21 fresh out of college and have 25k to invest

8 Replies

Hi all,

I just recently graduated from The Citadel, The Military College of South Carolina with a degree in Biology and moved to NW Georgia for a career in orthopedic device sales and am now interested in getting into real estate to begin collecting more cash flow. I have 25K to invest and absolutely no experience with real estate investing or any investing for that matter. I have done a little research and think that getting into a multi family property would probably be the best niche to get into right off the bat. 

If you have any advice on how I should approach my first investment I would greatly appreciate it. Thank you for your time and help, I greatly appreciate it. 

Respectfully,

Hayden 

In multifamily, I had did a deal with 77 units. I would recommend setting up a team:

RE Lawyer/Title
RE Accountant

Property Manager

Mortgage Broker and/or Banker

Property (Home) Inspector / Construction Engineer ( 50 units or more)

If the PM does not have an insurance agent then getting one for yourself

Realtor

Litigation Attorney that specialize in Evictions

Optional but recommended
Like Kind Exchange Manager

Chamber of Commerce rep ( Development Committee member)

City Council member

Asset Attorney/ Accountant for if you plan on doing a private offering or syndicating funds.

Hope that helps, having a team in place helps a lot for big deals. 25 k

I think you are on the right track with starting with Multi-Families....

I suggest doing "house hacking"...you buy a duplex, triplex or 4plex with FHA loan, live in 1 unit and rent the others out. This will give you great experience as a landlord, managing your properties and could save you money being located there. After 1+ yrs move out. Once you move out you can repeat but would need to refinance the FHA mortgage to a conventional (this will allow you to use the FHA again and repeat the process by buying another multifamily and house hacking).

If not interested in "house hacking" then look for a multifamily and use your $$$ as down payment.  $25k may/may not be enough for 20% down & the need for a little money on the side for emergencies, vacancies, repairs etc. 

Originally posted by @Bryan C. :

I think you are on the right track with starting with Multi-Families....

I suggest doing "house hacking"...you buy a duplex, triplex or 4plex with FHA loan, live in 1 unit and rent the others out. This will give you great experience as a landlord, managing your properties and could save you money being located there. After 1+ yrs move out. Once you move out you can repeat but would need to refinance the FHA mortgage to a conventional (this will allow you to use the FHA again and repeat the process by buying another multifamily and house hacking).

If not interested in "house hacking" then look for a multifamily and use your $$$ as down payment.  $25k may/may not be enough for 20% down & the need for a little money on the side for emergencies, vacancies, repairs etc. 

I agree with Bryan C.  At your age, house-hacking is the way to go.  Find a Quadplex, live in the best unit and rent out the other 3 for a few years.  "Go to war on your mortgage"   Use tenant rents and the healthy income you will receive from medical sales to knock that mortgage down.  Assuming that you get a decent deal when you buy and the property appreciates slightly while you live there, and you accelerate the mortgage payoff, you can then use equity from the quadplex to buy more income property and use your income from you day job to buy a nice personal residence in a few years.  Good luck!

@Hayden Gamarra

It is good to see another young investor on BP. Welcome  to a wonderful website/community with everything you will need to learn and get started.

A few have already talked about house hacking. On BP house hacking is talked about a lot, and is a great way to get your feet wet. Like mentioned above you can use an FHA loan with a low down payment which I believe is 3.5%. Also as I am doing my research I have found you can use a 203k loan which is very similar but can used for any required renovations. Both of these loans require the owner to occupy the property.

Personally I would not like to house hack considering I will have to live with the tenants right next door. I mean this all depends on the quality of the neighborhood and tenants I guess, but I have had heard some stories that didn't always work out for the better. Like building a team you can also look into have a partner who can help finance and manage the property. This is what I am looking to do, but then you have to consider his thoughts and feelings instead of your own. Well wish you luck

Hayden, congrats on El cid. I graduated from South Carolina a few years ago. I was in a similar situation to yours. The house hacking will be the most profitable thing you can do towards your bottom line. With the income covering your rent and utilities you discretionary income will be nice.  Two pieces of advice - spend that discretionary income on things that appreciate or are income producing and not things that depreciate. 

Next just buy something. So many people search so long for the greatest deal that they never buy a single property. Pull the trigger. I'm not saying blindly go forth but you will learn more owning 1 a property than researching 1000 deals.

@Hayden Gamarra If you can build a great team and house hack for a couple years you will set yourself up for HUGE success. 

@John Cohen how would you recommend going about setting up a team? And what members of the team would be necessary? I just don't know many people that would want to go into an investment with a 21 year old. 

Hayden: I admire your tenacity, but my first recommendation is take it slow. I've seen too many first time investors jump into a hot deal and lose everything. Read, study, listen for awhile, a long while, and then longer. Don't need to spend money on a $$$ REI guru because there's plenty of inexpensive and practical ways to learn.

For multi-family I'd suggest reading Ken McElroy's books and visit his website. 

Good luck, 

Steve

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