Investing in Colorado Springs

8 Replies

Hello,

I am an 18 year old and attend high school in WV. But, I will be attending the United States Air Force Academy in June of this year. Currently, I have about 4k in my bank account to use in investments. My current knowledge of real estate investment consists of several books I've read and a few discussions I've had with a real estate investor. 

With this information in mind, what would you suggest I do to continue? I would like to start investing now, but I also see the hazards that come with investing at such a young age while at USAFA. I am open to any opinion or suggestion. Thank you for helping a novice, want-to-be investor!

Cameron.

Personally, I learn by putting my money in the game. Then it makes me 100% involved.

However, it is going to be hard to invest $4,000. 

I think that you should continue to network and spend time with investors locally.

You're young so you have time to learn as much as possible and continue to save up. I would never stop saving.

That money will come in handy one day!

@Cameron Zobrist Congratulations on getting into the AFA! 

I agree that it will be very hard to invest $4,000. However, I just confirmed this with my lender - being an AFA student, you are considered active military and would be qualified for a VA loan that can get you into a single family home with 0% down or even a multi-unit property. There are a few things I should mention: In order to qualify, you would need to have income enough to qualify and good credit. If you do not have enough income to qualify (which I would guess is the case with you being a student), you can use a co-signer IF they are also VA eligible.

Please remember that there are also closing costs and you should have a reserve saved if there are any necessary repairs down the road. Sometimes you can re-negotiate price to have the seller cover the closing costs, but this can be discussed further if you like. 

So the very best scenario would be to buy a multi-unit (duplex, triplex, 4plex) in the Springs with your VA benefits (likely with a VA co-signer), and you would essentially live for free or at least very cheaply by renting out the other units, while building equity in the property and gaining some great landlord experience.

My lender also has a 0 down program for an owner-occupied single family home (not mult-unit) if you have a co-signer but they are not VA eligible. This way, you would be spending about the same every month for housing, but would be spending this money on building your equity as compared to paying a landlord (and while realizing any additional appreciation on the property).

Of course all of this assumes that you would be living off-campus and at the property you are buying. It would be extremely difficult to come by any non owner-occupied loans where you would put down less than 20 or even 25% of the purchase price as downpayment. 

Hope this helps - let me know if you have any questions.


Phillip Bicker, Real Estate Agent in CO (#FA100069146)
Originally posted by @Phillip Bicker :

@Cameron Zobrist Congratulations on getting into the AFA! 

I agree that it will be very hard to invest $4,000. However, I just confirmed this with my lender - being an AFA student, you are considered active military and would be qualified for a VA loan that can get you into a single family home with 0% down or even a multi-unit property. There are a few things I should mention: In order to qualify, you would need to have income enough to qualify and good credit. If you do not have enough income to qualify (which I would guess is the case with you being a student), you can use a co-signer IF they are also VA eligible.

Please remember that there are also closing costs and you should have a reserve saved if there are any necessary repairs down the road. Sometimes you can re-negotiate price to have the seller cover the closing costs, but this can be discussed further if you like. 

So the very best scenario would be to buy a multi-unit (duplex, triplex, 4plex) in the Springs with your VA benefits (likely with a VA co-signer), and you would essentially live for free or at least very cheaply by renting out the other units, while building equity in the property and gaining some great landlord experience.

My lender also has a 0 down program for an owner-occupied single family home (not mult-unit) if you have a co-signer but they are not VA eligible. This way, you would be spending about the same every month for housing, but would be spending this money on building your equity as compared to paying a landlord (and while realizing any additional appreciation on the property).

Of course all of this assumes that you would be living off-campus and at the property you are buying. It would be extremely difficult to come by any non owner-occupied loans where you would put down less than 20 or even 25% of the purchase price as downpayment. 

Hope this helps - let me know if you have any questions.

Thank you so much for the reply! I had considered a VA loan, but I know very little about the qualifications. Also, as a AFA Cadet I am required to live on campus for the 4 years of my schooling. How does this affects my living status for primary-residence loans? Would it still be possible to acquire loans where I can list the property as my primary residence while only visiting the property on the weekends? Once again, thank you for helping me out.

@Cameron Zobrist Unfortunately, yes, this does change being able to get this primary occupancy loan as VA loan rules require the borrower to certify they will use the property as their primary residence. No investment properties or summer homes may be purchased with a VA loan.

I haven't personally helped a client this product yet, but it would be worth talking to a lender about if you would qualify to purchase the property upfront as your primary residence:

A VA borrower is permitted to apply for an Interest Rate Reduction Refinancing Loan or IRRRL, which does not have the same occupancy requirements than a new purchase VA home loan.

According to the VA's official site, "The occupancy requirement for an IRRRL is different from other VA loans. When you originally got your VA loan, you certified that you occupied or intended to occupy the home. For an IRRRL, you need only certify that you previously occupied it."

So, if you buy the home intending to live there and later find out that you will need to rent the home, you may be able to refinance through the VA with this IRRRL and still have 0% down. You will need to talk to a lender to find out how long you need to occupy the home to begin with and how the IRRRL works. It looks like the refi would be zero out of pocket - check out the VA's site:

https://www.benefits.va.gov/homeloans/irrrl.asp

Again, the most important items: you need to be able to qualify up front with your income and credit (or a co-signer with VA eligibility), you must originally certify and sign that you are intending to occupy the property, you must occupy the property for some time (ask the lender how long this may be), and then you may be able to refi with this product.... Just thinking outside the box!! Hope this helps

Phillip Bicker, Real Estate Agent in CO (#FA100069146)

@Cameron Zobrist you might want to spend some time looking into the wholesaling. Get to know the investors in the Springs and start looking for homes that you could get under contract and wholesale to another investor. Wholesaling is a great way to get started with little cash. It take a lot of work to be the first to identify properties but it's a great way to get started.

Rick Thomas, Broker in CO (#100053334)
719-569-0735

@Cameron Zobrist - I would agree with what is said in previous posts. As an AFA cadet you will have to live on base during your college career and with only $4,000 you won't be able to buy an investment property. Wholesaling will be the best way to get started but be smart about it. It wouldn't take much to blow $4,000 on direct mail and not get a single call. Be sure to do your homework and I would recommend talking to other wholesalers in town and networking. I also partner with many wholesalers in town and would be happy to sit down with you also when you get into town. Just let me know when you get here and we can schedule a time!

Colin Smith, Real Estate Agent in CO (#ER.100052152)
719-232-6709

Hi Cameron!  I'm a 1997 USAFA grad!  A couple of things -- 1) as a freshman, you may not have the time to deal with investing.  DEFINITELY not during BCT.  JMHO.  But 2) consider investing in vacant land.  It is absolutely possible to invest 4K in vacant land.  I'm happy to help.  Congrats, btw! :)

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