Future newbie from Chicago and Milwauke WI

[Jose M.]

Hi all,

I am hoping to be a real estate investors in two years. Here is my spiel:

I just turned 22 and I will be entering my final year of college this fall (graduating next spring). I am originally from the city of Chicago, but I go to school in Milwaukee WI. I will hopefully start investing in RE 2 years from now (so spring/summer 2016) Now here is my plan.

1. I have been lucky enough to be around when my industry is booming so I have worked in both Chicago and Milwaukee during my undergraduate career. I will have the option to work in either location when I graduate. What are your personal experiences with either location. Is the Chicagoland area tougher for a newbie? I think the real estate aspect will play a small role in where I decide to work. I understand that real estate can investing can be successful just about anywhere, but I would appreciate any feedback you may have for me.

2. I am somewhat risk averse so I am building up my tax sheltered retirement accounts (401k and IRA) before I dive into RE part time. Right now I have about 15k in a roth IRA & 401k. In two years I will have somewhere between 50-60k in retirement accounts (40% roth 60% traditional). This is important for me so I can feel more comfortable delving into real estate. Do lenders look at this when they are considering a customer? Do they prefer the roth vs traditional accounts? Just to be clear this is not money that I want to use for RE investing, but i was hoping it would help me get better loan rates and such.

3. On top of the retirement accounts I should have 20-50k saved up for a down payment on my first RE investment. I will slowly add to this fund whenever I have extra cash. Since I am risk averse and it will me my first investment I want it be a traditional 15-25% down payment. The plan is to be a live in situation so multiple units (obviously this can change in two years). Do you keep your cash for RE in cash? I was thinking maybe putting the money in a 50/50 stock/bonds account. Maybe short term CD's?

4. All of this is speculative of course, but that is the general plan! The good news is that I have two years to passively learn. Here are some things I am thinking about jumping into in the next two years.

 * I already went through the beginners guide - I will do so again I am sure.

* Be more active in the BP community. I will upload a pic and fill out more information. Eventually I also hope to learn enough that I can return the favor and help out other members. 

* Listen to all of the podcasts and read some books of course.

* Take some courses and attend some classes. Are there any you recommend?

* Start talking with local members ( a bit hard since I am not sure where I will end up).

* Save as much as I possibly can for my first down payment. 

I know this post is long and I will edit later for any mistakes/typos I have made. I appreciate any and all feedback. I hope my post made sense. Thanks!

-Joey

[Jose M.]

Dmitriy: Thank you. I think this blog is an excellent resource and I look forward to being and active member and giving back as well.

Dawn: I expect an average real return of 5-10% from my retirement accounts. However, for such a short period of time I think in terms in how much I am comfortable losing. I would feel uncomfortable losing more than 10% in these two years. So 100% stocks is too risky, but .85% saving account doesn't really cut it either.

Thanks!