Americans.. I did it in the Bay Area 3 times and in Oregon 2 times and just about ready to do it for a 4th time on my potential move to Vegas.. 500k tax free equity spends quite nicely.

Not crazy! My husband and I have seven rentals and I'm 24. Getting into real estate investing has been one of the best decisions I've made, even with the ups and downs.

Haha and by "not crazy" I mean that it sounds like you're doing the right thing by looking into getting a house. For some reason I had it in my head that your title was something along the lines of "am I crazy for considering this"

@Matthew Kafami Buying in the near future may be a good idea, but buying NOW is not.  Let me explain...

Don't take what I'm about to say personally, as I am going to make a few assumptions since I obviously don't know you.  But the average 22yr old thinks that they know everything, when the reality is often the exact opposite.  If you don't know if buying a home is the right thing to do or not, then you haven't done nearly enough research to make an informed decision.  You have stumbled upon a great website with tons of free information, so use it.  Go to the library and find a few real estate books, watch the podcasts on this site, read the forums, do research on your local market conditions ect ect.  Once you have done your research, you will intrinsically know the answer to your question, and instead you will have other, more intelligent questions.

The question should never be 'should I buy a home'.  instead it should be:

What neighborhoods should I buy in

How can I find a good deal at a below average purchase price in one of the neighborhoods that I want

How will I fund my purchase

What happens if I need to relocate for my job

How will I pay for an unexpected expense such as a broken AC unit

What happens if home values dip and I end up owing more than the house is worth

And the list goes on....

The second reason why you shouldn't buy now is that you simply don't have enough money in reserves in my opinion. If you use an FHA loan you only need to put a 3.5% down payment on the house. This translates into $5600 on a 160k home. This does not count all of the misc fees that come with purchasing a home such as appraisal fees, loan origination fees, realtor fees, or any minor repairs that need done ect, which your 7k will struggle to pay for. Even after you pay all of this, you still need to have enough money in reserves to pay any unexpected bills. What happens if the month after you buy your home your car breaks down? Or your refrigerator stops working?

Take a few months, and do your research.  Find out if there are any down payment assistance programs that you qualify for, first time homebuyer programs, or if your state offers a Mortgage Credit Certificate ect.  While you are doing your research live frugally and save up your money such that when you are mentally ready to make a decision, that you have the assets to be able to pull the trigger.

If done PROPERLY, owning real estate is the most proven path towards obtaining long term financial success.

A live in flip could be a great idea, especially if you can get an FHA loan. As far as rushing into it, assuming you want to go down this financial path to freedom, NO you aren't rushing. But this particular property? How many properties have you looked at until you found this one? Have you crunched the numbers and done your homework on the area? Definitely take your time analyzing before making any purchase. GOOD LUCK!

Originally posted by @Jay Hinrichs :

Suggest you only use your FHA mortgage slot to buy a 4 plex at your age in that location its about doors.

@Jessie Niu   disagree .. just depends on where you live.

My first house at 19 was in Milpitas CA..  I parlayed that one Bay area house into 2 homes in Palo Alto.. if you know anything About BAy area real estate you know where I am going with this.. the 500k tax free exemption when you move is the single best tax treatment we have as Americans.. I did it in the Bay Area 3 times and in Oregon 2 times and just about ready to do it for a 4th time on my potential move to Vegas.. 500k tax free equity spends quite nicely.

I second the 4 plex FHA route. Purchased my first unit at 19 and now have 81 doors at 24. My only regret is not starting off in multi-family.

I'm with @Ben Zimmerman on this one, 

Not to discourage you or persuade you to do other wise but if you only have $7,000 think about all the expenses you'll occur since it's a flip, do your research and don't consider a low-end estimate. 

-Can you afford the mortgage, taxes and all utilities by yourself? Since it's a flip having roommates will be nearly impossible due to the living conditions if you're hacking at walls, gutting bathrooms and so on. This can cause legal issues quickly and they'll probably win...  

- Do you have the time? Flipping with a full-time job is rough but doable especially at your age just no that you will probably not need a phone anymore since you wont have a social life haha.  

- Do you have friends that are handy because this will help a lot especially if you can bribe them once in a while with pizza and beer. 

I can't stress enough on the expenses! If you need appliances, new roof, A/C, tools, new tile or carpet, any other main renovations. While $7,000 looks great at 22 you can spend that on decent A/C.  

If you can manage all of this than Do it, if not take an extra year and save for at least $10K just for the flip.  

@Matthew Kafami I think it is a great idea to do a live in flip. For your first property/flip I would suggest doing a minor fixer. If you are doing a single family 3/2 you should rent out at least one of the rooms to someone (for cheap) that will tolerate the renovation. That will help a bit with the monthly costs. I know quite a few people that did that in college and after about a year they moved on to the next property with the same roommates. 

Jay,

You might want to accelerate those plans because of proposed changes in the Trump tax plan.
Sec 121 may be on the chopping block in some shape or form.

Originally posted by @Jay Hinrichs :

 I did it in the Bay Area 3 times and in Oregon 2 times and just about ready to do it for a 4th time on my potential move to Vegas.. 500k tax free equity spends quite nicely.

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